Weekly Law Resume - January 27, 2011: Indemnity - Assignee of Indemnity Rights Entitled to Reimbursement of Defense Costs


Searles Valley Minerals Operations, Inc. v. Ralph M. Parson Service Co., et al. Court of Appeal, Fourth District (January 21, 2011)

An indemnitee may contract with an indemnitor for defense and indemnification for liability arising out of the indemnitor's work or actions. In this case, the issue is whether the indemnitee may assign its indemnity rights, including the incurring of defense costs, to a third party.

In 1974, Kerr-McGee Chemical Corporation ("KM") entered into a contract with Parson Service Company ("Parson") for the design and construction of a soda ash processing plant on KM's property. The design and construction included installation of a pneumatic conveyer system. The construction contract contained an indemnity provision, which held that Parson would defend and indemnify KM for personal injury or death arising out of Parson's or its subcontractors' negligence in connection with the job. The contract also permitted KM to assign its rights under the agreement.

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