Title: Reyburn Lawn v. Plaster Development Co.

State: nevada

Issuer: Nevada Supreme Court

Document:

427 Nev, Advance Opinion Zfe
IN THE SUPREME COURT OF THE STATE OF NEVADA.

REYBURN LAWN & LANDSCAPE No, 53518
DESIGNERS, INC.,

Appellant, | FILED

PLASTER DEVELOPMENT COMPANY, | wn g220n1
INC,, A NEVADA CORPORATION,
Respondent.

Appeal from the final district court judgment in a
constructional defect action. Kighth Judicial District Court, Clark County;
Nancy M, Saitta and David B. Barker, Judges.

Reversed and remanded,

Lemons, Grundy & Eisenberg and Robert Hisenberg, Reno; Luh &

Associates and Charlie H. Luh, Las Vegas,
for Appellant,

Lewis & Roca, LLP, and Daniel F. Polsenberg, Joel D. Henriod, Jennifer
B. Anderson, and Jacqueline A. Gilbert, Las Vegas; Pengilly Robbins
Slater and Bell and James W. Pengilly and John R. Bell, Las Vegas,

for Respondent.

  

 

BEFORE DOUGLAS, C.J., PICKERING and HARDESTY, JJ.

"Then district court judge Nancy M. Saitta conducted the trial of this
case. Judge David B. Barker decided all post-trial motions and entered
the final judgment.

 

 
OPINION

By the Court, HARDESTY, J.

In this appeal, we consider whether an indemnity clause in a
construction contract between a general contractor and a subcontractor
obligates the subcontractor to indemnify the general contractor for its
partial negligence for constructional defects, rogardless of whether the
subcontractor is also negligent. In this, we must also determine whether
the subcontractor’s testimony constituted a judicial admission by a party,
rendering it automatically negligent and liable for indemnification.
Additionally, we consider the scope of the indemnification clause’s duty to
defend and appellant's argument that attorney fees and costs in indemnity
cases should be apportioned according to the percentage of negligence of
the indemnitor,

This appeal arises from a constructional defect action in which
a group of homeowners brought suit against the developer and general
contractor, respondent Plaster Development Company, Inc, Plaster then
filed a third-party complaint against its subcontractor, appellant Reyburn
Lawn & Landscape Designers, Inc,, based on Reyburn’s indemnification
obligation and failure to defend Plaster pursuant to the indemnity clause
in their contract. During trial, Plaster moved for and was granted
judgment as a matter of law after the district court considered Reyburn’s
owner's testimony to be a judicial admission of liability. As a result of the
order granting judgment as a matter of law, the district court precluded
Reyburn from submitting any jury instructions, limited the scope of
Reyburn’s closing argument, and did not allow the jury to determine
Reyburn’s liability for the constructional defects. Ultimately, the jury

 
found Plaster 99 percent at fault? The district court held Reyburn liable
for the resulting judgment, and Reyburn appealed.

Consistent with our holding in George L, Brown Insurance v.
Star Insurance Co,, 126 Nev. __, 237 P.8d 92 (2010), explaining that the

 

intent of the parties to indemnify another's negligence must be explicitly

‘ated within the contract, we conclude that the indemnification clause in
the parties’ contract here did not explicitly or expressly state that Reyburn
would have to indemnify Plaster for Plaster's own negligence. Rather, the

clause links Reyburn's indemnification and defense duties to defects

 

‘caused or allegedly caused by Reyburn, only, In this, we extend the
holding in Brown to require express language of indemnification for
contributory negligence as well as the sole negligence of the indemnitor.

Because the district court's indemnification determination was
based on its conclusion that Plaster was not solely negligent, since
Reyburn had admitted liability at trial, we also take this opportunity to
address the standards for determining judicial admissions resulting from
oral testimony at trial. Because Reyburn’s owner's testimony was not a
deliberate, clear, and unequivocal statement of a concrete fact, it was not a
judicial admission; and because there was conflicting evidence of
Reyburn’s liability, we conclude that the district court erred in granting
Plaster’s motion for judgment as a matter of law on Plaster’s contractual
indemnity and breach of contract causes of action.

Finally, based on our conclusion that the duty to defend
extended only to claims connected with Reyburn’s potential negligence, we

2One percent of the fault was apportioned to the homeowners.

 

 
further conclude that any award of attorney fees to Plaster should have
been limited to those fees and damages incurred defending against the
causes of action concerning Reyburn's scope of work, not the entire
amount of damages and all attorney fees and costs Plaster incurred
throughout this eight-year litigation. We therefore reverse the district
court's judgment and remand this matter for a new trial.®
FACTS

Historical facts

Plaster was the developer and general contractor of the
/Marble Canyon residential construction project in Las Vegas. ‘The terrain
of the project required the use of retaining walls to support the residential
building lots. The project also required the construction of sidewalls,
which were not retaining walls, but rather served as “fence walls.”

