Summary
In Paquin, a different panel of the Michigan Court of Appeals held that since the jury found that the plaintiff's injury was due to the negligence of both the indemnitee and the plaintiff, the injury was not due to the indemnitee's sole negligence.
Summary of this case from Burdo v. Ford Motor Co.Opinion
Docket No. 53516.
Decided February 2, 1982. Leave to appeal applied for.
Butch, Quinn, Rosemurgy, Jardis Valkanoff, P.C., for Hanna Mining Company.
Jack Carpenter, for Proksch Construction Company.
Before: N.J. KAUFMAN, P.J., and J.H. GILLIS and CYNAR, JJ.
Hanna Mining Company (hereinafter Hanna), defendant and third-party plaintiff herein, appeals as of right from the trial court's grant of a motion for directed verdict in favor of third-party defendant Proksch Construction Company (hereinafter Proksch) and from its denial of Hanna's motion for reconsideration and for entry of judgment of indemnity or a new trial on the indemnity issue.
Although there were numerous parties to this litigation, this appeal involves only Hanna and Proksch and deals with the application of two indemnification provisions contained in a contract entered into between these two parties.
Hanna was engaged in the business of mining. In connection therewith, it desired to expand existing buildings located on property owned by it to include a truck repair shop. It entered into a contract with Proksch whereby Proksch agreed to perform the desired expansion. The bid proposal contained the following conditions:
"The Contractor shall defend any and all suits brought against the Owner and its officers, agents and employees by any employee or other person (whether employed by the Contractor or not) for damage to property and/or injury to person (including death) alleged or claimed to have been caused by or through the performance by the Contractor or any subcontractor of the Work, and shall indemnify and hold harmless the Owner, its officers, agents and employees, from and against any and all claim or claims arising out of the Work performed by the Contractor or any subcontractor; also, the Contractor shall pay, liquidate and discharge any and all claims or demands for bodily injury (including death), and/or loss of or damage to any property alleged or claimed to have been caused by, grown out of or incidental to the performance of the Work performed by the Contractor or any subcontractor, including damage to the building and other property of the Owner and including all damages for the obstruction of private drive-ways, streets and alleys and all costs and expenses of suits and reasonable attorney's fees. In the event of any such injury (including death), loss or damage (or claim or claims therefrom), the Contractor shall give immediate notice thereof to the Owner. The Contractor shall not, however, be responsible to the Owner on indemnity against liability for damages arising out of bodily injury to persons or damage to property caused by or resulting from the sole negligence of the Owner, its agents or employees, where such indemnity would apply to the construction, alteration, repair or maintenance of a building, structure, appurtenance and appliance, including moving, demolition and excavating connected therewith."
A purchase order which also became part of the contract contained the following conditions:
"9. Indemnity
"Contractor expressly agrees to indemnify and save Owner harmless from and against all claims, loss, expense, damage and liability (including but not limited to attorneys' fees) directly or indirectly caused by or resulting from any act or omission of Contractor or anyone acting in his behalf in connection with or incident to this Contract or the work to be performed hereunder, except that the Contractor shall not be responsible to the Owner on indemnity for damages caused by or resulting from the Owner's sole negligence."
Construction of the building proceeded over the course of several months. After Proksch had completed construction of part of the building, Hanna began truck repair operations in the completed portion while Proksch continued construction of the remaining portion of the structure. Charles Proksch, then vice-president of Proksch, testified that it was anticipated at the time that the contract was entered into that Hanna would begin using the building while construction was ongoing. It was also anticipated that Hanna would permit Proksch to use an overhead crane, owned by Hanna, to install bracing for the roof of the building.
Joseph Ray, construction foreman for Proksch, testified that both Hanna and Proksch alternately used the crane and had done so for several months prior to January 19, 1976. On that date, the plaintiff (all references to plaintiff are to Roy Paquin only) and Wilfred Gardner were perched on the top of the crane while installing some bracing in the roof of the building when a Hanna employee approached Joseph Ray and indicated that Hanna needed to use the crane for a short period of time. Ray informed the plaintiff and Gardner, both of whom were employees of Proksch, that the crane was about to be moved. The plaintiff and Gardner climbed off the crane and onto a nearby catwalk. As the crane moved forward, the plaintiff reached out onto the crane rail to pick up some washers and bolts that had been placed there. As he did so, the crane severed several of his fingers.
The plaintiff filed suit against the manufacturer of the crane, Harnischfeger Corporation, the distributor of the crane, Jasper Engineering and Equipment Company, the firm which had installed the crane, J. Verette Company, and Hanna. The claim against Hanna was premised on owner liability as well as ordinary negligence. Hanna impleaded Proksch as a third-party defendant on the basis of the contractual indemnification provisions quoted supra. J. Verette Company impleaded Roland LaCasse and Kenneth LaCasse.
