A recent Oregon Supreme Court decision in a construction defect case (Eclectic Investments, I LLC v. Patterson, 357 Or. 25 (March 19, 2015)), may signal the end of common law indemnity claims in many cases in Oregon and signal an ongoing trend in comparative fault states.
Common law indemnity is a court-created doctrine that allows a defendant to make another party pay for a plaintiff’s damages that the defendant was found liable for. Under the doctrine (as applied traditionally in Oregon and several other jurisdiction), a defendant with “passive” negligence could shift responsibility to a party whose “active” negligence caused the injury for which they were both being sued.
The court in Eclectic noted that this passive/active indemnity doctrine developed before the Oregon Legislature created the modern comparative fault system. See Oregon Revised Statutes §§ 31.600, 31.605. Under that system, defendants in Oregon are only responsible for their own fault and not their co-defendants’ fault. That is, Oregon law provides for several liability—not joint—among tortfeasors.
The Eclectic court reasoned that under this new scheme, there is be no need for a common law indemnity claim among defendants:
In cases in which the Oregon comparative fault negligence statutes apply and in which jurors allocate fault—and thereby responsibility—for payment of damages between tortfeasors, and each tortfeasor’s liability is several only, a judicially created means of allocating fault and responsibility is not necessary or justified.
Eclectic, 357 Or. at 38. Further, the court noted that this was in line with cases in other jurisdictions that have “held that the statutory adoption of a comparative negligence scheme effectively abrogates the theory of indemnity bases on the active/passive negligence dichotomy.” Eclectic, 357 Or. at 37.
Finally, the court noted that defense costs may still be shifted under limited circumstances, and suggested that they may only be available when a tortfeasor has committed a tort that “required the [passive defendant] to protect its interests by defending a claim brought by plaintiff or that plaintiff’s claim against the [passive defendant] existed only because of the tort of the [active tortfeasor].” Eclectic, 357 Or. at 39.
What does this mean? It may lead to streamlining of pleadings in multi-defendant cases (common in construction defect) by eliminating many of the superfluous indemnity cross-claims. It also clarifies that, under Oregon law, the defendants may be stuck with the allocations made by the jury, and defendants should not hope to re-shift the liability during post-verdict motions by arguing about whether their negligence was “passive” or “active.”