Opinion ID: 6967821
Heading Depth: 2
Heading Rank: 3

Heading: Equitable indemnity claim

Text: After establishing diversity-based subject matter jurisdiction, the district court granted summary judgment for Hapag-Lloyd on its equitable indemnity claim. Safeway appeals this ruling, arguing that California law precludes equitable indemnity given the facts of this case. Specifically, Safeway makes two arguments: (1) the alleged wrong is not a tort; and (2) equitable indemnity is not a permissible remedy when the claimed indem-nitee is totally without fault. Both arguments are without merit. Safeway contends that the underlying principal action for cargo damage is in contract rather than tort and thus equitable indemnity is inapplicable. However, this Court has already established that a vessel owner’s breach of its duty of care for a cargo gives rise to liability in tort, irrespective of the contractual obligations of the parties. All Alaskan Seafoods, Inc. v. M/V SEA PRODUCER, 882 F.2d 425, 429-30 (9th Cir.1989). The existence of a contract between Safeway and Galt does not preclude Hapag-Lloyd’s equitable indemnity claim against Safeway. Safeway also contends that neither it nor Hapag-Lloyd is a tortfeasor and that California law requires both indemnitee and indemnitor to be tortfeasors for a proper equitable indemnity claim. According to California law, equitable indemnity permits “a concurrent tortfeasor to obtain partial indemnity from another concurrent tortfeasor on a comparative fault basis.” American Motorcycle Ass’n. v. Superior Court of Los Angeles County, 20 Cal.3d 578, 598, 146 Cal.Rptr. 182, 578 P.2d 899 (1978). Safeway reasons that it cannot qualify as a tortfeasor because it froze its own ham and cannot tortiously act against itself. Further, Safeway reasons that Hapag-Lloyd cannot qualify as a tort-feasor because it successfully proved itself free of fault. Safeway’s reasoning would produce an unjust result. Safeway rescinded the contract with ITC, which ultimately led to an action by ITC’s insurer, Galt, against the various transportation entities. Those transportation entities eventually proved that Safeway itself caused the damage. Those transportation entities — specifically Hapag-Lloyd — incurred costs to fend off Galt’s suit, when all the while Safeway was the party that damaged the ham. After sitting back and letting the transportation entities defend themselves against Galt for damage to the ham caused by Safeway, Safeway cannot now duck responsibility by arguing that since it froze its own ham, it cannot be a tortfeasor. The wrongdoing is not that Safeway damaged its own property but rather that Safeway handled its property in such a way that led to a loss to Galt for which Hapag-Lloyd has already paid a settlement. This perspective supports a claim for equitable indemnity. The California Supreme Court recognizes the “obligation resting on one party to make good a loss or damage another has incurred.” Bay Dev., Ltd. v. Superior Court, 50 Cal.3d 1012, 1029, 269 Cal.Rptr. 720, 791 P.2d 290 (1990) (quoting E.L. White, Inc. v. City of Huntington Beach, 21 Cal.3d 497, 506, 146 Cal.Rptr. 614, 579 P.2d 505 (1978)). That principal applies to Safeway here. As to Hapag-Lloyd’s status as a tortfeasor, Mullin Dumber Co. v. Chandler, 185 Cal.App.3d 1127, 230 Cal.Rptr. 122 (1986), establishes a clear rule that a settling innocent party can take on the mantle of joint tortfeasor with the indemnitor in order to maintain an action for equitable indemnity. According to Mullin Lumber, a settling defendant is held to a lesser burden of proof in order to establish a right to indemnity and need not prove his or her own fault to be entitled to indemnity: We hold in an action for equitable indemnity based on comparative fault the settling defendant need only prove the settlement was based on a reasonable estimate of its liability at the time of the settlement. The court need only find the defendant’s ‘estimate of potential liability was reasonable at the time of settlement’ ... [and][t]his requirement is satisfied if the injured party could state a recognized cause of action against the settling defendant and the settlor faced actual, potential or reasonably apparent liability. The settling defendant would still have to prove fault on the part of the non-settling defendant contributed to the plaintiffs injuries. Id. at 1133-34, 230 Cal.Rptr. 122. Thus, by California law, Hapag-Lloyd is not precluded from equitable indemnification by virtue of its lack of fault.