Opinion ID: 534112
Heading Depth: 2
Heading Rank: 1

Heading: Indemnity conditioned on releasing control of the litigation

Text: 8 Victoria contends that Victoria's right to indemnity is not conditioned on releasing control of the litigation to the Bonannos, because no language explicitly creates a condition precedent and the implication of such conditions is disfavored by law. 9 We do not need to imply a condition precedent in this case. The approval clause expressly applies to litigation to the extent that the claims raised thereunder are subject to this indemnity agreement. Thus, since Victoria seeks indemnity for its settlement, the approval clause required it to seek the Bonannos' approval. 10 This result is not unreasonable, as Victoria argues. Assuming Victoria tendered control of the litigation to the Bonannos, the indemnity clause would make the Bonannos liable for any expenses resulting from the litigation, including an award in excess of a previous settlement offer. 11 Victoria argues there is a factual issue that it tendered control of the litigation to the Bonannos, fulfilling the condition precedent. Victoria contends that by informing Rosenthal of the negotiations and by allowing Rosenthal to make the opening statement at the May 27 meeting with the FNMA, there was an effective tender of control. 12 Victoria fails to raise a triable issue regarding its tender of the litigation to the Bonannos. The facts, as presented by Victoria, show that the Bonannos were excluded from the initial negotiations, and asked to stay out. The fact that Rosenthal made the first comments in the negotiations at the May 27 meeting is not significant, considering Victoria very soon thereafter made a larger settlement offer without Rosenthal's approval. 13 Even if Victoria failed to tender control of the litigation to the Bonannos, it argues that the Bonannos cannot use the failure as a defense to Victoria's action for indemnity. Victoria cites Clemmer v. Hartford Ins. Co., 22 Cal.3d 865, 151 Cal.Rptr. 285, 587 P.2d 1098 (1979), where an injured party sued an insurer on the policy after obtaining a judgment against the insured. The California Supreme Court held that the insurer could not defend by asserting the insured's failure to tender its defense to the insurer, unless the insurer could show prejudice. Prejudice is shown by proof that [the insurer] would have defended the action if there had been notice and tender. Id. at 883, 151 Cal.Rptr. at 294, 587 P.2d at 1107. Victoria claims the rule applies here, and that the Bonannos have not shown prejudice. 14 Victoria fails to show how Clemmer applies. The Clemmer court found it significant that the right of the injured party to sue an insurer after obtaining judgment against the insured is guaranteed by statute. Id. at 882, 151 Cal.Rptr. at 294, 587 P.2d at 1107. Here, however, Victoria's right would be purely contractual, and the same social policy concerns that motivate shifting the burden of showing prejudice to the insurer do not necessarily apply. Assuming the Clemmer rule applied, the Bonannos showed prejudice, as a matter of law. Rosenthal wrote a letter to Victoria the day after the May 27 meeting reiterating the Bonannos' rejection of the settlement, and expressing the desire to negotiate further or litigate. If the Bonannos cannot produce more evidence of their willingness to assume control of the litigation, this is due to the fact that Victoria settled the claims without the Bonannos' consent after Rosenthal left the meeting. 15