Cunha v City of New York

[*1] Cunha v City of New York 2008 NY Slip Op 52424(U) [21 Misc 3d 1139(A)] Decided on December 3, 2008 Supreme Court, Kings County Partnow, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on December 3, 2008
Supreme Court, Kings County

Severino Cunha et ano., Plaintiffs,

against

The City of New York, Defendant. The City of New York., Third-Party Plaintiff, Haks Engineers, P.C., Third-Party Defendant.



49367/02



The plaintiff was represented by: Davidson & Cohen

265 Sunrise Highway

Rockville Center, NY 11570

516-763-6700

The defendant /3rd party plaintiff City of New York was represented by:

Smith Mazure Director Wilkins Young and Yagerman, PC

111 John Street -20th Floor

New York, NY 10038

212-964-7400 The 3rd party defendant Haks was represented by:

Milber Makris Plousadis Seiden

3 Barker Avenue - 6th floor

White Plains, NY 10601

914-681-8700

Mark I. Partnow, J.

Upon the foregoing papers, defendant/third-party plaintiff The City of New York (the City) moves for an order declaring that it is entitled to recover all of legal fees, costs, expenses and disbursements expended defending the plaintiffs' direct action against it, from the third-party defendant Haks Engineers, P.C. (Haks), and scheduling a hearing for said purpose.

BACKGROUND AND CONTENTIONS

The subject motion arises out of a construction accident which occurred on May 14, 2002, at a job site owned by the City. Plaintiff, while inside a seven-foot deep ditch, was involved in the process of cleaning away dirt to expose a utility cable, when the excavation caved in, causing him to suffer serious physical injuries. At the time, plaintiff was employed by non-party JLJ Enterprises.

Haks had been hired by the City to inspect the work conducted by all trades on the project and to ensure that the project was conducted in accordance with the terms of the contract, and in accordance with safety guidelines. Subsequent to plaintiff's commencement of the lawsuit and after joinder of issue, the City, on September 7, 2004, commenced a third-party action against Haks for contractual and common-law indemnification.

Thereafter, the City moved for an order granting summary judgment (1) dismissing plaintiff's Labor Law § 241(6) and § 200 causes of action; and (2) over and against Haks as to the City's claims for contractual and common-law indemnification. By order dated April 3, 2006, the motion court (Hurkin-Torres, J.) dismissed the Labor Law § 200 claim as against the City. Thus, inasmuch as plaintiff had previously stipulated to discontinue his cause of action alleging a violation of Labor Law § 240(1), plaintiff's only remaining cause of action as against the City was that alleging a violation of Labor Law § 241(6).

On the date trial of plaintiffs' action was scheduled to commence, a settlement agreement was entered into among plaintiff, the City and Haks. Specifically, it was agreed by and between the parties the case would be settled, unconditionally, for a total sum of $1.2 million. The City, conceding liability for violation of Labor Law § 241(6), premised upon a violation of Industrial Code Rule 23.4 et seq., agreed to pay $800,000, and Haks agreed to pay $400,000. Accordingly, the only issue left to be tried was whether Haks owed complete indemnity to the City. Since the only remaining cause of action was one for statutory liability, the City itself could not be found to be negligent. Thus, if Haks was found to be negligent with respect to the accident, and if the jury found that Hak's negligence was [*2]a substantial factor in causing the accident, the City would be entitled to full indemnification.[FN1]

After trial, the jury rendered a verdict finding liability and causation as against Haks, and further found that Haks was 40% at fault. However, upon appeal taken by the City, the Appellate Division, by Decision and Order dated November 13, 2007 (Cunha v City of New York, 45 AD3d 624 [2007]), ordered that the City was entitled to full common-law indemnification from Haks for the amount of its settlement to plaintiff, and directed entry of an amended judgment to reflect same.[FN2] Consequently, relying on the holding of the Court of Appeals in Chapel v Mitchell (84 NY2d 345 [1994]), the City, on the instant motion, contends that by operation of law, and without the need for a separate order providing for same, it is entitled to recover all of its legal fees, costs, expenses and disbursements.

In opposition, Haks contends that there exists no legal basis for disturbing the stipulation of settlement, the terms of which were clear, and which provided for no reservation of rights which would support the City's present claim. In reply, the City, relying on the "no conditions" language set forth on the record, argues that it is entitled to seek the instant relief, and has not waived its right to do so.

