Someone bought a property in Berkeley, then discovered that there was an easement across it that no one told her about. She sued her broker and the seller’s broker for failing to disclose the easement.
The buyer’s broker brought a cross-complaint against the seller’s broker for “equitable indemnity.” Under California law, where there are two tortfeasors (wrongdoers) who are both liable for the plaintiff’s injuries, they are entitled to have the liability split between them based on comparable fault. This can be accomplished through the cross-complaint for equitable indemnity.
However, the trail court judge threw out the cross-complaint, claiming that, since both brokers were already in the lawsuit, their comparable fault would be apportioned anyway in the trial.
The Court of Appeal said the Judge was wrong, and allowed the cross-complaint. Among several reasons, including a Supreme Court decision that states that the cross-complaint is appropriate, the court of appeal noted that the seller’s broker could settle with the plaintiff on the eve of trial, and be dismissed. Then the Buyer’s broker would not be able to have liability apportioned- the other toreador is out of the case. The other party on appeal argued that the court could make a determination as to the good faith of a party’s settlement (CCP 877.6). The court of appeal said that was not enough- determination of a good faith settlement would not eliminate the need for a cross-complaint. After a determination of a good faith settlement, a separate motion, such as demurrer or summary judgment, would be required to dismiss the cross-complaint.
So, the rule is always file the cross-complaint. This makes sure that any liability is apportioned; and it makes sure that all tortfeasors are at the table during settlement conference.
Paragon Real Estate Group of SF Inc. v. Hansen (2009) 178 Cal.App. 4th 177.