Mel Clayton Ford v. Ford Motor Company

Appellant Ford Motor Company appeals from a judgment on an express indemnity contract in favor of respondent Mel Clayton Ford (the Dealer). The parties were codefendants in an earlier lawsuit involving a third party seriously injured while driving a vehicle manufactured by Ford and sold and repaired by the Dealer. The parties entered into separate settlements of that lawsuit, and then commenced this action for indemnity. The trial court ruled that; (1) under the express terms of the agreement between the parties, Ford’s obligation to defend the Dealer was broader than its obligation to indemnify; (2) even if the terms of the agreement could not be so construed, a broad duty to defend whenever the underlying lawsuit was potentially covered by the indemnification provision should be implied; (3) an indemnitee who settles a lawsuit after the indemnitor breaches its duty to defend and obtains a good faith determination under Code of Civil Procedure section 877.6, is entitled, without further proof, to recover its defense costs and the settlement amount from the indemnitor; (4) the Dealer could recover its defense costs and the settlement amount from Ford whether it paid these…