NY Court Examines Applicability of Back-Dated Indemnification Agreement

A New York appellate court affirmed a trial court’s decision denying that portion of an employer/third-party defendant’s motion seeking dismissal of a contractual indemnification claim filed against it by a defendant/third-party plaintiff that had been sued by one of the employer’s employees following a work-related injury [Lorica v. Krug, 2021 N.Y. App. Div. LEXIS 3736 (3D Dept., June 10, 2021)]. Acknowledging that the employer had executed a written indemnification agreement after the employee’s injury, which would not ordinarily create any obligation on the part of the employer, the appellate court said there were issues of fact as to whether the parties intended the agreement to have retroactive effect.

Background

Plaintiff Joseph Lorica (“plaintiff”) was employed by G & C when he sustained work-related injuries on May 12, 2016, at a construction site owned by defendant Jeremy Kung and managed by defendant Krug Group Corp. Plaintiff and his spouse filed a civil action against the defendants, alleging violations of N.Y. Labor Law §§ 200, 240, and 241(6). Defendants filed a third-party action against G & C, seeking contractual and common-law indemnification. After answering, G & C moved for summary judgment dismissing the third-party action. The trial court dismissed the cause of action for common-law indemnification, but it found that there were questions of fact that precluded dismissal as to the allegations of contractual indemnification. G & C appealed.

Statutory Framework

The appellate court set the statutory framework for the dispute, observing that N.Y. Workers’ Comp. Law § 11 prohibits third-party claims for indemnification against an employer except, as relevant here, where there is a written contract entered into prior to the accident or occurrence by which the employer had expressly agreed to contribution or indemnification. Moreover, the court noted that an indemnification agreement that is executed after a plaintiff’s accident may only be applied retroactively where it is established that (1) the agreement was made as of a date prior to the accident and (2) the parties intended the agreement to apply as of that prior date.

The Hold Harmless Agreement

G & C submitted a hold harmless agreement dated January 1, 2016 that had been signed by its president, Frank Lorica, and by the bookkeeper for The Krug Group Corp. In a deposition, Lorica asserted that he actually signed the agreement on May 17, 2016—five days after plaintiff’s accident—when the bookkeeper sent him an email requesting that he execute the agreement and date it January 1, 2016, as the bookkeeper needed the forms on an annual basis. Lorica testified that he and the bookkeeper did not discuss the agreement and that it was not his intention to take on any obligation that pre-dated his execution of the agreement.

What Was the Intended Effective Date?

The court observed that Lorica placed his signature on a line next to where the date, January 1, 2016, had been typed and that Lorica had not objected to the date. The agreement was silent as to retroactivity. It did not expressly state its effective date. Under these circumstances, the appellate court there were questions of fact regarding whether the parties had entered into an indemnification agreement prior to plaintiff’s accident and whether they intended the written agreement to apply retroactively. Accordingly, the trial court properly denied that portion of G & C’s motion that sought dismissal of the contractual indemnification claim.