42 N.Y.2d 669 (1977)

A lease agreement containing an indemnification clause obligates the lessee to indemnify the lessor for any recovery obtained against it in a personal injury action, but does not necessarily require the lessee to provide a defense in that action unless explicitly stated in the agreement.

Summary

Hogeland involved a dispute over the interpretation of an indemnification clause in a lease agreement. The New York Court of Appeals held that the lessee, Bradley & Williams, Inc., was obligated to indemnify the lessor, Sibley, Lindsay & Curr Co., for any recovery obtained against it in an underlying personal injury action. However, the court clarified that the lease did not require the lessee to provide a legal defense for the lessor in that action. The court modified the Appellate Division’s order, granting summary judgment to the plaintiff (lessor) on indemnification but denying the requirement to defend, remitting the case for a judgment declaring the lessee’s indemnification obligation.

Facts

Sibley, Lindsay & Curr Co. (lessor) and Bradley & Williams, Inc. (lessee) entered into a lease agreement containing an indemnification clause. Defendant Palmeri sustained personal injuries on the premises. Palmeri then sued Sibley, Lindsay & Curr Co. Sibley, Lindsay & Curr Co. sought indemnification and a defense from Bradley & Williams, Inc. based on the lease agreement.

Procedural History

The Supreme Court initially ruled on the matter. The Appellate Division issued an order. The Court of Appeals reviewed the Appellate Division’s order, modifying it to deny summary judgment to the defendant Bradley & Williams, Inc., grant summary judgment to the plaintiff, and remit the case to the Supreme Court for entry of a judgment declaring the defendant’s obligation to indemnify but not to defend. The Court of Appeals affirmed the order as modified.

Issue(s)

1. Whether the indemnification clause in the lease agreement obligated the lessee to indemnify the lessor for any recovery obtained against it in the underlying personal injury action?

2. Whether the lease agreement required the lessee to provide a legal defense for the lessor in the underlying personal injury action?

Holding

1. Yes, because the terms of the agreement constituted one of indemnification rather than exoneration, obligating the lessee to indemnify the lessor for any recovery obtained against it in the underlying personal injury action.

2. No, because nothing in the language of the agreement required the lessee to provide a defense for the lessor in that action.

Court’s Reasoning

The Court of Appeals, referencing the dissenting memorandum at the Appellate Division, found that the lease agreement’s terms obligated the lessee to indemnify the lessor for any recovery in the personal injury action, citing Gross v. Sweet, 49 NY2d 102, 108. The court emphasized the distinction between indemnification and exoneration. The court reasoned that while the lessee was obligated to indemnify, the lease did not explicitly require the lessee to provide a legal defense. According to the court, “Nothing in the language of the agreement however requires the lessee to provide a defense for the lessor in that action. A breach of the obligation to provide insurance for the lessor would at most provide a predicate for an action for damages sustained as a result of the breach; it would not authorize the entry of what might be described as the equivalent of a decree of specific performance.” This highlights a crucial distinction: the duty to indemnify is separate from the duty to defend, and the latter must be explicitly stated in the agreement. The court’s decision underscores the importance of clear and specific language in contracts, particularly regarding the scope of obligations such as the duty to defend.