Case Title: Volair Contractors, Inc. v. Amquip Corporation

Citation: 

Docket Number: 575, 2002

State: delaware

Court: Delaware Supreme Court

Date: 2003-07-22T00:00:00Z

Document:
IN THE SUPREME COURT OF THE STATE OF DELAWARE
VOLAIR CONTRACTORS, INC.,
§ No. 575, 2002
§     
Third Party Defendant Below, §
Appellant,
§ Court Below:  Superior Court of 
§ the State of Delaware in and for
              v.
§ New Castle County
§
AMQUIP CORPORATION,
§ C.A. No. 00C-05-252
§
Third Party Plaintiff Below,
§
Appellee.
§
Submitted: May 6, 2003
Decided: 
July  22, 2003
 Before VEASEY, Chief Justice, HOLLAND and STEELE, Justices.
Upon appeal from the Superior Court.  AFFIRMED.
Frank E. Noyes, II, Esquire, of White and Williams, LLP, Wilmington,
Delaware, for Appellant.
George H. Seitz, III, Esquire, and Carrie I. Dayton, Esquire, of Seitz, van
Ogtrop & Green, Wilmington, Delaware; Of Counsel:  Francis Deasey, Esquire, and
Michael L. Barbiero, Esquire (argued), of Deasey, Mahoney & Bender, Ltd.,
Philadelphia, Pennsylvania, for Appellee.
VEASEY, Chief Justice:
In this case we consider whether the application of the common law borrowed
servant doctrine conflicts with a statute that declares void as against public policy
contracts by which one party purports to indemnify the other for the latter's own
negligence.  We affirm the judgment of the Superior Court holding that the common
law borrowed servant doctrine governs and is not barred by the statute declaring
invalid as against public policy contracts indemnifying tortfeasors in connection with
construction projects.  Because the common law borrowed servant doctrine was the
operative principle applied in this case, the statute was not implicated, and the
common law doctrine was not invalidated.
Facts 
In June 1999 Pettinaro Construction Company became the general contractor
for a project at a facility owned by Household International in New Castle.  On June
9 Pettinaro entered into a sub-contractor agreement with appellant, Volair Contractors,
Inc.  Volair was to perform heating and air conditioning installation services for
Pettinaro.  Volair further entered into a rental contract with appellee, AmQuip
Corporation.  The contract stated that AmQuip was to provide Volair with a crane and
operator to assist in installing the air conditioning units.  Thereafter, AmQuip engaged
an operator, Edward Gutierrez, through a local union hall.
On July 26, 1999, Gutierrez and the crane arrived at the construction site.
Gutierrez met with two representatives of Volair who were in charge on the site,
2
superintendent, Joseph Tigue, and foreman, Jack Lester.  Tigue and Lester gave
Gutierrez specific instructions, directions and procedures for performing the job.  The
two men told Gutierrez that Tigue was in charge on the ground and that Lester was in
charge on the roof.  Gutierrez would not be able to see onto the roof from his position
in the crane, thus Lester was to be his “eyes, ears and controller of the lift once the
unit was over the roof.”  Volair also had other crew members on the roof in charge of
placing and installing the units.  One of these members was Richard Breece.
During the course of the work, the crane received a flat tire.  In order to change
the tire, one-third of the counterweights on the crane were removed.  One hour later
the tire was replaced and installation of the units continued.  It was then decided that
the removed counterweights would not be added back on.  There is some dispute
about who made this decision.
Lester directed Gutierrez to continue with the third round of lifts.  During the
course of this lift, the crane experienced difficulties, and Gutierrez was required
quickly to lower the unit to the roof.  The problems with the crane were either caused
by the ground below the crane supports giving way, lack of sufficient counterweights,
or a combination of both.
At this point Lester decided it would be best to raise the air conditioning unit
a few feet above the roof and slowly “walk” the unit toward the edge of the roof.
1Emphasis supplied.
3
Lester instructed the Volair crew to help walk the unit to the edge by guiding it.  The
walking of the unit in this manner was a normal procedure followed by Volair’s
employees to control such lifts.
While walking the lift Lester noticed Breece backing away from the area.
Breece was not assisting in the walking of the unit but was on the roof.  As Breece
was backing away from the unit Lester yelled to him to watch where he was going.
Breece, however, fell through an uncovered hole in the roof and sustained injuries.
Breece filed suit against AmQuip, Gutierrez and Pettinaro.  AmQuip demanded
that Volair  defend, indemnify, and hold AmQuip harmless in connection with the
litigation.  Volair did not respond.  As a result, in December 2000 AmQuip filed a
third party complaint against Volair seeking contractual indemnification based on the
rental contract.  The rental contract stated, in pertinent part, that Volair:
[A]bsolutely and unconditionally warrants and agrees to indemnify,
reimburse, save harmless and defend AmQuip Corporation, its
subsidiaries, affiliates and their respective shareholders, directors,
officers, employees (loaned, borrowed, or otherwise), successors and
assigns, of and from any and all claims, demands, liabilities, obligations,
damages, costs and expenses, including without limitation counsel fees
and costs, of all and every kind or character whatsoever without
limitation, which may arise under, by reason of or related to this
agreement, the rental, the handling, moving or installing of goods,
equipment or materials and/or any default in payment.1
2DEL. CODE ANN. tit. 6, § 2704(a).
4
Pettinaro and AmQuip eventually settled with Breece, with AmQuip
