Opinion
No. 56339-4-I.
May 22, 2006.
Appeal from a judgment of the Superior Court for King County, No. 04-2-19276-5, Jeffrey M. Ramsdell, J., entered May 31, 2005.
Counsel for Appellant(s), Michael David Hunsinger, Hunsinger Associates Sutkus Kestle, 100 S King St Ste 400, Seattle, WA 98104-2817.
Counsel for Respondent(s), Alan Edward Garrett, Safeco Insurance, 1601 5th Ave Ste 1210, Seattle, WA 98101-3602.
Mark Edward Mills, Law Offices of William D. Garcia, 1601 5th Ave Ste 1210, Seattle, WA 98101-3602.
Affirmed by unpublished opinion per Schindler, J., concurred in by Appelwick, C.J., and Becker, J.
The Spirit of Washington Dinner Train collided with a van at a private railroad crossing. The injured passengers sued Spirit of Washington and the Burlington Northern and Santa Fe Railroad Company (Railroad) for failure to adequately warn and failure to maintain the vegetation that obscured the driver's view of the oncoming train. Robert and Gayle Seda (collectively Seda) leased the portion of the railroad right-of-way property with the vegetation on it from the Railroad. After the Railroad agreed to settle the injured passengers' lawsuit, the Railroad assigned Spirit of Washington its rights to indemnification under the lease with Seda. When Seda refused to indemnify, Spirit of Washington filed this lawsuit to enforce the indemnification provisions of the lease. On summary judgment, the trial court ruled the indemnification provisions in the lease did not require Seda to indemnify the Railroad. Spirit of Washington contends the trial court erred in dismissing the lawsuit to enforce the indemnification provisions in the lease. We affirm.
FACTS
In 1987, Robert and Gayle Seda purchased a waterfront house in Bellevue. Seda's house is located near Bagley Lane adjacent to the railroad tracks. The only access from the public road to Seda's house and the houses on Bagley Lane is across a private railroad crossing, known as the Bagley Lane Crossing. The prior owners of Seda's house leased Railroad right-of-way to use the Bagley Lane Crossing and to provide a vegetative buffer between the house and the railroad tracks. When Seda purchased the house, the Railroad sent Seda an application to lease two right-of-way parcels. One parcel was to access the Bagley Lane Crossing (the driveway parcel). The other parcel was for the vegetative buffer (the beautification parcel). The beautification parcel is adjacent to and borders the driveway parcel. The annual rent for both parcels was $180 a year. Seda decided to only lease the driveway parcel and in January 1998, Seda signed a lease with the Railroad.
Lease No. 400286.
Four months later, Seda decided he wanted to lease the beautification parcel. In April, Seda and the Railroad signed a supplement to the lease. The supplement increased the rent from $90 to $180 per year; otherwise, the terms of the January 1998 lease did not change.
In response to Seda's inquiry about leasing the beautification parcel, the Railroad sent Seda a letter telling him that he could either pay to lease the parcel, or 'remove all shrubs and trees that have been added to this property and clear it to a condition satisfactory to our office' within 30 days.
On July 31, 1995, James Ploegman and his two sons were injured when the Spirit of Washington Dinner Train struck their van at the Bagley Lane Crossing. The Ploegmans sued the Railroad and Spirit of Washington for negligence and damages. The Ploegmans alleged the train was traveling at an excessive speed and did not sound a warning whistle at the Crossing. They also alleged the Railroad failed to maintain the vegetation at the Crossing which prevented the driver from seeing the oncoming train.
The Ploegmans dismissed their claims against Spirit of Washington during the litigation. But Spirit of Washington is contractually obligated to defend and indemnify the Railroad for any liability from operation of the Dinner Train.
The Railroad, in turn, sued Ralph Ploegman's Estate for indemnification as a third-party defendant. About thirty years earlier, Ralph Ploegman, James Ploegman's father, signed a private road crossing permit agreement with the Railroad to use the Bagley Lane Crossing. The agreement required Ploegman to pay a nominal fee and to remove any vegetation which impaired visibility at the Crossing. Ralph Ploegman also agreed to indemnify the Railroad for any death, injury or damages caused by using the Bagley Lane Crossing, regardless of fault.
Before trial, the court ruled Ploegman had a duty under the road crossing agreement to maintain the vegetation at the Bagley Lane Crossing. On appeal, this court reversed and held Ralph Ploegman's duty to remove the vegetation was discharged when the Railroad leased the beautification parcel to Seda without reserving a right for Ploegman to enter and cut the vegetation. Thereafter, the Railroad settled with the Ploegmans and assigned its rights to indemnification under the Seda lease to Spirit of Washington.
The Ploegmans proceeded to trial, but confined their claim to negligence based on the failure to adequately warn of the train's approach. The jury returned a verdict in favor of the Railroad.
