Case Title: McCarthy, et al. v. Turner Construction, Inc.

Citation: 

Docket Number: 

State: new-york

Court: New York Appellate Court

Date: 2011-06-28T00:00:00Z

Document:
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This opinion is uncorrected and subject to revision before
publication in the New York Reports.
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No. 117  
John McCarthy, et al.,
            Plaintiffs,
        v.
Turner Construction, Inc.,
            Defendant,
John Gallin & Son, Inc.,
            Respondent,
Boston Properties, Inc., et al.,
            Appellants.
(And Other Actions.)
Carol R. Finocchio, for appellants.
Andrew L. Klauber, for respondent.
JONES, J.:
The issue before the Court is whether defendant-
property owners Boston Properties, Inc. and Times Square Tower
Associates, LLC (the "property owners") are entitled to common
law indemnification from defendant-general contractor John Gallin
& Son, Inc. ("Gallin").  For the reasons that follow, we hold
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No. 117
they are not.
The property owners leased a retail storefront located
at 7 Times Square Tower (the "premises") to non-party Ann Taylor,
Inc.  By agreement dated December 20, 2004, Ann Taylor, Inc.
engaged Gallin, as construction manager, to build out its space. 
Pursuant to the agreement, Gallin was required to "supervise and
direct the Work, using [its] best skill and attention[, and] be
solely responsible for and have control over construction means,
methods, techniques, sequences and procedures for coordinating
all portions of the Work under the Contract . . . ."  The
agreement further stated that Gallin was required to take
reasonable safety precautions to protect the workers from injury. 
The name of the construction project was "Ann Taylor 7 Times
Square."
Pursuant to a purchase order dated December 29, 2004,
Gallin engaged Linear Technologies, Inc. ("Linear") as its
subcontractor to install telephone and data cables.  About two
weeks later, Linear, by purchase order, hired Samuels Datacom,
LLC ("Samuels") as its subcontractor to perform the actual cable
installation for the project.  Plaintiff, an electrician, was an
employee of Samuels.
On March 2, 2005, plaintiff, while working on the
project site, was injured when he fell from an A-frame ladder. 
Plaintiff, and his wife derivatively (collectively, "plaintiff"),
brought a personal injury action against Turner Construction,
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No. 117
Inc., Gallin and the property owners, asserting claims under
Labor Law §§ 200, 240 (1) and 241 (6) and common law negligence.1 
In their answer, the property owners asserted cross claims for
contribution and common law indemnification, contractual
indemnification and breach of contract against Gallin. 
Subsequently, Gallin impleaded Linear, and Linear impleaded
Samuels.  After the completion of discovery and the filing of the
note of issue, motions and cross motions for summary judgment
were brought regarding, inter alia, the parties' Labor Law § 240
(1) liability and the property owners' contractual
indemnification claim against Gallin. 
Supreme Court granted plaintiff summary judgment on his
Labor Law § 240 (1) claim, finding that the property owners and
Gallin were vicariously liable for plaintiff's injuries under the
statute.2  Further, the court denied that portion of the property
owners' cross motion for summary judgment seeking contractual
indemnification against Gallin, finding that there was no
contract between the property owners and Gallin, and that the
property owners were not third-party beneficiaries of the
agreement between Ann Taylor, Inc. and Gallin such that they
1 By stipulation dated November 30, 2005, the action against
Turner Construction, Inc. was discontinued.
2 Summary judgment, dismissing so much of plaintiff's
complaint as alleged violations of Labor Law §§ 200 and 241 (6)
and common-law negligence, was granted in the property owners'
favor.
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No. 117
could avail themselves of any contractual indemnification claim
that might be owed by Gallin.3  In addition, the court found and
held that:
"[T]he record contains no evidence of
Gallin's negligence.  Although Gallin
interacted with Linear, Gallin had no
supervisory authority over Samuel's work. 
[Further,] Kondracki [-- Gallin's vice
president and project manager --] stated that
Gallin would not have directed [plaintiff]
how to perform his work, and [that] Gallin
did not provide any tools or ladders to the
subcontractors who worked at the [project]
site."
The defendants eventually settled plaintiff's claims for $1.6
million, with the property owners contributing $800,000 and
Gallin contributing $800,000.
Relying primarily on the agreement between Ann Taylor,
Inc. and Gallin, the property owners then moved for judgment on
their cross claim for common law indemnification against Gallin. 
Supreme Court denied the motion and dismissed the property
owners' claim, concluding they failed to establish that Gallin
"had direct control over the work giving rise to the injury"
(i.e., plaintiff's work).  The Appellate Division affirmed,
stating "Gallin neither was negligent nor directly supervised and
controlled plaintiff's work" (72 AD3d 539, 539 [1st Dept 2010]
[citation omitted]).  
The Appellate Division, First Department granted the
property owners leave to appeal and certified the following
3 No claim for contractual indemnification is before us.
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No. 117
question to the Court:  "Was the order of Supreme Court, as
affirmed by this Court, properly made?"  We now affirm the order
of the Appellate Division, and answer the certified question in
the affirmative.
The property owners argue they are entitled to common
law indemnification, whether or not Gallin directly supervised
and controlled plaintiff's work, since Gallin, by virtue of its
agreement with Ann Taylor, Inc., contractually assumed sole
responsibility and control of the entire project, and had the
contractual authority to (1) direct, supervise and control the
means and methods of plaintiff's work, and (2) institute safety
precautions to protect the workers.  Based on this authority, the
property owners argue, only Gallin was in the position to take
any steps to protect plaintiff and prevent the accident.  The
property owners thus request that this Court adopt the following
general rule:  a party may be liable for common law
indemnification upon a showing that the party (i.e., the proposed
indemnitor) either was actually negligent or had the authority to
direct, control or supervise the injury producing work, even if
it did not exercise that authority.  In essence, the property
owners are equating a party with mere authority to direct,
control or supervise with a party who is actively at fault in
bringing about the injury suffered by the plaintiff.  
We reject the property owners' arguments and their
proposed articulation of the applicable rule because under their
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No. 117
rule, every party engaged as a general contractor or construction
manager, whether by the owner or not, would owe a common law duty
to indemnify the owner regardless of whether such party was
actively at fault in bringing about the injury.  This proposed
rule is not consistent with the equitable purpose underlying
common law indemnification.    
 
