Week of June 4-10

In Cano v. Mid-Valley Oil Co., Inc., the Second Department addressed both issues of liability and damages in a Labor Law 240(1) case as well as contractual indemnification. In Cano, the plaintiff claimed that he sustained injuries at a construction site when he was working on an unsecured ladder and fell to the ground. Plaintiff sued the owner of the property (Drake Petroleum) as well as Warex, which was a sister company to Drake and which had signed the construction contract with plaintiff’s employer, Adventura. Drake, in turn, commenced a third-party action against Adventura for contractual indemnification. In opposition to summary judgment on Labor Law 240(1), Drake merely argued that the plaintiff’s credibility was called into question because he was an undocumented immigrant who failed to pay taxes and who had utilized a coworker’s name to obtain health insurance after the accident. The lower court apparently agreed and denied summary judgment. The case then proceeded to trial, where a jury found that Drake did not violate 240(1) but had violated 241(6). The jury apportioned fault, 75% to Drake and 25% to the plaintiff. After a subsequent trial on damages, the jury awarded $100,000 for past pain and suffering, $375,000 for future pain and suffering, $700,000 for past medical expenses, $1,515,000 for future medical expenses, $150,000 for past lost earnings and $160,000 for future lost earnings.

Drake moved, pursuant to CPLR 4404, to set aside the jury’s verdict awards. The trial court reduced the awards of past and future medical expense to the principal sums of $250,000 and $600,000, respectively. Additionally, the court granted judgment in favor of Drake and against Adventura, finding that Adventura was obligated to indemnify Drake based upon the indemnification provision in Adventura’s construction contract with Warex. All parties appealed.

On appeal, the appellate court reversed the lower court on issues of liability, finding that the lower court should have granted plaintiff’s motion for summary judgment on the issue of liability on his Labor Law 240(1) cause of action. According to the court, issues regarding plaintiff’s immigrant status, his failure to pay taxes, and the fact that he had used a co-worker’s name to obtain insurance, did not present an issue relating to the plaintiff’s credibility “as to any material fact.” Additionally, because contributory negligence will not exonerate a defendant who has violated Labor Law 240(1), the jury’s finding of comparative fault was also vacated.

With respect to the award of contractual indemnity, the appellate court found that the trial court had incorrectly granted judgment in favor of Drake and against Adventura. As the court explained, the words in the contract “are to be construed to achieve the apparent purposes of the parties,” especially when a party is under no legal duty to indemnify except by contract (plaintiff did not sustain a “grave injury”). In this case, even though Drake was the ”Owner” of the property, the contract listed Warex as the “Owner” and, thus, the only parties to the agreement were Adventura and Warex. There was no provision in the contract that extended the indemnity agreement to the agents or affiliates of Warex. “Had Drake, which was affiliated with Warex, wanted to be included under the agreement as the owner, it could easily have substituted its name for Warex’s at the time Adventura and Warex reached their agreement with regards to Adventura acting as the construction project’s general contractor.” Thus, Drake was not entitled to an award of contractual indemnification from Adventura.

As for plaintiff’s damages, the appellate court found that the amounts awarded by the jury for past and future pain and suffering deviated materially from what would be reasonable compensation, and actually significantly increased those awards. At trial, the plaintiff’s evidence demonstrated that he underwent surgery to repair a comminuted fracture in his dominant wrist. He continued to suffer limited range of motion in his wrist and lost almost all range of motion in his left pinky. He also had two separate spinal fusion surgeries, and his back pain did not improve. He also experienced significant restrictions in his range of motion. None of the defendants presented any evidence at trial despite the fact that the plaintiff, in addition to offering his own testimony, offered the testimony of a specialist in hand surgery with experience in back surgery, and the testimony of a vocational rehabilitation specialist. The court held that the plaintiff was entitled to $1,000,000 for past pain and suffering and $2,5000,000 for future pain and suffering, a significant increase from the jury’s award.

Relying on this case, we should more closely look at contractual indemnity provisions in contracts and determine which parties actually entered into the contract. If a party seeking contractual indemnification was not a party to the contract, and was not included in the contractual indemnification provision, we should oppose any such relief.

This case also demonstrates that a court will look solely at the injuries sustained by the plaintiff, and will disregard any extraneous facts which do not have a direct impact on liability or damages, i.e., the fact that plaintiff lied to obtain health insurance coverage, and that we must present expert testimony at trial to address plaintiff’s claimed damages, especially when liability will likely be strictly imposed.