Board of Mgrs. of Manhattan Place Condominium v 616 First Ave., LLC 2019 NY Slip Op 30216(U) January 25, 2019 Supreme Court, New York County Docket Number: 652240/17
Judge: Frank P. Nervo is an excellent primer on the law of contribution and indemnity. In this property construction setting, there is none available.
“The underlying action herein concerns a building (the building) which is owned by the plaintiff Manhattan Place Condominium (the condominium), and located at 630 First Avenue in the County, City and State of New York. See notice of motion, exhibit A (complaint), if 12. The co-plaintiff Board of Managers of Manhattan Place Condominium (the board) is the condominium’s board of managers. Id., if 1. The underlying complaint alleges that the building suffered structural damage as a result of negligent excavation and dewatering work that was performed on the adjacent property in 2014. Id., if 11. It also”alleges that defendant Peterson Geotechnical Construction LLC (Peterson) was the dewatering subcontractor retained by the condominium’s general contractors, defendants JDS Construction Group LLC and JDS Development LLC {together, JDS). Id., iii! 26-27. Peterson’s third-party complaint alleges that Moretrench designed the dewatering system that Peterson used in its work on the building. Id.; exhibit B (third-party complaint), 11-13. The original complaint does not mention Moretrench at all, however; and instead alleges that co-defendant RA Consultants, LLC (RA Consultants) designed the dewatering system. Id., exhibit A (complaint), if 25. ”
“First, Moretrench argues that “Peterson cannot assert a claim for common-law indemnification … because it is being sued for active negligence, not for vicarious liability.” See notice of motion Kauffman affirmation, 16-19. To support its argument, Moretrench cites the decision of the Appellate Division, First Department, in Chatham Towers, Inc. v Castle Restoration & Constr., Inc. (151 AD3d 419 [I st Dept 2017]), which held that:
“Common-law indemnification may be pursued by parties who have been held vicariously liable for the party that actually caused the negligence that injured the plaintiff. Here, however, there is no common-law indemnification claim because [plaintiff] sought recovery from [defendant/third-party plaintiff] because of the latter’s alleged wrongdoing-. breach of contract-and not vicariously because of any negligence on the part of [third-party defendant].” 151 AD3d at 420 (internal citations omitted). In response, Peterson cites the First Department’s holding in 17 Vista Fee Assoc. v Teachers Ins. & Annuity Assn. of Am. (259 AD2d 75 [1st Dept 1999]) that:
“The principle of common-law, or implied indemnification, permits one who has
been compelled to pay for the wrong of another to recover from the wrongdoer the
damages it paid to the injured party. In the classic case, implied indemnity
permits one held vicariously liable solely on account of the negligence of another
to shift the entire burden of the loss to the actual wrongdoer.
“Implied indemnification has permitted a vicariously liable building owner and
contractor to shift all liability to a subcontractor whose negligence actually caused
the loss. However, “a party who has itself actually participated to some degree in
the wrongdoing cannot receive the benefit of the doctrine [of indemnification].”
Thus, to be entitled to indemnification, the owner or contractor seeking indemnity
must have delegated exclusive responsibility for the duties giving rise to the loss
to the party from whom indemnification is sought.” 259 AD2d at 80 (internal citations omitted). Peterson then argues that “in the instant case … Moretrench was solely responsible for the design of the dewatering system … [and] plaintiffs seek damages allegedly due, in part, to the improper design of the dewatering system.” See mem of law in opposition, at 4. Moretrench replies that the 17 Vista Fee Assoc. holding is factually inapposite, however, because: 1) paragraph 25 of the underlying complaint alleges that RA Consultants designed the dewatering system that as used at the building; 2) the underlyingcomplaint “never mentions Moretrench or alleges that Peterson designed the dewatering system”; and 3) paragraph 27 of the underlying complaint alleges that Peterson “performed the dewatering and related work” in a negligent fashion. See reply mem, at 3-5. After reviewing the underlying complaint, the court agrees that it contains no allegations whatsoever regarding Moretrench, or that the exclusive responsibility for designing the dewatering system had been delegated to Peterson. Thus, the court also agrees that Peterson does not stand in the same shoes as the defendant/third-party plaintiff in 17 Vista Fee Assoc., because the underlying complaint alleges that Peterson “actually participated to some degree in the wrongdoing” by itself performing
negligent dewatering work. As a result, the court rejects Peterson’s first opposition argument
and concludes that New York law does not permit Peterson to avail itself of the doctrine of
implied indemnification. Consequently, so much of Peterson’s third-party claim as alleges
“indemnification” is not legally viable.
Next, Moretrench argues that, because “plaintiffs are seeking purely economic loss
damages against Peterson … Peterson’s contribution claim against Moretrench should be
dismissed.” See notice of motion Kauffman affirmation, 20-21. In its reply papers,
Moretrench noted the First Department’s decision in Children’s Corner Learning Ctr. v A.
Miranda Contr. Corp. (64 AD3d 18 [lst Dept 2009]) holding that “[w]here … the underlying
claim seeks purely economic damages, a claim for common-law contribution is not available,”
because “it is well established that purely economic loss resulting from a breach of contract does
not constitute injury to property.” 64 AD3d at 323 (internal citations and quotation marks
omitted). Moretrench’smotion had noted that so much of Peterson’s third-party claim as alleges
contribution is defective because the underlying complaint had only alleged that plaintiffs sustained “economic losses,”