Present: All the Justices
SAFEWAY, INC.
v. Record No. 042656 OPINION BY JUSTICE CYNTHIA D. KINSER
September 16, 2005
DPI MIDATLANTIC, INC.
FROM THE CIRCUIT COURT OF FAIRFAX COUNTY
Jonathan C. Thacher, Judge
The question in this appeal is whether the exclusivity
provision of the Virginia Workers’ Compensation Act (the
Act), invalidates an express indemnification agreement
between an employer and a third party. Because we answer
that question in the negative, we will reverse the judgment
of the circuit court sustaining a plea in bar and
dismissing a third-party motion for judgment against the
employer.
FACTS AND PRIOR PROCEEDINGS1
Terence Williams, an employee of DPI Midatlantic, Inc.
(DPI), filed a motion for judgment against Safeway, Inc.
(Safeway), seeking damages for personal injuries sustained
as a result of a fall. While delivering products for his
employer to a store owned and operated by Safeway, Williams
utilized a wooden ramp to access the receiving area of the
1
The circuit court heard no evidence in support of the
employer’s plea in bar. Thus, we consider only the
pleadings in resolving the issue presented and take the
facts stated in the third-party plaintiff’s pleadings as
true. Niese v. City of Alexandria, 264 Va. 230, 233, 564
S.E.2d 127, 129 (2002).
Safeway store. The ramp gave way and broke, causing
Williams to fall and injure himself.
Safeway subsequently filed a third-party motion for
judgment against DPI, alleging that, if Safeway was found
liable for Williams’ alleged injuries, then Safeway was
“entitled to full and complete indemnity, via contract
. . . or otherwise, and/or contribution . . . from DPI.”
Safeway also alleged that the incident was caused by DPI’s
“negligence . . . in failing [to] instruct its agents and
employees about proper delivery procedures.”
In response to the third-party motion for judgment,
DPI filed a plea in bar, stating that Williams’ accident
and resulting injuries occurred while he was acting within
the scope of his employment for DPI and that, therefore,
the third-party claim against Williams’ employer is barred
by the exclusivity provision of the Act, specifically Code
§ 65.2-307.2 Safeway countered on the grounds that Safeway
and DPI had entered into a written agreement of
indemnification, namely, the “CONTINUING COMMODITY GUARANTY
2
Code § 65.2-307(A) provides that “[t]he rights and
remedies herein granted to an employee when his employer
and he have accepted the provisions of this title
respectively to pay and accept compensation on account of
injury or death by accident shall exclude all other rights
and remedies of such employee . . . .”
2
AND INDEMNITY AGREEMENT” (the Agreement),3 and that the
exclusivity provision of the Act does not invalidate an
express indemnification agreement between an employer and a
third party.
The relevant portion of the Agreement states:
[DPI] [d]oes hereby agree to indemnify, defend
and hold [Safeway] harmless from and against any
and all claims, demands, actions and proceedings
which are hereafter made or brought against
[Safeway] by any person, including but not
limited to any employee of [Safeway], for the
recovery of damages for the injury, illness
and/or death of any person or animal, or damage
to property, which is caused or alleged to have
been caused by the handling, shipment, delivery,
consumption or use of any Article shipped or
delivered by [DPI] to [Safeway], including
without limitation any judgment rendered against
or settlement paid by or on behalf of [Safeway]
in any such action and reasonable attorneys’ fees
and costs, if any, incurred by or on behalf of
[Safeway] in connection therewith.
The circuit court sustained DPI’s plea in bar and
dismissed it from the action with prejudice. Safeway
appealed.4 The sole issue before this Court is whether the
3
An entity known as DPI Halperin Distributing executed
the Agreement. On brief, DPI denied that the Agreement
applies to it but agreed to assume that it does for the
sole purpose of deciding the issue raised in its plea in
bar and on appeal. Thus, the question whether DPI is a
party to the Agreement is not before us.
4
Because the issue presented in DPI’s plea in bar is
separate and distinct from the issues in Williams’ claim
against Safeway, the circuit court’s ruling on the plea in
bar is appealable under the “severable” interest rule.
Maitland v. Allen, 267 Va. 714, 718 n.2, 594 S.E.2d 918,
3
exclusivity provision of the Act invalidates the Agreement
between Safeway and DPI.5
ANALYSIS
Relying on this Court’s decision in VEPCO v. Wilson,
221 Va. 979, 277 S.E.2d 149 (1981), DPI argues on appeal,
as it did before the circuit court, that the exclusivity
provision of the Act bars any indemnification obligation to
Safeway. In VEPCO, two plaintiffs filed actions “seeking
damages for personal injuries sustained from a gas main
explosion allegedly caused by the concurring negligence of
. . . three defendants.” Two of the defendants were VEPCO
and the plaintiffs’ employer, a contractor. Id. at 980,
277 S.E.2d at 149. Both plaintiffs received workers’
compensation benefits; thus, the trial court dismissed the
claims as to the contractor. Id. VEPCO, however, filed a
third-party motion for judgment against the contractor,
seeking contribution or indemnity for a portion of whatever
amount VEPCO might be obligated to pay to the plaintiffs.
920 n.2 (2004). Subsequent to Safeway’s appeal, a jury
returned a verdict in favor of Williams and awarded him
$350,000 in damages against Safeway. This Court refused
Safeway’s separate appeal from the judgment of the circuit
court in favor of Williams.
