Stipulation To Judgment On Indemnity Cross-Complaint “Sealed The Deal.”
Arcade Game at 2012 State Fair, Sacramento, California. Carol M. Highsmith, photographer. Library of Congress.
Code of Civil Procedure section 1021.6 has a fee-shifting provision which allows a prevailing party on a claim for implied indemnity to recover attorney’s fees if the indemnitee can show three things: (1) it had to bring or defend an action “through the tort of the indemnitor,” (2) the indemnitor refused to bring or defend the action after proper notice, and (3) the indemnitee was without fault or obtained a final judgment in its favor. This provision was by the Legislature to overrule a contrary turndown of indemnitee fee-shifting in Davis v. Air Technical Industries, Inc., 22 Cal.3d 1 (1978). (See John Hancock Mutual Life Ins. Co. v. Setser, 42 Cal.App.4th 1524, 1532 (1996).)
In Andamiro Co. Ltd. v. Round One Entertainment, LLC, Case No. B258005 (2d Dist., Div. 7 Feb. 16, 2016) (unpublished), an arcade owner sued in a negligence/products liability action subsequently filed a cross-complaint against the game’s manufacturer/distributor which was also named in plaintiff’s suit. Arcade owner obtained a summary judgment on the complaint, the manufacturer/distributor settled with plaintiff, and manufacturer/distributor stipulated to a judgment on arcade owner’s cross-complaint. The arcade owner moved for and received a fee award of $27,744.51 under section 1021.6, a ruling affirmed by the Second District.
Manufacturer/distributor’s main argument was that arcade owner never actually prevailed on the implied indemnity cross-claim (the third statutory requirement), but that was belied by the stipulated judgment in favor of arcade owner on its cross-complaint—the necessary judicial determination for 1021.6 purposes. Section 1021.6 is broad, only requiring that the indemnitee “was involved” in the action “due to the tort” of the indemnitor and allowing recovery of fees even if the indemnitee’s involvement includes defending against claims that it was negligent. (Slip Op., p. 12.) The first and second requirements, too, were met such that the fee award was affirmed.