| Nesterczuk v Goldin Mgt., Inc. |
| 2010 NY Slip Op 07519 [77 AD3d 800] |
| October 19, 2010 |
| Appellate Division, Second Department |
| Christopher Nesterczuk et al., Plaintiffs, v GoldinManagement, Inc., et al., Appellants-Respondents, and Alisa Construction Co., Inc.,Respondent-Appellant, et al., Defendants. (And a Third-PartyAction.) |
—[*1] Rubin, Fiorella & Friedman, LLP, New York, N.Y. (Stewart B. Greenspan of counsel), forrespondent-appellant.
In an action to recover damages for personal injuries, etc., the defendants GoldinManagement, Inc., and Park Slope Terrace, LLC, appeal, as limited by their brief, from so muchof a judgment of the Supreme Court, Kings County (Partnow, J.), entered September 22, 2008,as, upon a jury verdict in favor of them and against the defendant Alisa Construction Co., Inc., inthe total sum of $120,625.35, and, upon an order of the same court dated November 20, 2007,inter alia, denying that branch of the renewed joint motion of the defendants GoldinManagement, Inc., and Park Slope Terrace, LLC, which was for summary judgment on the crossclaim of Park Slope Terrace, LLC, for contractual indemnification against the defendant AlisaConstruction Co., Inc., to the extent it sought reimbursement of a settlement payment in the totalsum of $475,000, paid by its insurer to the plaintiffs on behalf of the defendants GoldinManagement, Inc., and Park Slope Terrace, LLC, and denying those branches of the renewedjoint motion which were for summary judgment on the cross claims of the defendant GoldinManagement, Inc., for common-law indemnification and, in effect, for contractualindemnification against the defendant Alisa Construction Co., Inc., awarded the defendant ParkSlope Terrace, LLC, the total sum of only $120,625.35 on its cross claim for contractualindemnification against the defendant Alisa Construction Co., Inc., and the defendant AlisaConstruction Co., Inc., cross-appeals from the same judgment, which, upon a jury verdict findingit 100% at fault for the happening of the incident, is in favor of the defendant Park Slope Terrace,LLC, and against it in the total sum of $120,625.35, and awarded the defendant Park SlopeTerrace, LLC, prejudgment interest on the award for contractual indemnification.
Ordered that the judgment is modified, on the law, by deleting from the first decretalparagraph thereof the total sum of $120,625.35; as so modified, the judgment is affirmed insofaras appealed and cross-appealed from, with costs payable to the defendant Park Slope Terrace,LLC, by the defendant Alisa Construction Co., Inc., that branch of the renewed joint motion ofthe defendants Goldin Management, Inc., and Park Slope Terrace, LLC, which was for summary[*2]judgment on the cross claim of the defendant Park SlopeTerrace, LLC, for contractual indemnification against the defendant Alisa Construction Co., Inc.,for reimbursement of the settlement payment made by its insurer to the plaintiffs on its behalf isgranted, the order dated November 20, 2007, is modified accordingly, and the matter is remittedto the Supreme Court, Kings County, for a hearing to determine what portion of the settlementpayment in the sum of $475,000 was paid on behalf of the defendant Park Slope Terrace, LLC,and for the entry thereafter of an appropriate amended judgment.
On June 16, 2004, the plaintiff Christopher Nesterczuk was assaulted by an intruder in theparking lot of certain premises that are part of the defendant Park Slope Terrace Condominium(hereinafter the condominium). The injured plaintiff and his wife, derivatively, commenced thisaction to recover damages for personal injuries, against, among others, the defendants Park SlopeTerrace, LLC, the sponsor and developer of the condominium (hereinafter the sponsor), GoldinManagement, Inc., the management company of the condominium (hereinafter the managementcompany), and Alisa Construction Co., Inc., the general contractor (hereinafter the contractor). Intheir joint verified answer to the supplemental complaint, the sponsor and the managementcompany, inter alia, interposed cross claims for contractual and common-law indemnificationagainst the contractor.
