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Contribution and indemnity are both ways that a defendant in a personal injury lawsuit can sue other parties to pay for some or all of the damages that the plaintiff has collected from the defendant. Contribution and indemnity are typically used when a plaintiff is injured by multiple parties but only chooses to sue one defendant. Because, for the most part, it is the plaintiff’s prerogative who to sue, a defendant who believes that others are also liable for the plaintiff’s injuries can resort to indemnification or contribution to reimburse it for the plaintiff’s damages. For example, defendants 1, 2, and 3 all cause the same injury to the plaintiff. Still, P only sues defendant one and collects a $5,000 judgment from that defendant; defendant one can sue defendants 2 and 3 through contribution or indemnity for reimbursement for some or all of the $5,000.
Contribution and indemnification are also used when multiple defendants are found to be jointly and severally liable, and the plaintiff collects the entire judgment from one defendant. That defendant can then seek contribution or indemnification from the other defendants.
With the guidance of a lawyer, contribution allows one defendant to sue other defendants for only a portion of the total judgment. This is often used by defendants who are partially at fault and want the other defendants to pay for their respective shares of the plaintiff’s damages. Contribution requires apportionment of responsibility and damages among the defendants. This may be done equally or in proportion to fault, depending on the state. Apportionment by equal shares requires all the defendants to pay equal amounts of the judgment, regardless of how at fault they are. Some states, however, use comparative contribution, which requires each defendant to pay a portion of the judgment that is proportional to their degree of fault for the plaintiff’s injury.
However, the contribution is precluded if the defendants jointly committed an intentional tort, such as assault or battery.
Indemnity allows a defendant to sue other defendants for the entire amount of the total judgment. Thus, indemnity shifts the entire judgment to one or more defendants. Indemnity can only be used if the defendant is not at fault for the plaintiff’s injuries at all. However, some states allow one defendant to recover against another if there is a considerable difference of fault among the defendants. Therefore, the defendant who is least responsible can recover in indemnity from the most responsible defendant.
Indemnity may arise from the contract if one party has agreed to indemnify the other against the consequences of his negligence. A defendant may also seek indemnity if they were held vicariously liable for damages caused by another. This often occurs when an employer is held vicariously liable for the torts of its employee. For example, suppose a waiter punches a customer, and the customer sues the restaurant and recovers $10,000. In that case, the restaurant can seek indemnification from the waiter for the entire $10,000 since the waiter is at fault for punching the customer.
Another common use of indemnity is by suppliers of a defective product sued in a strict product liability action by an injured consumer. The suppliers can seek indemnity from previous suppliers in the distribution chain, and the manufacturer is ultimately liable if the product was defective when it left the manufacturer.
Thanks to Eglet Adams for their insight on indemnification and contribution in personal injury cases.