Plaster contracted with Bill Young's Masonry, Inc., to
construct and backfill the retaining walls and to construct the sidewalls.
Plaster contracted with Reyburn to perform the rough and final grading of
the building lots, but Reyburn did not design or construct any of the
retaining walls and sidewalls in Marble Canyon. Rough grading occurs
after the concrete pad or foundation of the home has been poured and
establishes the basic elevation and drainage of the lot. Finish grading
‘occurs near the end of construction and, in this case, required Reyburn to

apply four inches of sand, or topsoil, on the lot and grade it to allow water

"Because we reverse on other grounds and remand for a new trial,
we do not address Reyburn's argument that the new district judge who
was assigned to the case post-trial was not sufficiently familiar with the
issues and evidence to determine the then-pending post-trial motions.

   

 

 

 
to drain away from the home, retaining walls, and sidewalls. The
sidewalls were not constructed until after the final grading was completed.
Once Bill Young’s Masonry finished building the sidewalls, Reyburn
completed its duties by clearing away any excess materials.

The contract between the contractor, Plaster, and the
subcontractor, Reyburn, contained the following indemnification clause:

INDEMNITY: ... Subcontractor agrees to
save, indemnify and keep harmless Contractor
against any and all liability, claims, judgments or
demands, including demands arising from injuries
or death of persons (Subcontractor’s employees
included) and damage to property, arising directly
or indirectly out of the obligation herein
undertaken or out of the obligations conducted by
Subcontractor, save and except claims or litigation
arising through the sole negligence or sole willful
misconduct of Contractor, and will make good to
nd reimburse Contractor of any expenditures,
including reasonable attorney's fees. If requested
by Contractor, Subcontractor will defend any such
suits at the sole cost and expense of Subcontractor.

 

Soon after homeowners moved into Marble Canyon in 1996,
they made general complaints about both the retaining walls and the
sidewalls, Eventually, they hired an independent engineer to evaluate the
structural integrity of the walls, and the results, showing that the walls
were engineered and installed improperly, were provided to Plaster.
Plaster responded that the walls were in compliance with all applicable
codes and had passed inspection.

Procedural facts

The homeowners filed a class-action complaint against Plaster
in May 2000, alleging that their perimeter retaining walls and sidewalls

were defective as a result of improper design, preparation, materials, and

 

 
construction. In November 2001, 18 months after initiation of the
litigation and 5 years after the homeowners first complained about the
walls, Plaster, for the first time, notified Reyburn of the alleged defects in
the walls and tendered the defense of the defect claims to Reyburn, Stuart
Reyburn, owner of Reyburn, would later testify that he received the tender
of defense and attempted to contact Plaster’s counsel to inquire about the
litigation, but Plaster’s counsel never responded. In any event, Reyburn
did not take over the defense of the action. In March 2002, Plaster
inst Reyburn and Bill Young's

 

brought a third-party complaint aj
Masonry for indemnity and/or contribution Plaster also asserted a
breach of contract claim against Reyburn for failing to defend, among
other things. Reyburn answered, denying any liability.

‘The homeowners, Plaster, and Reyburn proceeded to trial,
which was held in the spring of 2004. The majority of the trial focused on
the homeowners’ claims: whether the design of the retaining walls was
adequate, their conformance to the specifications and design,
waterproofing and backfilling, and appropriate drainage. In addition, the
homeowners complained about the design of the sidewalls, which was so
poor, according to thom, that one of the sidewalls blew over in the wind
Also during trial, some argument was made and testimony taken
pertaining to Plaster’s third-party complaint against Reyburn. Plaster
argued that Reyburn contributed to the retaining walls’ defectiveness by

‘Prior to trial, Bill Young’s Masonry settled with the homeowners
‘and was removed from the action,

This wall was replaced by Plaster prior to trial

 

 
obstructing drainage at the base of the wall when it performed the final
grading of the building lot. Stuart conceded in his trial testimony that, as
a general rule, a contractor should not cover a wall's drainage system with
sand and that, if

ind, it would have been a mistake. However, he also testified that even if

 

‘employees had covered the drainage openings with

 

sand was deposited over the drainage openings, sand is permeable and

 

‘would have permitted the water to drain,

Near the end of the trial, Plaster orally moved for judgment as
‘a matter of law against Reyburn on the contractual indemnity and breach
of contract causes of action, claiming that Stuart's testimony amounted to
judicial admission of liability. The district court granted the motion
after minimal argument by counsel and without the benefit of briefing on
the issues, The district court found that Stuart had admitted that placing
sand over the drainage openings was within Reyburn’s scope of work and
that it was a mistake to cover the drainage openings during final grading.
The district court then explained that the evidence demonstrated that
Plaster was not solely negligent in causing the damages and that the lack
of sole negligence triggered the indemnity clause between the parties.

