Case Title: St. Paul Fire and Marine Ins. Co. v. Gilpatrick Const. Co., Inc.

Citation: 

Docket Number: 

State: wyoming

Court: Wyoming Supreme Court

Date: 1987-01-29T00:00:00Z

Document:
St. Paul Fire and Marine Ins. Co. v. Gilpatrick Const. Co., Inc.1987 WY 8731 P.2d 1188Case Number: 86-173Decided: 01/29/1987Supreme Court of Wyoming

ST. PAUL FIRE AND MARINE INSURANCE 
COMPANY, APPELLANT (THIRD-PARTY PLAINTIFF), C.J. ABBOTT, INC., (THIRD-PARTY 
PLAINTIFF),

 
 
v.

 
 
GILPATRICK CONSTRUCTION CO., INC., 
APPELLEE (THIRD-PARTY DEFENDANT),

 
 
v.

 
 
TOM M. JOHNSON, 
(PLAINTIFF),

 
 
v.

 
 
C.J. ABBOTT, INC., A WYOMING 
CORPORATION, MARK JUSTICE GILPATRICK, A/K/A DICK GILPATRICK, BOB KYSELMIRE AND 
ROY NORMAN, (DEFENDANTS).

 
 
Appeal from the District Court, 
LaramieCounty, Joseph F. Maier, 
J.

 
 
J. Kent Rutledge and Peter K. 
Michael of Lathrop & Uchner, P.C., Cheyenne, for appellant (third-party 
plaintiff).

 
 
John R. Vincent of Hettinger and 
Leedy, P.C., Riverton, for appellee 
(third-party defendant).

 
 
Before BROWN, C.J., and THOMAS, CARDINE, URBIGKIT 
and MACY, JJ.

 
 

MACY, Justice.

 
 

[¶1.]      This is an appeal 
from a district court judgment in favor of Gilpatrick Construction Co., Inc., 
appellee, on a third-party complaint for indemnification. We are asked to 
determine whether the indemnification provisions at issue are sufficiently 
explicit to require indemnification by Gilpatrick. We find that the provisions 
are sufficiently explicit, and we reverse.

 
 

[¶2.]      The parties 
stipulated to the following facts. In June of 1980, C.J. Abbott, Inc. contracted 
with the Wyoming State Highway Commission to do road work in Carbon County, Wyoming. In July of 1980, Abbott entered into 
a subcontract with Gilpatrick in which Gilpatrick agreed to perform the rock 
crushing work associated with the road project. The following provisions of the 
subcontract are relevant:

 
 
"V. To save the Owner and the 
Contractor harmless from all loss, cost or expense resulting either directly or 
indirectly from the failure of the Sub-Contractor faithfully to carry out any 
provision of this Sub-Contract.

 
 
* * * * * *

 
 
"VII. To adequately and properly 
protect his work of construction by lights, barriers, supports, signs and guards 
so as to avoid injury or damage to persons or property and to be directly 
responsible for damages to persons and property occasioned by failure so to do, 
or by any negligence of the Sub-Contractor or any of his officers, agents or 
employees in the performance of his work. The standards of protection shall be 
not less than those specified in the General Contract or required by 
law.

 
 
* * * * * *

 
 
"IX. To be bound to the Contractor 
by the terms of the General Contract, to conform to and comply with all of the 
terms of the General Contract and to assume toward the Contractor all the duties 
and obligations that the Contractor assumes in the General Contract toward the 
Owner in so far as they are applicable to this Sub-Contract unless changed in 
this Sub-Contract.

 
 
* * * * * *

 
 
"XII. To comply with all applicable 
federal, state and municipal laws and/or ordinances and regulations effective 
where the work is to be performed under this Sub-Contract and to pay all costs 
and expenses connected with such compliance; to pay all taxes, assessments and 
premiums under the federal social security act or any applicable unemployment 
insurance, disability benefit, old age benefit or retirement act, all sales and 
use taxes, all personal property taxes, all transportation taxes and all other 
taxes payable by reason of the Sub-Contractor's work; and to furnish all 
necessary reports and information to the appropriate federal, state and 
municipal agencies with respect to all of the foregoing, the same as though the 
Sub-Contractor was in fact the Contractor."

