Great Northern Insurance Company v. Laboz

Background

Great Northern Insurance Company brought the action as the subrogee of its policyholders, Arunesh Hari and Ranjana Hari. Subrogation allowed Great Northern to pursue claims that the Haris could have pursued against parties legally responsible for their losses. The Haris’ apartment was damaged after a pipe broke during demolition work in Albert Laboz’s apartment. Great Northern paid the Haris $1,277,471.25 for their losses.

Laboz had hired M&R Construction Group, Inc. as the general contractor, and M&R had hired Alba Services Inc. as the demolition subcontractor. Before demolition began, the cooperative’s superintendent identified the location of a live water riser and warned the workers to work carefully. During demolition on June 28, 2018, an Alba employee used a hammer to remove plaster and lath from a wall. A pipe then broke, causing water damage. The parties disputed whether the pipe broke because it was improperly soldered or because Alba struck it during demolition.

Great Northern asserted negligence claims against all three defendants and a breach-of-contract claim against Laboz. Laboz, M&R, and Alba also asserted crossclaims involving contractual indemnification, common-law indemnification, contribution, and insurance procurement.

Court’s analysis

The court applied the summary-judgment standard, under which judgment is appropriate when there is no genuine dispute about a material fact and the moving party is entitled to judgment as a matter of law.

On Great Northern’s breach-of-contract claim against Laboz, the court held that the Haris could not enforce Laboz’s Apartment Alteration Agreement as third-party beneficiaries. The agreement expressly stated that people who were not parties to it, including other cooperative shareholders, were not third-party beneficiaries. The court also concluded that the other agreements Great Northern identified could not support the claim. The proprietary lease did not show an intent to benefit the Haris, the cooperative’s notice to shareholders was not a contract, and the Haris’ apartment was two units below Laboz’s rather than immediately below it. The court therefore found amendment of the complaint would be futile.

On negligence, the court held that Laboz was not liable for the alleged negligence of M&R or Alba because he had retained independent contractors and had not performed, directed, supervised, or controlled the demolition work. The court rejected Great Northern’s argument that Laboz had a nondelegable duty under the agreements or the New York City Building Code. It granted Laboz’s cross-motion for summary judgment dismissing Great Northern’s negligence claim against him. The court stated that Great Northern’s negligence claims against M&R and Alba remained intact.

On Laboz’s indemnification claims, the court held that the agreements with Alba and M&R clearly required indemnification for damage caused, in whole or in part, by negligent acts of the contractors or subcontractors. The court found that Laboz was free from negligence relating to the accident. It concluded that Alba was at least partly negligent because Alba knew the pipe was live, was responsible for the demolition, and its employee was using the hammer when the pipe broke. The court granted Laboz summary judgment on contractual indemnification against Alba.

The court also granted Laboz summary judgment on contractual indemnification against M&R. M&R’s agreement covered negligent acts by M&R and its subcontractors, including Alba, and the court concluded that Alba’s partial negligence triggered the agreement. The court did not address Laboz’s common-law indemnification claim because contractual indemnification resolved the issue.

Finally, the court held that M&R’s agreement with Alba clearly required Alba to indemnify M&R for Alba’s negligent acts. Because the extent of M&R’s own negligence had not yet been determined, the court granted M&R conditional summary judgment on its contractual indemnification claim against Alba. The amount or share of any indemnification would depend on how much Alba’s negligence contributed to the accident.

Disposition

The court denied Great Northern’s motion for summary judgment against Laboz; granted Laboz’s cross-motion for summary judgment against Great Northern; granted Laboz’s motion for summary judgment against Alba and M&R; and granted M&R’s motion for conditional summary judgment against Alba. The court also denied Great Northern’s motion for leave to amend because the proposed amendments would be futile. The court disregarded Alba’s cross-motion seeking dismissal of Great Northern’s contract claim against Laboz because Alba was not a defendant on that claim and therefore lacked standing to bring that motion. Judge Naomi Reice Buchwald directed the Clerk of Court to terminate the listed pending motions.