Thursday, November 3, 2022
A Connecticut law firm sued a person who allegedly had failed to attend a foreclosure sale to bid on behalf of its client Bank of America.
The Vermont Superior Court granted judgment on the pleadings because any damage suffered as the result of the breach was to the client (not a party to the suit) not the law firm
This suit is really an action for indemnity disguising as a negligence or breach of contract suit. According to the Complaint, the law firm’s client, Bank of America, N.A., realized a loss of $59,852.63 when Hayden failed to appear at the auction, and the law firm “was then liable to its client for the client’s loss in connection with this property” (Id., ¶13). The law firm now seeks to recover that $59,852.63 loss from Hayden, not because Hayden’s actions caused the law firm to sustain the loss, but because the law firm was allegedly liable to its client for the client’s loss. That is a classic indemnity claim. Such claims can be based upon either an express or implied indemnification agreement, but, either way, the claim is separate and distinct from a negligence and breach of contract claim, and indemnity claims come with their own separate set of defenses. See, for example, Quality Market v. Champlain Valley Fruit, 127 Vt. 562, 566 (1969) (“To protect the indemnitor’s right to defend against liability, a voluntary payment by an indemnitee, without notice to the person sought to be charged, may foreclose restitution.” (citation omitted)).
Assuming the allegations of the Complaint are all true, the Plaintiff law firm cannot sustain a claim against the Defendant for either negligence or breach of contract.