Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca10-86-01431/USCOURTS-ca10-86-01431-0/pdf.json

Nature of Suit Code: 360
Nature of Suit: Other Personal Injury
Cause of Action: 

---

.. FI LED 

United Staus Courc of Appeals 

Tenth Circuit 

UNITED STATES COURT OF APPEALS 

TENTH CIRCUIT 

AUG • 8 1990 

DONALD R. FREUND, ) 

) 

Plaintiff, ) 

) 

ARGONAUT INSURANCE COMPANIES, ) 

) 

Plaintiffs-Intervenors, ) 

) 

v. ) 

) 

UTAH POWER & LIGHT COMPANY, ) 

a Utah Corporation; CABLEMAIN, ) 

INC., a Texas Corporation, ) 

) 

Defendants-Third Party- ) 

Plaintiffs-Appellants, ) 

) 

V • ) 

) 

C.P. NATIONAL CORPORATION, ) 

) 

Third Party-Defendant- ) 

Appellant-Cross-Appellee, ) 

) 

and ) 

) 

JONES INTERCABLE, INC.; CABLE TV ) 

FUND VIII-B; KONOCTI TV, INC., ) 

) 

Third Party-Defendants- ) 

Appellees. ) 

) 

) 

) 

UTAH POWER & LIGHT COMPANY, ) 

) 

Plaintiff-Third Party- ) 

Plaintiff-Appellant, 

) 

v. ) 

) 

FIREMAN'S FUND INSURANCE COMPANY, ) 

) 

Defendant, ) 

) 

&OBERT L. HOECKER 

Clerk 

Nos. 86-1390 

86-1431 

86-1432 

(D.C. No. C-82-0747W) 

(District of Utah) 

Nos. 86-2386 

86-2389 

(consolidated) 

(D.C. No. C-84-0400W) 

(District of Utah) 

Appellate Case: 86-1431 Document: 010110040725 Date Filed: 08/08/1990 Page: 1 
JONES INTERCABLE, INC.; CABLE TV ) 

FUND VIII-B, ) 

) 

Defendants-Third Party- ) 

Defendants, ) 

) 

) 

and ) 

) 

C.P. NATIONAL CORPORATION, ) 

) 

Defendant-Cross-Claimant- ) 

Appellant, ) 

) 

and ) 

) 

THE HOME INSURANCE COMPANY, ) 

) 

Defendant-Appellee, ) 

) 

v. ) 

) 

ALEXANDER & ALEXANDER, INC., ) 

) 

Third Party-Defendant. ) 

ORDER AND JUDGMENT * 

Before McKAY, BARRETT, and SEYMOUR, Circuit Judges. 

After submission on appeal, we certified controlling questions of Utah law to the Supreme Court of the State of Utah in 

case numbers 86-1390, 86-1431, and 86-1432. We also held in abeyance case numbers 86-2386 and 86-2389 (consolidated) pending 

* This order and judgment has no precedential value and shall 

not be cited, or used by any court within the Tenth Circuit, 

except for purposes of establishing the doctrines of the law of 

the case, res judicata, or collateral estoppel. 10th Cir. R. 

36.3. 

-2-

Appellate Case: 86-1431 Document: 010110040725 Date Filed: 08/08/1990 Page: 2 
' 

' 

answer to the certified questions. In accordance with the opinion 

of the Supreme Court of the State of Utah, Freund v. Utah Power & 

Light Co., 793 P.2d 362 (Utah 1990), a copy of which is attached, 

we AFFIRM the trial court's grant of summary judgment dismissing 

the claims of appellant Cablernain, Inc. against Jones Intercable, 

Inc., Cable TV Fund VIII-B, and Konocti TV, Inc. We REVERSE the 

grant of summary judgment against C.P. National and Utah Power and 

Light Company in favor of Jones Intercable, Inc. and The Horne 

Insurance Company, and REMAND for further proceedings consistent 

with the opinion of the Supreme Court of the State of Utah. 

-3-

Entered for the Court 

Monroe G. McKay 

Circuit Judge 

Appellate Case: 86-1431 Document: 010110040725 Date Filed: 08/08/1990 Page: 3 
' 

IN THE SUPREME COURT OF THE STATE OF UTAH 

Regular May Term, 1990 

Donald R. Freund, 

Plaintiff, 

v. 

Utah Power & Light Company, 

and Cabvlemain, Inc., 

----000000----

Defendants, Third-Party 

Plaintiffs, and Appellants, 

v. 

Jones Intercable, Inc., 

Third-Party Defendant 

and Appellee, 

and 

C.P. National Corporation, 

Third-Party Defendant 

and Appellant. 

May 18, 1990 

REMITTITUR 

No. 880261 

Nos. 86-1390, 86-1431 & 

86-1432 

-Federal certification questions--1. exclusive remedy 

provision in #35-1-60 bars implied indemnity; 2. language in 

indemnification agreement (FAA) is a sufficiently clear and 

unequivocal agreement of express indemnity; 3. parties expressly 

provided for indemnity notwithstanding #35-1-60; 4. rule of 

construction of indemnification agreements does not apply to this 

particular agreement to purchase insurance; and 5. paragraph 22 of FAA 

required licensee to obtain insurance coverage to protect licensor. 

Issued: June 12, 1990 

Record: 8 Volumes 

3 Envelopes 

Appellate Case: 86-1431 Document: 010110040725 Date Filed: 08/08/1990 Page: 4 
' 

REMITTITUR 

This opinion is subject to revision before 

publication in the Pacific Reporter. 

