Earl L. HOLLOWAY, Cross-complainant and Appellant, v. CRESCENT TRUCK LINES, INC., et al., Cross-defendants and Respondents.
Earl L. Holloway, M.D. (hereafter Holloway) timely appeals from a post-trial order of the Napa County Superior Court denying his application for attorney fees and expert witness fees on the grounds that Code of Civil Procedure section 1021.6 1 was not applicable to the case and the tender of defense requirement set out in the statute had not been met. This case presents the unique question of whether a defendant who is absolved of all liability in a personal injury action is entitled to statutory attorney fees from his codefendants where there is no right to express or implied contractual indemnity. We conclude section 1021.6 does not apply to situations where the alleged indemnitee's right to indemnification would be based solely on a theory of comparative or partial equitable indemnity. As a result, Holloway's statutory claim for attorney fees and expert witness fees must be denied. Accordingly, we affirm.
I. FACTUAL AND PROCEDURAL BACKGROUND
This case arises from a tractor-trailer accident involving Crescent Truck Lines, Inc.'s employee, Robert Jessie Nolan, Jr. (hereafter Crescent and Nolan or collectively respondents). On July 26, 1991, Nolan, as a truck driver for Crescent and while in the course and scope of his employment, fell asleep at the wheel, driving Crescent's tractor-trailer into a line of stopped cars. One person was killed, and numerous others were injured.
Eight separate lawsuits alleging wrongful death and various other personal injury claims were ultimately filed against respondents and later consolidated with the present action. On July 14, 1993, plaintiffs amended their complaints to add Nolan's cardiologist, Holloway, as a defendant. Thereafter, on November 4, 1993, Crescent filed a cross-complaint for indemnity against Holloway, claiming Holloway's medical negligence prevented the proper diagnosis of Nolan's cardiac arrhythmia,2 and was a substantial factor in causing the accident. Holloway denied all allegations, and on January 11, 1994, filed a cross-complaint for comparative indemnity against Nolan and Crescent. Holloway alleged he would be entitled to comparative indemnity from respondents for any damages for which he might be found liable, and “for his costs and expenses in settling some or all of the alleged actions, in proportion to the percentage of fault or responsibility which cross-defendant's [sic] were said to bear for said damages.”
The matter proceeded to a jury trial where, on December 22, 1994, Holloway was found not liable for the accident, and Crescent was found 85 percent liable. No indemnity issue was presented to the jury in the special verdict form utilized. Reference was made, in a post-trial declaration of counsel, to a stipulation among the attorneys that “the percentage of negligence attributable to each defendant” would also apply to the cross-complaints for indemnity. A transcript of the actual stipulation has not been provided in this appeal.
Following the entry of judgment in his favor, Holloway filed a Memorandum of Costs and Disbursements, which included a claim for attorney and expert witness fees. In filing a Motion to Strike/Tax Costs, respondents opposed all demands for attorney fees and expert witness fees, as well as other costs claimed by Holloway. Holloway then filed a separate Motion for Attorney's Fees and Costs asserting a claim for implied indemnity and entitlement to attorney fees and expert witness fees pursuant to section 1021.6.
The gravamen of Holloway's motion was that respondents caused him to be sued in an unsuccessful attempt to shift the blame for the accident from themselves. To support this assertion, Holloway claimed that after respondents' expert cardiologist testified in a deposition that Holloway's care of Nolan was below the standard of care, plaintiffs immediately amended their complaints to include Holloway as a defendant and adopted Crescent's theory that Nolan's cardiac arrhythmia caused Nolan to fall asleep while driving. In support of his section 1021.6 motion Holloway claimed he had (1) prevailed on a claim for implied indemnity against respondents, (2) been forced to defend himself in the instant action solely because of the tortious conduct of Crescent and Nolan, (3) properly tendered his defense to Crescent, and (4) obtained a judgment in his favor.
On April 7, 1995, the trial court denied Holloway's Motion for Attorney's Fees and Expert Witness Fees, concluding section 1021.6 was not applicable to the case and the requirement of tendering a defense had not been met. This timely appeal followed.
