New York Law Review

Tag: Balsam v. New York City Industrial Development Agency

  • Balsam v. New York City Industrial Development Agency, 17 N.Y.3d 20 (2011): Limiting Owner Liability for Factory Elevator Safety

    17 N.Y.3d 20 (2011)

    A regulation imposing liability on non-operating building owners for factory elevator safety violations is invalid to the extent it conflicts with Labor Law § 316(1), which generally limits such liability to factory operators.

    Summary

    This case addresses whether a building owner who does not operate a factory within the building can be held liable for injuries sustained in a factory elevator accident due to alleged safety violations. The New York Court of Appeals held that the building owner, NYCIDA, was not liable. The Court reasoned that Labor Law § 316(1) places the responsibility for factory safety on the factory operator, and an agency regulation cannot contradict the clear language of a controlling statute. The Court emphasized that expanding liability through administrative regulations to non-operating owners would conflict with the legislative intent, especially considering the specific provisions for tenant-factory buildings.

    Facts

    Plaintiff, an employee at a furniture factory in the Bronx, was injured when he fell down a factory elevator shaft. The factory was located in a building owned by the New York City Industrial Development Agency (NYCIDA). NYCIDA had a sale-and-lease-back agreement with K&B Furniture Warehouse, the factory operator, meaning NYCIDA held title to the building but had no involvement in its operation, maintenance, or control.

    Procedural History

    Plaintiff sued NYCIDA, alleging that as the building “owner,” NYCIDA was liable for failing to comply with elevator safety regulations under Labor Law § 255. NYCIDA moved for dismissal, arguing that responsibility for elevator safety rested solely with the factory operator. Supreme Court granted NYCIDA’s motion, and the Appellate Division affirmed. The New York Court of Appeals granted leave to appeal.

    Issue(s)

    Whether 12 NYCRR 8-1.12(a)(1), which imposes liability on building owners for elevator safety violations, is inconsistent with Labor Law § 316(1), which generally imposes such liability on factory operators.

    Holding

    No, because the regulation expands liability beyond what the statute allows, conflicting with the principle that an agency cannot promulgate rules that contravene the will of the Legislature.

    Court’s Reasoning

    The Court emphasized that an agency regulation cannot contradict a statute. Labor Law § 316(1) clearly places responsibility for factory safety on the factory operator. The Court cited Liebowitz v. Denison Realty Corp., a similar case where a non-operating owner was not held liable for elevator safety violations. The Court distinguished between general factory buildings and tenant-factory buildings, where the Legislature specifically imposed liability on owners to ensure uniformity in compliance due to the shared nature of those buildings. The court stated, “If an agency regulation is ‘out of harmony’ with an applicable statute, the statute must prevail.” By expanding liability administratively, 12 NYCRR 8-1.12(a)(1) conflicts with Labor Law § 316(1). The court emphasized the legislative intent to confine Article 11 responsibility for elevator safety to factory operators. The Court further reasoned, “Were we to conclude otherwise, section 316’s distinction between tenant-factory owners and other factory owners (as NYCIDA, here) would be rendered meaningless.”