Opinion
Case No. 2:03-CV-848 TS.
August 6, 2004
ORDER GRANTING PLAINTIFF'S MOTION FOR PARTIAL SUMMARY JUDGMENT
This matter came before the court on April 28, 2004, for hearing on Plaintiff's Motion for Partial Summary Judgment.
I. FACTUAL AND PROCEDURAL BACKGROUND
Plaintiff Stone Gate hired Defendant Psomas to provide surveying and civil engineering services in connection with developing Stone Gate's 52-acre Provo River property into a gated residential community. On April 27, 2000, they entered into a Consulting Services Agreement (Agreement) that provided as follows: Psomas, referred to as "Consultant" in the Agreement, shall perform all services under the Agreement in accordance with professional standards of care; Psomas shall comply with and be solely responsible for compliance with all applicable laws, ordinances, codes, regulations and requirements of governmental authorities; and, that Psomas will indemnify Stone Gate for all losses, including attorneys fees and litigation costs, caused by the failure of Psomas to perform including losses "arising out of or caused by any active or passive negligent act, error, or omission or intentional wrongdoing of the Consultant, Consultant's subconsultants or their agents, employees or representatives in the performance of" the listed services.
On September 29, 2003, Stone Gate filed the Complaint herein. Among other things, Stone Gate demands indemnification from Psomas and alleges that it incurred damages because Psomas used a Utah County surveying monument with the incorrect elevation listed on it.
Plaintiff brings the following causes of action: First, Breach of Contract, alleging failure to comply with applicable laws; Second, Breach of Contract, alleging failure to indemnify; Third, Breach of Contract alleging failure to adhere to Professional Standards of Care; Fourth, Breach of Implied Covenant of Good Faith and Fair Dealing; Fifth, Breach of Express Warranty; Sixth, Breach of Implied Warranty; Seventh, Professional Negligence; Eighth, Negligent Misrepresentation; and Ninth, Declaratory Judgment on Indemnity.
In its Answer, Psomas indicates that it seeks to have liability apportioned to a consulting engineer firm (LEI) and the Utah County Surveyor under the Utah Liability Reform Act. Plaintiff filed its Motion for Partial Summary Judgment seeking a ruling that apportionment is not appropriate.
DISCUSSION AND CONCLUSIONS
Under the Utah Liability Reform Act, Utah Code Ann. §§ 78-27-37 through 40, a defendant is not liable to a plaintiff for damages in excess of the proportion of fault attributed to that defendant. Utah Code Ann. § 78-27-38(3). Fault is defined to include "negligence in all of its degrees, . . . breach of express or implied warranty of a product." Utah Code Ann. § 78-27-37.Plaintiff filed this Motion for Partial Summary Judgment seeking judgment that apportionment under the Act does not apply to its First, Second, Third, Fourth, Fifth, Sixth and Ninth Causes of Action, because they are contract actions not covered by the Act. The parties do not dispute that apportionment will apply to Plaintiff's Seventh and Eighth causes of action.
Psomas opposes the Motion and contends that because the Complaint alleges that the losses were caused by the "active or passive negligent act, error, or omission or intentional wrongdoing" of Psomas and/or its employees, agents or subconsultants, the claims are actually tort actions that are covered by the Act. Psomas points out that the Act's definition of "fault" as including negligence allegedly covers these claims. Psomas appears to concede that the Act does not cover claims for non-product breach of warranties.
Summary judgment is appropriate only if "there is no genuine issue as to any material fact and . . . the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). In reviewing the motion, the court views "the evidence in the light most favorable to the nonmovant." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)).
The Motion for Partial Summary Judgment raises a legal issue. The few facts relevant to this issue, such as the language of the Consulting Services Agreement, and of the Complaint, are not disputed. There is no case law directly on point in Utah. There is varying case law from other jurisdictions, but it is not controlling. E.g. Rothberg v. Reichelt, 293 A.D.2d 948 (N.Y.App. 2002) (in breach of contract and architectural malpractice claims, where separate tort damages other than those also flowing from the breach of contract claim were proven, it was error to apportion liability among parties).
Under Utah law, indemnity agreements are enforceable if they are clear and unequivocal. Russ v. Woodside Homes, 905 P.2d 901 (Utah Ct.App. 1995). When duties arise under both tort law and a contract, a party may elect to bring a tort action, a contract action or both. Guardian Title Co. of Utah v. Mitchell, 54 P.3d 130, 133 (Utah 2002). In this case, the duties alleged in the Complaint arise under both tort law, such as professional standards, and under contract, by which Psomas agreed to comply with professional standards and comply with requirements of applicable law, as well as to indemnify Stone Gate for certain defined losses. That the acts giving rise to the alleged contractual liability may also give rise to tort liability, and so be covered under the Liability Reform Acts's definition of fault, does not mean that the claims are limited to only the tort actions. Instead, Stone Gate, as Plaintiff, may elect to bring a tort action, a contract action, or both.
As noted in Restatement Third of Torts, § 22(b), a person entitled to contractual indemnity from a party may recover from that party even if the party would not otherwise be liable to the Plaintiff. However, as stated in Guardian Title, 54 P.3d at 133 n. 3, there cannot, of course, be a dual recovery for the contract claims and for the tort claims alleged in the Seventh and Eighth causes of action. However, the issue of any dual recover is a matter for later proceedings, including jury instructions.
The parties' Agreement assigns a risk to Psomas of a potentially very great liability for any professional failures on its part or on the part of its agents, employees or subconsultants. That was the agreement of the parties and Plaintiff's First, Second, Third, Fourth, Fifth, Sixth and Ninth Causes of Action are contractual causes of action seeking to recover based on that Agreement.
It is therefore
ORDERED that Plaintiff's Motion for Partial Summary Judgment is GRANTED. It is further
ORDERED that apportionment does not apply to the First, Second, Third, Fourth, Fifth, Sixth and Ninth Causes of Action