Blogs

Commercial Division Blog

Current Developments in the Commercial Divisions of the
New York State Courts by Schlam Stone & Dolan LLP
Posted: June 1, 2021

Common Law Indemnification Claim Dismissed Because Party Seeking Indemnification Allegedly Participated in the Wrong-Doing

On May 12, 2021, Justice Borrok of the New York County Commercial Division issued a decision in Board of Mgrs. of the St. Tropez Condominium v. JMA Consultants, Inc., 2021 NY Slip Op. 31646(U), dismissing a common law indemnification claim because the party seeking indemnification was alleged to have participated in the wrongdoing, explaining:

As the First Department has explained, since the predicate for common-law indemnity is vicarious liability without actual fault on the part of the proposed indemnitee, it follows that a party who has itself actually participated to some degree in the wrongdoing cannot receive the benefit of the doctrine of indemnification. Here, JMA cannot assert a common-law indemnification claim against Blum because the Board has not alleged in the first-party action that JMA should be held vicariously liable for other parties, but only for its own alleged wrongdoing.

Nor can the Defendants assert a claim for contribution against Blum. Pursuant to CPLR § 1401, parties who are subject to liability for damages for injury to property may claim contribution among them. The only first-party claims against JMA sound in breach of contract and the resulting damages allege purely economic loss, which cannot constitute injury to property so as to permit a claim for contribution. Accordingly, Blum’s motion to dismiss both the indemnification and the contribution claims is granted.

(Internal quotations and citations omitted).

We frequently litigate issues relating to the advancement or indemnification of litigation expenses such as attorneys’ fees to corporate officers, directors and employees, as well as claims for common law indemnification and contribution as is described in this decision. Contact Schlam Stone & Dolan partner John Lundin at jlundin@schlamstone.com if you or a client have questions regarding a situation where you may be held liable for someone else’s misconduct.

Click here to subscribe to this or another of Schlam Stone & Dolan’s blogs.

View posts