Mccarthy v. Turner Constr. Inc.

• Decision Date: 28 June 2011
• Citation: 929 N.Y.S.2d 556,17 N.Y.3d 369,953 N.E.2d 794,2011 N.Y. Slip Op. 05541
• Court: New York Court of Appeals Court of Appeals
• Parties: John McCARTHY et al., Plaintiffs,v.TURNER CONSTRUCTION, INC., Defendant,John Gallin & Son, Inc., Respondent,andBoston Properties, Inc., et al., Appellants.(And Other Actions).

17 N.Y.3d 369

953 N.E.2d 794

929 N.Y.S.2d 556

2011 N.Y. Slip Op. 05541

John McCARTHY et al., Plaintiffs,

v.TURNER CONSTRUCTION, INC., Defendant,John Gallin & Son, Inc., Respondent,andBoston Properties, Inc., et al., Appellants.(And Other Actions).

Court of Appeals of New York.

June 28, 2011.

Carol R. Finocchio, New York City and Marie R. Hodukavich, for appellants.Malapero & Prisco, LLP, New York City (Andrew L. Klauber and Frank J. Lombardo of counsel), and Farber Brocks & Zane L.L.P., Mineola (Sherri N. Pavloff of counsel), for respondent.

OPINION OF THE COURT

JONES, J.

The issue before the Court is whether defendant property owners Boston Properties, Inc. and Times Square Tower Associates, LLC (the property owners) are entitled to common-law indemnification from defendant general contractor John Gallin & Son, Inc. (Gallin). For the reasons that follow, we hold they are not.

The property owners leased a retail storefront located at 7 Times Square Tower (the premises) to nonparty Ann Taylor, Inc. By agreement dated December 20, 2004, Ann Taylor, Inc. engaged Gallin, as construction manager, to build out its space. Pursuant to the agreement, Gallin was required to “supervise and direct the Work, using [its] best skill and attention[, and] be solely responsible for and have control over construction means, methods, techniques, sequences and procedures for coordinating all portions of the Work under the Contract.” The agreement further stated that Gallin was required to take reasonable safety precautions to protect the workers from injury. The name of the construction project was “Ann Taylor 7 Times Square.”

Pursuant to a purchase order dated December 29, 2004, Gallin engaged Linear Technologies, Inc. (Linear) as its subcontractor to install telephone and data cables. About two weeks later, Linear, by purchase order, hired Samuels Datacom, LLC (Samuels) as its subcontractor to perform the actual cable installation for the project. Plaintiff, an electrician, was an employee of Samuels.

On March 2, 2005, plaintiff, while working on the project site, was injured when he fell from an A-frame ladder. Plaintiff, and his wife derivatively (collectively, plaintiff), brought a personal injury action against Turner Construction, Inc., Gallin and the property owners, asserting claims under Labor Law §§ 200, 240(1) and § 241(6) and common-law negligence.¹ In their answer, the property owners asserted cross claims for contribution and common-law indemnification, contractual indemnification and breach of contract against Gallin. Subsequently, Gallin impleaded Linear, and Linear impleaded Samuels. After the completion of discovery and the filing of the note of issue, motions and cross motions for summary judgment were brought regarding, inter alia, the parties' Labor Law § 240(1) liability and the property owners' contractual indemnification claim against Gallin.

Supreme Court granted plaintiff summary judgment on his Labor Law § 240(1) claim, finding that the property owners and Gallin were vicariously liable for plaintiff's injuries under the statute.² Further, the court denied that portion of the property owners' cross motion for summary judgment seeking contractual indemnification against Gallin, finding that there was no contract between the property owners and Gallin, and that the property owners were not third-party beneficiaries of the agreement between Ann Taylor, Inc. and Gallin such that they could avail themselves of any contractual indemnification claim that might be owed by Gallin.³ In addition, the court found and held that

“the record contains no evidence of Gallin's negligence. Although Gallin interacted with Linear, Gallin had no supervisory authority over Samuel [s]'s work. [Further, Robert] Kondracki[—Gallin's vice-president and project manager—]stated that Gallin would not have directed [plaintiff] how to perform his work, and [that] Gallin did not provide any tools or ladders to the subcontractors who worked at the [project] site.” (2007 N.Y. Slip Op. 31325 [U], *14–15, 2007 WL 2176569.)The defendants eventually settled plaintiff's claims for $1.6 million, with the property owners contributing $800,000 and Gallin contributing $800,000.

Relying primarily on the agreement between Ann Taylor, Inc. and Gallin, the property owners then moved for judgment on their cross claim for common-law indemnification against Gallin. Supreme Court denied the motion and dismissed the property owners' claim, concluding they failed to establish that Gallin “had direct control over the work giving rise to the injury” (i.e., plaintiff's work) (24 Misc.3d 1245[A], 2009 N.Y. Slip Op. 51889[U], *5, 2009 WL 2871488). The Appellate Division affirmed, stating “Gallin neither was negligent nor directly supervised and controlled plaintiffs work” (72 A.D.3d 539, 898 N.Y.S.2d 836 [1st Dept.2010] [citation omitted] ).

