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Appointment: The Court Clarifies The State Of Contribution And Indemnity

May 01, 2014 BY Emily Shuman

   Since tort reform was enacted in 2005, the Georgia law on apportionment has continued to evolve. To some extent, the Courts have become more clear about whether contribution and indemnity still exist. 

   As a reminder, apportionment law in Georgia requires the trier of fact to consider all responsible entities when awarding damages.  While the statute provides means for parties to tell the trier of fact who to consider, apportionment has also been attempted by a defendant filing a third party complaint against entities not named by the underlying plaintiff.  In a recent case, Dist. Owners Ass’n, Inc. v. AMEC Envtl. & Infrastructure, Inc., 322 Ga. App. 713 (2013), cert. denied Nov. 4, 2013, the Court of Appeals clarified the types of indemnity claims that survive after tort reform, while also holding that a third party complaint that seeks common law contribution/apportionment is not a viable claim in light of the apportionment statute.  This article examines that case, a key precedent to that case, and a related issue regarding contribution.

   It is helpful to look back at the basis for apportionment law in Georgia, O.C.G.A. § 51-12-33.  This statute suggests even by its plain language that contribution has been abolished in Georgia:  Section (b) states that the damages apportioned by the trier of fact “shall not be subject to any right of contribution” and “shall not be a joint liability among the persons liable”.

   A subsequent case, Murray v. Patel, 304 Ga. App. 253 (2010), was consistent with the statute to the extent it held there was no right of contribution between the defendant/third party plaintiff and third party defendant.  However, in Murray, the Court allowed the third party complaint to survive despite the third party defendant’s motion to dismiss.  There, the plaintiffs sued the defendants for alleged injuries from a car incident in which the plaintiffs’ son was driving the plaintiffs.  The defendants filed a third party complaint against the son/driver including allegations that his negligence was the sole and proximate cause of the plaintiffs’ injuries and if a judgment was entered against the third party plaintiffs, the third party defendant should indemnify them. 

   As the third party defendant, the son/driver argued that dismissal of the third party complaint was proper because (1) it was an improper means to bring in the defendants; and (2) the third party plaintiff could not seek contribution from him since joint and several liability had been abolished.  The trial court granted the dismissal of the third party complaint.  The Court of Appeals, however, reversed, holding (1) the indemnification language was sufficient for a viable third party complaint seemingly at least in part because by pleading that, the third party plaintiff did not completely deny liability; and (2) even though the third party plaintiffs and the third party defendant cannot seek contribution against each other, the plain language of the apportionment statute requires apportionment between them, so the third party complaint cannot be dismissed.

   Recently, in Dist. Owners Ass’n, Inc., the Court of Appeals questioned the precedential value of Murray. Dist. Owners Ass’n, Inc. not only held that common law contribution/apportionment has been abrogated, but, unlike in Murray, also affirmed the dismissal of the third party complaint.  In Dist. Owners Ass’n, Inc., the plaintiff sued a property owner after he jumped over a wall while jogging, thinking he would land in a parking deck and continue his run.  Instead, when he jumped there was actually a deep drop off and he was injured. The property owner/defendant filed a third party complaint against various third party defendants seeking common law indemnification, or in the alternative, common law apportionment, for any amount the defendant may be liable to the plaintiff.  Most third party defendants filed motions to dismiss (although one filed a motion for summary judgment) arguing that the third party claims were barred by the apportionment statute. The trial court granted their motions, and the Court of Appeals affirmed.

   In reaching its decision, the Court addressed indemnity and then contribution.  First, the Court held that the type of indemnity claim asserted in this particular case (i.e., if I as the defendant/third party plaintiff owe the plaintiff, then you as the third party defendant owe me) was not a viable claim for common law indemnity.  In other words, under the circumstances and allegations in Dist. Owners Ass’n, Inc., using a third party complaint to name a joint tortfeasor was not a way around the apportionment statute.  This reasoning is critical, and goes back to the plain language of the apportionment statute, which says there is no right of contribution nor is there joint liability.  The Court suggested the third party complaint might have been viable, however, if there were allegations of (a) contractual indemnity; or (b) common law indemnity principles of vicarious liability/imputed negligence (e.g., agent-principal, employer-employee), since O.C.G.A. § 51-12-33 has not abrogated claims based on those principles.  Therefore, while this indemnity claim did not survive, a third party claim for indemnity might be proper under the right facts.  (A subsequent case suggests that Georgia law remains somewhat uncertain on whether indemnity based on the passive/active negligence theory is a third form of indemnity that may have survived apportionment.  See Allstate Prop. & Cas. Ins. Co. v. Omega Flex, Inc., Civil Action No. 1:13-cv-879-JEC, 2014 WL 1292588 (N.D. Ga. Mar. 31, 2014)).

   Second, the Dist. Owners Ass’n, Inc Court held there is no independent claim for apportionment as a means to seek contribution.  The apportionment statute provides two situations in which to consider apportioning fault to a non-party: fault may be apportioned to a non-party with whom the plaintiff settled; or a non-party who was identified in a notice filed by a defendant.  Filing a third party complaint is not discussed in this statute.  “[N]ot only did OCGA § 51-12-33 fail to create a cause of action for apportionment, it abrogated such actions under the common law.”  Therefore, while citing to Murray as a correct statement of the law, the Court expressed doubt in the precedential value of Murray.  “[I]n the time since Murray was decided….our Supreme Court has held that OCGA § 51-12-33 supplanted claims for common-law contribution and apportionment.” 

   In light of Dist. Owners Ass’n, Inc., it seems the validity of the third party indemnity claim in Murraymay also be in question.  Therefore, while clarifying legal precedent, Dist. Owners Ass’n, Inc. is also instructive about the procedural mechanisms for identifying an entity against whom to consider apportioning damages. The holding in Dist. Owners Ass'n, Inc. suggests added clarity and precedential value since the very same judge who wrote the opinion in Murray later concurred with the opinion in Dist. Owners Ass'n, Inc. that questioned whether Murray is binding.  This stance seems to provide additional guidance that the holding in Dist. Owners Ass'n, Inc. is the state of the Court's interpretation of the apportionment statute.  The abrogation of contribution is further confirmed by a recent United States District Court decision, Allstate Prop. & Cas. Ins. Co. v. Omega Flex, Inc.

   In addition to the above, one needs to consider the interplay with other holdings by the Court of Appeals.  Contribution is available between joint tortfeasors where a case has not reached the trier of fact (e.g., the joint tortfeasors settle with the plaintiff).  Zurich Am. Ins. Co. v. Heard, 321 Ga. App. 325 (2013); see alsoBrian T. Moore and Myles Levelle, Georgia Court of Appeals: Defendants’ Maintain Their Right to Contribution for Pre-trial Settlements, DREW ECKL & FARNHAM LLP JOURNAL, May 2013, at 22.  In Zurich Am. Ins. Co., the Court essentially held that contribution is possible between joint tortfeasors in the context of pre-trial settlements because the case has not reached the “trier of fact” to trigger the application of the apportionment statute. 

   It will be important to keep these distinctions and also overlap in mind, as future opinions by Georgia courts will likely continue to develop and clarify the implications of apportionment and related principles under Georgia law.  An understanding of the current state of the law should better equip parties, insurance companies, and legal practitioners to determine how to address such issues (e.g., which motion might be advantageous) if and when they arise.

The Journal is a publication for the clients of Drew Eckl & Farnham, LLP. It is written in a general format and is not intended to be legal advice to any specific circumstance. Legal Opinions may vary when based upon subtle factual differences. All rights reserved. 

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H. Michael Bagley