Opinion
No. ED 82504
August 24, 2004
Appeal from the Circuit Court of the County of St. Louis, Honorable Carolyn C. Whittington.
Attys for Noranda Aluminum, Inc. Attys for Zurich Insurance Company, St. Louis, MO, Ronald C. Willenbrock, Mark Mueller William E. Quirk, Susan C. Hascall, Kansas City, MO, for appellant.
Debbie S. Champion, Gerre S. Langton St. Louis, MO, for respondent.
Before Shaw, P.J., Crahan, J., and Cohen, J. concurring.
Noranda Aluminum, Inc. ("Owner") and Zurich Insurance Company ("Owner's Insurer") appeal the judgment entered following a bench trial in favor of Utility Service and Maintenance, Inc. ("Painter") and TIG Insurance Company ("Painter's Insurer") in their action to recoup amounts they expended in defending and settling a lawsuit filed against Owner by Painter's employee. We affirm in part and reverse in part.
The facts as found by the trial court are as follows. Owner and Painter entered into a contract in which Painter agreed to paint certain substation structures for Owner. In the course of performing the work specified in the contract, Gary Murphy ("Employee"), one of Painter's employees, was seriously injured while working at the substation. Employee filed suit alleging that he was injured due to Owner's negligence and carelessness and seeking damages for bodily injury.
Owner requested that Painter provide a defense to the lawsuit pursuant to paragraph 13 of Exhibit C to the contract. Painter forwarded the request to Painter's Insurer and requested that it provide a defense to Owner pursuant to the contractual liability provisions of the insurance policy Painter's Insurer had issued to Painter.
Painter's Insurer hired attorneys to defend Owner and requested the attorneys to obtain a copy of Exhibit C from Owner. The attorneys requested the document but Owner, which received the request, did not forward Exhibit C to the attorneys. Painter's Insurer's adjuster authorized the attorneys to accept the defense and indemnification of Owner and directed them to unconditionally answer and defend the case.
One of Painter's Insurer's attorneys later wrote to Owner and advised that Painter was defending Owner based on Owner's representation that Painter was obligated to defend pursuant to the provisions of Exhibit C. He also advised Owner that Painter's Insurer did not have a copy of Exhibit C and asked for a copy. Owner promptly responded that it would forward a copy of the contract together with exhibits under separate cover. However, Owner did not forward a copy of Exhibit C at that time.
Two months later, Painter's Insurer again wrote to Owner reiterating that Painter was defending Owner based on Owner's representation that Exhibit C contained an enforceable indemnity agreement between Owner and Painter. The letter further informed Owner that Painter's Insurer had reason to believe that Exhibit C was not a part of the contract.
Owner promptly responded and forwarded what Owner considered to be a complete copy of the contract between Owner and Painter, including Exhibit C. Owner asserted that "by dint of paragraph 19 of the Terms and Conditions of Purchase and paragraph 13, Exhibit C-General Conditions of Contract," Painter agreed to indemnify Owner.
Employee's attorney later made a demand to settle the lawsuit against Owner for $30 million. Owner demanded that Painter's Insurer settle the lawsuit within its available limits and further demanded that mediation be scheduled. Painter's Insurer responded and informed Owner that there was a dispute about whether Exhibit C ever became part of the contract and that Owner's right to a defense and indemnity depended upon the validity and presence of an enforceable indemnity agreement between Owner and Painter. Painter's Insurer informed Owner that reimbursement of the cost of defense and indemnity would be sought if a determination was made that the indemnity agreement was not a part of the contract. Owner was further informed that Painter's Insurer would expend every effort to defend, settle, or successfully litigate Employee's lawsuit. Painter's Insurer further informed Owner that in the event of a judgment or settlement that exceeded policy limits, Owner would be obligated for an amount in excess of the policy limit. Because of that possibility, Painter's Insurer advised Owner that it could, at its own expense, have its attorney associate with the attorneys hired to defend the lawsuit.
Although not an issue on appeal, we note that this appears to be incorrect. Assuming an enforceable indemnity agreement between Owner and Painter, it would seem that Painter, not Owner, would be liable for any judgment in excess of the policy limits.
The trial court found that at all relevant times, Owner's attorneys were actively involved in preparing Owner's defense, supplying factual information, attending depositions and reviewing pleadings and discovery.
During mediation of Employee's suit, Painter's Insurer agreed to settle the suit for an amount within its policy limits. The trial court found that the amount paid to settle the suit was fair and reasonable.
Painter and Painter's Insurer filed the underlying suit to obtain reimbursement for the amounts expended to defend and settle the suit against Owner. The trial court found that there was no certain evidence that, during the course of negotiation of the contract between Painter and Owner, Exhibit C or paragraph 13 thereof was attached to the documents under discussion. The trial court specifically found that Exhibit C was not part of the contract between Painter and Owner.
