Contribution is the concept that one party might owe another party the obligation to share in the bad times…and to be financially responsible for a claim or verdict against the first party. It matters whether the claim is for tort or contract. In legal malpractice the lines are blurred, but when the contribution is for claims arising from a contract, there is no right to contribution.
Bloostein v Morrison Cohen LLP 2016 NY Slip Op 31309(U) July 11, 2016 Supreme Court, New York County Docket Number: 651242/2012 Judge: Anil C. Singh, which we dicussed earlier this week has a nice opinion on contribution.
“Under New York law, there is no right to contribution in contract actions, either by common law or by the CPLR which limits contribution to “personal injury, injury to property or wrongful death. New York CPLR 1401. “[A] purely economic loss resulting from a breach of contract does not constitute an “injury to property” within the meaning of CPLR 1401.” See, Bd. of Educ. of Hudson City Sch. Dist. v Sargent, Webster, Crenshaw & Folley, 71 N.Y. 2d 21, 26 (1987); Structure Tone, Inc. v Universal Servs. Grp., Ltd., 87 AD3d 909, 911 (1st Dept 2011). If “a plaintiffs direct claims … seek only a contractual benefit of the bargain recovery, their tort language notwithstanding, contribution is unavailable.” Trump Vil. Section 3 v New York State Hous. Fin. Agency, 307 A.D. 2d 891, 897 (1st Dept 2003). Although CPLR 1401 requires the existence of tort liability, independent of a breach of contract, the mere existence of a contract does not preclude the possibility of tort liability. Landon v Kroll Lab. Specialists, Inc., 91 AD3d 79, 83 (2d Dept 2011) (“A person is not necessarily insulated from liability in tort merely because he or she is engaged in performing a contractual obligation.”) (citations omitted). ”
“The case against Stonebridge hinges on whether Stonebridge breached a duty to the plaintiff investors independent of the Stonebridge/Investor agreement. Here, Morrison Cohen argues that Stonebridge breached a fiduciary duty to the investors because it acted as their advisor. Additionally, Morrison Cohen argues that Stonebridge owed the investors “an independent duty to exercise reasonable care” as an expert and a financial services provider. ”
“Morrison Cohen also argues that Stonebridge, as an expert and financial service provider, had an independent duty to exercise reasonable care in this transaction. Here, Morrison Cohen has not alleged an independent duty to exercise reasonable care. In Sommer, the court held that “[a] legal duty independent of contractual obligations may be imposed by law as an incident to the parties’ relationship … [p ]rofessionals, common carriers and bailees, for example, may be subject to tort liability for failure to exercise reasonable care, irrespective of their contractual duties.” Further, the Court observed that “the nature of the injury, the manner in which the injury occurred and the resulting harm” are all relevant factors in considering whether claims for breach of contract and tort may exist side by side. However, the Court of Appeals have declined to extend Sommer to cases involving only economic harm. New York Univ. v Cont. Ins. Co., 87 N.Y. 2d 308, 314 (1995). ”
“Moreover, the touchstone for purposes of whether one can seek contribution is not the nature of the claim in the underlying complaint but the measure of damages sought therein. Children’s Corner Learning Ctr. v A. Miranda Contr. Corp., 64 A.D. 3d 318, 324 (1st Dept 2009); Sommer v. Federal Signal Corp, 79 N.Y.2d 540 (1992) (“the determination of whether a claim is grounded in contract or tort is the damages the plaintiff seeks”); In Fid. and Deposit Co. of Maryland v Levine, Levine & Meyrowitz, CPAs, P.C., 66 A.D. 3d 514, 515 (1st Dept 2009), the court held that because plaintiff seeks to recover against defendants for actions and omissions explicitly covered in the scope of a contract, and both causes of action seek the same measure of damages, defendants may not seek contribution against the third-party defendants, whether the causes of action are labeled breach of contract or malpractice. Here, the damages sought by plaintiff in the main action are purely economic damages. “