Will New York entertain counterclaims for attorney fees and costs to a prevailing defendant?

Underlying claim is dismissed for assumption of the risk. Falling out of the sky is obviously dangerous.

Nutley v SkyDive the Ranch, 2009 NY Slip Op 6153; 883 N.Y.S.2d 530; 2009 N.Y. App. Div. LEXIS 5999 (N.Y. Appel. First 2009)

Plaintiff: Lisa Nutley

Defendant: SkyDive the Ranch

Plaintiff Claims: Negligence

Defendant Defenses: Release and Assumption of the risk, counterclaim for attorney fees based on the release

Holding: for the defendant on the claims based on assumption of the risk

 

This is an interesting case. To understand the case, I’ve also posted the trial court opinion leading to the appeal of this case.

The spouse of the plaintiff bought her a tandem sky dive as a gift. During the jump, the main shoot did not open. The reserve shoot did open. During the jump, the plaintiff broke her third and fourth fingers on her right hand. She sued for negligence.

The defendant filed a motion for summary judgment to dismiss the plaintiff’s claims based on the three releases she had signed and the video and instruction she had watched.

The trial court denied the motion for summary judgment (Nutley v. Skydive The Ranch, 22 Misc. 3d 1122(A); 881 N.Y.S.2d 365; 2009 N.Y. Misc. LEXIS 274; 2009 NY Slip Op 50223(U); 241 N.Y.L.J. 23) and the defendant appealed.

Summary of the case

The basis of the denial of the motion for summary judgment is a New York statute which prohibited the use of a release for recreational activities. New York General Obligations Law (“GOL”) §5-326. The lawsuit was dismissed because the trial court found the defendant operated a sky-diving  facility as a recreational business. The Defendant had argued that it was an educational business which does not fall under §5-326.

The appellate court found the releases were void under the New York statute.

The appellate court found that the risks of the activity were fairly obvious, and the plaintiff had assumed the risk of her injuries.

Here, the risk of the main parachute failing to open during a tandem sky dive was perfectly obvious. Indeed, plaintiff was given a reserve parachute. Plaintiff failed to raise a triable issue of fact as to whether the injury-causing event resulted from defendant’s negligence, creating unique and dangerous conditions beyond those inherent in the sport

The court then went back to its decision on releases and found the language attempting to release the defendant for negligence was void; however, the rest of the release was still valid.

So much of the waiver and release signed by plaintiff as purports to exempt defendant from its own negligence is void under General Obligations Law § 5-326. Severance of that provision leaves the rest of the contract intact…

Part of one of the releases had included a clause that any suit required the plaintiff to pay the defendant’s damages of attorney fees and costs. The defendant filed  a counterclaim against the plaintiff based upon this clause. The court did not rule on this issue finding that the trial court needed to look into whether this clause violated public policy as advanced by the statute that voids releases.

As to defendant’s counterclaims, however, we note that whether agreements not to sue a defendant and to pay its attorney’s fees and litigation costs might transgress the public policy of promoting recreational activities advanced by § 5-326 does not appear to have been considered by the courts.

The matter was sent back to the trial court to determine if the counterclaim for attorney fees and costs of the defendant violated New York Public policy and for any defenses the plaintiff may have to the defendant’s counterclaims.

So Now What?

The defendant lost on the defense of release, but won on the defense of assumption of the risk. The defendant might win on the opportunity to sue the plaintiff for attorney fees and costs in the assumption of risk agreements (since the releases are void).

This case appears to be fairly clear in its approach and decision. You can get hurt if you fall out of the sky. That is pretty obvious. Therefore, you assume the risk.

The argument about the sky-diving  facility being an educational business rather than recreation is discussed in the trial court decision. That argument made by the defendant was based on Lemoine v Cornell University, 2 A.D.3d 1017; 769 N.Y.S.2d 313; 2003 N.Y. App. Div. LEXIS 13209 (NY 2003). In Lemoine, the university was subject to the statute which voids releases in New York, but because it was an educational organization and not one for recreation, the statute did not apply.

What is different is the issue that the court held out the possibility that a demand for attorney fees and costs to a prevailing defendant may be viable in New York.

Four years has passed since this decision, and no other cases have been reported. Consequently, as of this time we do not have a decision to rely upon for this issue.

Even if there is not a valid claim because it violates public policy, there are several other theories on how a defendant can recover attorney fees in situations like this that may survive.

 

What do you think? Leave a comment.