The trial court further found that there was no certain evidence that either party knew with specificity what contract terms were considered under negotiation at any given moment. However, the trial court did find that, after receiving a proposal from Painter, Owner did fax a purchase order to Painter with different terms and supplemented the purchase order with general Terms and Conditions. Painter accepted the purchase order and the Terms and Conditions supplied by Owner through its commencement of performance. However, the trial court further found that paragraph 19 of the Terms and Conditions relied upon by Owner did not obligate Painter to indemnify Owner for Owner's own negligence. Accordingly, the trial court found that Painter and Painter's Insurer were entitled to reimbursement. This appeal follows.
On appeal of a judgment in a court-tried case, we must affirm the judgment of the trial court unless there is no substantial evidence to support it, it is against the weight of the evidence, or it erroneously declares or applies the law. Murphy v. Carron, 536 S.W.2d 30, 32 (Mo. banc 1976); Spradlin v. City of Fulton, 982 S.W.2d 255, 263 (Mo. banc 1998). We must give due regard to the trial court's opportunity to judge the credibility of witnesses. Prewitt v. Hunter, 105 S.W.3d 874, 876 (Mo.App. 2003). The trial court is free to believe all, part, or none of the testimony of any witness. Harris v. Desisto, 932 S.W.2d 435, 443 (Mo.App. 1996). In determining the sufficiency of the evidence, we will accept as true all facts and permissible inferences in favor of the prevailing parties and disregard all contrary evidence. Id. We will consider any fact issue upon which no specific finding was made as having been determined in accordance with the result reached. Landvatter Ready Mix, Inc. v. Buckey, 963 S.W.2d 298, 304 (Mo.App. 1997).
On appeal, Owner asserts nine points of error which can be grouped into three categories: (1) contentions that Painter and/or Painter's Insurer should be estopped from denying coverage and/or seeking reimbursement on various grounds; (2) contentions that the trial court erred in finding that Exhibit C was not part of the contract between Owner and Painter and/or in interpreting paragraph 19 of the general Terms and Conditions not to require Painter to indemnify Owner for Owner's own negligence; and (3) a contention that the trial court erred in allowing Painter and Painter's Insurer to recover attorney's fees expended in defense of Owner. We will address the second category of alleged errors first because they are potentially dispositive of the remaining points on appeal.
In its seventh point, Owner claims that the trial court erred in holding that Exhibit C, containing a clause that Owner contends required Painter to indemnify Owner for Owner's negligence, was not part of the contract because under Missouri law, matters incorporated by reference are as much a part of the contract as if set out in haec verba. The difficulty with this contention is that the trial court found as a fact that there was no certain evidence that during the course of negotiation Exhibit C was ever attached to the documents exchanged. Painter's President, Mr. Dunnaway, testified that Exhibit C was not part of the bid package he received, and Owner's purchasing manager, Mr. Lape, testified that although it was Owner's normal practice to include Exhibit C in bid packages, he had no personal recollection as to what contract documents were in this particular bid package. It is the province of the trial court to resolve such questions of credibility. McAllister v. McAllister, 101 S.W.3d 287, 291 (Mo.App. 2003).
Even if there was evidence that would have supported a finding that Exhibit C was attached to Owner's request for quotation, the request for quotation stated in bold type: "THIS IS NOT AN ORDER." It was not an offer by Owner but a solicitation of offers. The proposal forwarded by Painter to Owner was an offer. Painter's proposal made no reference to Exhibit C, which was not a standard document used in the industry, was prepared by Owner, and was unknown to Painter. Thus, regardless of whether Exhibit C was referenced in or even attached to Owner's request for quotation, it was not part of the offer made by Painter to Owner.
Moreover, Owner did not accept Painter's offer as submitted. Instead, Owner issued a purchase order containing different Terms and Conditions than those set forth in Painter's proposal, thus constituting a counteroffer. See Nelson v. Baker, 776 S.W.2d 52, 53 (Mo.App. 1989) ("In order to form a contract, an offer must be accepted as tendered. If the purported acceptance of an offer introduces additional or variant terms, it constitutes a counter-offer, which operates as a rejection of the original offer"). Among the variants was paragraph 19 of the Terms and Conditions for Purchase pertaining to indemnity. Moreover, the Terms and Conditions included with the purchase order specifically provided that it was not an acceptance of Painter's proposal; that any additional or different terms stated in Painter's proposal were rejected; that commencement of work constitutes acceptance of the Terms and Conditions; and that it, together with any written documents which may be incorporated by specific reference constitutes the entire agreement. There was no specific reference to Exhibit C in the purchase order or the Terms and Conditions. Painter commenced work without objecting to Owner's terms as set forth in the purchase order. We find no error in the trial court's determination that the purchase order and attached Terms and Conditions constituted the entire agreement of the parties and that Exhibit C was not part of the contract. Point denied.
