NY Practice - Third Party Practice, Contribution and Indemnification Flashcards
IMPLEADER
IMPLEADER is a procedural device used by D to join another party alleged to be liable in whole or in part to D for damages that D may have to pay P. The usual claim in these circumstances is for INDEMNITY or CONTRIBUTION, both of which involve claims by D for reimbursement arising out of the SAME TRANSACTION OR OCCURRENCE as the P’s COA. Rather than forcing D to wait until after she has paid a judgment to P, impleader enables D to join the other party as a THIRD-PARTY DEFENDANT (TPD). – In relation to TPD, D is referred to as a THIRD PARTY PLAINTIFF
Mechanics of IMPLEADER - How does D join a THIRD PARTY DEFENDANT?
D does not need a court order, i.e. no need to make a motion. D may implead TPD at any time after the D serves the ANSWER to the complaint.
Steps for JOINING a TPD
(1) FILE a summons and 3rd party complaint
(2) SERVE: within 120 days of the filing, D serves a copy of summons and 3rd party complaint on D (same reqs of basis of jurisdiction and proper service apply)
Plaintiff is also entitled to a copy of all papers served on TPD
TPD must then serve third-party ANSWER on D, P and all other parties who have appeared in the action. TPD’s time limit for answering is the same that would apply to an ordinary D. (ie 20 or 30 days depending on how TPD was served)
Plaintiff v. THIRD PARTY DEFENDANT
After TPD is joined, P may AMEND HER COMPLAINT to assert a claim directly against TPD, thereby making TPD an additional D in P’s action.
(P can make this amendment without the need to obtain judicial permission if she does so WITHIN 20 days after P was served with TP Answer. If P waits beyond 20 days, P must make motion to get court’s permission for such amendment)
How should S/L be applied with respect to P’s newly added claim against TPD?
GENERAL RULE for measuring compliance with S/L for claim in amended complaint -
To comply with applicable S/L general ruls is that DATE OF AMENDMENT must occur within S/L
EXCEPTION: Relation Back Benefit for Impleader-Related Claims
- For S/L purposes, P’s added claim against TPD will be DEEMED interposed on the date TPD was impleaded (when D filed impleader papers) PROVIDED:
(1) P’s claim against TPD is based on SAME TRANSACTION OR OCCURRENCE as the impleader claim AND
(2) The P’s claim on TPD would have been timely on the date of the impleader
- For S/L purposes, P’s added claim against TPD will be DEEMED interposed on the date TPD was impleaded (when D filed impleader papers) PROVIDED:
Thus, regardless of when P actually asserts his related claim aginst TPD, the amendment will RELATE BACK for S/L purposes to the date that D impleaded TPD
e. g. Car driven by Ari, Drama and Turtle collidd at film festival on June 1, 2009. Ari sues Drama for his injuries on Apr 1, 2012 (under 3 yr wire) and Drama IMPLEADS Turtle for CONTRIBUTION on May 1, 2012. ON Aug 1, 2012, Ari seeks permission to amend complaint to assert a claim for injuries against turtle. is Ari’s claim against turtle time-barred?
- - NO, not time-barred bc Ari’s claim against turtle RELATES BACK to date on which DRAMA IMPLEADED turtle for S/L purposes bc
(1) based on same T&O and
(2) claims would have been timely on date of impleader
Rationale: no prejudice to TPD bc impleader claim basically gave him notice that P might sue him directly for this same occurrence
INDEMNITY
INDEMNITY allows one party to shift 100% of the responsibility to another party
(1) by CONTRACT - e.g. construction contract, subcontractor may agree to indemnify general contractor for any losses that contractor has to pay as a result of subcontractor’s inadequate performance in the construction contract.
(2) IMPLIED-IN-LAW INDEMNITY
(i) Products Liability - retailer held liable for selling defective product is ENTITLED to indemnity from manufacturer
(ii) Vicarious Liability Situations - e.g. in NY, owner of a car is vicariously liable for damages caused by negligent driving of any person to whom owner has given permission to drive the car. Owner who pays victim as result of vicarious liability is entitled to indemnity for driver
CONTRIBUTION
CONTRIBUTION - is the sharing of losses - ie apportionment - among multiple tortgeasors who are all actual participants in the tort. The purpose of contribution is to mitigate the harshness of the law of Joing and Several Liability
EACH TORTFEASOR can be held liable to P for the FULL AMOUNT of P’s damages without regard for individual tortfeasors %of fault.
Then the tortfeasor who paid full amount can sue other tortfeasors for CONTRIBUTION for their share of fault
e.g. if judgment for $100,000 - each torfeasor jointly and severally liable for full amt, then can sue for % contribution
Is an INTENTIONAL tortfeasor entitled to seek contribution?
Multi-State Rule: Contribution is NOT available when liability is based on an INTENTIONAL wrong-doing
***NY RULE: Allows contribution in ALL tort cases, including intentional torts
Ways to assert claims for CONTRIBUTION
(1) CROSS-CLAIMS - if P originally joined the tortfeasors as co-Ds, they can assert CROSS-CLAIMS
(2) IMPLEADER - If P omits a tortfeasor, D can IMPLEAD the outsider as TPD
(3) Tortfeasor may sue TPD in a separate action (in which case “Res Judicata” and “Collateral Estoppel” will NOT apply against TPD)
e.g. Assume Mike sues Vinny alone and gets a judgment for $100k. During trial, it was established that Pauly’s conduct also contributed to Mike’s injuries. If VInny timely sues Pauly in a separate action for CONTRIBUTION, would Pauly be bound by the findings of fact in the prior action of Mike v. Vinny?
