New York Law Review

Frank v. Meadowlakes Development Corp., 6 N.Y.3d 685 (2006): Limits on Indemnification Under CPLR Article 16

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The New York Law Review

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6 N.Y.3d 685 (2006)

Under CPLR Article 16, a tortfeasor whose liability is determined to be 50% or less can be held responsible for indemnification of noneconomic loss only to the extent of their proportionate share of fault.

Summary

Frank, injured at a construction site, sued Meadowlakes (the property owner) and D.J.H. Enterprises (the general contractor). Meadowlakes then filed a third-party action against Frank’s employer, Home Insulation. After a trial, the jury apportioned fault: 10% to Frank, 10% to Home, and 80% to D.J.H. Frank settled with D.J.H. and Meadowlakes. Meadowlakes then sought full indemnification from Home. The Court of Appeals held that while Meadowlakes retained its right to indemnification, Home, found only 10% liable, was responsible only for its proportionate share of noneconomic damages and all economic damages. The court reconciled CPLR 1602(1) and 1602(2)(ii), emphasizing the legislative intent to protect low-fault defendants from disproportionate liability.

Facts

Stephen Frank, while working at a building site owned by Meadowlakes, fell and sustained serious injuries. The accident occurred when Frank, carrying insulation up a staircase lacking a railing, lost his balance. Frank and his wife sued Meadowlakes and D.J.H. Enterprises (general contractor) for negligence. Meadowlakes initiated a third-party action against Home Insulation, Frank’s employer, seeking indemnification.

Procedural History

The case proceeded to a bifurcated trial on liability. The jury apportioned fault: 10% to Frank, 10% to Home, and 80% to D.J.H. The court directed a verdict against Meadowlakes and D.J.H. based on a Labor Law § 240(1) violation. Frank settled with D.J.H. and Meadowlakes. Supreme Court granted Meadowlakes’ motion for common-law indemnification against Home for the full settlement amount. The Appellate Division affirmed. The Court of Appeals reversed in part, limiting Home’s indemnification liability.

Issue(s)

Whether a tortfeasor whose liability is 50% or less can be found responsible for total indemnification of noneconomic loss, despite CPLR Article 16.

Holding

No, because CPLR Article 16 limits the amount a low-fault defendant must pay in indemnification for noneconomic damages to their proportionate share of fault, even while preserving the underlying right to indemnification itself.

Court’s Reasoning

The Court of Appeals reconciled CPLR 1602(1) and 1602(2)(ii). CPLR 1602(1) states that Article 16 applies to indemnification claims. CPLR 1602(2)(ii) states that Article 16 should not limit any existing right to indemnification. The Court reasoned that 1602(2)(ii) is a savings provision meant to preserve the *right* of indemnification, but not to allow for unlimited recovery from a low-fault defendant. The court stated that the purpose of Article 16 was “to place the risk of a principally-at-fault but impecunious defendant on those seeking recovery and not on a low-fault, deep pocket defendant.” The court explicitly rejected the First Department’s holding in Salamone v. Wincaf Props., which found an irreconcilable conflict between CPLR 1602(1) and 1602(2)(ii) and gave precedence to the latter. The proper calculation of Home’s share involves dividing indemnity among potential indemnitors, excluding Frank’s own share of fault. Thus, Home’s indemnity to Meadowlakes is limited to all economic loss and one-ninth of noneconomic loss.

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