The New York State Legislature Has Drastically Changed Third-Party Practice

New York, N.Y. (December 24, 2025) - On December 19, 2025, Governor Kathy Hochul signed the "Avoiding Vexatious Overuse of Impleading to Delay (AVOID) Act" into law, drastically changing third-party practice in New York (see L 2025, ch 704; 2025 N.Y. Senate Bill S8071A; 2025 N.Y. Assembly Bill A08728). The AVOID Act amends Civil Practice Law and Rules (CPLR) § 1007 – the primary statute regulating third-party practice – by establishing new time limits for the commencement of third-party actions. The new law does not take effect for a few months, however, as discussed in further detail below. Attorneys, insurers, and risk management professionals should all familiarize themselves with the new standards before the effective date, so as to avoid potentially negative consequences flowing from a failure to comply.

The CPLR has long permitted "a defendant [to] proceed against a person not a party who is or may be liable to that defendant for all or part of the plaintiff's claim against that defendant" by commencing a third-party action (CPLR § 1007). "In other words, the liability to be imposed upon a third-party defendant . . . should arise from or be conditioned upon the liability asserted against the third-party plaintiff" as a defendant "in the main action" (Qosina Corp. v C & N Packaging, Inc., 96 AD3d 1032 [2d Dept 2012] [internal quotation marks and alterations omitted]). Thus, third-party actions typically involve causes of action for indemnification and/or contribution (see e.g. Nieto v. 1054 Bushwick Ave, LLC, 219 AD3d 754, 755-756 [2d Dept 2023]; Padilla v Absolute Realty Inc., 195 AD3d 422, 423-424 [1st Dept 2021]).

Before the enactment of the recent legislation, New York lacked any explicit statutory time limit for the commencement of third-party actions. Nonetheless, "CPLR 1010 [has] provide[d] a safety valve for cases in which the third-party claim w[ould] unduly delay the determination of the main action or prejudice the substantial rights of any party" (Vincent C. Alexander, Practice Commentaries, McKinney's Cons Laws of NY, CPLR 1010 [internal quotation marks omitted]). It has been recognized that, "n a case where the main action s trial-ready but still-outstanding discovery on the third-party action would unreasonably delay bringing the plaintiff's case to trial, a joint trial of the main and the third-party actions could prejudice the plaintiff" (Rothstein v. Milleridge Inn, Inc., 251 AD2d 154, 155 [1st Dept 1998]). Upon finding such prejudice, courts have had the authority, inter alia, to "dismiss a third-party complaint without prejudice, [or] order a separate trial of the third-party claim or of any separate issue thereof" (CPLR 1010; see CPLR 603). In deciding whether to exercise discretion to grant such relief, courts have generally been obligated to conduct a balancing test, weighing the delay-related prejudice to the plaintiff against, among other things, "the interest of judicial economy and [] avoid[ing] the possibility of inconsistent jury verdicts" (Herrera v. Municipal Hous. Auth. of City of Yonkers, 107 AD3d 949, 949 [2d Dept 2013]).

The AVOID Act, however, effectively removes such discretion from New York's courts and instead imposes express time limits for the commencement of third-party actions. The Legislature's justification for amending CPLR 1007 in this way is that certain defendants, due to the statute's "silen[ce] regarding the timetable for impleading [new] parties," have purportedly "developed an egregious strategy to add years to any case and, during that respite, avoid financial accountability" (Assembly Mem in Support of 2025 N.Y. Assembly Bill A08728). "With this technique," according to the Legislature, "a case that should take two years to resolve routinely takes twice or three times as long," which "not only frustrates individual cases, but needlessly ties up the court's docket and drains court resources overall" (id.). Thus, the new law "aims to prevent late impleading solely to delay a resolution of an action and [] to ensure that all necessary parties are impleaded into a case within one year after the filing of the action" (id.).

Under the AVOID Act, a defendant must commence a third-party action "within sixty days after serving an answer" in circumstances where the liability sought to be imposed "arises from a contractual relationship between the defendant and" the third-party defendant, "or otherwise within sixty days of becoming aware that such person is or may be liable to the defendant for all or part of a plaintiff's claim" (L 2025, ch 704, § 2; see forthcoming CPLR § 1007[1]). Stated otherwise, the time to commence a third-party cause of action for contractual indemnification or breach of contract for failure to procure insurance will begin to run from the date the defendant serves an answer and will end 60 days later, whereas the clock for contribution or common-law indemnification causes of action will end 60 days after the defendant learns of the proposed third-party defendant's potential liability. A plaintiff's employer, however, may be impleaded up to 120 days after its identity is ascertained (see CPLR § 1007[d]).

The act imposes even shorter time limits upon third-party defendants who seek to shift their potential liability against others by commencing their own third-party actions. An initial third-party defendant has 45 days from the service of an answer to file a second third-party action, whereas a second third-party defendant has only 30 days and any subsequent third-party defendants have only 20 days (L 2025, ch 704, § 2; see forthcoming CPLR §§ 1007[2]-[4]). Notably, the provisions of the new law relating to the time for third-party defendants to bring in new parties do not distinguish between liability arising from a contractual relationship as compared to other types of liability, even though the provision regarding original defendants does so distinguish. This will likely result in litigation involving third-party defendants who, at the time they are initially sued, do not know – and have no reason to know – of the identities of other parties against whom they may seek indemnification or contribution.

Although the AVOID Act sets forth explicit time limits for third-party practice, it also anticipates that parties and courts may be inclined to extend the statutory deadlines in appropriate circumstances. The CPLR allows parties to enter into stipulations on all manner of topics, including extensions of time (see CPLR § 2104), while also permitting courts to extend deadlines (see CPLR § 2004). Under the AVOID Act, however, parties may only stipulate amongst themselves to extend the new deadlines by up to 30 days, as any extension "longer than [30] days" will require "an order of the court" (L 2025, ch 704, § 2; see forthcoming CPLR § 1007[5]). Any third-party action sought to be commenced 12 months or more after the answer is interposed requires not only court approval, but also the "written consent of . . . the plaintiff" (id.). Significantly, this means that, in certain circumstances, a plaintiff's attorney can effectively veto a defendant's pursuit of a third-party action. Moreover, third-party practice "after the filing of a note of issue" is not permitted (see forthcoming CPLR § 1007[c]).

The AVOID Act's amendments to CPLR § 1007 will now require defendants to act more promptly than ever to identify any parties against whom they may potentially hold liable for indemnification or contribution. This is particularly the case in circumstances giving rise to liability for contractual indemnification. Defense attorneys should investigate potential third-party defendants as soon as possible and stress the statutory time limits – as well as the risks of failing to comply – to their clients. Insurers and risk management professionals should also be aware of the new time limits, not only for litigation purposes, but also when pursuing or responding to tender requests. As a practical matter, attorneys and insurers should err on the side of being overinclusive when identifying third-party defendants, rather than underinclusive, so as to avoid the negative ramifications of the new deadlines.

The AVOID Act is set to take effect 120 days after the date the governor approved it, which falls on Saturday, April 18, 2026 (see L 2025, ch 704, § 3). Although deadlines that fall on weekends or holidays typically roll over until the next weekday business day (see General Construction Law § 25-a), that rule generally does not apply to the "effective date" of statutes (see People v. Assi, 14 NY3d 335, 342-343 [2010]). The new law will also "apply to cases pending on or after" the effective date, but not to third-party complaints that were both "filed and served prior [thereto]" (L 2025, ch 704, § 3). Between now and the effective date, defense attorneys should review files to ensure that any necessary third-party actions are commenced.

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