Contribution and Indemnity in Legal Malpractice
CIT Lending Serv. Corp. v Morrison & Foerster LLP 2013 NY Slip Op 31980(U) August 20, 2013
Sup Ct, New York County Docket Number: 653797/2012 Judge: Melvin L. Schweitzer has a well written discussion of the difference between contribution and indemnity, as well as an exposition on how "pure economic loss" applies to legal malpractice. We discussed the contribution issues several days ago. Here are the indemnity issues.
"Implied Indemnity Claim
Morrison & Foerster amended its complaint to include an implied indemnity claim after the Third-Party Defendants' motion to dismiss. Morrison & Foerster objects to Third-Party Defendant's attempt to expand their motion to address that separate claim for relief in their reply papers. "[T]he moving party has the option to decide whether its motion should be applied to the new pleadings." Sage Realty Corp. v Proskauer Rose LLP, 251 AD2d 35, 38 (1 st Dept 1998). Morrison & Foerster has fully argued the issues in dispute in its memoranda and sur-reply papers. In favor of judicial efficiency, the Third-Party Defendants motion to dismiss applies to the claim for implied indemnity.
The common law doctrine of implied indemnity permits one who is held vicariously liable, solely on account of the negligence of another, to shift its burden of the loss to the actual wrongdoer. Third Party Defendants argue that in the absence of vicarious liability, the claim for implied indemnity should be dismissed. Although indemnity commonly arises in cases involving an express contract, an implied indemnity obligation may be based upon the law's notion of what is fair and proper between the parties. See Mas v Two Bridges Assoc. by Nat. Kinney Corp., 75 NY2d 680, 690 (1990). Third-Party Defendants argue that the claim for implied indemnity should be dismissed
because Morrison & Foerster is being sued for its own alleged wrongdoing, attorney malpractice, which bears no relation to the Third-Party Defendants' actions. A party cannot seek common law implied indemnification, when its liability is predicated on its own fault. See Bleecker St. Health & Beauty Aids, Inc. v Granite State Ins. Co., 38 AD3d 231, 233 (1st Dept 2007); Mathis v Central Park Conservancy, AD2d 171, 172 (1998). The basis for liability in claims of implied indemnity "arises from the principle that 'every one is responsible for the consequences of his own negligence, and if another person has been compelled ... to pay the damages which ought to have been paid by the wrongdoer, they may be recovered from him. ", Raquet v Braun, 90 NY2d 177, 183 (1997). CIT's malpractice claim against Morrison & Foerster is primarily based on the improper filing of the Building Loan Agreement which, as alleged in the Third-Party Complaint, resulted from the Third-Party Defendants' untimely filing of the Amendment to the Building Loan Agreement.
Morrison & Foerster has properly alleged a claim for implied indemnity against Third- Party Defendants."