A. The Applicable Standard of Review
The parties concede the trial court's determination that section 1021.6 did not apply to Holloway's case was the resolution of a question of law, and that a de novo review by this court is required. (City and County of San Francisco v. Golden Gate Heights Investments (1993) 14 Cal.App.4th 1203, 1211, 18 Cal.Rptr.2d 467; Simpson v. Unemployment Ins. Comp. Appeals Board (1986) 187 Cal.App.3d 342, 350, 231 Cal.Rptr. 690.) We agree. When the trial court ruled the statute did not apply, it was determining, as a matter of law, the resulting status of appellant under section 1021.6 with respect to his indemnification claim. Hence, the decision is properly subject to de novo review by the appellate court. (See Uniroyal Chemical Co. v. American Vanguard Corp. (1988) 203 Cal.App.3d 285, 291–292, 297–298, 249 Cal.Rptr. 787.) (Uniroyal.)
B. Section 1021.6 3 Applies in Cases Where There is an Independent Right to Indemnification
Holloway contends he is entitled to recover attorney fees and costs 4 under section 1021.6 because he was required to defend an action that arose entirely from the torts of respondent Crescent and others and was absolved of any liability.5 The case law interpreting the enactment and purpose of section 1021.6 indicates that the goal of the statute was simply to assure that a party found entitled to implied indemnity for any damages awarded would also have the right to recover attorney fees incurred in defending against the underlying action giving rise to the indemnity claim. “In short, section 1021.6 imposes liability on a tortious indemnitor for attorney fees it causes an innocent indemnitee to incur.” (Fidelity Mortgage Trustee Service, Inc. v. Ridgegate East Homeowners Assn. (1994) 27 Cal.App.4th 503, 514, 32 Cal.Rptr.2d 521 (Fidelity ).)
In John Hancock Mutual Life Ins. Co. v. Setser (1996) 42 Cal.App.4th 1524, 50 Cal.Rptr.2d 413 (John Hancock ), we reviewed the history and purpose of section 1021.6. We concluded the statutory provision “provides attorney fees to any ‘innocent indemnitee’ who has incurred attorneys fees to defend itself and has otherwise satisfied the requirements of section 1021.6, including one who has been found to be a joint tortfeasor but has been relieved of all responsibility in the fault allocation, or one who claims implied contractual indemnity.” (Id. at p. 1533, 50 Cal.Rptr.2d 413, citations omitted.) We also noted “․ section 1021.6 does not on its face create a right to indemnity. It merely ‘permits an indemnitee to recover ․ attorney fees in an implied indemnity action under specified circumstances.’ As such, section 1021.6 is simply a fee-shifting statute which codifies an exception [to] the so-called ‘American Rule’ (§ 1021),[6 ] under which each party must bear his or her own attorney fees unless otherwise provided by statute or contract.” (Id. at p. 1531, 50 Cal.Rptr.2d 413, citation omitted.)
Holloway correctly argues that section 1021.6 was enacted to “correct the injustice created” by the decision in Davis v. Air Technical Industries, Inc. (1978) 22 Cal.3d 1, 148 Cal.Rptr. 419, 582 P.2d 1010. (Davis.) (Uniroyal, supra, 203 Cal.App.3d at p. 297, 249 Cal.Rptr. 787; see also, John Hancock, supra, 42 Cal.App.4th at p. 1532, 50 Cal.Rptr.2d 413; Fidelity, supra, 27 Cal.App.4th at pp. 513–514, 32 Cal.Rptr.2d 521.) From this simple statement of fact, Holloway then concludes any codefendant absolved of liability in a personal injury action is entitled to section 1021.6 attorney fees from a defendant found liable. We find no authority for this conclusion and the cases cited by Holloway are inapposite.
