On December 19, 2025, New York State Governor, Kathy Hochul, signed the AVOID Act \u201cAvoiding Vexatious Overuse of Impleading to Delay\u201d into law. While this legislation will not take effect until April 18, 2026, the AVOID Act significantly amends when third-party practice is permitted pursuant to the CPLR. The changes the AVOID Act brings to litigation involving the construction industry are especially significant, and counsel, insurers and risk professionals should familiarize themselves with these modifications before they take effect.<\/p>\n
Prior to the enactment of the AVOID Act, courts held that claims of common law and contractual indemnification were not ripe until the underlying action was resolved. McDermott v. City of New York, 50 N.Y.2 211 (1980). In practice, defendants in actions pending in New York State Courts were not barred from commencing a third-party action. A third-party action could commence when the information needed to support such action materialized. However, the AVOID Act, which unsurprisingly was lobbied for by the Plaintiff\u2019s bar, amends the current CPLR \u00a71007 to fundamentally alter the same.\u00a0<\/p>\n
The terms of the original proposed bill were modified in Chapter Amendments A. 9502 and SS8809, merging under SS8809[1]<\/a>. Effective on April 18, 2026, the below discussed changes will be added to the subsections of CPLR \u00a71007.<\/p>\n Ninety day deadline\u00a0<\/p>\n We note that the law set to take effect is not as harsh as the initial proposed bill. The chapter amendments limited the outreach lobbied for by the Plaintiff\u2019s bar.\u00a0\u00a0<\/p>\n Subsection \u201cb\u201d, contrary to initial proposed bill, states all third-party actions (contractual and non-contractual) filed on or after April 18, 2026 must be filed within ninety (90) days after serving of an answer, as a matter of right; however, a Court order could extend the ninety (90) day deadline.<\/p>\n Court\u2019s discretion\u00a0<\/p>\n While the ninety (90) day deadline should now be engrained in defense counsel\u2019s calculations and best practices, the amended subsection \u201cc\u201d does allow the Court to exercise its discretion.\u00a0<\/p>\n The deadline to implead can be extended if \u201cgood cause\u201d and \u201cinterest of justice\u201d are established. We expect that there will be litigation concerning these terms which will likely turn on when a defendant knew, or should have reasonably known, that the prospective third-party should have been impleaded.<\/p>\n In anticipation of this legislation taking effect, insurers and lawyers are encouraged to undertake early and thorough investigations to identify prospective, necessary parties so that timely commencement of impleader actions take place. Risk transfer analysis while always crucial to a case strategy will need to be accelerated, and thus the law will inevitably lead to impleaders of parties who are ultimately not proper entities in the case so as not to run afoul of the deadlines, with all the attendant costs therein.<\/p>\n Note of issue deadlines<\/p>\n The amended subsection \u201cc\u201d prohibits the filing of any third-party action post Note of Issue, without establishing \u201cgood cause\u201d or \u201cinterest of justice\u201d.<\/p>\n Severance<\/p>\n The amended subsection \u201cd\u201d holds that an action filed in violation (i.e. an untimely third party action) of the new time deadlines shall be severed or dismissed without prejudice.<\/p>\n Notably, the ACT does not prevent the commencement of a separate action against a third-party that was not timely impleaded.<\/p>\n Exception carved out for claims against employer<\/p>\n The amendments also carve out exceptions for employers and give leeway to impleading employers under the amended subsection \u201ce\u201d. This was likely carved to ensure the availability of 1B coverage[2]<\/a>, which is often pursued in construction tort claims.\u00a0<\/p>\n A third-party action can be commenced after the deadline and within 90 days after the following:<\/p>\n Where the identity of the unknown employer becomes known.\u00a0 Impact on Labor Law actions\u00a0<\/p>\n We anticipate that the Act will have a major impact on Labor Law \u00a7240(1) claims especially. Labor Law \u00a7240(1) imposes absolute liability on property owners and general contractors for gravity-related injuries. Plaintiffs cannot be found comparatively negligent under \u00a7240(1) unless deemed to be the sole proximate cause of their accident. In Labor Law \u00a7240(1) cases where property owners and\/or general contractors do not have any active negligence, it will be imperative to ensure that discovery is complete, particularly with regard to other culpable parties, prior to plaintiff\u2019s filing of their Note of Issue to ensure that all necessary parties are impleaded.<\/p>\n Where an owner\/general contractor is named in a suit, plaintiff\u2019s counsel may opt to prematurely file their Note of Issue before obtaining necessary information on other necessary parties, simply to gain a tactical advantage.\u00a0Plaintiff\u2019s counsel may even waive depositions and file the Note of Issue followed by a summary judgment motion, using the strict statutory liability issue as leverage in settlement discussions.<\/p>\n In the event that discovery is incomplete which could otherwise serve to identify indispensable parties, defendants must timely move to vacate a plaintiff\u2019s Note of Issue.\u00a0<\/p>\n Motion practice<\/p>\n Not only will motions to vacate Notes of Issue be more prevalent (another unintended but likely outcome of the law), defendants will need to proactively monitor their files for all outstanding discovery responses and immediately move to compel any outstanding discovery in order to remain compliant with the deadlines set forth in the AVOID Act and to meet the \u201cgood cause\u201d and \u201cinterest of justice\u201d standards. In the event that the Court does not permit an impleader, defendants will need to commence separate actions and thereafter, move to consolidate.<\/p>\n Practical tips<\/p>\n Professionals in the construction industry are encouraged to take the following actions:<\/p>\n Engage in early and thorough pre-suit investigations to identify prospective, necessary parties and timely commence all necessary impleader actions. For more information on the AVOID Act and its implications on New York practice, please contact Kristiana Zuccarini or Nitin Sain.\u00a0<\/p>\n <\/p>\n
\nIn claims based on common law indemnity wherein a \u201cgrave injury\u201d [3]<\/a> is alleged, when it is known or should be known that the alleged injuries qualify as grave injury.<\/p>\n
\nFocus on obtaining all relevant contracts and insurance policies in furtherance of risk transfer efforts.
\nConsider pre-Answer motion practice in the event that a pleading is vague or ambiguous as a pre-Answer motion does not \u201cstart the clock\u201d the same way interposing an Answer would.
\nObtain an extension of time to answer, thereby providing an opportunity for further investigation into potential culpable parties.\u00a0
\nWhen in doubt, commence a timely third party action to protect client\u2019s interest.\u00a0
\nTimely pursue all outstanding discovery responses.
\nClosely monitor for Note of Issue deadlines and timely move to vacate same.\u00a0<\/p>\n