contributing $400,000.  Volair refused to indemnify AmQuip for the amount.  After
various court proceedings between AmQuip and Volair, AmQuip filed a summary
judgment motion.  
At the hearing on the motion AmQuip contended that the contract alone was
dispositive.  In the alternative, AmQuip conceded that if the contract was not
dispositive, the borrowed servant question would be one of fact.  Volair contended
that the contract ran afoul of the public policy set forth in Section 2704(a) of the
Delaware Code.2  
The Superior Court applied the common law borrowed servant provision.  The
court then decided that the jury must apply the doctrine to the facts because the issue
of whether Gutierrez was a borrowed servant of Volair was an issue of material fact.
The court denied the summary judgment motion and the issue went to trial.  The jury
found that Gutierrez was an employee of Volair at the time of the incident.  Volair
now appeals.
Issues on Appeal
Volair contends that the trial court erred in two respects.  First it argues that the
court erred by applying the common law borrowed servant doctrine.  Second, Volair
3Newtowne Village Service Corp. v. Newtowne Road Development Co., Inc., 772 A.2d 172, 174-75 (Del. 2001).
5
asserts that the court erred by holding it liable for Gutierrez’ negligence because the
contractual indemnification was rendered void by Section 2704(a) as against public
policy.
The Statutory Public Policy
Volair contends the trial court erred by applying the common law borrowed
servant doctrine.  It asserts that the contract regarding indemnification was the
operative principle and it was void and unenforceable pursuant to Section 2704(a).
Thus, Volair argues, it could not be held liable by applying the common law doctrine.
AmQuip argues that the trial court properly applied the common law doctrine.  This
Court reviews de novo the trial court’s interpretation and application of legal
precepts.3
Section 2704(a) relates to the public policy of certain contracts of purported
indemnification and  states in relevant part:
A covenant, promise, agreement or understanding in, or in connection
with or collateral to, a contract or agreement . . . relative to the
construction, alteration, repair or maintenance of a road, highway,
driveway, street, bridge or entrance or walkway of any type constructed
thereon, and building structure, appurtenance or appliance, including
without limiting the generality of the foregoing, the moving, demolition
and excavating connected therewith, purporting to indemnify or hold
harmless the promisee or indemnitee or others, or their agents, servants
and employees, for damages arising from liability for bodily injury or
4DEL. CODE ANN. tit. 6, § 2704 (emphasis supplied).
5J.S. Alberici Construction Co., Inc. v. Mid-West Conveyor Co., Inc., 750 A.2d 518, 521 (Del. 2000) quoting
6 Del. C. § 2704(a).
6
death to persons or damage to property caused partially or solely by, or
resulting partially or solely from, or arising partially or solely out of the
negligence of such promisee or indemnitee or others than the promisor
or indemnitor, or its subcontractors, agents, servants or employees, is
against public policy and is void and unenforceable, even where such
covenant, promise, agreement or understanding is crystal clear and
unambiguous in obligating the promisor or indemnitor to indemnify or
hold harmless the promisee or indemnitee from liability resulting from
such promisee's or indemnitee's own negligence.4
The purpose of Section 2704(a) is to make clear that, “a contractual provision
requiring one party to indemnify another party for the second party’s own negligence,
whether sole or partial, ‘is against public policy and is void and unenforceable.’”5
Amquip contends here that the contractual provision does not render Volair liable by
way of indemnification for the negligence of Amquip’s servant.  Rather it was the
negligence of Volair’s borrowed servant, Gutierrez, that rendered Volair liable.
Because Breece asserted a claim against Amquip as a result of the negligence of
Volair’s borrowed servant, Gutierrez, Volair was contractually bound to indemnify
Amquip.  But the public policy statute is not implicated because the indemnification
is not for Amquip’s negligence.  
Common Law borrowed Servant Doctrine
6Richardson v. John T. Hardy & Sons, Inc., 182 A.2d 901, 902 (Del. 1962) citing RESTATEMENT (SECOND)
OF AGENCY § 227.
7See id. at 904 (finding that the test for determining liability of an employer is to determine who “had control
over the activities of the employee”).
7
The common law borrowed servant doctrine focuses on the relationship
between an employer and an employee.  
The general rule is that an employee, with his consent, may be loaned by
his general employer to another to perform specific services, and that, in
the course of and for the purpose of performing such services, he may
become the employee of the specific employer rather than the employee
of the general employer. . . .  Accordingly, a loaned employee may
become the specific employer’s employee while at the same time
remaining, generally speaking, the employee of him who loans his
services.6
Therefore, under the common law, an employee (in this case Gutierrez) of one party
(in this case AmQuip) can temporarily become the employee of another (in this case
Volair) in the performance of certain services.  So, if Gutierrez is found by the jury
to be the borrowed servant of Volair ("rather than the employee of his general
employer," AmQuip), Volair could be liable for his negligence on a respondeat
superior basis because, as the employer, it would have control over Gutierrez’
activities.7
Volair contends that its contract with AmQuip is invalid because it violated