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Nutley v SkyDive the Ranch, 2009 NY Slip Op 6153; 883 N.Y.S.2d 530; 2009 N.Y. App. Div. LEXIS 5999 (N.Y. Appel. First 2009)

Nutley v SkyDive the Ranch, 2009 NY Slip Op 6153; 883 N.Y.S.2d 530; 2009 N.Y. App. Div. LEXIS 5999 (N.Y. Appel. First 2009)

[*1] Lisa Nutley, Plaintiff-Respondent, v SkyDive the Ranch, Defendant-Appellant.

862, 108665/06

SUPREME COURT OF NEW YORK, APPELLATE DIVISION, FIRST DEPARTMENT

2009 NY Slip Op 6153; 883 N.Y.S.2d 530; 2009 N.Y. App. Div. LEXIS 5999

August 11, 2009, Decided

August 11, 2009, Entered

PRIOR HISTORY: Nutley v. Skydive The Ranch, 22 Misc. 3d 1122A, 881 N.Y.S.2d 365, 2009 N.Y. Misc. LEXIS 274 (2009)

CORE TERMS: counterclaim, summary judgment, sport, attorney’s fees, enter judgment, recreational activity, parachute, default

COUNSEL: [***1] The Law Offices of David M. Schreier, New York (Steven E. Kurtz of counsel), for appellant.

McMahon, Martine & Gallagher, LLP Brooklyn (Patrick W. Brody of counsel), for respondent.

JUDGES: Tom, J.P., Friedman, Catterson, Moskowitz, Richter, JJ.

OPINION

[**530] Order, Supreme Court, New York County (Martin Shulman, J.), entered January 28, 2009, which denied defendant’s motion for summary judgment dismissing the complaint and for a default judgment on its counterclaim for attorney’s fees and [**531] costs, unanimously modified, on the law, the motion granted to the extent of awarding defendant summary judgment, the complaint dismissed, and otherwise affirmed, without costs. The Clerk is directed to enter judgment accordingly. Plaintiff is directed to respond to defendant’s counterclaims within 60 days of the date of this order.

Defendant demonstrated prima facie entitlement to summary judgment on the doctrine of assumption of risk. Plaintiff was engaged in a sport or recreational activity, the commonly appreciated risks of which are inherent in, and arise out of, the nature of the sport generally and are consequent upon such participation (see e.g. Morgan v State of New York, 90 NY2d 471, 484, 685 N.E.2d 202, 662 N.Y.S.2d 421 [1997]). Here, the risk [***2] of the main parachute failing to open during a tandem sky dive was perfectly obvious. Indeed, plaintiff was given a reserve parachute. Plaintiff failed to raise a triable issue of fact as to whether the injury-causing event resulted from defendant’s negligence, creating unique and dangerous conditions beyond those inherent in the sport (id. at 485).

So much of the waiver and release signed by plaintiff as purports to exempt defendant from its own negligence is void under General Obligations Law § 5-326. Severance of that provision leaves the rest of the contract intact (see Caruso v Allnet Communication Servs., 242 AD2d 484, 485, 662 N.Y.S.2d 468 [1997]). As to defendant’s counterclaims, however, we note that whether agreements not to sue a defendant and to pay its attorney’s fees and litigation costs might transgress the public policy of promoting recreational activities advanced by § 5-326 does not appear to have been considered by the courts (cf. Ciofalo v Vic Tanney Gyms, 10 NY2d 294, 297, 177 N.E.2d 925, 220 N.Y.S.2d 962 [1961] [exculpatory clause not barred by “overriding public interest”]), the parties have not briefed the issue, and we do not reach it (see Brown v Christopher St. Owners Corp., 87 NY2d 938, 939, 663 N.E.2d 1251, 641 N.Y.S.2d 221 [1996]; Bacchiocchi v Ranch Parachute Club, 273 AD2d 173, 176, 710 N.Y.S.2d 54 [2000]). [***3] Defendant’s motion to enter judgment by default (CPLR 3215[c]) was appropriately denied in the exercise of discretion (cf. Charles F. Winsom Gems v D. Gumbiner, Inc., 85 A.D.2d 69, 71, 448 N.Y.S.2d 471 [1982], [*2] affd 57 NY2d 813, 441 N.E.2d 1118, 455 N.Y.S.2d 600 [1982]), and plaintiff should be afforded the opportunity to assert any defenses she might have to defendant’s counterclaims.

THIS CONSTITUTES THE DECISION AND ORDER OF THE SUPREME COURT, APPELLATE DIVISION, FIRST DEPARTMENT.

ENTERED: AUGUST 11, 2009

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