Opinion
NOT TO BE PUBLISHED
APPEAL from a judgment of the Superior Court of Los Angeles County, No. BC290354 Peter D. Lichtman, Judge.
Howrey, Keith A. Meyer; Quinn Emanuel Urquhart Oliver & Hedges, Harold A. Barza, Daniel H. Bromberg and William B. Adams for Defendant and Appellant.
Morgan, Lewis & Bockius, Thomas M. Peterson; Paul A. Zevnik, Michel Y. Horton and David S. Cox for Plaintiff and Respondent.
TURNER, P. J.
I. INTRODUCTION
The Scotts Company, LLC (defendant) appeals from a February 7, 2007 judgment in favor of ITT Corporation, formerly known as ITT Industries, Inc. (plaintiff). Applying New York contract law, we affirm the judgment.
II. BACKGROUND
For 15 years, from April 1971 through November 1986, defendant (then known as O.M. Scott & Sons Company) was a wholly-owned lawn and garden products subsidiary of plaintiff. Defendant, as a subsidiary, was insured under policies issued to plaintiff. On November 24, 1986, the parties entered into a sale agreement whereby all of defendant’s stock was transferred from plaintiff to CDS Acquisition Corporation, which then changed its name to The Scotts Company. The transaction closed on December 30, 1986.
A number of lawsuits were subsequently filed alleging asbestos injuries arising from exposure prior to the December 30, 1986 sale. Plaintiff brought this action against multiple insurers alleging they had a duty to defend and indemnify it in connection with the asbestos actions. In addition, plaintiff sought a declaration it had no duty to indemnify defendant with respect to the asbestos injury claims. On April 27, 2006, the trial court granted plaintiff’s summary adjudication motion in that regard. The trial court construed the sale agreement between the parties and ruled plaintiff had no duty to indemnify defendant. The judgment was entered on February 7, 2007. This appeal followed.
Two sections of the purchase and sale agreement are central to this action—Section 8, “Indemnification” and Section 17, “Indemnity for Insurable Events.” Section 8 provides: “8.1 Indemnification by [Plaintiff]. [Plaintiff] will indemnify and hold [defendant] harmless from and against any and all claims, liabilities, losses, damages, costs and expenses, including reasonable counsel fees (collectively ‘Losses’), arising out of, or relating to: [¶] (a) any failure or any breach by [plaintiff] of any representation or warranty, covenant, obligation or undertaking made by [plaintiff] in this Agreement. [¶] (b) any lawsuit, action, proceeding, investigation or inquiry affecting [defendant] commenced on or prior to the closing date, [¶] (c) any occurrence, conduct or condition existing on or prior to the Closing Date that [¶] (i) violates, is alleged to violate or gives rise to a claim under any law, rule, ordinance, judgment, order or decree relating to handling or disposal of toxic or hazardous materials, air or water pollution or otherwise relating to protection of or damage to the environment . . .; or [¶] (ii) is the basis for any common law . . . nuisance or similar claim in connection with which the Company is alleged to have release[d] harmful, toxic or hazardous substances into [the] environment; or [¶] (iii) is the basis for a claim that the claimant contracted a disease as a result of exposure to any product of or raw material used by [plaintiff] . . .; [¶] (d) any workers compensation claim in the State of Ohio relating to pre-Closing compensable occurrences. [¶] 8.2. Limitation on Indemnification by [Plaintiff]. . . . . [¶] 8.3. Indemnification by the Purchaser. . . . . [¶] 8.4. Control of Litigation. . . . . [¶] 8.5. Payments. . . . . [¶] 8.6 Survival of Representations; Termination. [¶] . . . [With exceptions not applicable here,] [t]he indemnification obligations of any party under this Section 8 . . . shall terminate and be of no further effect on the sixth anniversary of the Closing Date.” (Italics added.) As noted above, the transaction closed on December 30, 1986. Six years from the closing date was December 30, 1992.
Plaintiff was self-insured with respect to the Ohio workers compensation claims.
