Indemnification for Another’s Negligence? Not So Easy in NY.

Though GOL §5-322.1, provides that an indemnitee cannot be indemnified for its own negligence, there have always been certain situations where an indemnification provision — that would otherwise appear to be void — was upheld by courts because of its “saving language” or because of the specific facts of the case. An indemnification provision that seemingly indemnifies the indemnitee for its own negligence has been upheld so long as the provision has the saving language “to the fullest extent permitted by applicable law.” See, e.g., Dutton v. Charles Pankow Builders, 296 A.D.2d 321 (1st Dep’t 2002), appeal denied, 99 N.Y.2d 511(2003). In other situations flawed indemnification provisions (purportedly indemnifying an indemnitee for its own negligence) have been enforced where the indemnitee’s lack of negligence has been established as a matter of fact. See, e.g., Alesius v. Good Samaritan Hospital, 23 A.D.3d 508 (2d Dept. 2005).

In Hadzihasanovic v. 155 East 72nd Street Corp., 70 A.D.3d 637 (2d Dept. Feb. 2, 2010), defendants Dale and Stephen Hoffman purchased shares in a cooperative building and hired a contractor to perform certain alterations to their apartment. To gain the approval for the alterations, the Hoffmans signed an indemnification agreement in favor of 155 East 72nd Street Corp. (the building owner) and Wallack (the building manager). The plaintiff, a subcontractor’s employee, was injured while working in the apartment. He sued the Hoffmans, 155 Corp. and Wallack. 155 Corp. and Wallack asserted, a cross claim against the Hoffmans for contractual indemnification. Subsequently, the Hoffmans moved, for summary judgment dismissing 155 Corp. and Wallack’ cross claim for contractual indemnification, and 155 Corp. and Wallack cross-moved for summary judgment. The court granted the Hoffman’s motion and denied 155 Corp. and Wallack’s motion holding the the alteration agreement was void pursuant to GOL 5-322.1. The court found that “A broad indemnification provision in a lease, such as the alteration agreement here, which is not limited to the lessee’s acts or omissions, fails to make exceptions for the lessor’s own negligence, and does not limit the lessor’s recovery under the lessee’s indemnification obligation to insurance proceeds, is unenforceable pursuant to General Obligations Law § 5-321.”

While it is not clear from the decision whether the indemnification agreement had “saving language” or whether 155 Corp. and Wallack were free from negligence, it appears that the Second Department has revisited the issue–and is attempting to once again broaden GOL §5-322.1’s reach.

http://pdf.wcmlaw.com/pdf/GOL Opinion.pdf

Special thanks to Cheryl Fuchs for her contributions to this post. If you have any questions, please contact Bob Cosgrove at rcosgrove@wcmlaw.com.