You Can’t Pass Me A Tort When You’re Given A Contract Action (April-June 2010 Litigation Quarterly)
Published: April 1, 2010 By: Christopher Burrows
A Defense of Third Party Actions for Indemnity and Contribution
There is some predictability in the initial procedural blossoming of a lawsuit seeking damages for larger scale construction defects, but there is also a degree of legal nuance in the proper structuring of multi-party claims that can be overlooked by legal counsel and form the basis for a defense that is grounded in the fundamental tenants of our civil law. Under one common scenario, an owner complaining of actionable construction defects brings suit directly against its general contractor with whom it entered into contract, prompting the general contractor to institute third party claims against its subcontractors who performed the work, and who may be liable to the general contractor for the owner’s claims. Depending on the particular facts of the project at issue, there may be cause for the subcontractors to pass through liability on the original owner’s action further onto fourth party sub-subcontractors, laborers, and material suppliers. What can sometimes be disregarded by defect case defendants, in their haste to divert a charge of liability, is the interplay between claims which are based in contract, and those which are based in tort law, and the difference in legal effect that may have on their ability to sustain pass through causes of action.
The owner’s choice of legal theories determines what causes of action may be alleged by the general contractor, and those downstream of the general contractor, to pass liability. For reasons beyond the scope of this article, it may be necessary that the owner state the claims in the alternative, e.g., the plaintiff owner may be able to state both a cause of action for breach of the contract against the general contractor as well as negligence, which is an action sounding in tort law, for damages unconnected with relief that may have been provided for in the contract with the general contractor. In some circumstances, the owner may decide to file only a breach of contract action against the general contractor and forego stating an alternative action for negligence. In such an event, the general contractor and downstream defendants are limited, as a matter of law, in their ability to bring third party causes of action in tort, such as common law indemnity and contribution, because an underlying breach of contract claim does not support tort-based claims for either common law indemnity or contribution.
Common law indemnification is an equitably-imposed shifting of the entire burden of loss from one tortfeasor, who has been compelled to pay the loss to another party whose active negligence is the primary cause of the injured party’s harm.1 Under this principle, one who is considered a “passive” tortfeasor may recover indemnity from a so-called “active” tortfeasor.2 In other words, indemnification seeks to shift the loss from one tortfeasor, who has been compelled to pay, onto the shoulder of another tortfeasor, who should properly bear the loss instead.3
Common law indemnity is a fault-based tort remedy, and does not apply where an original defendant’s liability is under contract only. Indemnity cannot lie where the party seeking indemnity has any fault; the indemnitee must be only “passively negligent.”4 Fault is a tort concept, and indemnity requires a finding of “no fault” on the part of the indemnitee. Yet, breach of contract claims are not based upon the tort concept of fault. Rather they are based purely upon whether or not a defendant met its contractual obligations. Whether the direct defendant was actively or passively negligent is not an issue and is not relevant to those claims. Since a breach of contract defendant’s liability cannot be based upon either active or passive negligence, it follows that the direct defendant has no indemnity claim against a third party defendant based upon a showing that it was only passively negligent.
Contribution among joint tortfeasors is a right that inures only by statute. There is no common law claim for contribution among tortfeasors.5 Fla. Stat. §768.31, titled “Contribution Among Tortfeasors”, provides in pertinent part:
(2) Right to Contribution
(a) Except as otherwise provided in this Act, when two or more persons become jointly or severally liable in tort for the same injury to person or property … this is a right of contribution among them … (Emphasis Added)
Contribution requires common liability between contributory third party plaintiff and contributory third party defendant for plaintiff’s injury. One without fault cannot recover for contribution.6 Contribution requires joint tortfeasors. Because breach of contract claims are based purely upon whether or not a defendant met its contractual obligations, and are not based upon the tort concept of fault, it follows that the direct defendant has no contribution claim against a third party defendant based upon joint liability in tort.
The state of Florida law, with respect to the availability of third party claims for common law indemnity and contribution for a general contractor facing only a breach of contract action by a property owner for construction defect, emphasizes the importance and ubiquity of indemnity provisions in subcontracts for construction projects. Third party contractual indemnity claims bridge the contract/tort law divide, ensuring that if an owner brings a cause of action against the general contractor for breach of contract only, the general contractor has a legal avenue to pursue pass-through liability to its subcontractors can be a significant precaution. Otherwise, third party defendants facing only tort-based claims may be found to have a defense that leaves its general contractor going it alone.
1 Houdaille Industries v. Edwards, 374 So.2d 490 (Fla. 1979).
2 Mims Crane Service, Inc. v. Insley Manufacturing Corp., 226 So.2d 836, 839 (Fla. 2nd DCA 1969).
3 VTN Consolidated, Inc. v. Coastal Engineering Association, Inc., 341 So.2d 226, 228 (Fla. 2nd DCA 1976).
4 Firestone Tire and Rubber Co. v. Thompson Aircraft Tire Corp., 353 So.2d 137, 139 (Fla. 3rd DCA 1977).
5 Florida Patient’s Compensation Fund v. St. Paul Fire and Marine Ins. Co., 559 So.2d 195, 197 (Fla. 1990).
6 Kala Investments, Inc. v. Sklar, 538 So.2d 909, 916 (Fla. 3rd DCA), rev. denied 551 So.2d 461 (Fla. 1989).