Section 17 states in part: “Indemnity for Insurable Events. [¶] (a) [Plaintiff] shall indemnify and provide, or cause to be provided by its insurer, defense to [defendant] for all Losses (as defined in Section 8.1) arising out of Insurable Occurrences (as defined below) on or prior to the Closing Date, other than workers compensation claims in the State of Ohio, which are covered by Section 8. [Defendant] shall indemnify and provide, or cause to be provided by its insurer, defense to [plaintiff] for all Losses (as defined in Section 8.1) arising out of Insurable Occurrences after the Closing Date, except for occurrences for which [plaintiff] has indemnified [defendant] pursuant to Section 8.1. ‘Insurable Occurrence’ shall mean an occurrence which would customarily be insured against by corporations similarly situated with and in businesses similar to [defendant], as [defendant] exists after the Closing. [¶] (b) In the event that [defendant is] unable to recover pursuant to paragraph (a) of this Section 17, [defendant] will maintain its full right to coverage which may be available to [it] under various policies of insurance purchased or arranged by [plaintiff] and/or any of its subsidiaries. It is also understood and agreed that any and all prospective and retrospective premiums that might be due under any such policies of insurance shall be the sole responsibility of [plaintiff]. [¶] (c) This Section 17 does not refer to insurance constitution an employee welfare benefit plan.”
Plaintiff initially offered the subsidiary for sale “‘as is, where is,’” meaning the buyer would take the asset in whatever condition it was in. Plaintiff understood, however, that it would not be able to sell the subsidiary “as is” and that it would be necessary to grant the purchaser “some sort” of indemnity. Plaintiff’s chief contract negotiator, Leonard J. Nathanson, testified at a deposition that he expected prospective buyers to raise questions about employee exposure to asbestos, “environmental product liability” and age discrimination claims.
At that time, it was plaintiff’s practice to obtain insurance policies covering its subsidiaries and to insure industry-wide in certain areas. Defendant claims plaintiff refused to allow it, as a prospective purchaser, to inspect the insurance coverage. But plaintiff’s manager of insurance, Kathryn Turck-Rose, testified she believed at least some insurance information was provided to defendant. She stated, “[T]he director was not in favor of providing corporate policies to people outside the corporation, and I just can’t recall if we made an exception for divestitures.” Ms. Turck-Rose believed that at the very least, plaintiff had provided insurance schedules to defendant. According to Ms. Turck-Rose, the schedules would have shown, “[T]he type of coverage, the insurance carrier, the policy period, probably the limits of insurance, [and] maybe a very brief description of the coverage.”
The draft sale agreement circulated to prospective buyers provided in part: “Section 17. Insurance [¶] (a) [Plaintiff] shall assume responsibility for all known and unknown events occurring on or before the Closing Date that result in a loss or losses which are or would be covered under the Company’s Workers Compensation (excluding Ohio which the Company self insures)/Employers Liability, Comprehensive General Liability and Comprehensive Automobile Liability insurance written by Pacific Employers Insurance Company/INA. The Company or the Purchaser shall assume responsibility for all such events occurring after the Closing Date[.]” (Italics added.) Defendant proposed that the references to specific insurance (italicized above) be omitted and the clause changed to, “[Plaintiff] shall assume responsibility for all known and unknown insurable events occurring on or before the Closing Date that result in a loss or losses.” (Italics added.) In response, Mr. Nathanson commented, “Ohio self-insured Workers Compensation cases are not to be considered insurable events.” In addition, Mr. Nathanson wanted to substitute “occurrences”—the standard insurance contract term—for “events,” the term used in defendant’s proposed language.
Defendant also proposed that section 8 be added to the agreement as follows: “Indemnification [¶] 8.1 . . . [Plaintiff] will indemnify and hold the Purchaser . . . harmless from and against all [losses] arising out of, or related to . . . (c) any occurrence, conduct or condition existing on or prior to the Closing Date that . . . (iii) is the basis for a claim that the claimant contracted a disease as a result of exposure to any product of or raw material used by the Company.” Mr. Nathanson’s handwritten notation in response reads, “+ (iv) self funded Ohio Workers Comp – the except from sect. 17.”