At trial, evidence was introduced showing that the crane did not have any type of warning device indicating that the crane was in movement nor did it have any type of device which acted to sweep foreign objects off its railing. There was evidence presented that Ray had instructed the plaintiff and Gardner to remain on the catwalk, above the crane, while Hanna used the crane. Ray indicated that he gave the instruction because it took longer for the men to descend to the ground and climb back up than it did for Hanna to use the crane.
From the interior of the crane, the operator could not see the area where the plaintiff and Gardner were located. Ray testified that after he warned the plaintiff and Gardner that a Hanna employee was about to use the crane, he removed a locking device which held the crane motionless and told the Hanna employee that it was "okay" to move it.
Following the close of plaintiff's proofs, the court directed a verdict in favor of Jasper Engineering and Equipment Company and J. Verette Company. The court's action also had the effect of terminating Verette's claim against Roland and Kenneth LaCasse.
During the presentation of Hanna's proofs, Charles Proksch testified that he was the Proksch official in charge of preparing bid proposals and had prepared the bid on this particular project. He stated that at the time of the bid the number of employees the company employed ranged from 25 to 100. In 1976, the company generated $3.5 million of business. He testified that he had a bachelor's degree in business administration from Northern Michigan University. He did not recall reading the indemnification provisions in question. However, he was aware that most contracts of this nature contained indemnification clauses and had reviewed many such provisions. Costs for such items as insurance were included in preparing bids.
Following the presentation of Hanna's proofs, Proksch moved for a directed verdict, arguing that indemnification provisions did not require it to indemnify Hanna where the injury was caused by Hanna's joint negligence. The court granted the motion.
The jury returned a verdict in favor of the plaintiff and against Hanna. A verdict of no cause of action was rendered in favor of Harnischfeger Corporation. The jury found that the plaintiff had suffered $200,000 in damages and that his wife had suffered damages of $50,000. The jury also found that the plaintiff's own negligence had contributed to his injuries. It found that 75% of the total combined negligence was attributable to the plaintiff. Therefore, the court reduced the judgment to reflect the jury's finding of comparative negligence. It awarded the plaintiff $50,000 and awarded the plaintiff's wife $12,500.
Following trial, Hanna moved the court to reconsider its grant of Proksch's motion for directed verdict and requested the court to enter judgment on its claim of indemnity. The court denied Hanna's motion, ruling that the indemnity agreement was not intended to apply to Hanna's own negligence.
This is not the first occasion on which this Court has dealt with the interpretation of an indemnity agreement. The relevant rules of construction are adequately recited in numerous cases and need not be repeated here. See Title Guaranty Surety Co v Roehm, 215 Mich. 586; 184 N.W. 414 (1921), Meadows v Depco Equipment Co, 4 Mich. App. 370; 144 N.W.2d 844 (1966), Gartside v Young Men's Christian Ass'n, 87 Mich. App. 335; 274 N.W.2d 58 (1978), Klann v Hess Cartage Co, 50 Mich. App. 703; 214 N.W.2d 63 (1973), Hubbert v Acme Equipment Co, 55 Mich. App. 313; 222 N.W.2d 224 (1974), Peeples v Detroit, 99 Mich. App. 285; 297 N.W.2d 839 (1980), Pritts v J I Case Co, 108 Mich. App. 22; 310 N.W.2d 261 (1981). We need only note that in the context of a claim that the indemnity agreement was intended to apply to one's own negligence, the controlling considerations are the language of the contract, the situation of the parties and the circumstances surrounding the contract. Title Guaranty Surety Co, supra, Pritts, supra. See Vanden Bosch v Consumers Power Co, 394 Mich. 428; 230 N.W.2d 271 (1975).
The indemnity provisions in the case at bar make abundant use of the words "any" and "all" and of the phrase "any and all" in describing the claims to which the provision applies. This choice of terms has been interpreted to include one's own negligence most recently in Pritts v J I Case Co, supra, 30, wherein the Court quoted from Laudano v General Motors Corp, 34 Conn Sup. 684; 388 A.2d 842, 845 (1977), as follows:
"[T]here cannot be any broader classification than the word `all'. In `its ordinary and natural meaning, the word "all" leaves no room for exceptions.'"
In Geurink v Herlihy Mid-Continent Co, 5 Mich. App. 154; 146 N.W.2d 111 (1966), this writer signed an opinion which took the opposite position with regard to use of the term "any" in an indemnity clause. There the opinion quoted the following from Batson-Cook Co v Industrial Steel Erectors, 257 F.2d 410, 412 (CA 5, 1968):
"`The phrase stressed heavily is indeed broad. But the broad, all-inclusiveness of language used is itself one of the indicia which the law regards as insufficient. The purpose to impose this extraordinary liability on the indemnitor must be spelled out in unmistakable terms. It cannot come from reading into the general words used the fullest meaning which lexicography would permit.'" Geurink, supra, 158.
The circumstances surrounding the agreement and the situation of the parties were not discussed in Geurink.
