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IN RE POLING TRANSP. CORP.

January 9, 1992

In the Matter of POLING TRANSPORTATION CORP., for Exoneration from or Limitation of Liability.

SWEET


The opinion of the court was delivered by: ROBERT W. SWEET

Sweet, D. J.

 A motion has been made to dismiss the claim of the Long Island Railroad and the Metropolitan Transportation Authority (the "LIRR/MTA") against plaintiff Poling Transportation Corp. and the Motor Vessel Poling Bros. No. 7 (collectively, "Poling") for indemnification and its cross-claims for indemnification against claimants David Theophilous ("Theophilous"), Antonio Coca ("Coca") (together with Sylvia Coca, the "Individual Claimants"), and the group of claimants referred to in prior opinions of this court as the "Ditmas Group" or the "Porcelli Corporations." This motion arises in the context of a morning-of-trial settlement in principle (the "Settlement") between the Individual Claimants and Poling, the Individual Claimants and the Ditmas Group, and the Ditmas Group and Poling.

 The parties and facts involved in this case have been discussed in prior opinions of this court, familiarity with which is assumed. See In re Complaint of Poling Transp. Corp., 782 F. Supp. 20 (S.D.N.Y.1991); In re Complaint of Poling Transp. Corp., 776 F. Supp. 779 (S.D.N.Y.1991); In re Complaint of Poling Transp. Corp., No. 87 Civ. 8505 (RWS), slip op. (S.D.N.Y. June 17, 1991); In re Complaint of Poling Transp. Corp., 764 F. Supp. 857 (S.D.N.Y.1991).

 In its claim and amended answer in this proceeding, the LIRR/MTA asserted its claim and cross-claims for contribution and/or indemnification. Assuming for purposes of this opinion that the Settlement has taken place, the LIRR/MTA no longer may pursue its contribution claims against any of the settling tortfeasors. Subsections (b) and (c) of New York General Obligations Law § 15-108 (McKinney's 1992) ("G.O.L. § 15-108") provide that when one of two or more joint tortfeasors obtains a release (i.e., settles with the plaintiff), he may neither be held liable for contribution to nor may he seek contribution from the other joint tortfeasors.

 G.O.L. § 15-108 does not operate, however, to bar indemnification claims by or against settling tortfeasors. See Rosado v. Proctor & Schwartz, Inc., 66 N.Y.2d 21, 24-25, 494 N.Y.S.2d 851, 853, 484 N.E.2d 1354 (1985); McDermott v. City of New York, 50 N.Y.2d 211, 428 N.Y.S.2d 643, 406 N.E.2d 460 (1980); Practice Commentary to G.O.L. § 15-108, at 702 (McKinney's 1989 vol.). To determine whether the LIRR/MTA continues to have a claim against Poling, Theophilous, Coca and Ditmas Group, therefore, it is necessary to determine whether it may properly assert a basis for indemnity against any or all of these parties.

 The New York Court of Appeals has made clear that "the statutory bar to contribution may not be circumvented by the simple expedient of calling the claim indemnification." Rosado, 66 N.Y.2d at 25, 494 N.Y.S.2d at 854 (citations omitted). In contribution, which arises without any agreement amongst the wrongdoers, joint tortfeasors are required to pay a share proportionate to their liability to one who has discharged their joint liability. In indemnification, which arises out of an express or implied contract, the party held legally liable shifts the entire loss to another "to prevent a result which is regarded as unjust or unsatisfactory". See, e.g., Mas v. Two Bridges Assocs., 75 N.Y.2d 680, 689-90, 555 N.Y.S.2d 669, 674, 554 N.E.2d 1257 (1990); Rosado, 66 N.Y.2d at 23-24, 494 N.Y.S.2d at 853; McDermott, 50 N.Y.2d at 216, 428 N.Y.S.2d at 645-46.

