Contribution and Indemnity in a Legal Malpractice Case
Something went really wrong with the settlement in a case against A& T Healthcare, LLC by the New York Healthcare Facilities Worker's Compensation Trust. Settlement (and a release) were followed by several other cases, in which A & T had to pay significant money. It sued its attorneys in the case of A & T Healthcare, LLC v Markstein 2012 NY Slip Op 51513(U) Decided on August 7, 2012 Supreme Court, Rockland County Jamieson, J. Plaintiff v. Defendant aside, now defendant seeks to bring in an "expert" it relied upon, on a theory of contribution and indemnity. Or should it be negligence. The difference is important because it is more than 3 years, but less than 6 years.
"Now, third-party defendants seek to dismiss the third-party complaint on statute of limitations grounds. They argue that although framed as claims for contribution and indemnification, which have a six-year statute of limitations, third-party plaintiffs' claims are really for malpractice (which has a three-year statute of limitations). Third-party plaintiffs, of course, disagree. Third-party plaintiffs argue that "a plain examination of the Third-Party Complaint reveals that the claims sets forth against the Third-Party Defendants are for contribution and [*3]indemnification not for professional malpractice." Plaintiff agrees with this assertion, arguing that "the limitations period for a claim for contribution/indemnification is six years regardless of the nature of the actual allegation of wrongdoing and its contaminant [sic] limitations period."
Having reviewed the law on claims for contribution, it appears that the Court need not reach the issue of the statute of limitations for the cause of action for contribution in this case, which is essentially for breach of contract. Structure Tone, Inc. v. Universal Services Group, Ltd., 87 AD3d 909, 929 N.Y.S.2d 242 (1st Dept. 2011) (subcontractor's alleged tort claims were really based on contract). Contribution "is unavailable in the context of a contract action. As the Court of Appeals has noted, purely economic loss resulting from a breach of contract does not constitute injury to property' within the meaning of New York's contribution statute.'" Pilewski v. Solymosy, 266 AD2d 83, 698 N.Y.S.2d 660 (1st Dept. 1999). The First Department has expanded on this holding, in the case of Children's Corner Learning Center v. A. Miranda Contracting Corp., 64 AD3d 318, 879 N.Y.S.2d 418 (1st Dept. 2009). In that case, the Court dismissed a third-party claim for common-law contribution because the underlying claim sought purely economic damages.
Turning to the Second Cause of Action, which seeks indemnification from Mr. Gale and National Risk Services, Inc., the complaint states that Mr. Gale "held himself out as an expert. . . [and third-party plaintiff] relied on the expert advice provided by Monte J. Gale in recommending that A & T agree to execute the Settlement Agreement. . . ." Based on this allegedly negligent advice, A & T entered into the ill-fated Settlement. The complaint states that it seeks indemnification from Mr. Gale should third-party plaintiffs be found liable for malpractice. Third-party defendants argue that this cause of action is time-barred, because it really is seeking damages for malpractice.
Having read all of the papers, the Court finds that third-party defendants have not adequately addressed the issue of whether this claim is actually one for malpractice or negligence,[FN2] rather than a claim for indemnification. Moreover, the motion fails to address the issue of whether a timely indemnification claim can lie when it is based on malpractice or negligence claims which would be untimely. See generally Germantown Cent. School Dist. v. Clark, Clark, Millis & Gilson, AIA, 294 AD2d 93, 743 N.Y.S.2d 599 (3d Dept. 2002) ("Permitting plaintiffs to add these tort claims by recasting them in indemnification and restitution language would improperly circumvent the Statute of Limitations' bar on these claims."). Accordingly, the Court denies third-party defendants' motion with respect to the Second Cause of Action, without prejudice. "