Under the ruling, the district court limited the scope of
Reyburn’s closing argument, precluded submission of jury instructions or
a verdict form, and barred the jury from determining Reyburn's liability, if
any. During deliberations, the jury sent a note to the judge asking where
they could indicate their conclusions concerning Reyburn's liability, but
the judge directed them to fill out the verdict form “as is.” The jury

ultimately awarded damages to the homeowners, attributing l-percent
fault to the homeowners and 99-percent fault to Plaster.

 

 
After the verdict was rendered, all parties filed post-trial
motions. Reyburn sought reconsideration of the district court's oral order
granting judgment as a matter of law and moved for a new trial. Plaster
moved for a determination of damages against Reyburn on its indemnity
and breach of contract causes of action, and the homeowners moved for an

award of attorney fees, costs, and interest against Plaster. The district

 

court held a hearing on the motions in August 2004 and made an oral
ruling denying Reyburn’s motion for a new trial, The district court held a
supplemental hearing on the remaining post-trial motions in June 2005,
but none of the pending motions were resolved when the trial judge
resigned from the district court in December 2006.

 

As a result of the trial judge's resignation, the case was
assigned to Judge David B. Barker in 2007, In December 2008, Reyburn
and Plaster renewed their post-trial motions. Judge Barker ultimately
resolved the renewed motions in February and April 2009, five years after
the conclusion of the trial, denying Reyburn's motion for new trial and
finding that Reyburn was required to indemnify Plaster for all of the
homeowners’ claims. The district court then entered judgment for Plaster
and awarded Plaster attorney fees and costs against Reyburn in the sum
of $952,813.26, and interest in the amount of $582,264.18, based on
Reyburn’s failure-to-defend contract claim.

Reyburn now appeals, arguing that the trial judge erred by
granting Plaster’s motion for judgment as a matter of law on the
indemnity and breach of contract claims and that it was error to order
Reyburn to pay all of Plaster’s attorney fees and costs related to the suit.

DISCUSSION
In resolving this appeal, we must interpret the indemnity

clause in the parties’ contract both as to damages and as to the duty to

 

 
defend. In doing so, we first consider whether Reyburn's negligence alone
can trigger Reyburn's duty to indemnify Plaster for liability on the
retaining wall and sidewall claims, and then whether the covered liability

 

extends to damages based on Plaster’s contributory negligence or merely
to damages for Reyburn's negligence. In this, we must consider whether
the district court erred when it characterized Stuart's testimony as a
judicial admission of liability, triggering the indemnity clause, and, if 80,
whether a disputed factual is
that judgment as a matter of law was precluded. Finally, we addres:

 

jue as to Reyburn’s liability remains, such

 

whether Reyburn had a duty to defend under the contract and, if so,
whether Reyburn was responsible for the entirety of Plaster’s attorney
foes and costs,

1 . .

‘Typically, “[clontractual indemnity is where, pursuant to a
contractual provision, two parties agree that one party will reimburse the
other party for liability resulting from the former's work.” Medallion Dev.
‘v. Converse Consultants, 113 Nev. 27, 33, 930 P.2d 115, 119 (1997),
superseded by statute on other grounds as stated in Doctors Company v.
Vincent, 120 Nev. 644, 654, 98 P.3d 681, 688 (2004). When the duty to
indemnify arises from contractual language, it generally is not subject to

  

equitable considerations; “rather, it is enforced in accordance with the
terms of the contracting parties’ agreement.” Prince v, Pacific Gas & Elec.
Co,, 202 P.3d 1115, 1120 (Cal. 2009). And since Nevada has not adopted
an anti-indemnity statute, parties have great freedom in allocating

6A majority of states have adopted some form of anti-indemnity
statutes, “which, in one form or another, restrict, modify, or invalidate
continued on next page .

 

 
indemnification responsibilities between one another. Id, ‘The
interpretation of an indemnity clause within a contract is a question of
law, which this court will review de novo, Jacobs Constructors v, NPS
Energy Services, 264 F.3d 365, 371 (Sd Cir. 2001); see also Anvui, LLC v.

G.L. Dragon, LLC, 128 Nev. 212, 216, 163 P.3d 405, 407 (2007).
In our recent decision in George L. Brown Insurance v. Star