IN THE SUPREME COURT OF THE STATE OF UTAH 

----00000----

Donald R. Freund, 

Plaintiff, 

v. No. 880261 

Utah Power & Light Company 

and Cablemain, Inc., 

F I L E D 

May 18, 1990 

v. 

Defendants, Third-Party 

Plaintiffs, and Appellants, 

Jones Intercable, Inc., 

Third-Party Defendant 

and Appellee, 

and 

C.P. National Corporation, 

Third-Party Defendant 

and Appellant. Geoffrey J. Butler, Clerk 

Attorneys: Robert Gordon, David A. Westerby, Stephen B. 

Nebeker, Anthony B. Quinn, Jeffrey D. Eisenberg, 

Salt Lake City, for Utah Power & Light Co. 

Allan L. Larson, Jerry D. Fenn, Salt Lake City, for 

Cablemain 

Robert W. Brandt, Robert G. Gilchrist, Michael P. 

Zaccheo, Gary L. Johnson, Salt Lake City, for 

C.P. National 

Scott W. Christensen, Salt Lake City, for The Home 

Insurance Company 

Glenn C. Hanni, Paul M. Belnap, Mark J. Taylor, Salt 

Lake City, for Jones Intercable, Cable TV Fund 

VIII-B, and Konocti TV, Inc. 

On Certification from the United States Court of 

Appeals for the Tenth Circuit, The Honorables Monroe G. 

McKay, James E. Barrett, and Stephanie K. Seymour 

HOWE, Associate Chief Justice: 

The United States Court of Appeals for the Tenth 

Circuit, pursuant to rule 41 of the Rules of the Utah Supreme 

Appellate Case: 86-1431 Document: 010110040725 Date Filed: 08/08/1990 Page: 5 
Court, has certified to us the following questions of Utah 

law: (1) whether the exclusive remedy provision of the Utah 

Workers' Compensation Act, Utah Code Ann.§ 35-1-60, bars a 

claim by a third party that a statutory employer impliedly 

agreed to indemnify the third party against claims for 

injuries sustained by an employee; (2) whether, under Utah 

law, the indemnification provision of paragraph 21 of the 

"Facilities Attachment Agreement" is a sufficiently clear and 

unequivocal agreement by Jones Intercable, Inc., to indemnify 

Utah Power & Light Co. for its own negligence which resulted 

in injuries to a Jones employee in connection with the 

"erection, maintenance, presence, use or removal of Jones' 

equipment"; (3) whether, in view of the exclusive remedy 

provision of the Utah Workers' Compensation Act, the language 

set out in paragraph 21 of the "Facilities Attachment 

Agreement" is explicit enough to be an enforceable agreement 

on the part of Jones (the employer) to indemnify Utah Power 

for amounts paid to Jones's employee as a result of injuries 

sustained by the employee; (4) whether it is a correct 

interpretation of Utah law that an agreement to purchase 

insurance to cover a third party's own negligence is governed 

by the same rule of construction as an indemnification 

agreement to indemnify a third party for its own negligence 

according to the Tenth Circuit's decision in Kennecot.t CQQ~x 

Corp. v. General Motors Corp., 730 F.2d 1380, 1382 (10th Cir. 

1984); and (5) assuming the rule of construction which 

governs an agreement to purchase insurance to cover a third 

party's own negligence is the same rule which governs an 

indemnification agreement, whether the language of 

paragraph 22 of the "Facilities Attachment Agreement'' is a 

sufficiently clear and unequivocal agreement by Jones to 

obtain insurance against Utah Power's own negligence which 

resulted in injuries to a Jones employee. 

The factual and procedural background of this case 

is stated in the opinion of the United States District Court 

for the District of Utah reported at Freund v. Utah Power & 

Light, 625 F. Supp. 272 (D. Utah 1985). In October 1981, 

plaintiff Donald R. Freund was injured when he came in 

contact with an electrical power line as he was splicing 

amplifiers into a television cable previously hung by 

Cablemain, Inc., on utility poles owned by Utah Power & Light 

Co. ( "UP&L"). At the time of the accident, Freund was 

working for Jones Intercable, Inc., and Fund VIII-B, a 

limited partner of Jones, in the construction of a cable TV 

system in Washington City, Utah. He received workmen's 

compensation benefits from Jones. 

Freund brought suit against Cablemain and UP&L, who, 

in turn, asserted claims for indemnity against third-party 

defendants Jones, Fund VIII-B, and Konocti, a subsidiary of 

Jones. Cablemain's claim was for implied indemnity, based on 

Jones's alleged breach of an independent duty owed to 

No. 880261 2 

Appellate Case: 86-1431 Document: 010110040725 Date Filed: 08/08/1990 Page: 6 
Cablemain. UP&L based its claim upon a written agreement 

known as the "Facilities Attachment Agreement" ("FAA"), 

which had been entered into between C.P. National and Summit 

Communications, the predecessors in interest of UP&L and 

Jones, respectively. Under the terms of the FAA, Summit 

Communications was permitted to attach cables to C.P. 

National's utility poles, provided it agreed to indemnify 

C.P. National for damages and injuries which might result and 

to obtain liability insurance for C.P. National's protection. 

We shall hereafter assume, as did the federal district court, 

that UP&L and Jones are entitled to the benefits of and are 

bound by the terms of the FAA. 

