Opinion ID: 2512184
Heading Depth: 4
Heading Rank: 2

Heading: the authority's claim for indemnity based on implied warranty

Text: {18} In the absence of an express or implied agreement to indemnify, the Authority asserts that its agreement with Gallagher included an implied warranty on Gallagher's part to indemnify it against losses arising from the London policies. We take the Authority's argument to mean that Gallagher's warranty to use reasonable skill, a warranty implicit in all professional services contracts, includes a warranty for indemnification. We disagree. {19} When professional services provided pursuant to a contract are substandard, a plaintiff may bring a cause of action for malpractice or for breach of contract arising from the breach of the implied warranty to use reasonable skill. Adobe Masters, Inc. v. Downey, 118 N.M. 547, 548, 883 P.2d 133, 134 (1994). Whether a plaintiff sues for malpractice or for breach of contract, the standard of care is the same and is measured by the duty to apply the knowledge, care, and skill of reasonably well-qualified professionals practicing under similar circumstances. Id. We found no authority supporting the proposition that a professional services agreement should include an implied warranty of indemnity for losses paid to a third party when the professional who provided those services is not also directly liable to the third party for its injuries. {20} We are aware, however, that New Mexico case law allows a party to recover all damages resulting from an agent's or broker's erroneous failure to procure coverage that he or she undertook to provide. See, e.g., Sanchez v. Martinez, 99 N.M. 66, 69-70, 653 P.2d 897, 900-01 (Ct.App.1982) (an insurance broker who undertakes to provide but negligently fails to procure insurance may be held liable for any damage resulting therefrom in breach of contract or negligence action). However, we again could not find any authority extending the principle elucidated in Sanchez to actions for indemnity. Therefore, we reject the Authority's argument that its professional services contract with Gallagher contained an implied warranty of indemnity.