Rosado v. Proctor & Schwartz, Inc.

OPINION OF THE COURT Fein, J. The facts are fairly stated in the dissent. It is conceded that no claim for contribution is now available. Any such claim, founded upon negligence, has been extinguished by reason of the settlement of plaintiff’s claims against the third-party defendant (Comet) and the third-party plaintiff (Proctor) (General Obligations Law, § 15-108, subds [b], [c]; McDermott v City of New York, 50 NY2d 211, 220). The only issue is whether Comet can be held liable to indemnify Proctor, either (1) under the terms of the contract between them, which it is conceded contains no provision for indemnification, or (2) upon the basis of implied indemnity. One of the causes of action pleaded by plaintiff against Proctor, the manufacturer of the equipment, was premised on the theory of strict liability. Proctor now asserts that had the jury [28] rendered a verdict for the plaintiff against Proctor on strict liability, Proctor would have been entitled to indemnification from Comet, plaintiff’s employer who purchased the equipment from Proctor. As the dissent concedes, no basis for contractual indemnification can be found, since there is no explicit agreement by Comet (the purchaser and plaintiff’s employer) to indemnify or hold the manufacturer harmless (Levine v Shell Oil Co., 28 NY2d 205; Pahlavi Foundation v Metropolitan Life Ins. Co., 90 AD2d 730; Margolin v New York Life Ins. Co., 32 NY2d 149; Vey v Port Auth., 54 NY2d 221). The manufacturer contends that strict products liability is a species of absolute liability without fault so that if it were to be held liable to plaintiff under strict liability, it would be entitled to recover on the basis of implied indemnity from Comet, which undertook to install the safety guards and is alleged to have been primarily responsible for any improper installation. It cannot be concluded that strict tort liability imposes liability without fault, albeit a plaintiff in such a case need not prove negligence (Cover v Cohen, 61 NY2d 261, 270). It is plain that strict liability requires proof that the product was defective when it left the hands of the manufacturer, whether the defect consisted of a mistake in manufacture, a design defect, or the absence or inadequacy of warnings as to the use of the product. As stated in Codling v Paglia (32 NY2d 330, 342): “We accordingly hold that, under a doctrine of strict products liability, the manufacturer of a defective product is liable to any person injured or damaged if the defect was a substantial factor in bringing about his injury or damages”. The rationale for such doctrine is stated in that case (at pp 340-341): “In today’s world, it is often only the manufacturer who can fairly be said to know and to understand when an article is suitably designed and safely made for its intended purpose. * * * We are accordingly persuaded that from the standpoint of justice as regards the operating aspect of today’s products, responsibilities should be laid on the manufacturer, subject to the limitations we set forth.” Although strict liability may not require proof of fault in the negligence sense, it is nonetheless founded upon a species of fault. A manufacturer who launches or places a defective product on the market is liable because he has breached a duty to those who use the product and who are injured by reason of the defect (Micallef v Miehle Co., 39 NY2d 376; Voss v Black & Decker Mfg. Co., 59 NY2d 102,107). It is not a species of liability without fault. Nor is it a form of vicarious liability for the [29] wrongdoing of another, imposed as a matter of social policy, such as the liability of an employer for the acts of an employee, or of an owner of a vehicle for the acts of the driver, or of an owner for the acts of a contractor. This has nothing to do with the liability of Proctor, the manufacturer here. Its liability is founded upon its breach of duty to the plaintiff, imposed by the doctrine of strict liability. Proctor is here seeking to shift its liability to Comet because of their contract. Thus, the dissent’s reliance upon Garrett v Holiday Inns (86 AD2d 469) is misplaced. There it was alleged that the municipal authorities were negligent in issuing a certificate of occupancy to prior owners falsely certifying that the building complied with fire laws. It was held that lessees and new owners of the premises were not entitled to indemnification from the city for the amounts paid by them to plaintiffs injured on the premises in a fire which occurred by reason of the defective condition. The municipal authorities owed no duty to the plaintiff, nor did they owe a duty to the owner of the premises. Here, both Comet, the purchaser, and Proctor, the manufacturer and seller, owed a duty to plaintiff, Comet’s employee. Each breached its duty. What is really being sought is contribution, not indemnity. As Garrett (supra) holds, implied indemnity, relied on here, is a restitution concept which permits shifting the costs, because to fail to do so would result in the unjust enrichment of one party at the expense of the other. Indemnity can be sustained only if the third-party plaintiff and the third-party defendant have breached a duty to plaintiff and some duty to indemnify exists between them (Garrett v Holiday Inns, 86 AD2d, at p 471). In Garrett there was no unjust enrichment of the municipal authorities by denying indemnity to the owner of the premises. No duty to indemnify is shown here. Nor is McDermott v City of New York (supra), relied upon in the dissenting and concurring opinions, to the contrary. In that case the sanitation worker was injured while