The federal district court granted summary judgment 

in favor of Jones and against Cablemain in light of the 

exclusive remedy provision, section 35-1-60, and the lack of 

controlling law in Utah as to whether an implied indemnity 

agreement survives that provision. The court also determined 

that paragraph 21 of the FAA was not sufficiently clear and 

unequivocal to require Jones to indemnify Utah Power against 

claims for injuries sustained by Jones's employees caused in 

whole or in part by UP&L's negligence in view of Utah case 

law and in view of the exclusive remedy provision. Relying 

on ~ennecott Copper Coro. v. General t1.Q_tors Corp., 730 F.2d 

1380, 1382 (10th Cir. 1984), the court also determined that 

Jones's agreement in section 22 of the FAA to procure 

insurance was not sufficiently clear and unequivocal that it 

was intended to provide insurance for injuries sustained by 

Jones's employees as a result of UP&L's negligence. 

I 

The first question is whether section 35-1-60, the 

exclusive remedy provision of the Utah Workers' Compensation 

Act, bars a claim by a third party (Cablemain) that a statutory employer (Jones) imolied__ly agreed to indemnify Cablemain 

against a claim made by Jones's employee for injuries 

sustained. This question was left open in our decision in 

Shell Oil Co. v. Brinkerhoff-Signal Drilling Co., 658 P.2d 

1187, 1191 n.3 (Utah 1983), which dealt with an express 

contract for indemnity. We held that the enforcement of the 

written contract was not barred by the exclusive remedy 

provision because the employer had voluntarily undertaken 

liability separate from and in addition to that owed to his 

employees which were imposed by the Workers' Compensation 

Act. This decision accords with a statement by A. Larson, in 

volume 2B, section 76.42 of his treatise, The Law of 

Workmen's ComoensatiQn (1989) [hereinafter 2B Larson]: "The 

clearest exception to the exclusive-liability clause is the 

third party's right to enforce a11 express contract in which 

the employer agrees to indemnify the third party for the very 

kind of loss that the third party l1as been made to pay to the 

employee." See also 2B Larson,§ 76.42 n.37 (Cum. Supp. 

3 No. 880261 

Appellate Case: 86-1431 Document: 010110040725 Date Filed: 08/08/1990 Page: 7 
1989); Larson, Thi_rd-Party~ ction Over Ag_ainst Workers' 

Compensation Employer, 1982 Duke L.J. 483, 500 & n.79. 

Cablemain contends that although Jones did not 

expressly agree to indemnify it, an implied agreement of 

indemnity arises from the contractual relationship between 

the parties out of which Cablemain hung a television cable 

for Jones on utility poles owned by UP&L. Briefly, Cablemain 

contends that Jones gave it a sketch showing the height at 

which it wanted the television cable to be attached to the 

poles; that Cablemain expressed concern to Jones that it 

could not maintain the minimum clearance between the power 

lines and the cable required by the National Electrical 

Safety Code and the FM and that Cablemain did not want to be 

held responsible if the lack of clearance later caused 

problems; that Jones represented that C.P. National had given 

its written permission as required by the FM for the cable 

to be attached, whereas in fact it had never given such 

permission; and that Jones assured Cablemain that it would 

take responsibility to straighten out the lack-of-clearance 

problem. Based on these assurances, Cablemain consented to 

attach the cable as directed by Jones. 

Cablemain urges that if it can prove that the 

foregoing representations and assurances were made to it, 

the law should imply an agreement on the part of Jones to 

indemnify it against Freund's claim for damages and that 

such an implied agreement should not be foreclosed by section 

35-1-60, which provides: 

The right to recover compensation 

pursuant to the provisions of this title 

for injuries sustained by an employee, 

whether resulting in death or not, shall 

be the exclusive remedy against the 

employer and shall be the exclusive remedy 

against any officer, agent or employee of 

the employer and the liabilities of the 

employer imposed by this act shall be in 

place of any and all other civil liability 

whatsoever, at common law or otherwise, to 

such employee or to his spouse, widow, 

children, parents, dependents, next of 

kin, heirs, pers o nal representatives, 

guardian, or any other person whomsoever, 

QD account of any accident or injury or 

death, in any wa y contracted, sustained, 

aggravated or incurred by such employee in 

the course of or because of or arising out 

of his employment, and no action at law 

ms!Y___l>e maintaineQ_\:lgainst an employer or 

against any offi c er, agent or employee of 

the employer _ba s e___Q_J,l__QQ__n any ace iden t, 

-inju ry o r dea th of a n e mployee. 

No. 8 8 0 261 4 

Appellate Case: 86-1431 Document: 010110040725 Date Filed: 08/08/1990 Page: 8 
(Italics added.) As we co nsider this q11estion, we will 

assume but not decide for purposes of this opinion that 

absent section 35-1-60, implied indemnity would lie although 

none of the parties cite any Utah case law on that question. 

The question as certified queries only whether implied 

indemnity survives section -60. 

In his treatise at volume 2B, section 76.11, Larson 

comments on the issue before us as follows: "Perhaps the 

most evenly-balanced controversy in all of compensation law 

is the question whether a third party in an action by the 

employee can get contribution or indemnity from the employer, 

when the employer's negligence has caused or contributed to 

the injury." The author demonstrates his point by reference 

to American District Telegraph Co. v. Kittleson, 179 F.2d 946 

(8th Cir. 1950). In that case, Kittleson, an employee of 

Armour & Company was injured when a repairman of American 

District Telegraph Company fell through a skylight in an 

Armour building and landed on Kittleson. Kittleson accepted 

workers' compensation from Armour and also sued American, 

alleging that American's employee was negligent in failing to 

ascertain whether the skylight could support his weight. 

