Nicoletti, Gonson, Spinner, LLP

Partial Contractual Indemnification Now Available Throughout New York

The ability of a general contractor to pass through liability to a sub-contractor pursuant to contract has been a thorny issue in New York for several years. Whether a contractual indemnification provision violated a prohibition in General Obligations Law § 5-322.1 against indemnifying a contractor for its own negligence has given rise to much litigation. In particular, various Appellate Divisions issued contradictory opinions concerning the availability of partial indemnification for a general contractor where both it and the sub-contractor were found negligent. Now, the New York Court of Appeals has ruled on this issue, finding that partial indemnification is available to include the damages that were caused by the sub-contractor’s own negligence.

In Brooks v. Judlau Contracting, Inc., 2008 WL 4620804 (N.Y. Oct 21, 2008), a determination was made that the GC’s installation of a safety cable in an “ineffective and unsafe manner” was a substantial factor in causing plaintiff’s accident. As a result, the lower court found that the GC was actively negligent “at least to some degree” and that such negligence meant it was not entitled to contractual indemnification from its sub-contractor who had employed plaintiff. The indemnification clause at issue provided that “to the fullest extent permitted by law” the sub-contractor was to hold the GC harmless “from any claims or causes of action of whatever nature arising from the Subcontractor’s work…. or by reason of any claim or dispute of any person or entity for damages from any cause directly or indirectly relating to any action or failure to act by the Subcontractor, its representatives, employees, subcontractors, or suppliers.”

Reviewing the indemnification clause, the Court of Appeals held that “the provision is clear, obligating [the sub-contractor] to indemnify [the GC] only when it is shown that damages were caused by [the sub-contractor’s] own negligence.” Examining the general principle of partial indemnification, the Court concluded that a partially negligent general contractor may seek contractual indemnification from its subcontractor so long as the indemnification provision does not purport to indemnify the general contractor for its own negligence.