California Code, Military and Veterans Code - MVC § 987.89

The action of a veteran purchaser for damages against any third party does not affect his right of action for all damages against any party other than the department. If the department indemnifies, or becomes obligated to indemnify, the veteran purchaser, it may likewise bring an action against any such third party responsible for damage to the contract property. In the latter event, the department may recover in the same suit all payments made on behalf of the veteran purchaser.

If either the veteran purchaser or the department brings an action against such third party, the veteran purchaser or the department, as the case may be, shall forthwith give to the other written notice of the action and of the name of the court in which the action is brought, by personal service or registered mail. Proof of such service shall be filed in such action. If the action is brought by either the veteran purchaser or the department, the other may, at any time before trial on the facts, join as party plaintiff, or shall consolidate the action if brought independently.

The court shall first apply, out of the entire amount of any judgment for any damage recovered by the veteran purchaser, a sufficient amount to reimburse the department for the amount of its expenditures for indemnification. If the department has not joined in the action or has not brought action, or if the action has not been consolidated, the court, on the department's application, shall allow as a first lien against the entire amount of any judgment for any damages recovered by the veteran purchaser, the amount of the department's expenditures for indemnification.