 A right to "implied indemnification" can exist even absent an express agreement creating a right to indemnification. See, e.g., Bellevue South Assocs. v. HRH Constr. Corp., 78 N.Y.2d 282, 296, 574 N.Y.S.2d 165, 171, 579 N.E.2d 195 (1991); Mas, 75 N.Y.2d at 690, 555 N.Y.S.2d at 674; see also Peoples' Democratic Republic of Yemen v. Goodpasture, Inc., 782 F.2d 346, 351 (2d Cir. 1986). It arises when "'[a] person [ ], in whole or in part, has discharged a duty which is owed by him but which as between himself and another should have been discharged by the other, is entitled to indemnity.'" McDermott, 50 N.Y.2d at 216-17, 428 N.Y.S.2d at 646 (quoting Restatement, Restitution § 76). *fn1"

 The inquiry thus becomes, under what circumstances "should [the duty] have been discharged by the other"? Interpreting New York law, the Second Circuit has distinguished between two sets of circumstances in which a right to implied indemnification may exist. The first is where the special nature of a contractual relationship between the parties gives rise to the right (the "implied contract theory"); the second is a tort-based right "found where there is a great disparity in the fault of two tortfeasors, and one of the tortfeasors has paid for a loss that was primarily the responsibility of the other" ("implied in law indemnity"). Goodpasture, 782 F.2d at 351. *fn2"

 In what Goodpasture terms as the "implied contract" theory of implied indemnification, the proposed indemnitee holds a non-delegable duty to the plaintiff, the responsibility for which he transfers to the proposed indemnitor by agreement. See Ramirez v. National R.R. Passenger Corp., 576 F. Supp. 95, 99-100 (S.D.N.Y. 1983). This theory is particularly well illustrated by the New York Court of Appeals decision in Mas v. Two Bridges Assocs., 75 N.Y.2d 680, 555 N.Y.S.2d 669, 554 N.E.2d 1257 (1990). In Mas the plaintiff was injured in attempting to escape from an elevator stuck between floors of her apartment building. She sued the owner of the building and the Otis Elevator Company ("Otis"), which had contracted with the owner to maintain the elevator. The jury apportioned 85% of the fault to the owner and Otis for failure to maintain and repair the elevator. The court held that the owner had a right to implied indemnification from Otis. Although as an owner of a multiple dwelling, the owner owed a nondelegable duty to the plaintiff to maintain the premises in a reasonably safe condition, Otis had contractually assumed the duty of maintaining the elevator. Thus, while the owner was liable to the plaintiff by operation of law, Otis was liable over to the owner in indemnification because it had agreed to maintain the elevator. The court wrote that:

 as between the owner and one voluntarily undertaking responsibility for maintenance . . . the party assuming the contractual duty is liable to the owner for the damages the owner must pay.

 Id. at 673, 555 N.Y.S.29 at 673.

 No right to implied indemnification exists when the proposed indemnitee retains a duty it owes directly to the plaintiff. In Rosado v. Proctor & Schwartz, Inc., 66 N.Y.2d 21, 494 N.Y.S.2d 851, 484 N.E.2d 1354 (1985), for instance, the court found that the manufacturer of a machine that injured the plaintiff had no right to implied indemnification against the plaintiff's employer, who was contractually required to install all "necessary guards for the exposed moving parts of the machine . . . .," because the manufacturer retained a direct independent duty to the plaintiff to install safety devices. Id., 66 N.Y.2d at 23, 494 N.Y.S.2d at 852. Similarly, in Guzman v. Haven Plaza Housing Dev. Fund Co., 69 N.Y.2d 559, 516 N.Y.S.2d 451, 509 N.E.2d 51 (1987), the court held that a building owner had no right to implied indemnification from its tenant for damages it paid to plaintiff, who was injured walking down steps in the building. While the lease required the tenant to maintain the steps, the building owner had retained "'a right to enter the demised premises at all times' for the purpose of inspection and the right to make repairs at tenant's expense 'if the tenant failed to make' them." Id. at 564, 516 N.Y.S.2d at 452. Thus, because the lease did not totally divest the owner of control over and responsibility for maintenance and repair, the owner had breached a duty it owed directly to the plaintiff and thus had only a claim for contribution. Id. at 569, 516 N.Y.S.2d at 455.

 Goodpasture's "implied in law indemnification" takes more varied forms. Implied indemnification arises where one tortfeasor is held liable solely on account of the negligence of another, Guzman, 69 N.Y.2d at 567-68, 516 N.Y.S.2d at 454. In other words, the negligence of the proposed indemnitee is "secondary," that is, his liability is based on a non-delegable duty to the plaintiff as a matter of law, and the negligence of the proposed indemnitor is "primary," or ...


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