IN THE COURT OF APPEALS OF IOWA
No. 14-0032
Filed March 11, 2015
PAUL CRAIG JEFFRIES and GERALD JEFFRIES as
Administrators/Executors of the Estate of FANCHON B. JEFFRIES,
Plaintiffs-Appellants,
vs.
GENERAL CASUALTY INSURANCE COMPANIES, et al.,
Defendants-Appellees.
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Appeal from the Iowa District Court for Jasper County, Darrell Goodhue,
Judge.
The plaintiffs appeal from the district court’s grant of summary judgment to
all defendants. AFFIRMED.
Erin Patrick Lyons and David J. Dutton of Dutton, Braun, Staack
& Hellman, P.L.C., Waterloo, for appellants.
Douglas A. Haag of Patterson Law Firm, L.L.P., Des Moines, for appellee
General Casualty Insurance Company.
Joseph M. Barron and John M. Wharton of Peddicord, Wharton, Spencer,
Hook, Barron & Wegman, L.L.P., West Des Moines, for appellees Interstate
Insurance Services, LTD.; Leonard Woythaler; David Lureman; and Josie Carter.
Apryl Delange and Rebecca Reif of Hopkins & Huebner, P.C., Des
Moines, for appellees Jasper Construction Services, Inc.; Donald Van
Dusseldorf; and Steven Rhoads.
Kimberly S. Bartosh of Whitfield & Eddy, P.L.C., Des Moines, for
appellees Heritage Mutual Insurance Company n/k/a Acuity Mutual Insurance
Company; and Heritage Insurance, Heritage Insurance Companies.
Timothy N. Lilliwitz, Des Moines, for appellees Reed Construction Co.,
Inc., et al.
Heard by Vaitheswaran, P.J., and Tabor and Mullins, JJ. Goodhue, S.J.,
takes no part.
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VAITHESWARAN, P.J.
The primary issue in this appeal is whether a contractor and subcontractor
on a city construction project have a duty to indemnify a truck driver and the
truck’s owner for the truck driver’s negligence.
I. Background Facts and Proceedings
Jasper Construction Services, Inc. contracted with the City of Centerville,
Iowa, to resurface streets. Jasper subcontracted with Reed Construction Co.,
Inc. to provide and lay the asphalt. Reed, in turn, contacted Larry Dean Reinier
to transport the asphalt. Orval Kopp drove a truck owned by Reinier. While
behind the wheel, Kopp failed to yield and crashed into a car in which Fanchon
B. Jeffries was a passenger. Jeffries died.
The administrators of Jeffries’ estate sued Kopp and Reinier. The Jeffries
reached a settlement, which included an assignment to the estate of Reinier’s
and Kopp’s indemnification rights, if any. The Jeffries then sued Jasper, Reed,
their insurers, and the company retained to procure insurance for Jasper. The
district court granted summary judgment in favor of all the defendants. The
Jeffries appealed.
II. Analysis
Summary judgment is proper only if “the pleadings, depositions, answers
to interrogatories, and admissions on file, together with the affidavits, if any, show
that there is no genuine issue as to any material fact and that the moving party is
entitled to a judgment as a matter of law.” Iowa R. Civ. P. 1.981(3). Indemnity
questions are legal issues, appropriate for the court to decide as a matter of law.
Martin & Pitz Assocs., Inc. v. Hudson Constr. Servs., Inc., 602 N.W.2d 805, 808
(Iowa 1999).
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The Jeffries contend defendants Jasper and Reed and their insurers
General Casualty Insurance Companies and Heritage Mutual Insurance
Company, “were required to indemnify Reinier and Kopp” for Kopp’s negligence
in failing to yield and, because Reinier and Kopp assigned their claims to the
estate, their summary judgment motions should not have been granted.
