Gordon & Rees San Francisco partner William Peters and senior associate Michael Wilson, Jr. recently won a bench trial seeking express contractual indemnity against several cross-defendants. The trial was bifurcated out of a larger construction personal-injury case and tried first.
The underlying personal-injury action arose out of an alleged Ellis-shoring accident during the construction of a university’s social sciences and management building. Gordon & Rees’s client served as the construction manager and university’s representative for the project. After an Ellis-shoring timber (i.e. a 4x4) allegedly fell on the lead plaintiff from over 12 feet above where he was welding, the plaintiff and his wife sued the firm’s client and various contractors seeking more than $1.7 million in damages for medical expenses, past and future wage loss, and related damages for loss of consortium.
The plaintiffs focused their case against the firm's client, arguing that in its role as construction manager, it failed to resolve a dangerous condition in the workplace. In response, Peters and Wilson filed a cross-complaint for contractual indemnity on the client’s behalf against the contractors having overlapping duties related to the construction and maintenance of the Ellis-shoring, or otherwise having a contractual obligation to maintain safe working conditions at the construction site.
Unfortunately, the contractual indemnity issues were not clear-cut. The cross-defendants argued that the firm’s client was not entitled to indemnity under the relevant contract provisions based on factual and legal arguments. The issues became complex, such that none of the parties were willing to step up and take a significant amount of the exposure in settlement talks. Recognizing the impediment to settlement, the court chose to bifurcate the client’s cross-complaint from the remainder of the case so that it could be tried first and allow the other parties to evaluate the ruling prior to the second phase of the trial.
Following the Phase 1 bench trial, the court held that Gordon & Rees’s client was entitled to express contractual indemnity (but it did not reach the issue as to the final scope of this obligation). Despite the fact that the extent of the obligation could not be resolved until after the trial of the main action, the parties recognized the ruling meant that an immediate defense obligation existed even if they could show they were not negligent, in accordance with the seminal California Supreme Court case Crawford v. Weather Shield (2008). The parties also recognized that in addition to the obligation to provide an immediate defense against plaintiffs' claims, the indemnitors would have a future obligation to indemnify/reimburse the indemnitee for any damages or loss occasioned by the indemnitors' negligence.
As a result, the Phase 1 trial win was a double-victory. Not only did the contractors fund the entire global settlement of plaintiffs’ claims on the eve of the Phase 2 Trial, but Gordon & Rees’s client received a partial reimbursement of its fees and costs incurred in defending its interests against plaintiffs’ claims and prosecuting its cross-complaint against the contractors, in accordance with Crawford and the California Court of Appeal decision in UDC v. CH2M Hill (2010).