A1nerican brought a third-party complaint against Armour, 

asserting that the i11jury was primarily due to Armour's 

negligence in allowing the skylight to become so encrusted 

with dirt that it was indistinguishable from the roof around 

it. Kittleson recovered a judgment against American for 

about $60,000, and the circuit court of appeals held that 

Armour could be held liable to American for the damages that 

American had to pay Armour's employee.I Larson frames the 

controversy as follows: 

Each side to the controversy has an 

argument in its favor which, considered 

alone, sounds irresistible. The employer 

here complains with considerable cogency 

that the net result is that $60,000 has 

been put in the employee"s pocket and has 

left the employer's pocket, all because of 

a compensable injury, in spite of the 

plain statement in the act that the 

1. Larson comments that the decisional history of Kittleson 

is representative of the zigzag approach taken on the issue 

over the past three decades. The Iowa Supreme Court held in 

l_Qwa Power & Light Co. v. Abild Construction Co., 259 Iowa 

314, 324, 144 N.W.2d 303, 309 (1966), that the Eighth Circuit 

had been mistaken about Iowa law. Later, in Hysell v. I~wa 

Public Service Co., 534 F.2d 775 (8th Cir. 1976), the Eighth 

Circuit repudiated its own Kittleson decision on the strength 

of Abild. Larson, 1982 Duke L.J. at 484, n.2; 2B Larson 

§ 76.11. A recent case declined to follow Kittleson: ~~ 

Inc. v. Super Concrete Co., 565 A.2d 293 (D.C. App. 1989). 

5 No. 880261 

Appellate Case: 86-1431 Document: 010110040725 Date Filed: 08/08/1990 Page: 9 
employer's liability for such an injury 

shall be limited to compensation payments. 

Yet if the third party were made to 

bear the entire $60,000 damages, he would 

argue with equal cogency that it is unfair 

to subject him, the lesser of two wrongdoers, to a staggering liability which he 

would not have had to bear but for the 

sheer chance that the other parties 

involved happened to be under a compensation act. Why should he, a stranger to 

the compensation system, subsidize that 

system by assuming liabilities that he 

could normally shift to or share with the 

employer? 

2B Larson,§ 76.11; see also ~aJ.illh v. Rogers, 24 Cal. 2d 

200, 217, 148 P.2d 633, 643 (1944) (Traynor, J., dissenting) 

(employer made liable for damages by the "chance circum~ 

stance" that he was driving an automobile owned by a third 

person). 

The Oregon Supreme Court, in United States Fidelity 

& Guarantee Co. v. Kaiser Gypsum Co., 273 Or. 162, 539 P.2d 

1065 (1975), interpreted Larson's appraisal of the issue as 

being "evenly balanced" to refer to the persuasiveness of 

the arguments on both sides, not to the weight of authority. 

The Oregon court found: 

[A] substantial majority and the better 

reasoned cases allow a third party to 

recover indemnity from an employer when 

the injury to the employee for which the 

third party was held liable resulted from 

the breach of an independent duty owed to 

the third party by the employer. This 

duty will be implied by law from the 

relationship between the employer and the 

party seeking indemnity. 

273 Or. at 177, 539 P . 2d at 1072. Larson, however, states 

that the majority of jurisdictions reject the implied 

indemnity doctrine: 

When we turn to cases arising under state 

law, we find a sharp divergence of opinion 

between the small minority of jurisdictions 

holding that, when the relation between 

the parties is based on contract, an 

obligation of care with acc~mpanying 

indemnity obligation can be implied which 

survives the exclusiveness defense, and 

No. 880261 6 

Appellate Case: 86-1431 Document: 010110040725 Date Filed: 08/08/1990 Page: 10 
the majority that reject the implied 

indemnity doctrine. 

2B Larson,§ 76.71; Larson, 1982 Duke L.J. at 525 & 

nn.254-55. Larson cites many cases in support but cites 

Kaiser as representing the minority view. 

Cablemain contends that for several reasons, 

section 35-1-60 should not bar its action to recover 

indemnity from Jones under the facts of this case. First, 

Cablemain argues that a third party such as itself is not 

"[an]other person" as used in that statute whose cause of 

action is replaced--that the legislature did not intend to 

affect causes of action of anyone other than (1) the 

employee, (2) the natural beneficiaries of his wealth, and 

(3) his financial representatives. Cablemain relies upon 

the _e_j_usdem generis rule to show that when general words or 

terms follow specific ones, the general must be understood 

as applying to things of the same kind as the specific. 

Heathman v. Giles, 13 Utah 2d 368, 370, 374 P.2d 839, 840 

(1962). Thus, Cablemain argues that the phrase "or any 

other person whomsoever" in the Act is limited to other 

persons of the class designated by the specific words 

preceding it, each of whom is either a relative of the 

employee or a person claiming through or on behalf of him. 

Unrelated third parties do not fit into this class, 

Cablemain asserts, and if the legislature had intended to 

eliminate causes of action of all persons, it would have 

been totally unnecessary to state a long list of categories; 

"all persons" would have sufficed. 

Jones argues that the ejusdem generis rule does not 

apply in the absence of ambiguity and that there is no 

ambiguity in the statute. We agree. The phrase "any other 

person whomsoever" is unqualified. It plainly includes 

third parties. Additionally, this conclusion is reinforced 

by the last phrase of the sentence in section 35-1-60, "no 

action at law may be maintained against an employer . 

based upon any accident . " Here again, there is no 

qualification of the language "no action." Thus, we are led 

to conclude that the legislature meant to include an implied 

indemnity action brought by a third party. 