This court remanded for trial on whether the Railroad was negligent in maintaining vegetation and whether the overgrown vegetation was the cause of the accident.
When Spirit of Washington demanded indemnification under the lease, Seda refused. Spirit of Washington then brought this indemnity action against Seda. Both parties moved for summary judgment. The trial court granted Seda's motion for summary judgment. The court ruled that as a matter of law the indemnification provisions in the lease were unenforceable and dismissed the lawsuit. Spirit of Washington appeals.
ANALYSIS
Spirit of Washington contends Seda assumed responsibility for all risk of injury and agreed to indemnify the Railroad under the clear and unambiguous terms of the lease for the Railroad right-of-way property. Spirit of Washington also argues Seda has a duty under the lease to maintain the vegetation on the beautification parcel and, therefore, has an obligation to indemnify the Railroad.
This court reviews summary judgment de novo. Retired Pub. Employees Council of Wash. v. Charles, 148 Wn.2d 602, 612, 62 P.3d 470 (2003). Summary judgment is appropriate only if the moving party is entitled to judgment as a matter of law. CR 56(c); Charles, 148 Wn.2d at 612. The construction of a contract and whether a contract is ambiguous is a legal question we review de novo. Schwab v. Seattle, 64 Wn. App. 742, 751, 826 P.2d 1089 (1992).
Indemnification agreements are "interpreted like any other contracts, and the touchstone of the interpretation of contracts is the intent of the parties." Scott Galvinizing v. Northwest EnviorServices, Inc. 120 Wn.2d 573, 580, 844 P.2d 428 (1993) (internal citations omitted). Washington follows the objective manifestation of contracts theory and our primary goal in interpreting a contract is to ascertain the parties' intent. Hearst Communs., Inc. v. Seattle Times Co., 154 Wn.2d 493, 503, 115 P.3d 262 (2005). We determine intent by focusing on the objective manifestation of the parties in the written contract rather than the unexpressed subjective intent of either party. Hearst, 154 Wn.2d at 504; Berg v. Hudesman, 115 Wn.2d 657, 667-68, 801 P.2d 222 (1990). We must consider "'the contract as a whole, the subject matter and objective of the contract, all the circumstances surrounding the making of the contract, the subsequent acts and conduct of the parties to the contract, and the reasonableness of respective interpretations advocated by the parties.'" Berg, 115 Wn.2d at 667 (quoting Extrinsic evidence and surrounding circumstances "gives meaning to words used in the contract" but may not be used to "show an intention independent of the instrument" or to "vary, contradict or modify the written word." Hollis v. Garwall, Inc., 137 Wn.2d 683, 695, 974 P.2d 836 (1999) (citations omitted). If a contract is ambiguous, "the doubt created by the ambiguity will be resolved against the one who prepared the contract." Felton v. Menan Starch Co., 66 Wn.2d 792, 405 P.2d 585 (1965).
Seda's lease with the Railroad contains three separate indemnification provisions. First, in paragraph 9, Seda agrees to indemnify the Railroad for a condition that threatens human health or the environment. Second, in paragraph 10, Seda assumes all risk of injury and agrees to indemnify the Railroad for injury or damages without regard to any fault of the Railroad (the "sole negligence" provision). Third, Seda also agrees in paragraph 10, to indemnify the Railroad for injury, death, loss or damage from any act or omission.
Spirit of Washington primarily relies on the sole negligence provision in paragraph 10 to argue the lease unambiguously requires Seda to indemnify the Railroad for injuries and damage even if there was no negligence on Seda's part. Paragraph 10 provides, in pertinent part, as follows: It is understood by Lessee that the Premises are in dangerous proximity to railroad tracks and that persons and property on Premises will be in danger of injury, death or destruction incident to the operation of the railroad, including, without limitation, the risk of derailment, fire, or inadequate clearance (including sight clearance or vision obstruction problems at grade crossings on or adjacent to the Premises), and Lessee accepts the Lease subject to such dangers.
Lessee understands, as one of the material considerations of this Lease without which it would not be granted, that Lessee assumes all risk of injury to or death of all persons, and damage to or loss or destruction of buildings, contents, or other property (including animals) brought upon or in proximity to the Premises by Lessee, or by any other person with the consent or knowledge of the Lessee, WITHOUT REGARD TO WHETHER SUCH BE THE RESULT OF NEGLIGENCE OR MISCONDUCT OF ANY PERSON IN THE EMPLOY OR SERVICE OF RAILROAD OR OF DEFECTIVE TRACKAGE, EQUIPMENT OR TRACK STRUCTURES. Lessee hereby indemnifies and agrees to protect Railroad from all such injury or death and loss, damage or destruction to property, including claims and causes of action asserted against Railroad by any insurer of said property. NOTWITHSTANDING THE FOREGOING, HOWEVER, LESSEE SHALL NOT BE LIABLE FOR INJURY TO OR DEATH OF RAILROAD'S EMPLOYEES OR AGENTS, OR ROLLING STOCK BELONGING TO RAILROAD OR OTHERS, OR SHIPMENTS OF THIRD PARTIES IN THE COURSE OF TRANSPORTATION, WHEN SAID INJURY, DEATH OR DAMAGE IS CAUSED BY RAILROAD'S OWN, SOLE NEGLIGENCE. For example, if a train derails because of Railroad's sole negligence, Railroad will bear the cost of damage to its own people and property and property on the train, but Lessee will be responsible, and will have no recourse against Railroad for its own damages, and will have to reimburse Railroad for any expense or judgment Railroad incurs from claims of persons on the Premises or having property on the Premises with Lessee's knowledge or consent.
