Hawthorne v. South Bronx Community Corp.

• Decision Date: 19 November 1991
• Citation: 576 N.Y.S.2d 203,78 N.Y.2d 433,582 N.E.2d 586
• Parties: , 582 N.E.2d 586 Clordia HAWTHORNE et al., Plaintiffs, v. SOUTH BRONX COMMUNITY CORP., et al., Defendants, et al., Third-Party Plaintiff, et al., Second Third-Party Plaintiff, et al., Third-Party Defendant, Second Third-Party Defendant and Fourth-Party Plaintiff. State Insurance Fund, Fourth-Party Defendant-Appellant; Zurich-American Insurance Companies, Fourth-Party Defendant-Respondent.
• Court: New York Court of Appeals Court of Appeals

Page 203

576 N.Y.S.2d 203

78 N.Y.2d 433, 582 N.E.2d 586

Clordia HAWTHORNE et al., Plaintiffs, v. SOUTH BRONX COMMUNITY CORP., et al., Defendants, et al Third-Party Plaintiff, et al., Second Third-Party Plaintiff et al., Third-Party Defendant, Second Third-Party Defendant and Fourth-Party Plaintiff State Insurance Fund, Fourth-Party Defendant-Appellant Zurich-American Insurance Companies, Fourth-Party Defendant-Respondent.

Court of Appeals of New York.

Nov. 19, 1991.

Carolyn B. Stevens and Steven H. Kaplan, New York City, for fourth-party defendant-appellant.

Ignatius John Melito and S. Dwight Stephens, New York City, for fourth-party defendant-respondent.

OPINION OF THE COURT

SIMONS, Judge.

This appeal involves a dispute between two insurers, both of whom insured a subcontractor held liable to indemnify the owner and general contractor for injuries sustained by one of the subcontractor's employees. One insurer provided coverage for contractual indemnity and the other provided coverage for common-law indemnity. The issue is whether the existence of an insured's contractual duty to indemnify supersedes a common-law duty to indemnify and thereby relieves the insurer of the latter risk from liability on its policy. The Appellate Division found that contractual and common-law indemnity liability may coexist so that an insured who sustains a loss due to an indemnification obligation on both grounds is entitled to coverage from both insurers. We agree and, therefore, affirm.

Defendant Anthony Marino Construction Corp. was the general contractor for the construction of a housing project owned by defendant, Judge Gilbert Ramirez Housing Development Fund Company, Inc. Bri-Den Construction Co., Inc. was a subcontractor. Plaintiff Clordia Hawthorne, an employee of Bri-Den, was injured while working at the construction site and instituted this action for damages against the owner and the general contractor. They impleaded Bri-Den seeking contribution and common-law and contractual indemnification. After defendants settled the Hawthorne action, a dispute arose between Bri-Den's two insurers, State Insurance Fund and Zurich-American Insurance Companies, over which was responsible for indemnifying defendants for the Hawthorne settlement.

In submitting the dispute for resolution, the insurers have stipulated that Bri-Den was 100% at fault for Hawthorne's injuries, that the owner and general contractor were not at fault but absolutely liable under Labor Law § 240(1), and that Bri-Den is liable to the owner and general contractor under principles of both common-law and contractual indemnity.

They also have submitted the insurance policies and the contract. By the policies State Insurance Fund insured Bri-Den for worker's compensation and employer's liability risks, including coverage for "liability imposed upon [Bri-Den] by Law", but specifically excluded coverage for liability assumed by plaintiff under any contract. Zurich-American Insurance Companies insured Bri-Den under a comprehensive general liability insurance policy affording coverage for loss sustained due to contractual indemnification liability, but the policy excluded coverage for common-law indemnification liability. In the construction contract between Bri-Den and the general contractor, Bri-Den obligated itself to:

"save harmless the Contractor and/or Owner from and against any and all loss and/or expense which they or either of them may suffer or pay as a result of claims or suits due to, because of, or arising out of any and all such injuries, deaths and/or damage irrespective of the fact that the Contractor and/or Owner has contributed thereto or is the cause thereof".

Based upon these facts, State Fund contends that Bri-Den had a contractual duty to indemnify the general contractor and the owner against its negligence. The Appellate Division so held, 165 A.D.2d 652, 560 N.Y.S.2d 30, and we agree (see, Brown v. Two Exch. Plaza Partners, 76 N.Y.2d 172, 556 N.Y.S.2d 991, 556 N.E.2d 430). State Fund next claims that a contractual duty to indemnify cannot coexist with a common-law duty to indemnify, but rather supersedes it. Its claim stems from its characterization of common-law indemnification liability as quasi-contractual in nature, and from its assumption that quasi contracts are not implicated when express contracts exist. Consequently, State Fund argues that plaintiff's express contractual indemnification liability precludes it from being liable for common-law indemnification so that plaintiff's loss does not fall within State Fund's coverage.

State Fund further asserts that even if contractual and common-law indemnification liability can coexist, the existence of the contractual hold-harmless provision, coupled with the contract's...