The Governor has recently approved Senate Bill 8071-A, commonly referred to as the AVOID Act. In our view, the Act creates far more problems than it purports to solve, while imposing unnecessary and impractical burdens on defense counsel and insurance carriers, particularly in New York Labor Law litigation.
The AVOID Act significantly alters third-party practice under CPLR § 1007, When Third-Party Practice Allowed. These changes are of special concern in cases involving construction accidents, where multiple contractors, subcontractors, and insurers are often implicated, and where risk-transfer obligations are rarely clear at the outset.
The stated purpose of the Act, as set forth in the Governor’s Approval Memorandum, is to promote efficiency and ensure the timely resolution of disputes. Unfortunately, the Act is far more likely to have the opposite effect.
A “Use It or Lose It” Approach to Third-Party Practice
At its core, the AVOID Act transforms third-party practice into a rigid “use it or lose it” system. For contractual indemnity claims, a defendant must now file a third-party summons and complaint within 60 days of serving an answer, or within 60 days of becoming aware that a person or entity may be liable for all or part of the plaintiff’s claim.
As a practical matter, this timeframe is wholly unrealistic in Labor Law cases.
It is rarely possible to obtain all relevant contracts within 60 days. While a defendant may possess contracts to which it is a signatory, discovery of agreements between other project participants—where indemnity and additional-insured obligations may exist—often takes months. The inevitable result will be a shotgun approach to impleader, forcing defendants to name every conceivable third party simply to preserve rights, regardless of whether those entities ultimately prove to be necessary or proper parties.
Owners Often Lack Early Information
Under existing practice, defendants typically first gather contracts, accident reports, and witness statements before determining whether and to whom a tender should be made. Owners, who are often valid Labor Law defendants, may not even be aware that an accident occurred on the project and may have no accident investigation materials available within the 60-day window. Requiring informed impleader decisions at that stage is simply unrealistic.
Compounding the problem, it is equally unrealistic to expect contractual tenders to be resolved by primary insurers within 60 days. As a result, defendants will be forced to commence third-party actions even where coverage acceptance is likely—purely to avoid forfeiture. Where excess coverage is implicated, the problem is magnified, as the full scope of a plaintiff’s injuries is rarely known early in the case. This raises further concerns, including potential conflicts with the anti-subrogation rule.
Sanctions, Costs, and Motion Practice
The Act also invites needless motion practice. Where a third-party defendant is later shown to have had no involvement in the injury-producing work, will motions to dismiss be accompanied by demands for costs or sanctions? The statute provides no guidance, but the risk is real.
Recognizing these challenges, we are advising clients to obtain and preserve all project contracts at the outset of any job, so they are immediately available for review if a Labor Law claim arises.
Non-Contractual Claims: Even Greater Uncertainty
The Act is even more problematic for non-contractual third-party claims. It applies to any person or entity who “is or may be liable” to the defendant—a phrase so broad and undefined that it offers little meaningful guidance.
With no discovery, no depositions, and often no investigation completed, defendants must decide within 60 days of “becoming aware” that another party may be liable. The statute allows only a single 30-day extension. After that, court approval is required, and if more than 12 months have passed since the answer, plaintiff’s written consent is mandatory—regardless of good faith or newly discovered facts.
This lack of judicial flexibility was acknowledged by Governor Hochul, whose Approval Memorandum notes that the Act “did not allow courts the flexibility to account for unforeseen circumstances.” It is hoped that this concern will be addressed through chapter amendments.
Accelerating Deadlines for Successive Third-Party Actions
The time constraints become increasingly onerous with each additional third-party action:
- First third-party action: 60 days
- Second: 45 days
- Third: 30 days
- All subsequent actions: 20 days
The Governor herself noted ambiguities in how these deadlines are calculated. It is anticipated—if not hoped—that chapter amendments will clarify these issues before the Act takes effect.
Grave Injury Claims and Employer Impleader
The Act provides a limited extension for claims against employers involving a “grave injury,” allowing 120 days from the answer or discovery of the employer’s identity. Even here, failure to meet the deadline requires court approval and the employer’s consent.
In practice, determining whether a grave injury exists may take far longer than 120 days. While death or paralysis may be obvious, traumatic brain injuries and loss-of-use claims often cannot be evaluated until after medical discovery and depositions—frequently more than a year after the answer is filed.
Post–Note of Issue Third-Party Practice
The Act also addresses third-party practice after the filing of a Note of Issue. Any such third-party action must be either severed or dismissed without prejudice, and consolidation is expressly prohibited—again eliminating judicial discretion, even in the face of “unforeseen circumstances.”
Service Deadlines Slashed
Finally, the Act drastically reduces the time to serve a third-party summons and complaint—from 120 days to just 20 days—creating yet another procedural trap.
The Practical Reality
Far from streamlining litigation, the AVOID Act is likely to increase it. Defendants will implead more parties earlier. Third-party defendants with no real involvement will be forced to defend themselves. Discovery will slow as more parties are added. Motions to dismiss will proliferate. Carriers will be required to defend additional parties in situations that were previously resolved through tenders.
The prior system worked. Courts exercised discretion, granting extensions where appropriate and severing claims when necessary. The notion that judges were incapable of managing their own dockets is not borne out by real-world practice.
Ultimately, it will fall to defense counsel to develop practical methods of complying with the AVOID Act while protecting clients’ interests. Unfortunately, the likely result will be more delay, more expense, and fewer practical solutions, all in service of addressing a problem that, for the vast majority of cases, simply did not exist.
One size does not fit all. And this statute proves it.