A November 20, 1986 draft of the agreement added the time limitation in section 8, “The indemnification obligations of any party under this Section 8, except with respect to representations and warranties (which are governed by the preceding sentence), and the occurrences described in clause (b) of Section 8.1 (for which the indemnification shall survive until any lawsuit or other action is finally settled and not appealable), shall terminate and be of no further effect on the sixth anniversary of the Closing Date.” The November 20, 1986 draft also added a section 17(b) as follows: “In the event that the Purchaser and the Company [(defendant)] are unable to recover pursuant to paragraph (a) of this Section [17], the Company will maintain its full right to coverage which may be available to the Company under various policies of insurance purchased or arranged by [plaintiff] and/or any of its subsidiaries. It is also understood and agreed that any and all prospective and retrospective premiums that might be due under any such policies of insurance shall be the sole responsibility of [plaintiff].”
Plaintiff presented evidence section 17 was not intended to create additional indemnification obligations. Ms. Turck-Rose testified: “[Section 17(a)] was talking about how the insurance policy should work. It was part of an overall section which . . . flows into section (b) and a lot of this was discussions on how the retro premiums . . . would relate – how the insurance program would continue given the retrospective rating nature of it, how the insurance program would continue after divestiture.” At her deposition, Ms. Turck-Rose was asked, “Did you have an understanding that this proposed section 17 imposed any type of obligation on [plaintiff]?” She responded: “Certainly that [the subsidiary] after the divestiture would still have . . . access to Pacific Employers Insurance Company, . . . that claims would go into Pacific Employers and there would be retro premiums that would be charged or credited based on . . . the rating procedure of the program.” She was then asked, “But did you have an understanding that this section 17 imposed any type of obligation on [plaintiff] apart from access to the Pacific Employers policy?” Ms. Turck-Rose replied: “Well, this is talking about the Pacific Employers policy. . . . [T]his . . . section talks about our insurance and it’s a section of how the insurance is going to work post divestiture.” According to Ms. Turck-Rose’s understanding: “[S]ection 17 was an insurance section that spoke to how the insurance policies would respond when there was something that was indemnified that was subject to insurance. The indemnity section was the one that had the conditions of the indemnity, the termination of the indemnity, and governed the indemnity, and . . . section 17 was simply what happened when there was insurance that related to something that was indemnif[i]able, that was part of the indemnity agreement.” Ms. Turck-Rose’s deposition testimony continued: “Q. And it was [plaintiff] that was providing the indemnity for the insurable events in the event that [plaintiff’s] insurers would not or could not pay claims for pre-closing occurrences; right? [¶] . . . [¶] A. That is not my understanding of that section. My understanding of that section is that our insurers could step in and take on our indemnity obligations.”
Mr. Nathanson testified similarly: “Q. There was never any negotiation of a termination date for the indemnity obligations under Section 17, was there? [¶] A. There were no separate indemnity obligations under Section 17 that I’m aware of without looking at Section 8. [¶] Q. What do you mean there were no separate indemnity obligations? [¶] A. Because any indemnity in Section 17 would have been time limited by Section 8. [¶] Q. Why do you say that? [¶] A. Because that was the breadth of the indemnity we were offering up. [¶] Q. In Section 8. [¶] A. In the agreement. [¶] Q. Sir, do you remember looking at one of your notes earlier on where you had written beside Section 17 that there was no time limit on it? You wrote ‘forever.’ [¶] Do you remember that? [¶] . . . [¶] A. I remember seeing the word forever. I don’t remember in what context. I don’t remember whether it was a comment I made or it was a point that I pursued.” Mr. Nathanson further testified the section 17 indemnity obligations were subject to the section 8 time limits. The following transpired: “Q. When did you first form that belief? [¶] A. I assume at the time of negotiating the agreement, because we would not negotiate an agreement that does not have a time limit on it, an indemnity that does not have a time limit. Q. . . [¶] Did you ever tell anybody at [defendant] that Section 17 was subject to the time limits of Section 8? [¶] A. My recollection is that both parties understood there was a time limit on the indemnities. [¶] Q. Could you answer my question please? [¶] A. I think I just did. [¶] Q. My question is, did you ever—yes or no[—]tell anybody from [defendant] or anyone acting for [defendant] that Section 17 and the indemnity obligations of [plaintiff] thereunder were subject to the time limits of Section 8? [¶] A. I believe I did. . . . [¶] . . . [¶] Q. Whom did you tell that to? [¶] A. I have no idea. [¶] Q. When did you tell them that? [¶] A. I am sure that as part of this negotiation, both parties understood what the time limits were on the indemnity.” Mr. Nathanson had no recollection of ever telling defendant that if something was covered under section 8.1 of the purchase and sale agreement it was therefore excluded from section 17. Mr. Nathanson stated, “I recall that Section 17 was to include insurance matters and that’s really about all I recall on Section 17.”