Section 2704(a).  AmQuip asserts that Section 2704(a) is irrelevant to the case, in light
of the court’s instruction to the jury on the common law borrowed servant doctrine
8Trial Transcript at 57-58.
8
and the jury’s ruling.  It contends that the court properly applied the common law
borrowed servant doctrine.
The Superior Court, in ruling on AmQuip’s motion for summary judgment,
found that the central issue required a determination of the identity of Gutierrez’
employer at the time of the incident.  The Court found that the contract was not
dispositive of this issue.  Specifically the Court stated:
[I] agree more with AmQuip’s analysis of the lack of applicability of
Section 2704.  When that statute was enacted, I don’t think it had the
effect of repealing Delaware’s common law doctrine, borrowed servant
doctrine, which is pretty strongly entrenched in our case law.  And I
don’t think the analysis of the borrowed servant doctrine in this case, if
it were to result in Volair’s being deemed the employer, would violate
the concept that a party cannot be indemnified for his or its or her own
negligence.
I think that the borrowed servant doctrine is merely an independent
analysis to be undertaken to determine in the first instance who was the
employer at the time of the negligent act.  Was it the general employer,
in this case, AmQuip?  Or was it a specific employer, in this case,
Volair?
* * *
As I see it, the validity of the indemnification provision depends on
whose employee Gutierrez was for whatever negligent act was involved.
And I’m not quite clear what that is.  And that just may be for a jury to
determine.8
9Richardson indicates that had the injuries “resulted from the faulty or careless operation” of the crane,
AmQuip might be liable as the general employer or, at the least, the issue would be submitted to the jury.  Richardson,
182 A.2d at 903.
10Richardson, 182 A.2d at 903.
9
The Court’s analysis is correct.  We assume, without the need to decide the
issue, that the contract would be void and unenforceable if it were applicable to
indemnify Amquip for the negligence of Amquip’s own employee.  In that case, if
AmQuip were the employer, it would arguably be passing on to Volair liability for
AmQuip's negligence in violation of Section 2704(a).  A jury determination, under the
common law, however, that Volair was Gutierrez’ employer at the time of the incident
would not invalidate the contractual indemnification provision because the contract
does not indemnify Amquip for its own negligence.  Rather, a common law borrowed
servant determination would render Volair liable for the negligence of its  borrowed
servant, Gutierrez, for the specific acts for which he was borrowed.9  Thus, the key to
the case was for the jury to determine who was the employer of Gutierrez at the time
of the accident. 
To determine Gutierrez’ employer at the time of the incident the Superior Court
applied the borrowed servant doctrine.  By application of the borrowed servant
doctrine, the trier of fact could determine whether Gutierrez was “acting in the
business of and under the direction of” AmQuip, the general employer, or Volair, the
specific employer.10  This determination was a question of fact and could not be
11See id. at 902-03 (finding that whether a loaned employee is the “employee of the one whose immediate
purpose he serves is always a question of fact. . . .”).
12Richardson, 182 A.2d at 902-03 citing RESTATEMENT (SECOND) OF AGENCY § 227 cmt. a, 35 AM. JUR. Master
and Servant § 541.
10
properly resolved through a summary judgment motion.11  Thus, the trial court
properly ruled that this factual determination must be left for the jury.
Volair contends that the borrowed servant doctrine cannot coexist with  Section
2704(a).  We disagree.  Section 2704(a) is intended to prevent one party from
contracting away its own negligence to another party.  The borrowed servant doctrine
is not contrary to this principle.  Rather, the borrowed servant doctrine is not an
indemnification principle, but is used solely to determine the identity of the employer
who was in control of the employee at the time of the negligent act.  The identified
employer would then be held liable for the negligence of its employee—in this case,
Volair's borrowed employee, Gutierrez.
In Richardson this Court held that,
Whether or not a loaned employee becomes the employee of the one
whose immediate purpose he serves is always a question of fact, and
depends upon whether or not his relationship to the specific employer
has the usual elements of the employer-employee status.  Fundamentally,
it is not important whether or not he remains the employee of the general
employer as to matters generally.  What is important to determine is,
with respect to the alleged negligent act in question, whether or not he
was acting in the business of and under the direction of the general or the
specific employer.12 
11
In this case Gutierrez was taking direction from Volair’s crew.  He was under their
control and was told by them what to do and how to do it.  Given these circumstances
it was reasonable for a jury to conclude that Volair was Gutierrez’ employer at the
time of the accident. 
Conclusion
Volair does not appear to dispute the jury’s determination that it was Gutierrez’
employer at the time of the accident, apparently resting its case on the application of
the public policy statute.  AmQuip argues that the jury’s finding was proper and that
the statute is not involved. 
Because the jury could reasonably find Volair was Gutierrez’ employer, under
the borrowed servant doctrine, Section 2704(a) was not violated and Volair must
indemnify Amquip.  
The judgment of the Superior Court is affirmed.