SUPREME COURT OF THE STATE OF NEW YORK
Appellate Division, Fourth Judicial Department
664
CA 13-02212
PRESENT: CENTRA, J.P., FAHEY, PERADOTTO, SCONIERS, AND DEJOSEPH, JJ.
ARTHUR E. BIGELOW, AS ADMINISTRATOR OF THE
ESTATE OF TERRANCE BIGELOW, DECEASED,
PLAINTIFF,
V MEMORANDUM AND ORDER
GENERAL ELECTRIC COMPANY, ET AL., DEFENDANTS.
---------------------------------------------
GENERAL ELECTRIC COMPANY, THIRD-PARTY
PLAINTIFF-APPELLANT,
V
CARRIER CORPORATION, THIRD-PARTY
DEFENDANT-RESPONDENT.
GOLDBERG SEGALLA LLP, BUFFALO (JOHN P. FREEDENBERG OF COUNSEL), FOR
THIRD-PARTY PLAINTIFF-APPELLANT.
BURDEN, GULISANO & HICKEY, LLC, BUFFALO (JONATHAN S. HICKEY OF COUNSEL),
FOR THIRD-PARTY DEFENDANT-RESPONDENT.
Appeal from an order of the Supreme Court, Genesee County (Robert
C. Noonan, A.J.), entered February 6, 2013. The order, among other things,
denied the motion of third-party plaintiff for summary judgment granting
common-law indemnification and granted the cross motion of third-party
defendant for summary judgment dismissing the third-party complaint.
It is hereby ORDERED that the order so appealed from is unanimously
affirmed without costs.
Memorandum: In 2005 plaintiff=s decedent was injured in a fire in
his mobile home, and he died from those injuries nine days later. The
fire originated in the area of an electrical outlet with a window air
conditioning unit plugged into it, and an investigation conducted by the
Genesee County Sheriff=s Office concluded that the cause of the fire was
most likely electrical in nature. The subject air conditioning unit was
manufactured by third-party defendant, Carrier Corporation (Carrier),
and marketed and sold by defendant-third-party plaintiff, General Electric
Company (GE), under its brand name. Plaintiff commenced this negligence
and strict products liability action against three defendants, including
GE, on the theory that the fire was caused by the allegedly defective
air conditioning unit. When Carrier refused to provide a defense and
indemnification for GE in the main action, GE commenced this third-party
-2- 664
CA 13-02212
action seeking, inter alia, common-law indemnification from Carrier in
the underlying action.
GE thereafter moved for summary judgment granting Acommon[-]law
indemnification for all potential liability which may arise with respect
to plaintiff=s claims,@ and sought reimbursement from Carrier for all fees,
costs, and expenses incurred by GE in defending the underlying action.
Carrier cross-moved for summary judgment dismissing the third-party
complaint on the ground that there had been no determination that GE or
Carrier was liable for decedent=s injuries and, further, that there was
no evidence that the subject air conditioning unit was defective. GE
also moved for summary judgment dismissing the complaint in the main
action, and Carrier joined in that request by way of a cross motion.
In a single decision, the court granted GE=s motion in the underlying
action, concluding that the air conditioning unit was not defective and
that the fire was likely caused by a faulty wiring at the outlet and granted
Carrier=s cross motion to dismiss the third-party complaint, concluding
that GE was not entitled to common-law indemnification from Carrier because
there was no finding of fault on the part of Carrier.
The issue in this case is whether GE, a downstream retailer, is
entitled to recoup its costs in defending a products liability action
from Carrier, an upstream manufacturer, when they both are ultimately
absolved of liability. We conclude that GE is not entitled to recoupment,
and we therefore affirm.
