analogy to vicarious liability, which this indemnity theory involves, is flawed, under the circumstances presented here. See Rosado, 66 N.Y.2d at 26, 494 N.Y.S.2d at 854.
U.S. Trust argues that S&G were the "special counsel" to AIM in the 1986 Acquisition of AIM from Wolfensohn. S&G respond that U.S. Trust and AIM were represented by several other law firms during the acquisition. But U.S. Trust denies this assertion, arguing instead that, although Curtis Mallet were the corporate lawyers handling the deal for U.S. Trust, and Choate Hall & Stewart were the corporate lawyers handling the deal for AIM, S&G were involved in the process through the information they provided to AIM. (Fahey Dep. at 141-42; 259; 262-65; 304.)
Similarly, S&G contend that they represented neither U.S. Trust nor AIM in connection with the 1988 Agreement, and that those companies were represented by the law firm of Ropes & Gray. (Third-Party Def.'s 3(g) Statement P 19.) Again, U.S Trust denies this claim and insists that, although Ropes & Gray were the corporate lawyers handling the deal, S&G approved the language of Schedule 2.17 upon which it relied in making the seller's warranties and representations on the sale, through the information S&G provided Coopers & Lybrand, which information Coopers used to draft part of the 1988 Agreement. (Def.'s 3(g) Statement PP 15-16, 18.) Furthermore, U.S. Trust claims Ms. Fahey had several discussions with Howard Adler of S&G, regarding the sale and the appropriate language to be used in the Agreement. (Def.'s 3(g) Statement PP 19, 22; Fahey Dep. at 169-71. )
S&G contend that at no time prior to December 22, 1988, did AIM or U.S. Trust inform them that: (1) U.S. Trust owned AIM, (2) U.S. Trust intended to sell AIM to Transtech, or (3) U.S. Trust intended to make certain representations regarding the Equitable Tower Lawsuit to Transtech in connection with the Agreement. (Third-Party Def.'s 3(g) Statement P 22; Adler Dep. at 110-11, 118-19, 122, 232.) Moreover, S&G claim that at no time prior to December 22, 1988, did AIM or U.S. Trust consult S&G regarding the accuracy of any of the representations set forth in the Agreement. (Third-Party Def.'s 3(g) Statement P 23; Adler Dep. at 122, 232; Fahey Dep. at 285-87.) S&G also insist they were not the source of the representations regarding the Equitable Tower Lawsuit made by U.S. Trust in the 1988 Acquisition Agreement, and did not approve the representations made by U.S. Trust in that Agreement. (Third-Party Def.'s 3(g) Statement PP 24, 25; Adler Dep. at 122, 164, 232.)
U.S. Trust denies these assertions and refers the Court to the letters written by S&G to Coppers & Lybrand as well as ambiguous testimony by Fahey. (Def.'s 3(g) Counter Statement to S&G PP 13 (a), 13(b), 22-24.) U.S. Trust insists that S&G were, in fact, informed by AIM that it was preparing a schedule in connection with the 1986 acquisition of AIM and approved the language of the text. (Def.'s 3(g) Counter Statement to S&G P 22.) Furthermore, U.S. Trust contends that had it been so advised by S&G, it would have disclosed any potential seven-figure Equitable Tower claim or existing exposure in the schedules describing the litigation in both the 1986 and 1988 contracts. (Def.'s 3(g) Counter Statement to S&G P 22(c); Fahey Dep. 223-26.)
However, the documents, depositions and pleadings do not set forth support for any conceivable liability by S&G to U.S. Trust. It is clear from the review of the transcript of AIM Vice President Sandra Fahey that she took the "head in the sand" approach to AIM's liability on the Equitable Tower Lease. (Fahey Dep. at 67-68, 137-38.) The Lease dated May 30, 1984, on its face sets forth potential liability of AIM for any violations of the Lease. (Lease P 18, "Remedies of Landlord and Waiver of Redemption;" P 19 Fees and Expenses.)
Further, it is quite clear that, despite the vague allegation that Fahey told Adler of S&G that AIM was being purchased, this is not supported by her own testimony,
and it is consistently and unequivocally denied by Howard Adler. Adler Dep. at 110-11, 118-19, 122, 232. Furthermore, the allegation is totally unsupported by any of the documents submitted by the parties. It appears, that for whatever reason, Ms. Fahey was attempting to solicit information pertinent to acquisitions from S&G without telling them the dual purpose she intended for the information supplied to the auditors allegedly for annual financial statements.
(Fahey Dep. at 133-49, 168-73.)
Furthermore, Ms. Fahey testifies that she was present during the August 1985 trial, even though she does not recall anything that happened, and claims no understanding of the Stipulation and calculations made therein. (Fahey Dep. at 82-87.) On the other hand, Fahey acknowledges that as of October 1985, her "impression" was that the landlord in the Equitable Tower litigation was not cancelling any claim that he might have, based on a letter to her on October 28, 1985, saying that the landlord "does not accept the surrender of such premises as effective under the lease obligations . . . ." (Fahey Dep. at 98-100.) While Fahey alleges that she did not understand or did not recall the significance of the August 1985 trial Stipulation, or the calculations that she must have participated in to obtain numbers for that Stipulation, it is inconceivable particularly in light of the Lease itself and her testimony about Adler consulting with her through the trial, (Fahey Dep. at 82-88; Adler Dep. 74-77), that AIM itself was not aware of its potential liability under the Lease well in advance of its acquisition by either U.S. Trust or Transtech.
Further, no documents support the contention that S&G were aware of the acquisition of AIM by either U.S. Trust or Transtech until Equitable Towers asserted its demand for the balance of the Lease. Nor do they support a finding that S&G and U.S. Trust had a special relationship sufficient to support a finding for implied indemnity.
Finally, U.S. Trust has only itself to blame for the information provided in the Agreement. Even assuming S&G had a duty to provide U.S. Trust certain information and that U.S. Trust could rely of the information provided to Coopers & Lybrand, neither which is the case here, U.S. Trust did not change the information in the Agreement to conform to the information in the letters.
U.S. Trust has failed to advance any legal argument that would support an indemnity claim against S&G.
On the credible evidence before the Court, there is no basis for a claim by U.S. Trust against S&G for either indemnification or subrogation. S&G's Motion for Summary Judgment is granted.
Transtech's motion seeking indemnification from the Defendant, U.S. Trust, is hereby GRANTED in the amount of $ 441,572.42 plus 9% interest. Hence, only Plaintiff's Counts three and four of the Complaint remain. Third-Party Defendant, S&G's motion is GRANTED.
Dated: New York, New York
July 16, 1996
Deborah A. Batts