Taft v. Shaffer Trucking, Inc.

• Citation: 52 A.D.2d 255,383 N.Y.S.2d 744
• Parties: Douglas W. TAFT, Jr., et al., Plaintiffs, v. SHAFFER TRUCKING, INC., et al., Defendants. CRAWFORD AND COMPANY, Third-Party Plaintiff-Appellant, v. Doris R. GORMAN, Third-Party Defendant-Respondent.
• Decision Date: 21 May 1976
• Court: New York Supreme Court Appellate Division

Page 744

383 N.Y.S.2d 744

52 A.D.2d 255

Douglas W. TAFT, Jr., et al., Plaintiffs, v. SHAFFER TRUCKING, INC., et al., Defendants.

CRAWFORD AND COMPANY, Third-Party Plaintiff-Appellant, v. Doris R. GORMAN, Third-Party Defendant-Respondent.

Supreme Court, Appellate Division, Fourth Department.

May 21, 1976.

Davidson & Castellino, Elmira (Samuel Castellino, Elmira, of counsel), for third-party plaintiff-appellant.

Cucci, Welch, Colicchio & Weinstein, Rochester (Roy Colicchio, Rochester, of counsel), for third-party defendant-respondent.

Before MOULE, J.P., and CARDAMONE, SIMONS, MAHONEY and DILLON, JJ.

MOULE, Justice Presiding.

This case arises out of an automobile accident which occurred on April 24, 1970 near Lawrenceville, Pennsylvania. Plaintiffs were injured when their New York automobile was struck by a trailer truck operated by defendant Roy Jones and owned by defendant Shaffer Trucking, Inc., a foreign corporation with offices in Pennsylvania. At the time of the accident Shaffer was insured by defendant Cavalier Insurance Corporation (Cavalier). In order to safeguard its interests, Cavalier retained the services of defendant Seaboard Underwriters, Inc. (Seaboard) which in turn, hired defendant and third party plaintiff Crawford and Co. (Crawford) as its New York representative.

Plaintiffs' complaint makes the following allegations. Shortly after the accident, Crawford contacted plaintiffs concerning a settlement of their claims. Subsequently, on May 11, 1970 plaintiffs' attorney, third party defendant Doris Gorman, advised Crawford that she was representing plaintiffs with respect to this accident. Thereafter, frequent conversations were held between Crawford and Gorman concerning the extent of plaintiffs' injuries and their medical progress. Gorman informed Crawford that upon the completion of all medical examinations and evaluations, the final reports and the computation of the special damages would be submitted for settlement negotiations. During this period, Crawford did not deny defendants' liability.

Due to the extent of two of the plaintiffs' injuries and their necessarily protracted treatment, it was not until June, 1972 that Gorman notified Crawford that the final medical reports and specials had been prepared and that negotiations for settlement could, therefore, begin. Subsequently, on June 15, 1972 Crawford informed Gorman that the applicable two-year Pennsylvania Statute of Limitations had expired and that no settlement payment would be made to plaintiffs.

Gorman thereafter commenced an action on behalf of plaintiffs against all defendants for fraud and misrepresentation. Seeking damages in the sum of $220,000.00, the plaintiffs in their amended complaint alleged that the fraudulent statements and misrepresentations of defendants' agent, Crawford, lulled plaintiffs, through their attorney, into a false sense of security resulting in plaintiffs' failing to commence their personal injury action within the mandatory two-year period. Specifically, it was alleged that Crawford represented that it was authorized to handle the settlement negotiations regardless of the Statute of Limitations; that Crawford would complete the settlement upon receipt of the final medical reports; that Crawford did not inform plaintiffs that the Statute of Limitations was about to expire; that Crawford continued to negotiate with plaintiffs by requesting medical information far beyond the expiration date of the Statute, and that Crawford never advised plaintiffs that defendants would rely upon the Statute of Limitations as a defense.

After service of an answer in which defendants alleged that the complaint failed to state a cause of action in fraud, Crawford commenced a third party action against plaintiffs' attorney on August 26, 1974. In the third party complaint Crawford alleged that plaintiffs' failure to commence timely the personal injury action was due solely to the negligence of their attorney 'without any negligence, fraud or misrepresentation of the Third-Party Plaintiff (Crawford) contributing thereto.' Crawford demanded dismissal of the complaint or, in the alternative, judgment against Gorman for all or part of any recovery obtained by plaintiffs.

On September 10, 1974 Gorman moved to dismiss the third party action pursuant to CPLR 3211(a)(7) and CPLR 1010 on the basis that it failed to state a cause of action. In a memorandum decision, the court granted this motion on the ground that, if Crawford were found liable for fraud, it could not hold Gorman liable 'in that it cannot benefit itself through its own fraud and misrepresentation.' Crawford appeals from this order.

CPLR 3026 provides that all pleadings shall be liberally construed and policy considerations against dismissing third party actions require that such complaints be entitled to a more liberal reading than others (Braun v. City of New York, 17 A.D.2d 264, 268, 234 N.Y.S.2d 935, 938). In view of this, the instant complaint may be read as seeking either indemnification or contribution.

Assuming, arguendo, that by this complaint Crawford merely sought indemnification against Gorman for any recovery by plaintiffs, the court properly dismissed it. Crawford has not alleged any type of a contract between it and Gorman which, if proven, would require such indemnity. It is well settled that such a cause of action must be based upon either an express or implied contract for indemnification (McFall v. Compagnie Maritime Belge, 304 N.Y. 314, 107 N.E.2d 463).

Nor has it validly stated a cause of action under the common-law theory of implied indemnity. Generally, a right of implied indemnification will arise in favor of one who is compelled to pay for another's wrong (Margolin v. New York Life Ins. Co., 32 N.Y.2d 149, 152, 344 N.Y.S.2d 336, 338, 297 N.E.2d 80, 82). In the instant case, however, if Crawford is found liable to plaintiffs on the basis of fraud and misrepresentation, its liability would be grounded in its own tortious conduct. Thus Crawford would be required to pay for its own wrong and not for any wrong or negligence on the part of plaintiffs' attorney. A claim for contribution, on the other hand, arises 'when two or more tort-feasors have shared, albeit in various degrees, in the responsibility by their conduct or omissions in causing an accident, in violation of the duties they respectively owed to the injured person' (Rogers v. Dorchester Associates, 32 N.Y.2d 553, 564, 347 N.Y.S.2d 22, 31, 300 N.E. 403, 409). Under this theory we hold that Crawford's third party complaint stated a valid cause of action.

In recent years the substance and application of the doctrine of contribution has undergone substantial revision. Under prior law a right of contribution existed only when a joint judgment had been recovered against the various defendants and one defendant had paid more than his pro rata share. Furthermore, strict pleading requirements prohibited tort-feasors, accused of active negligence, from impleading other tort-feasors who were also actively negligent. Thus, in most situations, plaintiff's choice of defendant was binding upon the parties. However, after the decision in Dole v. Dow Chemical Co., 30 N.Y.2d...