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Recovering Indemnity Under North Carolina Law


If you own businesses – whether small, medium, or large – indemnity and contribution are important facets of North Carolina law which you should understand. These theories entitle a defendant in a civil law suit to reimbursement for part or all of any damages paid to the Plaintiff. Such reimbursement can be recovered from co-defendants who have been held jointly and severally liable or from other third parties who may be “joined” to the lawsuit by the defendant. The Raleigh business litigation attorneys of Maginnis Law can assist you in understanding your rights under North Carolina law and can protect your interests in both state and federal court. To speak with one of our lawyers, contact the firm at 919.526.0450.

In any civil action with more than one liable defendant, the Plaintiff may recover all of his damages from any of them and will usually pursue the defendant with the most assets. In that scenario, the defendant that has been required to pay will be entitled to contribution under N.C.G.S. § 1B-1. This statute allows the paying defendant to pursue the pro-rata share of the other defendants. So, for example, if there the defendant paid $150,000.00 of damages to the plaintiff and there were two other defendants, he can pursue $50,000.00 from each (equal to their 1/3 of the damages paid).

While contribution is certainly an important right, indemnity can be even more valuable. It allows a paying defendant to recover all of the damages paid from another responsible party. There are three situations where a paying defendant pay recover indemnity:

(1) Indemnity pursuant to an express contract: If you have a contract that states you are entitled to indemnity from some third-party, you can join that third-party to the civil action or file a separate action to recover any damages paid.

EXAMPLE: A roofing company hires a temporary employee from a staffing service. The agreement between the roofing company and the staffing service states that the staffing service must indemnify the roofing company for any damages it has incurred because of the actions of the temporary employee. The temporary employee drops a hammer on a homeowner. The homeowner sues the roofing company and the roofing company has to pay $25,000.00 in damages. The roofing company is entitled to recover the full amount from the staffing service.

(2)  Indemnity under a “contract implied-in-fact”: This is similar to (1) except that the contract between the parties does not expressly discuss indemnity. The courts infer from the nature of relationship, and the intended agreement, that there is a right to indemnity. Otherwise, it will work just as explained in the Example above.

(3) Indemnity under tort theory of active/passive negligence: In this situation, two defendants have been jointly sued for negligence or some other tort. However, one’s bad actions were merely passive and secondary, while the others were active and primary. Basically, one party was primarily responsible and the other was not. If this is the case, and the defendant whose negligence was passive is forced to pay damages to the plaintiff, he or she can pursue complete indemnity from the active tortfeasor.

If you have been sued in a situation where you believe you may be entitled to indemnity, or would like to pursue contribution or indemnity for a judgment you have already paid, it is important you seek legal counsel. The Raleigh civil litigation law firm of Maginnis Law will work to defend you in any civil action and, if necessary, pursue your contribution and indemnification rights.

The Raleigh attorneys of Maginnis Law regularly represent individuals and businesses – small, medium, and large – in and around the Triangle area, including Raleigh, Durham, Cary, Chapel Hill, Apex, Wake Forest, Fayetteville, as well as Chatham and Johnston Counties. For a free consultation, contact the firm at 919.526.0450. You will normally be able to speak with an attorney immediately and, if not, your call will be returned the same day. You can also submit confidential email inquiries via our contact page.