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Schoolhouse LLC v. Creekside Owners

Schoolhouse LLC v. Creekside Owners

Case No. 
13-0812
Opinion Date: 
5/08/2014
Opinion Author: 
Memorandum Decision
Decision 
Affirmed
Vote: 
Unanimous
Facts 

In this case a group of defendants, but not all of them, settled out of a case. The non-settling defendant, Schoolhouse, protested the extinguishing of its implied indemnity claims against the settling defendants. Essentially, Schoolhouse thought the implied indemnity claims would allow it to keep its co-defendants potentially on the hook for anything Schoolhouse ultimately had to pay in the case.

The settling defendants argued that they had limited the plaintiffs' remaining claims to those claims that depended upon some finding of fault against Schoolhouse. In other words, all the claims against Schoolhouse that were exclusively vicarious were resolved in the settlement and only claims of direct misconduct against Schoolhouse were left. Traditionally, this scenario would make implied indemnity a non-starter for Schoolhouse.

Issue 

Whether or not Schoolhouse could keep its implied indemnity case alive even though only claims involving some fault against Schoolhouse were left (it could not). Alternatively, whether it was true that only direct claims against Schoolhouse were left (it was true).

Analysis 

The Court made short work of this case after oral argument. Even though it had originally been placed on the Rule 20 docket, once it became clear that the direct claims against Schoolhouse were all that was left, the longstanding rules of Hager v. Marshall and Woodrum v. Johnson clearly controlled and the case was affirmed unanimously in a Memorandum Decision.

The key passage in the opinion is here (second paragraph quotes the decision below):

"In the case at bar, as the respondents argue and as the circuit court found, the Amended Complaint does not assert any claims against Schoolhouse predicated upon imputed, strict, or vicarious liability of Schoolhouse for the actions or omission of the settling defendants. The circuit court concluded that
"[the] settlement agreement and competing claims for implied indemnity are unique, in that the settlement agreement extinguishes any claim for which the putative indemnitors could be held liable. The claims that would survive this Court’s approval of the parties’ settlement agreement allege independent conduct by the respective non settling defendants. As such, any verdict rendered on the remaining claims cannot be attributed to the Settling Defendants . . . ."

Op. at 9. There simply was no basis for Schoolhouse's contention that it could keep its implied indemnity claims alive when the direct claims were all that was left by the settlement. The Court concluded:

"As it currently stands, if Schoolhouse is found to be at fault for its own actions, inaction, or conduct under the independent theories of liability that have been asserted against it, Schoolhouse would not be able to seek implied indemnity as it would not be fault-free. Conversely, if Schoolhouse is found to be without fault, there would be nothing to indemnify as it will not be made to pay damages on either the independent claims asserted against it, or on any “claims for vicarious liability for work performed by or products supplied by the Settling Defendants that Creekside made or could have made against any remaining party Defendant[,]”15 which have been dismissed."

Op. at 10. A classic summary of this scenario that every litigator should know.

Commentary 

This case shows that the Court can't always be sure what it has on its hands until oral argument. When this case was scheduled for Rule 20 argument, indicating a potential new syllabus point could emerge, one might have thought a change to bedrock cases like Hager and Woodrum could be in the offing. But as it turned out, once the Court became clear on the terms of the settlement itself, those long-standing cases completely controlled the outcome.

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