The trial court ruled: to read the contract as requiring indemnification under section 17 would render the section 8.6 time limit meaningless; defendant did not show, as required under New York law, that the parties manifested an unmistakable intent to enter into an indemnity agreement with no end; the six-year limitation in section 8.6 was a specific provision; section 8.6 applied instead of the more general provisions in section 17; a contractual indemnity provision must be strictly construed; and the provisionally proffered extrinsic evidence did not establish what defendant urged. The trial court concluded, “There were no separate indemnity obligations under [section] 17 independent of Section 8.”
III. DISCUSSION
Interpretation of the purchase and sale agreement is governed by New York law. Section 20 of the contract states: “This Agreement . . . shall be construed under and in accordance with the laws of the State of New York[.]” Hence, New York law controls contractual construction. (Nedlloyd Lines B.V. v. Superior Court (1992) 3 Cal.4th 459, 470; Olinick v. BMG Entertainment (2006) 138 Cal.App.4th 1286, 1297; Cal-State Business Products & Services, inc. v. Ricoh (1993) 12 Cal.App.4th 1666, 1676.) In Nedlloyd Lines B.V., our Supreme Court held, “[A] valid choice-of-law clause, which provides that a specified body of law ‘governs’ the ‘agreement’ between the parties, encompasses all causes of action arising from or related to that agreement, regardless of how they are characterized . . . .” (Nedlloyd Lines B.V. v. Superior Court, supra, 3 Cal.4th at p. 470.)
Familiar concepts govern contract interpretation in New York state courts. The court’s role is to ascertain the parties’ intentions at the time they entered into the contract. (Evans v. Famous Music Corp. (2004) 1 N.Y.3d 452, 458 [775 N.Y.S.2d 757, 761, 807 N.E.2d 869, 872]; Greenfield v. Philles Records, Inc. (2002) 98 N.Y.2d 562, 569 [750 N.Y.S.2d 565, 569, 780 N.E.2d 166, 170].) If an agreement is clear and unambiguous on its face, the parties’ intent must be discerned from the plain language of the contract and not from extrinsic evidence. (Evans v. Famous Music Corp., supra, 807 N.E.2d at p. 872; Greenfield v. Philles Records, Inc., supra, 780 N.E.2d at pp. 170-171; Berns v. Halberstam (N.Y. App.Div. 2007) 46 A.D.3d 808, 809 [848 N.Y.S.2d 323, 325]; Clark v. Clark (N.Y. App.Div. 2006) 33 A.D.3d 836, 837 [827 N.Y.S.2d 159, 160]). And the contract must be enforced according to its plain terms. (Greenfield v. Philles Records, Inc., supra, 780 N.E.2d at p. 170; R/S Assoc. v. New York Job Deve. Auth. (2002) 98 N.Y.2d 29, 32 [744 N.Y.S.2d 358, 360, 771 N.E.2d 240, 242].) Extrinsic evidence may be considered only if the agreement is ambiguous. (Greenfield v. Philles Records, Inc., supra, 780 N.E.2d at pp. 170-171; W.W.W. Assocs. v. Giancontieri (1990) 77 N.Y.2d 157, 162 [565 N.Y.S.2d 440, 443, 566 N.E.2d 639, 641-642].) Whether an agreement is ambiguous is a question of law for the court. (Greenfield v. Philles Records, Inc., supra, 780 N.E.2d at p. 170 , ; Clark v. Clark, supra, 827 N.Y.S.2d at p. 160; Berns v. Halberstam, supra, 848 N.Y.S.2d at p. 325; Kass v. Kass (1998) 91 N.Y.2d 554, 566 [673 N.Y.S.2d 350, 356, 696 N.E.2d 174, 180]; Wallace v. 600 Partners Co. (1995) 86 N.Y.2d 543, 548 [634 N.Y.S.2d 669, 671, 658 N.E.2d 715, 