Beyond Sovereign Immunity: Supreme Court Jurisdiction Over the State as Garnishee Clarified in Matter of Doran Construction Corp. v. New York State Insurance Fund

Introduction

The Appellate Division, Second Department’s decision in Matter of Doran Construction Corp. v. New York State Insurance Fund, 2025 NY Slip Op 03716 (June 18 2025) stakes out critically important ground on the reach of CPLR Article 52 when the State of New York appears not as a judgment debtor but as a garnishee. At its core, the case answers a previously unsettled question: Does the Supreme Court possess subject-matter jurisdiction to entertain enforcement proceedings directed at a State agency when that agency merely holds money for another (i.e., is a “garnishee”)?

Marking a rare intersection of sovereign-immunity doctrine, workers’ compensation indemnity, and post-judgment enforcement practice, the court emphatically answered “Yes.” In doing so, it detailed how CPLR 5207 and 5221(a)(4) interact with the Constitution’s reservation of exclusive money-damage jurisdiction against the State to the Court of Claims.

The decision involves three layers of litigation: personal-injury claims under Labor Law § 240(1), common-law indemnification among contractors, and finally, a CPLR Article 52 garnishment attempt directed at the New York State Insurance Fund (“NYSIF”). While the personal-injury phase produced a familiar Labor-Law jackpot verdict, the enforcement phase produced a novel jurisdictional holding whose ramifications will reverberate throughout judgment-enforcement practice in New York.

Summary of the Judgment

Holding: The Supreme Court has subject-matter jurisdiction under CPLR Article 52 to entertain a garnishment proceeding against the State or a State agency as garnishee. The Court of Claims’ exclusive jurisdiction is not implicated because the proceeding does not seek money damages from the State itself but merely requires the State to turn over money it owes to a private party.
Disposition: Order of the Supreme Court (Hubert, J.) denying NYSIF’s cross-motion to dismiss (for lack of jurisdiction or on public-policy grounds) and alternatively to compel discovery is affirmed.
Key Statutes Applied: CPLR 5207 (“Enforcement involving the State”), CPLR 5221(a)(4) (venue and court designation for enforcement proceedings).
Consequential Rulings:
- The Supreme Court’s power extends to issuance of an order (not a “judgment”) compelling payment of funds not claimed by the State.
- Any subsequent non-compliance by the State would be redressable in the Court of Claims via Article 78 mandamus, preserving constitutional constraints.
- The attempted “bucket-brigade” indemnity scheme raised by NYSIF does not defeat the petition on the pleadings.
- Discovery was properly denied under the court’s broad CPLR 408 discretion in special proceedings.

Analysis

1. Precedents Cited and Their Influence

The decision synthesizes an array of authorities:

People v. Correa, 15 NY3d 213 (2010) – Re-states the Supreme Court’s general jurisdiction and the constitutional carve-out for money-damage claims against the State.
Commissioners of State Insurance Fund v. Mathews & Sons Co., 131 AD2d 301 (1st Dept 1987) – Recognises NYSIF’s sovereign status; yet never addressed garnishee posture.
Matter of Bankers Trust Co. v. State of N.Y. (Dept. of Audit & Control), 28 AD2d 272 (3d Dept 1967) – An almost forgotten but on-point holding that Article 52 applies when the State is merely a garnishee. The Second Department resurrects and endorses this authority, bridging a 58-year precedential gap.
Matter of Butler v. State of New York, 47 Misc 2d 365 (Broome Cty Ct 1965) – A county-level decision foreshadowing the same principle; relied upon as persuasive historic support.
CPLR commentaries by Professors Siegel, Weinstein-Korn-Miller, and Richard C. Reilly – Treated as secondary yet probative sources clarifying legislative intent behind CPLR 5207.

None of these earlier authorities were from the Second Department. By expressly adopting them, the panel cements a statewide consensus that had, until now, remained implied but untested in other departments.

