Opinion
6577/05.
Decided January 28, 2008.
FINKELSTEIN PARTNERS, LLP, Attorneys for Plaintiff. (Thomas J. Pronte, Esq.), Newburgh, New York.
LAW OFFICES OF ALAN I. LAMER, Attorneys for Defendant/Third Party Plaintiff, Fuller Road Management Corporation (Stephen L. Barry, Esq.), New York. NAPERSKI, VANDENBURGH NAPERSKI, LLP, Attorneys for Defendant/Third Party Defendant.
August Bohn Contracting Company, Inc. (Thomas J. O'Connor, Esq.), Albany, New York. APPEARANCES.
Defendant/Third Party Plaintiff Fuller Road Management Corporation (Fuller Road), brings this motion after a jury trial seeking a directed verdict on the contractual indemnification claim asserted against the Defendant/Third Party Defendant August Bohl Contracting Company (August Bohl). August Bohl opposes the motion. Plaintiff takes no position in the matter.
The Court entertained oral arguments on the motion on January 18, 2008.
This cases arises out of personal injuries sustained by plaintiff on December 26, 2003 while working at a construction site in the City of Albany owned by Fuller Road. Construction work was performed under the general supervision of the project manage and contractor, Welliver McGuire (Welliver), who was also plaintiff's employer. Because Welliver needed crane operators, but did not have a contract with the local operating engineers union, Welliver contracted with August Bohl to obtain crane operators. Plaintiff was injured while assisting in the movement of a portable light tower from the basement area of the project. Plaintiff was directed by his employer, Welliver, to hold onto a tag line to keep the light tower from swinging while it was being lifted by a crane. The crane operator, John Harrington, lowered a cable and hook into the basement, which was attached to the light. According to plaintiff, the crane operator hoisted the cable too quickly causing plaintiff to be "yanked", and causing him to lose his footing due to snow and ice accumulation on the floor. According to plaintiff, he was then dragged 20 feet and fell.
This matter was tried before a jury commencing on October 29, 2007, and on November 2, 2007, a verdict was rendered as follows:
1)Fuller Road violated Labor Law § 241(6), and the violation was a substantial factor in causing plaintiff's injuries;
2)Fuller Road was negligent, and its negligence was a was a substantial factor in causing plaintiff's injuries;
3)The crane operator, John Harrington, was a special employee of Welliver at the time of the accident.
4)Plaintiff was negligent, and his negligence was a was a substantial factor in causing his injuries;
5)The jury fund that Fuller Road was 70% at fault for plaintiff's injuries, while plaintiff was held to be 30% at fault.
6)The jury found August Bohl to be 0% at fault for plaintiff's injuries.
The contract between Welliver and August Bohl incorporates by reference "General Conditions" dated June 1, 2003, which contain an indemnification provision, providing, in pertinent part:
"To the fullest extent permitted by law, SUBCONTRACTOR agrees to hold harmless, defend and indemnify the CONTRACTOR, Owner, Architect/Engineer, their affiliates, parents, subsidiaries, officers, directors, employees, shareholders and agents, at SUBCONTRACTOR's expense, against each and every claim, demand, damage, expense, loss, liability and suit of other action arising out of any injury, including death, to persons, including SUBCONTRACTOR's employees and property, occasioned in any way by (i)the actions or omissions of SUBCONTRACTOR, its sub-subcontractors, suppliers, sub-subcontractors' agents, employees or other persons while engaged in the performance of the Work or while in or about the premises of Owner. . . . This provision shall not be construed to require the SUBCONTRACTOR to indemnify the CONTRACTOR for the CONTRACTOR's negligence, to the extent that the CONTRACTOR's negligence proximately caused the damages complained for."
The subcontract references "Schedule A" to define the work to be completed. Schedule A describes the work to be completed as "Provide crane operator" and "Provide oiler".
The General Conditions also require August Bohl to obtain liability insurance naming Fuller Road as an additional insured and provide "coverage for the defense and indemnification of . . . Owner,. . . . against all claims for damages arising from any activities conducted in connection with the WORK, including all claims by or on behalf of any person for injury to person or persons. . . .". Insurance procurement provisions are valid and enforceable and are not proscribed by General Obligations Law § 5-322.1. Leibel v. Flynn Hill Elevator Co., 25 AD3d 768, 769 (2nd Dept. 2006).
Fuller Road brings the instant motion claiming its entitlement to contractual indemnification against August Bohl, notwithstanding that a jury found Fuller Road to be the only defendant liable for plaintiff's injuries. Specifically, the jury found Fuller Road to be in violation of Labor Law § 241(6), negligent and 70% at fault for plaintiff's injuries. Fuller Road claims that the indemnification clause is triggered because the clause provides for indemnification based on any injury caused in any way by the acts or omissions of any person while engaged in the performance of the work, regardless of August Bohl's fault. More specifically, Fuller Road claims that it is entitled to partial indemnification for that part of the jury's verdict for which Fuller Road was found liable, but for which it was not actively negligent. August Bohl opposes Fuller Road's motion, contending that the indemnification clause is not triggered because Fuller Road failed to establish that 1) plaintiff's injuries were caused by August Bohl, its employees, subcontractors or agents; or 2) that Bohl employees were engaged in the work or on the job site at the time of plaintiff's accident. August Bohl further argues that Fuller Road's claim for indemnification is barred by General Obligations Law § 5-322.1.
