Legal Question in Business Law in California
Definition of legal term'agrees to defend'
In a partnership dissolution agreement(I left the partnership) the term 'C' agrees to DEFEND, indemnify and hold (me) harmless from all debts of the partnership existing as of 1999, including the electrician'. 'C' died 6 months later and her estate didn't pay her bills from the business. I was sued by the Elect and had to retain an attorney to deal with the suit. My costs so far are $3500, and my interpretation of the disso agreement is that the estate of ex partner should pay my legal fees!! There is no provision in the disso SPECIFICALLY stating legal fees will be covered however.Thanks
2 Answers from Attorneys
Re: Definition of legal term'agrees to defend'
The words "indemnify and hold harmless" and "defend," when used in an indemnity contract all pretyy much mean the same thing. The all encompass paying legal fees and any judgment. The big issue for you is if your agreement contains a clause stating it is binding upon and inures to the benefit of each party's heirs, successors and assigns. It does not have to be in those exact words but it does need to show the parties intended the agreement to bind their successors, which includes a probate estate. Unfortunately, indemnity agreements (like insurance policies) are only as good as the financial strength of the person giving them. Also, if someone who gives an indemnity refuses to do so, it takes a lawsuit to enforce the indemnity, which is just an ordinary contract.
Re: Definition of legal term'agrees to defend'
The attorney defending you against Elect. should have given you the explanation and advice you're now seeking, if she/her was aware of the disso agreement and C's death.
As I understand an agreement to DEFEND, when suit was brought against you, you were supposed to tender the defense to C (or C's estate if C was already dead), after which C or C's estate would be obligated to retain an attorney and carry out the defense, much as insurance company attorneys defend insured parties rather than the parties' own attorneys.
Having failed to tender the defense, however, you still could have recouped your legal costs through the hold harmless and indemnity provisions.
I do not practice probate law, but my understanding is that claims against an estate must be brought according to a prescribed timetable. Your claim for attorneys' fees against C's estate may not now be timely.
You may want to review the Probate Code, which should be available at the reference desk at most public libraries, on line, and for sure at the county law library. Note these sections:
Probate 9100, Expiration Date for Filing
Probate 9103. (regarding late filing of claims)
Probate 9150 Persons entitled to file
Probate 9151(a)(3) re contingent claims.
Probate 9350-9392 also may be of some interest.
If the executor or administrator knew or should have known of the indemnity and failed to notify you per Probate Code 9050-9052, he/she might be liable to you under PC 9053.
Because time deadlines may affect your rights, I suggest you consult a local attorney who is familiar with probate and get a quick reading on your chances to make a claim, or show fraud on the part of the executor or administrator.
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