311 Ga. App. 674
Ga. Ct. App.2011Background
- U. S. Lawns contracted to provide landscaping services to Bank of America and subcontracted to Cutting Edge.
- The subcontract contained an indemnity provision obligating Cutting Edge to indemnify U. S. Lawns for claims arising from Cutting Edge’s performance.
- Gloria Freeman sued Bank of America, U. S. Lawns, and Cutting Edge in 2007 for injuries from a hole on bank premises; U. S. Lawns failed to answer and went into default.
- After a denied motion to open the default, U. S. Lawns settled with Freeman in March 2009 for an amount including costs.
- In 2009, U. S. Lawns sued Cutting Edge seeking both common law and contractual indemnification for the Freeman settlement.
- The trial court denied U. S. Lawns’ summary judgment motion and granted Cutting Edge’s cross-motion for both indemnification theories.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether U. S. Lawns may recover common law indemnity for the Freeman settlement | U. S. Lawns had a meritorious defense and should be indemnified. | Settlement due to default, and no defense asserted, bars indemnity. | No; indemnity barred due to failure to assert available defense. |
| Whether U. S. Lawns may recover contractual indemnity for the Freeman settlement | Contract requires Cutting Edge to indemnify for claims arising from its performance even if there was a default. | Default and failure to assert a meritorious defense means indemnity does not arise from Cutting Edge’s performance. | No; contractual indemnity denied because the liability arose from U. S. Lawns’ default, not Cutting Edge’s performance. |
Key Cases Cited
- Nguyen v. Lumbermens Mut. Cas. Co., 261 Ga. App. 553 (2003) (indemnity may arise by operation of law; settlement does not bar indemnity unless defense was available and not asserted)
- Auto-Owners Ins. Co. v. Anderson, 252 Ga. App. 361 (2001) (indemnity generally available despite settlement; defense not asserted defeats indemnity)
- Emergency Professionals of Atlanta, P.C. v. Watson, 288 Ga. App. 473 (2007) (default and failure to assert meritorious defense defeats indemnity)
- GAF Corp. v. Tolar Constr. Co., 246 Ga. 411 (1980) (defense availability may defeat indemnity when not asserted)
- Pippin v. City of Albany, 269 Ga. App. 22 (2004) (burden on indemnitee to prove liability; failure to assert defense defeats indemnity)
- Foster v. Nix, 173 Ga. App. 720 (1985) (whether indemnitee had an available defense affects indemnity outcome)