The New York Court of Appeals in Hooper Associates, Ltd. v. AGS Computers, Inc.1 established the principle that a claim under an indemnification clause for the recovery of attorney’s fees by one contracting party against the other is allowed only where the clause makes it “unmistakably clear” that it was intended to apply to disputes between the parties. In the more than 20 years since that decision, New York courts continue to be faced with considerable litigation on this issue. In almost all cases, such litigation arises because the indemnification clause at issue fails to address directly the issue of claims between the contracting parties. While in many cases this lack of clarity is a result of the push and pull of contract negotiations, with ambiguity being the accepted outcome, such ambiguity frequently falls short of satisfying the unmistakably clear standard.
A recent decision by Justice Eileen Bransten of the New York County Commercial Division in Gotham Partners, L.P. v. High River L.P.,2 and its subsequent review by the First Department, amply demonstrate the struggles that New York courts continue to have in applying the Hooper standard to indemnification clauses that do not directly address coverage for claims between the contracting parties.
The ‘Hooper’ Decision
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