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Current Developments in the Commercial Divisions of the
New York State Courts by Schlam Stone & Dolan LLP
Posted: April 17, 2020

Existence of Contract Bars Claim for Equitable Indemnification

On April 13, 2020, Justice Borrok of the New York County Commercial Division issued a decision in Allergan Fin., LLC v. Pfizer Inc., 2020 NY Slip Op. 50422(U), holding that the existence of a contract that addressed indemnification barred a claim for equitable indemnification, explaining:

The principle of equitable indemnification, also known as common law indemnification, allows a non-culpable party who has been compelled to make a payment to shift the entire burden of loss to the liable party and obtain from that party full reimbursement for its loss. The obligations that the Defendants undertook with respect to KadianĀ® were expressly defined in the APA. A valid and enforceable contract generally precludes recovery in quasi contract for losses arising from the same subject matter. Allergan cannot circumvent the APA by proceeding under an equitable theory of indemnification to recover more than it would otherwise be entitled to under the APA. The equitable indemnification claim is dismissed, without prejudice to permit Allergan’s to replead this claim within 30 days if Allergan can assert a non-contractual basis.

(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, as well as to contractual counter-parties, as is discussed here. Such litigation involves both statutory law and parsing the terms of employment agreements and corporate documents. Less common in commercial litigation are claims for equitable or 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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