Insurance Co,, 126 Nev. _, __, 237 P.8d 92, 97 (2010), we adopted the
rule that, while the parties are free to contractually agree to indemnify
another for its own negligence, “an express or explicit reference to the
indemnitee’s own negligence is required.” Therefore, “contracts
purporting to indemnify a party against its own negligence will only be
enforced if they clearly express such an intent and a general provision
indemnifying the indemnitee “against any and all claims,” standing alone,

is not sufficient.” Id, (quoting Camp, Dresser & McKee v, Paul N.
continued

indemnification agreements contained in construction contracts.” 3 Philip
L. Bruner & Patrick J. O'Conner, Jr., Bruner & O'Conner on Construction
Law § 10:77 (2002), For example, California has adopted legislation that
renders an indemnity clause void as against public policy if the agreement
provides indemnity for the indemnitee's “sole negligence or willful
misconduct.” CL. Eng. & Const. v. Johnson & Turner Paint, 189 Cal.
Rptr. 824, 827 (Ct. App. 1983) (internal quotations omitted), To avoid
invoking an applicable anti-indemnity statute excluding liability based on
the indemnitee’s sole negligence, many indemnity clauses carve out
exceptions for sole negligence and are similarly worded to the indemnity
clause in this case. 3 Bruner, supra, § 10.76. On the other hand, other
states, such as New Mexico, have anti-indemnity legislation that
addresses concurrent negligence and prevents an indemnitee from
“contract[ing] away liability for his own percentage of negligence.”
Guitard v, Gulf Oj] Co,, 670 P.2d 969, 972 (N.M. Ct. App. 1983).

 

 
Howard, 853 So, 2d 1072, 1077 (Fla, Dist. Ct. App. 2003) (internal
citations omitted)). In adopting this rule, we held that it provides “clarity
and fairness to the parties involved” and allows the “wrongdoer [to] face{ }
the consequences of his or her actions rather than” having those
consequences fall on an innocent party. Id, We repeated our approval of
the express negligence doctrine which requires “the intent of the parties
[to] be specifically stated within the four comers of the contract.” Id.
(quoting Lehmann_v, Har-Con Corp., 76 S.W.3d 655, 560 (Tex. App.
2002). After strictly construing the indemnity clause in that case, we
concluded that the clause was not explicit enough to require the
indemnitee to indemnify the indemnitor for its own negligence. Id,

Here, Plaster argues that the agreement's scope was intended
to indemnify Plaster for its own negligence so long as Plaster was
contributively, not solely, negligent. Plaster explains that because the
agreement expressly excludes indemnification for its sole negligence, the
parties intended that Plaster would be indemnified for its contributory
negligence. Therefore, according to Plaster, once it demonstrated that it
was not solely negligent in causing the defects, the indemnification
agreement was triggered. The district court agreed and determined that
Plaster only needed to demonstrate that it was not solely negligent in
order to invoke the indemnity clause and thus granted Plaster’s motion for
judgment as a matter of law. We disagree and conclude that because the
indemnity clause is not explicit about whether Reyburn is required to
indemnify Plaster even if Reyburn is not negligent, and as to whether the
scope of the agreement includes indemnity for Plaster's contributory
negligence, the clause necessarily covers only Reyburn’s negligence.

a

 
According to the indemnity clause at issue here, Plaster must

 

be indemnified for “any and all” liabilities that “aris{e) directly or
indirectly out of’ Reyburn’s obligations under the subcontract.7

Consistent with our holding in Brown, we determine that this phrasing

 
 

does not unequivocally condition Reyburn's duty to indemnify Plaster

 

‘upon anything other than Reyburn’s actions, and it does not explicitly
state that Reyburn has to indemnify Plaster for Plaster’s own negligence

Because the clause at issue here is not explicit, and because we must
strictly construe the indemnity clause’s language, id, at _, 287 P.3d at
97, we conclude that there must be a showing of negligence on Reyburn'

part prior to triggering Reyburn’s duty to indemnify Plaster. Otherwise,
Reyburn’s duty to indemnify could arise from another subcontractor's
obligation or scope of work, which should trigger that subcontractor’s duty
to indemnify, if any, not Reyburn’s. Moreover, the indemnity clause does
not contain a clear and unequivocal statement of the parties’ intent for
Reyburn to indemnify Plaster for Plaster’s own negligence.’ Indeed, the
clause is notably silent on that subject. Contributory negligence is merely
a derivative of negligence, and the distinction between the two forms of
negligence does not change our holding that indemnification for any form
of the indemnitee’s own negligence must be explicitly and unequivocally
‘expressed in the contract. Thus, we conclude that because the indemnity
clause does not expressly or explicitly state that Reyburn would indemnify

"Pursuant to the subcontract, Reyburn's only obligation was to
complete the rough and finish grading on the lots.

*Plaster’s negligence is only mentioned in the context of Reyburn not
having to indemnify Plaster if Plaster is found to be solely negligent.

 

 
Plaster for Plaster’s contributory negligence, Reyburn is required to
indemnify Plaster only for liability or damages that can be attributed to
Reyburn's negligence.