Davis was a product liability case in which plaintiff had sued the manufacturer and retailer. Responsibility for the product's defect, which was determined to be the cause of the accident, was placed solely on the manufacturer. However, the retailer was found strictly liable to plaintiff. Nevertheless, the California Supreme Court held the retailer was not entitled to have its attorney fees paid by the manufacturer. The injustice addressed by section 1021.6 was the fact that the retailer incurred considerable attorney fees as a result of the manufacturer's defective design. “There are few areas of the law wherein parties may be subjected to liability solely by virtue of their status (i.e., their position within the chain of distribution) more readily, without any independent evidence of wrongdoing on their part, than in the field of products liability. [Citation.] It is clear that a retailer, which is sued on the basis that it was in the chain of distribution of an allegedly defective product which it did not manufacture, falls within the category of entities which are required to act in their own interests by defending an action by a third person arising out of the tort of another.” (Uniroyal, supra, 203 Cal.App.3d at p. 293, 249 Cal.Rptr. 787.) By the inclusion of the indemnification language, it is clear the injustice addressed by section 1021.6 was much more narrowly tailored then the interpretation proposed by Holloway.
Fidelity was a case that was remanded to the trial court for a further factual determination with respect to the applicability of section 1021.6. The decision of the Court of Appeal in Fidelity notes the language of the statute is unambiguous, and “by its terms, applies to claims for implied indemnity where the indemnitee has been required to bring or defend an action ‘through the tort of the indemnitor.’ ” (Fidelity, supra, 27 Cal.App.4th at p. 512, 32 Cal.Rptr.2d 521, italics omitted.) The decision then provides a summary of the cases involving section 1021.6. “Consistent with the plain language of the statute, the California decisional authority in which section 1021.6 is discussed has involved claims for indemnification by allegedly innocent indemnitees who have been required, through the tort of the indemnitor, to defend an action by a third party. (See Bay Development, Ltd. v. Superior Court (1990) 50 Cal.3d 1012, 1026–1027, 269 Cal.Rptr. 720, 791 P.2d 290 [purchaser of condominium complex claimed right to implied contractual indemnity against developer on ground builder's tortious misrepresentation of fact resulted in suit against new owner]; Uniroyal Chemical Co. v. American Vanguard Corp. (1988) 203 Cal.App.3d 285, 293, 249 Cal.Rptr. 787 [retailer and wholesaler of agricultural chemical sought indemnification against manufacturer who engaged in tortious conduct on grounds their liability was solely a result of their position in the chain of distribution]; Reliance Electric Co. v. Superior Court (1986) 190 Cal.App.3d 369, 372, 237 Cal.Rptr. 1 [crane owner alleged right to indemnification against designer and manufacturer of portions of crane in personal injury action]; IRM Corp. v. Carlson (1986) 179 Cal.App.3d 94, 100, 111, 224 Cal.Rptr. 438 ․ [manager of apartment complex sought indemnification against general contractor and subcontractor in suit by tenant for injuries suffered when he struck a glass shower door].)” (Ibid.) Each of these cases involved an indemnitee who, prior to the injury to the plaintiff in the underlying case, had a relationship with the indemnitor. In addition, in each case the indemnitee was sued as a result of some form of derivative, imputed or vicarious liability.
Holloway claims an entitlement to section 1021.6 attorney fees on the theory he was required to defend himself because of the tort of Crescent. It is true that Crescent was held primarily liable for the accident. The argument can, therefore, be made that, absent the negligence of Crescent, there would not have been an accident or a lawsuit. The problem with Holloway's theory is his total avoidance of the clear statutory requirement of a right to indemnification from Crescent. “[S]ection 1021.6 allows a trial court, ‘[u]pon motion, ․ [and] after reviewing the evidence in the principal case,’ to award attorney's fees to ‘a person who prevails on a claim for implied indemnity.’ This language makes clear that a determination a party prevailed ‘on a claim for implied indemnity’ is a section 1021.6 prerequisite to the trial court's exercise of its discretion to award fees. Phrased another way, if a party did not prevail on a claim for implied indemnity, then section 1021.6 is simply not applicable.” (Uniroyal, supra, 203 Cal.App.3d at 292, 249 Cal.Rptr. 787.)
The essential question presented in this appeal is whether Holloway was an “indemnitee” or could be considered a party who “prevailed on a claim for implied indemnity” as required by the statute.
