Garrett v. Holiday Inns, Inc.

• Decision Date: 21 May 1982
• Citation: 450 N.Y.S.2d 619,86 A.D.2d 469
• Parties: Timothy S. GARRETT, as Limited Administrator of the Goods, Chattels and Credits of Nancy J. Garrett, Deceased, and Timothy S. Garrett, Individually, Plaintiffs, v. HOLIDAY INNS, INC., Comparato Construction Co., Inc., Corona Court, Inc., Compson Development Co., Inc., Anthony Comparato, Leo Spezio, Nathan Benderson, Jack Chesbro, Respondents, and The Town of Greece, New York, Appellant. (Four other main actions, 20 third-party actions)
• Court: New York Supreme Court — Appellate Division

Page 619

450 N.Y.S.2d 619

86 A.D.2d 469

Timothy S. GARRETT, as Limited Administrator of the Goods Chattels and Credits of Nancy J. Garrett Deceased, and Timothy S. Garrett Individually, Plaintiffs, v. HOLIDAY INNS, INC., Comparato Construction Co., Inc., Corona Court, Inc., Compson Development Co., Inc. Anthony Comparato, Leo Spezio, Nathan Benderson, Jack Chesbro, Respondents, and The Town of Greece, New York, Appellant. (Four other main actions, 20 third-party actions)

Supreme Court, Appellate Division, Fourth Department.

May 21, 1982.

Winchell, Connors & Corcoran, Rochester, for third-party defendant-appellant; Charles Hall, Rochester, of counsel.

Fix, Spindelman, Turk, Himelein & Schwartz, Rochester, for third-party plaintiffs-respondents Benderson and Chesbro.

Nixon, Hargrave, Devans & Doyle, Rochester, for third-party plaintiff-respondent Holiday Inns; Harold Kurland, Rochester, of counsel.

Hickey, McHugh & Garlick, Rochester, for third-party plaintiff-respondent Leo Spezio; William Gandy, Rochester, of counsel.

O'Brien & DeHond, Rochester, for third-party plaintiff-respondent Anthony Comparato.

Harris, Beach, Wilcox, Rubin & Levey, Rochester, for third-party plaintiff-respondent Corona Court.

Dennis McCoy, Rochester, of counsel, for third-party plaintiffs-respondents Benderson, Chesbro Anthony Comparato and Corona Court.

Before SIMONS, J. P., and CALLAHAN, DENMAN, BOOMER and MOULE, JJ.

SIMONS, Justice Presiding:

The appeal is on the sufficiency of the third-party complaints.

Defendants--third-party plaintiffs, are the lessee, owners and developers of a Holiday Inn in the Town of Greece, New York. They have been sued in 5 negligence actions seeking damages for wrongful death, personal injuries and property damage allegedly sustained by guests of the motel when a fire destroyed it on November 26, 1978. Plaintiffs originally named the Town as a primary defendant, but we dismissed their causes of action against it, holding that the Town owed no duty to them (Garrett v. Town of Greece, 78 A.D.2d 773, 433 N.Y.S.2d 637, affd. for reasons stated below 55 N.Y.2d 774, 447 N.Y.S.2d 246, 431 N.E.2d 971). Defendants then impleaded the Town alleging separate causes of action for contribution and indemnity in their third-party complaints. The Town moved to dismiss for failure to state a cause of action, Special Term denied the motion and we now reverse. A third-party action for contribution or indemnity does not lie against one who has not violated a duty owed to plaintiff in the primary action.

The conceptual differences between contribution and indemnity have been traced many times before (see, e.g., D'Ambrosio v. City of New York, 55 N.Y.2d 454, 450 N.Y.S.2d 149, 435 N.E.2d 366 (1982); McDermott v. City of New York, 50 N.Y.2d 211, 216-217, 428 N.Y.S.2d 643, 406 N.E.2d 460; Rock v. Reed-Prentice Div. of Package Mach. Co., 39 N.Y.2d 34, 38-39, 382 N.Y.S.2d 720, 346 N.E.2d 520; Smith v. Hooker Chem. & Plastics Corp., 83 A.D.2d 199, 200-201, 443 N.Y.S.2d 922). In contribution, joint tort-feasors responsible for plaintiff's loss share liability for it. Since they are in pari delicto, their common liability to plaintiff is apportioned and each tort-feasor pays his ratable part of the loss. ¹ In indemnity, a party held legally liable to plaintiff shifts the entire loss to another. His right to do so may be based upon an express contract (see Margolin v. New York Life Ins. Co., 32 N.Y.2d 149, 344 N.Y.S.2d 336, 297 N.E.2d 80), but more commonly the indemnity obligation is implied, based upon the laws' notion of what is fair and proper as between the parties legally liable. Implied indemnity, which we are considering here, is a restitution concept which permits shifting the loss because to fail to do so would result in the unjust enrichment of one party (the indemnitor) at the expense of the other (the indemnitee). Indemnity is common in cases of vicarious liability (see, e.g., Rogers v. Dorchester Assoc., 32 N.Y.2d 553, 347 N.Y.S.2d 22, 300 N.E.2d 403 Logan v. Esterly, 34 N.Y.2d 648, 355 N.Y.S.2d 381, 311 N.E.2d 512 Traub v. Dinzler, 309 N.Y. 395, 131 N.E.2d 564 ) Oceanic S.N. Co. v. Compania Transatlantica Espanola, 134 N.Y. 461, 31 N.E. 987; Opper v. Tripp Lake Estates, Inc., 274 App.Div. 422, 84 N.Y.S.2d 461, affd. 300 N.Y. 572, 89 N.E.2d 527 but there are other circumstances also, not involving vicarious liability, in which indemnity may be had (see, e.g., McDermott v. City of New York, 50 N.Y.2d 211, 428 N.Y.S.2d 643, 406 N.E.2d 460 supra and see, generally, Restatement, Torts 2d, § 886B, subd. ).

