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Commercial Division Blog

Current Developments in the Commercial Divisions of the
New York State Courts by Schlam Stone & Dolan LLP
Posted: January 3, 2020

Defendant that Engaged in Wrongdoing Not Entitled to Common Law Indemnification

On December 20, 2019, the Fourth Department issued a decision in Board of Educ. of Palmyra-Macedon Cent. Sch. Dist. v. Flower City Glass Co., Inc., 2019 NY Slip Op. 09123, holding that a defendant that had engaged in wrongdoing was not entitled to common law indemnification, explaining:

We further agree with Nudo that the court erred in denying its motion with respect to the Flower City defendants’ common-law indemnification cross claim, and we therefore further modify the order accordingly. Since the predicate of 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. Here, as discussed above, plaintiff’s breach of contract cause of action is based on allegations of Flower City’s active wrongdoing, i.e., its failure to install the panels in conformance with contractual requirements.

(Internal 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. Such litigation involves both statutory law and parsing the terms of employment agreements and corporate documents. Less common in commercial litigation are claims for common law indemnification or contribution. 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 negligence or misconduct.

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