Pursuant to a construction contract to develop the condominium between the sponsor and thecontractor, the contractor agreed, inter alia, to indemnify the sponsor and its representativesagainst all claims, demands, or liability for damages (including attorney's fees) to persons or toproperty arising out of the execution of its work, and at its own expense to defend any suit oraction brought against the sponsor and its representatives founded upon the claim of suchdamage. The contractor also agreed to be responsible and liable for all costs, disbursements, andexpenses, including attorney's fees, incurred by the sponsor, only, as a result of the sponsorhaving to defend or take part in any action or proceeding which directly or indirectly related toacts or omissions of the contractor (hereinafter the indemnification clause).
Before the trial, the management company moved for summary judgment dismissing thecomplaint and all cross claims insofar as asserted against it, the sponsor separately moved forconditional summary judgment on its cross claims for contractual and common-lawindemnification against the contractor, and the contractor cross-moved for summary judgmentdismissing the complaint and all cross claims insofar as asserted against it. The Supreme Courtdenied the motions and cross motion, finding issues of fact requiring a trial. Thereafter, thesponsor and management company settled with the plaintiffs for the total sum of $475,000,which their insurer, Greater New York Mutual Insurance Company, paid on their behalf. A trialon the issue of liability ensued at which the jury found the contractor 100% at fault for thehappening of the incident. Thereafter, the sponsor, inter alia, renewed that branch of its motionwhich was for summary judgment on its cross claim for contractual indemnification against thecontractor. The management company joined in that motion, seeking summary judgment on itscross claim for common-law indemnification.
In an order dated November 20, 2007, the Supreme Court, upon determining that themanagement company was not a representative of the sponsor, granted the renewed motion onlyto the extent that the sponsor was awarded its presettlement defense costs and expenses. TheSupreme Court, however, denied that branch of the renewed motion which was for summaryjudgment on the sponsor's cross claim for contractual indemnification against the contractor tothe extent it sought reimbursement of the settlement payment in the total sum of $475,000, anddenied that branch of the renewed motion which was for summary judgment on the managementcompany's cross claim for common-law indemnification against the contractor. The SupremeCourt further determined that to the extent the management company was seeking contractualindemnification against the contractor, such relief also was not available.
Contrary to the contractor's contention, on its motion for summary judgment it failed to meetits prima facie burden of establishing that it did not owe a duty to the injured plaintiff based onone of the three exceptions to the general rule that breach of a contractual obligation isinsufficient to impose tort liability to a noncontracting third party (see Church v CallananIndus., [*3]99 NY2d 104 [2002]; Golisano v Keeler Constr. Co., Inc., 74AD3d 1915 [2010]; Musilli vKohler Co., 50 AD3d 1600 [2008]). One of the recognized exceptions to this rule existswhere the plaintiff has suffered injury as a result of reasonable reliance upon the defendant'scontinuing performance of a contractual obligation (see Church v Callanan Indus., 99NY2d at 111-112; Espinal v Melville Snow Contrs., 98 NY2d 136, 139-141 [2002];see also Prosser and Keeton, Torts § 92, at 658 [5th ed]; Restatement [Second] ofTorts § 324A [c]; cf. Vignapianov Herbert Constr. Co., 46 AD3d 544, 545 [2007]).
Here, the contractor failed to establish, prima facie, that the injured plaintiff did not sustaininjury because he reasonably relied upon the contractor's continuing performance of certainsecurity measures it undertook at the condominium during its construction. Since the contractorfailed to meet its initial burden as the movant, this Court need not review the sufficiency of theopposition papers (see Winegrad v New York Univ. Med. Ctr., 64 NY2d 851, 853[1985]).
Contrary to the Supreme Court's determination, the sponsor was entitled to reimbursement ofthe settlement payment made on its behalf to the plaintiffs. "When an indemnitor has notice ofthe claim against it, the general rule is that the indemnitor will be bound by any reasonable goodfaith settlement the indemnitee might thereafter make" (Coleman v J.R.'s Tavern, 212AD2d 568, 568 [1995]; see Goldmark Indus. v Tessoriere, 256 AD2d 306 [1998]).Where the record establishes that the indemnitor received such notice, the indemnitee made areasonable settlement in good faith, and the indemnitee "could have been held liable if it hadproceeded to trial," the indemnitor is obligated to indemnify the indemnitee for the settlementamount (Fidelity Natl. Tit. Ins. Co. of N.Y. v First N.Y. Tit. & Abstract, 269 AD2d 560,562 [2000]).
