Opinion ID: 1192306
Heading Depth: 4
Heading Rank: 2

Heading: Adjudication as to UFI.

Text: The district court also concluded that the judgment against ITO and the City in the Ernish lawsuit was an `adjudication' of liability . . . ultimately[] of UFI if and when called upon to indemnify ITO and the City. Nat'l Union II, 2007 WL 2701990 at , 2007 U.S. Dist. LEXIS 68100 at  (parentheses omitted). We disagree. Following Ernish's filing of the suit against ITO and the City  as noted, he did not bring suit against UFI, his employer  ITO and the City filed a third-party action impleading UFI. They claimed that they were entitled to, inter alia, contractual indemnity, common law indemnity, and added insured status. But before this third-party action was litigated to a conclusion, ITO and the City reached a settlement with UFI, purportedly executed on its behalf by Mutual Marine  the First Agreement  disposing of the third-party action and dismissing all claims against UFI with prejudice. [7] By the time the Ernish suit was decided, then, UFI was no longer party to it. When the state trial court directed a verdict of liability against the defendants, ITO and the City, and the jury thereafter awarded damages of $3 million (reduced on appeal to $2,175,000), judgment was not entered against non-party UFI. The district court thought it puzzling that General Star would complain about the First Agreement because, in the court's view, absent the First Agreement, General Star would have been obligated to pay one-hundred percent of the Ernish judgment in excess of Mutual Marine's policy. Nat'l Union II, 2007 WL 2701990 at , 2007 U.S. Dist. LEXIS 68100 at . In the Ernish litigation, ITO and the City were held strictly liable for Ernish's injuries under New York's scaffolding law. See N.Y. Labor Law § 240(1); [8] Ernish, 2 A.D.3d at 256-58, 768 N.Y.S.2d at 325-26. Liability pursuant to this statute is not predicated on fault: it is imputed to the owner or contractor by statute and attaches irrespective of whether due care was exercised and without reference to principles of negligence. Brown v. Two Exch. Plaza Partners, 76 N.Y.2d 172, 179, 556 N.E.2d 430, 433, 556 N.Y.S.2d 991, 994 (1990) (internal citation omitted). While strict liability attaches under section 240(1), [i]t is well settled that an owner or general contractor who is held strictly liable under Labor Law § 240(1) is entitled to full indemnification from the party actually responsible for the incident. Frank v. Meadowlakes Dev. Corp., 6 N.Y.3d 687, 691, 849 N.E.2d 938, 940, 816 N.Y.S.2d 715 (2006) (internal quotation marks and citation omitted). Thus, if UFI was actually responsible for Ernish's injuries, it could have become liable to indemnify ITO and the City for the judgment against them. But that outcome was uncertain. A party seeking either contractual or common law indemnity must establish that it was free from any negligence and was held liable solely by virtue of the statutory liability. Correia v. Prof'l Data Mgmt., Inc., 259 A.D.2d 60, 65, 693 N.Y.S.2d 596, 600 (1st Dep't 1999); see also Brown, 76 N.Y.2d at 180-81, 556 N.E.2d 430, 556 N.Y.S.2d at 995 (discussing contractual indemnification). The district court properly acknowledged that under the GenStar Policy, if UFI could prove that ITO or the City were negligent in connection with the incident that caused Ernish's injuries, UFI would not have been obligated to indemnify ITO and the City for their losses. [9] Nat'l Union II, 2007 WL 2701990 at , 2007 U.S. Dist. LEXIS 68100 at . The terms of the GenStar Policy support that conclusion. [10] The district court found, nonetheless, and Mutual Marine urges on appeal, that there was no evidence in the record of negligence on the part of ITO or the City and that UFI therefore would not have been able to receive indemnification from them. Id. But the district court was in no position to make that finding at the summary judgment stage, as a matter of law. The question of any such negligence was not before the district court and there was therefore no basis for a belief that the record before the district court contained all possible evidence of such negligence. Put another way, the district court was making a finding in a lawsuit that was not before it  a hypothetical third-party action by ITO and the City against UFI that was litigated to the finish. Thus the Ernish adjudication was not tantamount to an adjudication of legal liability on the part of the relevant insured in this case, UFI. And without an establishment of legal liability, ultimate net loss could not be established either.