David J. Tonking, et al. v. The Port Authority of New York and New Jersey, et al.

This case involves a dispute over the scope of an
indemnification clause in a renovation contract between the owner
of a building and a contractor. The agreement obligated the
contractor to indemnify the owner and, among others, the owner's

- 2 - No. 155

1Plaintiff obtained summary judgment on his Labor Law § 240
(1) claim against Port Authority and Bovis. Plaintiff received
workers' compensation benefits as a result of the accident.
Supreme Court noted that he did not sustain a "grave injury" as
defined in Workers' Compensation Law § 11. That issue is not
before us.

- 2 -

"agents" for certain claims arising out of the project. The
question before us is whether a firm that performed management
services for the owner qualified as the owner's agent under the
indemnification clause. We hold that it did not.
In 1999, the Port Authority of New York and New Jersey
entered into a renovation contract with V.P.H. Mechanical Corp.
for heating and ventilation work at One World Trade Center. As
owner, Port Authority also contracted with Bovis Lend Lease LMB,
Inc. f/k/a Lehrer McGovern Bovis, Inc. for certain construction
management services for the project. Plaintiff, an employee of
V.P.H., was injured on the job and sued Port Authority and Bovis,
alleging negligence and Labor Law violations.1

Port Authority commenced a third-party action against
Bovis, which in turn brought a third-party action against V.P.H.
Bovis acknowledged that it had no contractual relationship with
V.P.H., but asserted that it was nevertheless entitled to
contractual indemnification based on an indemnity clause in the
contract between V.P.H. and Port Authority. Supreme Court granted
V.P.H.'s motion to dismiss the third-party complaint against it,
concluding that Bovis was not entitled to indemnification. A
divided Appellate Division affirmed, as do we.

- 3 - No. 155
- 3 -

The outcome of this appeal turns on the language of the
contract and whether, as contracting parties, Port Authority and
V.P.H. intended the indemnification clause to benefit Bovis. The
relevant provisions read as follows:
"[V.P.H.] shall indemnify the Authority against
[certain losses] to the extent caused by the negligent
acts or omissions of [V.P.H.], including all expense
incurred by it in the defense, settlement or
satisfaction thereof, * * *. The provisions of this
numbered clause shall also be for the benefit of the
Commissioners, officers, agents and employees of the
Authority, so that they shall have all the rights which
they would have under this numbered clause if they were
named at each place above at which the Authority is
named, including a direct right of action against
[V.P.H.] to enforce the foregoing indemnity"
(emphasis ours).

The contract does not define the term "agent." Bovis
maintains that it qualifies as Port Authority's agent because the
Authority retained supervision and control over Bovis's work.
Pursuant to its contract with Port Authority, Bovis was required
to furnish the Authority with cost estimates and could start work
only after the Authority approved the estimates. Further, Port
Authority required Bovis to submit specifications and daily time
records and could not subcontract any of its work without the
Authority's prior written approval. Moreover, all copies of
documents and plans that Bovis generated became the property of
Port Authority.

In arguing that Bovis was not Port Authority's agent,
V.P.H. asserts that while the contract between the Authority and
V.P.H. refers to the "construction manager" more than 130 times,

- 4 - No. 155
- 4 -

the indemnification clause contains no reference to the
construction manger or to Bovis by name. V.P.H. further points
out that nowhere in the contract is the construction manager
referred to as an agent of Port Authority. V.P.H. also asserts
that in the section of the contract that prohibited V.P.H. from
giving gifts to Port Authority, the contracting parties used the
terms "agent" and "construction manager" as separate
classifications.

We agree with the Appellate Division majority. Bovis
has pieced together a number of factors that still fall short of
an indemnity obligation. In Hooper Assoc. v AGS Computers (74
NY2d 487 [1989]), we set forth the governing rule. There, the
issue was whether in a contract between a buyer and seller an
indemnity clause entitled the buyer to recover counsel fees. In
ruling against the plaintiff, we held that "[w]hen a party is
under no legal duty to indemnify, a contract assuming that
obligation must be strictly construed to avoid reading into it a
duty which the parties did not intend to be assumed" (id. at 491
[citing cases]). In the case before us, as in Hooper, the
language of the parties is not clear enough to enforce an
obligation to indemnify, and we are unwilling to rewrite the
contract and supply a specific obligation the parties themselves
did not spell out. If the parties intended to cover Bovis as a
potential indemnitee, they had only to say so unambiguously.
Our result is in keeping with the Omnibus Workers'

- 5 - No. 155
- 5 -

Compensation Reform Act of 1996 (L 1996, ch 635), by which the
Legislature limited employers' liability to third parties for
injury to their employees (see Castro v United Container
Machinery Group, Inc., 96 NY2d 398 [2001]). Where the plaintiff
has not sustained a "grave injury," section 11 of the Workers'
Compensation Law bars third-party actions against employers for
indemnification or contribution unless the third-party action is
for contractual indemnification pursuant to a written contract in
which the employer "expressly agreed" to indemnify the claimant.
Requiring the indemnification contract to be clear and express
furthers the spirit of the legislation.