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Miller v. Ellis10/31/2002
CERTIFIED FOR PUBLICATION
Mitchell D. Ellis appeals from a judgment in favor of respondent Lawrence D. Miller on Miller's action for equitable indemnity. The action arises from a previous personal injury lawsuit and ensuing malpractice action by the personal injury plaintiff against attorneys Ellis, Miller, and Joseph Pisano for failing to bring the underlying case to trial within five years. Ellis contends the trial court erred as a matter of law in applying the collateral source rule to this action, in which one of two co-tortfeasors (Miller) is seeking equitable indemnification from the other (Ellis) for sums paid in settlement of the underlying personal injury action by an insurance company. Because the trial court misapplied the collateral source rule and the remedy of equitable indemnification in a way that would result in unjust enrichment, we reverse and remand for modification of the judgment.
Factual and Procedural Background
After suffering injury in a slip and fall accident in July 1990, Michael Fay retained appellant Ellis to represent him in a personal injury action. On April 9, 1991, Ellis filed suit on behalf of Fay. In 1992, Ellis associated respondent Miller to assist in the litigation of Fay's case.
Miller was the attorney assigned to attend a trial setting conference on Fay's personal injury lawsuit. Miller set the Fay matter for trial on a date that was past the five-year deadline. As a result the Fay case was dismissed for failure to comply with the five-year statute. (Code Civ. Proc., ยง 583.310.)
Fay filed an action for legal malpractice against Ellis, Miller, and the fictitious firm of "Pisano and Ellis." Miller carried errors and omissions insurance coverage; neither Ellis nor Pisano had such coverage. Miller's malpractice insurance carrier nevertheless in effect provided Ellis and Pisano with a "courtesy defense." Ultimately, the insurer paid Fay $75,000 in settlement of Fay's lawsuit. In exchange, Fay and his attorney executed a global settlement and release prepared by Miller's malpractice insurer's outside counsel. This settlement agreement released not only Miller, but also Ellis, the fictitious firm of "Pisano & Ellis," and "any and all other agents, employees, persons, firms, associations, or corporations . . . who are or may ever become liable to the undersigned, of and from any and all claims, demands, damages, actions and causes of action of every kind, known or unknown, arising out of or in any way connected with the occurrence out of which it is claimed that the undersigned suffered damage to person and property and which resulted in the undersigned's legal malpractice claim against the parties released herein . . . with respect to their handling of the undersigned's personal injury and worker's compensation actions."
In connection with the settlement of the malpractice action, Miller incurred $13,742.78 in attorney's fees and costs. Of this amount Miller paid only his deductible in the amount of $5,000, while the insurance carrier paid the $8,742.78 remainder. Prior to the settlement of the malpractice action, Miller never advised Ellis or Pisano that he intended to pursue an action for equitable indemnity against them.
On March 2, 2000, Miller filed the instant action against Ellis, Pisano, and the alleged firm of "Pisano & Ellis" for "implied equitable indemnity." In their pretrial briefing, Ellis and Pisano both argued that the global settlement and release was in good faith and constituted a complete defense to Miller's claim for equitable indemnity pursuant to Code of Civil Procedure section 877.
At the conclusion of a two-day court trial, the trial court ru
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