“Under a contract for indemnification, ‘one party (the indemnitor) promises
to hold another party (the indemnitee) harmless for loss or damage of some
kind.’” McNally & Nimergood v. Neumann-Kiewit Constructors, Inc., 648 N.W.2d
564, 570 (Iowa 2002) (quoting II E. Allan Farnsworth, Farnsworth on Contracts
§ 6.3, at 108 (2d ed. 1998)). Indemnity agreements are generally held to the
same standards of construction as other contracts. Campbell v. Mid-Am. Constr.
Co. of Iowa, 567 N.W.2d 667, 669 (Iowa Ct. App. 1997). However, “we have
crafted a special rule of construction for indemnification contracts when the
contract is claimed to relieve the indemnitee from liability for its own negligence.”
McNally, 648 N.W.2d at 571. “This rule provides that indemnification contracts
will not be construed to permit an indemnitee to recover for its own negligence
unless the intention of the parties is clearly and unambiguously expressed.” Id.
“Thus, indemnification contracts claimed to contain these provisions are
construed more strictly than other contracts.” Id. Additionally, “‘where an
indemnification is not given by one in the insurance business but is given incident
to a contract whose main purpose is not indemnification, the indemnity provision
must be construed strictly in favor of the indemnitor.’” Martin & Pitz, Inc., 602
N.W.2d at 809 (quoting 41 Am.Jur.2d Indemnity § 13, at 356 (1995)).
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A. Jasper-Centerville Contract
The Jeffries begin with section 2.20(d) of the contract between Jasper and
the city, which states:
The Contractor shall be fully responsible for all acts and omissions
of his Subcontractors and of persons and organizations directly or
indirectly employed by them and of persons and organizations for
whose acts any of them may be liable to the same extent that he is
responsible for the acts and omissions of persons directly
employed by him. Nothing contained in this Contract shall create
any contractual relation between any Subcontractor and the Owner.
They contend this provision holds Jasper responsible for the acts of Reinier and
Kopp.
In isolation, section 2.20(d) could be read as the Jeffries request. But
“‘meaning can almost never be plain except in context.’” Fausel v. JRJ Enters.,
Inc., 603 N.W.2d 612, 618 (Iowa 1999) (quoting Restatement (Second) of
Contracts § 212 cmt. b (1981)). “A writing is interpreted as a whole, and all
writings that are part of the same transaction are interpreted together.”
Restatement (Second) of Contracts § 202 (1981). This rule does “‘not depend
upon any determination that there is an ambiguity, but [is] used in determining
what meanings are reasonably possible as well as in choosing among possible
meanings.’” Fausel, 603 N.W.2d at 618 (quoting Restatement (Second) of
Contracts § 202 cmt. a (1981)).
Section 2.20(d) falls under the heading “Superintendence and
Workmanship,” within the “General Conditions of Contract.” In context, there is
simply no question the cited language delineates Jasper’s responsibilities to the
City of Centerville. As the district court stated, the estate is “attempting to make
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language obviously included to protect the City into an indemnification clause to
protect a third party for their own fault.”
The Jeffries nonetheless argue a separate indemnification clause running
to the city, section 2.10(a) would render section 2.20(d) superfluous if section
2.20(d) is also read as an indemnification clause running to the city. See Alta
Vista Props., LLC v. Mauer Vision Ctr., PC, 855 N.W.2d 722, 727 (Iowa 2014)
(“‘[A]n interpretation which gives a reasonable, lawful, and effective meaning to
all terms is preferred to an interpretation which leaves a part unreasonable,
unlawful, or of no effect.’” (citation omitted)).
Section 2.20(d) is a clause outlining Jasper’s responsibilities with respect
to “superintendence and workmanship,” whereas section 2.10(a) is a general
indemnification clause holding the owner harmless “from any and all liability
claims, losses or damage arising or alleged to arise from the performance of the
work” except those arising from the “sole negligence of the Owner or the
Engineer.” See Thomas v. Progressive Cas. Ins. Co., 749 N.W.2d 678, 685
(Iowa 2008) (notwithstanding rule to interpret policy so as not to render any
provision superfluous, “‘we will not do so when that [interpretation] is inconsistent
with the structure and format of the [provision] and when that [interpretation] is
otherwise unreasonable’” (citation omitted)). The provisions are not coextensive
and, therefore, not redundant. Accordingly, we find this argument unpersuasive.