NO - all those finding of fact not binding on other tortfeasors in separate action (weren’t there to defend/be heard) — THIS PROVIDES INCENTIVE TO JOIN TPDs in original action
Note: a party cannot assert COLLATERAL ESTOPPEL (“issue preclusion”) against a party who has now had her day in ct
- so impleader is wiser course bc then get res judicata and collateral estoppel
EQUAL SHARES FORMULA OF CONTRIBUTION
this is MINORITY VIEW - says the contribution shares are equal in amount regardless of % of fault for each tortfeasor
e..g Mike sues all three drives and jury finds Vinny 45% at fault, Pauly 35% at fault and Snooki 20% at fault. If Vinny pays full amt of judgment and seeks contribution he is entitled to $33,333 from each (individual % of fault irrelevant in these jurisdictions)
COMPARATIVE DEGREES OF FAULT
Multi-state and NY formula: Amount of contribution to which a tortfeasor is entitled is the excess actually paid by him over and above his equitable share (%) of the judgment
e.g. degrees of fault: Vinny 45%, Pauly 35%and Snooki 20%
if vinny pays whole 100k judgment he can get $35k from pauly, and $20k from snooki
BUT NOTE: a party from whom contribution is sought cannot be required to pay more than her equitable share
e.g. if Vinny seeks contribution from Pauly, but Pauly is insolvent, still can’t get more than $20k from Snooki
joint and several liability still allows P to come after any of the 3 for full amt
Substantive Law Rule for Contribution
The general rule is that a right to contribution exists whenever TPD breached a duty in tort which contributed to or aggravated the damages for which D may be held liable to P. Thus, D may seek contribution from TPD even if the injured P HAS NO RIGHT TO RECOVER AGAINST TPD
e. g. P, building owner, installed a fire alarm system manufactured by A. P also entered into a written contract with B for fire monitoring services. The contract with B limited B’s liability to GROSS NEGLIGENCE (no liability to P for ordinary negligence). In a fire at P’s building, the alarm system failed, and B negligently reported it too late to avoid catastrophic damages. Even though B is NOT LIABLE TO P because of the exculpatory clause in the monitoring contract, can B be held liable to A in CONTRIBUTION?
- -YES bc B’s negligence aggravated the damages for which A could be held liable to P and that is enough to sustain A’s contribution claim against B
Limitation on Contribution (and Indemnity) in WORKERS’ COMPENSATION Cases
Rationale: to minimize contribution and indemnity liability of employers
If an employee is injured on the job, she CANNOT sue employer, regardless of employer’s fault, because of WORKERS COMP law. However, employer CAN SUE a third person who is partially at fault for the accident - e.g. manufacturer of a product that the employee was using at the workplace when she was inured.
In these circumstances may the third person seek contribution or indemnity from P’s employer?
MULTI-STATE RULE: NO, 3rd person has no right to contribution or indemnity against the employer of P
***NY RULE: compromise rule - 3rd person generally has no right of contribution or indemnity for P’s employer UNLESS the P sustained “GRAVE INJURY”
“Grave Injury” - statutorily defined as: death, total loss of an arm, leg, hand, foot, nose, ear or index finder; total loss of multiple fingers or toes; paraplegia or quardiplegia; severe facial disfigurement, total deafness or blindness, or brain damage causing total disability
– NOTE: Ct of apps STRICTLY construes “grave injury” - e.g. loss of thumb, loss of tips of three fingers, blindness in one eye DO NOT COUNT
CONTRIBUTION in cases involving SUCCESSIVE TORTFEASORS
e.g. Mike gets in car accident with Vinny on June 1, 2009 and taken to hospital where doctor makes matters worse by tearing muscles. Mike sues vinny in Feb 2012, and Vinny impleads dr. in Aug 2012.
VInny is liable to Mike for all injuires proximately flowing from accident. However, bc Dr. made it worse, Vinny DOES HAVE A SUBSTANTIVE LAW BASIS for a contribution claim against the Dr.
Note on S/L: Vinny’s claim against Dr. is NOT BARRED by S/L bc this is NOT a med mal claim, it is a claim for CONTRIBUTION, and contribution has 6 yr S/L that begins once the payment is made (ie once Vinny pays out to Mike) so S/L hasn’t even begun to run yet.
Settlements in cases involving multiple tortfeasors
(1) No discharge of liability of non-settling tortfeasors - P’s pre-trial release of 1 tortfeasor in partial satisfaction of claim doesn’t discharge liability of other tortfeasors
(2) Law prohibits EXCESS RECOVERY for P, so any judgment for P against a non-settling tortfeasor will have to be reduced to cake account of the settlement
REDUCTION FORMULA: Any judgment for P against a non-settling tortfeasor must be reduced by EITHER:
(i) the amount of the settlement OR
(ii) the SETTLING TORTFEASOR’s equitable share of fault, WHICHEVER IS LARGER
e. g. mike gets $30k settlement with Pauly, and case against Snooki goes to trial and jury finds in Mike’s favor assessing $100 and apportioning fault at 10% for Pauly and 90% for Snooki. What is proper judgment to be ntered by Mike against Snooki?
- -$70k (either reduce by 10k or 30k - 30k greater)
What if Pauly was found to be 40% at fault and settled for $30k
-Snooki only has to pay $60k
What is the effect of SETTLEMENT on CONTRIBUTION CLAIMS?
A party who settles CANNOT be sued for CONTRIBUTION (rule intended to encourage settlement, but settling party also forfeits his own contribution right)
Note: non-settling party does get the benefit of contribution in a sense bc his liability in the first place is now reduced by % of fault or settlement amt. (whichever is greater)
e.g. Mike v. Pauly accident - continue to assume Pauly settled for $30k at trial, but jury found him only 10% at fault. Could pauly seek contribution for Snooki? NO! - he forfeited this by settling