Second, Cablemain asserts that its action for 

indemnity is not "on account of" Freund's accident, nor is 

it "based upon" the accident within the meaning of the 

statute. Rather, Cablemain argues, its claim is based upon 

the breach of an independent duty arising out of the 

contract between Cablemain and Jones to hang the television 

cable on the poles. While this argument has some appeal and 

has found support in some cases, Pan American Petroleum 

Corp. v. Maddux Well Service, 586 P.2d 1220 (Wyo. 1978); 

United States Fidelity & Guarantee Co. v. Kaiser Gypsum Co . , 

7 No. 880261 

Appellate Case: 86-1431 Document: 010110040725 Date Filed: 08/08/1990 Page: 11 
273 or. 162, 539 P.2d 1065 (1975); Diamond State Tel. Co. v. 

Univ~ity of Delaw~re, 269 A.2d 52 (Del. 1970); Westchester 

Lighting Co. v. Westchester County Small Estates Coro., 278 

N.Y. 175, 15 N.E.2d 567 (1938), we conclude that indemnity 

should be enforced only where the employer has expressly 

agreed to indemnify, thereby affirmatively waiving the 

immunity afforded him by the exclusive remedy provision, as 

was done in Shell Oil Co., 658 P.2d at 1191. In Royal 

Indemnity__Co. v. Sout~rn California Petroleum CorJL..., 67 

N.M. 137, 143, 353 P.2d 358, 362 (1960), the court refused 

to allow indemnity against an employer based upon an implied 

agreement, reasoning as follows: 

If such an agreement to indemnify were to 

be implied, the employer would be 

obligated to pay damages to an injured 

employee, through a third party, over and 

above the amount of compensation fixed by 

the Act, and thus impose the very 

liability against which the Act declared 

the employer should be insulated. This 

does not appear to be the legislative 

intention, and the court will not by 

decision alter the plain, clear language 

of the legislative enactment. 

While we recognize that the New Mexico statute construed in 

that case is arguably worded more strongly than our section 

35-1-60, we believe that the same result follows: the 

employer should not be forced by the indirect means of 

indemnity to contribute sums in addition to workmen's 

compensation for the injury or death of an employee. The 

Court of Appeals of Maryland, in Standard Wholesale 

I:_bosphate & Acid Works, Inc. v. Rukert Terminals Corp., 193 

Md. 20, 65 A.2d 304 (1949), reached the same conclusion, 

stating: 

The statute declares his [employer's] 

liability for compensation to be 

exclusive. If it should be construed to 

preserve his liability, for the payment of 

a sum measured in whole or in part by the 

damages sustained by the employee, merely 

because the negligence of a third party 

concurred, or is claimed to have 

concurred, with his own in producing the 

injury, his liability for compensation 

would not be exclusive. [I]t is 

essentially a liability to pay, or share 

in the payment of, damages for the injury 

to his employee, of which the statute 

relieves him. 

No. 880261 8 

Appellate Case: 86-1431 Document: 010110040725 Date Filed: 08/08/1990 Page: 12 
l 9 3 Md . a t 2 9 - 3 0 , 6 5 A . 2 d a t 3 0 8 . A 1 though .S t and Q.r d 

Wh.Qlesc!.le.. is a maritime, stevedoring case, the underlying 

contractt1al quality of the relation makes the case relevant 

and applicable here. See Larson, 1982 Duke L.J. at 526. 

In West..kbester Li_g_b.tin_g Co. v. Wes_llhes_t.e_r_c_ounty 

.Sm9_Ll_Es ta tes Corp. , Chief Judge Crane, in a dissenting 

opinion, characterized the Workmen's Compensation Law of New 

York as a new system "substituted in its entirety for an 

outgrown and objectionable one." 278 N.Y. at 182, 15 N.E.2d 

at 570 (quoting Shanahan v _. Mo...n..a...u;:J:}Eng_'._g~o., 219 N.Y. 469, 

478, 114 N.E. 795, 798 (1916)). He dissented to a majority 

opinion which required an employer who had paid compensation 

to the representatives of his deceased employee to also 

indemnify a third party against whom the representatives had 

brought a negligence action. He succinctly pointed out: 

[T]he representatives [of the deceased 

worker] receive a large sum of money 

through a negligence action from the 

employer merely because the money passes 

through the hands of a third party; and 

yet all concede that the employer is not 

liable to the representatives. To me this 

is mere sophistry. 

278 N.Y. at 185, 15 N.E.2d at 571; see also Hilzer v. 

MacDonald, 169 Colo. 230, 237, 454 P.2d 928, 931-32 (1969) 

(implied indemnity denied in view of the exclusive remedy 

provision in the Colorado act). 

Third, Cablemain urges that implied indemnity 

should not be barred because its negligence, if any, was 

merely passive or secondary, whereas Jones's negligence was 

active or primary. Cablemain relies on Salt Lake City v. 

Schubach, 108 Utah 266, 280, 159 P.2d 149, 155-56 (1945). 

Even if we were inclined to recognize the foregoing 

distinction, it would not aid Cablemain. We held in Curtis 

v. Harm_Q_n Electric, Inc., . 552 P.2d 117, 119 (Utah 1976), and 

in Phillips v. Union Pacific Railroad, 614 P.2d 153 (Utah 

1980), that under section 35-1-60, an employer was not 

liable for contribution to a third-party tort-feasor. We 

reasoned that the employer was not a joint tort-feasor 

because his liability to the employee sprang from the 

Workmen's Compensation Act and not from tort law. We eschew 

the invitation to now cloud the law by imposing indemnity 

based on negligence where contribution would not lie. 