Other contract language cited by the Jeffries also does not alter our
conclusion. For example, section 2.21(e), which states, “[t]he contractor shall be
responsible for all accidents that occur through negligence of himself, his
employees, or subcontractors,” is preceded by a reference to maintaining
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“sufficient warning signs, lights, and barricades on the work to mark all
excavations and places dangerous to traffic and pedestrians.” The entire section
falls under the heading “Protection of Property.” Again, there can be no question
the section relates to the city’s work site and Jasper’s responsibilities on the work
site.
We conclude the contract between Jasper and the City of Centerville does
not express a clear and unambiguous intent to indemnify Reinier and Kopp for
Kopp’s negligence in striking the vehicle in which Jeffries was a passenger. See
McNally, 648 N.W.2d at 571. Accordingly, the district court correctly granted
Jasper’s motion for summary judgment. Our conclusion necessarily resolves the
Jeffries’ claims against Jasper’s insurers, the General Casualty Companies.
B. Jasper-Reed Subcontract Agreement
The Jeffries next contend Reed “agreed to step into Jasper’s shoes with
respect to Reinier’s and Kopp’s liability to” them. They rely on section 15 of the
Jasper-Reed subcontractor agreement, which states:
A. To the fullest extent permitted by law, the Subcontractor shall
indemnify, defend and hold harmless the Owner, Contractor,
Engineer, Engineer’s consultants, their agents and employees,
from and against claims damages, losses, and expenses including
but not limited to attorney’s fees and expenses arising out of or
resulting from performance of the Subcontractor’s Work under this
Subcontract provided that such claim, damage, loss or expense is
attributable to bodily injury, sickness, disease, or death or injury to
destruction of tangible property (other than the Work itself)
including loss of use resulting therefrom, but only to the extent
caused in whole or in party by the negligent act or omission of the
Subcontractor, the Subcontractor’s subcontractors, anyone directly
or indirectly employed by them or anyone for whose acts they may
be liable, regardless of whether or not such claim, damage, loss, or
expense is covered in part by a party indemnified hereunder. Such
obligations shall not be construed to negate, abridge, or otherwise
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reduce other rights or obligations of indemnity which would
otherwise exist as to a party or person described in this action.
In the Jeffries’ view, this provision required Reed to “(1) assume[] ‘all’ of Jasper’s
‘obligations and responsibilities,’ and (2) agree[] to indemnify Jasper for claims
against it arising out of ‘the negligent act or omission of [Reed], [Reed’s]
subcontractors, anyone directly or indirectly employed by them.’”
Like the district court, we believe the Jeffries’ arguments as to Reed’s
responsibilities fail based on our conclusion concerning Jasper’s obligations: if
Jasper had no obligation to indemnify Reinier and Kopp, neither did Reed. But,
even if this were not the case, the district court correctly concluded a separate
provision in Reed’s subcontractor agreement, section 12, “limits Reed’s
obligation[s under section 15A] . . . to those obligations and responsibilities that
the contractor had assumed towards the owner.”
The district court did not err in granting Reed summary judgment.
Accordingly, the court also did not err in granting Reed’s insurance carrier,
Heritage, summary judgment.
C. Third-Party Beneficiary
The Jeffries alternatively contend Reinier and Kopp were third-party
beneficiaries of the Jasper-Centerville contract and the Jasper-Reed contract. In
deciding this issue, we focus on “whether the contract manifests an intent to
benefit a third party.” Midwest Dredging v. McAninch Corp., 424 N.W.2d 216,
224 (Iowa 1988) (adopting the Restatement (Second) of Contracts § 302 (1981)
relating to third-party beneficiaries).
