Opinion ID: 2275449
Heading Depth: 1
Heading Rank: 1

Heading: indemnity and comparative fault

Text: The general rule at common law provided that a joint tort feasor who is compelled to pay damages for the negligent or tortious act of another is not entitled to indemnity from the latter, [1] but an exception to this general rule allowed a tortfeasor whose responsibility for a plaintiff's damages was less than that of a joint tortfeasor (or, in the parlance of the common law, who was not  in pari delictoequal fault  with the joint tortfeasor) to obtain complete indemnity from the other party. In Brown Hotel Co. v. Pittsburgh Fuel Co ., [2] the predecessor to this Court recognized that KRS 412.030, which authorized contribution among joint tortfeasors in pari delicto, [3] abrogated the so-called general rule but made no change in the exception which allows a right to indemnity where the person seeking it and the person from whom it is sought are not in pari delicto. [4] The remaining right to indemnity, known generally after the opinion as  Brown Hotel indemnity existed: Where one of two parties does an act or creates a hazard and the other, while not concurrently joining in the act, is, nevertheless, thereby exposed to liability to the person injured, or was only technically or constructively at fault, as from the failure to perform some legal duty of inspection and remedying the hazard, the party who was the active wrongdoer or primarily negligent can be compelled to make good to the other any loss he sustained. [5] This exception allows the right of indemnity where the person seeking it and the person from whom it is sought are not in pari delicto, as where the party who was compelled to pay the damages was less culpable than the other wrongdoer, although both were equally liable to the person injured. [6] Indemnity among joint tortfeasors did not derive from a statute, but stands entirely on principles of equity, [7] and is based upon or spring[s] from the idea of equalization of burden. [8] In Hilen v. Hays , [9] this Court again departed from the common law of this state by discarding contributory negligence in favor of comparative negligence and justified the departure by stating: In broad outline, stare decisis directs us to stand by our previous decisions unless there are sound legal reasons to the contrary. Every case must be decided with a respect for precedent. But the doctrine of stare decisis does not commit us to the sanctification of ancient fallacy. In Goetzman v. Wichern, 327 N.W.2d 742 (Iowa 1983), the Supreme Court of Iowa observed: `(S)tare decisis does not preclude the change. That principle does not require blind imitation of the past or adherence to a rule ... We must reform common law doctrines that are unsound and unsuited to present conditions.' Id. at 753. The common law is not a stagnant pool, but a moving stream. City of Louisville v. Chapman, Ky., 413 S.W.2d 74, 77 (1967). It seeks to purify itself as it flows through time. The common law is our responsibility; the child of the courts. We are responsible for its direction. In International News Service v. Associated Press, 248 U.S. 215, 39 S.Ct. 68, 63 L.Ed. 211 (1918), Mr. Justice Brandeis wrote: `The unwritten law possesses capacity for growth; and has often satisfied new demands for justice by invoking analogies or by expanding a rule or principle.' 248 U.S. at 262, 39 S.Ct. at 81. Mr. Justice Sutherland wrote in Funk v. United States, 290 U.S. 371, 54 S.Ct. 212, 78 L.Ed. 369 (1933): (T)o say that the courts of this country are forever bound to perpetuate such of its rules as, by every reasonable test, are found to be neither wise nor just, because we have once adopted them as suited to our situation and institutions at a particular time, is to deny to the common law in the place of its adoption a `flexibility and capacity for growth and adaptation' which was `the peculiar boast and excellence' of the system in the place of its origin.' 290 U.S. at 383, 54 S.Ct. at 216. The adoption of comparative negligence in Hilen v. Hays was premised upon the principle of fundamental fairness, that liability should be assessed in relation to fault and that the extent of liability should be determined by the extent of the fault. [10] As a result, when there are joint tort-feasors the liability of either of them is limited by the extent of his fault. [11] This includes original defendants and third-party defendants. [12] The extent of the liability of each is a several liability and is limited to the degree of fault apportioned to each. [13] Thus, a defendant's liability is limited to its degree of fault, no more and no less. [14] The General Assembly codified the holding of Hilen v. Hays and its progeny in KRS 411.182: (1) In all tort actions, including products liability actions, involving fault of more than one party to the action, including third-party defendants and persons who have been released under subsection (4) of this section, the court, unless otherwise agreed by all parties, shall instruct the jury to answer interrogatories or, if there is no jury, shall make findings indicating: (a) The amount of damages each claimant would be entitled to recover if contributory fault is disregarded; and (b) The percentage of the total fault of all the parties to each claim that is allocated to each claimant, defendant, third-party defendant, and person who has been released from liability under subsection (4) of this section. (2) In determining the percentages of fault, the trier of fact shall consider both the nature of the conduct of each party at fault and the extent of the causal connection between the conduct and the damages claimed. (3) The court shall determine the award of damages to each claimant in accordance with the findings, subject to any reduction under subsection (4) of this section, and shall determine and state in the judgment each party's equitable share of the obligation to each claimant in accordance with the respective percentages of fault. (4) A release, covenant not to sue, or similar agreement entered into by a claimant and a person liable, shall discharge that person from all liability for contribution, but it shall not be considered to discharge any other persons liable upon the same claim unless it so provides. However, the claim of the releasing person against the other persons shall be reduced by the amount of the released persons' equitable share of the obligation, determined in accordance with the provisions of this section. [15] The writers of one of the best-known treatises on tort law suggested that the adoption of such comparative fault schemes may lead to a paradigmatic shift in the manner in which courts