Is an attorney entitled to indemnity for receiving funds from a third party that is not his client's client?

California, United States of America


The following excerpt is from Verde Peninsula Fund Ii, LLC v. Darwyn P. Fair, A151531 (Cal. App. 2018):

"2. Attorneys often receive payments on behalf of their clients from third parties, which the attorney agrees to hold 'in escrow' or 'in trust' pending the client's performance of a contract (e.g., payments received as a deposit on purchase of the client's property, or stock certificates received in connection with a stock sale and/or transfer). 'When an attorney receives money on behalf of a third party who is not his client, he nevertheless is a fiduciary as to such third party.' (Johnstone v. State Bar (1966) 64 Cal.2d 153, 155-156money received on behalf of non-client lienholder; Crooks v. State Bar (1970) 3 Ca1.3d 346, 355lawyer serving as escrow holder for sale of business.)

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"3. The elements of a cause of action for indemnity are (1) showing of fault on the part of the indemnitor and (2) resulting damage to the indemnitee for which the indemnitor is equitably responsible. (Bailey v. Safeway, Inc. (2011) 199 Cal.App.4th 206, 217.)

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