 
 
In October of 1980, Tom Johnson, an 
employee of Gilpatrick, was injured while working on the road project when he 
became entangled in a rock crushing machine owned and operated by Gilpatrick. 
The accident was caused by the absence of a guard on the feed belt of the 
machine. Johnson filed suit against Abbott and three employees of 
Gilpatrick.

 
 

[¶3.]      In his claim 
against Abbott, Johnson alleged that the contract with the State imposed certain 
safety requirements upon Abbott and that Abbott was negligent and breached its 
contractual duties in failing to see that the safety requirements were observed. 
In contrast, Abbott argued that the obligation to comply with the safety 
requirements was expressly delegated to Gilpatrick in the subcontract, and thus 
any liability for breach of contract or negligence in failing to provide 
adequate safety measures must be assumed by Gilpatrick. On that basis, Abbott 
demanded that Gilpatrick assume the defense in the action filed by Johnson. When 
Gilpatrick refused, Abbott filed a third-party complaint naming Gilpatrick as 
defendant.

 
 

[¶4.]      Prior to trial on 
the original complaint, Abbott's insurance carrier, St. Paul Fire and Marine 
Insurance Company, appellant, offered Johnson $20,000 to settle the claim 
against Abbott. Johnson accepted, and Abbott was dismissed from the action. 
St. Paul was 
then substituted as third-party plaintiff on the third-party complaint against 
Gilpatrick. The third-party complaint was submitted to the district court for 
disposition upon stipulated facts in lieu of trial.

 
 

[¶5.]      In denying St. 
Paul's claim for indemnification, the district court found this Court's holding 
in Wyoming Johnson, Inc. v. Stag Industries, Inc., Wyo., 662 P.2d 96 (1983), to 
be controlling. We do not find it to be controlling and reverse the district 
court's order.

 
 

[¶6.]      In Wyoming Johnson, Inc., we 
were asked to construe the following contract provision:

 
 
"`FIRST: * * * The subcontractor 
agrees to be bound to the Contractor by the same terms, as the Contractor's 
contract with the Owner and assume toward the Contractor all obligations and 
responsibilities which the Contractor by contract, assumes toward the Owner. * 
*' [Emphasis omitted.]

 
 
"`SECOND: * * * The Subcontractor 
further agrees * * * to fully indemnify the Contractor from any liability or 
suit arising from the acts or omissions of the Subcontractor, including all 
costs attached to the same. * * *' [Emphasis omitted.]

 
 
"`NINTH: The Subcontractor 
specifically further obligates himself to the Contractor in the following 
respect, to-wit: To indemnify Contractor against and save him harmless from any 
and all claims, suits or liability for injuries to property, injuries to persons 
including death and from any other claims, suits or liability on account of any 
act or omission of Subcontractor, or any of his officers, agents, employees or 
servants.' [Emphasis omitted.]" Id. at 98.

 
 
We found the broad language of the 
first paragraph to be insufficient to impose the same obligations and 
responsibilities on the subcontractor as the general contract imposed on the 
contractor. Absent some more specific provision delegating the contractor's 
obligations under the general contract to the subcontractor, we could find no 
basis for granting the claim for indemnification. We then looked to the 
remaining provisions to determine the extent of the subcontractor's liability 
for indemnification. Under the second and ninth paragraphs, we found that the 
subcontractor was required to indemnify the contractor only for liability 
resulting from its own acts or omissions or those of its officers, agents, 
employees, or servants. Because the complaint alleged liability resulting only 
from the acts or omissions of the contractor, not the subcontractor, and because 
we found the all-encompassing language of the first paragraph to be too broad to 
impose liability on the subcontractor for those acts and omissions, we held that 
the subcontractor was not required to indemnify the 
contractor.

