Bridgestone/Firestone, Inc. v. Ogden Plant Maintenance Co. of North Carolina

WALKER, Judge.

This appeal involves plaintiffs claim for indemnity from defendants arising out of an industrial accident which resulted in the deaths of two individuals. The accident occurred on 9 September 1994 at a tire manufacturing facility, owned by Bridgestone/Firestone, Inc. (plaintiff), in Wilson County, North Carolina.

Plaintiff contracted with Ogden Plant Maintenance Company of North Carolina (defendant Ogden) to maintain the plant and operate its powerhouse, which generated energy for the plant’s manufacturing process and included two large fuel storage tanks (tanks). Plaintiff also contracted with Budd Services, Inc. (defendant Budd) to provide security for the plant and to issue “hot work” permits which allowed jobs to be performed by independent contractors who engage in welding or other types of “hot work” at the plant. The contracts between plaintiff and each defendant included a provision obligating each defendant to indemnify plaintiff from any and all losses suffered by plaintiff arising out of defendants’ respective acts of negligence at the plant.

*505Prior to 9 September 1994, defendant Ogden determined that two of the tanks needed measuring devices. Defendant Ogden then requisitioned plaintiff for the parts and labor for this job, which included the services of an off-facility independent contractor, A. B. Electric Services, Inc. (ABES), that defendant Ogden had selected. Plaintiff agreed to supply the parts and contracted with ABES to perform the installation of the measuring devices.

On 9 September 1994, ABES arrived at the plant to install the measuring devices. ABES first determined that pipes would need to be attached to the top of each tank to house the measuring devices and therefore requested defendant Budd to issue a “hot-work” permit for the welding necessary to attach the pipes. After defendant Budd issued the permit, ABES employees proceeded with their welding work on top of one of the tanks. During this task, the tank exploded from the heat generated by the welding and resulted in the deaths of both employees as well as the destruction of the tank.

The estates of the deceased welders filed wrongful death suits alleging negligence and gross negligence by plaintiff, defendant Ogden and defendant Budd. Plaintiffs motion for summary judgment was denied. Defendants Ogden and Budd then settled the claims prior to trial and plaintiff settled the claims against it during trial. Plaintiff subsequently filed this action seeking indemnity and/or contribution from defendants for its costs and sums paid to settle the underlying claims. Plaintiff also sought the costs of repair to its property destroyed during the accident. From the trial court’s granting of defendants’ motions for judgment on the pleadings, plaintiff appeals.

In its assignments of error, plaintiff argues the trial court erred in granting defendants’ motions for judgment on the pleadings. Plaintiff contends it is entitled to be indemnified for its costs and sums paid to settle the claims and for its property damage pursuant to indemnity provisions in the contracts with defendants because the accident did not arise from plaintiff’s negligence but from the negligence of defendants.

At the outset, we note that when a trial court considers a motion for judgment on the pleadings pursuant to Rule 12(c) of our Rules of Civil Procedure, all allegations in the non-movant’s pleadings are deemed admitted. Ragsdale v. Kennedy, 286 N.C. 130, 137, 209 S.E.2d 494, 499 (1974) (citations omitted); N.C.R. Civ. P. 12(c) (1999). The motion is granted when the movant, held to a strict standard, shows that “no material issue of [fact] exists and that he is clearly entitled *506to judgment.” Ragsdale, 286 N.C. at 137, 209 S.E.2d at 499, citing Southern Ohio Bank v. Merrill Lynch, Pierce, Fenner and Smith, Inc., 479 F.2d 478 (6th Cir. 1973). The purpose of the motion is to dispose of baseless claims and to ensure that a party is not precluded from a full and fair hearing on the merits. Id.

Contractual indemnity provisions in this State are controlled by N.C. Gen. Stat. § 22B-1 (1999), which provides:

Any promise or agreement in, or in connection with, a contract or agreement relative to the design, planning, construction, alteration, repair or maintenance of a building, structure, highway, road, appurtenance or appliance. . . purporting to indemnify or hold harmless the promisee, the promisee’s independent contractors, agents, employees, or indemnitees against liability for damages arising out of bodily injury to persons or damage to property proximately caused by or resulting from the negligence, in whole or in part, of the promisee, its independent contractors, agents, employees, or indemnitees, is against public policy and is void and unenforceable. Nothing contained in this section shall prevent or prohibit a contract, promise or agreement whereby a promisor shall indemnify or hold harmless any promisee or the promisee’s independent contractors, agents, employees or indemnitees against liability for damages resulting from the sole negligence of the promisor, its agents or employees....