C. Appellant is Not an “Indemnitee” Within the Meaning of Section 1021.6
In the underlying action Holloway was sued for medical negligence, and Crescent was sued, vicariously, for general negligence. As previously mentioned, section 1021.6 does not create an independent right to indemnity. (John Hancock, supra, 42 Cal.App.4th at p. 1531, 50 Cal.Rptr.2d 413.) We must determine whether, under the undisputed facts of this case, Holloway could have prevailed on a claim for implied indemnity if any damages had been rendered against him. (Bay Development, Ltd. v. Superior Court (1990) 50 Cal.3d 1012 1027, 269 Cal.Rptr. 720, 791 P.2d 290.)
Generally, a right to indemnification arises in three contexts; where there is an express contract 7 , where there is an implied contract (implied indemnity), or as a result of equitable considerations (equitable indemnity).8 (Bear Creek, supra, 164 Cal.App.3d at p. 1236, 211 Cal.Rptr. 172, citing Rossmoor Sanitation, Inc. v. Pylon Inc. (1975) 13 Cal.3d 622, 628, 119 Cal.Rptr. 449, 532 P.2d 97, disapproved on other grounds in Bay Development, supra, 50 Cal.3d at p. 1032, fn. 12, 269 Cal.Rptr. 720, 791 P.2d 290.)
1. Implied Contractual Indemnity
A claim for implied contractual indemnity lies where there is a specific duty owed, by the indemnitor to the indemnitee, to protect the indemnitee from a loss. “An action for implied contractual indemnity is not a claim for contribution from a joint tortfeasor; it is not founded upon a tort or upon any duty which the indemnitor owes to the injured third party. It is grounded upon the indemnitor's breach of duty owing to the indemnitee to properly perform its contractual duties.” (Bear Creek, supra, 164 Cal.App.3d at pp. 1238–1239, 211 Cal.Rptr. 172, italics in original; see also, Ryan Stevedoring Co. v. Pan–Atlantic Steamship Corp. (1956) 350 U.S. 124, 131–133, 76 S.Ct. 232, 235–37, 100 L.Ed. 133.) In addition to the requirement of a relationship between the parties to support an implied obligation to indemnify, a review of the cases demonstrates there must also be a connection by the indemnitor with the acts against which the indemnitee defended itself. (See, e.g., John Hancock, supra; Uniroyal, supra; Raynolds v. Volkswagenwerk Aktiengesellschaft (1969) 275 Cal.App.2d 997, 80 Cal.Rptr. 610; Great Western Furniture Co. v. Porter Corp. (1965) 238 Cal.App.2d 502, 48 Cal.Rptr. 76.) None of the parties has cited a case, nor have we located one, that imposes an obligation to indemnify on a theory of implied contractual indemnity where there is no connection between the parties with respect to the particular acts or omissions that led to liability in the underlying case. In determining claims of implied contractual indemnity, “[t]he court is concerned only with the obligations flowing between the indemnitor and the indemnitee, and whether the indemnitor breached an obligation which foreseeably resulted in the indemnitee being made liable for damages to the third party.” (Bear Creek, supra, 164 Cal.App.3d at p. 1240, 211 Cal.Rptr. 172, italics added; see also Prentice v. North Amer. Title Guar. Corp. (1963) 59 Cal.2d 618, 621, 30 Cal.Rptr. 821, 381 P.2d 645 [involvement of indemnitee in litigation was “the natural and proximate consequence” of the negligence of the indemnitor].)
In the present case neither of the two requirements has been met. There was no relationship between Holloway and Crescent prior to the accident, and there was no connection by Crescent with the alleged medical malpractice that formed the basis of the allegations against Holloway. Consequently, there is no basis upon which Holloway would qualify for attorney fees under an implied contractual indemnity theory.