Having determined that not only must Reyburn be partially
negligent to trigger the indemnity provision, but algo that the indemnity
provision covers only Reyburn's negligent acts, we now turn our attention
to the district court's conclusion that Reyburn was at least partially

negligent when it granted judgment

 

matter of law against Reyburn
based on its findings that Stuart Reyburn made a judicial admission of
liability.®
Judgment as a matter of law—contractual indemnity
This court reviews a district court's order granting judgment
‘as a matter of law de novo, Winchell v. Schiff, 124 Nev. 938, 947, 193 P.3d
946, 952 (2008). NRCP 50(a)(1) states that a district court may grant
judgment as a matter of law if “a party has failed to prove a sufficient
issue for the jury.” However, “filf there is conflicting evidence on a
‘material issue, or if reasonable persons could draw different inferences
from the facts, the question is one of fact for the jury and not one of law for
the court.” Banks v, Sunrise Hospital, 120 Nev. 822, 839, 102 P.3d 52, 64
"Because we remand this case for a new trial, we do not address the
extent of Reyburn's indemnification obligation to Plaster for damages, if
any, resulting from defective sidewalls or retaining walls. This issue must
bbe resolved by the district court based on the scope of Reyburn’s work or
the allocation of negligence between the parties. See generally 3 Bruner,
supra note 6, §§ 10:66-10:67 (discussing apportionment of liability between

multiple at-fault parties, albeit in the context of indemnification
agreements with different triggering language than the one at issue here).

 

13

 
one

(2004) (alteration in original) (quoting Broussard v. Hill, 100 Nev. 325,
927, 682 P.2d 1376, 1877 (1984),

Toward the end of the trial, Plaster orally moved for judgment
asa matter of law against Reyburn on Plaster’s contractual indemnity
cause of action. After determining that the indemnity clause required
Reyburn to indemnify Plaster once Plaster proved that the damages were
not the result of Plaster's sole negligence, the district court granted the
directed verdict. In reaching its conclusion, the district court considered
the testimony elicited from Stuart on cross-examination and determined

that it constituted a judicial admission and proved that Reyburn was, at

 

least, partially negligent for the damages and defects alleged by the
homeowners. However, we determine that the

 

strict court erred when it
construed Stuart's testimony as an admission of liability.

Judicial admission

As Reyburn’s owner, Stuart testified at trial about the work
performed by Reyburn under the subcontract, He described the process of
final grading and was asked whether he was aware of the drainage system
for the retaining walls. Stuart responded that,

there's no specific verbiage in the contract talking
about drainage of walls... . and based on what I've
seen now, you know, there was some head joints
[(drainage openings) in] some places and none
other places.

He was also unsure whether there was some other type of mechanical
drainage system in place, therefore, he was uncertain as to the drainage
system applied to the retaining walls. Plaster’s counsel next asked Stuart
about his standard practices when grading:

Q Okay. So is it your normal practice on
any job to make sure, for instance, if you're going
to do grading where you're actually putting dirt

4
se ES SE PRI RESET

 
against a wall, that you're not covering up
whatever drainage scheme is in place?

A: That would be a normal practice.

But what you need to understand is we're
not block wall experts. We don’t-that’s not our
that’s not our scope of work. I mean, we are there
per contract, and per contract states we want four
inches of topsoil over the entire lot.

So the lots are inspected by the city. They're
inspected by the supervifsor]. That's [another
contractor's] job. So if there was an issue at hand,
you know, with us potentially [blocking] head
joints, that would have been an easy fix.

But I think the thing that I need to stress is,
is if there was dirt covering a head joint, dirt is not
waterproof. I mean, it would still allow for the
water to drain because we're just putting in sand,
We're not compacting, nothing. We're just laying
sand. So if I had any sand over a head joint or
partially blocking a head joint, the head joint
would still be able to drain.

Stuart also testified that, as a general rule, a subcontractor should not

 

cover drainage openings.
Plaster’s counsel then asked Stuart:

Q: [Tlf you and [Plaster] covered up—you
know, raised the dirt in the upper lot above the
waterproofing, that would be a mistake, right?

As Yes,

Q: And if you and Plaster raised the dirt up
on the lower lot above the weep holes or the open
head joints, that would be a mistake, correct?

A: That's correct.
Stuart then testified that he understood that Reyburn would be
responsible to repair any work that was improper, but that he was
uncertain about the legal implications of the indemnity clause. He

15

 

 
ultimately testified that he understood that Reyburn would defend Plaster
80 long as Reyburn had proper notice of the defects and was given an
opportunity to repair the problems. On cross-examination, Stuart testified
that neither he nor Reyburn was ever notified that Reyburn had covered
any drainage openings and that they had not received any complaints
from Plaster or anyone else concerning Reyburn’s work.

