Words Have Meaning

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Posted on: Oct 19 2022

In prior articles, we have talked about the importance of saying what you mean in a contract. (E.g., here and here.) When contracts are clear and unambiguous, the meaning ascribed to the words used therein will be enforced because they reflect the intent of the parties. Such was the case in Padron v. Granite Broadway Dev. LLC, 2022 N.Y. Slip Op. 05798 (1st Dept. Oct. 18, 2022).

In Padron, plaintiff claimed that he sustained injuries when he slipped and fell on a watery condition on a stairwell landing while transporting steel handrails at a construction project. Defendant, Granite Broadway Development LLC (“Granite”), owned the property under construction and had retained Defendant, CNY Builders 1717 LLC’s (“CNY”), as the construction manager. Transcontinental Contracting, Inc. d/b/a Transcontinental Steel (“Transcontinental”), plaintiff’s employer, was the steelwork contractor. The watery condition was believed to be caused by a burst pipe of another contractor.

Plaintiff sought damages for the injuries sustained from his fall based on Labor Law §§ 200, 240(1), and 241(6) and negligence.

Following discovery, Granite and CNY moved for summary judgment, claiming that, inter alia, Transcontinental had a contractual obligation to indemnify them and summary judgment dismissing Transcontinental’s counterclaims for common-law indemnification and contribution against Granite.

The motion court granted Granite’s motion for contractual indemnification against Transcontinental and summary judgment dismissing Transcontinental’s counterclaims for common-law indemnification and contribution against it and denied Transcontinental’s motion for summary judgment dismissing Granite and CNY’s contractual indemnification claims against it.

On appeal, the Appellate Division, First Department modified the order to deny Granite’s motion for summary judgment on its contractual indemnification claim against Transcontinental, and otherwise affirmed.

We examine the Court’s holding with regard to the contractual indemnification claim.

The Court held that Granite was not entitled to summary judgment on its contractual indemnification claim against Transcontinental.¹ The contracts referred to were trade contracts that the parties signed. Those contracts provided that Transcontinental was to indemnify Granite and CNY to the fullest extent permitted by law.

In Paragraph 16.02 of the agreement, the “Trade Contractor” was required, “[t]o the fullest extent permitted by law” to “defend, indemnify and hold harmless, the Owner, Construction Manager and Additional Insureds from and against all claims … and/or liabilities arising out of the Trade Contractor’s Work provided that any such claim, damage, loss and/or expense is attributable to bodily injury ….”

In Paragraph 16.03 of the agreement, the “Trade Contractor” was required, “[t]o the fullest extent permitted by law” to “defend, indemnify and hold harmless the Owner, Construction Manager and Additional Insureds from and against all claims … and/or liabilities arising out of or in any way connected with or incidental to, the performance of the Work by Trade Contractor, its Subcontractors, suppliers, materialmen and/or vendors of any tier including anyone directly or indirectly employed by any of them and for whose acts they may be liable”.

The First Department found that “[a]lthough plaintiff’s accident triggered the broadly worded provisions in paragraphs 16.02 and 16.03 of the agreement requiring Transcontinental to provide indemnification for all claims ‘arising out [of] or in any way connected with or incidental to’ Transcontinental’s work, and refer[red] to both the Construction Manager and the Owner, that provision [did] not apply to Granite.”² The Court noted that the “Standard Trade Contract with Transcontinental, in Article 1, titled ‘Definitions’ subsection (k) define[d] ‘Owner’ to ‘mean the persons or entities identified as the Owner on the cover page of th[e] Agreement, and include[d] any heir, legal representative, successor or assign of such specified Owner.’”³ The Court went on to note that the “cover page of the Agreement only name[d] ‘CNY Builders 1717 LLC’ and ‘Transcontinental Steel’”.⁴ Thus, concluded the Court, “Granite [was] not named on the cover page or otherwise identified as ‘Owner’ anywhere in the contract” and could not claim a contractual obligation to indemnify.⁵

“Furthermore”, said the Court, “although Exhibit K annexed to the contract titled ‘Final Release and Waiver of Lien’ identified Granite as the ‘Owner’ and CNY as the ‘Construction Manager,’ it [did] not identify Transcontinental as the ‘Trade Contractor’, and is unsigned and un-dated, creating an issue of fact as to whether the parties intended to be bound by its provisions.”⁶

Takeaway

Padron underscores the fundamental principle of contract interpretation – i.e., contracts are to be construed pursuant to the parties’ intention. When the parties’ writing is clear and unambiguous on its face – that is, the terms are reasonably susceptible to only one meaning – it should be enforced according to the plain meaning of those words. In Padron, the Court concluded that the terms of the trade agreements were clear and unambiguous. The agreements did not apply to Granite because “Granite [was] not named on the cover page or otherwise identified as ‘Owner’ anywhere in the contract”. Since the indemnification provisions under those agreements related to the obligations of the “Owner”, Granite could not claim contractual indemnification under those agreements.

Footnotes

Slip Op. at *1.
Id. (citing, Tonking v. Port Auth. of N.Y. & N.J., 3 N.Y.3d 486, 490 (2004); Nicholson v. Sabey Data Ctr. Props., LLC, 160 A.D.3d 587 (1st Dept. 2018); Crimi v. Neves Assoc., 306 A.D.2d 152, 153 (1st Dept. 2003)).
Id. at *1-*2.
Id. at *2.
Id.
Id. (citing, Dwyer v. Cenral Park Studios, Inc., 144 A.D.3d 552, at 552-553 (1st Dept. 2016)).

Jeffrey M. Haber is a partner and co-founder of Freiberger Haber LLP.

This article is for informational purposes and is not intended to be and should not be taken as legal advice.