Engineering & Construction Innovations, Inc. v. L.H. Bolduc Co.

CONNOLLY, Judge

(dissenting).

I respectfully dissent. I would affirm the district court’s grant of summary judgment in favor of Bolduc because our statutory prohibition against indemnifying parties for their own negligence prohibits ECI from being indemnified by Bolduc when Bolduc was specifically found not negligent by a jury and the jury awarded no damages to ECI. I would also affirm the district court’s grant of summary judgment in favor of Travelers because the specific language of its endorsement limits its insurance coverage to the acts and omissions of Bolduc, not any other alleged acts or omissions.

The phrase “caused by or alleged to have been caused by any act or omission” invites the mischief that Minn.Stat. § 337.02 (2010) is designed to avoid. Minn.Stat. § 337.02 does not permit a party to a construction contract to be indemnified for its own negligence. See Minn. Stat. § 337.02(1) (stating that indemnification agreements executed in connection with construction contracts are unenforceable except to extent that the injury or damage is attributable to negligence of promisor). In this case, the parties stipulated that the only issue to be tried to the jury was ECI’s claim that Bolduc was negligent and Bolduc’s defense that ECI was negligent. Finally, the jury had to find what, if any, damages that ECI was entitled to if it prevailed. Bolduc was found not negligent by the jury, and ECI was awarded no damages. Consequently, ECI is the only other party that could be negligent under the facts of the case. Therefore, Bolduc is being asked to indemnify ECI for its own negligence. This scenario is prohibited by statute.

I also do not believe that Minn.Stat. § 337.05 applies. This statute provides that a specific promise to purchase specific insurance coverage for the benefit of another is valid and enforceable regardless of Minn.Stat. § 337.02. “Agreements seeking to indemnify the indemnitee for losses occasioned by its own negligence[, however,] are not favored by the law and are not construed in favor of indemnification unless such intention is expressed in clear and unequivocal terms, or unless no other meaning can be ascribed to it.” Yang v. Voyagaire Houseboats, Inc., 701 N.W.2d 783, 791 (Minn.2005) (quotation omitted).

In this case there is no such specific, clear, and unequivocal term. If the parties truly intended the subcontract provision to *926cover instances in which ECI could be indemnified for its own negligent acts, they needed to use the specific, clear, and unequivocal language that has been approved by the Minnesota Supreme Court in Holmes v. Watson-Forsberg Co., 488 N.W.2d 473, 474-75 (Minn.1992). The language in Holmes is very different from the language in this case. In Holmes, the subcontractor promised to indemnify the contractor “for all damages or injury to all persons, whether employees or otherwise, and to all property, arising out of it, resulting from or in any manner connected with, the execution of the work provided for in this [contract].” 488 N.W.2d at 474 (emphasis added). Thus, the obligation to indemnify was tied to the broader nature of the work being performed under the subcontract and not to damages caused by the acts or omissions or alleged acts or omissions of a subcontractor.

As to Travelers, the issue is even simpler because the language dealing with any “alleged” acts or omissions is not found in the endorsement. The specific language of its additional insured endorsement is set forth below and reads, in pertinent part, as follows:

BLANKET ADDITIONAL INSURED
(CONTRACTORS OPERATIONS)
This endorsement modifies insurance provided under the following:
COMMERCIAL GENERAL LIABILITY COVERAGE PART
1. WHO IS AN INSURED — (Section II) is amended to include any person or organization that you agree in a “written contract requiring insurance” to include as an additional insured on this Coverage Part, but:
a) Only with respect to liability for “bodily injury,” “property damage” or “personal injury”; and
b) If, and only to the extent that, the injury or damage is caused by acts or omissions of you or your subcontractor in the performance of “your work” to which the “written contract requiring insurance” applies. The person or organization does not qualify as an additional insured with respect to the independent acts or omissions of such person or organization.

(Emphasis added).

Read in the context of the parties in this case, the additional insurance coverage would be triggered (1) “only to the extent that,” (2) damage was “caused by acts or omissions of [Bolduc],” but that (3) “[ECI] does not qualify as an additional insured with respect to the independent acts or omissions of [ECI].” This language makes it clear that the intent of the parties was that Travelers would provide coverage to ECI “only to the extent that” ECI became responsible for payment of damages due to improper acts or omissions of Bolduc, but that Travelers would not provide coverage to ECI for damages that resulted from ECI’s independent actions, or the actions of some third party.

Reading this language any other way (or reading the words “acts or omissions” as advocated by ECI) disregards the policy and its intent, namely that ECI would be entitled to coverage only for Bolduc’s negligent acts. Here, the jury determined that Bolduc was not negligent for causing the damage to the pipeline and that ECI was entitled to zero dollars in damages. The jury’s verdict made it clear that Bol-duc’s actions did not cause the damage to the pipeline. As a result, no additional named-insured coverage is available to ECI under a plain and simple application of the language of the additional insured endorsement. Finally, acceptance of ECI’s argument would lead to the unpractical and unintended result that ECI could *927immunize itself from the risk of ever having to accept responsibility for its own negligent acts, thus defeating the whole purpose of Minn.Stat. § 337.02.

Because a jury found Bolduc not negligent and awarded no damages to ECI and Minn.Stat. § 337.02 would prohibit ECI from being indemnified for its own negligence, and because the indemnity provision does not comport with the requirements of Minn.Stat. § 337.05, I would affirm the district court’s grant of summary judgment in favor of Bolduc. Because the additional insured endorsement language does not require Travelers to provide coverage to ECI for Bolduc’s non-negligent acts, I would affirm the district court’s grant of summary judgment in favor of Travelers.