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Walters v. A-Way Tank Service12/29/2000
t his claim for indemnity. There is no rigid requirement that the indemnitee offer the above precise choice to the indemnitor. The primary concern is fairness to the indemnitor. If it can be shown that the indemnitor was afforded substantially the same protection that the above choice affords, then the indemnitee will have to show only potential liability. A formal tender of defense is not required, rather only an opportunity to defend is necessary. Id. at 1246 (citations omitted) (emphasis added).
The terms of the indemnity agreement govern the obligations of the parties. Meloy v. Conoco, Inc., 504 So.2d 833 (La.1987). In this case, the indemnity agreement is silent on the issue of tender and notification. Therefore, as in Morris, we find that the equitable principles of indemnity must apply.
In the instant case, it is clear from the record that A-Way offered CESI and Lloyds the option of assuming its defense pursuant to the agreement. In February of 1993, A-Way, Wilkins, and Mayeaux filed a cross-claim seeking judicial recognition of the indemnification agreement. CESI and Lloyds denied the existence of this obligation in their answer to the cross-claim. Before the settlement was consummated, A-Way, in September of 1995, filed a second cross-claim against CESI and Lloyds, again seeking recognition of its indemnification rights. Again, CESI and Lloyds denied, by answer, the existence of the obligation. Additionally, as settlement negotiations progressed, counsel for A-Way continued to press for CESI to honor its duty to defend A-Way. The record contains a letter dated October 19, 1995, from A-Way's attorney to several other attorneys, including counsel for CESI and Lloyds. The letter listed the perceived exposure of insurers involved in the litigation, including Lloyds' exposure; referenced the indemnity agreement and duty to defend; and stated in part:
As you are aware, Mr. Walters has given us until Friday to respond to his latest offer. On behalf of my clients, I am hereby making demand upon each of you to negotiate with [Walters' attorney] in good faith toward resolving this case before trial.
My client is an insured under each of your respective policies. Therefore, you owe my client a duty of good faith and fair dealing. In the body of this letter I will outline the exposure I believe each of your respective clients have. If you disagree, I would appreciate it if you would respond and give me specific facts and/or jurisprudence upon which you rely.
Considering the magnitude of Mr. Walters' injuries, if this case goes to trial, A-Way Tank is being exposed for liability in excess of the policy limits. A-Way Tank is an insured under each of your policies. Each of you owe A-Way Tank a duty to protect A-Way Tank by settling within your policy limits. Considering the $1 million offer that has been made, I am putting each of you on notice that I feel you have failed to settle within your policy limits when afforded the opportunity to do so and therefore believe you will be responsible for any excess judgment taken against my client.
I would ask that if you disagree with any of the above, each of you give me specific policy provisions upon which you rely to dispute my allegations.
As of the time of the signing of the judgment of dismissal on April 2, 1996, which was based upon the settlement, neither CESI nor Lloyds had stepped forward to provide a defense for A-Way. Given these facts, it was highly unlikely that CESI would seriously have considered taking over the defense of Walters' claims against A-Way.
However, Morris requires that the indemnitee also give the indemnitor the choice of approving the settlement
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