using equipment sold by the manufacturer to the City of New York with a latent defect. The worker was injured 19 days after delivery of the equipment to the city. The city was found entitled to indemnification because the manufacturer had breached a duty to the injured sanitation worker and was therefore responsible for the damages the city had to pay on account of that breach of duty. The obligation of the manufacturer to the employee was the foundation of its liability for indemnification (McDermott v City of New York, 50 NY2d 211, 218, 219, nn 4, 5, supra). Here, the breach of duty to the employee was that of the manufacturer who now seeks to recover from its purchaser, [30] plaintiff’s employer, based upon the contract between them. At best for the manufacturer, the alleged failure of the purchaser to perform the duty which strict liability imposed upon the manufacturer amounted to a breach of their contract. But since the law is clear that in New York there is no liability to indemnify unless it is plainly spelled out in the contract (Levine v Shell Oil Co., supra; Margolin v New York Life Ins. Co., supra), no basis exists for finding implied indemnity. Moreover, both the manufacturer and the purchaser were at fault, and thus, the claim is for contribution and not indemnity, albeit Proctor asserts its claim is for indemnity (Garrett v Holiday Inns, 86 AD2d 469, 471, supra; McDermott v City of New York, supra; County of Westchester v Becket Assoc., 102 AD2d 34, 45-47). Moreover, there is no triable issue as to whether the case is one for products liability. In McDermott (supra), the product malfunctioned due to a latent defect. Whatever the liability of the city, it was not premised upon its failure properly to design the equipment. The duty breached, upon which indemnification was based, was the duty of the manufacturer not to place on the market a piece of equipment which was defective in design, albeit the defect was latent. No reason exists why Proctor, the manufacturer here, should be permitted to shift liability to Comet, the purchaser, where the agreement between them imposed no duty of indemnification. Each breached a different duty. Had the parties intended indemnification, their contract could have clearly so provided. No theory of implied indemnity should be invoked to add a provision to a contract which fails to provide indemnity. There is no unjust enrichment in denying indemnity. Proctor & Schwartz v United States Equip. Co. (624 F2d 771), relied upon in the dissent, was decided under Michigan law. There is no authority to the same effect in New York. In that case, the same manufacturer, relying upon the same contract as that involved here, was found entitled to indemnity from an employer who purchased the machine. However, the Sixth Circuit held that a manufacturer’s duty to the consumer may be delegated to the consumer because he is in the best position to install the necessary safety devices. This is contrary to the New York products liability cases holding that the duty rests upon the manufacturer because of his superior knowledge and ability to design and install adequate safety devices (Codling v Paglia, supra). Robinson v Reed-Prentice Div. (49 NY2d 471) makes this clear in another context (at p 480): “[T]he manufacturer is in a [31] superior position to anticipate the reasonable use to which his product may be put and is obliged to assure that no harm will befall those who use the product in such a manner. It is the manufacturer who must bear the responsibility if its purposeful design choice presents an unreasonable danger to users.” In that case, the manufacturer escaped liability solely because the owner-purchaser of the equipment had so modified it as to defeat the safety devices. Cox v Cordice (90 AD2d 297), also relied upon by the dissent, is not to the contrary. A hospital was held liable for negligent diagnosis by a pathologist under contract to the hospital. Obviously, the liability of the hospital was dependent upon the acts of its employees or contractors, since it could only act through such persons. The hospital’s liability flowed from those persons’ breach of duty, and hence, the duty imposed upon the hospital to respond in damages for their malpractice entitled the hospital to indemnity even in the absence of an express contract to that effect. The effect of the dissent’s proposed reinstatement of the cause of action for indemnity in the amended third-party complaint could only result in a mock trial. The plaintiff has settled out of the case as against the third-party plaintiff and the third-party defendant, and obviously has no further interest in litigating the claim. In effect, the trial would consist of an effort by the third-party plaintiff to establish either that there was no defect in the equipment that it manufactured and sold, or that if there was such a defect it was the duty of its purchaser to correct the defect. Obviously, this is an attempt to shift a duty imposed by law, not on the basis of vicarious liability but on the basis of a contract lacking any provision for indemnity. A boiler plate provision in a contract requiring the purchaser to install safety devices should not give rise to a claim for indemnity. Nor is there any basis for finding implied indemnity under the circumstances. To hold otherwise would defeat the salutory purposes of the doctrine of strict products liability. Order of Supreme Court, New York County (Orest V. Maresca, J.), entered July 27,1983, granting third-party defendant’s motion to dismiss the second cause of action asserted in the amended third-party complaint, should be affirmed, with costs.