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The Jasper-Centerville contract unambiguously disclaims third-party
beneficiary status. The contract incorporates a standard Iowa Department of
Transportation (DOT) provision, section 1107.12, which states:
[I]t is specifically agreed between the parties executing this contract
that it is not intended by any of the provisions of any part of the
contract documents to create in the public or any member thereof a
third-party beneficiary hereunder, or to authorize anyone not a party
to this contract to maintain a suit for personal injuries or property
damage pursuant to the terms or provisions of this contract. The
duties, obligations, and responsibilities of the parties to this contract
with respect to third parties shall remain as imposed by law.
The provision further states:
It is understood that no subcontractor is a third-party beneficiary to
any contract between the Contracting Authority and the prime
contractor. Nothing in any special provision or any supplemental
specification shall be construed as eliminating or superseding the
requirements of this section.
The contractual intent could not be clearer.
The Jeffries, however, point to another portion of the DOT specifications
stating “Unless otherwise specified in the Special Provisions, the Department of
Transportation Specifications shall not apply to General Conditions of Contract,
definition of Pay Items, measurement of quantities, or payment.” In their view,
section 1107.12 is inapplicable to section 2.20(d) which, as noted, appears under
the general conditions section of Jasper’s contract with the city. This argument
overlooks the “[u]nless otherwise specified” language. By its terms, section
1107.12 applies to “any of the provisions of any part of the contract documents.”
This language is dispositive. See RPC Liquidation v. Iowa Dep’t of Transp., 717
N.W.2d 317, 322 (Iowa 2006) (construing section 1107.12 to mean “there are no
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third-party beneficiaries to the contracts”). The district court correctly refused to
find Reinier and Kopp to be third-party beneficiaries of the contracts.
D. Iowa Rule of Civil Procedure Claim
The Jeffries also seek to hold Jasper and Reed accountable under Iowa
Rule of Civil Procedure 1.202. The rule states:
When a bond or other instrument given to the state, county, school
or other municipal corporation, or to any officer or person, is
intended for the security of the public generally, or of particular
individuals, action may be brought thereon, in the name of any
person intended to be thus secured, who has sustained an injury in
consequence of a breach thereof, except when otherwise provided.
Iowa R. Civ. P. 1.202. The district court rejected this argument, reasoning “[t]he
bond is limited in its obligation to claims for performing any work or labor in
furnishing materials. It assumes no obligation beyond that stated. . . . Plaintiff’s
claims do not fit under any of the classifications covered and included in the
bond.” We discern no error in this ruling.
E. Interstate
The Jeffries’ claim against Interstate Insurance Services is based on
Jasper’s request to have Interstate procure insurance for it. The Jeffries contend
Interstate breached a general duty to “use reasonable care, diligence, and
judgment in procuring the insurance requested by an insured.” In their view,
Interstate should have procured insurance covering Reinier and Kopp.
Before a plaintiff may prevail on a claim that an insurance agent was
negligent in providing insurance to a third-party,
a plaintiff [must] show that he or she was the “direct, intended, and
specifically identifiable beneficiar[y]” of the policy as well as the other
elements of negligence. Further, the plaintiff must produce evidence
from the written instrument itself that indicates the plaintiff is the
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intended beneficiary of the policy. If the plaintiff cannot show that he
or she is the intended beneficiary of the policy, then the insurance
agent does not owe that plaintiff a duty of care
Pitts v. Farm Bureau Life Ins. Co., 818 N.W.2d 91, 106 (Iowa 2012) (citations
omitted). The Jeffries could not make this showing. As noted, the direct,
intended, and specifically identifiable beneficiary of Jasper’s insurance policies
was the City of Centerville. Nowhere is there an indication Jasper also intended
to cover unknown individuals who might, through their own negligence, injure
other unknown individuals.
III. Disposition
We affirm the summary judgment rulings in favor of the defendants.
Based on our manner of disposition, we find it unnecessary to address the
Jeffries’ argument that Reinier and Kopp were Jasper’s and Reed’s
subcontractors. We also find it unnecessary to address their argument that
Jasper and Reed assumed liability for their negligence under their contracts
(assuming this is a different argument than the indemnification argument
discussed in Part II, section A, above).
AFFIRMED.