717].) An agreement is ambiguous if it is reasonably susceptible of more than one interpretation. (Berns v. Halberstam, supra, 848 N.Y.S.2d at p. 325; Clark v. Clark, supra, 827 N.Y.S.2d at p. 160.) The New York Court of Appeals has explained, “A contract is unambiguous if the language it uses has ‘a definite and precise meaning, unattended by danger of misconception in the purport of the [agreement] itself, and concerning which there is no reasonable basis for a difference of opinion’ [citation].” (Greenfield v. Philles Records, Inc., supra, 780 N.E.2d at pp. 170-171.) In deciding whether an agreement is ambiguous, a court should: examine the entire contract; consider the relation of the parties; and analyze the circumstances under which the contract was executed. (Kass v. Kass, supra, 696 N.E.2d at pp. 180-181; Berns v. Halberstam, supra, 848 N.Y.S.2d at p. 325; Clark v. Clark, supra, 827 N.Y.S.2d at pp. 160-161.)
As the New York Court of Appeals explained in Kass v. Kass, supra, 696 N.E.2d at pages 180-181: “[T]he common-law principles governing contract interpretation are not [novel]. Whether an agreement is ambiguous is a question of law for the courts (see, Van Wagner Adv. Corp. v. S & M Enters. [(1986)] 67 N.Y.2d 186, 191). Ambiguity is determined by looking within the four corners of the document, not to outside sources (see, W.W.W. Assocs. v Giancontieri, [supra, ]77 N.Y.2d 157, 162-163). And in deciding whether an agreement is ambiguous courts ‘should examine the entire contract and consider the relation of the parties and the circumstances under which it was executed. Particular words should be considered, not as if isolated from the context, but in the light of the obligation as a whole and the intention of the parties as manifested thereby. Form should not prevail over substance and a sensible meaning of words should be sought’ (Atwater & Co. v Panama R. R. Co. [(1927)] 246 N.Y. 519, 524). [¶] Where the document makes clear the parties’ over-all intention, courts examining isolated provisions ‘“should then choose that construction which will carry out the plain purpose and object of the [agreement]”’ (Williams Press v State of New York [(1975)] 37 N.Y.2d 434, 440, quoting Empire Props. Corp. v Manufacturers Trust Co. [(1942)] 288 N.Y. 242, 249).”
Further, under New York law, in the event of a conflict between two provisions, a specific contract clause controls over a general one. (Muzak Corp. v. Hotel Taft Corp. (1956) 1 N.Y.2d 42, 46 [150 N.Y.S.2d 171, 174]; Green Harbour Homeowners’ Assn., Inc. v. G.H. Development and Const., Inc. (N.Y.App.Div. 2005) 14 A.D.3d 963, 965 [789 N.Y.S.2d 319, 321]; Bank of Tokyo-Mitsubishi, Ltd. New York Branch v. Kvaerner a.s. (N.Y.App.Div. 1998) 243 A.D.2d 1, 8 [671 N.Y.S.2d 905, 910].) And a construction that makes a contract provision meaningless is contrary to basic principles of contract interpretation and should be avoided. (Beal Sav. Bank v. Sommer (2007) 8 N.Y.3d 318, 324 [834 N.Y.S.2d 44, 47-48, 865 N.E.2d 1210, 1213]; Lawyers’ Fund for Client Protection of State of N.Y. v. Bank Leumi Trust Co. of N.Y. (2000) 94 N.Y.2d 398, 404 [706 N.Y.S.2d 66, 69-70, 727 N.E.2d 563, 566-567]; Columbus Park Corp. v. Department of Housing Preservation and Development of City of New York (1992) 80 N.Y.2d 19, 30-31 [586 N.Y.S.2d 554, 560, 598 N.E.2d 702, 708].)
