Indemnity for Active Negligence Fades Away

Traditionally, when two defendants were responsible for someone else’s damages, the law occasionally permitted one of the defendants to recover payment of damages from the other. The idea was that if one defendant’s wrongdoing was the result of an affirmative act (was “actively” wrong) and the other’s was a passive omission, the passive defendant could recover from the active one. A recent case in Oregon highlights a growing trend in states with comparative fault laws to drop that rule.

A landowner hired a contractor to excavate land for a parking lot above the owner’s existing business. The contractor began work before it obtained a permit from the county, and by the time the county did issue the permit, it had observed that the soil in the upland was eroding. It did not, however, require the contractor to take action to prevent slides. The upland, predictably, slid, damaging the landowner’s property, and it sued the contractor and the county.

A jury found the landowner more than 50 percent at fault as a result of its own negligence (starting work without permits and not consulting an engineer), and as a result, the landowner collected nothing because Oregon’s comparative fault law allows payment only to plaintiffs who are 50 percent or less at fault. The jury found the county seven percent at fault and the contractor four percent at fault. Because, however, the county claimed that the contractor’s negligence was based on active excavation and its own negligence was based on failure to issue proper protective requirements, it wanted the contractor to reimburse it for its attorney fees and court costs.

Under previously recognized law, the county probably had a point. The Oregon Supreme Court ruled, however, that the comparative fault law had effectively repealed the old cases.

The court reasoned that the old rule allowing recovery of the entire expense by the “passive” defendant was adopted because, at the time, the law did not require defendants to share in the payment of damages according to the proportion of their fault. If the landowner had not been found more than 50 percent at fault, it would have been able, under the old rules, to collect from either the county or the contractor and the only recourse for whichever one paid was the rule allowing recovery of everything by whichever defendant’s negligence was considered passive. The comparative fault law has changed the no-sharing rule. In this case, if the landowner had been allowed to recover, the county would have been responsible for seven percent of the damages and the contractor four percent. Allowing a passive defendant to recover from an active defendant would interfere with the new proportion of fault rule. As a result, the court ruled that the comparative fault law overrode previous understandings of the law.

In Washington, the legislature thought about this issue when it enacted a comparative fault law. As a result, Washington hasn’t allowed recovery by a passive defendant since the early 1980’s.

If you think more than one person may be responsible for injuries or damage, and you have concerns that one of them might not be able to pay, you should discuss the question of potential recovery with a lawyer early on. There is no point in going after someone who can’t pay, and even if you leave them out of the case, the other defendants can point to them. On the other hand, if you are being sued, you should talk to a lawyer (probably the one your insurance might hire for you) about any other potential defendants. It may save you some money.

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2 Responses to Indemnity for Active Negligence Fades Away

  1. […] law requires that each responsible person pay according to the percentage of his or her fault. <https://danielreitman.wordpress.com/2015/03/23/indemnity-for-active-negligence-fades-away/&gt; A recent case from the federal appeals court covering most of the Western states, however, […]

  2. There has been a new development in the case discussed in this article. The county asked the court to reconsider its opinion in light of a law allowing defendants who pay more than their share of fault to recover from other defendants. The court agreed to reconsider its decision, but then decided that the law did not change its result. It decided that the active/passive fault issue no longer required a special rule.

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