“Judicial admissions are defined deliberate, clear,

 

unequivocal statements by a party about a concrete fact within that
party's knowledge.” Smith v, Pavlovich, 914 N.E.2d 1258, 1267 (Ill. App.
Ct, 2009), What constitutes a judicial admission should be determined by
the circumstances of each case and evaluated in relation to the other
testimony presented in order to prevent disposing of a case based on an
unintended statement made by a nervous party, Id, at 1268. The caselaw
cited by Reyburn, which is unchallenged by Plaster, similarly instructs
that oral testimony should not be considered a judicial admission but,
rather, should be evaluated as evidence and considered in context with
any other testimony. See Scalf v. D.B. Log Homes, Ine,, 27 Cal. Rptr. 3d
826, 833 (Ct. App. 2005) (reasoning that concessions in pleadings are
judicial admissions whereas oral testimony subject to traditional
impeachment is construed as evidence); Conagra, Inc. v. Nierenberg, 7
P.3d 369, 380 (Mont. 2000) (holding that oral responses to aggressive
examination by trained lawyers will not be construed as a judicial
admission). In contrast to judicial admissions, there are also evidentiary
admissions, which occur when a testifying party “admits a fact which is
adverse to his claim or defense.” Keller v. US,, 58 F.3d 1194, 1199 n8
(7th Cir. 1995), Evidentiary admissions “may be controverted or explained
by the party.” Id.

16

 
Stuart's oral testimony w:

 

not a clear, unequivocal statement
of liability nor did it admit a fact adverse to Reyburn's claims. Rather,
Stuart's testimony was responsive to hypothetical conditions or practices.
He did not deliberately, clearly, and unequivocally testify that Reyburn
covered any drainage openings or that any damages arose from Reyburn’s
work, Thus, we conclude that the district court erred when it construed

Stuart's testimony

 

an admission of liability; Stuart's testimony was
neither a judicial or evidentiary admission.

Conflicting evidence

In addition, a review of the record indicates that there was
conflicting evidence regarding Reyburn's negligence. Judgment as a
matter of law should not be granted when there is conflicting evidence on
material issues. Banks, 120 Nev. at 839, 102 P.3d at 64. In addition to
the ambiguity of Stuart's testimony, the record demonstrates that
Reyburn’s work might not have been implicated in the defective retaining
walls, Reyburn’s expert witness testified that the damage to the walls was
not related to Reyburn’s work. Plaster’s expert witness testified that
approximately 93 percent of the homeowners had made improvements to
their landscaping, which would also affect the final grading performed by
Reyburn and the damage to the retaining walls. Additionally, Plaster’s
expert concluded that the sand blocking the drainage openings might
impede the water from draining, which would result in staining, but it
would not result in the structural problems that were part of the damages
‘the homeowners alleged. Because a reasonable jury could draw different
inferences from the evidence presented, there remain questions of fact for
the jury to decide concerning Reyburn's negligence for the defects alleged.
Thus, we conclude that the district court erred in granting Plaster's

7

 
om ae

 

motion for judgment as a matter of law on the contractual indemnity
cause of action.
Reyburn's duty to defend

‘The indemnity clause also imposes a duty to defend—“fiJf
requested by [Plaster], [Reyburn] will defend any such suits at the sole
cost and expense of [Reyburn].” This court has previously addressed an
insurer's duty to defend under an insurance policy, but has only generally
discussed the duty to defend arising from an indemnity clause. Sec
Allstate Insurance Co. v, Miller, 125 Nev. __, 212 P.3d 318 (2009); United
Nat'l Ins. Co. v. Frontier Ins. Co,, 120 Nev. 678, 99 P.3d 1153 (2004);
Hughes Properties Inc. v. Plaza Investments, 103 Nev. 136, 137-38, 734
P.24 710, 711 (1987) (holding that the duty to defend clause contained
within a sublease agreement was not invoked because the plaintiffs
complaint did not sufficiently allege that the injuries arose from the
subleased property).

An indemnity clause imposing a duty to defend is construed
under the same rules that govern other contracts. Crawford v. Weather
Shield MFG. Inc., 187 P.3d 424, 430 (Cal. 2008). However, “[t]he duty to
defend is broader than the duty to indemnify” because it covers not just
claims under which the indemnitor is liable, but also claims under which
the indemnitor could be found liable. United Nat'l Ins. Co., 120 Nev. at
686, 99 P.8d at 1158.

Plaster argues that Reyburn breached its duty to defend by

 

refusing to defend the allegations that involved Reyburn’s scope of work.
Plaster relies upon Crawford for its contention that Reyburn's duty to
defend was triggered by the filing of the homeowners’ complaint,
regardless of Reyburn's ultimate liability. In Crawford, the jury
determined that the indemnitor was not negligent and, thus, the trial

18.

 
court determined that the indemnitor was not required to indemnify the

indemnitee, 187 P.3d at 428. The trial court, however, concluded that the

 

indemnitor still owed the indemnitee a contractual duty to defend “against

the homeowners’ claims, insofar as those claims concerned the

 

[indemnitor’s scope of work].” Id, The trial court then appraised the
percentage of the homeowners’ claims that invoked the indemnitor's scope
of work and apportioned those defense costs to the indemnitor. Id, at 429.
The California Supreme Court upheld the trial court’s decision and
determined that the indemnitor was obligated to defend the indemnitee
from the outset of any suit that arose from the indemnitor’s role in the
project. Id, at 431. Even if the indemnitor was later determined not to be
liable, the duty to defend arose when the claim was made and was
independent of the indemnitor’s duty to indemnify the indemnitee. Id, at
485. The breach of that duty, the California Supreme Court recognized,
“may give rise to damages in the form of reimbursement of the defense
costs the indemnitee was thereby forced to incur” in defending “against
claims encompassed by the indemnity provision.” See id, at 434, 432.

