Quote of the Day - This is a get-out-of-liability-free card.
Here's a conundrum for you: as a defendant, you win a lawsuit against the plaintiff. The court holds that you owe nothing to the plaintiff. Zip. Zero. Nada. Butkus.
Not to be outdone, however, the plaintiff sues someone else, and then that someone else sues you, seeking indemnity for the very same thing the plaintiff sued you.
Do you owe money to the someone else? Of course not, you think. I already won that lawsuit, so how could I be liable to someone else for the same thing that I'm not liable to the plaintiff?
You may not have read the case entitled: Prince v. Pacific Gas & Electric Co. yet.
Let's get to the facts. Ten-year old Joshua Jackson and his friend were playing video games at the friend's house and got bored. His friend's Mom suggested that Josh and and her son go outside and fly Josh's new kite. They did, but the kite got away from Josh and became tangled in some low-hanging power lines on his friend's Grandmother's property, just next door.
The boys knocked on Grandma's door to get help, but she wasn't home. They spied an aluminum pole just long enough to reach the kite, and tried to free the kite from the power lines. The pole accidentally touched one of the power lines, and Josh was severely injured. Not surprisingly, Josh sued PG&E to recover for his injuries.
PG&E won in a case referred to as Jackson I. There's a statute in California that protects easement holders like PG&E for injuries resulting from recreational use of their easements. Josh's use in flying a kite easily qualified as a recreational use, so PG&E ended up not liable to Josh.
Josh next sued his friend's Grandmother, who promptly cross-complained against PG&E for indemnity. PG&E responded that the company couldn't be liable for two reasons: first, they won in the first suit, so they couldn't be liable here. Second, PG&E claimed that there can be no indemnity where there is no liability. The Grandmother, you see, "enjoyed" the same protection from liability as PG&E, since Josh's use of her property was recreational.
Here's where it gets a bit tricky.
The easement Grandma granted to PG&E, however, requires that PG&E maintain the power lines in such a way that they won't injure someone. Here, as noted above, the power lines were hanging too low, allowing Josh to reach them with an aluminum pole. Typically, in a tort case, the idea that PG&E has no liability would likely hold up, but here we're dealing with a contract, which invokes an entirely different theory of laws.
PG&E"s problem, is two-fold. First, a child got hurt, and courts don't like to allow children to be hurt without compensating them. More important and perhaps much more relevant, however, is that PG&E breached its contractual obligation to Grandma. It didn't maintain its lines in a way that would have avoided injury to Josh. So, the Court ruled that PG&E is obligated to pay Grandma.
The real problem with PG&E's argument that there is no indemnity without liability lies in PG&E's own actions. It created the situation that resulted in Josh's injury.
The legal wrangling in the case linked above is a great read for lawyers involved in these types of cases, especially here where this case is the first time a California case has applied the "no indemnity without liability" in a case involving contracts.