HB Allocation oct2013 impact of indemnity final

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HB Allocation oct2013 impact of indemnity final

  1. 1. final October 28-29, 2013
  2. 2. Gregory L. Dillion Newmeyer&Dillion LLP Andy Miller Clyde & Co US LLP Debra R. Puebla Sinnott, Puebla, Champagne &Curet, APLC Brian DeSoto Great American Insurance Group
  3. 3.  What’s the point of indemnity agreements? ◦ Allocate loss ◦ Share (or shift) pain ◦ Protect the party to be indemnified – the “indemnitee” – against specified liability
  4. 4. Developer designs and sells automated litigation calendaring software for law firms. Firm, a customer of Developer, purchases the software from Developer. Owing to a design flaw, Developer’s software incorrectly calendars a deadline which Firm misses, leading to entry of a default judgment against Firm’s Client. Client’s retention agreement with Firm specifies that Firm will employ both manual and automated calendaring systems. Client sues Firm, which tenders suit to Developer under the Indemnity provision of Developer’s contract with Firm: Developer shall indemnify Firm from and against any and all claims to the extent that they arise out of or are in any way connected with any negligent act or omission by Developer. Developer agrees, at his own expense, and upon written request by Firm, to defend any suit, action, or demand brought against Firm on any matter encompassed by this indemnity provision. Further, Developer warrants that Firm shall be named as an insured under Developer’s policies of commercial general liability and professional liability insurance affording limits of no less than $1 million per claim, loss, or occurrence.
  5. 5. 1. Is there one? 2. If so, what does it say? (a) Who is the indemnitor? (b) Who is the indemnitee? (c) What is the scope of the indemnitor’s obligation to defend? Are there conditions/limitations? (d) What is the scope of the indemnitor’s obligation to indemnify? Are there conditions/limitations? (e) Are there cross-indemnification provisions? (f) Are there any other risk transfer provisions?
  6. 6. 1. Does the indemnitee have additional insured rights under the indemnitor’s primary and/or excess policies? (a) (b) (c) If so, what are those rights? Are the rights as an indemnitee greater than those of an AI? If the AI carrier defends the indemnitee as an insured, does it have the ability to share in that obligation with anyone? Can the indemnitee simultaneously pursue rights as indemnitee and AI?
  7. 7. 1. 2. Does it matter if both the indemnitor and the indemnitee’s direct policies are primary? Does it matter if the indemnitee is an AI under indemnitor’s policies?
  8. 8.             Gregory L. Dillion Newmeyer&Dillion LLP 949-854-7000 – greg.dillion@ndlf.com Andy Miller Clyde & Co US LLP 415-365-9825 – amiller@clydeco.us Debra R. Puebla Sinnott, Puebla, Campagne& Curet, APLC 213-996-4200 – dpuebla@spcclaw.com Brian DeSoto Great American Insurance Company Phone Email

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