Skip to content
Sep 15, 2017

Innocent Parties Can Use Indemnity to Recover Cleanup Costs under New California Decision

By: Charles Bolcom

In litigation, indemnity is generally regarded as one party’s obligation to pay for the liability of another.  Indemnity can be based on equity, where two or more parties are responsible for a plaintiff’s damages.  It can be based on a contract in which the specific terms of the indemnity are spelled out.  It can be based on a statute.  It can be based  on a document or the actions of the parties from which indemnity can be implied.  But fundamentally, indemnity is based on liability:  "There can be no indemnity without liability."  Munoz v. Davis, (1983) 141 Cal. App. 3d 420, 425.

But the Court of Appeal in Orange County Water District v. Alcoa Global Fasteners Inc. (2017) 12 Cal. App. 5th 252 decided that liability was not necessary for an indemnity action.  An innocent party like the water district could use statutory indemnity under California’s Hazardous Substance Accounting Act (HSAA) to recover cleanup costs for a contaminated aquifer.  Defendants had argued that since the district was not a liable party for the cleanup, it could not recover because only plaintiffs liable for response costs under HSAA could sue.   Plaintiffs like the district had “volunteered” to clean up the contamination.  The Court disagreed, finding that the HSAA provided a private right of action for innocent parties looking for reimbursement of their cleanup costs.  This decision is a welcome development for municipalities, real estate owners and developers and other private parties in California seeking to recover their costs for cleaning up hazardous waste.