Travelers Indemnity Co. v. Firestone Tire & Rubber Co.

• Decision Date: 17 July 1973
• Docket Number: Civ. A. No. 7512-73.
• Court: U.S. District Court — Southern District of Alabama
• Parties: The TRAVELERS INDEMNITY COMPANY, a corporation, Plaintiff, v. The FIRESTONE TIRE & RUBBER COMPANY, a corporation, Defendant.

360 F. Supp. 1328

The TRAVELERS INDEMNITY COMPANY, a corporation, Plaintiff, v. The FIRESTONE TIRE & RUBBER COMPANY, a corporation, Defendant.

Civ. A. No. 7512-73.

United States District Court, S. D. Alabama, S. D.

July 17, 1973.

William H. Hardie, Jr., Mobile, Ala., for plaintiff.

T. E. Twitty, and John N. Leach, Jr., Mobile, Ala., for defendant.

ORDER ON MOTION TO DISMISS

PITTMAN, Chief Judge.

The plaintiff, The Travelers Indemnity Company (hereinafter, Travelers), filed this action against the defendant, The Firestone Tire and Rubber Company (hereinafter, Firestone), seeking to recover indemnification for the expenses of defending an intermediate seller in a products liability case against Firestone and the intermediate seller. The defendant has moved the court to dismiss the complaint for failure to state a claim upon which relief can be granted.

The plaintiff's insured, Gene White Company, was a defendant in two civil actions in this court brought against White, Firestone, and others. Both of these actions sought damages for injuries allegedly caused by a defective fuel cell. The fuel cell was allegedly manufactured by Firestone and then sold to White. It was allegedly sold by White to a retail outlet that ultimately sold it to the plaintiff in one of the actions. Travelers alleges that it provided White with a defense of claims made in these civil actions pursuant to a policy of insurance and that a verdict was directed in favor of the defendant White in one case and the other civil action was dismissed against it by the plaintiff. The complaint then alleges that the plaintiff incurred expenses in defense of these two civil actions and demands judgment against Firestone.

Simply stated, the issue is whether an insurer of an intermediate seller can recover the costs of defending the intermediate seller from the manufacturer where there has been no determination of ultimate liability to the injured party and no determination of primary liability as between the manufacturer and intermediate seller. The qustion is one of first impression in Alabama. Under the Erie doctrine, in the absence of a state court ruling, a federal court sitting in a diversity of jurisdiction case has a duty to determine what a state court would hold and apply that determination to the case. Meredith v. City of Winter Haven, 320 U.S. 228, 64 S.Ct. 7, 88 L.Ed. 9 (1943); Daily v. Parker, 152 F.2d 174 (7th Cir. 1945); Wright, Federal Courts § 58.

The general rule on indemnity in tort cases is set out in 42 C.J.S. Indemnity § 21, which states in part:

It is a well-recognized rule that an implied contract of indemnity arises in favor of a person who without any fault on his part is exposed to liability and compelled to pay damages on account of the negligence or tortious act of another, the former having a right of action against the latter for indemnity. . . . This right of indemnity is based on the principle that every one is responsible for his own negligence, and if another person has been compelled by the judgment of a court having jurisdiction to pay the damages which ought to have been paid by the wrongdoer they may be recovered from him. (Emphasis added.)

This general rule sets out three prerequisites to a right of recovery: (1) that the indemnitee be without fault, (2) that the indemnitor be the party responsible, or primarily liable, and (3) that the indemnitee has been required to pay out money by a judgment of a court. This three prong...