Montfort, Healy, McGuire & Salley Successfully Appeals Case Involving the Scope and Interpretation of an Indemnification Clause

Donald S. Neumann, Michael A. Baranowicz and Christopher T. Cafaro of Montfort, Healy, McGuire & Salley LLP successfully represented a defendant third-party plaintiff-appellant telecommunications company before the New York State Supreme Court, Appellate Division, Second Department. The client sought action against a subcontractor for indemnification for attorneys’ fees in conjunction with the successful dismissal of a personal injury action against the telecom company and its subcontractor.

In the underlying case, the plaintiff-respondent claimed she was injured when her bicycle hit a pothole at an intersection in Queens. She commenced an action to recover damages for personal injuries against the telecom company, among others. Before the accident happened, the company received a street opening permit from the City of New York to do work on the intersection and hired a subcontractor to perform the work. However, no work was actually done at the intersection at issue. The trial court dismissed the action against the telecom company and the subcontractor. However, the subcontractor failed to indemnify the telecom company for its attorneys’ fees, as agreed to in their agreement. The Firm commenced a third-party action on behalf of the telecom company against the subcontractor based on the claims of breach of contract and contractual indemnification.

The contract between the two parties stated that the subcontractor agreed to defend and indemnify the telecom company against “claims” resulting from the subcontractor’s “acts or omissions,” whether such claims “arise[ ] or [are] alleged to arise out of the sole acts or omissions of the [subcontractor] or the concurrent acts or omissions of the [subcontractor] or any indemnified parties.” (see Diudone v. City of New York, 87 AD3d 608; Sand v. City of New York, 83 AD3d 923; Barnes v. New York City Hous. Auth., 43 AD3d 842). The subcontractor argued that, since the work was never performed, it should not be responsible for indemnifying the telecom company for attorneys’ fees. The lower court agreed.

In reversing the lower court, the appellate court found that the “plain and unambiguous terms of the contract did not condition [the subcontractor’s] obligation to indemnify [the telecom company] for attorneys’ fees and costs on a finding of fault.” Thus, the telecom company was entitled to indemnification in defense of the main action, despite the fact that the subcontractor never worked in the area and was not at fault for the accident.

To read the full decision, click here.