Joseph J. Rava Published in Latest Issue Of The New York Law Journal with Dan D. Kohane and David Adams

AVOID Act Upends Third-Party Practice—Delays Guaranteed

By Dan Kohane Joseph Rava & David Adams

On Dec. 19, 2025, Governor Kathy Hochul signed into law Chapter 704 of the Laws of 2025, applicable to cases pending as of April 19 of this year. By its very title—the Avoiding Vexatious Overuse of Impleading to Delay (AVOID) Act—the Legislature, urged on by the plaintiffs’ bar, once again, paints civil defendants as bad actors engaged in sharp practice. In doing so, it defines a largely illusory problem and prescribes a cure that will almost certainly generate more litigation, higher costs, and longer delays in the resolution of civil actions.

At the conclusion of this article is a review of the Chapter Amendments to this legislation, introduced on Jan. 7, which we understand are by agreement with the governor and the sponsors.

The AVOID Act imposes rigid and unprecedented time limits on third-party practice under the CPLR. It now requires that a defendant file and serve a third-party summons and complaint:

Within sixty days after serving an answer upon the plaintiff where the claimed liability arises from a contractual relationship, or otherwise within sixty days of becoming aware that such person or entity is or may be liable to the defendant for all or part of the plaintiff’s claim.

Subsequent third-party actions are subject to even shorter deadlines. The statute provides a slightly longer deadline only for claims against employers alleging “grave injuries” under Workers Compensation Law §11, and that deadline is still only 120 days. That is an insufficient time in many such cases to evaluate if the injuries sustained could qualify as a “grave injury.”

The Law Before the AVOID Act

CPLR 1007 has long permitted third-party practice so that defendants may implead those from whom they seek contractual or common law indemnification or contribution. When commenced at an appropriate point in the litigation, third-party defendants participate in discovery and trial, promoting efficiency, finality, and consistent verdicts by binding all interested parties in a single proceeding.

Where third-party actions were commenced late—after discovery in the main action was largely complete—courts already possessed ample discretion to sever or dismiss those claims where necessary to avoid prejudice. That discretion has been exercised thoughtfully and consistently.

Judicial Discretion in Practice

The Second Department addressed this precise issue in Carvajal v. Alcaide, holding that delay alone does not warrant severance where discovery can be accommodated and no substantial prejudice is shown. The court emphasized that judicial economy and verdict consistency are best served by a single trial where common factual and legal issues predominate.

The Supreme Court providently exercised its discretion in denying that branch of Alcaide’s motion which was pursuant to CPLR 1010 to dismiss the third-party action or, in the alternative, to sever the third-party action from the main action. Notwithstanding FHMC’s delay in commencing the third-party action, Alcaide’s discovery rights can be accommodated, and Alcaide has not otherwise demonstrated prejudice due to his having been impleaded at this juncture… Further, there is no indication that the brief additional delay to permit discovery in the third-party action will cause substantial prejudice to the plaintiff in the main action…

Moreover, while “it is within a trial court’s discretion to grant a severance, this discretion should be exercised sparingly” (Nieto v 1054 Bushwick Ave, LLC, 219 AD3d 754, 755, 195 N.Y.S.3d 85 [2023])… Here, the Supreme Court providently exercised its discretion in declining to sever the third-party action from the main action.

The third-party action raises factual and legal issues in common with the main action, and the interests of judicial economy and consistency of verdicts will be served by having a single trial …

Carvajal v. Alcaide, 241 N.Y.S.3d 761, 764 (2nd Dept 2025)

The First Department has reached the same conclusion in Neckles v. VW Credit, Inc., 23 A.D.3d 191, 192 (1st Dept 2005):

The motion court erred in granting plaintiff’s motion to sever the main action from the third-party action. The main and third-party actions involve common factual and legal issues which should be tried together…. Furthermore, plaintiff does not claim that further disclosure is required (compare 17 Vista Fee Assoc. v. Teachers Ins. & Annuity Assn. of Am., 226 AD2d 298, 642 NYS2d 625 [1996]), or that the trial in the main action otherwise will be delayed if the motion is denied. Moreover, denial of plaintiff’s motion to sever will allow the third-party defendant, who may be liable for indemnification to appellant, to participate in the damages phase of the first-party action… Finally, plaintiff’s claim of prejudice is speculative and unsupported by the record.