Contractual indemnity provisions are quite common in construction agreements. In essence, an indemnification agreement is a promise by which one party, the indemnitor (usually a subcontractor) promises another party to the contract, the indemnitee (usually an owner or general contractor), that the indemnitor will pay specified damages arising out of certain accidents or activities. Robinson v. City of New York, 8 Misc 3d 1012(A), 2005 WL 1618087, 5 (S. Ct. Bronx County 2005).
Contractual indemnity provisions most often fall into two distinct categories, i.e., those in which the indemnitor agrees to indemnify regardless of fault and those in which the indemnitor's fault is a necessary predicate for indemnification. See Keena v. Gucci Shops, 300 AD2d 82 (1st Dep't 2002); Correia v. Professional Data Mgmnt Inc., 259 AD2d 60 (1st Dept. 1999); Keohane v. Littlepark House Corp., 290 AD2d 382 (1st Dept. 2002); Robinson, supra, at 5. The first category of indemnity agreement includes agreements whereby the indemnitor agrees to provide indemnity for accidents "arising out of" or "in connection with" the work to be performed irrespective of any fault on the part of the indemnitor. See, e.g., Velez v. Tishman Foley Partners, 245 AD2d 155 (1st Dept. 1997); Keena, supra; Correia, supra. In this case, because of the particular language employed in defining the scope of the agreement to indemnify, the duty to indemnify is not contingent upon proof that August Bohl had been negligent.
General Obligation Law § 5-322.1 provides that an agreement, which purports to indemnify the indemnitee against liability for damages caused or resulting in whole or part from indemnitiees' negligence, "is against public policy and is void and unenforceable". Id; Leibel, supra at 768. Yet, an indemnification clause that purports to indemnify a party for its own negligence may be enforced where the party to be indemnified is found to be free of any negligence and its liability is merely imputed or vicarious. Brown v. Two Exchange Plaza Partners, 76 NY2d 172 (1990); Cabrera v. Board of Education of City of New York, 33 AD3d 641 (2nd Dept. 2006); Potter v. M.A. Bongiovanni, Inc., 271 AD2d 918 (3rd Dept. 2000).
The Court of Appeals has spoken on the issue of whether General Obligations Law § 5-322.1 prohibits the enforcement of an agreement indemnifying a promisee for its own negligence. In Brown v. Two Exchange Plaza Partners, supra, where the trial evidence failed to demonstrate fault on the part of the general contractor, the court held that "neither the wording nor intent of the statute is violated by allowing it to allocate responsibility for this unexplained accident through an indemnification provision". Id. at 180-181. The court held that inasmuch as the general contractor's liability was solely statutory, based on the absolute liability provisions of Labor Law § 240(1) and not upon any negligence on its part, the General Obligations Law prohibition against indemnifying a party for its own negligence was not implicated.
In Itri Brick Concrete Corp. v. Aetna Cas. Sur. Co., 89 NY2d 786 (1997), the converse was true and the court answered the question left open in Brown, i.e., "whether, and to what extent, an indemnification agreement between a general contractor and subcontractor can be enforced where the general contractor has been found partially negligent in an action brought by an employee of the subcontractor against the general". Id. at 789-790. The court held that "because the agreements in question contemplate full, rather than partial, indemnification, the agreements are unenforceable under General Obligations Law § 5-322.1 in the circumstances of these cases". Id. at 790.
"Full indemnification agreements are unlimited agreements that purport to indemnify negligent owners or general contractors both for the subcontractor's negligence and owner's or contractor's negligence". Bush v. City of New York. 195 Misc 2d 882, 885 (S. Ct. Bronx County 2003).
The case law makes it plain that GOL § 5-322.1 "only prohibits enforcement of a contractual indemnification clause if the party seeking indemnification was negligent, or had the authority to supervise, direct, or control the manner of the work that caused the injury. . . .". Damiani v. Federated Department Stores, 23 AD3d 329, 331 (2nd Dept. 2005). Provisions that contain limiting language, such as "to the fullest extent permitted by law," do not run afoul of GOL § 5-322.1.
See e.g. Jackson v. City of New York, 38 AD3d 324, 324-325 (1st Dept 2007) [indemnification "provision contains the requisite language limiting the subcontractor's obligation to that permitted by law"], citing Dutton, supra at 322[no violation of GOL § 5-322.1 because clause provides indemnification only "to the fullest extent permitted by applicable law"]; Cabrera, supra at 643[no violation of GOL § 5-322.1 because provision authorized indemnification "to fullest extent permitted by law"].