Similar to Crawford, the Indiana Court of Appeals also limited
the defense costs under a duty to defend to those costs incurred from
defending against the indemnitor’s scope of work. Henthorne v, Legacy
Healthcare, Inc., 764 N.E.2d 751, 760 (Ind. Ct. App. 2002). The
indemnitor was not contractually obligated to pay the defense costs
associated with the indemnitee’s own negligence. Id.

Following the standards enunciated in Crawford and
Henthorne, we now hold that unless specifically otherwise stated in the

 

indemnity clause, an indemnitor’s duty to defend an indemnitee is limited

to those claims directly attributed to the indemnitor's scope of work and

 

 
om ie

 

does not include defending against claims arising from the negligence of
other subcontractors or the indemnitee’s own negligence. Accordingly,
here we must first determine whether the district court properly granted
Plaster’s motion for judgment as a matter of law on its breach of contract
cause of action before we consider the extent of Reyburn's obligation, if
any, to pay for any of Plaster’s defense costs

Judgment as a matter of law—breach of contract

‘The district court, without much explanation, granted

 

Plaster's motion for judgment as a matter of law against Reyburn on its
breach of contract cause of action, concluding that Reyburn had breached
its duty to defend Plaster. In so doing, the district court relied upon
evidence that indicated that Reyburn had received the tender of defense
letter from Plaster and did not defend.!® Stuart testified at trial that,
while he did receive Plaster’s letter, his calls to Plaster’s attorney went
unanswered, Ultimately, the district court concluded that Reyburn was
responsible for Plaster’s defense costs for the entire litigation, presumably
because it concluded that the contract required Reyburn to indemnify
Plaster for all negligence except for Plaster’s sole negligence.

To invoke the duty to defend, the plaintiffs’ complaint must
have sufficiently alleged negligence on the part of Reyburn, or their claims

‘Plaster did not send the letter tendering its defense to Reyburn
until November 2001, 18 months after the initiation of litigation.
Although the 18-month delay in receiving notice of its duty to defend wa:
likely prejudicial, Reyburn again failed to raise this issue in the district
court, so we do not consider it on appeal. See Albios v. Horizon
Communities, Inc,, 122 Nev. 409, 420 n.14, 182 P.3d 1022, 1029 n.14
(2006).

20

 
 

must have concerned Reyburn's scope of work for the project. See Hughes
Properties Inc., 103 Nev, at 137-38, 734 P.2d at 711; Crawford, 187 P.3d at
442, Here, the homeowners’ complaint concerned the design and
construction of the retaining walls and sidewalls. Reyburn’s scope of work

 

to complete the rough and final grading of the homes and did not
include the design, construction, or development of the retaining walls or
sidewalls. Given the conflicting evidence at trial as to whether Reyburn’s
work was implicated in the defective retaining walls and sidewalls, and
viewing the evidence and inferences in Reyburn’s favor, we conclude that a
reasonable jury could have granted relief in favor of Reyburn, See
Winchell v. Schiff, 124 Nev, 938, 946-47, 193 P.3d 946, 951-52 (2008).
‘Thus, we conclude that the district court erred in granting Plaster's
motion for judgment as a matter of law on the breach of contract cause of
action. See id. at 947, 193 P.3d at 952 (an order granting judgment as a
matter of law is reviewed de novo).
Defense costs

After the conclusion of trial, Plaster moved for a
determination of damages against Reyburn. Approximately five years
elapsed between the filing of post-trial motions and the district court's
award of attorney fees and costs to Plaster. During that time, the trial
judge resigned from the district court and a new judge was assigned to the
case. The new judge conducted numerous hearings on new post-trial
motions and ultimately entered judgment against Reyburn and ordered it
to indemnify Plaster for any award against Plaster and in favor of the
homeowners; ordered Reyburn to pay all of Plaster’s attorney fees and
costs totaling $952,813.26; and ordered Reyburn to pay $582,264.18 in
interest that accumulated from the conclusion of trial in 2004, until the

post-trial motions were decided in 2009.

