No. 95-369
IN THE SUPREME COURT OF THE STATE OF MONTANA
1996
BILLY A. SLATER,
Plaintiff and Respondent,
-vs -
CENTRAL PLUMBING AND HEATING COMPANY,
Defendant and Appellant,
and
EDSALL CONSTRUCTION COMPANY, INC.,
(AMERICAN STATES INSURANCE COMPANY,
SLJBROGEE),
Defendant and Respondent.
APPEAL FROM: District Court of the Eighth Judicial District,
In and for the County of Cascade,
The Honorable Marc G. Buyske, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
George D. Goodrich; Garlington, Lohn & Robinson,
Missoula, Montana
For Respondent:
James R. Walsh; Smith, Walsh, Clarke & Gregoire,
Great Falls, Montana
Submitted on Briefs: January 18, 1996
Decided: February 22, 1996
Filed:
-
Justice W. William Leaphart delivered the Opinion of the Court.
Central Plumbing & Heating Company (Central) appeals from the
March 17, 1995, order of the Eighth Judicial District Court,
Cascade County, granting American States Insurance Company's
(American) summary judgment on a cross-claim, brought in the name
of Edsall Construction Company (Edsall), concluding that Central
had breached its contract with Edsall. We reverse.
We consider the following issues on appeal:
1. Did the District Court err in granting summary judgment
to Edsall concluding that Central breached the subcontract
agreement?
2. Did the District Court err in awarding prejudgment
interest and attorney's fees to Edsall?
Edsall was the general contractor on a project to build a
commissary building, over 30 feet high, on Malmstrom Air Force
Base, located near Great Falls, Montana. Edsall contracted with
Central, a subcontractor, to perform work on the project. In turn,
Central sub-subcontracted with other construction companies,
including Building Sprinkler Company. On March 10, 1988, Billy
Slater (Slater) , an employee of Building Sprinkler, was injured
when a wheel on the motorized scaffolding he was using to install
a fire control system fell into a floor drain grate causing the
scaffolding to tip and Slater to fall. Defendant Central had
installed the floor drains.
Slater filed suit against Edsall and Central for his injuries.
Slater moved for partial summary judgment as to liability against
Edsall. The District Court found that "the party originally
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responsible for job safety has a non-delegable duty to employees of
subcontractors." The District Court determined that, by virtue of
its prime contract with the United States Government, Edsall had a
nondelegable duty to provide for the safety of workers and ensure
the compliance of subcontractors. The District Court ruled that
Edsall, in failing to properly cover or protect the floor openings,
had violated its own contractual duties as well as the Montana
Scaffolding Act, §§ 50-77-101 to 50-77-107, MCA, (the Act).
Further, the District Court recognized that as the party in control
of the work, Edsall was absolutely liable for any violation of the
Act. Thus, the District Court granted the motion for partial
summary judgment against Edsall on the issue of liability.
In addition, Slater moved for partial summary judgment against
Central; the court, however, denied that motion. Before trial,
Slater settled with Central. The District Court directed a verdict
for Slater against Edsall on the questions of duty, breach and
causation, thus, the jury determined only the amount of damages.
The jury awarded Slater $675,000. No appeal was taken from this
verdict. American, Edsall's insurer, paid the judgment.
Subsequently, American, in Edsall's name, filed an amended
cross-claim against Central claiming indemnification due to
Central's breach of the subcontract agreement between Central and
Edsall. American's complaint alleged that:
The contract between Edsall and Central, and in
particular the first paragraph thereof, was breached by
Central . . . These breaches caused the judgment
against Edsall and payment by Edsall to Billy Slater
described herein, and for that reason, Edsall is entitled
to be fully indemnified by Central Plumbing and Heating
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for its loss
. .
Alternatively, and in addition to the foregoing, the
contract between Edsall and Central provides at paragraph
9 that Central will protect and indemnify Edsall against
any loss or damage suffered by anyone arising through the
negligence of Central, or those employed by it, or its
agents or servants. Under this provision, Central is
liable to Edsall for all damages caused by its
negligence, the negligence of its sub-sub-contractor, or
of Billy Slater himself.
Both Central and American moved for summary judgment. Central
claimed that "Edsall, by virtue of its prime contract with the
United States Government, had a non-delegable duty to provide for
the safety of workers and ensure the compliance of subcontractors."
Further, because Central was not the party in control of the
workplace, it was not liable as a matter of law. American argued
that Central had breached the subcontract agreement by not
complying with the Act and the Occupational Safety and Hazard Act
(OSHA) . On April 18, 1992, the District Court granted summary
judgment in favor of American on the breach of contract claim
leaving the question of damages for a later determination. On
March 17, 1995, the District Court awarded judgment against Central
in the amount of $630,044.31 (the amount that American had paid
Slater), together with interest accruing at the rate of 10% per
annum from June 3, 1991. The District Court, pursuant to a clause
in the subcontract agreement, also awarded American attorney's fees
and costs incurred in the defense of Slater's claim against Edsall
and in the prosecution of the cross-claim against Central. Central
appeals from this determination.
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1. Did the District Court err in granting summary judgment
to Edsall concluding that Central breached the subcontract
agreement?
Our standard in reviewing a district court's grant of a motion
for summary judgment is the same as that used by the district
court; we are guided by Rule 56(c), M.R.Civ.P. Chilberg v. Rose
(Mont. 1995), 903 P.2d 1377, 1378-79, 52 St.Rep. 1038, 1039 (citing
Minnie v. City of Roundup (1993), 257 Mont. 429, 431, 849 P.2d 212,
214). Thus, we determine whether a genuine issue of material fact
exists and whether the moving party is entitled to judgment as a
matter of law. Chilberq, 903 P.2d at 1378-79. In this case, the
underlying facts are not in dispute, therefore, we consider whether
the District Court was correct in concluding that American was
entitled to damages for breach of the subcontract agreement as a
matter of law.