2. The Court’s Legal Reasoning

Distinction Between “Judgment Debtor” and “Garnishee.” The opinion pivots on CPLR 105(i)’s definition of “garnishee.” When the State merely owes money to a private entity, it is not being sued “for damages” but is instead a stakeholder in a debtor–creditor execution context.
Statutory Text of CPLR 5207.
- Sentence 1: “None of the procedures for the enforcement of money judgments are applicable to a judgment against the state.” (Preserves sovereign immunity.)
- Sentence 2: “All procedures…are applicable to the state…as a garnishee, except where otherwise prescribed by law…” (Express statutory waiver for garnishment.)
Constitutional Reconciliation. Article VI § 9 vests exclusive jurisdiction over money-damage claims in the Court of Claims. Because a garnishment order is not a monetary judgment against the State but rather an instruction to pay a third party monies already owed, constitutional constraints are undisturbed.
Procedural Safeguards. The text bars the entry of a “judgment” against the State and limits any order to “moneys not claimed by the State,” insuring that the State’s coffers are not raided for sovereign funds.
Application to the Facts. NYSIF had an indemnity obligation to Bipex, the third-party tortfeasor. Doran, armed with an indemnification judgment against Bipex, stepped into Bipex’s shoes to collect those funds. Thus NYSIF held “property in which [the] judgment debtor [Bipex] has an interest.” Jurisdiction under Article 52 was therefore complete.

3. Likely Impact on Future Litigation

The decision revitalises and headline-clarifies a largely overlooked enforcement avenue. Its probable effects include:

Enhanced Post-Judgment Strategy. Judgment creditors may now confidently initiate Supreme Court turnover or garnishment proceedings against State-affiliated entities holding funds for private debtors.
Streamlined Recovery. Creditors avoid the costly detour to the Court of Claims, expediting satisfaction and reducing docket pressure on that specialised court.
Increased Exposure for NYSIF and Similar Agencies. Agencies that routinely indemnify private actors (e.g., contractors under Workers’ Compensation Law § 11) will face more aggressive, direct enforcement.
Guidance for Trial-Level Courts. Supreme Court justices statewide now have appellate confirmation that they not only may but must entertain such petitions, subject to the lettered limitations of CPLR 5207.
Legislative Stability. While the legislature could amend CPLR 5207, the decision’s thorough statutory parsing reduces any perceived ambiguity, diminishing pressure for legislative intervention.

Complex Concepts Simplified

Sovereign Immunity: The doctrine that the State cannot be sued for money damages unless it expressly consents; in New York that consent is channelled through the Court of Claims.
CPLR Article 52: Collection mechanics for money judgments: income executions, restraining notices, subpoenas, turnover motions, etc.
Garnishee: An entity (person, bank, or here a State agency) that owes money to, or holds property for, a judgment debtor. The creditor can compel the garnishee to turn over those assets.
Labor Law § 240(1): “Scaffold Law” imposing strict liability on owners/contractors for elevation-related injuries to workers.
Bucket Brigade: Informal nickname used in the record for a payment-reimbursement loop: debtor pays plaintiff; debtor is indemnified by insurer; insurer’s payment re-cycles to plaintiff, repeating until full judgment satisfaction.
Article 78 Mandamus: Special proceeding to compel a state officer or agency to perform a non-discretionary duty—in this context, to obey a turnover order.

Conclusion

The Second Department’s decision in Matter of Doran Construction Corp. v. NYSIF delivers a lucid blueprint for navigating the interface between sovereign immunity and judgment enforcement. By distinguishing garnishee liability from direct money-damage liability, the court confirmed that CPLR 5207’s plain text means what it says: the State can be compelled, in the Supreme Court, to deliver funds belonging to a private debtor—subject to important procedural guardrails.

Practitioners, judgment creditors, and lower courts now have authoritative assurance that Article 52 reaches the State in its stakeholder capacity. The ruling accelerates collection efforts, buttresses the integrity of judgments, and harmonises half-century-old statutory language with modern enforcement realities. Most importantly, it illustrates that sovereign immunity, though robust, is not a license for the State to shield private debts from legitimate collection processes.

“Beyond Sovereign Immunity: Supreme Court Jurisdiction Over the State as Garnishee Clarified in Matter of Doran Construction Corp. v. New York State Insurance Fund”