In its eighth point, Owner claims the trial court erred in holding that paragraph 19 of the Terms and Conditions is not enforceable to require Painter to indemnify Owner for claims based on Owner's negligence. Paragraph 19 provides:
19. [Painter] shall indemnify and save purchaser free and harmless from and against any and all claims, damages, liabilities or obligations of whatsoever kind, including but not limited to, damage or destruction of property and injury or death of persons resulting from or connected with [Painter's] performance hereunder or any default by [Painter] or breach of its obligations hereunder.
In a contract where the parties stand on substantially equal footing, one may legally agree to indemnify the other against the indemnitee's own negligence. Nusbaum v. City of Kansas City, 100 S.W.3d 101, 105 (Mo. banc 2003). However, a contract of indemnity will not be construed so as to indemnify one against loss or damage resulting from one's own negligence unless such intention is expressed in clear and unequivocal terms. Id. Mere general, broad, and seemingly all-inclusive language is not sufficient to impose liability for the indemnitee's own negligence.Economy Forms Corp. v. J.S. Alberici Const. Co., 53 S.W.3d 552, 554 (Mo.App. 2000).
We find paragraph 19 of the Terms and Conditions to be ambiguous. One reasonable construction is that it required Painter to indemnify Owner for all claims, damages, liabilities or obligations "resulting from or connected with [Painter's] performance hereunder or default by [Painter's] or breach of its obligations hereunder." Under this construction, Owner clearly would not be entitled to indemnity for damages resulting from its own negligence. We find no clear and unequivocal expression of the parties' intention to require Painter to indemnify Owner for damages resulting from Owner's negligence.
Moreover, we agree with Painter that paragraph 19 of the Terms and Conditions does not satisfy the requirement discussed in Economy Forms that an indemnity provision be conspicuous. Paragraph 19 is one of 23 provisions, pre-printed in miniscule type without any emphasis that would alert Painter that it would be required to indemnify Owner for damages resulting from Owner's negligence. In contrast, in Monsanto Co. v. Gould Electronics, Inc., 965 S.W.2d 314 (Mo.App. 1998), the case principally relied on by Owner, the indemnity provision was a separate agreement drafted especially for that purpose and clearly and unequivocally provided for indemnity for all damages, regardless of causation. The trial court did not err in holding that paragraph 19 was not enforceable to require Painter to indemnify Owner for damages resulting from Owner's negligence. Point denied.
In its first five points, Owner asserts the trial court erred in finding that Painter's Insurer was not estopped from seeking reimbursement because (1) it unconditionally accepted the defense of employee's lawsuit; (2) it never properly reserved its rights; (3) it unilaterally settled the case; and (4) it voluntarily settled the case with knowledge of the facts and the law that Owner was not liable because it did not exercise the requisite control over Employee and/or he was a "borrowed servant." The principal difficulty with these contentions is that waiver and estoppel cannot be employed to create coverage where it otherwise does not exist. Shelter General Ins. Co. v. Siegler, 945 S.W.2d 24, 27 (Mo.App. 1997). Waiver and estoppel do not themselves give a cause of action, and the purpose of estoppel is to preserve rights previously acquired but not to create new ones. Id. In this case, there was no contract between Owner and Painter's Insurer. Owner's right to indemnity from Painter was wholly dependent on the existence of a valid indemnity agreement between Owner and Painter. As discussed above, the trial court properly found that the terms of the parties' agreement did not require Painter to defend or reimburse Owner for claims based on Owner's negligence. In the absence of such a contractual requirement, Owner cannot invoke estoppel to create a right to indemnity it did not otherwise enjoy.
Moreover, as the trial court found, the facts do not support a finding of waiver or estoppel. Painter's Insurer put Owner on clear notice that its defense was conditioned on the existence of a valid indemnity agreement between Owner and Painter. Painter's Insurer informed Owner that it would seek reimbursement if this turned out not to be the case. Owner was given the option to assume control of the defense if it so chose. Instead, Owner demanded that the case be settled within Painter's policy limits. It should not now be heard to complain that it was prejudiced by that settlement. Points denied.
In its sixth point, Owner contends that Painter's Insurer was a volunteer payor in Employee's lawsuit and thus it could not recover the money it paid from Owner. A volunteer who pays money, in the absence of fraud or duress, is not entitled to the return of his money. Commercial Union Ins. Co. v. Farmer's Mut. Fire Ins. Co., 457 S.W.2d 224, 226 (Mo.App. 1970). However, to be a true volunteer payor, one must have full knowledge of all the facts in the case. Id. The facts as found by the trial court do not support the conclusion that Painter's Insurer was a volunteer payor. It was clearly acting under duress. It had a contractual obligation to Painter to provide a defense and reimbursement if, in fact, Painter was obligated to indemnify Owner for Owner's negligence. Even if that obligation was doubtful, it certainly would have risked liability to Painter if it simply abandoned the defense instead of seeking a judicial determination of the matter.
