Zalkind v. Ceradyne, Inc
Indemnity provisions typically refer to third party claims, but if the parties so intend, such provisions may also encompass direct claims.
Zalkind v. Ceradyne, Inc. (2011) 194 Cal.App.4th 1010, addressed this issue at length: "The terms 'indemnify' and 'indemnity' have been defined in several ways. 'Indemnity may be defined as the obligation resting on one party to make good a loss or damage another party has incurred.' " (Ibid.)
"Although indemnity generally relates to third party claims, 'this general rule does not apply if the parties to a contract use the term 'indemnity' to include direct liability as well as third party liability.' 'Each indemnity agreement is "interpreted according to the language and contents of the contract as well as the intention of the parties as indicated by the contract."' When indemnity is expressly provided by contract, the extent of the duty to indemnify must be determined from the contract itself. " (Zalkind, supra, 194 Cal.App.4th at p. 1024.)
"'The question whether an indemnity agreement covers a given case turns primarily on contractual interpretation, and it is the intent of the parties as expressed in the agreement that should control. When the parties knowingly bargain for the protection at issue, the protection should be afforded. This requires an inquiry into the circumstances of the damage or injury and the language of the contract; of necessity, each case will turn on its own facts.' The indemnity provisions of a contract are to be construed under the same rules for interpreting contracts, '"with a view to determining the actual intent of the parties."' " (Zalkind, supra, 194 Cal.App.4th at pp. 1024-1025.)
The contract in Zalkind stated the "'Buyer shall indemnify, hold harmless and defend the Selling Parties . . . from and against any and all Damages that arise from or are in connection with: . . . . . . Any breach or default by the Buyer of its covenants or agreements contained in this Agreement.'" (Zalkind, supra, 194 Cal.App.4th at p. 1022.)
The contract defined "Damages" as "'(i) demands, claims, actions, suits, investigations and legal or other proceedings brought against any indemnified party. . . and (ii) all liabilities, damages, losses, . . . costs and expenses (including . . . reasonable attorneys'. . . fees . . . ) incurred by any indemnified party.'" (Id. at p. 1023.)