requested several changes; and it was Gencon who summarized the proposal and recommended it to the Committee. Moreover, Sten-Re was not the only broker, nor was St. Paul's the only proposal evaluated by Gencon in fulfilling its duty to obtain the excess coverage. In short, the relationship between Gencon and Sten-Re was simply that of an insurance agent and insurance broker; if an implied contract for indemnification were to be found here, one would have to be implied from every insurance agent-broker agreement. Cf. Goodpasture, 782 F.2d at 351 ("If an implied contract for indemnification were to be found here, one would have to be found in nearly every commodities sale contract that lacked a clause excluding it, a result that would reverse all standard contract and indemnity law.").
Nor is there anything special about the relationship between AHS and Sten-Re of such nature that contractual indemnification may be implied. AHS was responsible for supervising the Church hospitals and staff and obtaining appropriate malpractice insurance coverage on their behalf. AHS argues that it delegated to Gencon its duty to obtain excess retroactive coverage and Gencon in turn delegated this duty to Sten-re. This argument must fail because, as explained supra, while Sten-Re agreed to assist in obtaining favorable proposals, it in no way assumed the full responsibility for actually obtaining coverage for the health care staff at the AHS hospitals. Hence, as a matter of law, neither Gencon nor AHS is entitled to implied contractual indemnification.
B. Implied-In-Law Indemnity
This tort-based indemnification doctrine applies when there is a great disparity in the fault of two tortfeasors, and one of the tortfeasors is held liable for a loss primarily the responsibility of the other. Goodpasture, 782 F.2d at 351. The doctrine is designed to allocate the cost of negligence to the primary tortfeasor, and is often employed in favor of one vicariously liable for another's tort. Poling, 784 F. Supp. at 1049. In the instant case the issue is whether AHS and Gencon are entitled to indemnification because by satisfying the Barenbrugge judgment they were held vicariously liable for Sten-Re's negligence in failing to obtain an insurance policy that covered staff physicians.
With regard to Gencon, because it is a settling tortfeasor, it must show that "it may not be held responsible in any degree" to be entitled to indemnification implied in law. Rosado v. Proctor & Schwartz, Inc., 66 N.Y.2d 21, 494 N.Y.S.2d 851, 854, 484 N.E.2d 1354 (1985). As explained in Rosado, New York General Obligations Law § 15-108 precludes a settling tortfeasor from receiving or obtaining contribution. Id. at 853. While there is no comparable statutory bar against indemnification, the settling tortfeasor who "seeks what it characterizes as indemnification" must demonstrate its complete lack of responsibility "as the statutory bar to contribution in favor of one who has settled may not be circumvented by the simple expedient of calling the claim indemnification." Id. at 854.
As explained supra, the undisputed facts reveal that Gencon remained actively involved in the placement of the St. Paul policy as AHS's insurance agent and retained its own responsibility to obtain retroactive coverage for staff physicians such as Dr. Rich. Indeed, the facts show that Gencon not only reviewed the St. Paul policy, but also summarized it before recommending it to the Committee, and then negotiated changes in the policy. As a matter of law, Gencon cannot show that it was not responsible in any degree for failing to make sure that the policy covered staff physicians. Rather, its liability for the Barenbrugge judgment was based on its own breach of duties.
With regard to AHS, indemnity cannot be implied if it is "at least partially at fault." Knight, 675 F. Supp. at 143 (quoting Hanley v. Fox, 97 A.D.2d 606, 468 N.Y.S.2d 193, 194 (1983)); see Jordan v. Madison Leasing Co., 596 F. Supp. 707, 709 (S.D.N.Y. 1984). The facts reveal that AHS's liability was not vicarious but rather, like Gencon's, was the result of its own breach of duty to Dr. Rich. The Committee reviewed and ultimately approved the St. Paul policy; in failing to obtain the excess coverage for staff physicians such as Dr. Rich, it breached its own duty and hence was held liable for the Barenbrugge judgment.
In sum, we agree with defendants that plaintiffs' claims are essentially for broker malpractice and/or breach of contract and cannot be disguised as causes of action for indemnification.
There is no genuine issue of material fact in dispute, and there is no basis for implying indemnification under New York law for Gencon or AHS; thus summary judgment is granted in favor of defendants on these claims.
II. AHS's Contribution Claim
New York law does not permit a party to seek contribution 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). In Gencon I, we did not dismiss AHS's claim for contribution because it was unclear from the Complaint whether AHS's liability to Dr. Rich was based on breach of contract. The undisputed facts now reveal, and AHS concedes, that it was indeed based on Hinsdale Hospital's contractual obligation to Dr. Rich. AHS argues, however, that its contribution claim should not be dismissed because its liability to Dr. Rich could have been based on a duty independent of the contract. AHS relies on Sommer v. Federal Signal Corporation, 79 N.Y.2d 540, 583 N.Y.S.2d 957, 593 N.E.2d 1365 (1992), which 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. AHS contends that if it had not paid the Barenbrugge judgment, Dr. Rich could have sued it for negligence in addition to breach of contract because at the time of the judgment the primary policies were not exhausted and yet AHS appealed the verdict without consulting Dr. Rich; by the time the appeals were completed, the policies were exhausted. AHS's reliance on Sommer is misplaced.
Sommer involved a fire alarm company's breach of contract which resulted in a small fire's spreading out of control. 583 N.Y.S.2d at 959. The Court of Appeals held that these facts could give rise to tort liability separate from the contract, which liability would support a contribution claim. The Court explained that the nature of the alarm company's services imposed a duty to act with reasonable care:
Fire alarm companies  perform a service affected with a significant public interest; failure to perform the service carefully and competently can have catastrophic consequences. The nature of Holmes' services and its relationship with its customer therefore gives rise to a duty of reasonable care that is independent of Holmes' contractual obligations.
Id. at 962. Such a duty is imposed by public policy rather than by the contract between the parties. Id. at 961.
By contrast, the instant case involves a contract to provide malpractice insurance. Failure of AHS to provide such insurance would not have resulted in "catastrophic consequences" such that public policy requires the imposition of a duty independent of the contract. Rather, if AHS had refused to pay the Barenbrugge judgment, Dr. Rich simply would have sued AHS to seek the benefit of her contractual "Merely alleging that the breach of contract duty arose from a lack of due care will not transform a simple beach of contract into a tort." Id. at 961 (citations omitted).
Because AHS's liability to Dr. Rich was based on breach of contract, and there is no independent duty creating a basis for contribution, AHS cannot, as a matter of law, seek contribution from Sten-Re.
For the foregoing reasons, defendants' motion for summary judgment on all claims is granted.
Date: July 22, 1994
New York, New York
William C. Conner
United States District Judge