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Georgia Court of Appeals Holds Apportionment Statute Limits Indemnification Claim – Health Law and Regulation Update Blog Post by Eric Frisch

Health Law and Regulation Update Blog Post by Eric Frisch.

The Georgia Court of Appeals has ruled that the apportionment statute limits claims for indemnification to situations where there is a contractual right or vicarious liability.

The underlying case arose out of a failed real estate transaction. The transaction did not close because a title search did not identify one of the beneficiaries to an easement. Following the failure to close, the investment company and its five individual investors sued the law firm who was to conduct the closing and the title insurer. The evidence showed the closing attorneys hired the title insurer to issue a commitment over the easement. The title insurer hired another attorney to check title and that attorney hired an abstractor, who overlooked the beneficiary at issue. The company and individual investors sued for negligence, among other things.

The plaintiffs reached a settlement with the closing attorneys. As part of the settlement, the closing attorneys assigned to plaintiffs the right to seek indemnification from the title insurer. The individual investors then filed suit against the title insurer, both on direct liability claims and for indemnification.

The trial court granted summary judgment to the title insurer and the Court of Appeals affirmed. In pertinent part, the Court held that the claim for indemnification against the title insurer was limited to claims that either arose by contract or by vicarious liability. The Court further explained that the apportionment statute vitiated the old rule under Georgia law that a passive tortfeasor could seek indemnification from an active tortfeasor. The Court held that the apportionment statute “changed the Georgia law of joint tortfeasor liability (whether in the context of claims for contribution or in the context of claims for indemnity) by limiting joint and several liability of tortfeasors to instances when fault is legally or factually indivisible.” Since plaintiffs in this case did not seek indemnification based on contract or vicarious liability, they could not recover as a matter of law.

Take-home: Georgia’s appointment statute limits indemnification to contract and vicarious liability and the old active/passive tortfeasor distinction has limited application, if at all.

The case is ALR Oglethorpe, LLC v. Fidelity National Title Insurance Company, ___ S.E.2d ____, 863 S.E.2d 568 (Ga.Ct.App. Sept. 27, 2021).

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