 
 

[¶7.]      In the present 
case, paragraph IX of the subcontract contains the same broad language we found 
insufficient in Wyoming Johnson, Inc. Absent some more specific provision 
delegating Abbott's obligations under the general contract to Gilpatrick, we 
would be compelled under Wyoming Johnson, Inc. to deny St. Paul's claim for 
indemnification. However, as demonstrated previously, the subcontract in the 
present case goes further and expressly requires Gilpatrick to protect against 
injury at its work site and to assume responsibility for damages caused by its 
failure to do so. Among the measures enumerated to protect against injury are 
lights, barriers, supports, signs, and guards. In addition, the subcontract 
specifically provides that Gilpatrick will be responsible for any loss resulting 
from its failure to carry out any provision of the subcontract. Finally, the 
subcontract specifically provides that Gilpatrick will comply with all 
applicable federal, state, and municipal laws, ordinances, and regulations 
effective where the work is performed. Unlike the broad provision construed in 
Wyoming Johnson, Inc., these provisions express an intent in clear and 
unequivocal terms to impose liability on Gilpatrick for injuries resulting from 
the failure to provide adequate safety measures.

 
 

[¶8.]      Having concluded 
that Wyoming Johnson, Inc. does not require denial of the indemnification claim, 
the only questions remaining are whether Gilpatrick failed to provide adequate 
safety measures as required by the subcontract and whether such failure caused 
the loss to St. 
Paul. The parties stipulated that there is sufficient 
evidence to show that the feed belt of the rock crushing machine did not have a 
guard as required by 30 C.F.R. § 56.14-1 and that the absence of the guard was 
the cause of the accident. Therefore, we reverse the district court's order 
denying St. 
Paul's claim for indemnification by 
Gilpatrick.

 
 

THOMAS, Justice, specially 
concurring.

 
 

[¶9.]      In disposing of 
this case we need to account for other prior decisions by this court which 
address this problem. In Mountain Fuel Supply Co. v. Emerson, Wyo., 578 P.2d 1351 (1978), we construed language in an agreement which appears to have been 
somewhat more specific than this agreement as manifesting an intention to 
indemnify Mountain Fuel Supply Co. from the consequences of its own negligence. 
In that case, however, we held the indemnification agreement unenforceable 
because of the provisions of § 30-28.3, et seq., W.S. 1957, C. 1967, Cum.Supp. 
1975, which now is codified as § 30-1-131, et seq., W.S. 
1977.

 
 

[¶10.]    Next the court addressed this 
question in Pan American Petroleum Corporation v. Maddux Well Service, 
Wyo., 586 P.2d 1220 (1978). In that case we recognized a right of indemnity under circumstances 
such as those presented by this case, and we sent the case back for trial on the 
implied indemnity claim asserted by Pan American. With respect to a contractual 
indemnity claim we held that the language in the contract was not sufficient to 
create the right of indemnity, but we were critical of an argument that we 
concluded tended to confuse the law of torts with the law of indemnification. We 
pointed out in that case that the liability of Maddux to Pan American Petroleum 
Corporation was to be determined by reference to the independent obligations 
which Maddux owed to Pan American.

 
 

[¶11.]    The court next decided 
Wyoming Johnson, Inc. v. Stag Industries, Inc., Wyo., 662 P.2d 96 (1983), in which we again 
recognized a right of indemnity in factual circumstances such as these, but we 
held that the contractual language was not sufficient to justify the claim. In 
Cities Service Co. v. Northern Production Co., Wyo., 705 P.2d 321 (1985), we 
cited Wyoming Johnson, Inc. v. Stag Industries, Inc., supra, for the proposition 
that, "where the agreement, in clear and unambiguous language and beyond 
peradventure when strictly construed, provides indemnification against one's own 
negligence, it will be upheld." Cities Service Co. v. Northern Production Co., 
supra, at 326. In this latter case we held that a strict construction of the 
contractual language would pertain with respect to an assertion that Northern 
Production Co. had agreed to provide indemnity to Cities Service Co. against 
Cities Service Co.'s own negligence. With respect, however, to the contention 
that the agreement was sufficient to indemnify Cities Service Co. for the 
negligence of Northern Production Co. we applied a rule of liberal construction. 
We then held that the agreement was not one to indemnify Cities Service Co. for 
its own negligence; the agreement was not void but valid; and it was not 
unenforceable because of the provisions of § 30-1-131, W.S. 
1977.