Labor Law § 240 (1) imposes upon owners and general
contractors, and their agents, a nondelegable duty to provide
safety devices necessary to protect workers from risks inherent
in elevated work sites (see Rocovich v Consolidated Edison Co.,
78 NY2d 509, 512-513 [1991]; Ross v Curtis-Palmer Hydro-Elec.
Co., 81 NY2d 494, 500 [1993]; Felker v Corning, Inc., 90 NY2d
219, 223-224 [1997]).  However, Labor Law § 240 (1) -- which
holds owners and general contractors absolutely liable for any
breach of the statute even if "the job was performed by an
independent contractor over which [they] exercised no supervision
or control" (Rocovich, 78 NY2d at 513) -- does not obviate the
right of an owner or general contractor, who is only vicariously
liable by statute, to seek "full indemnification from the party
wholly responsible for the accident" (Kelly v Diesel Constr. Div.
of Carl A. Morse, Inc., 35 NY2d 1, 6 [1974]).  
A party's right to indemnification may arise from a
contract or may be implied "based upon the law's notion of what
is fair and proper as between the parties" (Mas v Two Bridges
Assoc., 75 NY2d 680, 690 [1990]).  "Implied [,or common law,]
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No. 117
indemnity is a restitution concept which permits shifting the
loss because to fail to do so would result in the unjust
enrichment of one party at the expense of the other" (id., citing
McDermott v City of New York, 50 NY2d 211, 216-217 [1980]; see
also Rosado v Proctor & Schwartz, Inc., 66 NY2d 21, 24 [1985]
[indemnity may be implied "to prevent a result which is regarded
as unjust or unsatisfactory" and "is frequently employed in favor
of one who is vicariously liable for the tort of another"]
[internal quotation marks and citation omitted]).  Common law
indemnification is generally available "in favor of one who is
held responsible solely by operation of law because of his
relation to the actual wrongdoer" (Mas, 75 NY2d at 690; see
D’Ambrosio v City of New York, 55 NY2d 454, 460 [1982]).  
Consistent with the equitable underpinnings of common
law indemnification, our case law imposes indemnification
obligations upon those actively at fault in bringing about the
injury, and thus reflects an inherent fairness as to which party
should be held liable for indemnity (see e.g., Rogers v
Dorchester Assoc., 32 NY2d 553 [1973]; Kelly v Diesel Constr.
Div. of Carl A. Morse, Inc., 35 NY2d 1 [1974]; Felker v Corning,
Inc., 90 NY2d 219 [1997]).  The Rogers Court concluded that
common law indemnification was available to the owner and manager
of an apartment building, held statutorily liable under Multiple
Dwelling Law § 78 -- which imposes a nondelegable duty on owners
to maintain their premises in a reasonably safe condition -- for
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No. 117
plaintiff's injuries resulting from an elevator accident, against
Otis Elevator Company because Otis, under a maintenance contract,
assumed "the exclusive duty to maintain the elevators" and "the
owner and manager had the right . . . to look to Otis to perform
their entire duty to plaintiff" (Rogers, 32 NY2d at 563; see Mas,
75 NY2d 680 [same]).  In Kelly, the Court held that a general
contractor was entitled to full indemnity from subcontractor
hoist company whose negligence was the sole cause of plaintiff's
(who was subcontractor's employee) accident.  Although the
general contractor "undertook to furnish, maintain and operate
the hoist," it, through various subcontracts, delegated
responsibility for supply and maintenance of the hoist
"particularly its brakes and other safety devices" to the hoist
company, which inspected the equipment before and after
installation (Kelly, 35 NY2d at 4-5).  Felker involved a
plaintiff who was injured when he fell over an eight-foot alcove
wall and through a suspended ceiling to the floor nine feet
below.  This Court held that the general contractor was entitled
to common law indemnification from the subcontractor (plaintiff's
employer) notwithstanding the absence of a showing of negligence
