KRAFT FOODS INC v. PERRY CONSTRUCTION INC (2003)

Plaintiff commenced this breach of contract action seeking to recover costs and attorney's fees incurred in prosecuting an underlying Labor Law action, as well as costs and attorney's fees incurred in prosecuting this action.   The complaint alleges the breach of an indemnity agreement that not only obligates defendant to indemnify and hold plaintiff harmless from any liability under the Labor Law, but also provides that, “[i]n the event that [defendant] shall fail or refuse to defend any such claim or action, [defendant] shall be liable to [plaintiff] for all costs of [plaintiff] in defending such claim or action and all costs of [plaintiff] including attorney ['s] fees [incurred] in recovering such defense costs from [defendant].”   Plaintiff moved for partial summary judgment on the issue of liability for costs and attorney's fees in both the underlying Labor Law action and this action, and defendant cross-moved for summary judgment dismissing plaintiff's complaint.

Supreme Court properly granted that part of plaintiff's motion for partial summary judgment on defendant's liability for costs and attorney's fees in the underlying Labor Law action.   The court erred, however, in granting that part of plaintiff's motion for partial summary judgment on defendant's liability for costs and attorney's fees incurred in seeking recovery from defendant in this action.   Defendant has raised issues of fact concerning plaintiff's performance under the contract, i.e., whether plaintiff properly tendered its defense and whether defendant failed or refused to defend plaintiff in the underlying action, thereby breaching the agreement.

We therefore modify the order by denying that part of plaintiff's motion for partial summary judgment on the issue of liability for costs and attorney's fees incurred in prosecuting this action.

It is hereby ORDERED that the order so appealed from be and the same hereby is unanimously modified on the law by denying that part of plaintiff's motion for partial summary judgment on the issue of liability for costs and attorney's fees incurred in prosecuting this action and as modified the order is affirmed without costs.

MEMORANDUM: