Lopez v. Consolidated Edison Co., 40 N.Y.2d 605 (1976)
When a contract specifies the scope of work and assigns specific duties to each party, an indemnification clause will not apply to liabilities arising from work outside the contractor’s assigned duties, especially in specialized areas requiring specific expertise and equipment.
Summary
Lopez and Sudlow, employees of Peckham Road Corporation, were injured in a gas explosion while working on a manhole installation project for Consolidated Edison (Con Ed). They sued Con Ed for negligence, and Con Ed filed a third-party action against Peckham, seeking indemnification based on a clause in their contract. The New York Court of Appeals held that Peckham was not required to indemnify Con Ed because Peckham’s negligence did not cause the incident; Con Ed employees were responsible for gas line related work. The contract and industry practice placed the responsibility for gas-related safety measures, including gas detection, on Con Ed.
Facts
Peckham contracted with Con Ed to install manholes, vaults, and ducts. The contract specified that Con Ed employees would handle all connections to and disconnections from live gas mains. During the manhole installation, Peckham employees discovered a gas service pipe. Con Ed employees severed and sealed the pipe. Later, a gas leak occurred, leading to an explosion that injured Peckham’s employees. Before entering the manhole on the day of the explosion, Peckham’s foreman spoke with the Con Ed supervisor on site regarding a gas smell, and was told the area was safe.
Procedural History
The injured Peckham employees sued Con Ed, and Con Ed filed a third-party claim against Peckham seeking indemnification. The trial court ruled in favor of the plaintiffs and dismissed Con Ed’s third-party complaint. The Appellate Term modified the judgment to include a dismissal of the third-party complaint, which was affirmed by the Appellate Division. The New York Court of Appeals granted leave to appeal.
Issue(s)
Whether Peckham was obligated to indemnify Con Ed for damages arising from the gas explosion, given the contractual division of labor and industry practice regarding gas line safety.
Holding
No, Peckham was not obligated to indemnify Con Ed because the indemnification clause applied only to injuries caused by Peckham’s acts or omissions, and the responsibility for gas-related safety measures, including testing for gas leaks, belonged to Con Ed.
Court’s Reasoning
The court emphasized that the indemnification clause in the contract was triggered only by an “act or omission” of Peckham. Con Ed argued that Peckham was negligent in failing to test the manhole for gas before allowing its employees to enter. However, the court found that the contract, when read as a whole, assigned responsibility for gas-related work and safety to Con Ed. While a general provision in the contract obligated Peckham to provide “all necessary and proper equipment”, more specific provisions detailed the nature of Peckham’s work and reserved gas-related tasks for Con Ed. The court noted, “Con Ed, both in its contract and in its practice, reserved for itself the right and duty to perform gas line related work.” Parol evidence, regarding industry custom and practice, demonstrated that Con Ed possessed the specialized equipment (Davis Meter) and expertise to test for gas leaks, and that Peckham’s employees lacked such training and equipment. The court concluded: “Although Peckham may have assumed full responsibility for damages resulting from the work it was to perform, irrespective of any fault of Con Ed’s, Peckham certainly did not assume liability for work that it did not perform, particularly in a specialty for which it and its employees had no special training and no special equipment.”