Moreover, a payor should be allowed to recover for payments made for others in good faith where, because of the relationship, the payor had reason to believe it would be reimbursed. Ticor Title Ins. Co. v. Mundelius, 887 S.W.2d 726, 728 (Mo.App. 1984). Here, the trial court found the payment was made on the condition that Exhibit C was part of the underlying contract. It was not. When defense and indemnity are conditioned on certain facts, reimbursement is expected if those facts are untrue.
To the extent that Painter's Insurer's payment can be characterized as a mistake of law, Painter's Insurer correctly points out that equity will relieve against a mistake of law when the surrounding facts raise an independent equity, as where the mistake is induced, or is accompanied by inequitable conduct of the other party. Hartford Accident Indemnity Co. v. M.J. Smith Sawmill, Inc., 883 S.W.2d 91, 94 (Mo.App. 1994). As the court observed in Handly v. Lyons, 475 S.W.2d 451, 463 (Mo.App. 1971):
It is not necessary that such inequitable conduct should be intentionally misleading, much less that it should be actual fraud; it is enough that the misconception of the law was the result of, or even aided or accompanied by, incorrect or misleading statements, or acts of the other party. When the mistake of law is pure and simple, the balance held by justice hangs even; but when the error is accompanied by an inequitable conduct of the other party, it inclines in favor of the one who is mistaken.
Having incorrectly insisted throughout that it was entitled to indemnity for its own negligence, Owner cannot now be heard to complain that Painter's Insurer made a voluntary payment based on the same mistake of law. Point denied.
In its final point, Owner contends the trial court erred in awarding Respondents the attorney fees incurred in defense of Employee's lawsuit because an award of attorney's fees must be based solely pursuant to statute or contract. This is incorrect. It is well established that restitution may include an award of attorney's fees. Harris v. Desisto, 932 S.W.2d 435, 448 (Mo.App. 1996). Painter and Painter's insurer defended the lawsuit conditioned upon the existence of a valid indemnity agreement requiring Painter to indemnify Owner for damages caused by Owner's negligence. As discussed above, no such agreement was part of the parties' contract. Owner and Owner's Insurer would be unjustly enriched if the cost of the defense was not included in the restitution ordered. Point denied.
Owner also argues that Painter's Insurer should not be able to reclaim attorney's fees incurred prior to its conditioning the defense on the existence of an enforceable indemnity clause. Owner did not raise this issue before the trial court and thus the issue is not preserved.See Nishwitz v. Blosser, 850 S.W.2d 119, 123-24 (Mo.App. 1993). Furthermore, the argument was not preserved at the appellate level by being raised in the points relied on. See Biermann v. Gus Shaffer Ford, Inc., 805 S.W.2d 314, 325 (Mo.App. 1991).
In its sole point on appeal, Owner's Insurer claims the trial court erred in entering judgment against it because there was no evidence admitted regarding the terms and conditions of the policies it issued to Owner. In its reply brief, Owner's Insurer concedes that the policies were, in fact, received in evidence. We have reviewed the briefs and the record on appeal and find that extended discussion would be of no precedential value. We deny this point pursuant to Rule 84.16(b).
On Rehearing
In its motion for rehearing, Owner's Insurer urges, apparently for the first time, that the trial court lacked subject matter jurisdiction to enter judgment against it because neither Painter nor Painter's Insurer have standing to obtain a declaration of its liability for Employee's claims. We agree. Plaintiffs were not a party to the insurance contract between Owner's Insurer and Owner and thus lack standing to obtain a declaration of Owner's Insurer's liability for Employee's claims or to enforce its insurance contract with Owner. St. Paul Fire Marine Ins. Co. v. Medical Protective Co. of Fort Wayne, Ind., 675 S.W.2d 665, 667 (Mo.App. 1984); American Economy Ins. Co. v. Ledbetter, 903 S.W.2d 272, 276 (Mo.App. 1995). Inasmuch as Plaintiff's have no contract with Owner's Insurer and their claims for reimbursement from Owner's Insurer are wholly dependent upon the contract between Owner and Owner's Insurer, the trial court lacked subject matter jurisdiction to adjudicate an essential element of their claim and the judgment against Owner's Insurer must be reversed.
The absence of subject matter jurisdiction clearly was not raised in the briefs and we find no reference to such contention in the record. Nevertheless, the absence of subject matter jurisdiction can be raised at any time, including, for the first time, on appeal. Davis v. Oaks, 942 S.W.2d 464, 466 (Mo.App. 1997).
The judgment against Zurich Insurance Company is reversed. In all other respects the judgment is affirmed.
Booker T. Shaw, P.J., Concurs.
Patricia L. Cohen, J., Concurs.