Opinion
01 Civ. 2427 (LAK)
July 11, 2001
ORDER
This is an action for breach of contract. Defendants have responded in part by counterclaiming for a determination that plaintiff would be obliged to indemnify them for liability and costs they might incur in two unrelated state court lawsuits brought against plaintiff and defendants by a third party (the "Prince Actions"). Plaintiff has moved to dismiss the counterclaims. Defendants have not responded to the motion.
The counterclaims were interposed in response to the complaint. Although plaintiff subsequently amended the complaint and defendants have not yet answered the amended complaint, plaintiff understands that the same counterclaims will be interposed in the answer to the amended complaint and urges the Court to treat the motion as directed to that pleading. As defendants have neither denied that they will interpose the same counterclaims nor objected to this procedure, the Court adopts plaintiff's suggestion.
The first counterclaim seeks indemnity for any amount for which defendants may be held liable in the Prince Actions. As a cause of action for indemnity arises under New York law only upon the payment of the primary liability by the putative indemnitee, e.g., Transportation Displays Inc. v. Winston, 870 F. Supp. 74, 76 (S.D.N.Y. 1994); Bay Ridge Air Rights, Inc. v. State of New York, 44 N.Y.2d 49, 53-54, 404 N.Y.S.2d 73, 74-75 (1978); Rubain v. City of New York, 182 A.D.2d 583, 582 N.Y.S.2d 435 (1st Dept. 1992); Chrysler First Financial Services Corp. v. Chicago Title Insurance Co., 156 Misc.2d 814, 820, 595 N.Y.S.2d 302, 306 (Sup.Ct.Nassau Co. 1993), this claim is premature.
The second counterclaim seeks indemnification for legal expenses expended in the defense of the Prince Actions to date and that are likely to be expended therein in the future. While the second counterclaim, to the extent it seeks indemnification with respect to expenses not yet paid, is premature for the reasons outlined above, the same cannot be said as to legal expenses already paid by the defendant. Plaintiff's estoppel claim is without merit because judicial estoppel requires not only that the party against whom the estoppel is asserted have taken inconsistent positions, but that it have obtained relief by its previous assertion of an inconsistent position — an element not alleged here. Nor is it clear that defendants' sole remedy for the costs of defending themselves in the Price Actions lies under Article 7 of the Business Corporation Law.
Accordingly, plaintiff's motion to dismiss the counterclaims is granted to the extent that the first counterclaim and so much of the second counterclaim as seeks a determination that plaintiff is obliged to indemnify the defendants for legal expenses paid in the defense of the Prince Actions after the date of the answer are dismissed. The motion is denied in all other respects.
SO ORDERED.