Mid-Century Insurance Exchange v. Daimler-Chrysler Corp.

If, prior to any litigation, an insurer pays the policy limits on a potential claim against its insured in return for a complete release of all claims, does Code of Civil Procedure 1 section 877.6 bar its later bid for equitable indemnity against other tortfeasors who enter into good faith settlements with the injured party after litigation commences against them? We conclude it does and hence affirm the judgment dismissing the equitable indemnity action of appellant Mid-Century Insurance Exchange (Mid-Century).

*313 I. Background

On February 7, 1998, Frank Eggloff owned a 1994 Chrysler Le Baron. Mid-Century was the automobile insurance liability carrier for Mr. Eggloff under a policy which provided $100,000 liability insurance. That day, Mr. Eggloff and his friend, Andreas Von Lowtzow, were attempting to start the car. The hood of the engine was raised. The battery suddenly exploded in Mr. Von Lowtzow’s face, causing serious injuries to his face and eyes.

Mr. Eggloff notified Mid-Century of a potential claim of liability against him as owner of the vehicle. Mid-Century settled Mr. Von Lowtzow’s claim at the policy limits and obtained a release of all liability before…