Who Assumes Defense If Indemnity Depends On Sole Fault?
August 20, 2014
A Massachusetts case between a car dealer franchisee and an auto manufacturer Ferreira v Chrysler Group LLC shows when and if liabilities from claims by consumer purchasers, flow between downstream sellers and upstream makers– and who has to pay to defend while the fault is being figured out.
Ferreira bought a Chrysler and believing it to be defective, brought a claim against the seller, an Chrysler franchisee. Between Chrysler and its franchisee was an agreement to indemnify the other if a court should finally decide the claim was solely the fault of the other. Each also agreed that as soon as it received notice of a claim, it would defend the other.
Since the duty to defend comes first, the Court ruled that the only sort of asserted claim that would trigger the duty to defend, would be one that, if proven, would also trigger rights of indemnification.
If the claim alleged that the maker and the seller each contributed fault to the damage, each defendant would have to defend themselves.
Claim-shapers blame framing triggers duty to defend – or not.
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