With the exception of Gencon's contribution claim, which is dismissed, we disagree.
I. The Indemnity Claims
When, as in the case at bar, there is no express contractual indemnification provision, an implied right to indemnification may be based either on an "implied contract theory" or an "implied-in-law theory". Peoples' Democratic Republic of Yemen v. Goodpasture, Inc., 782 F.2d 346, 351 (2d Cir. 1986). Under the former theory, a right to indemnity may be implied from a special contractual relationship between the parties. On the other hand, "indemnity implied in law" is a tort-based doctrine which applies when there is a great disparity in the fault of two tortfeasors and one tortfeasor has paid for a loss that was primarily the responsibility of the other. Id.
In support of their motion, defendants contend only that the facts set out in the complaint do not support a right to indemnification implied in law. They argue that, since there was no direct duty running from Sten-Re to Dr. Rich, Sten-Re and plaintiffs were not "joint tortfeasors". Defendants conclude that they have no implied-in-law obligation to indemnify plaintiffs. Def. Br. in Reply at 8-10. However, defendants make no argument and cite no authority which would allow us, as a matter of law, to find that there is no right to indemnification implied in the contractual relationship between the parties.
In Bellevue S. Assoc. v. HRH Constr. Corp., 78 N.Y.2d 282, 574 N.Y.S.2d 165, 579 N.E.2d 195 (1991), the New York Court of Appeals held that, although an implied right to indemnity exists against "active" tortfeasors in favor of "passive" tortfeasors (implied-in-law theory), a right to indemnity may also be implied from a separate duty owed by the indemnitee to the indemnitor (implied contract theory). 574 N.Y.S.2d at 171. In Bellevue, a building owner recovered from a flooring subcontractor for breach of contract. Although there was no direct duty flowing from the tile supplier to the building owner, the court found that the tile supplier had an implied duty to indemnify the subcontractor. The Court reasoned that the warranty of merchantability, implied in contracts for the sale of goods by N.Y. U.C.C. § 2-314 (McKinney 1964), created an implied right of indemnity in favor of the purchaser. In the case at bar, the relationships between plaintiffs and Sten-Re are not sufficiently detailed in the complaint to enable us to determine whether an implied right of indemnity flowed therefrom. Therefore, we may not dispose of plaintiffs' indemnity claims as a matter of law. See Nieves v. Douglas Steamship, Ltd., 451 F. Supp. 407, 410 (S.D.N.Y. 1978) (failure to submit proof of facts indicating the nature and scope of a business relationship from which indemnity might be implied precluded resolving issue upon summary judgment); see also Flickinger v. Harold C. Brown & Co., Inc., 789 F. Supp. 616, 622 n.7, 622-23 (W.D.N.Y. 1992) (party to whom a contract duty was delegated had implied obligation to indemnify delegator, when both delegator and delegatee were liable to a third party for breach of contract).
Since plaintiffs' cause of action for implied contractual indemnity survives this motion to dismiss, we need not reach defendants' argument that plaintiffs have no right to indemnity implied in law. Defendants' motion to dismiss the indemnity claims is denied.
II. The Contribution Claims
Defendants make two alternative arguments which together require that we dismiss Gencon's contribution claim. First, if the underlying settled claim between AHS and Gencon, on which Gencon now seeks contribution, was one for breach of contract, then the contribution claim must be dismissed because New York law forbids contribution claims when the underlying liability is for breach of contract. Board of Educ. v. Sargent, Webster, Crenshaw & Folley, 71 N.Y.2d 21, 523 N.Y.S.2d 475, 517 N.E.2d 1360 (1987). Second, if the underlying claim sounds in tort, then the contribution claim must be dismissed because Gencon settled its claim with AHS and New York law forbids contribution claims by tortfeasors who have obtained a release. N.Y. Gen. Oblig. Law § 15-108(c) (McKinney 1989) ("A tortfeasor who has obtained his own release from liability shall not be entitled to contribution from any other person"). Defendants therefore submit that Gencon's contribution claim should be dismissed whether the underlying claim sounded in tort or contract.
Plaintiffs offer no arguments in support of Gencon's contribution claim but instead petition the Court to allow Gencon to state a claim directly against defendants for breach of contract. Pl. Br. in Op. at 11. However, even if we were to allow plaintiffs to amend their complaint, a claim for breach of contract would be barred by New York's six-year statute of limitations for such actions. N.Y. Civ. Prac. L. & R. § 213(2) (McKinney 1990).
The complaint states that Sten-Re was retained by AHS and Gencon to acquire an insurance contract with a particular breadth of coverage and that in late 1981 or early 1982 Sten-Re procured a policy with inadequate coverage and therefore breached its agreement with plaintiffs. The statute of limitations on a breach of contract claim begins to run at the time of the breach. Ely-Cruishank Co., Inc. v. Bank of Montreal, 81 N.Y.2d 399, 615 N.E.2d 985, 599 N.Y.S.2d 501 (N.Y. Ct. App. 1993). In Ely-Cruishank, the Court reasoned that under N.Y. Civ. Prac. L. & R. § 203(a) (McKinney 1990), a statute of limitations begins to run when the cause of action accrues, and since nominal damages are always available for breach of contract, a cause of action accrues at the time of the breach. Id.; see National Life Ins. Co. v. Frank B. Hall & Co., Inc., 67 N.Y.2d 1021, 503 N.Y.S.2d 318, 494 N.E.2d 449 (1986).
The complaint alleges that defendants breached their agreement with plaintiff in 1982 at the very latest and this action was filed in 1992. Therefore, even if plaintiffs were permitted to amend their pleading to state a claim for breach of contract, the cause of action would be time barred.
AHS's contribution claim is likely to be meritless as well. If, as we suspect, AHS was contractually obligated to indemnify Dr. Rich for the judgment against her, then, as discussed above, Sargent, 71 N.Y.2d 21, 523 N.Y.S.2d 475, 517 N.E.2d 1360, would require that AHS's contribution claim be dismissed. However, the reason for AHS's payment of the judgment is not clear from the complaint. Moreover, the New York Court of Appeals has recently upheld a contribution claim where the underlying cause of action was one where the parties' relationship was initially formed by contract, but there was a claim that the contract was performed negligently. Sommer v. Federal Signal Corp., 79 N.Y.2d 540, 551, 583 N.Y.S.2d 957, 961, 593 N.E.2d 1365 (1992). Since pursuant to this motion to dismiss we rely only on the allegations in the complaint and draw all inferences in, plaintiffs' favor, we can not determine the validity of AHS's contribution claim until the nature of the underlying cause of action is more clear.
For the foregoing reasons Gencon's contribution claim is dismissed and the remainder of defendants' motion is denied.
Dated: New York, New York
July 16, 1993
William C. Conner
United States District Judge