approach indemnity issues: Changes in the law of contribution and comparative fault may materially alter the context and the equities, thus causing courts to reconsider rules of indemnity. In the past, courts often viewed their choice as one between allocating the whole loss to one of two tortfeasors or dividing it equally between them. Adoption of comparative fault may be seen as creating another optionallocating loss according to percentages. In some contexts, this outcome may appear more equitable than either of the first two. Recognition of this option of percentage allocation has already caused some modification of the law of indemnity, and further modification may be expected. [16] In fact, some jurisdictions which have faced this issue have found that comparative negligence and comparative fault statutes have abrogated the common law remedy of equitable implied indemnity between passive and active joint tortfeasors [17] while others have modified their common law to allow only for partial indemnity in proportion to comparative fault. [18] In holding that their legislatures had modified the common law, these courts recognized equitable implied indemnity as a blunt instrument for reallocating responsibility to damages [which] shifts the entire loss from one culpable wrongdoer to another [19] and took note of the malleability of the distinction between active and passive negligence: With a little ingenuity in phrasing, negligence can be made to be either active or passive as suits the writer. For example, driving an automobile with bad brakes or running through the stop sign or using a defective crane might be said to be active negligence, while omitting maintenance of brake fluid level or neglecting to apply the brakes or failing to inspect the crane in order to discover its defectiveness might be passive negligencethese are the same acts or omissions, but the outcome depends not upon the facts, but upon how someone chooses to characterize them. [20] While labels such as active or passive are themselves largely indeterminate, questions such as whether one party's negligence is secondary because it arose from the negligence of the other party and would not have arisen but for it and whether the parties were or were not in pari delicto are proper factors to be weighed by the jury in determining the degree of fault apportioned to each party. [21] The same principles of fundamental fairness that compelled the discarding of contributory negligence in favor of comparative negligence also compels the elimination of indemnity between joint tortfeasors who shoulder unequal fault. The Supreme Court of Minnesota addressed this issue and reasoned that an equitable concept such as implied indemnity exists only to correct unjust enrichment which cannot exist in a comparative fault jurisdiction which has abandoned joint and several liability: In the related area of contributory negligence, our legislature has abandoned the all-or-nothing approach of the common law by adopting a comparative negligence statute.... Tortfeasors must now accept responsibility for damages commensurate with their own relative culpability. Because indemnity in [these] situations is an equitable doctrine, we are at liberty to ameliorate the rigid common-law rules in keeping with legislative philosophy without an express statutory mandate. By limiting the reallocation of loss between joint tortfeasors to contribution based upon relative fault, the more culpable tortfeasor will continue to bear a greater share of the loss, but at the same time his joint tortfeasor will not continue to escape all liability as in the past.... The jury found that both [the defendants] were negligent and that the negligence of each was a direct cause of plaintiff's injury. Consequently, as between them, each will bear the cost of compensating plaintiff in proportion to its relative culpability. [22] To hold otherwise effectively eviscerates the bedrock upon which KRS 411.182 was built and overrules Hilen v. Hays and its progeny. This Court held that liability should be assessed in relation to fault and ... the extent of liability should be determined by the extent of the fault [23] because of its faith that juries can properly assess relative degrees of fault and, when appropriate, place the lion's share of liability on the principal wrongdoer. Today's majority withdraws that faith and holds that, even when a jury has determined that a defendant has engaged in tortious conduct and should be responsible for a proportional share of the plaintiff's damages, a tortfeasor may bring an equitable implied indemnity action against a more culpable joint tortfeasor who is really responsible for the plaintiff's damages. This holding is plainly inconsistent with KRS 411.182. Other jurisdictions have chosen to allow plaintiffs to recover only when their own negligence is less than, or equal to, that of a defendant, but under Kentucky's system of fault allocation, a plaintiff may recover even when his responsibility for his damages exceeds that of the defendant or defendants. In other words, a plaintiff who is ninety percent (90%) responsible for his own damages may still recover against a defendant found to be ten percent (10%) liable for those damages. In striking the balance in favor of pure comparative fault, the General Assembly has clearly signaled that the legislature in this state wishes to hold wrongdoers responsible in proportion to their respective percentages of fault. [24] Today's majority opinion not only ignores the General Assembly's plain intent with respect to the comparative fault of joint tortfeasor defendants, but also potentially reinstates contributory negligence by, at least theoretically, allowing a passively negligent defendant to bring an action for equitable implied indemnity against an actively negligent plaintiff. [25] Today's majority polishes up a relic from days gone by which the courts created to address inequities which arose in the context of a harsh law of tort which held multiple jointly negligent tortfeasors entirely responsible for a single indivisible injury because it was thought that the injury could not be divided into parts to determine the responsibility of each negligent actor. Contribution, while provided for by statute as discussed in the majority opinion, was pro rata only, which was fundamentally unfair [26] when the relative liabilities of joint tortfeasors were disproportionate. In this century, Kentucky tort law requires tortious parties to pay for their share of the plaintiff's damages, and only their share of the plaintiff's damages. Equitable implied indemnity is very much an anachronism, and KRS 411.182 properly rendered it extinct.