21

 
Because we hold that an indemnitor’s duty to defend an
indemnitee is generally limited to those claims directly attributed to the
indemnitor’s scope of work and does not include defending against the
negligence of other subcontractors or the indemnitee's own negligence, see
Crawford, 187 P.3d at 429; Henthorne, 764 N.E.2d at 760, we conclude
that the district court erred in awarding Plaster its total amount of
attorney fees and costs without first apportioning those fees and costs
actually incurred by Plaster in defending against those claims directly
attributed to Reyburn's scope of work, if any.1"

™Reyburn also argues that Plaster should be precluded from seeking
attorney fees through a post-trial motion because attorney fees arising
from a breach of contract must be proved as special damages at trial. In
Sandy Valley Associates v. Sky Ranch Estates, we distinguished between
attorney fees as a cost of litigation and as special damages. 117 Nev. 948,
955-60, 35 P.3d 964, 968-71 (2001), receded from on other grounds as
stated in Horgan v, Felton, 123 Nev. 577, 579, 170 P.3d 982, 983 (2007)
Attorney fees that are a cost of litigation arise from an agreement, statute,
or rule authorizing the fees, whereas attorney fees that are considered
special damages are fees that are foreseeable arising from the breach of
contract or tortious conduct. Id. at 956, 35 P.3d at 969. In Shuette v.
Beazer_Homes Holdings Corp., we supplemented Sandy Valley by
explaining that fees as special damages “constitute a rather narrow
exception to the rule prohibiting attorney fees awards absent express
authorization.” 121 Nev. 837, 862, 124 P.3d 530, 547 (2005).

 

 

Because the indemnity clause in this case expressly authorizes
attorney fees, regardless of whether the attorney fees could have been
awarded as damages for breach of the contractual duty to defend, they
were also directly authorized by the contract as a cost of litigation and can
be considered in a post-trial motion. However, as discussed above, any
award of attorney fees to Plaster and against Reyburn must be limited to
Plaster's fees incurred defending against the causes of action specifically
concerning Reyburn’s scope of work or involvement in the project.

 

 
 

CONCLUSION

We conclude that the indemnity clause in this case does not
unequivocally or explicitly state that Reyburn would be required to

indemnify Plaster, even if Reyburn was not negligent, and does not clearly

 

require indemnification for Plaster’s contributory negligence. Therefore,
the indemnity clause must be interpreted against Plaster, meaning that
Plaster must prove negligence on the part of Reyburn before the clause is
triggered and that Plaster may be indemnified only for damages
associated with Reyburn's negligence. Additionally, because Stuart
Reyburn’s oral testimony was not a clear statement of liability but, rather,
merely responded to a hypothetical line of questioning, we conclude that
the district court erred in finding that Stuart's testimony was a judicial
admission of liability. Moreover, there was conflicting evidence in the
record regarding whether Reyburn's work was implicated in the defective
retaining walls. Thus, we determine that the evidence as a whole
presented sufficient issues of fact for a jury to decide. Accordingly, we
conclude that the district court erred in granting judgment as a matter of
law on Plaster's contractual indemnity cause of action.

Because Reyburn’s duty to defend Plaster is limited to those
claims directly attributed to Reyburn’s scope of work and does not include
defending against the negligence of other subcontractors or Plaster’s own
negligence, we conclude that whether the homeowners’ complaint
sufficiently alleged negligence on the part of Reyburn, triggering its duty
to defend, was also a material issue of fact for the jury to decide. Thus, we
conclude that the district court erred in granting judgment as a matter of
law on Plaster’s breach of contract cause of action as well.

Finally, if the jury determines that the homeowners
sufficiently alleged claims involving Reyburn's scope of work, we conclude

23

 
that the district court must apportion an award of fees and costs between
those actually incurred by Plaster in defending against those claims
directly attributable to Reyburn’s scope of work and those incurred in
defending its own negligence.

Accordingly, we reverse the judgment of the district court and
remand this matter for a new trial on Plaster’s indemnity and breach-of-
iling-to-defend claims against Reyburn.

 

contract-for-

 

 
PICKERING, J., concurring:

I submit that the express negligence rule has less utility than the
rule suggested in the Restatement (Third) of Torts: Apportionment of
Liability § 22 emt. f (2000), which holds that “An indemnitee can recover
contractual indemnity for his or her own legally culpable conduct only if
the contract is clear on that point,” but recognizes that, “{iJf the contract is
otherwise clear, it need not contain specific words, such as ‘negligence’ or
“fault.” See George L. Brown Ins. v. Star Ins. Co. 126 Nev. _, _, 287
P.3d 92, 98-99 (2010) (Pickering, J., concurring). The Restatement’s
broader formulation does a better job of capturing the core question: Is the
reading of the indemnity clause contended for reasonable in light of the
words the parties used and the circumstances under which they
contracted? Id. at __, 237 P.8d at 98 (quoting 5 Margaret N. Kniffin,
Corbin on Contracts § 24.22, at 240 (1998) (noting “preference for an
interpretation that will result in contract terms that are reasonable”)).
Although I write separately as to the express negligence rule, I otherwise

join the majority's opinion.

Pickering

 

om