Furthermore, to require indemnity where Cablemain is 

negligent, albeit only "passive or secondary," would be to 

require Jones to indemnify Cablemain for its own negligence 

where the parties have not by clear and unequivocal language 

agreed to do so, as explaine d in part II of this opinion. 

~ Barr v. Brezina Constr. Co ., 464 F.2d 1141, 1146 (10th 

9 No. 880261 

Appellate Case: 86-1431 Document: 010110040725 Date Filed: 08/08/1990 Page: 13 
Cir. 1972), c~. denied sub nom. Brezina Constr. Co. v. 

United States, 409 U.S. 1125, 93 S. Ct. 937, 35 L. Ed. 2d 

256 (1973); Ruvolo v. United States Steel Coro., 139 N.J. 

Super. 578, 354 A.2d 685 (1976) (one liable because of its 

independent negligence may not claim the benefit due a 

blameless third party of an implied indemnification 

undertaking by employer); see also Myca, Inc. v. Super 

Concrete Co., 565 A.2d at 298-99 (court rejects the 

passive-active theory of implied indemnification as contrary 

to the weight of authority and instead relies on the 

"independent duty" theory). 

Fourth, Cablemain contends that it is highly 

inequitable to allow an employer such as Jones to seek 

refuge in the exclusive remedy provision because a third 

party, unlike the injured employee, has not received a quid 

QLQ_g_UO in exchange for giving up its right to sue the 

employer. This reasoning has been relied upon in reaching 

the decision to allow indemnification in Pan-American 

Petroleum Co. v. Maddux Well Service, 586 P.2d at 1224, in 

Blackford v. Sioux City Dressed Pork, Inc., 254 Iowa 845, 

852-53, 118 N.W.2d 559, 564 (1962), partially overruled on 

Q~her grounds, Woodruff Constr. Co. v. Barrick Roofers, 

LDC., 406 N.W.2d 783, 787 (Iowa 1987), and in Lundfil'berg v. 

Bierman, 241 Minn. 349, 363, 63 N.W.2d 355, 365 (1954). 

Closely associated with this quid pro quo argument is the 

assertion that legislatures, in enacting workmen's 

compensation acts, only intended to affect rights between 

employer and employee, not to shield the employer from 

common law actions for indemnity by third parties. United 

States Fidelity & Guarantee Co. v. Kaiser Gypsum CQ_,_, 273 

Or. at 162, 539 P.2d at 1065, and authorities cited 

therein. While we recognize the force of that argument, 

imposing indemnity under the circumstances of the instant 

case may not be equitable either. This is because Cablemain 

admittedly knew that the cable which it strung did not have 

the proper clearance from the power lines and yet would have 

Jones bear the entire burden of the damages. See Woodruff 

Constr. Co. v. Barrick Roofers, Inc., 406 N.W.2d at 786 

("[W]here the proposed indemnitee aided in the creatidn of 

the hazard, the law should not imply a right to indemnity 

from the employer."). As opined by Larson, valid arguments 

exist on both sides of this issue. We can only presume that 

the legislature weighed the competing considerations when it 

enacted section 35-1-60 and can only suggest that complaints 

against inherent unfairness in the statutory scheme should 

be addressed to that body. We must grant judicial deference 

to what we think is the intent of the act. 

Last, Cablemain contends that if section 35-1-60 

precludes its claim for indemnity, it is denied access to 

the courts as guaranteed by article I, section 11 of the 

Utah Constitution (open courts provision). A short answer 

No. 880261 10 

Appellate Case: 86-1431 Document: 010110040725 Date Filed: 08/08/1990 Page: 14 
to this contention is that neither party has cited to us any 

case, and we have found none, where this Court has 

recognized a cause of- action for implied indemnity arising 

out of a contractual relationship such as the one existing 

here between Cablemain and Jones. That being so, the 

enactment of the exclusive remedy provision in our Workers' 

Compensation Act in 1917 cannot be said to have abolished a 

cause of action which had theretofore been judicially 

recognized in this state. 

In conclusion, we answer the first question 

certified to us in the affirmative. Assuming that the 

remedy of implied indemnity might otherwise be available 

here because of the relationship of the parties, a question 

we do not reach, it would not survive the exclusive remedy 

provision of section 35-1-60. The legislative intent was to 

bar that remedy against the employer as part of a new system 

to compensate injured employees without regard to fault on 

the part of either, except where the employer has expressly 

waived the bar. See generally Shell Oil Co., 658 P.2d at 

1190-91. 

II 

The next question is whether the indemnification 

provision of paragraph 21 of the FAA is a sufficiently clear 

and unequivocal agreement by Jones to indemnify UP&L for its 

own negligence which resulted in injuries to an employee of 

Jones in connection with the "erection, maintenance, 

presence, use or removal of Jones' equipment." 

In a long line of cases spanning more than fifty 

years, we have repeatedly held that an indemnity agreement 

which purports to make -a party respond for the negligence of 

another should be strictly construed. Shell Oil Co. v. 