2. Equitable Indemnity
Our Supreme Court recently provided an overview of the development of California's common law doctrine of equitable indemnity. (Western Steamship Lines, Inc. v. San Pedro Peninsula Hospital, supra, 8 Cal.4th at pp. 107–111, 32 Cal.Rptr.2d 263, 876 P.2d 1062. (Western Steamship Lines ).) In explaining the equitable nature of this form of implied indemnity, the Court observed “the restitutionary nature of indemnification clearly emerged as a common thread. ‘The basis for indemnity is restitution, and the concept that one person is unjustly enriched at the expense of another when the other discharges liability that it should be his responsibility to pay․ As [stated] in the Restatement of Restitution: ‘A person is enriched if he has received a benefit․ A person is unjustly enriched if the retention of the benefit would be unjust․ A person confers a benefit ․ not only when he adds to the property of another, but also when he saves the other from expense or loss. The word “benefit,” therefore, denotes any form of advantage.’ [Citation.] (Rest.2d Torts, § 886B, com. c, pp. 345–346; see Atchison, T. & S.F. Ry. Co. v. Lan Franco, supra, 267 Cal.App.2d at pp. 885–886, 73 Cal.Rptr. 660; Herrero v. Atkinson, supra, 227 Cal.App.2d at p. 74, 38 Cal.Rptr. 490.)” (Western Steamship Lines, Inc., supra, 8 Cal.4th at pp. 108–109, 32 Cal.Rptr.2d 263, 876 P.2d 1062.) Equitable indemnity is not available just because there are multiple tortfeasors. Its availability must be evaluated in the context of whether there has been an unjust enrichment by the indemnitor at the expense of the indemnitee. (See id. at p. 109, 32 Cal.Rptr.2d 263, 876 P.2d 1062.) “[A] cross-complaint for comparative equitable indemnity is not an action for the recovery of money or damages within the meaning of [section 1032].[9 ] It is instead a proceeding in equity by a tort defendant seeking an ‘equitable distribution of loss among multiple tortfeasors.’ ” (Miller v. American Honda Motor Co. (1986) 184 Cal.App.3d 1014, 1019, 229 Cal.Rptr. 523, citing American Motorcycle Assn. v. Superior Court (1978) 20 Cal.3d 578, 591, 146 Cal.Rptr. 182, 578 P.2d 899.)
Most important to our inquiry in the present case is the well established principle that “a fundamental prerequisite to an action for partial or total equitable indemnity is an actual monetary loss through payment of a judgment or settlement.” Christian v. County of Los Angeles (1986) 176 Cal.App.3d 466, 471, 222 Cal.Rptr. 76; see also Miller v. American Honda Motor Co., supra, 184 Cal.App.3d at p. 1020, 229 Cal.Rptr.2d 523.) Such a prerequisite is necessitated by and consistent with the concept of unjust enrichment which, in turn, gives rise to a claim for equitable indemnity. If there is no loss to the person seeking indemnification, the alleged indemnitor cannot have been unjustly enriched.
The statutory prerequisites for an entitlement to attorney fees pursuant to section 1021.6 are inconsistent with common law principles of equitable indemnity. To be entitled to attorney fees, the indemnitee must be found to be “without fault in the principal case․” (§ 1021.6 subd (c).) A party found to be totally “without fault in the principal case” is not entitled to equitable indemnity. (Western Steamship Lines, supra, 8 Cal.4th at p. 110, 32 Cal.Rptr.2d 263, 876 P.2d 1062; Christian v. County of Los Angeles, supra, 176 Cal.App.3d at p. 471, 222 Cal.Rptr. 76.) Consequently, Holloway cannot prevail on his claim for attorney fees pursuant to section 1021.6 on a theory of implied equitable indemnity.
Holloway confuses equitable indemnity and implied contractual indemnity in his argument that he is entitled to section 1021.6 fees even though he was absolved of any liability. It is true that the loss prerequisite under a claim of equitable indemnity is not present in implied contractual indemnity cases. Where there is a valid claim for implied contractual indemnity, the indemnitee need not be found liable for any damages in order to be eligible to recover statutory attorney fees, “so long as the indemnitee demonstrates it would have been entitled to indemnity for any judgment that had been rendered against it.” (Bay Development, Ltd. v. Superior Court, supra, 50 Cal.3d 1012, 1027, 269 Cal.Rptr. 720, 791 P.2d 290, italics added, citing with approval, Uniroyal, supra, 203 Cal.App.3d at pp. 291–297, 249 Cal.Rptr. 787.)
