Gavin Howe
Common law indemnity is a claim asserted as a defence that allows a defendant to shift the blame for an injury to another party. It is based on the common law of contract and the common law of agency. Common law indemnity allows an entirely faultless party to shift the risk of an adjudicated loss to another party, regardless of whether that indemnitor was involved in the litigation. This is in contrast to contribution, which is a post-trial remedy. To be entitled to common law indemnification, a party must show that it has been held vicariously liable without proof of negligence or actual supervision on its part and that the proposed indemnitor was either negligent or exercised actual supervision or control over the injury-producing work.
| Characteristics | Values |
|---|---|
| Definition | Common law indemnity involves an attempt by a party held legally liable only because of the tort of another party to shift the entire loss back to that party. |
| Basis | Common law indemnity has its basis in the common law of contract and the common law of agency. |
| Application | Common law indemnity applies when two parties are both liable for an injury, but one is only vicariously liable. |
| Requirements | To plead a cause of action for common law indemnity, a party must allege that it is wholly without fault, that the party from whom it is seeking indemnity is at fault, and that it is liable to the injured party only because it is vicariously, constructively, derivatively, or technically liable for the wrongful acts of the party from whom it seeks indemnity. |
| Relationship | Common law indemnity arises out of obligations imposed through special relationships, such as employer-employee or principal-agent relationships. |
| Co-existence with Contractual Indemnity | Contractual indemnity and common law indemnity can co-exist as long as both claims for indemnity flow the same way. |
| Limitation | Common law indemnity is limited to specific relationships between parties and is unavailable if the proposed indemnitee has any degree of fault. |
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What You'll Learn
Common law indemnity and contractual indemnity can coexist
Common law indemnity allows a defendant who is not at fault to shift the blame for an injury to another party. This is typically applied in cases where two parties are both liable for an injury, but one is only vicariously liable. For example, an employer may be held vicariously liable for the wrongdoing of their employee, or a principal may be held responsible for the actions of its agent.
In the case of Lamela v. Verticon, Ltd., a construction contract was entered into between Lamela and Verticon. The contract included a valid and enforceable indemnification provision flowing from Lamela to Verticon. The Court held that there could only be a one-way obligation to indemnify by Lamela, and any reciprocal obligation was extinguished. This case demonstrates that common law indemnity and contractual indemnity can coexist as long as both claims for indemnity flow the same way.
In the case of Hawthorne v. South Bronx Community Corp., both the owner and the general contractor were found liable under Labor Law, and the subcontractor/employer was found liable to the owner and the general contractor under principles of both common law and contractual indemnity. The Court of Appeals found that since the insured paid for coverage of its common-law liability, it should not be deprived of that coverage because it also had obtained coverage for contractual indemnity. This case further supports the coexistence of common law indemnity and contractual indemnity.
It is important to note that the right to common law indemnification requires the party seeking indemnity to be wholly without fault and to be liable only because of their vicarious relationship with the party at fault. In addition, the party at fault must have caused constructive liability to be imposed on the party seeking indemnity. These requirements must be met for common law indemnity to coexist with contractual indemnity.
In summary, common law indemnity and contractual indemnity can coexist as long as the claims for indemnity are consistent and the requirements for common law indemnity are met. However, it is essential to carefully draft enforceable indemnity provisions and consider the specific relationships and liabilities involved in each case.
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Common law indemnity and contribution
Common law indemnity allows a defendant who is without fault to shift the entire liability for a loss to another party who is at fault. This is typically seen in relationships where one party is exposed to liability by the wrongful act of another, such as employer-employee or principal-agent.
In the case of Linney v. Consistory of Bellevue Reformed Church, 115 A.D.2d 209 (3d Dept. 1985), the court found that there was an implied obligation for the wrongdoer to reimburse the non-culpable party for any damages sustained as a result of the former's conduct. This was further supported by the Court of Appeals in McDermott v. City of New York, 50 N.Y.2d 211 (1980), which stated that implied indemnification is rooted in principles of equity.
To assert a claim for common law indemnity, certain elements must be met. In Florida, for example, the party seeking indemnity must allege that they are wholly without fault, that the party from whom they are seeking indemnity is at fault, and that they are liable only because of their vicarious, constructive, derivative, or technical relationship with the other party.
Common law indemnity can co-exist with contractual indemnity, as seen in the case of Hawthorne v. South Bronx Community Corp., 78 N.Y.2d 433 (1991). In this case, the Court of Appeals found that the insured should not be deprived of coverage for their common-law liability just because they also obtained coverage for contractual indemnity.
Contribution is a post-trial remedy that allows for the apportionment of fault among joint tortfeasors. It is available only against a joint-tortfeasor and is limited to parties that have been sued by the underlying plaintiff or properly joined within the applicable time frame. While contribution allows for the allocation of fault, common law indemnity shifts the entire liability to another party, provided the party seeking indemnity is entirely faultless.