Emphasis added.
Washington courts generally enforce indemnification agreements according to their terms and a party may contractually indemnify against loss resulting from that party's own negligence, "unless prohibited by statute or public policy." Northwest Airlines v. Hughes Air Corp., 104 Wn.2d 152, 154, 702 P.2d 1192 (1985). An indemnity agreement is essentially an agreement for contractual contribution, whereby one tortfeasor, may look to another for reimbursement. Redford v. Seattle, 94 Wn.2d 198, 615 P.2d 1285 (1980); Stocker v. Shell Oil Co., 105 Wn.2d 546, 549, 716 P.2d 306 (1986). But when an indemnification agreement seeks to indemnify an indemnitee for his sole negligence, the agreement is strictly construed. The intent to indemnify the indemnitee for losses that result from one's own negligence must be "expressed in clear and unequivocal terms." Hughes, 104 Wn.2d at 155. The use of unequivocal language is necessary to prevent injustice, and to ensure a contracting party has fair notice that a large and potentially ruinous award can be assessed against it solely by reason of negligence attributable to the other contracting party. McDowell v. Austin Co., 105 Wn.2d 48, 53, 710 P.2d 192 (1985). Any ambiguity in a sole negligence provision is resolved in favor of the indemnitor. Jones v. Strom Constr. Co., 84 Wn.2d 518, 520, 527 P.2d 1115 (1974); Brame v. St. Regis Paper Co., 97 Wn.2d 748, 649 P.2d 836 (1982).
As the Washington Supreme Court noted in Hughes, some states have enacted statutes prohibiting indemnification clauses for an indemnitee's own negligence. Washington has not and there is no statute prohibiting the sole negligence indemnity provision at issue here.
See Hughes, 104 Wn.2d 152, 158, (citing Md. Real Prop. Code Ann. sec. 8-105 (1981)); N.Y. Gen. Oblig. Law sec. 5-321 (McKinney 1978); S.D. Codified Laws sec. 53-9-3 (1980)).
Construction contracts are the only context in which sole negligence indemnification provisions are statutorily prohibited. See RCW 4.24.115(1).
Below, Seda argued that the language in the sole negligence provision in paragraph 10 was narrow in scope and Seda only assumed the risk of injury to persons on the leased right-of-way property with his "'consent or knowledge.'" We agree with Seda's interpretation of paragraph 10. Paragraph 10 requires Seda to assume responsibility for the risk of death or injury of "all persons" . . . "brought upon or in proximity of the premises by Lessee, or by any other person with the knowledge or consent of the Lessee." The "knowledge or consent" language is used twice in paragraph 10. First, the language is in the assumption of risk provision: Lessee assumes all risk of injury to or death of all persons, and damage to or loss or destruction of buildings, contents, or other property (including animals) brought upon or in proximity to the Premises by Lessee, or by any other person with the consent or knowledge of Lessee.
CP 285. Although Seda does not make this argument on appeal, because he made this argument below, we can consider this argument on appeal. Redding v. Va. Mason Med. Ctr., 75 Wn. App. 424, 426, 878 P.2d 483 (1994). see also LaMon v. Butler, 112 Wn.2d 193, 200-01, 770 P.2d 1027 (1989); Int'l Bhd. of Elec. Workers, Local Union No. 46 v. Trig Elec. Constr. Co., 142 Wn.2d 431, 434-35, 13 P.3d 622 (2000).
The language is used again in the hypothetical example in paragraph 10: For example, if a train derails because of Railroad's sole negligence, Railroad will bear the cost of damage to its own people and property and property on the train, but Lessee will be responsible, and will have no recourse against Railroad, for its own damage, and will have to reimburse Railroad for any expense or judgment Railroad incurs from claims of persons on the Premises or having property on the Premises with Lessee's knowledge or consent.
