Quevedo v. City of New York, 56 N.Y.2d 150 (1982)
Under former General Obligations Law § 5-322.1, an indemnification clause in a building maintenance contract is unenforceable only to the extent it indemnifies the promisee against liability caused by the promisee’s sole negligence, but remains enforceable for instances of joint fault.
Summary
Raphael Quevedo, an employee of Berley Industries, was injured in an explosion in a City of New York-owned building. He sued the City, who then sought contractual indemnification from Berley based on their maintenance contract. The contract included an indemnification clause where Berley agreed to indemnify the City against liability arising from the contract. The New York Court of Appeals held that under the former General Obligations Law § 5-322.1, the indemnification clause was only unenforceable to the extent it covered the City’s *sole* negligence. Because there was no determination that the City was solely negligent, the clause was enforceable.
Facts
Raphael Quevedo, an employee of Berley Industries, Inc., suffered injuries from a boiler explosion in a building owned by the City of New York.
Berley Industries had a contract with the City to provide janitorial and maintenance services for certain City-owned buildings.
The maintenance contract contained a clause requiring Berley to indemnify the City against liability arising out of or connected with the performance of the contract.
The contract also required Berley to obtain an insurance policy that included coverage for the contractual indemnification.
Procedural History
Quevedo and his wife sued the City and V and A Oil Burner Services, Inc. The City asserted a cross-claim against V and A and commenced a third-party action against Berley for common-law and contractual indemnification.
Following jury selection, the parties settled, with the City, Berley, and V and A each contributing $36,000.
The City continued its claim for contractual indemnification against Berley, moving for enforcement of the indemnification clause.
Supreme Court granted the City’s motion.
The Appellate Division affirmed the Supreme Court’s order.
The New York Court of Appeals granted leave to appeal.
Issue(s)
Whether, under former General Obligations Law § 5-322.1, the indemnification clause in the building maintenance contract is wholly unenforceable because it requires Berley to indemnify the City against its own negligence.
Whether the City’s alleged failure to provide timely notice to the insurer bars enforcement of the indemnification clause.
Holding
1. No, because former section 5-322.1 renders an indemnification clause unenforceable only to the extent it purports to indemnify the City against liability caused by the *sole* negligence of the City. Since there was no determination of sole negligence, the clause is enforceable.
2. No, because the contract explicitly stated that notice to the insurance company by *either* party (City or Berley) would be sufficient, and there was no claim Berley failed to provide timely notice.
Court’s Reasoning
The Court of Appeals clarified the scope of former General Obligations Law § 5-322.1, emphasizing that it only proscribes indemnification clauses that seek to protect a promisee from *sole* negligence. The court noted, “The Legislature, however, unambiguously proscribed only those clauses that purport to indemnify the promisee against ‘the sole negligence of the promisee’.” The statute aimed to prevent contractors from assuming liability for others’ negligence, but it didn’t invalidate agreements covering joint fault.
The court found that the clause in question required Berley to indemnify the City even for injuries caused by the City’s negligence, but also covered instances of joint fault. Therefore, the entire clause was not void; only the portion pertaining to the City’s sole negligence was unenforceable. Citing Central N. Y. Tel. & Tel. Co. v Averill, 199 NY 128, 140, the court stated that the statutory bar need not invalidate the agreement *in toto.*
Because the main action settled prior to trial and there was no determination or admission of fault by any party, the record did not establish that the plaintiff’s injuries resulted from the City’s *sole* negligence. Thus, there was no basis to deny enforcement of the indemnification clause.
Addressing the notice issue, the court highlighted the contract’s explicit provision that notice to the insurer by either party would be sufficient. There was no allegation that Berley failed to provide timely notice, negating this argument against enforcement. The court pointed out that “[n]otice to the company by either party shall be deemed sufficient notice under the policy.”
The court also clarified that the existence of insurance does not automatically save an otherwise unenforceable indemnification clause under section 5-322.1, noting that the statutory proviso regarding insurance contracts merely ensures that contractors do not lose insurance coverage simply because it extends to liability under an unenforceable agreement.