Brinkerhoff-Signal Drilling CQ...._, 658 P.2d at 1189; Union 

Pacific R.R. v. Inter!!lQ.1!ntain Farmers Ass'n, 568 P.2d 724, 

725-26 (Utah 1977); Bowe Rents Corp. v. Worthen, 18 Utah 2d 

263, 265, 420 P.2d 848, 849 (1966); Union Pacific R.Rr v. El 

R.fil;o Natural Gas Co., 17 Utah 2d 255, 260, 408 P.2d 910, 

913-14 (1965); Barrus v. Wilkinson, 16 Utah 2d 204, 205-06, 

398 P.2d 207, 208 (1965); Walker Bank & Trust Co. v. First 

Security Corp., 9 Utah 2d 215, 220, 341 P.2d 944, 947 

(1959); Jankele v. Texas Co., 88 Utah 325, 54 P.2d 425 

(1936). A party is contractually obligated to assume 

ultimate financial responsibility for the negligence of 

another only when that intention is "clearly and 

unequivocally expressed." Shell Oil Co., 658 P.2d at 1189; 

El Paso Natural Gas Co., 17 Utah 2d at 259, 408 P.2d at 914. 

As recognized by our court of appeals in Pickhove~ 

v. Smith's Management Corp., 771 P.2d 664, 667-68 (Utah Ct. 

App. 1989_), cert. denied, __ P.2d __ (May 8, 1990), there 

11 No. 880261. 

Appellate Case: 86-1431 Document: 010110040725 Date Filed: 08/08/1990 Page: 15 
is a growing trend to relax some of the strictness of the 

rule of construction when the indemnity arises in a 

commercial context. See the cases cited there. Another 

example is Niagara Frontier Transportation Authority v. 

Tri-Delta Construction CorQ......, 107 A.D.2d 450, __ , 487 

N.Y.S.2d 428, 430 (N.Y. App. Div. 1985), where the language 

of the indemnification agreement expressed in unequivocal 

terms the unmistakable intent of the parties that the 

indemnitor indemnify the indemnitee, regardless of the 

indemnitee's negligence, for damages arising out of the 

performance of the contract. Applying the strict construction rule, the court nevertheless recognized that the 

rule has been somewhat liberalized in New York. The court 

stated that the indemnification agreement had been 

"negotiated at arm's length between. . sophisticated 

business entities" and the intent was there to allocate "the 

risk of liability to third parties between themselves." 

.Ld...._ at 430. The court held, "In such circumstances it is 

not necessary that the exculpatory language refers expressly 

to the negligence of the indemnitee, so long as the intention to indemnify can be 'clearly implied from the language 

and purposes of the entire agreement, and the surrounding 

facts and circumstances.'" Id. at 430 (quoting Margolin v. 

New York Life Ins. Co., 32 N.Y.2d 149, 153, 344 N.Y.S.2d 

336, 339, 297 N.E.2d 80, 82 (1973)). We agree that in 

strictly construing the contractual language, evaluating the 

indemnification agreement according to the objectives of the 

parties and the surroundin~ facts and circumstances is 

entirely appropriate. 

UP&L contends that paragraph 21 of the FAA is a 

sufficiently clear and unequivocal expression of indemni -

fication, i.e., that Jones agreed to indemnify UP&L from all 

liability. The first sentence of that paragraph provides 

for indemnity from "any and all" liability arising out of 

the attachment of cable equipment to poles: 

Licensee [Jones] shall indemnify, protect, 

and save harmless Licensor [UP&L] from and 

against £ny____and all claims, demands, 

~Quses o~ action, costs or other 

liabilities for damages to property and 

injury or death to persons which may arise 

out of or be connected with the erection, 

maintenance, presence, use or removal of 

Licensee's equipment, or of structures, 

guys and anchors, used, installed or 

placed for the principal purpose of 

supporting Licensee's equipment or by any 

act of Licensee on or in the vicinity of 

Licensor's poles, including, but not by 

way of limitation, payments made under 

~orkmen's compensation laws. 

No. 880261 12 

Appellate Case: 86-1431 Document: 010110040725 Date Filed: 08/08/1990 Page: 16 
(Italics added.) It is true that this sentence does not 

specifically mention the effect of any negligence on the part 

of the licensor. However, the broad sweep of the language 

employed by the parties clearly covers those instances in 

which the licensor may be negligent. The parties covered 

"any and all claims, demands, causes of action, costs or 

other liabilities." The word "liabilities" is particularly 

significant since it covers those instances where the 

licensor is legally liable for damages, including those where 

liability arises because of the licensor's negligence. 

This construction of the first sentence is 

supported by comparing it with the next (second) sentence 

of paragraph 21. In contrast, the second sentence provides 

for indemnification for liabilities arising from any "interruption, discontinuance or interference with Licensee's 

service," but with express exceptions. The second sentence 

provides: 

Except for intentional wrongdoing or 

willful negligence on the part of 

Licensor, or any of its agents or 

employees, Licensee shall also indemnify[,] 

protect[,] and save harmless Licensor from 

and against any and all claims, demands, 

causes of action, costs, or other 

liabilities arising from any interruption, 

discontinuance or interference with 

Licensee's service which may be occasioned 

or which may be claimed to have been 

occasioned by any action of Licensor 

pursuant to or consistent with this 

agreement. 

(Italics added.) This sentence clearly and unequivocally 

provides that the licensee's indemnity obligation extends to 

the licensor's actions which may cause interruption, discontinuance, or interference with licensee's service. But the 

parties employed language to make it clear that when the 

licensor's liability arose because of interruption of service 

to cable customers, there would be indemnification only if 

the liability was not predicated on "willful negligence'' or 

"intentional wrongdoing" of the licensor. 

