Accompanying the New Year is a dramatic change to commencement of third party actions, which will take effect in April 2026.   On December 19, 2025, Governor Kathy Hochul signed the “Avoiding Vexatious Overuse of Impleading to Delay (AVOID) Act” into law (L 2025, ch 704; 2025 N.Y. Senate Bill S8071A; 2025 N.Y. Assembly BillA08728).  AVOID amends Civil Practice Law and Rules (CPLR) § 1007  by mandating new time limits for the commencement of third-party actions. It is imperative for all legal practitioners, insurers, and risk management professionals to be aware of this new requirement to avoid the negative ramifications that could result from a failure to comply.  

Under the AVOID Act, a third-party action must be commenced “within sixty days after serving an answer” in claims derived 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]).   The practical impact of AVOID is that the clock begins to run for third-party claims for contractual indemnification and/or breach of contract for failure to procure insurance from the date the defendant serves an answer and expires 60 days later.  However, third party claims for contribution or common-law indemnification must be filed within 60 days after the defendant learns of the proposed third-party defendant’s potential liability.   One exemption is that a plaintiff’s employer may be impleaded up to 120 days after their identity is uncovered.

Even more vexing is the shortened time limit for the third party defendants seeking to transfer their potential liability as third-party defendants will have  only 45 days to implead a second third-party defendant, second-third-party defendants will have30 days to implead another third-party defendant and any subsequent third-party defendant will have only 20 days to implead any further third-party defendant.

AVOID does allow for an extension of time to commence a third party action beyond the two month period upon application to the court, but interestingly plaintiffs have been bestowed a “veto” power as the amendment requires plaintiff’s written approval for these extensions.

Finally, post note of issue third party actions are barred under AVOID.

Third party actions are the linchpin in most risk transfer litigation plans that seek to shift liability to a party not named in the underlying action or, more commonly, claims for indemnification and/or contribution.  From Labor Law to products liability, landlord/tenant and interstate transportation claims, an evaluation of potential risk transfer via third party actions  is as crucial as the assessment of the underlying liability allegations.    

Before the enactment of “AVOID,” there was no fixed statutory time limit for the commencement of third-party actions. Instead, the delayed commencement of a third party action would be subject to CPLR 1010 and CPLR 603 and, upon application, could result in a dismissal without prejudice or severance of the third party action.  

Often a belated third party filing would result in third-party defendants claiming that if the third-party action was not severed they would be prejudiced by being subject to a substantially abbreviated discovery schedule.  See, Skolnick v Max Connoe LLC, 89 AD3d 443 (1st Dept. 2011); Santos v Sure Iron Works, 166 AD2d 571 (2dDept. 1990).  Moreover, in instances where discovery was completed in the underlying action, plaintiffs would argue that the third party discovery would “unreasonably delay bringing the plaintiff’s case to trial, [and] a joint trial of the main and the third-party actions could prejudice the plaintiff.” See, Rothstein v. Milleridge Inn, Inc., 251 AD2d 154, 155 (1st Dept1998).  While plaintiffs often move for a dismissal of a third-party complaint without prejudice or severance of the third party action, defendants/ third party plaintiff’s argue that potential prejudice to the plaintiff in delaying the trial of the action is outweighed by the interest of judicial economy and the need to avoid the possibility of inconsistent jury verdicts in separate actions that involve determinations of common issues of fact and law.  See, Herrera v. Municipal Hous. Auth. of City of Yonkers, 107 AD3d 949, 949 (2d Dept 2013);Leavitt v New York City Transit Authority, 111 AD2d 907 (2d Dept. 1985).

While the Legislature’s intent is to address delayed third party claims that have added years to pending litigation, the imposition of these strict time limits have essentially removed the discretionary case by case evaluations performed by New York’s courts in instances where third-party defendants were initially unaware of the identities of other parties against whom they may seek indemnification or contribution.  Often a decision is made to deliberately hold off on the commencement of these third party actions in order to permit an evaluation of respective coverage positions, which permitted a “look before you leap” determination to be made by carriers and defense counsel before commencing third party actions.

However, the enactment of the AVOID Act will require an expedited investigation of potential third party litigants upon receipt of a complaint especially those claims sounding in contractual indemnification.  Carriers and defense counsel must notify the first party defendants of the urgency involved in identifying any parties that may owe them indemnification or contribution and the pitfalls that exist in delaying or failing to meet the stringent time limits imposed by the Legislature.  This will also impact coverage litigation and should be considered when pursuing or responding to tender requests. Although the commencement of a claim against a non-responsible party is to be avoided, as a practical matter, the new legislation may result the inclusion of additional litigants, who may not bear any responsibility or contractual obligations, when defendants are faced with the potential  of being time barred from commencing third party claims.

A note of caution is that although AVOID is set to take effect in April 2026, the rule will be applicable to cases already pending but not to third party claims already commenced.

As such practitioners will be well advised to immediately investigate any potential third party claims before the AVOID effective date and commence same.  Otherwise, going forward claims professionals and attorneys must immediately obtain all contracts and certificates of insurance from insureds and initiate an immediate investigation into any potential third party litigants upon receipt of a claim.  Finally, defendants should seek any and all extensions of time to answer in the underlying claims in order to allow for additional time for impleading third party defendants.

Should you have any questions concerning the AVOID Act and its ramifications or how Fleischner Potash can assist in your defense or coverage claims, please feel free to contact Stuart Glass at sglass@fp.law or 646-520-4247

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