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Common law indemnity requirements
Common law indemnity allows a defendant who is not at fault to shift the blame for an injury to another party. This is also known as a 'shift of liability'.
In the US, common law indemnity requirements vary by state. For example, in Florida, the party seeking indemnity must allege three elements:
- That they are wholly without fault
- That the party from whom they are seeking indemnity is at fault
- That they are liable to the injured party only because they are vicariously, constructively, derivatively, or technically liable for the wrongful acts of the party from whom they are seeking indemnity
In New York, the requirements for common law indemnity in the Labor Law context are as follows:
- The party must show that it has been held vicariously liable without proof of any negligence or actual supervision on its part
- The proposed indemnitor was either negligent or exercised actual supervision or control over the injury-producing work
In the UK, indemnity claims arise by operation of law, such as the law of agency, which makes a principal liable to indemnify its agent against liabilities incurred while carrying out duties within the scope of the agent's authority. Indemnities under English law have their basis in the common law of contract and the common law of agency.
It is important to note that contractual indemnity and common law indemnity can coexist as long as both claims flow in the same way. However, in some cases, contractual indemnity provisions may be unenforceable due to a lack of legal specificity.
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Common law indemnity and vicarious liability
Common law indemnity allows a party that has been held vicariously liable, despite bearing no actual fault, to shift the entire loss back to the party that committed the tort. In other words, a party that is faultless but held vicariously liable has a right to indemnification from the actual wrongdoer.
Vicarious liability is limited to specific relationships between parties, such as the employer-employee or principal-agent relationship, whereby one party's liability is premised solely on the conduct of the other party. For example, an employer may be held vicariously liable for the wrongdoing of their employee, or a principal may be held responsible for the actions of its agent.
To obtain common law indemnification, the entity seeking it must establish that it was not negligent, and that the entity from which indemnification is sought was negligent or had the authority to direct, supervise, and control the work that gave rise to the injury. In the context of labour law, a party must show that it has been held vicariously liable without proof of any negligence or actual supervision on its part, and that the proposed indemnitor was either negligent or exercised actual supervision or control over the injury-producing work.
Common law indemnity and contractual indemnity can coexist as long as both claims for indemnity flow in the same way. For example, in Lamela v. Verticon, Ltd., a construction contract was entered into between Lamela and Verticon, with a valid and enforceable indemnification provision flowing from Lamela to Verticon. The Court held that there could only be a one-way obligation to indemnify by Lamela, and any reciprocal obligation was extinguished.
In some cases, indemnity claims arise by operation of law, such as in agency law, where a principal is liable to indemnify its agent against liabilities incurred while carrying out duties within the scope of the agent's authority. Many indemnities are also created by contract, where the paying party promises to pay an identified loss if a particular trigger event happens, usually an event over which the paying party has control.
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Common law indemnity and litigation
Indemnity claims can arise by operation of law or by contract. Indemnities under English law have their basis in the common law, principally the common law of contract and the common law of agency. Common law indemnity allows a defendant to shift liability in certain situations. For example, an employer may be held vicariously liable for the wrongdoing of an employee, a principal for the actions of its agent, or a vehicle owner for the tortious operation of its driver. In these cases, the faultless party can shift the risk of an adjudicated loss to another party, i.e., the actual wrongdoer.
In the context of Labor Law, to be entitled to common law indemnification, a party must show that it has been held vicariously liable without proof of any negligence or actual supervision on its part. It must also prove that the proposed indemnitor was either negligent or exercised actual supervision or control over the injury-producing work.
In the case of Lamela v. Verticon, Ltd., a construction contract was entered into between Lamela and Verticon, with a valid and enforceable indemnification provision flowing from Lamela to Verticon. The Court held that there could only be a one-way obligation to indemnify by Lamela, and any reciprocal obligation was extinguished.
In Florida Peninsula Ins. Co. v. Ken Mullen Plumbing, Inc., the court ruled that to plead a cause of action for common law indemnity, the party seeking indemnity must allege three elements: firstly, that they are wholly without fault; secondly, that the party from whom indemnity is sought is at fault; and thirdly, that they are liable to the injured party only because they are vicariously, constructively, derivatively, or technically liable for the wrongful acts of the party from whom indemnity is sought.
It's important to note that common law indemnity is distinct from contribution, which is a post-trial remedy available only against a joint-tortfeasor. The right of contribution is considered inferior to the right to be indemnified, as common law indemnity allows for reimbursement of defense costs and expenses.
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Frequently asked questions
Common law indemnity is a claim asserted as a defence that allows a defendant to shift the blame for an injury to another party.
To be entitled to common law indemnity, a party must show that they are without fault and that they are being held vicariously liable for the actions of another party, who is at fault.
Common law indemnity can arise in certain relationships, such as employer-employee or principal-agent. For example, an employer may be held vicariously liable for the wrongdoing of their employee.
Common law indemnity allows an entirely faultless party to shift the risk of an adjudicated loss to another party, regardless of whether that party was involved in the litigation. This can be done through reimbursement or contribution.