(emphasis added). In other words, a construction indemnity agreement may purport to indemnify a promisee from damages arising from negligence of the promisor, but any provision seeking to indemnify the promisee from its own negligence is void. “The indemnity provisions to which G.S. § 22B-1 apply are those construction indemnity provisions which attempt to hold one party responsible for the negligence of another.” International Paper Co. v. Corporex Constructors, Inc., 96 N.C. App. 312, 315, 385 S.E.2d 553, 555 (1989) (holding that where contract provision which violated N.C. Gen. Stat. § 22B-1 was not a central feature of the contract, the illegal provision was severable from the otherwise valid indemnity contract).

In the instant case, the indemnity provision in the contract between plaintiff and defendant Ogden is as follows in pertinent part:

Except as provided in Article XIII of this contract, [defendant Ogden] shall indemnify [plaintiff] and save it harmless from dam*507age to or theft of [plaintiffs] property and from all claims and judgments for injury or death to persons or property damage (including costs of [litigation] and attorney’s fees) made or obtained against [plaintiff] by third persons including [plaintiffs] and [defendant Ogden’s] employees and agents, based on injuries to person or property, in any manner caused by, incident to, connected with, resulting or arising from the performance of this contract or the presence of [defendant Ogden’s] employees, and/or agents on [plaintiff’s] premises, regardless of whether such claims are alleged to be caused by negligence, or otherwise, on the part of [plaintiff] or its employees, excepting however, injury to or death of employees of [defendant Ogden], from any cause whatsoever.

By this provision, plaintiff seeks indemnity for costs and sums paid as a result of defendant Ogden’s negligence. Plaintiff is therefore not attempting “to hold [defendant Ogden] responsible for the negligence of [plaintiff].” Id. This indemnity provision does not violate N.C. Gen. Stat. § 22(b)(1).

The indemnity provision in the contract between plaintiff and defendant Budd contains the following language:

[Defendant Budd] will further indemnify and hold [plaintiff] harmless from and against any and all liabilities, claims, demands, suits, losses, damages, costs, attorney’s fees and expenses for bodily injury to, or death of any person, or damage to or destruction of any property, caused by any negligent or intentional act or omission on the part of [defendant Budd], its officers, employees or former employees. Except [plaintiff] shall not be held harmless for any such liabilities, claims, demands, suits, losses, damages, costs, attorney’s fees and expenses caused by any negligent or intentional act or omission on the part of [plaintiff], its officers, employees or agents.

Likewise, this indemnity provision purports to hold defendant Budd responsible for its own negligent acts but not the negligent acts of plaintiff.

In this State, “a principal generally is liable for the negligent acts of his agent which result in injury to another.” Willoughby v. Wilkins, 65 N.C. App. 626, 633, 310 S.E.2d 90, 95 (1983), citing King v. Motley, 233 N.C. 42, 62 S.E.2d 540 (1950). “Generally, there is no vicarious lia*508bility upon an employer for negligent acts of an independent contractor.” Id., citing Hendricks v. Leslie Fay, Inc., 273 N.C. 59, 159 S.E.2d 362 (1968). But see Woodson v. Rowland, 329 N.C. 330, 407 S.E.2d 222 (1991) (which stated general rule that one who employs an independent contractor is not liable for the independent contractor’s negligence but recognized exceptions when: (1) the employer retains the right to control the manner in which the contractor performs his work; and (2) the independent contractor is employed to perform an inherently dangerous activity, because the employer has a continuing responsibility to ensure that adequate safety precautions are taken, which responsibility cannot be delegated to the independent contractor).

As to the question of when an issue of indemnity should be submitted to the jury, this Court has held:

The right to indemnity between defendants arises when liability is imposed upon one defendant for the other’s tortious conduct through operation of law, as for example, through the doctrine of respondeat superior. Indemnity is not permitted when the defendants are in pari delicto, that is, when both defendants breach substantially equal duties owed to the plaintiff. In order to recover indemnity from a second defendant, the first defendant must allege and prove (1) that the second defendant is liable to the plaintiff and (2) that the first defendant’s liability to the plaintiff is derivative, that is, based upon the tortious conduct of the second defendant.

