In Rodriguez v. Beulah Commons Associates, L.P., plaintiff was bitten by a dog while crossing the sidewalk in front of a building owned by the City of New York and leased to Belmont.  Plaintiff alleged that the dog emerged from Belmont’s premises and that Belmont was negligent in the maintenance of the premises because they knew that the dog was vicious and dangerous.

Belmont moved for summary judgment against the City on its cross-claim for contractual indemnification based on a provision in the lease.  Pursuant to the lease, the City directed Belmont not to purchase insurance and agreed to “indemnify and hold [Belmont] harmless from any loss, cost, liability, claim, damage…covered under such insurance incurred in connection with or arising from any injury to Belmont…if such injury, damage or loss arose as a result of a negligent act of any employee or agent of Belmont.”  The City opposed the motion to the basis that it violated General Obligations Law §5-322.1.

In reviewing the indemnification clause, the court recognized that General Obligations Law §5-322.1, precluded contractual indemnification where the indemnification clause in the contract sought to impose complete and total indemnification notwithstanding the indemnitee’s negligence.  However, an exception to the prohibition contained in the General Obligations Law exists if the lease calls for insurance procurement, and was negotiated by sophisticated business entities.

In granting summary judgment to Belmont, the Court found that Belmont and the City were both sophisticated parties and the contractual indemnification clause was clear and unambiguous.

While courts may not enforce a contractual indemnification clause where the clause seeks to impose complete indemnification for the indemnitee’s own negligence, where the lease is negotiated by sophisticated entities, and contains an insurance procurement provision, the indemnification clause may be enforced.

Thanks to Caroline Frelich for her contribution to this post.

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