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The Leasing Hotline
Indemnification Permitted
Where parties freely enter into an indemnification agreement whereby they use insurance to allocate the risk of liability, indemnification is not prohibited. Great Northern Insurance Co. v. Interior Construction Corp., et al., No. 117, New York Court of Appeals, Oct. 19, 2006.
New Water leased a portion of its building to Depository Trust. The lease required Depository to indemnify New Water from any and all claims arising from or in connection with, inter alia, any accident occurring in Depository's premises unless solely caused by New Water's negligence. After entering into the lease, Depository commenced construction on the premises and caused a flood that damaged property of another tenant, Neuberger. Thereafter, Great Northern Insurance Company (Neuberger's insurer) commenced a subrogation action against New Water and Depository to recover monies it had paid to Neuberger.
New Water interposed a cross-claim against Depository for contractual indemnification. New Water moved for summary judgment against Depository. The trial court denied the motion, and the appellate court reversed. The highest court affirmed the appellate division. It held that the indemnification clause was properly triggered because the parties stipulated that Depository was 90% responsible for the flood. It held that where parties freely enter into an indemnification agreement whereby they use insurance to allocate the risk of liability, indemnification is not prohibited.
Indemnification Permitted
Where parties freely enter into an indemnification agreement whereby they use insurance to allocate the risk of liability, indemnification is not prohibited. Great Northern Insurance Co. v. Interior Construction Corp., et al., No. 117,
New Water leased a portion of its building to Depository Trust. The lease required Depository to indemnify New Water from any and all claims arising from or in connection with, inter alia, any accident occurring in Depository's premises unless solely caused by New Water's negligence. After entering into the lease, Depository commenced construction on the premises and caused a flood that damaged property of another tenant, Neuberger. Thereafter, Great Northern Insurance Company (Neuberger's insurer) commenced a subrogation action against New Water and Depository to recover monies it had paid to Neuberger.
New Water interposed a cross-claim against Depository for contractual indemnification. New Water moved for summary judgment against Depository. The trial court denied the motion, and the appellate court reversed. The highest court affirmed the appellate division. It held that the indemnification clause was properly triggered because the parties stipulated that Depository was 90% responsible for the flood. It held that where parties freely enter into an indemnification agreement whereby they use insurance to allocate the risk of liability, indemnification is not prohibited.
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