Kim v. Professional Business Brokers, 74 N.C. App. 48, 51, 328 S.E.2d 296, 299 (1985) (citations omitted) (holding trial court did not err in failing to submit issue of indemnity to jury where multiple defendants were in pari delicto and thus not derivatively liable); See also Anderson v. Robinson, 275 N.C. 132, 165 S.E.2d 502 (1969).

In its complaint, plaintiff alleges that the accident occurred solely as a result of defendants’ negligence. Plaintiff further alleges that if it were in any way liable, it could only be on the “basis of some passive or derivative fault,” and thus would be entitled to indemnification. To support this assertion, the complaint also alleges that plaintiff was not involved in the discussion which took place between defendants and ABES regarding the installation job and that plaintiff “was not notified of [the welding] activity and had no personnel present.” In their answer, defendants admit discussing the installation job among each other and with ABES, and that plaintiff’s personnel were not *509present during the activity. However, defendants deny that plaintiff was not notified of the activity. Defendants also admit the “hot work” permit to perform the welding was issued without notice to plaintiff but deny the allegation that plaintiff was not included in the coordination of the activity.

Defendants contend plaintiff settled claims of direct and active negligence against it in the underlying action and therefore is not entitled to indemnification. Defendants further contend that because plaintiff has settled claims of direct and active negligence, it cannot recover either under common law or contractual indemnity.

In examining the record before us, there is no admission, finding or adjudication of negligence on the part of plaintiff in the underlying action. All that appears is that plaintiff, for whatever reasons, paid sums to settle the underlying claims.

Defendants cite City of Wilmington v. Natural Gas Corp., 117 N.C. App. 244, 450 S.E.2d 572 (1994), for the proposition that where a party voluntarily pays a claim for which it is not liable, that party is not entitled to indemnity. In that case, the City was required to pay a certain amount of workers’ compensation benefits to an individual pursuant to a city ordinance, which also provided that any additional amount paid was within the City’s discretion. Id. at 250, 450 S.E.2d at 577. Because the City paid additional amounts for which it “was not legally obligated to pay[,]” this Court found its “actions were voluntary” and thus it was not entitled to be indemnified. Id.

We distinguish this case from City of Wilmington. Plaintiff’s settlement in the underlying action came after Ogden and Budd had settled and plaintiff asserts it was faced with the prospect of costly and protracted litigation as the only remaining defendant in that action. We cannot conclude as a matter of law that plaintiff’s settlement payment was voluntary. See Griffin v. Van Norman, 302 S.C. 520, 397 S.E.2d 378 (1990); Valloric v. Dravo Corp., 178 W. Va. 14, 357 S.E.2d 207 (1987).

Defendant Ogden contends N.C. Gen. Stat. § IB-4 (1999) bars plaintiff from seeking contribution. Contribution, as opposed to indemnity, “arises when more than one tortfeasor is found liable for the plaintiff’s injury. It allows a defendant to demand assistance from the other joint tortfeasor(s) if his payment to the plaintiff exceeds his pro rata share. Contribution also allows the defendant to apply any damages it pays as a joint tortfeasor as a credit against the total dam*510age award.” David A. Logan and Wayne A. Logan, North Carolina Torts § 8.20, at ¶ 7 (1996), citing Holland v. Southern Pub. Util. Co., 208 N.C. 289, 180 S.E. 592 (1935).

On the other hand, as previously noted, indemnity arises under the doctrine of primary-secondary liability, also known as active-passive negligence. Here, plaintiff is seeking indemnification, as opposed to contribution, on the basis that it is not a joint nor primary tortfeasor.

We conclude plaintiff’s allegations, together with the contractual indemnity provisions, are sufficient to withstand defendants’ motion for judgment on the pleadings. We therefore reverse the trial court’s order and remand the case for a determination of whether plaintiff is entitled to indemnity from defendants Ogden and Budd.

Reversed and remanded.

Judge HUNTER concurs. Judge CAMPBELL concurs in part and dissents in part.