In a Nutshell: Equitable Indemnity in California
There are times when we must defend clients that have been sued in a lawsuit in which the plaintiff is blaming our client for wrongdoing that was actually partly or completely the fault of someone else entirely. In situations like these, it is wise to consider filing either a cross-complaint or a separate lawsuit for equitable indemnity against that third party who is responsible, in whole or in part, for the wrongful conduct that harmed the plaintiff.
Generally, a claim for equitable indemnity arises when one party has been ordered to pay damages to another party as a result of a third-party’s wrongful acts. For example: Beatriz was awarded $100,000 from Alan when she was injured as a result of Alan’s failure to use due care when Alan was digging a trench near Beatriz’s property Alan claims that he was not responsible for the trench digging, and instead it was his contractor, Xavier’s Trench Digging Corp., that was responsible for the work being done near Beatriz’s property. Alan now has a claim for equitable indemnity against Xavier’s Trench Digging Corp. for the damages Alan paid to Beatriz.
California law recognizes this type of claim. The right to equitable indemnity stems from the principle that one who has been compelled to pay damages (either by judgment or settlement) that ought to have been paid by another wrongdoer may recover from that wrongdoer. Bush v. Superior Court, (1992) 10 Cal. App. 4th 1374. See also, Herrero v. Atkinson, (1964) 227 Cal. App. 2d 69 (the duty to indemnify may arise, and indemnity may be allowed, when, in equity and good conscience, the burden of a judgment should be lifted from a person seeking indemnity to one from whom indemnity is sought).
“Comparative equitable indemnity includes the entire range of possible apportionments, from no right to any indemnity to a right of complete indemnity.” Far West Financial Corp. v. D & S Co., Inc., (1988) 46 Cal.3d 796, 808 (internal quotation marks and citation omitted). Total indemnification is just one end of the spectrum of comparative equitable indemnification. Id.
As noted above, the claim may be for total or partial equitable indemnity. Using our example, California recognizes that Xavier’s Trench Digging Corp. could be responsible for some, all or none of the amount Alan paid to Beatriz. When defending any client in a lawsuit, we must always consider whether other third parties might have been responsible for some of the wrongdoing and harm being alleged by the plaintiff, and whether a claim for equitable indemnity is in play.
Posted by Adam Nicolai, esq. and Ryan Gustafson, esq., February 17, 2015