With specific respect to indemnification contracts, the New York Court of Appeals has held: “A contract that provides for indemnification will be enforced as long as the intent to assume such a role is ‘sufficiently clear and unambiguous’ (Rodriques v. N & S Bldg. Contrs., Inc., 5 N.Y.3d 427, 433, 839 N.E.2d 357, 805 N.Y.S.2d 299 [2005]). A court must also be careful not to interpret a contracted indemnification provision in a manner that would render it meaningless (see Levine v. Shell Oil Co., 28 N.Y.2d 205, 212, 269 N.E.2d 799, 321 N.Y.S.2d 81 [1971].) When the intent is clear, an indemnification agreement will be enforced even if it provides indemnity for one’s own or a third party’s negligence [citations].” (Bradley v. Earl B. Feiden, Inc. (2007) 8 N.Y.3d 265, 274-275 [832 N.Y.S.2d 470, 475-476, 864 N.E.2d 600, 605-606].) Canela v. TLH 140 Perry Street, LLC (N.Y.App.Div. 2008) 47 A.D.3d 743, 744 [849 N.Y.S.2d 658, 659], is to the same effect: “The right to contractual indemnification depends upon the specific language of the contract [citation]. The intent to indemnify must be clearly implied from the language and purposes of the entire agreement and the surrounding circumstances [citations].” (Accord, Great Northern Ins. Co. v. Interior Const. Corp. (2006) 7 N.Y.3d 412, 417 [823 N.Y.S.2d 765, 767, 857 N.E.2d 60, 62]; Drzewinski v. Atlantic Scaffold & Ladder Co., Inc. (1987) 70 N.Y.2d 774, 777 [521 N.Y.S.2d 216, 218, 515 N.E.2d 902, 904]; Margolin v. New York Life Ins. Co. (1973) 32 N.Y.2d 149, 153 [344 N.Y.S.2d 336, 338-339, 297 N.E.2d 80, 82-83].) The intent of a party to indemnify another for the others own negligence—A indemnifies B against B’s own negligence—is found only where the contract language evinces an “‘unmistakable intent’” to indemnify. (Great Northern Ins. Co. v. Interior Const. Corp., supra, 857 N.E.2d at p. 62; Gross v. Sweet (1979) 49 N.Y.2d 102, 108 [424 N.Y.S.2d 365, 369, 400 N.E.2d 306, 309]; Hogeland v. Sibley, Lindsay & Curr Co. (1977) 42 N.Y.2d 153, 158-159 [397 N.Y.S.2d 602, 606, 366 N.E.2d 263, 266]; Levine v. Shell Oil Co., supra, 269 N.E.2d at pp. 210-213.) Here, defendant claims it is entitled to be indemnified for its own negligence prior to the closing of the December 30, 1986 sale. As noted, this occurred while defendant was plaintiff’s wholly owned subsidiary.
Defendant contends: the indemnification provisions in section 8 of the purchase and sale agreement overlap with and complement the insurance guarantee in section 17; section 17 unambiguously requires plaintiff to indemnify and defend defendant as to claims arising out of pre-sale occurrences that would customarily be insured against, such as the underlying asbestos claims, while section 8 applies without regard to customary insurance, albeit for a limited time; and section 17 provides defendant with a form of umbrella coverage—with plaintiff’s duties thereunder arising only if its insurers fails to provide coverage. Plaintiff argues the trial court’s ruling properly rests on the plain meaning of the agreement; moreover, the duty to indemnify defendant for asbestos injury claims ended in 1992, six years after the sale.
