Often, when talking to clients, a practitioner will interchangeably use words like “subrogation,” “contribution,” or “indemnification” to console a client about a loss that they are facing with a pending lawsuit or claim. However, these words are not as synonymous as some think they are. Although each term stands for the proposition of “don’t worry, we’ll get somebody else to help pay for this,” courts will carefully scrutinize whether each claim is viable in a particular situation.
Consider the recent decision in White Elec. Servs., Inc. v. Franke Food Servs., No. 09-CV-0504-CVE–PJC, 2010 WL 1542575 (N.D. Okla. Apr. 15, 2010). The case arose from an underlying lawsuit brought by Sarah Austin against an electrical contractor, White Electrical Services, Inc. Austin alleged that she received an electrical shock when she attempted to plug in a food preparation table while working at McDonald’s. Id. at *1. White settled with Ms. Austin and then brought suit against Franke, the alleged manufacturer of the food preparation table. Id.
Franke was not a party to the underlying lawsuit filed by Ms. Austin. Id. White alleged that the table was defective and that the table caused Ms. Austin’s injuries. As such, White sought to recover all funds paid to Ms. Austin from Franke. White asserted multiple claims against Franke including products liability, contractual indemnity, subrogation, equitable indemnity and contribution. Id. at *2. White apparently waived its claims of product and contractual claims. The court found that since White had not used the term “subrogation” in its complaint, it did not assert a subrogation claim. Id. When dealing with the claim of equitable indemnity, the court’s analysis was quite sound. That is, the court found that the right to indemnity is based upon a legal relationship between the parties. White asserted that since Franke was strictly liable to Austin, it was entitled to indemnity. The court disagreed and stated that in a products situation, a distributor may bring a claim for indemnification against the manufacturer of a defective product based upon the manufacturer’s duty to the distributor. Id. In this case, White was not a seller of the allegedly defective table. White was not in the chain of distribution whatsoever. The court held that a products liability theory does not supply the required legal relationship between White and Franke. Id. As such, White’s claim for equitable indemnification failed as a matter of law.
Finally, the court analyzed White’s claim for contribution and found that contribution “represents a sharing of joint and several liability by providing for proportional reimbursement from other parties who are liable to the plaintiff.” Id. at *3. Since there was at least a possibility that both White and Franke could have been jointly and severally liable to Ms. Austin, the court allowed for White’s contribution claim to go forward. The moral of this case is that practitioners must exercise caution when using seemingly synonymous terms in any document filed with the court.