WAGNER, DANIELLE v. PLOCH, ROBERT A. ( 2011 )

SUPREME COURT OF THE STATE OF NEW YORK
Appellate Division, Fourth Judicial Department
558
CA 10-02406
PRESENT: SCUDDER, P.J., CENTRA, CARNI, SCONIERS, AND GREEN, JJ.
DANIELLE WAGNER, PLAINTIFF,
V MEMORANDUM AND ORDER
ROBERT A. PLOCH, DEFENDANT.
---------------------------------
ROBERT A. PLOCH, THIRD-PARTY
PLAINTIFF-APPELLANT,
V
1680 ELMWOOD AVENUE, INC.,
THIRD-PARTY DEFENDANT-RESPONDENT.
RUPP, BAASE, PFALZGRAF, CUNNINGHAM & COPPOLA LLC, BUFFALO (JOHN R.
CONDREN OF COUNSEL), FOR THIRD-PARTY PLAINTIFF-APPELLANT.
KENNEY SHELTON LIPTAK NOWAK LLP, BUFFALO (MELISSA B. BURKE OF
COUNSEL), FOR THIRD-PARTY DEFENDANT-RESPONDENT.
Appeal from an order of the Supreme Court, Erie County (Russell
P. Buscaglia, A.J.), entered June 25, 2010 in a personal injury
action. The order denied the motion of third-party plaintiff for
summary judgment and granted the cross motion of third-party defendant
for summary judgment.
It is hereby ORDERED that the order so appealed from is affirmed
without costs.
Memorandum: Plaintiff commenced this negligence action seeking
damages for injuries she sustained while working at a restaurant
operated by third-party defendant on property owned by defendant-
third-party plaintiff (defendant). Third-party defendant was leasing
the property from defendant pursuant to an agreement that included an
indemnification provision and, after plaintiff commenced the main
action, defendant commenced the third-party action seeking contractual
indemnification. Contrary to defendant’s contention, Supreme Court
properly granted third-party defendant’s cross motion for summary
judgment dismissing the third-party complaint. “Pursuant to General
Obligations Law § 5-321, a lease provision which purports to exempt a
lessor from liability for its own acts of negligence is void and
unenforceable” (Rego v 55 Leone Lane, LLC, 56 AD3d 748, 749). The
indemnification provision here required third-party defendant to
indemnify defendant for “any and all liability . . . arising from
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CA 10-02406
injury . . . to person or property . . ., occasioned wholly or in part
by an act . . . of [third-party defendant or its employees].” We
agree with third-party defendant that the indemnification provision is
unenforceable under General Obligations Law § 5-321 because it “shifts
the entire responsibility for damages to [third-party defendant]
regardless of [defendant’s] own negligence” (Rego, 56 AD3d at 749; see
Ben Lee Distribs., Inc. v Halstead Harrison Partnership, 72 AD3d 715).
Indeed, the indemnification provision improperly “contemplate[d] a
complete rather than partial shifting of liability from [defendant] to
[third-party defendant]” (Itri Brick & Concrete Corp. v Aetna Cas. &
Sur. Co., 89 NY2d 786, 793, rearg denied 90 NY2d 1008), inasmuch as it
made no exception for defendant’s own negligence (see DeSabato v 674
Carroll St. Corp., 55 AD3d 656, 659; cf. Lennard v Mendik Realty
Corp., 43 AD3d 279).
Defendant’s reliance on the insurance rider to the lease
agreement is misplaced. Where a lease agreement, negotiated at arm’s
length between two sophisticated business entities or persons,
includes a provision that the tenant is to obtain insurance naming the
landlord as an additional insured, General Obligations Law § 5-321
will not prohibit an indemnification provision such as the one at
issue in this case inasmuch as the parties to the lease agreement are
using insurance to allocate between themselves the risk of liability
to a third party (see Great N. Ins. Co. v Interior Constr. Corp., 7
NY3d 412, 418-419; Castano v Zee-Jay Realty Co., 55 AD3d 770, 772, lv
denied 12 NY3d 701). In this case, however, the record establishes
that the lease agreement was not negotiated at arm’s length between
two sophisticated business entities or persons (see DeSabato, 55 AD3d
at 659). Moreover, although the insurance rider in this case required
third-party defendant to obtain insurance on the property, there was
no requirement that defendant be named as an additional insured on the
policy. A landlord may not circumvent General Obligations Law § 5-321
“merely by inserting in the lease a requirement that the tenant obtain
insurance” (Graphic Arts Supply v Raynor, 91 AD2d 827, 828; see Ben
Lee Distribs., Inc., 72 AD3d at 716).
All concur except CARNI, J., who concurs in the result in the
following Memorandum: Although I concur in the result reached by my
colleagues, I would affirm for a different reason. While I agree that
the indemnification clause in the lease in question is unenforceable
under General Obligations Law § 5-321, I cannot agree with my
colleagues that it is unenforceable based on the clause requiring
third-party defendant to indemnify defendant for “any and all
liability . . . arising from injury . . . to person or property . . .,
occasioned wholly or in part by an act . . . of [third-party defendant
or its employees].” Contrary to the conclusion of my colleagues, that
clause merely partially, rather than entirely, shifts the
responsibility for damages to third-party defendant. Indeed, by its
express language, the clause in question does not “indemnify the
promisee[, i.e., defendant,] for losses attributable to the promisee’s
own negligence and therefore do[es] not run afoul of the statute”
(Ostuni v Town of Inlet, 64 AD3d 854, 855; see Brooks v Judlau Contr.,
Inc., 11 NY3d 204, 207-211). Nevertheless, I concur with the majority
in the result based on the further language of the indemnification
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CA 10-02406
clause in question, which requires third-party defendant to indemnify
defendant “also for any matter or thing growing out of the occupation
of the demised premises or of the streets, sidewalks or vaults
adjacent thereto.” That broad indemnification language shifts the
entire responsibility for damages to third-party defendant regardless
of defendant’s own negligence, rendering the entire clause “void as
against public policy and wholly unenforceable” (§ 5-321; see Mendieta
v 333 Fifth Ave. Assn., 65 AD3d 1097, 1100-1101; Rego v 55 Leone Lane,
LLC, 56 AD3d 748, 749-750). Finally, I note my agreement with my
colleagues that the insurance rider to the lease is insufficient to
circumvent General Obligations Law § 5-321.
Entered: June 10, 2011 Patricia L. Morgan
Clerk of the Court