We find sections 8 and 17 of the purchase and sale agreement, when read together, are ambiguous. Indeed, the parties’ conflicting interpretations of the contract are evidence it does not have “‘a definite and precise meaning, unattended by danger of misconception’” as to the parties’ contractual duties. (Greenfield v. Philles Records, Inc., supra, 780 N.E.2d at pp. 170-171; see Sayers v. Rochester Tel. Corp. (2d Cir. 1993) 7 F.3d 1091, 1095.) The parties’ intent at the time of contracting with respect to sections 8 and 17 cannot be ascertained from the language of the contract. On one hand, section 17 could be construed as a promise by plaintiff to act, in perpetuity, as defendant’s insurer with respect to all pre-sale insurable claims, including those governed by section 8. Section 17(a) states, “ITT shall indemnify and provide, or cause to be provided by its insurer, defense to [Scotts] for all [claims, liabilities, losses, damages, costs and expenses] arising out of [an occurrence which would customarily be insured against by corporations similarly situated with and in business similar to (Scotts)] on or prior to the Closing Date . . . .” Section 17(b) provides that if defendant is unable to recover under section 17(a), then it has recourse to policies of insurance purchased by plaintiff. The foregoing language arguably makes plaintiff the first-line insurer. Section 17 contains no time limit.
On the other hand, section 17 carves out the claims governed by section 8. Plaintiff is obligated to indemnify and provide a defense to defendant with respect to claims arising out of insurable occurrences pre-sale “other than workers compensation claims in the State of Ohio”; which are covered by section 8. Defendant is required to indemnify and provide a defense to plaintiff for losses arising out of insurable occurrences post-sale “except for occurrences for which ITT has indemnified [defendant]” pursuant to section 8.1. It is not certain that, as defendant asserts, plaintiff intended to limit to six years its indemnification obligation, while also promising to act as an insurer with respect to the underlying asbestos claims. An intent to indemnify defendant with respect to the underlying asbestos claims notwithstanding the six-year limitation cannot be clearly implied from the contract language. (See Bradley v. Earl B. Feiden, Inc., supra, 864 N.E.2d at pp. 605-606; Great Northern Ins. Co. v. Interior Const. Corp., supra, 857 N.E.2d at p. 62; Drzewinski v. Atlantic Scaffold & Ladder Co., Inc., supra, 515 N.E.2d at p. 904; Margolin v. New York Life Ins. Co., supra, 297 N.E.2d at pp. 82-83.)
Further, the extrinsic evidence contradicts defendant’s asserted construction of the sale agreement. There was undisputed extrinsic evidence that at the time of contracting the parties intended section 17 to address how plaintiff’s insurance policies would operate in the aftermath of the sale; what would happen when a claim subject to indemnification by plaintiff was covered by insurance. Moreover, according to Ms. Turck-Rose and Mr. Nathanson: section 17 did not impose any separate or additional indemnification duties on plaintiff; section 8 set forth the conditions and termination of indemnity obligations, while section 17 addressed what would happen when there was insurance that related to something that was indemnifiable; and the parties understood plaintiff’s indemnification duties were time limited.
Moreover, to read section 17 as requiring plaintiff to indemnify defendant with respect to the underlying asbestos lawsuits beyond six years from the closing date would render the explicit time limitation in section 8 meaningless. In section 8, plaintiff agreed to indemnify and hold defendant harmless from and against any and all losses arising out of or relating to any pre-sale occurrence, conduct, or condition that was the basis for an asbestos claim, but only for six years following the sale. If section 17 is construed to obligate plaintiff to indemnify defendant with respect to the underlying asbestos lawsuits beyond the six year anniversary of the sale, the section 8 time limitation becomes a nullity. As a matter of New York contract law, such a construction is to be avoided. (Beal Sav. Bank v. Sommer, supra, 865 N.E.2d at p. 1213; Lawyers’ Fund for Client Protection of State of N.Y. v. Bank Leumi Trust Co. of N.Y., supra, 727 N.E.2d at pp. 566-567; Columbus Park Corp. v. Department of Housing Preservation and Development of City of New York, supra, 598 N.E.2d at p. 708.)
