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Third-Party Beneficiary of an Indemnification Agreement May Enforce Obligations Owed to the Judgment Debtor by the Indemnifying Party

The Second Department determined the third-party beneficiary of an indemnification agreement could bring an action to collect a debt by suing the entity which entered the indemnification agreement with the judgment debtor. “Pursuant to CPLR 5227, a special proceeding may be commenced by a judgment creditor ‘against any person who it is shown is or will become indebted to the judgment debtor.’ Such a proceeding is properly asserted against one who agreed to indemnify the judgment debtor in the underlying proceeding … . The judgment creditor stands in the judgment debtor’s shoes, and may enforce the obligations owed to the judgment debtor by the indemnifying party… “. Matter of White Plains Plaza Realty, LLC v Cappelli Enters., Inc., 2015 NY Slip Op 03549, 2nd Dept 4-29-15

 

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