Also known as: indemnity doctrine · indemnity
Written by attorneys — see sources below.
A right entitling one tortfeasor who has discharged a common liability to recover full payment from another tortfeasor whose conduct caused the harm. The right arises when the second tortfeasor would otherwise be unjustly enriched by the first's payment. It is distinct from contribution because it shifts the entire loss rather than allocating shares.
Diego Duarte, an employee of Dover Bank, negligently caused a car accident while on bank business. The injured plaintiff sued both Diego and the bank. Dover Bank paid the full judgment. The bank then recovered the entire amount from Diego because the bank was liable only through his conduct.
Davenport Pharmaceuticals, a Delaware company, sold a product that injured a consumer in State X. After paying the judgment, Davenport sought indemnity from its foreign component supplier. The supplier challenged personal jurisdiction in State X, arguing that merely placing parts into commerce did not support jurisdiction over the indemnity claim.
Damian Decker paid a judgment that compensated the victim for injuries caused by both his and Dorothy Daniels's conduct. Damian then demanded full reimbursement from Dorothy. The payment qualified as compensatory damages because it restored the victim for harm sustained.
Diamond Manufacturing paid the entire tort judgment arising from a joint project with Dillon Energy. Diamond then sought indemnity from Dillon under their agreement. Because Diamond held an indemnity right, Dillon could not pursue contribution against Diamond for any share of the payment.
Deanna Davenport directed her employee Dwight Dorsey to perform a task that injured a third party. Deanna paid the resulting judgment. Deanna recovered the full amount from Dwight because her liability arose solely from his conduct.
Diana Delgado's insurer paid a claim arising from a covered loss. The insurer then pursued the party whose negligence caused the loss. The payment triggered the insurer's right to recover the full amount from the responsible party.
In the late 1970s, ISO, an association of approximately 1,400 domestic property and casualty insurers that serves as the almost exclusive source of support services for CGL insurance in the United States, began revising its 1973 standard CGL policy form. The 1973 form provided occurrence-based coverage for sudden and accidental pollution and did not cap defense costs. Primary insurers including Hartford Fire Insurance Company, Allstate Insurance Company, Aetna Casualty and Surety Company, and CIGNA Corporation sought four changes: a shift to claims-made coverage with a retroactive date, elimination of pollution coverage, and a legal defense cost cap. After ISO proposed 1984 forms that omitted some of these changes, Hartford persuaded General Reinsurance Corporation, the largest American reinsurer, to procure the modifications or derail the program. The Reinsurance Association of America agreed to boycott the 1984 forms unless the changes were added, and domestic and London reinsurers informed ISO they would withhold reinsurance until the forms were altered. ISO then withdrew the 1984 forms and adopted 1986 forms containing a retroactive date and pollution exclusion; it later withdrew support services for the 1973 form. Separate agreements among London reinsurers required primary insurers to switch to claims-made policies and excluded pollution coverage from reinsurance contracts covering North American risks. Nineteen states and many private plaintiffs filed 36 complaints alleging that these actions violated section 1 of the Sherman Act. The cases were consolidated in the Northern District of California. The District Court granted motions to dismiss in 1989, holding the conduct fell within McCarran-Ferguson immunity and applying international comity to the foreign defendants. The Ninth Circuit reversed in 1991. The Supreme Court granted certiorari in 1992.
View caseIndemnity shifts the entire loss to one party when that party would otherwise be unjustly enriched. Contribution allocates loss according to equitable shares. When indemnity applies, contribution is unavailable.
Supporting sources
Indemnity arises when one party is liable only because of the conduct of another. The vicariously liable party who pays may recover the full amount from the actual wrongdoer.
Supporting sources
Yes. A principal who pays damages caused by an agent's breach of duty to a third party may obtain indemnity from the other principal whose breach produced the agent's conduct.
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…statutory authority to enjoin suits against the alleged tortfeasor as opposed to proceedings against the fund itself. Travelers Indemnity Co. v. Greyhound Lines, Inc. , 260 F. Supp. 530 (D. C. W. D. La. 1966). In light of the evidence that federal interpleader was not intended to serve the function of a “bill of peace” in…