IV. DISPOSITION
The judgment is affirmed. Plaintiff, ITT Corporation, is to recover its costs on appeal from defendant, The Scotts Company, LLC.
I concur: KRIEGLER, J.,
MOSK, J., Dissenting
This case involves the application to asbestos claims of the indemnification terms of a corporate sales transaction agreement. The interpretation of the agreement in question may well affect many claims.
To apply the six year sunset provision of section 8 of the agreement to asbestos claims would render much of section 17 superfluous. Under New York law, which is applicable, “a contract is to be construed so as to give effect to all its provisions.” (Chase Manhattan Bank v. New Hampshire Ins. (N.Y.App.Div. 2006) 810 N.Y.S.2d 129, 130.) Thus, “a contract should not be interpreted so as to render any clause meaningless.” (RM 14 FK Corp. v. Bank One Trust Co., N.A. (N.Y.App.Div. 2007) 831 N.Y.S.2d 120, 123; see Foster Poultry Farms, Inc. v. Suntrust Bank (E.D. Cal. 2004) 355 F.Supp.2d 1145, 1150 [applying N.Y. law].)
Section 8 is a general indemnification provision by plaintiff ITT in favor of the defendant (Scotts) covering a number of specific occurrences, such as a breach of warranty, pending litigation, violations of law, nuisance claims, diseases contracted from exposure to a raw material, and product liability claims. Indemnity claims arising under section 8 have certain dollar and time limitations. Section 8.6 provides, “The indemnification obligations of any party under this section 8 . . . shall terminate and be of no further effect on the sixth anniversary of the Closing Date.” (Italics added.)
Section 17 provides for “Indemnity for Insurable Events.” This clause provides for indemnity “for all losses (as defined in section 8.1) arising out of Insurable Occurrences . . . other than workers compensation claims in the State of Ohio, which are covered by section 8.” The term “Insurance Occurrences” is defined as “an occurrence which would customarily be insured against by corporations similarly situated with and in businesses similar to the Company, as the Company exists after the Closing.” Thus, section 17 deals with indemnification of certain specified claims—those that are insurable—and specifically excludes some claims covered by section 8—specifically certain workers compensation claims. The asbestos claim in this case would seem to be the type of claim that normally would be covered by insurance, although this might be a triable issue of fact.
If section 17 simply covered the same claims covered by section 8, there would have been no need to except from section 17 coverage workers compensation claims covered by section 8. There is no mention of insurable claims or insurance in section 8. Section 8 plainly states that its time limits apply only to indemnification obligations imposed by section 8.
Section 17 is not limited to ITT making insurance available to Scotts or indemnifying Scotts only if a claim is covered by ITT’s pre-Closing insurance policies. The clause requires ITT to indemnify Scotts against claims covered by that section—claims that were customarily insured against.
Although there is an overlap between sections 8 and 17, I see no inconsistency between the two provisions. Even if there is a resort to parol evidence, the parties dispute the interpretation of the evidence. If there is to be reliance on conflicting parol evidence, summary adjudication was not appropriate. It does not seem reasonable that a party would agree to a time limitation on insurable asbestos claims when such claims go unresolved for years. (Stonewall Ins. Co. v. Asbestos Claims Management (2d Cir. 1995) 73 F.3d 1178, 1198, modified on another point in Stonewall Ins. Co. v. Asbestos Claims Management (2d. Cir. 1996) 85 F.3d 49, 51.) Any principle that indemnification provisions should be interpreted narrowly should not be dispositive here. Adherence to that principle does not override the fact that in this case there are two indemnity clauses that must be reconciled. The second one that by its language applies here is not limited by the first one. (See Mid-Hudson Catskill Ministry v. Fine Host (2d Cir. 2005) 418 F.3d 168, 178-179 [“We agree with plaintiff that the broad language of the second [indemnity] provision, when read in conjunction with the first [indemnity] provision, indicates ‘unmistakably’ [citation] that the parties intended for the second provision to apply to ‘actions of any kind or nature. . . .’”].)
I would reverse the judgment.