Estate of Robert Liss v. Sage Systems, Inc., 175 A.D.3d 1147 (N.Y. App. Div. 2019)
Oct 20, 2022OUTCOME: Order reversed, with costs, plaintiff's motion for summary judgment denied and defendant's motion for summary judgment dismissing the complaint granted.
Plaintiff Sage Systems, Inc. and Robert Liss entered a partnership agreement to purchase a commercial cooperative unit. Section 13.02 (b) of the agreement is the indemnification provision, and provides ... , in relevant part: "The Partnership and the other Partners shall be indemnified and held harmless by each Partner from and against any and all claims, demands, liabilities, costs, damages, expenses and causes of action of any nature whatsoever arising out of or incidental to any act performed by a Partner which is not performed in good faith or is not [*2]reasonably believed by such Partner to be in the best interests of the Partnership and within the scope of authority conferred upon such Partner under this Agreement, or which arises out of the fraud, bad faith, willful misconduct or negligence of such Partner." Decades later, Robert Liss unsuccessfully brought a partnership dissolution action. Sage commenced this action against Liss seeking attorney's fees and costs incurred defending the dissolution action. Sage moved for summary judgment. Michael Liss, the substitute defendant in his role as executor of the Estate for now-deceased Robert Liss, cross-moved for summary judgment, arguing that the partnership agreement did not provide for attorney's fees and did not apply to actions between the partners. The court granted Sage's motion, concluding that the indemnification provision applies such that Sage was entitled to attorney's fees and that commencement of the prior dissolution action by Robert Liss constituted bad faith under section 13.02 (b). The Appellate Division affirmed (193 AD3d 624 [1st Dept 2021]). We granted the Executor leave to appeal (37 NY3d 912 [2021]). The Estate claims that it is entitled to summary judgment dismissing the complaint because the agreement does not provide for attorney's fees in this context. For its part, Sage argues that the indemnification provision's broad, unrestrictive language demonstrates the parties' clear intent to provide attorney's fees related to direct claims between them. The Court agreed with the Estate that the provision does not permit Sage to recover its attorney's fees incurred in the prior dissolution action and reversed the order, with costs, denied plaintiff's motion for summary judgment and granted defendant's motion for summary judgment dismissing the complaint. granted.
