Opinion ID: 2634651
Heading Depth: 2
Heading Rank: 2

Heading: Implied Indemnity Claims

Text: We established the availability of implied indemnity claims in Central Washington Refrigeration, Inc. v. Barbee, 133 Wash.2d 509, 946 P.2d 760 (1997). As Barbee explains, [w]hile indemnity sounds in contract and tort it is a separate equitable cause of action. 133 Wash.2d at 513, 946 P.2d 760 (footnote omitted). A cause of action for implied indemnity arises when one party incurs a liability the other party should discharge by virtue of the nature of the relationship between the two parties. Id. The implied indemnity action in Barbee was based on the existence of implied warranties. Id. at 516, 946 P.2d 760 (a contractual relationship under the U.C.C., with its implied warranties, provides sufficient basis for an implied indemnity claim). While the implied indemnity claim in Barbee was supported by implied warranties, the issue in this case is whether an implied indemnity claim can go forward on the basis of express warranties. The Court of Appeals held that an implied indemnity claim can be supported by an express warranty. Urban Dev., 114 Wash.App. at 649-50, 59 P.3d 112 (Because a relationship involving express warranties provides a sufficient basis for an implied indemnity claim, the trial court also erred in dismissing the indemnity claim against Dryvit.). We agree. Dryvit argues that the Court of Appeals' holding conflicts with our decision in Barbee because the express warranty in this case arose through representations made in advertising and did not involve a contractual relationship. As noted above, Barbee states that a contractual relationship under the U.C.C., with its implied warranties, provides sufficient basis for an implied indemnity claim.... Barbee, 133 Wash.2d at 516, 946 P.2d 760. From this statement, Dryvit concludes implied indemnity claims must be based on an underlying contract. According to Dryvit, Barbee creates a distinction between express warranties that arise through contract and express warranties that arise through direct representations in advertising. Dryvit's position that an implied indemnity may be supported only by an express warranty contained in a contract is a misreading of Barbee. Barbee specifically identifies implied indemnity as a separate equitable remedy, not an implied contractual remedy. Barbee, 133 Wash.2d at 517 n. 12, 946 P.2d 760 (indemnity is an equitable action and `is not based on contract or tort, although either may secondarily be involved, but on one party paying more than its fair share' (quoting City of Willmar v. Short-Elliott-Hendrickson, Inc., 512 N.W.2d 872, 874 (1994))). A contract was not required in Barbee to support the implied indemnity claim. Instead, a contract was required to support the implied warranties upon which the implied indemnity claim rested because implied warranties are not permitted in the absence of a contract. See Tex Enters., 149 Wash.2d at 211, 66 P.3d 625 (the plain language of both RCW 62A.2-314 and -315[UCC] requires that implied warranties arise only out of contractual relationships.... This language can be contrasted with RCW 62A.2-313 (express warranties), the language of which does not refer to an underlying `contract'). A contract was necessary in Barbee, therefore, to support the warranty basis for the implied indemnity claim. Barbee does not support Dryvit's position that there must always be a contractual privity for an implied indemnity claim to arise. As discussed above, contractual privity is not required to create express warranties. Dryvit offers no reason why Barbee should be read to permit implied indemnity on the basis of an implied warranty but forbid implied indemnity on the basis of an express warranty. [4] Moreover, the language of Barbee does not contain such a distinction. 133 Wash.2d at 517, 946 P.2d 760 (implied indemnity claim permitted when the buyer incurs liability to a third party as a result of a defect in the goods which would constitute a breach of the seller's implied or express warranties (emphasis added)). Instead, Dryvit argues that permitting implied indemnity in this case will expose it to claims from anyone who comes into contact with a Dryvit brochure. The extent of Dryvit's exposure, however, is tied to the extent of any express warranties it chose to make in its advertising. Dryvit may limit its exposure to express warranties by not making them. If, however, Dryvit finds express warranties to be a useful tool to induce builders to use its products and wishes to continue to make such representations regarding the quality and durability of its products, it cannot hide behind the doctrine of privity when its product fails to perform as represented.