Section Review

Fundamentals of contribution and indemnity

This article appeared in the July 1999 issue of the Section Review.
© 1999 Massachusetts Bar Association
Russell X.Pollock is an attorney with the Boston law firm of Campbell, Campbell &Edwards. He is the vice chairman of the Young Lawyers Division Section Council. It is fundamental for every practitioner to be fullyfamiliar with the concepts of contribution and indemnity. These distinctconcepts may pervade every aspect of lawsuit, regardless of whether there aremultiple parties in the case.

CONTRIBUTION Contribution refers to apportioning fault amongtortfeasors who are jointly liable to the plaintiff for an incident. Jointtortfeasors are entitled to contribution from each other based on theirrelative degrees of fault, if they pay more than their pro rata share ofliability to the plaintiff. In determining the pro rata share of eachtortfeasor's liability to the total liability, the relative degrees offault are not to be considered. G.L. c. 231B, § 2. The result is thatjoint tortfeasors are liable in equal shares to the plaintiff for a verdict.Zeller v. Cantu, 395 Mass. 76 (1985). Nevertheless, the jury will oftenapportion the percentage of each party's fault, but this is done largelyto determine issues of contributory negligence.
INDEMNITY Indemnity refers to a party being entitled to totalcompensation from another party based on a relationship between them. There isno such thing as partial indemnity. Three separate circumstances give rise to aright of indemnification:

  • Anexpress agreement between the parties. See, e.g., Whittle v. Pagani BrothersConstruction Co., Inc., 383 Mass. 796 (1981). It is not unusual to see suchexpress provisions in contracts between construction contractors andsubcontractors.
  • Acontractual right implied from the relationship between the parties. See, e.g.,Fall River Housing Authority v. H.V. Collins Company, 414 Mass. 10 (1992)(noimplied right found). This situation could arise where one party hasindemnified another several times in the past, and an expectation of, andreliance on, continued indemnity has arisen
  • Acommon law or tort based right of indemnification. See, e.g. Fireside Motors,Inc. v. Nissan Motor Corporation in U.S.A. et al., 395 Mass. 366 (1985). Anexample of this basis of indemnity is the common law indemnity that a seller ofa product may seek from the manufacturer.
An overview of the distinct bases of indemnity can befound in Araujo v. Woods Hole, Martha's Vineyard et al., 693 F.2d (1stCir. 1982) and Decker v. Black & Decker et al., 389 Mass. 35 (1983), bothof which should be read and understood by every litigation attorney.
SETTLEMENT Issues of contribution and indemnity should always beconsidered whenever deciding whether to file a cross-claim or commence athird-party action. However, these issues are especially important when yourclient is attempting to settle out of a case, either with or without the otherco-defendants. G.L. c. 231B, §§ 1 through 4 contains the rulesregarding contribution among joint tortfeasors. The statute is short andrelatively clear. Section 4 states that when a joint tortfeasor settles(plaintiff in good faith executes a release or a covenant not to sue or not toenforce a judgment), all claims for contribution are extinguished. However,before your client settles the case, you must still consider whether there areany remaining claims of indemnity, since these claims are explicitly notaffected under the statute. See G.L. c. 231B, § 1(e). If there are noindemnity claims (either asserted or viable unasserted), settlement can be easilyeffectuated without the fear that your client will remain in the case via across-claim. If there are claims of indemnity, you must request that theco-defendants agree to dismiss their claims for indemnity by signing anappropriate Stipulation of Dismissal. If one or more of the co-defendantsrefuse, you will have to move for summary judgment as to the indemnity claimsbefore your client is out of the case. See, e.g., Slocum v. Donahue, 44 Mass.App. Ct. 937, review denied 427 Mass. 1108 (1998). If the claims of indemnityhave a valid basis (they fall within one of the three discrete grounds ofindemnity), or at least there is an issue of fact as to whether indemnity isappropriate, you will have to resolve the indemnity claims before your clientis out of the case.
In situations where your client successfully settles outof the case without the other co-defendants, you should still keep track of thecase until it is ultimately resolved. If the case proceeds to trial against theremaining defendants, a settling party may be able to obtain contribution fromthe non-settling joint tortfeasors, if the settlement represents more than thesettling party's pro rata share of the damages as determined by the jury.For example, if your client settled for $50,000, and the plaintiff obtains averdict for $50,000 against the remaining defendant, you may be entitled tocontribution against that defendant since your client paid $25,000 more thanits pro rata share of the plaintiff's damages. See, e.g., A.L. v.Commonwealth, 402 Mass. 234 (1988). But see Barrios v. Viking Seafood, Inc. etal., 1996 WL 751535 (Super. Ct. 1996).
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