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The California Supreme Court issued a decision this week providing an extensive, back-to-basics tutorial in contractual indemnity language and interpretation, including the important holding that a contractual “duty to defend” is separate and distinct from a duty to “indemnify”.  If the “duty to defend” has been contracted for, it arises at the time a claim or lawsuit is brought, without waiting for the ultimate determination of whether the indemnifying party was in fact negligent or otherwise responsible for indemnification.  For example, having undertaken a duty to defend claims premised on its own negligence, the indemnifying party cannot decline to defend on the basis that it is simply deferring until its negligence has been established in court.  The Supreme Court’s opinion also reviews the boundaries of enforceable indemnification, noting that “if one seeks, in a non-insurance agreement, to be indemnified for his or her own act of negligence, regardless of the indemnitor’s fault –  protections beyond those afforded by the doctrines of implied or equitable indemnity – language on the point must be particularly clear and explicit, and will be construed strictly against the indemnitee” who benefits therefrom.  
 
Contractual indemnity is included or negotiated in a wide array of commercial contracts, and has also generated a vast body of case law with often inconsistent lines of authority.  It is also key to employer obligations in certain officer and director disputes.  Thus the state Supreme Court’s new decision is welcome in its extensive and careful reference to California’s fundamental indemnity statute Civil Code Section 2778, and its review of statutory and contractual indemnification language which can serve as an authoritative reference.  CWC partners Kathleen Carpenter and Carol Stair led CWC’s amicus curiae representation for project owners who emerged on the victorious side of this case. (Crawford v. Weather Shield Mfg., Inc., California Supreme Court No. S141541, July 21, 2008)

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