Strictly construing the language used in the sole negligence provision, we conclude, "knowledge or consent of the Lessee" modifies the scope of Seda's assumption of risk and agreement to indemnify. Because the language in the indemnification provision in paragraph 10 does not clearly and unequivocally indemnify the Railroad for its sole negligence, Seda is not obligated to indemnify the Railroad for the Ploegmans' injuries. Spirit of Washington argues that even if the sole negligence provision in paragraph 10 is not enforceable, Seda must indemnify the Railroad under the other provisions in paragraph 9 and paragraph 10.
Because of our conclusion, we need not address Seda's public policy argument. Even assuming the provision is enforceable as a general matter, it must be strictly construed and does not require Seda to indemnify the Railroad under these circumstances.
Paragraph 9 provides, in pertinent part:
Lessee shall not create or permit any condition on the Premises that could present a threat to human health or to the environment. Lessee shall indemnify and hold harmless Railroad from any suit or claim growing out of any damages alleged to have been caused, in whole or in part, by an unhealthful, hazardous or dangerous condition caused by, contributed to, or aggravated by Lessee's presence on and use of the Premises.
The "threat to human health or environment" indemnification provision in paragraph 9 obligates Seda to indemnify the Railroad for environmental pollution or contamination condition on the property. The provision refers to the lessee's violation of regulations pertaining to matters such as "solid or other wastes, chemicals, oil and gas, toxic, corrosive or hazardous materials." Paragraph 9 also protects the Railroad's right to enforce the indemnification provision if contamination is not discovered until after the lease is cancelled or the statute of limitations has expired. Given the language used in paragraph 9, we conclude it does not unambiguously encompass indemnification for overgrown vegetation on the property.
The acts or omissions provision in paragraph 10 provides in pertinent part: Lessee also agrees to indemnify and hold harmless railroad from any loss, damage, injury or death arising from any act or omission of Lessee, Lessee's invites, licensees, employees, or agents, to the person or property of the parties hereto and their employees, and to the person or property of any other person or corporation while on or near the Premises.
The parties agree that indemnification under the "act or omission of Lessee" provision in paragraph 10 depends on whether Seda had a duty to maintain the vegetation on the leased right-of-way property to ensure an unobstructed view at the Bagley Lane Crossing.
Seda's lease mentions vegetation on the leased right-of-way property only once, in paragraph 5. Paragraph 5 provides:
It is understood that Lessee has inspected the Premises and takes them "AS IS". Railroad is not obligated by this Lease to make any changes, removals, or repairs of any kind nor to construct any fences. Lessee shall use the Premises only in the manner described in the Application and shall not construct or place on the Premises any advertising billboards, structures, additions, or improvements not described in the foregoing Application, or plant or remove trees and shrubbery, except with express written permission of Railroad, and at Lessee's sole risk.
Emphasis added.
Seda relies on the language that the lessee "shall not plant or remove tress and shrubbery, except with express written permission of Railroad, and at Lessee's sole risk to argue he did not have a duty to maintain the vegetation. Seda also contends the lease prohibited him from removing any vegetation. Spirit of Washington asserts this provision did not prohibit Seda from cutting back the vegetation, but only prohibits the removal of trees and shrubs. Spirit of Washington contends that because the lease does not reserve the right for the Railroad to enter the property and cut the vegetation, the duty to maintain the vegetation is implicitly and necessarily Seda's.
We note that this argument is inconsistent with the Railroad's argument in the Ploegman case in which this court rejected the Railroad's assertion that the Seda's lease reserved a right to enter the leased property to maintain vegetation. See Ploegman v. Burlington N. Santa Fe Ry. Co., No. 46776-0-I, 2002 Wash. App. LEXIS 1212, at 5 (June 3, 2002).
But even if the lease allows Seda to cut back and maintain the vegetation on the leased right-of-way property, it does not expressly impose a duty to do so. By contrast, in the Railroad's agreement with Ralph Ploegman there was an expressly stated duty to maintain the vegetation that interfered with seeing an approaching train. The Railroad's agreement with Ralph Ploegman provided:
Permittee agrees to remove and keep removed at Permittee's sole expense any vegetation that will interfere with approaching trains being seen for a distance of not less than five hundred feet in each direction from any point in the road approaching said crossing at a distance of not less than fifty feet from the nearest rail.
If the Railroad intended Seda undertake the responsibility to maintain the vegetation on the leased right-of-way property to ensure visibility, it could have explicitly said so as it did in the agreement with Ploegman. As drafted, the acts or omissions provision in paragraph 10 does not clearly and unambiguously impose a duty on Seda to maintain the vegetation on the leased Railroad right-of-way property to ensure visibility at the Bagley Lane Crossing. Because Seda did not have a duty to maintain the vegetation to ensure visibility of the train at the Bagley Lane Crossing, Seda is not obligated to indemnify the Railroad for damages or injury caused by the "acts or omissions of the lessee."
We affirm the trial court's decision to grant summary judgment in favor of Seda and dismiss Spirit of Washington's lawsuit.
APPELWICK and BECKER, JJ., Concur.