While Uniroyal does say the indemnitee need not be found liable in order to prevail in a action for section 1021.6 attorney fees, Holloway's reliance is misplaced. Although we previously referred to Uniroyal as a case that authorized section 1021.6 attorney fees among joint tortfeasors (John Hancock, supra, 42 Cal.App.4th at p. 1533, 50 Cal.Rptr.2d 413) it was a classical implied contractual indemnity case. Uniroyal involved an underlying case where plaintiffs claimed crop damage caused by a defective agricultural chemical. The manufacturer, wholesaler, and retailer were all sued and cross-complained against each other. Pursuant to a jury verdict, judgment was entered against the manufacturer and wholesaler. The jury further found the manufacturer entirely at fault. The retailer and wholesaler then filed an action for indemnity and section 1021.6 attorney fees against the manufacturer. The Court of Appeal found both the retailer and the wholesaler entitled to section 1021 attorney fees. With respect to the retailer, the court observed: “Where the right to indemnity exists in favor of a retailer of a defective product against the manufacturer who created it, or where the right to indemnity results from the retailer's being held constructively or vicariously liable for the tort of another, such indemnity is implied.” (Uniroyal, supra, 203 Cal.App.3d at p. 294, 249 Cal.Rptr. 787, citations omitted.) The relationships among the parties in Uniroyal was almost identical to those found in Davis.
The type of derivative or vicarious liability present in Davis and Uniroyal are exactly the situations addressed by section 1021.6. It does not, however, have any application to the present case where the parties to this appeal were codefendants, sued on entirely distinct negligence theories, and who had no connection with each other.
Holloway would have us construe section 1021.6 as making all defendants ultimately found liable to a plaintiff in a multiparty tort action responsible for the attorney fees incurred by other non-liable defendants also sued. To do so would go against the long-standing public policy and tradition of the American Rule as embodied in section 1021. There is no authority for the proposition that the Legislature, by passage of section 1021.6, intended such a result.
The judgment is affirmed.
1. All statutory references are to the Code of Civil Procedure unless otherwise indicated.
2. In their cross-complaint, Crescent alleged Nolan suffered from cardiac arrhythmia and this condition caused him to suffer lapses in consciousness.
3. Section 1021.6 provides: “Upon motion, a court after reviewing the evidence in the principal case may award attorney's fees to a person who prevails on a claim of implied indemnity if the court finds (a) that the indemnitee through the tort of the indemnitor has been required to act in the protection of the indemnitee's interest by bringing an action against or defending an action by a third party and (b) if that indemnitor was properly notified of the demand to bring the action or provide the defense and did not avail itself of the opportunity to do so, and (c) that the trier of fact determined that the indemnitee was without fault in the principal case which is the basis for the action in indemnity or that the indemnitee had a final judgment entered in his or her favor granting a summary judgment, a nonsuit, or a directed verdict.”
4. Where a statute does not expressly provide for an award of expert fees, the court cannot award them as a cost item. (Ripley v. Pappadopoulos (1994) 23 Cal.App.4th 1616, 28 Cal.Rptr.2d 878.) Under the rubric of costs, appellant also seeks the collection of expert witness fees. Section 1021.6 contains no provision allowing for the recovery of costs.
5. Since ultimately we decide that the statute does not apply, we need not reach the issue of whether appellant properly tendered his defense to respondents.
6. Section 1021 provides in relevant part: “Except as attorney's fees are specifically provided for by statute, the measure and mode of compensation of attorneys and counselors at law is left to the agreement, express or implied, of the parties;․”
7. Holloway does not allege any right to indemnification as a result of a contractual relationship and we need not address the issue.
8. Implied contractual indemnity and equitable indemnity are both forms of implied indemnity. (Bear Creek Planning Com. v. Title Ins. & Trust Co. (1985) 164 Cal.App.3d 1227,1236, 211 Cal.Rptr. 172 (Bear Creek ).) When referring to equitable indemnity, the courts often use the terms equitable and implied indemnity interchangeably. (See, e.g., Western Steamship Lines, Inc. v. San Pedro Peninsula Hospital (1994) 8 Cal.4th 100, 107, 32 Cal.Rptr.2d 263, 876 P.2d 1062.)
9. Section 1032 allows the court to order costs to the prevailing party.
HITCHENS, Judge.* FN* Judge of the San Francisco Superior Court sitting under assignment by the Chairperson of the Judicial Council.
HAERLE, Acting P.J., and LAMBDEN, J., concur.