on the part of the subcontractor and the existence of a
contractual agreement to indemnify the general contractor only if
the subcontractor is negligent (see Felker, 90 NY2d at 226).  The
Court based its holding on the fact the subcontractor supervised
and controlled the work of the injured plaintiff (id.).
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No. 117
Although our case law imposes the duty to indemnify on
those parties who actually supervised and controlled the injury-
producing work, some of the Appellate Division decisions have
reached different conclusions regarding what sort of showing must
be made to establish a claim for common law indemnification where
the proposed indemnitor is not actually negligent in causing the
injury.  A number of decisions have suggested that a party may be
obligated to indemnify under the common law solely on the basis
of that party's authority to supervise the work at a site (see
e.g., Rodriguez v Metro. Life Ins. Co., 234 AD2d 156, 156 [1st
Dept 1996] [held that the subcontractor was obligated to
indemnify defendants (owner and general contractor); the court
stated, "A subcontractor may be obligated to indemnify under the
common law upon proof that its actual negligence caused an
accident, but it can also be held liable where it 'had the
authority to direct, supervise and control the work giving rise
to the injury'" (234 AD2d at 156, quoting Terranova v City of New
York, 197 AD2d 402, 402 [1st Dept 1993])]; Hernandez v Two E.
Ave. Apt. Corp., 271 AD2d 570, 571 [2d Dept 2000] [quoting
Rodriguez (234 AD2d at 156), the court repeats rule that a
subcontractor may be liable for common law indemnification based
on its authority to direct, supervise and control the work giving
rise to the injury] ["Hernandez I"]; Hernandez v Two E. End Ave.
Apt. Corp., 303 AD2d 556, 557 [2d Dept 2003] [same as Hernandez
I; summary judgment on owner's common law indemnification claim
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No. 117
precluded because material issue of fact existed as to whether
the injured plaintiff's employer was only the entity with the
authority to direct, supervise, and control work giving rise to
plaintiff's injury]).  
In addition, there are cases that support the view that
an entity may be liable for common law indemnification on the
basis of its authority, by virtue of a contractual duty, to
supervise the work (see e.g., Ortega v Catamount Constr. Corp.,
264 AD2d 323 [1st Dept 1999]).  In Ortega, the court found a
common law indemnity obligation where the proposed indemnitee,
the property owner, "did not exercise any actual control or
supervision over the work" because the owner had "hired [the
construction manager] to exercise such control and supervision"
(264 AD2d at 324).  The Ortega decision specifically refers to
"the absence of any evidence of the construction manager's direct
supervision of the work in which plaintiff was engaged" (id.).
On the other hand, a number of cases have held that
common law indemnity is available against the party that
"actually supervised, directed and controlled the work that
caused the injuries" (Keck v Bd. of Tr. of Corning Comm. Coll.,
229 AD2d 1016, 1017 [4th Dept 1996] [emphasis added]; see
Landgraff v 1579 Bronx Riv. Ave., LLC, 18 AD3d 385 [1st Dept
2005] [In this Labor Law § 240 (1) action, the building owner
brought a third-party claim for common law indemnification
against a building tenant.  The court held that owner was not
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No. 117
entitled to indemnification from tenant, noting that tenant was
not an active tortfeasor and did not exercise any actual control
or supervision of the injury-producing work]).  In further
support of the view that there must be actual supervision over
the injury-producing work, the Second Department, in Perri v
Gilbert Johnson Enters., Ltd. (14 AD3d 681 [2d Dept 2005]), spoke
of common law indemnification being available against a party
that "exclusively supervised and controlled plaintiff's work
site" (14 AD3d at 685).
To be sure, there are cases that appear to stand for