Here, the sponsor established its entitlement to judgment as a matter of law on that portion ofits cross claim which was for contractual indemnification covering the settlement it paid to theplaintiffs by showing that the contractor was on notice of the plaintiffs' claims against thesponsor, the reasonable possibility that those claims were encompassed by the indemnificationclause, that the settlement was reasonable and made in good faith, and that the sponsor couldhave been found liable to the plaintiffs (see Slepian v Motelson, 66 AD3d 871, 872 [2009]). Furthermore,contrary to the contractor's contention, the voluntary payment doctrine is not applicable to thesponsor's settlement payment to the plaintiffs (cf. Dillon v U-A Columbia Cablevision ofWestchester, 100 NY2d 525 [2003]) and thus, is not a bar to the sponsor's contractualindemnification cross claim against it (see Cunha v City of New York, 12 NY3d 504, 509 [2009];Rosado v Proctor & Schwartz, 66 NY2d 21 [1985]). Since we find that the sponsor isentitled to contractual indemnification from the contractor, it is not necessary to address its crossclaim for common-law indemnification (see Cunha v City of New York, 12 NY3d at510).
However, the Supreme Court properly denied that branch of the management company'srenewed cross motion which was for summary judgment, in effect, on its cross claim forcontractual indemnification against the contractor. When a party is under no legal duty toindemnify, a contract assuming that obligation must be strictly construed to avoid reading into ita duty which the parties did not intend to be assumed (see Levine v Shell Oil Co., 28NY2d 205, 211 [1971]; Kurek v Port Chester Hous. Auth., 18 NY2d 450, 456 [1966]).The intention to indemnify should not be found unless it can be clearly implied from thelanguage and purpose of the entire agreement and the surrounding facts and circumstances(see Hooper Assoc. v AGS Computers, 74 NY2d 487, 491-492 [1989]; Margolin vNew York Life Ins. Co., 32 NY2d 149, 153 [1973]; Niagara Frontier Transp. Auth. vTri-Delta Constr. Corp., 107 AD2d 450, 452 [1985], affd 65 NY2d 1038, 1040[1985]).
Here, the management company failed to establish that pursuant to the contract between thesponsor and the contractor, the management company was considered to be the sponsor's"representative" and, thus, entitled to indemnification from the contractor. Rather, the evidenceestablished that the management company, although retained by the sponsor before the firstelection of the condominium's board of managers, was retained on behalf of, and at all times wasemployed by, the condominium.
Further, as to the management company's claim for common-law indemnification against thecontractor, since the management company was sued for its own active negligence, and [*4]not based on a theory of vicarious liability or a nondelegable duty, itwas not entitled to common-law indemnification from the contractor (see Esteva v Nash, 55 AD3d 474,475 [2008]).
Contrary to the contractor's contention, the sponsor was entitled to prejudgment interest onthe award for contractual indemnification, computed from the date of its settlement with theplaintiff (see Bethlehem Steel Corp. v Youngstown Cartage Co., 79 AD2d 902 [1981];see generally 23 NY Jur 2d Contribution, Indemnity and Subrogation § 99, at208-209; JPMorgan Chase & Co. vTravelers Indem. Co., 73 AD3d 9 [2010]). Finally, in light of the contractor's settlementwith the plaintiffs during the trial on the issue of damages, and our determination that thecontractor is liable for contractual indemnification but not common-law indemnification, thecontractor's remaining contention that the jury's apportionment of fault between it and thenonparty assailant was contrary to the weight of the evidence is without merit (see CPLR1602 [1] [a]). Skelos, J.P., Santucci, Dickerson and Leventhal, JJ., concur.