Frank v. Meadowlakes Development Corp.
| Decision Date | 30 March 2006 |
| Parties | Stephen R. FRANK et al., Plaintiffs, v. MEADOWLAKES DEVELOPMENT CORPORATION et al., Defendants. Meadowlakes Development Corporation, Third-Party Plaintiff-Respondent, v. Home Insulation and Supply, Inc., Third-Party Defendant-Appellant. |
| Court | New York Court of Appeals Court of Appeals |
Herzfeld & Rubin, P.C., New York City (David B. Hamm of counsel), for third-party defendant-appellant.
Law Offices of John Quackenbush, Buffalo (John Wallace and Joseph A. Wilson of counsel), for Meadowlakes Development Corporation, defendant and third-party plaintiff-respondent.
The issue here is whether a tortfeasor whose liability is determined to be 50% or less can be found responsible for total indemnification of noneconomic loss despite CPLR article 16.* We hold that a third-party defendant found to have only one ninth of the tortfeasors' total fault should be responsible for one ninth of the noneconomic loss. The order of the Appellate Division should, therefore, be reversed and remitted to Supreme Court for further proceedings to calculate the portion of the settlement properly allocated to noneconomic loss.
On April 12, 1991, Stephen Frank was working at a building site in Clarence, New York, on property owned by the Meadowlakes Development Corporation. Frank was attempting to carry a large bag of double insulation over his right shoulder up a staircase on the property. The left side of the staircase had no railing and Frank lost his balance and fell. As a result of the fall, Frank received several serious permanent injuries to his back and spine. Frank and his wife commenced an action for personal injury and loss of consortium against Meadowlakes and the general contractor, D.J.H. Enterprises, Inc. Meadowlakes, in turn, filed a related third-party action for indemnification against Home Insulation and Supply, Inc., Frank's employer. After a bifurcated trial, the jury apportioned fault in the amount of 10% to Frank, 10% to Home and 80% to D.J.H. The court also directed a verdict against Meadowlakes and D.J.H. based upon a violation of Labor Law § 240(1).
On January 17, 2003, the Franks settled with D.J.H. for $300,000. On January 24 2003, the Franks settled with Meadowlakes for $1,400,000. Supreme Court then granted Meadowlakes' motion for common-law indemnification against Home in the sum of $1,552,160, which included interest on the Franks' settlement, accruing from January 31, 2003 until February 12, 2004.
Home appealed this judgment, arguing that Supreme Court erred (1) in denying its motion for a directed verdict to dismiss the third-party complaint against it because Home was not negligent and, thus, the jury's 10% allocation of fault to Home should not stand, and (2) in granting Meadowlakes complete indemnification against Home, even if the 10% of fault remained undisturbed, because it should be liable only for its proportionate share of negligence.
The Appellate Division held that Supreme Court properly denied the motion for a directed verdict dismissing the third-party complaint because Home's contention that there was no basis to allocate fault was without merit. The Court also disagreed with Home's argument that it should not be required to indemnify Meadowlakes for 100% of the settlement. The Court reasoned:
(20 A.D.3d 874, 875-876, 798 N.Y.S.2d 820 [2005] [citations omitted]).
Two Justices dissented, concluding that Home's liability should be limited to its proportionate share of fault. The Justices reasoned:
(id. at 881, 798 N.Y.S.2d 820).
We agree with the Appellate Division that there was sufficient evidence in the record to support the jury's determination. Therefore the motion for a directed verdict was properly denied. We disagree, however, with the majority's reasoning concerning complete indemnification. Although CPLR article 16 does not limit the right to indemnification, it does limit the amount that can be recovered when liability is 50% or less.
"A statute or legislative act is to be construed as a whole, and all parts of an act are to be read and construed together to determine the legislative intent" (McKinney's Cons. Laws of N.Y., Book 1, Statutes § 97). "Statutes will not be construed as to render them ineffective" (McKinney's Cons. Laws of N.Y., Book 1, Statutes § 144). CPLR 1602(1) provides, in part, that article 16 "shall ... apply to any claim for contribution or indemnification." CPLR 1602(2)(ii) states, "The limitations set forth in this article shall ... not be construed to impair, alter, limit modify, enlarge, abrogate or restrict ... any immunity or right of indemnification available to or conferred upon any defendant for any negligent or wrongful act or omission."
In Salamone v. Wincaf Props., 9 A.D.3d 127, 777 N.Y.S.2d 37 [1st Dept. 2004], the First Department addressed a substantially similar issue of whether a vicariously liable owner was limited in the amount of indemnification he could recover from a party whose proportionate share of fault was 50% or less. The Court found the savings provision in CPLR 1602(2)(ii) did not limit an owner's right of indemnification against the partially liable party. The owner argued that CPLR 1602(2)(ii) prevented its common-law right of indemnification from being limited or abrogated by CPLR article 16. The Court determined that the "plain meaning of the highlighted statutory language (quoting a portion of CPLR 1602[2][ii]) appears to be that [the owner's] common-law right of indemnification against [third-party defendant] should operate just as it would have operated had CPLR article 16 never been enacted" (id. at 135, 777 N.Y.S.2d 37). It further reasoned that "construing CPLR 1602(2)(ii) to leave indemnification claims unaffected by the limitations of CPLR article 16 serves to shift liability from nonculpable to culpable parties, consistent with the general intent of the article as a whole, and, presumably, the specific intent behind CPLR 1602(2)(ii)" (id at 138, 777 N.Y.S.2d 37). The Salamone court saw an inconsistency between the opening clause of CPLR 1602(1) and CPLR 1602(2)(ii). The Court viewed CPLR 1602(2)(ii) as the Legislature's paramount intention and CPLR 1602(1) as a subordinate provision which furthered article 16's purpose in no discernable way. The Salamone court and the Appellate Division here concluded that there was an irreconcilable conflict between CPLR 1602(1) and 1602(2)(ii).
"The legislative intent is to be ascertained from the words and language used, and the statutory language is generally construed according to its natural and most obvious sense, without resorting to an artificial or forced...
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