Peter Culley & Associates v. Superior Court

Code of Civil Procedure section 877.6 provides a defensive procedure by which a settling joint tortfeasor or co-obligor may extricate itself from a lawsuit and bar actions for equitable indemnity by remaining joint tortfeasors or co-obligors. The central element in section 877.6 is a finding by the court that the settlement was entered in good faith.

Good faith may also play a limited role in an action brought to enforce a contractual right to indemnification. Civil Code section 2778, subdivision 5 states that, if the person indemnifying neglects to defend the person indemnified, “a recovery against the latter suffered by him in good faith, is conclusive in his favor against the former.” When, instead of a recovery by judgment, there is a settlement of the underlying action, evidence showing the presence or absence of good faith may also affect the court’s decision whether to accept the settlement as proof of an indemnitee’s liability and the amount owed.

This contractual indemnity case illustrates some of the problems caused by blurring the distinction between the role of good faith in defensive section 877.6 proceedings and its role in offensive actions to enforce…