Plaintiff trustee sued defendant attorneys for improperly advising him of his duties and for concealing an improper transfer of trust property. The jury found for the trustee, but also found that the trustee was partly responsible for his own damages. The Los Angeles County Superior Court, California, refused to modify the jury’s findings, and a judgment for damages was entered. The attorneys appealed, and the trustee cross-appealed.

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Overview

The attorneys, who had cross-claimed for equitable indemnification, argued that a good faith settlement in the beneficiaries’ action against them barred the trustee’s recovery. The trustee argued that the attorneys were not entitled to equitable indemnification. The court concluded that all of the trustee’s claims were for indemnification from a joint tortfeasor under Code Civ. Proc., § 877.6. By broadly interpreting and applying § 877.6, the court concluded that the good faith settlement encompassed and barred all of the trustee’s claims against the attorneys. All of the trustee’s claims involved the management of the trusts and either were alleged or could have been alleged in the action in which the settlement occurred. Both the trustee and the attorneys caused the same injury to the beneficiaries. All of the trustee’s alleged damages from the operation of the trusts and actions against him by the beneficiaries resulted from the acts and omissions of the trustee and the attorneys as joint tortfeasors. Although the trustee claimed that the settlement was not in good faith, he did not attempt to challenge its good faith when it was made. Thus, he was bound by that determination.

Outcome

The court affirmed the judgment on the attorneys’ cross-complaint against the trustee for equitable indemnity for reasons contained in an unpublished portion of the opinion, but reversed the judgment as to the trustee’s recovery against the attorneys, and remanded with directions.

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