A violation of the duties imposed by the Montana Scaffolding
Act imposes absolute liability. Mydlarz v. Palmer/Duncan Constr.
co. (19841, 209 Mont. 325, 336, 682 P.2d 695, 701. Once the
District Court determined that Edsall was liable for Slater's
injuries because of its violations of the Act, American should not
have the opportunity to pin that liability on the subcontractor.
Edsall did not appeal from the judgment finding that it was liable
for violations of the Act. It is, therefore, inconsistent for
American to claim that Central breached the subcontract and assert
that the damages it paid on behalf of Edsall, the party found to be
responsible, were due to Central's violation of OSHA rather than
Edsall's violations of the Act. The District Court's instructions
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to the jury, as well as its original order, were premised on
Edsall's violations of the Act. Although American argues that
health and safety requirements were incorporated by reference into
Edsall's subcontract with Central, the Act was not one of the
safety requirements referenced in the prime contract. Thus, when
the prime contract did not even mention the Act, Central could not
have assumed duties under the Act by reference to the prime
contract. In addition, Central did not expressly assume duties
under the Act in its subcontract with Edsall.
The District Court determined that Edsall violated the Act in
its own right by failing to properly secure or protect the floor
openings. The District Court instructed the jury that:
I have also ruled that Edsall Construction Company
violated another section of the Scaffolding Act.
Specifically, they violated a section of the Act which
required all floor openings, be covered or otherwise
properly protected to prevent persons or equipment from
falling into the openings of the floor.
Thus, the District Court determined that Edsall itself had violated
§ 50-77-104, MCA.
The Montana Scaffolding Act subjected Edsall to absolute
liability. Section 50-77-101, MCA. To allow American to recover
for breach of the subcontract is, in effect, to grant indemnity to
American for its insured's violations of the Act. This Court has
held that a party cannot be indemnified against its own negligence
unless the contract provisions are clear and unequivocal. Sweet v.
Colborn Sch. Supply (1982)‘ 196 Mont. 367, 369-70, 639 P.2d 521,
523. We note that American relies on our opinion in Howard S.
Wright Constr. v. DeBeer Mechanical (1980), 185 Mont. 47, 49, 604
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P.2d 323, 325, which expresses a contrary holding on facts similar
to the instant case. However, since Howard S. Wriqht was decided,
this Court has adopted a standard under which contractual
provisions that indemnify a party for its own negligence must be
"clear and unequivocal" to be enforceable. Sweet, 639 P.2d at 523.
In light of Sweet, the indemnity clause in Howard S. Wrisht
and the clause at issue in the instant case are not sufficiently
"clear and unequivocal" to indemnify a general contractor for its
own negligence. Although the contract requires Central to
indemnify Edsall for damages arising out of Central's negligence,
it does not require Central to indemnify Edsall for Edsall's own
negligence. In addition, Edsall's cross-claim alleges that it is
entitled to indemnification due to Central's breach of the
subcontract. In seeking indemnification, American is attempting to
hold Central responsible for Edsall's own violation of the Act; a
finding that Edsall did not appeal.
As the District Court noted, "the contract does not clearly
and unequivocally indemnify Contractor/Edsall for its negligent
acts. Since this Court has found that Edsall was negligent per se,
Edsall may not use the indemnification clauses of the contract in
order to recover against Central." However, that is precisely the
effect of the District Court's determination that Central was
liable for breach of the subcontract. The underlying "breach of
contract" arguably resulted in Slater's injury, an injury that the
District Court already determined was completely attributable to
Edsall based on Edsall's nondelegable duty of safety and Edsall's
violations of the Act.
American asserts that Camp, Dresser & McKee v. Technical
Design Assoc. (2d Cir. 1991), 937 F.2d 840, is relevant to our
inquiry. In Camr,, the Second Circuit Court of Appeals stated that
the case was:
[a]n indemnification case only in the sense that the
amount of damages, which the trial court awarded to
[plaintiff] is the amount of money which [plaintiff] paid
the City as a result of the consent judgment. The cause
of action on which [plaintiff] recovered below, however,
is not an indemnification theory, but a breach of
contract theory.
Camp, 937 F.2d at 843. In m, the underlying suit involved a
defective heating and cooling system which had been installed by a
subcontractor. The prime contractor settled with the owner of the
project and then sued the subcontractor for breach of contract. In
Caml,, no underlying nondelegable duty was imposed on the prime
contractor. Further, there is no indication that the prime
contractor had breached any of its duties.
In the instant case, however, the District Court found Edsall
to be the responsible party pursuant to Edsall's own violations of
the Act. Recently, we determined that where the duties imposed on
the general contractor by virtue of the prime contract are
nondelegable, the general contractor cannot avoid liability by
attempting to shift responsibility for those duties to someone
else. Steiner v. Department of Highways (1994), 269 Mont. 270,
276, 887 P.2d 1228, 1232 (citing Nave v. Harlan Jones Drilling
(1992), 252 Mont. 199, 202-03, 827 P.2d 1239, 1241). Here, the
District Court determined that Edsall had a nondelegable duty of
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safety, and that Edsall's violation of that duty and Edsall's own
violations of the Act were the proximate cause of Slater's
injuries. Once these determinations had been made, and absent a
clear and unequivocal indemnity clause in the contract, the
District Court erred when it, in effect, granted Edsall indemnity
for its own negligence.
We determine that American was not entitled to indemnification
based upon breach of contract. Accordingly, as the underlying
claim is reversed, we need not consider the amount of the damage
award, the award of attorney's fees and costs, or the award of
prejudgment interest raised in issue two.
Reversed.
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