 
 

[¶12.]    Then in Reliance Insurance 
Co. v. Chevron U.S.A., Inc., Wyo., 713 P.2d 766 (1986) we again construed the 
provisions of § 30-1-131, et seq., W.S. 1977, with respect to a question of law 
certified to this court by the United States District Court. In the process, 
however, we recognized the contractual efficacy of an indemnity clause 
indemnifying "`against all loss, damage, liability, claims and liens of every 
kind arising out of or attributable, directly or indirectly, to the operations 
of Contractor hereunder, including without limitation, all claims for injury to 
or death of persons, loss of or damage to property * * *.'" Reliance Insurance 
Co. v. Chevron U.S.A., Inc., supra, 713 P.2d  at 
768.

 
 

[¶13.]    It thus appears that this 
court has adopted a rule of strict construction with respect to contractual 
agreements to indemnify a party such as C.J. Abbott, Inc. against the 
consequences of its own negligence. If the claimed agreement, however, is one 
indemnifying a party such as C.J. Abbott, Inc. against the consequences of the 
negligence or other conduct on the part of the indemnitor, Gilpatrick 
Construction Co., Inc., in this instance, then a rule of liberal construction in 
support of the right of the parties to contract will be applied. I am satisfied 
that the result in this case is consistent with our earlier cases including 
Wyoming Johnson, Inc. v. Stag Industries, Inc., supra.

 
 

[¶14.]    In Wyoming Johnson, Inc. v. 
Stag Industries, Inc., supra, we concluded that the adoption of a provision in a 
sub-contract of the duty of the general contractor to indemnify the owner did 
not amount to a clear and unequivocal agreement to indemnify the general 
contractor from the consequences of its own negligence. Proceeding to address a 
claim for indemnity premised upon a theory of breach of contract, we construed 
the contract as containing language which limited the duty to indemnify to the 
acts or omissions of the sub-contractor. The claims in the injured workman's 
complaint were for the negligence of the general contractor, and there was no 
additional information in the record relating to actual cause. Consequently we 
denied the right to indemnity in that case.

 
 

[¶15.]    The difference in this case 
is that the parties have stipulated that the injuries to Tom Johnson were 
proximately caused by the absence of a guard on the feedbelt of Gilpatrick's 
rock crushing machine. Gilpatrick had agreed to comply with governmental 
regulations which required such a guard, and also had agreed to indemnify C.J. 
Abbott, Inc. for consequences resulting from Gilpatrick's failure to carry out 
any provision of the subcontract. The record goes beyond the allegations in the 
injured workman's complaint. This case then stands for the proposition that if 
the injury clearly results from a failure of the sub-contractor to perform a 
contractual duty an agreement by the sub-contractor to indemnify the contractor 
for the failure of the sub-contractor to properly perform its obligations under 
the sub-contract is sufficient to demonstrate a right of express contractual 
indemnity. This result and this holding is consistent with the previous cases in 
which we have addressed this problem, and presents a just 
result.

 
 

URBIGKIT, Justice, specially 
concurring.

 
 

[¶16.]    Although I do not have 
general disagreement with the court's opinion, I would specially concur for the 
reason that Wyoming Johnson, Inc. v. Stag Industries, Wyo., 662 P.2d 96 (1983), 
is not necessarily applicable to the facts of this case. In Wyoming Johnson, the 
item of injury (roof) was under the general control of the contractor and not 
the indemnifying subcontractor, with the contendable result that the 
subcontractor was called to indemnify the general contractor for the results of 
the operational negligence of the general contractor.

 
 

[¶17.]    Conversely in this case, the 
item of injury (rock crusher) was owned by and under the control of the 
indemnifying subcontractor. Consequently, the subcontractor is asked to 
indemnify the general contractor for only the subcontractor's negligence in 
maintenance of a dangerous machine, which may additionally expose the general 
contractor to liability by failure of supervision of the subcontractor or other 
nondelegable duty. Jones v. Chevron U.S.A., Inc., Wyo., 718 P.2d 890 
(1986).

 
 

[¶18.]    For this reason, I would not 
necessarily find Wyoming Johnson persuasive here, even if, as discussed by the 
court, the singular difference in the language of the indemnifying agreements 
did not exist.