DISCUSSION

Generally, in the absence of an agreement, contract, or statute, a party involved in litigation is responsible for all legal fees and costs incurred in the defense or prosecution of the action and cannot recover the same from an opposing party (see Hooper Associates, Ltd. v AGS Computers, Inc., 74 NY2d 487 [1989]; RAD Ventures v Artukmak, 31 AD3d 412 [2006]; see also Chapel v Mitchell, 84 NY2d 345 [1994]). When the moving party is entitled to recover legal expenses and tenders proof of the reasonableness of the expenses incurred, absent a challenge regarding the reasonableness of said expenses, the moving party is entitled to the amount sought (see Gray Manufacturing Company v Pathe Industries, Inc., 33 AD2d 739 [1969]). If the reasonableness of the legal fees claimed is challenged, the court will conduct a hearing on that issue (see Tishman Construction Corp. of New York v American Manufacturers Insurance Company, 303 AD2d 323 [2003]).

However, in Chapel, 84 NY2d at 347, the Court of Appeals unambiguously stated:

"The first question to be addressed is whether defendant is entitled to recover the legal expenses incurred in defending the main action. It is well settled that an owner who is only vicariously liable under the Labor Law may obtain full indemnification from the party wholly [*3]at fault. This common-law right of indemnification against the party actually at fault encompasses the right to recover attorneys' fees, costs, and disbursements incurred in connection with defending the suit brought by the injured party. In this case, the nature of defendant's liability is vicarious and its predicate purely statutory. Accordingly, defendant is entitled to recover as part of its indemnification award the legal expenses for defending plaintiff's action" (citations omitted).

This right to indemnification and the concomitant right to recover attorneys' fees, costs, and disbursements incurred in connection with defending the suit brought by the injured party is not impaired by the fact that the personal injury action was resolved by settlement rather than judgment (see American Ref-Fuel Co. of Hempstead v Resource Recycling, Inc., 307 AD2d 939 [2003]; see also Fessenden v Marshalls Dept. Store of Pittsford, NY, 261 AD2d 839 [1999]). A determination of entitlement to attorney's fees must await a determination that the defendant/third-party plaintiff was vicariously liable (see Katz v Wiener, 302 AD2d 497 [2003]). In the instant matter, that did not occur until after the parties had entered into a stipulation of settlement of the primary action, and the Appellate Division determined that the City's liability was purely vicarious, and ordered the entry of the amended judgment directing full indemnification from Haks.

"It is well settled that a stipulation of settlement is an independent contract subject to the principles of contract interpretation" (Corrigan v Breen, 241 AD2d 861, 863 [1997]). It is equally well-settled that ""[s]tipulations of settlement are favored by the courts and not lightly cast aside. . .Only where there is cause sufficient to invalidate a contract, such as. . .mistake. . . will a party be relieved from the consequences of a stipulation made during litigation" (Hallock v State of New York, 64 NY2d 224, 230 [1984]; see also Denburg v Parker Chapin Flattau & Klimpl, 82 NY2d 375 [1993]; Matter of Galasso, 35 NY2d 319 [1974]).

Here, the stipulation of settlement, which contains no mention of attorneys' fees or any language limiting the rights of either party, was clear on its face indeed, it was, by its express terms, set forth as "unconditional". Its terms manifest no intention on the part of the City to relinquish a substantial right to which it might, and was ultimately determined to be, entitled. Consequently, the court grants the City's motion, finding no merit to Haks' claim that the City, either by the terms of the settlement agreement or waiver, is not entitled to the relief which it seeks herein (see Hannigan v Hannigan, 50 AD3d 957 [2008]).

Pursuant to Article 22 of the Judiciary Law, in accordance with the provision of part 122 of the rules of the Chief Administrator of the Courts, and upon the filing of the requisite forms and the approval of the Administrative Judge, this action is assigned to a Judicial Hearing Officer in the JHO Part to determine the reasonable amount of attorneys fees and disbursements to which the City is entitled. The date of the hearing will be fixed by the Clerk of the Part. [*4]

The foregoing constitutes the decision and order of the court.E N T E R,

J. S. C. Footnotes

Footnote 1:Because CPLR 1601 prohibits an apportionment against plaintiff's employer (JLJ), there was no other entity against whom a percentage of fault could be attributed.

Footnote 2:The Appellate Division stated "[w]here, as here, an owner or general contractor is only held vicariously liable for violating the provisions of the Labor Law, that owner or general contractor is entitled to full common-law indemnification from the party actually responsible for the incident."