Tedesco v. A.P. Green Industries, Inc., 8 N.Y.3d 243 (2007)
A dissolved corporation retains the capacity to bring a third-party claim for indemnity or contribution in an action arising from pre-dissolution events as part of winding up its affairs.
Summary
This case clarifies the extent to which a dissolved corporation can engage in litigation. Insulation Distributors, Inc. (IDI), dissolved for nonpayment of taxes, was sued in an asbestos-related claim. IDI then brought a third-party claim against DuPont for contribution or indemnification. The court addressed whether a dissolved corporation, like IDI, has the capacity to bring such a claim, particularly when the claim for indemnity/contribution did not fully accrue before dissolution. The court held that IDI could pursue the claim as it was part of winding up its affairs, explicitly authorized by the Business Corporation Law.
Facts
Insulation Distributors, Inc. (IDI) distributed asbestos-containing products and became a defendant in asbestos lawsuits.
IDI was sued by the estate of Frank Tedesco, who allegedly contracted asbestos-related illnesses through his work for DuPont.
IDI dissolved in 1999 for nonpayment of taxes.
Tedesco’s estate sued IDI in 2001; IDI then filed a third-party claim against DuPont for contribution or indemnification.
DuPont argued IDI lacked the capacity to sue because it was a dissolved corporation and the claim had not fully accrued prior to dissolution.
Procedural History
Supreme Court initially dismissed IDI’s third-party complaint, agreeing with DuPont that IDI lacked the capacity to sue.
The Appellate Division reversed, finding that IDI did have the capacity to sue.
The New York Court of Appeals granted DuPont leave to appeal.
Issue(s)
Whether a dissolved corporation has the capacity to bring a third-party claim for indemnity or contribution in an action arising out of predissolution events, when the cause of action for indemnity or contribution did not fully accrue prior to dissolution.
Holding
Yes, because under Business Corporation Law §§ 1005 and 1006, a dissolved corporation retains the capacity to sue or be sued and participate in actions as part of winding up its affairs, and pursuing a third-party claim for contribution or indemnification is a normal part of defending against claims like the asbestos suit.
Court’s Reasoning
The Court based its reasoning on Business Corporation Law §§ 1005(a)(1) and 1006(a), which permit a dissolved corporation to carry on business for the purpose of winding up its affairs, including the power to