New York Governor Kathy Hochul signed the Avoiding Vexatious Overuse of Impleading to Delay Act (the “Act”), amending Civil Practice Law and Rules (“CPLR”) § 1007 to shorten the time in which defendants may bring third-party claims. Although procedural in form, the Act carries meaningful practical consequences—particularly for parties that rely on contraxctual indemnification and insurance coverage to transfer risk. Designed to curb late-stage impleader that delays cases and expands litigation after discovery is underway, the Act imposes strict, front-loaded deadlines and, most notably, categorically bars impleader once a note of issue has been filed, subject only to narrow statutory exceptions. The Act takes effect on April 18, 2026.
Under the amended statute, defendants must act quickly. Where third-party liability arises from a contractual relationship—such as an indemnification or defense obligation—a third-party action must be commenced within sixty days after service of the defendant’s answer, or within sixty days of learning of the basis for potential third-party liability. Extensions are limited, and impleader is barred more than twelve months after the defendant’s answer, absent court approval and the plaintiff’s express written consent. Consistent with this, third-party defendants have forty-five days to file their own complaints, with subsequent tiers of third-party actions (i.e., second-third party and third-third party actions) allowing thirty days and twenty days, respectively. Under current law, parties do not have a specified deadline for impleader unless it is set forth in a court order. This permits impleader of additional parties late in litigation, often years after the action was first filed. A party seeking to avoid being impleaded late in the litigation faces the uncertain prospect of filing a motion to sever, which was often denied. The new rule creates a brightline that prevents this. The positive effect is that the rule provides greater certainty surrounding impleader. However, as outlined in this article, it is likely to have many less favorable consequences for insurers in their risk transfer investigations and for settlement of main actions.
Historically, defendants often tendered claims early to contractual indemnitors and their insurers, only to receive denials, reservations of rights, or a decision to “wait and see” how liability developed. That approach carried limited immediate risk to the indemnitors because impleader often remained available later in the case, allowing indemnity and contribution claims to proceed within the same action. The Act fundamentally disrupts that model. Defendants now face a compressed window to implead potentially responsible parties or permanently lose that procedural option, increasing the likelihood that indemnity disputes will proceed as separate lawsuits after judgment or settlement of the main action.
This shift is particularly significant given the very low bar for placing an indemnitor or insurer on notice under New York law. Courts have long held that no particular form of notice is required to bind an indemnitor; rather, it is sufficient that the indemnitor is fully and fairly informed of the claim and has a meaningful opportunity to defend or participate in the defense.[1] Formal tender is not required, and notice may be established through knowledge of the claim, receipt of pleadings, or other communications placing the indemnitor on notice of potential exposure. Accordingly, where an insurer is served with a proper tender of defense—particularly one referencing contractual indemnity obligations and enclosing the underlying pleadings—that tender will almost certainly satisfy New York’s notice requirement. Once such notice is provided, an insurer that elects not to defend does so with the understanding that it may later be bound by the outcome of the underlying action, including any reasonable, good-faith settlement entered by the indemnitee. By contrast, only where an indemnitor receives no notice or is denied an opportunity to defend does the indemnitee bear a heavier burden to establish liability, the absence of a viable defense, and the reasonableness of the settlement.[2]
The Act is likely to incentivize insurers to accept tenders earlier and participate more actively in the defense, rather than risk being bound to an outcome reached without their involvement. Because third-party practice may be foreclosed later in the case, an insurer that declines or delays a defense risk forfeiting any meaningful ability to influence liability and damages determinations or settlement strategy. This exposes insurers to a practical risk arising from the contractual or additional insured’s conduct after a tender is declined. Where an insured is left to defend the case without the participation of the indemnitor or its carrier, litigation incentives may become misaligned. The tendering party may have reduced motivation to pursue an aggressive defense or to negotiate the lowest possible resolution, particularly where it expects to shift the loss through contractual indemnity later. As a result, strategic decisions concerning discovery, motion practice, and settlement may be driven by expediency rather than minimizing ultimate exposure. This could result in higher negotiated settlements. Accordingly, an insurer that elects not to defend may avoid early participation in the main action, only to be presented—after settlement or judgment—with a demand it is contractually obligated to pay, at which point it has little ability to challenge the underlying liability findings or the reasonableness of the resolution. In this environment, delay may not merely postpone involvement; it may eliminate meaningful control over the outcome altogether, underscoring the increased urgency of promptly investigating tenders and making early defense decisions.
The Act’s compressed timelines may also produce additional unintended consequences that thwart its legislative purpose. By requiring parties to assert third-party claims at the outset of litigation, cases—particularly construction and other multi-party matters—may drastically expand early through additional discovery, depositions, and motion practice. That expansion may include dispositive motions brought by parties who contend they were improperly or prematurely drawn into the case, potentially resulting in discovery disputes or stays affecting the entire action while those motions are pending. Rather than streamlining proceedings, the Act’s front-loaded requirements may increase complexity and, in some cases, delay resolution. Defendants may feel compelled to bring in every potentially responsible party early to avoid forfeiting third-party rights.
Although rights of contribution or indemnity may still be pursued in a separate action, settlement with the plaintiff will generally waive contribution claims. This can disincentivize settlement in the main action, further complicating settlement strategy and resolution. The Act also prohibits consolidation of separate actions for contribution or indemnity where the third-party complaint is severed under the Act. This may result in defendants with strong contribution claims being effectively compelled to try two cases: one against the plaintiff and the other against the party subject to contribution, rather than settling the case pretrial and losing their contribution claim. This could significantly increase the number of cases tried rather than settled, lengthening delays on the court calendar and further straining the resources of litigants and the court system.
In sum, while the Act does not eliminate indemnification rights or mandate third-party practice in every case, it materially heightens the consequences of early strategic decisions. Indemnity issues can no longer be deferred without risk, and insurers can no longer rely on procedural delay without risking the loss of control over the defense and ultimate exposure. Early evaluation of risk-transfer provisions, timely tender decisions, and careful consideration of defense participation are now even more critical under New York’s revised third-party practice framework under the Act.
[1] Deutsche Bank Tr. Co. of Ams. v. Tri-Links Inv. Tr., 74 A.D.3d 32, 41–42 (1st Dep’t 2010); Zurich Am. Ins. Co. v. Tower Natl. Ins. Co., 159 A.D.3d 418, 418–19 (1st Dep’t 2018).
[2] Feuer v. Menkes Feuer, Inc., 8 A.D.2d 294, 299–300 (1st Dep’t 1959); Slepian v. Motelson, 20 Misc. 3d 1140(A), at *8–9 (Sup. Ct. Richmond Cnty. 2008)
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