Indemnification is grounded in the equitable principle that the party
who has committed a wrong should pay for the consequences of that wrong
(see North Star Reins. Corp. v Continental Ins. Co., 82 NY2d 281, 291;
Oceanic Steam Nav. Co. [Ltd.] v Compania Transatlantica Espanola, 134
NY 461, 468). Thus, New York courts have consistently held that
Acommon-law indemnification lies only against those who are actually at
fault@ (Nourse v Fulton County Community Heritage Corp., 2 AD3d 1121,
1122 [emphasis added]; see Colyer v K Mart Corp., 273 AD2d 809, 810),
i.e., the Aactual wrongdoer@ (Trustees of Columbia Univ. v
Mitchell/Giurgola Assoc., 109 AD2d 449, 451 [emphasis added]). In the
products liability context, a manufacturer is held accountable as a
Awrongdoer@ when it releases a defective product into the stream of commerce
(see Rosado v Proctor & Schwartz, 66 NY2d 21, 25-26), and Ainnocent@ sellers
who merely distribute the defective product are entitled to
indemnification from the at-fault manufacturer (see Godoy v Abamaster
of Miami, 302 AD2d 57, 62, lv dismissed 100 NY2d 614). That common-law
right of indemnification Aencompasses the right to recover attorneys= fees,
costs, and disbursements incurred in connection with defending the suit
brought by the injured party@ (Chapel v Mitchell, 84 NY2d 345, 347; see
Lowe v Dollar Tree Stores, Inc., 40 AD3d 264, 265, lv dismissed 9 NY3d
891; Colyer, 273 AD2d at 810).
Although there are no state court cases in New York that directly
address the issue presented here, we note that federal courts and the
vast majority of courts in other states have concluded that, in the absence
of fault on the part of the manufacturer for producing a defective product,
there is no implied right to indemnification for defense costs assumed
-3- 664
CA 13-02212
by downstream distributors (see e.g. Innovation Ventures, LLC v Ultimate
One Distrib. Corp., ___ F Supp 2d ___, ___ [ED NY]; Luna v American Airlines,
769 F Supp 2d 231, 239 [SD NY]; Papas v Kohler Co., Inc., 581 F Supp 1272,
1274 [Pa]; Merck & Co., Inc. v Knox Glass, Inc., 328 F Supp 374, 378 [Pa];
Clark v Hauck Mfg. Co., 910 SW2d 247, 252-253, overruled on other grounds
by Martin v Ohio County Hosp., 295 SW3d 104 [Ky]; Krasny-Kaplan Corp.
v Flo-Tork, Inc., 66 Ohio St 3d 75, 78-80, 609 NE2d 152, 154-155; Borchard
v WEFCO, Inc., 112 Idaho 555, 559, 733 P2d 776, 780; Greenland v Ford
Motor Co., Inc., 115 NH 564, 571, 347 A2d 159, 165; SEMCO Energy, Inc.
v Eclipse, Inc., 2012 WL 6049655, *6-7 [Mich App]; Automatic Time & Control
Co., Inc. v ifm Electronics, 410 Pa Super 437, 438-442, 600 A2d 220,
221-223; Oates v Diamond Shamrock Corp., 23 Mass App Ct 446, 448-449,
503 NE2d 58, 59-60, review denied 399 Mass 1104). In our view, those
cases are persuasive and in accord with New York law on common-law
indemnification and sound considerations of public policy.
Where, as here, it is ultimately determined that the subject product
is free from defect, there is no Afault@ or Awrongdoing@ on the part of
the manufacturer (see generally Rosado, 66 NY2d at 25-26). In that
situation, we see no valid basis for shifting the retailer=s defense costs
onto the manufacturer inasmuch as both the retailer and the manufacturer
are innocent parties. Thus, Athe retailer is in a position no different
from that of any other defendant forced to defend against spurious claims@
(Hanover Ltd. v Cessna Aircraft Co., 758 P2d 443, 448 [Utah App]). We
therefore conclude that the
A >general rule [that] attorneys= fees and disbursements are incidents of
litigation= @ and that each litigant is required to bear its own costs
should apply (Mount Vernon City Sch. Dist. v Nova Cas. Co., 19 NY3d 28,
39; see Papas, 581 F Supp at 1274; Oates, 23 Mass App Ct at 448-449, 503
NE2d at 59-60). To hold otherwise would require manufacturers to Abecome
the insurer of [the] seller=s defense costs, irrespective of whether the
product was defectively manufactured@ (Merck & Co., Inc., 328 F Supp at
378; see Greenland, 115 NH at 571, 347 A2d at 165; Automatic Time & Control
Co., Inc., 410 Pa Super at 440, 600 A2d at 222). We decline to adopt
such a rule.
Entered: August 8, 2014 Frances E. Cafarell
Clerk of the Court