Hooper Associates, Ltd. v. AGS Computers

In Hooper Associates, Ltd. v. AGS Computers (74 NY2d 487 [1989]) the Court of Appeals stated that: "words in a contract are to be construed to achieve the apparent purpose of the parties. Although the words might "seem to admit of a larger sense, yet they should be restrained to the particular occasion and to the particular object which the parties had in view" (Robertson v. Ongley Elec., 146 N.Y. 20, 23, 40 N.E. 390). This is particularly true with indemnity contracts. When a party is under no legal duty to indemnify, a contract assuming that obligation must be strictly construed to avoid reading into it a duty which the parties did not intend to be assumed." The Court in Hooper, recognizing that "attorney's fees are incidents of litigation and a prevailing party may not collect them from the loser unless an award is authorized by agreement between the parties, statute or court rule" (Hooper, 74 NY2d at 491), was concerned with determining whether an indemnification clause was "limited to attorney's fees incurred by plaintiff in actions involving third parties or also includes those incurred in prosecuting a suit against defendant for claims under the contract" (id. at 491), the very issue before this Court. The indemnification clause in Hooper called for the defendant to hold harmless the plaintiff from, among other things, breaches of warranty by defendant, "the performance of any service to be performed hereunder," infringement of patent rights, the installation of certain systems, and mechanic's liens. Id. at 490. Despite the language therein, isolated from the rest of the clause, which might appear to indemnify the plaintiff for attorneys' fees arising from a suit against defendant by plaintiff, the Court in Hooper held that none of the language employed "clearly permitted" such damages (id. at 492 ); that the clause was "typical of those which contemplate reimbursement when the indemnitee is required to pay damages on a third-party claim," and that none of the claims delineated "are exclusively or unequivocally referable to claims between the parties themselves or support an inference that defendant promised to indemnify plaintiff for counsel fees in an action on the contract." Id. In Hooper Associates, the Court found that the contract did not contain language that clearly allowed plaintiff to seek reimbursement from defendant of attorney's fees incurred in a suit between them. Instead, the Court found that the contract provisions "contemplate reimbursement when the indemnitee is required to pay damages on a third-party claim." Id.