Luna v. American Airlines, 769 F. Supp. 2d 231

Luna, a one-time passenger on American Airlines, sues for injuries from a meal allegedly containing foreign matter (lizard or insects).
Meal allegedly originated from Overhill Farms, the third-party defendant supplying meals under a master contract with American Airlines.
Sky Chefs acted as the airline's caterer handling receipt, storage, and delivery of meals; both American and Sky Chefs impleaded Overhill for indemnification.
Jury dismissed Luna's negligence and implied-warranty claims; defendants' third-party indemnification claims persisted for court resolution of expenses and fees.
Post-trial briefing addressed whether Overhill must indemnify defendants for litigation expenses, and whether Sky Chefs or American Airlines have contractual rights to indemnification under the Master Contract.
Court concludes: common-law indemnification is unavailable; American Airlines has contractual indemnification against Overhill for fees and expenses; Sky Chefs’ equivalent contractual indemnification claim is dismissed; Overhill has a setoff for Sky Chefs-paid expenses; amount payable to American must be proven via affidavit or evidentiary hearing.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the Master Contract authorizes indemnification after a defense verdict.	American seeks indemnification for defense costs.	Overhill's indemnity should apply regardless of plaintiff's verdict.	Yes; indemnification covers defense expenses even after no liability finding.
Whether the indemnity covers attorney's fees.	Indemnity includes attorney's fees under the contract.	Fees must be explicitly covered.	Yes; contract expressly contemplates recovery of fees.
Whether indemnification may include expenses for pursuing indemnification itself.	Expenses for pursuing indemnity should be recoverable.	Such pursuit costs are not clearly covered.	Yes; but with limits; expenses in pursuing indemnification must be addressed as to scope.
Whether common-law indemnification applies given no fault by Overhill.	Distributors have implied indemnity against manufacturer.	No fault established by jury against Overhill.	No; common-law indemnification dismissed.
What is Sky Chefs' status regarding indemnification and potential subrogation.	Sky Chefs may have rights if it paid American's costs.	Master Contract is solely between Overhill and American; Sky Chefs has no standing.	Sky Chefs no contractual indemnity right; setoff possible if Sky Chefs paid expenses.

North Star Reinsurance Corp. v. Continental Ins. Co., 82 N.Y.2d 281 (1993) (indemnity arises to allocate loss to the actual wrongdoer; payments by insurer do not create automatic rights for indemnification against insured)
Chapel v. Mitchell, 84 N.Y.2d 345 (1994) (clarifies limitations of indemnification when no fault by indemnitor)
Hooper Assocs., Ltd. v. AGS Computers, 74 N.Y.2d 487 (1989) (unmistakable clarity standard for indemnification of attorney's fees in suits between contracting parties)
Di Perna v. American Broadcasting Cos., 200 A.D.2d 267 (1994) (contractual indemnity vs. insurer's defense; equity of separate consideration and setoff concept)
Promuto v. Waste Mgmt., Inc., 44 F.Supp.2d 628 (1999) (contextual approach to broad indemnity clauses and third-party claims)
Bridgestone/Firestone, Inc. v. Recovery Credit Servs., Inc., 98 F.3d 13 (2d Cir. 1996) (indemnity scope must be unmistakably clear for non-third-party claims)
Yacovacci v. Shoprite Supermarket, Inc., 24 A.D.3d 539 (2005) (right to common-law indemnification requires tying fault to the indemnitor)