Brown v. Bowery Savings Bank, 65 N.Y.2d 778 (1985)
A party is entitled to full contractual indemnification when the intention to indemnify is clear from the agreement’s language, purpose, and surrounding circumstances, even without explicit reference to the indemnitee’s negligence, unless prohibited by statute.
Summary
This case concerns an injured painter’s claim under Labor Law § 240(1) and the subsequent contractual indemnity claims among the contractors, architect, and owner involved in a renovation project. The Court of Appeals affirmed the judgment in favor of the plaintiff but modified the order regarding contractual indemnity. The court held that the owner (Bowery Savings Bank) and its agent (Swanke Hayden Connell & Partners) were entitled to full contractual indemnification from the scaffolding contractor (Atlantic Scaffold & Ladder Co.) and the painter’s employer (Rambusch Decorating Co.) because the indemnity agreements demonstrated a clear intent to indemnify, and such indemnification was not prohibited by the relevant statute at the time of the accident.
Facts
A painter, employed by Rambusch Decorating Co., was injured when he fell from scaffolding at the Bowery Savings Bank headquarters, which was undergoing a major renovation. Atlantic Scaffold & Ladder Co. was contracted to provide, erect, and maintain the scaffolding. The contracts between the bank, Atlantic, and Rambusch contained indemnity agreements requiring each contractor to indemnify the Bank and the Architects against claims arising from their work.
Procedural History
The injured painter sued, and a jury found Atlantic, Rambusch, Bowery Savings Bank, and Swanke Hayden Connell & Partners liable. The Appellate Division affirmed the judgment in favor of the injured employee. However, the Court of Appeals modified the Appellate Division’s order, granting Bowery Savings Bank and Swanke Hayden Connell & Partners judgment over against Atlantic Scaffold & Ladder Co. and Rambusch Decorating Co. on the basis of full contractual indemnity.
Issue(s)
Whether Bowery Savings Bank and Swanke Hayden Connell & Partners are entitled to full contractual indemnification from Atlantic Scaffold & Ladder Co. and Rambusch Decorating Co., or whether their recovery should be limited to contribution due to the absence of express language referring to the negligence of the indemnitee in the indemnity clause.
Holding
Yes, because the intention to indemnify can be clearly implied from the language and purposes of the entire agreement and the surrounding facts and circumstances, and full contractual indemnification was not prohibited by the statute in effect at the time of the accident.
Court’s Reasoning
The court relied on Labor Law § 240(1), which places a non-delegable duty on owners and contractors to provide safe scaffolding for workers. The court found that Atlantic, as the scaffolding contractor, was properly held liable to the plaintiff for his injuries under this statute. The court also upheld the finding that Swanke, due to its activities at the jobsite, was Bowery’s agent and thus liable under Labor Law § 240(1). Regarding the indemnity claims, the court stated that a party is entitled to full contractual indemnification provided that the “intention to indemnify can be clearly implied from the language and purposes of the entire agreement and the surrounding facts and circumstances” (Margolin v New York Life Ins. Co., 32 NY2d 149, 153). The court further noted that, at the time of the accident, General Obligations Law former § 5-322.1 (as amended by L 1981, ch 964) did not prohibit such full contractual indemnification. The court distinguished the case from situations where the indemnity clause explicitly excludes indemnification for the indemnitee’s own negligence. The court emphasized that the indemnity clauses in the contracts at issue demonstrated a clear intent for the contractors to bear the ultimate responsibility for claims arising from their work, even if the owner or architect were also found liable under Labor Law § 240(1). This case underscores the importance of carefully drafting and interpreting indemnity agreements in construction contracts, especially in the context of Labor Law claims. “Each Contractor [to] indemnify the Bank and the Architects against claims arising from his work, to the fullest extent permitted by law”.