Theoretical differences aside, application of the governing rules leads to the same finding of legal insufficiency in both of defendants' causes of action against the Town. It is firmly established that "claim for contribution exists only when two or more tortfeasors share in the responsibility for an injury, in violation of duties they respectively owed to the injured person" (Smith v. Sapienza, 52 N.Y.2d 82, 87, 436 N.Y.S.2d 236, 417 N.E.2d 530; see, also, Schauer v. Joyce, 54 N.Y.2d 1, 5, 444 N.Y.S.2d 564, 429 N.E.2d 83; Holodook v. Spencer, 36 N.Y.2d 35, 51, 364 N.Y.S.2d 859, 324 N.E.2d 338; Barry v. Niagara Frontier Tr. System, 35 N.Y.2d 629, 633, 364 N.Y.S.2d 823, 324 N.E.2d 312; Rogers v. Dorchester Assoc., 32 N.Y.2d 553, 564, 347 N.Y.S.2d 22, 300 N.E.2d 403, supra; and cf. Nolechek v. Gesuale, 46 N.Y.2d 332, 413 N.Y.S.2d 340, 385 N.E.2d 1268). The nature of the duties may differ with the defendants (see CPLR 1401; and see City of Rochester v. MacKnight, Kirmmse & French, 75 A.D.2d 990, 429 N.Y.S.2d 116; Taft v. Schaffer Trucking, 52 A.D.2d 255, 383 N.Y.S.2d 744), but in each case a duty must be owed to plaintiff and not to some other person. Similarly, an indemnity cause of action can be sustained only if the third-party plaintiff and the third-party defendant have breached a duty to plaintiff and also if some duty to indemnify exists between them (see Smith v. Hooker Chem. & Plastics Corp., 83 A.D.2d 199, 202, 443 N.Y.S.2d 922, supra; Sea Ins. Co. v. U.S. Fire Ins. Co., 71 A.D.2d 51, 54, 421 N.Y.S.2d 930; Fladerer v. Needleman, 30 A.D.2d 371, 373, 292 N.Y.S.2d 277; Bush Term. Bldgs. Co. v. Luckenbach S.S. Co., 11 A.D.2d 220, 224, 202 N.Y.S.2d 172 revd. on other grounds 9 N.Y.2d 426, 214 N.Y.S.2d 428, 174 N.E.2d 516; City of Utica v. Holt, 88 Misc.2d 206, 387 N.Y.S.2d 377 42 CJS, Indemnity, § 2, p 565; Restatement, Torts 2d, § 886B). The rule is stated in the Restatement as follows:

"(1) If two persons are liable in tort to a third person for the same harm and one of them discharges the liability of both, he is entitled to indemnity from the other if the other would be unjustly enriched at his expense by the discharge of the liability."

In response, defendants contend that the Town is liable to them for negligent misrepresentation because the Town's building inspector issued a certificate of occupancy on which they relied, which falsely certified that the building complied with the fire laws (see Gordon v. Holt, 65 A.D.2d 344, 350, 412 N.Y.S.2d 534; Sexstone v. City of Rochester, 32 A.D.2d 737, 301 N.Y.S.2d 887). Thus, they claim that they are entitled to contribution because the Town was negligent and because its negligence was concurrent with their own (see Nolechek v. Gesuale, 46 N.Y.2d 332, 413 N.Y.S.2d 340, 385 N.E.2d 1268, supra).

First, it should be noted that neither Sexstone nor Gordon were contribution or indemnity cases (cf. City of Utica v. Holt, 88 Misc.2d 206, 387 N.Y.S.2d 377 supra). In both actions, property owners sought to recover property damages personal to themselves because of a building inspector's negligent misrepresentation in issuing a certificate of occupancy. In Sexstone, supra, the city issued a certificate of compliance to a vendor, though violations existed, and then demanded correction of the violations by the purchaser who had relied on the certificate. We held that the complaint stated a cause of action for the damages incurred by the purchaser in correcting the violations. In Gordon, supra, a new certificate of occupancy was similarly requested as a condition of sale some eight years after construction and was subsequently issued by the city despite major violations of the building code. The apartment house burned down three months after the sale. We held that the complaint stated a cause of action against the city. We did not discuss the nature of the damages recoverable by the property owner and we dismissed the companion actions by the tenants of the building (brought by the subrogee) against the city because the city owed them no duty.

In this case, the violations complained of occurred in 1963 and 1964, at the time of construction, and the certificate of occupancy which allegedly misrepresented the existence of those violations was issued then. Defendant Holiday Inns, Inc. leased the premises in 1967 and defendants Benderson and Chesbro purchased them in 1968, subject to Holiday's lease. It is questionable whether these defendants have a cause of action for misrepresentation under the circumstances, but even if they did, as defendants claim, the Nolechek case does not warrant impleader here on the grounds that the town was guilty of concurrent negligence.

In Nolechek, a father brought suit against defendant landowner because his 16 year-old son was killed while riding a motorcycle on defendant's property. The landowner impleaded the father, alleging that the father was guilty of concurrent...