In the present case, the indemnification agreement explicitly states that the August Bohl's obligation is limited "[t]o the fullest extent permitted by law." In light of the phrase limiting August Bohl's obligation to that permitted by law, the indemnification clause calls for partial, not full indemnification, and is therefore enforceable.
Also, the contract ". . . shall not be construed to require the SUBCONTRACTOR to indemnify the CONTRACTOR for the CONTRACTOR'S negligence, to the extent that the CONTRACTOR's negligence proximately caused the damages complained for." As such, the agreement in the instant case does not contemplate indemnification if the loss was caused solely by the general contractor's negligence.
In Dutton v Charles Pankow Builders, supra, plaintiffs were injured at a construction site. The jury apportioned fault 20% against the general contractor and 80% against the subcontractor that was also plaintiffs' employer. The subcontractor argued that the contractual indemnification provision at issue violated the GOL and was unenforceable because it would indemnify the general contractor for its own negligence. The provision provided that the subcontractor would indemnify the general contractor "to the fullest extent permitted by law". Therefore, the First Department held that the indemnification clause contemplated "partial, not full, indemnification of the general contractor for personal injuries partially caused by its negligence, and is therefore enforceable." Id. at 521.
An indemnitee may still be entitled to "partial indemnification", even if he has been found negligent. Robinson, supra. Under the doctrine of "partial indemnification", an indemnitee, like Fuller Road, despite its own negligence, and the mandate of General Obligations Law § 5-322.1, is entitled to be reimbursed by the indemnitor for that portion of the fault allocated by a jury to the fault of indemnitor or others. Robinson, supra at 7. Pursuant to General Obligations Law § 5-322.1, however, "a party to a contract who is a beneficiary of an indemnification provision must prove itself to be free of negligence; to any extent that the negligence of such a party contributed to the accident, it cannot be indemnified therefor". Reynolds v. County of Westchester, 270 AD2d 473, 474 (2nd Dept. 2002). To be entitled to indemnification, Fuller Road was required to demonstrate that no negligent act or omission on its part contributed to the plaintiff's injuries, and that its liability is therefore purely vicarious. Coque v. Wildflower Estates Developers, Inc., 31 AD3d 484 (2nd Dept. 2006). Fuller Road failed to satisfy its burden.First and foremost, the jury did not apportion active or vicarious liability between August Bohl and Fuller Road. The jury found that Fuller Road violated Labor Law § 241(6) and that Fuller Road was 70% negligent. Essentially, the Court is now being asked to make a factual determination as to which part of Fuller Road's 70% liability is attributable to Fuller Road's active or vicarious liability, when the jury was never asked to consider that issue. Fuller Road's assertion that the Court can act as a trier of fact and assign percentages is without substantiation. In light of the jury's findings that the Fuller Road was negligent and that such negligence was a substantial factor in causing the subject accident, without more, Fuller Road is barred, under General Obligations Law § 5-322.1, from seeking contractual indemnification against August Bohl.
"For example, when a broadly worded indemnification agreement exists and the indemnitee is found by the jury to have been 40% at fault for the happening of an accident, the indemnitee (including a plaintiff's employer) will seek to have the indemnitor pay the 60% not attributable to the negligence of the indemnitee. In effect, this form of "partial indemnity" would constitute a contract-based form of contribution . . . . There is considerable confusion as to whether partial indemnity is a valid doctrine." Robinson, supra at 7.
Because the crane operator was found to be a "special employee" of Welliver, the negligence of August Bohl was never presented to the jury.
The Court finds no merit to August Bohl's contention that John Harrington's status as "special employee" effects the indemnification provision, since the language of the indemnification clause covers the acts and/or omissions of August Bohn and "other persons while engaged in the performance of the Work or while in or about the premises of Owner." Further, contrary to August Bohl's contention, the indemnification provision incorporated into the subcontract is binding. Gonzalez v. Strand Condominium, 17 Misc 3d 1139(A) (S. Ct. New York County 2007).
Based on the forgoing, Fuller Road's motion is denied.
This memorandum shall constitute both the decision and the order of the Court. All papers, including this decision and order, are being returned to counsel for third party defendant August Bohl. The signing of this decision and order shall not constitute entry or filing under CPLR § 2220. Counsel is not relieved from the applicable provisions of that section relating to filing, entry and notice of entry.
IT IS SO ORDERED.
Dated: January 28, 2008JOHN C. EGAN, JR., J.S.C.
Albany, New York
The Court considered the following papers:
By Third-Party Plaintiff, Fuller Road Management Corporation:
Memorandum of Law dated November 28, 2007, with Exhibits A-C;
By Third-Party Defendant, August Bohl Contracting Company, Inc.:
Memorandum of Law dated November 30, 2007, with Attachments including the Trial Testimony of Donald S. Quay, and a conformed copy of the Verdict Sheet.