Subcontractor Not Prejudiced When Contractor Stipulates to Liability

By:  Bonita Gutierrez, Anthony Badaracco, K&L Gates, New York

Zawadzki v. 903 E. 51st Street, LLC, 80 A.D.3d 606, 914 N.Y.S.2d 272 (N.Y. App. Div. 2011)

In this case, the injured plaintiff, subcontractor’s employee, sued the owner and general contractor of a construction contract in Brooklyn.  The owner filed a third-party complaint against the subcontractor, which filed cross-claims against the contractor for contribution and indemnification.  The contractor filed a fourth-party complaint against the subcontractor, seeking indemnification.  The Appellate Division, Second Department, denied the subcontractor’s motion to dismiss or sever the fourth-party indemnification complaint, brought on the ground that the subcontractor would be prejudiced by the contractor’s stipulation of liability, to which the subcontractor did not consent.  The court found that the subcontractor was not prejudiced, because even though the contractor admitted liability, the subcontractor still could assert a defense to the contractor’s indemnification claim on the ground that the contractor was actively negligent and therefore not entitled to indemnification.