Legal Memorandum: Liabilities of Building Owners in NY

Issue: Under New York law, must a company that contracted to service an elevator indemnify a building owner against any damages awarded against the building owner in a claim for damages due to the elevator stopping abruptly?

           In Rogers v. Dorchester Associates, 32 NY.2d 553, 347 N.Y.S.2d 22 (App. 1973) the building owner had entered into a written contract with Otis Elevator Company whereby Otis undertook to “regularly and systematically examine, adjust [and] lubricate elevator machinery” and to “repair and replace” parts if required in Otis’ judgment, and to “use all reasonable care to maintain the elevator equipment in proper and safe operating condition.”  Also, the contract provided that all equipment would remain within the “possession and control” of the owner and that “under no circumstances shall we [Otis] be liable for consequential damages.”  Id. at ___, 347 N.Y.S.2d at 25.  Further, the evidence presented at trial established that none of the building employees were allowed to perform repairs on the elevator, but would shut down the elevator and call Otis in the event of problems.  In short, all maintenance of the elevators was handles exclusively by Otis.  Id. at ___, 347 N.Y.S.2d at 26.  Based on these contractual provisions, it was held that the building owner was entitled to be indemnified by Otis for the full amount of any damages awarded against the building owner by virtue of its nondelagable duty to the plaintiff.  Id. at ___, 347 N.Y.S.2d at 30.

Otis’s argument in Rogers that the warranty disclaimer set forth in the contract precluded indemnification was rejected on grounds of (i) section 5-323 of the General Obligations Law, which prevents an independent contractor from exempting itself from liability for its own negligence […]