In Vanden Bosch v Consumers Power Co, 56 Mich. App. 543, 558; 224 N.W.2d 900 (1974), Consumers Power sought indemnity from Ferro-Cast based on an agreement that Ferro-Cast "would save Consumers harmless for any loss by reason of the `location of such building under the transmission and/or distribution line wires of'" Consumers. The plaintiff was injured when a reinforcement rod he was installing came into contact with a 46,000-volt power line owned by Consumers. The trial court opined that it was only a matter of inference as to whether or not the agreement covered Consumers' own negligence and held that the agreement therefore did not apply. This Court affirmed, relying on Geurink for the proposition that such coverage must be expressly stated.
The Supreme Court reversed, rejecting Geurink's requirement of an express provision. Vanden Bosch v Consumers Power Co, 394 Mich. 428; 230 N.W.2d 271 (1975). Rather than focus solely on the words used in the agreement as was done in Geurink, the Supreme Court considered, in addition, the circumstances surrounding the agreement as well as the situation of the parties. The Court noted that the agreement was an accommodation by Consumers allowing Ferro-Cast to build and maintain a structure in a location where it otherwise did not have a right to do so. Furthermore, the provision did not appear to be improperly exacted by way of a monopoly position of the utility. The Supreme Court concluded that the parties intended indemnification to apply:
"Although not `expressly' stated in the agreement, we are persuaded from our reading of that agreement, in light of the surrounding circumstances, that the parties intended that Consumers Power be indemnified against liability for its own negligence of the type precipitating this litigation." 394 Mich. 428.
In the case at bar, although the indemnity provision did not expressly state that Hanna would be shielded from its own negligence, such language is not mandatory. Vanden Bosch, supra, Pritts, supra. The contract did state that Proksch would indemnify Hanna for any liability which was occasioned, either directly or indirectly, by any act or omission of the contractor or anyone acting on its behalf or incident to the contract, unless the damage was caused by Hanna's sole negligence. The fact that the clause expressly precluded indemnification in the even that the injury or damage was caused by Hanna's sole negligence, in order to avoid a violation of MCL 691.991; MSA 26.1146(1), indicates that the intent was to provide indemnity in all situations involving Hanna's own negligence except wherein caused by Hanna's sole negligence.
The situation of the parties and the circumstances surrounding the contract also indicate that indemnification for Hanna's own negligence was contemplated. There was evidence that it was understood at the time that the contract was entered into that both Hanna and Proksch employees would be working in the same area and that the use of the crane would be shared. There was also evidence that Proksch was a large company and that the agent who prepared this bid, Charles Proksch, was well-educated and familiar with this type of indemnification provision. Although he testified that he did not recall reading the indemnification provisions contained in this particular contract, that fact does not aid Proksch. Pritts, supra.
Under these circumstances, the trial judge erred in denying Hanna's motion for entry of judgment of indemnification. The indemnity provision was intended to apply to all claims, including those attributable to Hanna's own negligence as long as it was not due to Hanna's sole negligence. The jury's verdict found that the injury herein was due to the negligence of both Hanna and plaintiff. Thus, it was found that the injury was not due to Hanna's sole negligence. Plaintiff's claim falls within the terms of the provision providing indemnity where an injury results from the act of the "Contractor or anyone acting in his behalf in connection with or incident to this Contract". Pursuant to the terms of the indemnity agreement, Proksch must indemnify Hanna. The trial judge should have so ordered.
As an alternative basis for its grant of a directed verdict in favor of Proksch, the trial court held that to permit the indemnification would be akin to permitting an action for contribution and would be contrary to public policy as a violation of the exclusive remedy clause of the Worker's Disability Compensation Act. MCL 418.131; MSA 17.237(131). For the reasons stated by this writer in McLouth Steel Corp v A E Anderson Construction Corp, 48 Mich. App. 424, 430; 210 N.W.2d 448 (1973), we reverse on this basis also:
"First, we stress that our analysis deals with principles of indemnity, not contribution among joint tortfeasors. In this situation, contribution is not available since the Workmen's Compensation Act provides the only basis of recovery by the Whites against Anderson. Husted v Consumers Power Co, 376 Mich. 41; 135 N.W.2d 370 (1965).
"Second, even though the Workmen's Compensation Act precludes contribution, indemnification of McLouth by Anderson is permissible under either a properly drawn contractual agreement, Ryan Stevedoring Co, Inc v Pan-Atlantic Steamship Corp, 350 U.S. 124; 76 S Ct 232; 100 L Ed 133 (1956), or at common law, Husted v Consumers Power Co, supra; Indemnity Ins Co of North America v Otis Elevator Co, 315 Mich. 393; 24 N.W.2d 104 (1946); see also Dale v Whiteman, 388 Mich. 698; 202 N.W.2d 797 (1972)."
See also Nanasi v General Motors Corp, 56 Mich. App. 652; 224 N.W.2d 914 (1974).
Reversed and remanded for entry of judgment of indemnification.