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GENERAL CONF. OF SEVENTH-DAY ADVENTISTS

July 16, 1993

GENERAL CONFERENCE OF SEVENTH-DAY ADVENTISTS (RISK MANAGEMENT SERVICES), formerly known as GENCON RISK MANAGEMENT SERVICES, ADVENTIST HEALTH SYSTEMS/U.S. and ADVENTIST HEALTH SYSTEMS/U.S. LIABILITY TRUST, Plaintiffs,
v.
AON REINSURANCE AGENCY, INC., formerly known as COLE, BOOTH, AND POTTER, INC., formerly known as ALEXANDER & ALEXANDER OF NEW YORK, INC., formerly known as REED STENHOUSE INC. OF NEW YORK, formerly known as STEN-RE, COLE, AND ASSOCIATES, INC., RICHARD COLE and THOMAS SIMONE, Defendants.


Conner


The opinion of the court was delivered by: WILLIAM C. CONNER

Conner D.J.:

 Plaintiffs, General Conference of Seventh-Day Adventists Risk Management Services, f/k/a/ Gencon Risk Management Services ("Gencon"); Adventists Health Systems/U.S. ("AHS"); and Adventists Health Systems/U.S. Liability Trust ("AHS-Trust"), bring this action for indemnity and contribution against AON Reinsurance Agency, Inc. ("AON"), Richard Cole, and Thomas Simone. The action is presently before the Court on defendants' motion to dismiss pursuant to Rule 12(b)(6), Fed. R. Civ. P.. The motion is granted in part and denied in part.

 BACKGROUND

 AHS is an affiliate of the General Conference of Seventh-Day Adventists Church ("the Church") responsible for the supervision and maintenance of the Church's health care staff and facilities. Gencon is another affiliate of the Church which for all relevant periods served as AHS's insurance agent. Sten-Re, Cole and Assoc., Inc. ("Sten-Re") was an insurance broker and consultant retained by Gencon and AHS to obtain additional insurance coverage for AHS. Sten-Re has since been acquired by defendant AON. The gravamen of plaintiffs' complaint is that Sten-Re failed to procure a policy with sufficient breadth of coverage and therefore defendants must indemnify or contribute to an uninsured liability that was incurred by an AHS doctor and was paid by plaintiffs.

 Sten-Re was retained to obtain an insurance contract that would retroactively cover AHS facilities, employees, and physicians for liabilities, in excess of existing policy limits, arising from a group of known claims. In late 1981 or early 1982, Sten-Re arranged for the purchase of an insurance policy from St. Paul Surplus Lines Insurance Co. ("St. Paul Insurance"). The policy insured AHS for its liabilities, in excess of its existing policies for the years in question and a $ 1,000,000 self insurance retention, up to a maximum of $ 10,000,000.

 In 1984, Barenbrugge v. Nancy Rich, M.D., one of the claims enumerated in the St. Paul insurance contrast, went to trial and a judgment was entered against Dr. Nancy Rich, a staff physician at an AHS hospital. Since AHS's primary insurance coverage for the relevant period had been exhausted, AHS submitted the claim to St. Paul Insurance who refused to cover it because the policy did not extend to licensed physicians or surgeons acting within the scope of their duties. As a result, on November 13, 1986, AHS paid $ 2,268,811.03 on behalf of Dr. Rich to satisfy the judgment; *fn1" $ 1,268,811.03 of this amount would have been paid by St. Paul Insurance had the policy acquired by Sten-Re covered liabilities incurred by physicians. In August, 1989, AHS accepted $ 800,000 from Gencon in settlement of all claims against Gencon arising out of the refusal of St. Paul Insurance to cover the Barenbrugge judgment. Now AHS and Gencon unite to bring this action for indemnity and contribution against AON and the individual defendants.

 DISCUSSION

 On a motion to dismiss we accept all allegations in the complaint as true, and dismiss only if, after drawing all inferences in plaintiffs' favor, it is clear that they are not entitled to relief. Cosmas v. Hassett, 886 F.2d 8, 11 (2d Cir. 1989); see Conley v. Gibson, 355 U.S. 41, 45-46, 2 L. Ed. 2d 80, 78 S. Ct. 99 (1957). Defendants argue that plaintiffs' action is in essence one for breach of contract and therefore is barred by New York's six-year statute of limitations applicable to such claims. Although the complaint does allege facts that would be consistent with a claim for breach of contract, the only claims for relief alleged by plaintiffs are for indemnity and contribution. Indemnity and contribution claims stand independent of the underlying cause of action and carry their own six-year statute of limitations which begins to run upon payment of the claim to the third party. McDermott v. City of New York, 50 N.Y.2d 211, 215-18, 428 N.Y.S.2d 643, 644-46, 406 N.E.2d 460 (1980). As alleged, these claims are timely.

 Defendants contend that the facts alleged do not support claims for indemnity and contribution. 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 ...


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