The Appellate Division, First Department, granted the property owners leave to appeal and certified the following question to the Court: “Was the order of the Supreme Court, as affirmed by this Court, properly made?” We now affirm the order of the Appellate Division, and answer the certified question in the affirmative.

The property owners argue they are entitled to common-law indemnification, whether or not Gallin directly supervised and controlled plaintiff's work, since Gallin, by virtue of its agreement with Ann Taylor, Inc., contractually assumed sole responsibility and control of the entire project, and had the contractual authority to (1) direct, supervise and control the means and methods of plaintiff's work, and (2) institute safety precautions to protect the workers. Based on this authority, the property owners argue, only Gallin was in the position to take any steps to protect plaintiff and prevent the accident. The property owners thus request that this Court adopt the following general rule: a party may be liable for common-law indemnification upon a showing that the party (i.e., the proposed indemnitor) either was actually negligent or had the authority to direct, control or supervise the injury-producing work, even if it did not exercise that authority. In essence, the property owners are equating a party with mere authority to direct, control or supervise with a party who is actively at fault in bringing about the injury suffered by the plaintiff.

We reject the property owners' arguments and their proposed articulation of the applicable rule because under their rule, every party engaged as a general contractor or construction manager, whether by the owner or not, would owe a common-law duty to indemnify the owner regardless of whether such party was actively at fault in bringing about the injury. This proposed rule is not consistent with the equitable purpose underlying common-law indemnification.

Labor Law § 240(1) imposes upon owners and general contractors, and their agents, a nondelegable duty to provide safety devices necessary to protect workers from risks inherent in elevated work sites ( see Rocovich v. Consolidated Edison Co., 78 N.Y.2d 509, 512–513, 577 N.Y.S.2d 219, 583 N.E.2d 932 [1991]; Ross v. Curtis–Palmer Hydro–Elec. Co., 81 N.Y.2d 494, 500, 601 N.Y.S.2d 49, 618 N.E.2d 82 [1993]; Felker v. Corning Inc., 90 N.Y.2d 219, 223–224, 660 N.Y.S.2d 349, 682 N.E.2d 950 [1997] ). However, Labor Law § 240(1)—which holds owners and general contractors absolutely liable for any breach of the statute even if “the job was performed by an independent contractor over which [they] exercised no supervision or control” ( Rocovich, 78 N.Y.2d at 513, 577 N.Y.S.2d 219, 583 N.E.2d 932)—does not obviate the right of an owner or general contractor, who is only vicariously liable by statute, to seek “full indemnification from the party wholly responsible for the accident” ( Kelly v. Diesel Constr. Div. of Carl A. Morse, Inc., 35 N.Y.2d 1, 6, 358 N.Y.S.2d 685, 315 N.E.2d 751 [1974] ).

A party's right to indemnification may arise from a contract or may be implied “based upon the law's notion of what is fair and proper as between the parties” ( Mas v. Two Bridges Assoc., 75 N.Y.2d 680, 690, 555 N.Y.S.2d 669, 554 N.E.2d 1257 [1990] ). “Implied[, or common-law,] indemnity is a restitution concept which permits shifting the loss because to fail to do so would result in the unjust enrichment of one party at the expense of the other” ( id., citing McDermott v. City of New York, 50 N.Y.2d 211, 216–217, 428 N.Y.S.2d 643, 406 N.E.2d 460 [1980]; see also Rosado v. Proctor & Schwartz, 66 N.Y.2d 21, 24, 494 N.Y.S.2d 851, 484 N.E.2d 1354 [1985] [indemnity may be implied “to prevent a result which is regarded as unjust or unsatisfactory” and “is frequently employed in favor of one who is vicariously liable for the tort of another” (internal quotation marks and citations omitted) ] ). Common-law indemnification is generally available “in favor of one who is held responsible solely by operation of law because of his relation to the actual wrongdoer” ( Mas, 75 N.Y.2d at 690, 555 N.Y.S.2d 669, 554 N.E.2d 1257; see D'Ambrosio v. City of New York, 55 N.Y.2d 454, 460, 450 N.Y.S.2d 149, 435 N.E.2d 366 [1982] ).

Consistent with the equitable underpinnings of common-law indemnification, our case law imposes indemnification obligations upon those actively at fault in bringing about the injury, and thus reflects an inherent fairness as to which party should be held liable for indemnity ( see e.g. Rogers v. Dorchester Assoc., 32 N.Y.2d 553, 347 N.Y.S.2d 22, 300 N.E.2d 403 [1973]; Kelly v. Diesel Constr. Div. of Carl A. Morse, Inc., 35 N.Y.2d 1, 358 N.Y.S.2d 685, 315 N.E.2d 751 [1974]; Felker v. Corning Inc., 90 N.Y.2d 219, 660 N.Y.S.2d 349, 682 N.E.2d 950 [1997] ). The Rogers Court concluded that common-law indemnification was available to the owner and manager of an apartment building, held statutorily liable under Multiple Dwelling Law § 78—which imposes a nondelegable duty on owners to maintain their premises in...