Conversely, courts have not hesitated to sever third-party actions where defendants failed to act diligently and where delay would unfairly prejudice plaintiffs. Garcia v. Gesher Realty Corp., 280 AD2d 440 (1st Dept 2001), is but one example.

While plaintiff did not promptly provide defendants with an authorization for Department of Health (DOH) records concerning her exposure to lead in third-party defendants’ building, the redacted records provided by DOH did identify the managing agent of that building, and a modicum of diligence by defendants would have disclosed the identities of third-party defendants themselves. These circumstances (see, Miro v. Branford House, 174 AD2d 363; Freeland v. New York Communications Ctr. Assocs., 193 AD2d 511), together with the delays that will necessarily attend prosecution of the third-party action, including third-party defendants’ own need for disclosure, warrant a severance of the third-party action in order to avoid prejudice to plaintiff (see, Attie v. City of New York, 221 AD2d 274). While the main and third-party actions do involve common issues, any prejudice thereby caused to defendants is less than the prejudice caused to plaintiff by further delay (see, Pena v. City of New York, 222 AD2d 233). In the latter regard, a judgment against defendants in the main action will not impede their ability to obtain a judgment against third-party defendants in a severed third-party action (see, Ravo v. Rogatnick, 70 NY2d 305).

In short, the system already worked. If it ain’t broke, don’t fix it.

The Sponsor’s Premise, and Its Flaws

The sponsor’s memorandum, authored by State Senator Joseph Addabbo, makes no reference to judicial discretion. Instead, it condemns “clever defendants” who allegedly deploy “egregious delay strategies,” asserting—incorrectly—that discovery “begins anew” each time a third-party defendant is added.

That assertion does not reflect how litigation actually functions in New York courts. More importantly, any perceived abuse of third-party practice was already subject to judicial control under CPLR 1010. The Legislature’s solution thus addresses a problem the courts were already managing.

Why the New Rule Will Prolong Litigation

What this legislation actually accomplishes is the opposite of what it purports to achieve.

Plaintiffs benefit when all parties with potential financial exposure are at the table. In construction accident litigation, for example, contractual indemnity claims often run parallel to additional insured coverage disputes. Coverage tenders frequently take more than sixty days to resolve and, when accepted, may eliminate the need for third-party practice altogether. The statute now forces defendants to implead prematurely—before coverage issues can be resolved—thereby increasing the number of parties, depositions, document demands, and discovery disputes.

Given the statute’s limitations, general contractors, construction managers, and owners

will have to bring third-party actions against all subcontractors and sub-subcontractors associated with a project especially when the details of the occurrence are unknown to the defendants. In a case where a project has phases with more than one general contractor and where the contractors’ work overlaps in time and location, the addition of parties will be multiplied. In projects with separate prime contractors similar issues will arise, and multiple unnecessary third-party defendants will be added, and all parties will be forced to conduct expensive and unnecessary discovery to eliminate unnecessary defendants.

Similarly, the true severity of injuries often becomes apparent only with time. A case that initially appeared modest may later implicate excess layers of coverage following surgery or unforeseen complications. Preventing impleader at that stage allows excess carriers to remain on the sidelines, undermining meaningful settlement efforts and making global resolution far more difficult.

There are countless other scenarios: ambiguous indemnity provisions requiring discovery, failed early mediation efforts, strategic decisions to defer impleader in the hope that coverage resolutions or dispositive motions will streamline the case. The new statute ignores these practical realities.

