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John Mccarthy, et al v. Turner Construction

June 28, 2011


The opinion of the court was delivered by: Jones, J.:

This opinion is uncorrected and subject to revision before publication in the New York Reports.

The issue before the Court is whether defendant-property owners Boston Properties, Inc. and Times Square Tower Associates, LLC (the "property owners") are entitled to common law indemnification from defendant-general contractor John Gallin & Son, Inc. ("Gallin"). For the reasons that follow, we hold they are not.

The property owners leased a retail storefront located at 7 Times Square Tower (the "premises") to non-party Ann Taylor, Inc. By agreement dated December 20, 2004, Ann Taylor, Inc. engaged Gallin, as construction manager, to build out its space. Pursuant to the agreement, Gallin was required to "supervise and direct the Work, using [its] best skill and attention[, and] be solely responsible for and have control over construction means, methods, techniques, sequences and procedures for coordinating all portions of the Work under the Contract . . . ." The agreement further stated that Gallin was required to take reasonable safety precautions to protect the workers from injury. The name of the construction project was "Ann Taylor 7 Times Square."

Pursuant to a purchase order dated December 29, 2004, Gallin engaged Linear Technologies, Inc. ("Linear") as its subcontractor to install telephone and data cables. About two weeks later, Linear, by purchase order, hired Samuels Datacom, LLC ("Samuels") as its subcontractor to perform the actual cable installation for the project. Plaintiff, an electrician, was an employee of Samuels.

On March 2, 2005, plaintiff, while working on the project site, was injured when he fell from an A-frame ladder. Plaintiff, and his wife derivatively (collectively, "plaintiff"), brought a personal injury action against Turner Construction, Inc., Gallin and the property owners, asserting claims under Labor Law §§ 200, 240 (1) and 241 (6) and common law negligence.*fn1

In their answer, the property owners asserted cross claims for contribution and common law indemnification, contractual indemnification and breach of contract against Gallin. Subsequently, Gallin impleaded Linear, and Linear impleaded Samuels. After the completion of discovery and the filing of the note of issue, motions and cross motions for summary judgment were brought regarding, inter alia, the parties' Labor Law § 240

(1) liability and the property owners' contractual indemnification claim against Gallin.

Supreme Court granted plaintiff summary judgment on his Labor Law § 240 (1) claim, finding that the property owners and Gallin were vicariously liable for plaintiff's injuries under the statute.*fn2 Further, the court denied that portion of the property owners' cross motion for summary judgment seeking contractual indemnification against Gallin, finding that there was no contract between the property owners and Gallin, and that the property owners were not third-party beneficiaries of the agreement between Ann Taylor, Inc. and Gallin such that they could avail themselves of any contractual indemnification claim that might be owed by Gallin.*fn3 In addition, the court found and held that:

"[T]he record contains no evidence of Gallin's negligence. Although Gallin interacted with Linear, Gallin had no supervisory authority over Samuel's work. [Further,] Kondracki [-- Gallin's vice president and project manager --] stated that Gallin would not have directed [plaintiff] how to perform his work, and [that] Gallin did not provide any tools or ladders to the subcontractors who worked at the [project] site."

The defendants eventually settled plaintiff's claims for $1.6 million, with the property owners contributing $800,000 and Gallin contributing $800,000.

Relying primarily on the agreement between Ann Taylor, Inc. and Gallin, the property owners then moved for judgment on their cross claim for common law indemnification against Gallin. Supreme Court denied the motion and dismissed the property owners' claim, concluding they failed to establish that Gallin "had direct control over the work giving rise to the injury" (i.e., plaintiff's work). The Appellate Division affirmed, stating "Gallin neither was negligent nor directly supervised and controlled plaintiff's work" (72 AD3d 539, 539 [1st Dept 2010] [citation omitted]).

The Appellate Division, First Department granted the property owners leave to appeal and certified the following question to the Court: "Was the order of Supreme Court, as affirmed by this Court, properly made?" We now affirm the order of the Appellate Division, and answer the certified question in the affirmative.

The property owners argue they are entitled to common law indemnification, whether or not Gallin directly supervised and controlled plaintiff's work, since Gallin, by virtue of its agreement with Ann Taylor, Inc., contractually assumed sole responsibility and control of the entire project, and had the contractual authority to (1) direct, supervise and control the means and methods of plaintiff's work, and (2) institute safety precautions to protect the workers. Based on this authority, the property owners argue, only Gallin was in the position to take any steps to protect plaintiff and prevent the accident. The property owners thus request that this Court adopt the following general rule: a party may be liable for common law indemnification upon a showing that the party (i.e., the proposed indemnitor) either was actually negligent or had the authority to direct, control or supervise the injury producing work, even if it did not exercise that authority. In essence, the property owners are equating a party with mere authority to direct, control or supervise with a party who is actively at fault in bringing about the injury suffered by the plaintiff.

We reject the property owners' arguments and their proposed articulation of the applicable rule because under their rule, every party engaged as a general contractor or construction manager, whether by the owner or not, would owe a common law duty to indemnify the owner regardless of whether such party was actively at fault in bringing about the injury. This ...

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