5
Safeway does not challenge on appeal that portion of
the circuit court’s judgment dismissing its third-party
claim for contribution.
4
Id. The contractor responded with a plea in bar, which the
trial court sustained. Id.
This Court affirmed the trial court’s judgment. Id.
at 982, 277 S.E.2d at 150. Quoting Bartlett v. Roberts
Recapping, Inc., 207 Va. 789, 793, 153 S.E.2d 193, 196
(1967), we stated that, “before contribution may be had[,]
it is essential that a cause of action by the person
injured lie against the alleged wrongdoer from whom
contribution is sought.” VEPCO, 221 Va. at 981, 277 S.E.2d
at 150. Although indemnity, unlike contribution, is based
on a contractual relationship, we further stated: “What we
say here with reference to contribution is equally
applicable to indemnity.” Id. Thus, because the
plaintiffs did not have a cause of action against the
contractor, we held that VEPCO had no right of contribution
or indemnity from the contractor. Id. at 982, 277 S.E.2d
at 150.
Contrary to DPI’s argument, our decision in VEPCO is
not dispositive of the issue before us. Safeway argues,
and we agree, that there is a critical difference between
the facts in VEPCO and those in the present case. The
question of indemnity at issue in VEPCO was necessarily one
of implied indemnity as there was no written indemnity
agreement between the contractor and VEPCO.
5
Unlike the parties in VEPCO, however, Safeway and DPI
entered into an express indemnity agreement.
The purpose of an indemnity agreement is to shift an
entire loss to another party.6 Wallenius Bremen G.m.b.H. v.
United States, 409 F.2d 994, 998 (4th Cir. 1969);
Quadrangle Dev. Corp. v. Otis Elevator Co., 748 A.2d 432,
435 (D.C. 2000). An express indemnity agreement reflects
the “ ‘loss distribution agreed to by the contracting
parties.’ ” The Goodyear Tire & Rubber Co. v. J.M. Tull
Metals Co., 629 So.2d 633, 636 (Ala. 1993) (quoting City of
Artesia v. Carter, 610 P.2d 198, 201 (N.M. Ct. App. 1980)).
In the context of workers’ compensation, the majority of
courts considering the same issue now before us have
concluded that the exclusivity provisions of their
respective workers’ compensation statutes do not prohibit
the enforcement of an express indemnity agreement by a
6
In contrast, “[t]he right to contribution does not
arise out of any express agreement or contract, but is
based on broad principles of equity that where two or more
persons are subject to a common burden it should be borne
equally.” Van Winckel v. Carter, 198 Va. 550, 555, 95
S.E.2d 148, 152 (1956). “[T]he law implies a contract
between [such persons] to contribute ratably towards the
discharge of the obligation.” Wiley N. Jackson Co. v. City
of Norfolk, 197 Va. 62, 66, 87 S.E.2d 781, 784 (1955).
Thus, contribution lies “where two or more persons are
liable to pay a claim and one or more of them pays the
whole of it, or more than his or her share, the one so
paying may generally recover from the others the ratable
proportion of the claim that each ought to pay.” Id.; see
also Code § 8.01-34.
6
third party against an employer. Id. at 635; American Fed.
Sav. Bank v. County of Washoe, 802 P.2d 1270, 1274 (Nev.
1990); 7 Arthur Larson & Lex K. Larson, Larson’s Workers’
Compensation Law § 121.04 (2004).7
[I]t is generally agreed that a third-party
action for contract indemnification from the
employer is not an action based upon the
employee’s injury but rather is an action for
reimbursement based upon an expressed contractual
obligation between the employer and a third-party
plaintiff. This obligation is independent of any
statutory duty the employer may owe an employee.
Cosentino v. A.F. Lusi Constr. Co., 485 A.2d 105, 108 (R.I.
1984); accord Manson-Osberg Co. v. State, 552 P.2d 654, 659
(Alaska 1976).
Here, DPI specifically contracted to indemnify Safeway
for certain types of losses. Enforcing the Agreement
between Safeway and DPI is merely enforcing the loss
distribution agreed to by them. See City of Artesia, 610
P.2d at 201. That loss distribution does not affect either
the payment of workers’ compensation to an injured employee
or the policy of limiting an employer’s liability. Id. If
an employer chooses to depart from that policy and
relinquish its statutory protection, it may do so. Id.
7
For a compilation of cases holding that the
exclusivity provisions of workers’ compensation statutes do
not prohibit the enforcement of express indemnity
agreements between an employer and a third party, see
Goodyear Tire, 620 So.2d at 635-36.
7
DPI, having done so, is not being subjected to an
unexpected liability as an employer. See Bieger v.
Consolidation Coal Co., 650 F. Supp. 1294, 1296-97 (W.D.
Va. 1987).
Thus, we conclude that the exclusivity provision of
the Act does not invalidate an express indemnity agreement
like the one entered into between Safeway and DPI, nor do
any provisions of the Act itself prohibit such an
agreement.8 Accordingly, we hold that the circuit court
erred in sustaining DPI’s plea in bar.
CONCLUSION
For these reasons, we will reverse the judgment of the
circuit court and remand this case for further proceedings.
Reversed and remanded.
8
The provisions of Code § 65.2-307(B) also allow an
employer voluntarily to agree “to pay an employee
compensation above and beyond those benefits provided for
in the Act.”
8