There are also coverage and anti-subrogation scenarios that may complicate the problem. What happens when a primary carrier acknowledges defense and indemnity and the first layer excess carrier commits, but following layers remain silent and there is exhaustion? One of the methods used to encourage their participation in addition to a declaratory judgment is a third-party action against the insured.

Similar issues will arise in cases where a plaintiff engages in the common practice of multiplying injuries. This increases the exposure, and often necessitating the addition of a party whose carrier is providing defense and indemnity to either pursue its assets or ensure that its additional excess layer(s) participate. Not to mention the instances where a subcontractor’s subcontractor owes a contractual obligation to an owner or general contractor, but its involvement is not known or the contract not available to the sued parties within the time frame.

Section “5” of the Act creates a “savings clause” that permits extensions of time to file third-party actions, but to secure one, an application must be made to the court. The mandated application process cedes, in part, judicial authority and discretion to the plaintiff’s counsel. The statute creates a “12 month” rule—poorly drafted—which provides that “defendant may not proceed with the filing and serving a third-party summons and complaint twelve months after having filed an answer in the action without written consent of both the plaintiff and the court.” The imprecisely worded clause omits the words “more than” following the word “complaint” which one assumes the drafters meant to include.

Requiring consent of both the plaintiff and the court gives absolute veto power over further extensions to the plaintiff without consideration to the reasonableness of the plaintiff’s position and acts to further erode judicial authority and review. One can only imagine the increased motion practice and the number of separate indemnity actions this clause will spawn.

Chapter Amendments: Jan. 7 Update

When the governor signed the bill, it was with a understanding with the sponsors that there would be changes—Chapter Amendments—to make it more palatable. A. 9502 contains those Chapter Amendments and frankly, they do little to ameliorate the problem.

• Before a note of issue is filed, 60 days to start a third-party action has been extended to 90 days, “without an order of the court.” There is no instruction for when such an order should be granted or what criteria the court should consider. Of course, MORE motion practice, more expense, and no guarantee that the court will grant that application. So, an attorney representing a defendant has no reason to believe that waiting won’t prejudice his or her client, hoping for kindness from the court. At least plaintiff’s consent isn’t necessary, as in the original legislation.
• After a note of issue is filed, a third-party action be filed “upon good cause shown or in the interest of justice.” What does that mean?
• In actions against employers, a third-party action may be filed within 90 days of the LATER of (1) the date that defendant learns of the identity of the employer or (2) the date the defendant “knows or should know” the plaintiff has sustained a “grave injury.” When is that date? When the bill of particulars comes in alleging a TBI, when the medical and hospital records arrive? After an IME? Who knows?
• As to subsequent third-party actions against additional third-party defendants, the language from the AVOID action for a 30-day then 20-day time period is eliminated. What that means, I cannot answer. Likely it means that the 90-day requirement applies to those actions as well.
• The only clarification that make sense is the effective date. It applies to NEW lawsuits commenced 120 days after the effective date, which is around April 17, rather than to pending lawsuits.

Conclusion

Forcing early third-party litigation helps no one. It adds parties who may never need to be added, increases costs for all litigants, and sidelines insurance coverage issues that often streamline civil litigation rather than complicate it.

For decades, New York courts have exercised sound discretion—case by case—balancing efficiency, fairness, and judicial economy. With the AVOID Act, the Legislature has replaced that discretion with inflexible deadlines. Apparently, it no longer trusts the courts to manage litigation sensibly.

Whether this experiment will actually “avoid delay” remains to be seen. What is far more likely is that it will ensure exactly the opposite.

Dan Kohane is chair of the insurance coverage team at Hurwitz Fine P.C., and an adjunct professor of Insurance Law at the University at Buffalo School of Law. Joseph Rava is co-chair of the NY labor law practice group at Gallo Vitucci Klar. David R. Adams is chair of the New York State Labor Law Team at Hurwitz Fine.