the proposition that contractual authority to supervise, direct
and control, standing alone, is enough to hold a party liable for
indemnity under the common law.  However, these cases do not
adequately address the question whether a party who is
contractually responsible for supervision at a work site is
liable in indemnity even if there is a showing that another
party, with authority, engaged in actual supervision of the
injury-producing work at the site.  Moreover, a close examination
of a preponderance of the case law reveals that in spite of the
different articulations of the applicable standard, the Appellate
Division Departments have usually, consistent with the equitable
principles of common law indemnification and this Court's
teachings, imposed the obligation to indemnify on parties who
were actively at fault in bringing about the injury.
Based on the foregoing, a party cannot obtain common
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No. 117
law indemnification unless it has been held to be vicariously
liable without proof of any negligence or actual supervision on
their own part.  But a party's (e.g., a general contractor's)
authority to supervise the work and implement safety procedures
is not alone a sufficient basis for requiring common law
indemnification.  Liability for indemnification may only be
imposed against those parties (i.e., indemnitors) who exercise
actual supervision (see Felker, 90 NY2d at 226; see also Colyer v
K Mart Corp., 273 AD2d 809, 810 [4th Dept 2000] [for standard]). 
Thus, if a party with contractual authority to direct and
supervise the work at a job site never exercises that authority
because it subcontracted its contractual duties to an entity that
actually directed and supervised the work, a common law
indemnification claim will not lie against that party on the
basis of its contractual authority alone.
Here, Gallin and non-party Ann Taylor, Inc., not the
property owners, entered an agreement under which Gallin was Ann
Taylor, Inc.'s general contractor/construction manager.  Further,
Gallin engaged a subcontractor (Linear), which, in turn, engaged
its own subcontractor (Samuels), the entity which employed
plaintiff.  Although the agreement, inter alia, required Gallin
to supervise and direct the work at the premises owned by the
property owners, this fact alone was insufficient to establish
that Gallin actually supervised or directed the injured
plaintiff's work, especially in light of the fact that Gallin
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No. 117
contracted the work that resulted in plaintiff's injury out to a
subcontractor, and Supreme Court's findings that Gallin (1) had
no supervisory authority over Samuels's (plaintiff's employer's)
work, (2) would not have directed plaintiff as to how to perform
his work, and (3) did not provide any tools or ladders to the
subcontractors who worked at the site.  
Gallin's demonstrated lack of actual supervision and/or
direction over the work is sufficient to establish that Gallin
was not required to indemnify the property owners for bringing
about plaintiff's injury.  Further, the property owners'
vicarious liability (under Labor Law § 240 [1]) may not be passed
through to Gallin, the non-negligent, vicariously liable general
contractor with whom they did not contract.            
Thus, under the facts and circumstances of this case,
the property owners are not entitled to common law
indemnification from Gallin.  This result is in keeping with the
law's notion of what is fair and proper as between Gallin and the
property owners (see Mas, 75 NY2d at 690). 
Accordingly, the order of the Appellate Division should
be affirmed, with costs, and the certified question answered in
the affirmative.
*   *   *   *   *   *   *   *   *   *   *   *   *   *   *   *   *
Order affirmed, with costs, and certified question answered in
the affirmative.  Opinion by Judge Jones.  Chief Judge Lippman
and Judges Ciparick, Graffeo, Read, Smith and Pigott concur.
Decided June 28, 2011
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