Property owner wins indemnification

546 West 44th Street. Image Credit: Google Maps.

Property owner sued general contractor and design consultant for indemnification of costs resulting from violations of federal, state, and local disabilities law. CREF 546 owned property located at 546 West 44th Street in Manhattan and hired developers to construct two fourteen-story residential midrise apartment buildings that shared amenities. CREF 546 contracted with Code Consultants to review design and construction documents and Hudson Meridian as their general contractor. The building became occupied in 2016.

In 2018, a disabled wheelchair-using resident of the building successfully sued CREF 546, the owner of the buildings, establishing that CREF 546’s apartment building did not meet federal, State, and local accessibility requirements.  The resident obtained relief requiring accessibility to the building as well as compensatory and punitive damages.

CREF 546 then sought indemnification from both its general contractor, Hudson Meridian, and its design consultant, Code Consultants. CREF 546 invoked the indemnification clauses of their contracts for the cost of correcting the disability deficiencies and for costs related to the resident suit.  CREF 546 alleged that Code Consultant and Hudson Meridian breached their agreements by failing to ensure that the buildings complied with state and federal accessibility requirements.  Hudson Meridian and Code Consultants moved to dismiss CREF 546’s complaints.

Supreme Court Justice Gerald Lebovits rejected Hudson Meridian and Code Consultants’ arguments and upheld CREF 546’s claims under State and local law. The court ruled that the contract’s indemnification agreements may be upheld as long as the violation of State and local law was not intentional. Judge Lebovits, however, dismissed CREF 546’s claims under federal law, ruling that federal law placed the duty to comply on the building’s owner and that duty is a non-indemnifiable, non-delegable duty.

Judge Lebovits ordered the case to continue to trial.

CREF 546 West 44th Street v. Hudson Meridian Constr. Group, 128 N.Y.S.3d 829 (Sup. Ct. N.Y. Cty 2020).

By: Gianfranco Spinelli (Gianfranco is a New York Law School student, Class of 2023.)


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