The next (third) sentence of paragraph 21 states 

that the licensee shall provide a legal defense to ''any and 

all" suits brought by third parties and to "pay and satisfy" 

any such suit. Finally, paragraph 21 ends with a summary 

statement of what the parties intended to cover in the three 

foregoing sentences: 

This indemnification agreement by 

Licensee in favor of Licensor, shall 

13 No. 880261 

Appellate Case: 86-1431 Document: 010110040725 Date Filed: 08/08/1990 Page: 17 
provide Licensor with fu 11 and COITJQ]J;;! te 

indemuificatiQ11, including defense of any 

suits, actions or other legal proceedings 

resulting from Qil.Y claims for damages to 

property and injury or death to persons 

and shall apply to all claims, demands, 

suits, and judgments of whatever nature 

which shall be made or assessed against 

Licensor in furnishing such poles under 

the terms of this agreement or for any 

other thing done or omitted in conjunction 

with Licensor's dealings with Licensee. 

(Italics added.) 

We conclude that paragraph 21 as a whole expresses a 

clear and unequivocal intent by the parties that the licensee 

will indemnify the licensor from any and all liabilities, 

including the liability that arises because of the licensor's 

negligence, except when liability arises because of the 

licensor's intentional wrongdoing or willful negligence in 

the interruption of the licensee"s service. The breadth of 

the language employed, the use of the word "liabilities" 

throughout the paragraph, the striking contrast reflected in 

the second sentence by the recognition of an exception to 

liability, and the summary statement that "full and complete" 

indemnification is intended manifest a conscious effort by 

the parties to express their intent as clearly as our 

language will allow. 

III 

The next question is whether, in view of the 

exclusive remedy provision of the Utah Workers' Compensation 

Act, the language of paragraphs 21 and 22 of the FAA is 

explicit enough to be an enforceable agreement on the part of 

Jones to indemnify UP&L for the amounts paid by UP&L to 

Freund as damages for his injuries. 

As stated in part II, paragraph 21 requires 

indemnification by Jones (licensee) to UP&L (licensor) for 

any and all claims, etc., or other liabilities for damages to 

property and injury or death to persons arising out of or in 

connection with the "erection, maintenance, presence, use or 

removal of Licensee's equipment," including, but not in the 

way of limitation, payments made under workers' compensation 

laws. It is an inescapable conclusion that this coverage of 

indemnity includes Jones's employees. The purpose of the FAA 

was to give Jones's predecessor access to the utility poles 

owned by UP&L's predecessor so that television cable could be 

hung below the power lines. The licensor was understandably 

apprehensive about the danger associated with the licensee's 

utilizing the poles for its purposes. The parties certainly 

No. 880261 14 

Appellate Case: 86-1431 Document: 010110040725 Date Filed: 08/08/1990 Page: 18 
understood and intended that the licensee's employees would 

be on the poles to accomplish the "erection, maintenance, 

presence, use or removal of Licensee's equipment, or of 

structures, guys and anchors, used, installed or placed for 

the principal purpose of supporting Licensee's equipment 

Thus, Freund"s accident had to be one of the most 

obvious risks against which the licensor sought to be 

protected. If the agreement did not afford indemnity in this 

situation, it is difficult to conceive what indemnity was 

intended by the parties. To hold otherwise would, as a 

practical matter, render the indemnity provision of no effect 

at all, which obviously was not the intent of the contracting 

parties. Bartlett v. Davis Corp., 219 Kan. 148, 156, 547 

P.2d 800, 807 (1976). This result follows notwithstanding 

the fact that Jones is stripped of the protection it would 

have otherwise enjoyed under the exclusive remedy beneficence 

of section 35-1-60. Jones's predecessor chose to forego that 

protection when it entered into the FAA. See generally Shell 

Oil Co., 658 P.2d at 1190-91. 

IV 

We next answer whether it is a correct 

interpretation of Utah law that an agreement to purchase 

insurance to cover a third party's own negligence is governed 

by the same rule of construction as an indemnification 

agreement to indemnify a third party for its own negligence. 

Support for that proposition appears in the Tenth Circuit's 

decision in Kennecott Copper Corp. v. General Motors Corp., 

730 F.2d 1380, 1382 (10th Cir. 1984), wherein the court, in 

enunciating a strict contruction rule, relied on our case of 

Union Pacific Railroad v. Intermountain Farmers Association, 

568 P.2d 724 (Utah 1977). In Kennecott, the court held that 

a provision in a purchase order for lease of five dump trucks 

from General Motors requiring that the lessee ''provide 

liability and property insurance related to possession and 

operation of the units" did not indicate an intent, clearly 

and unequivocally, to require the lessee to purchase design 

liability insurance. 

We have no quarrel with that result. However, when, 

as in the instant case, the parties have chosen by clear and 

unequivocal language to require one party to indemnify the 

other from liability arising from any cause including the 

indemnitee's own negligence, a further provision in that 

agreement to fund that indemnification by purchasing 

insurance should be construed as any other contractual 

language. See La~rabee v. Royal Dairy Prods. Co., 614 P.2d 

160, 163 (Utah 1980) (first source of inquiry is within the 

document itself; it should be interpreted in its entirety and 

in accordance with its purpose; all of its parts should be 

given effect insofar as is possible); Atlas Corp. v. Clovis 

Nat'l Bank, 737 P.2d 225, 229 (Utah 1987) (in construing 

15 No. 880261 

Appellate Case: 86-1431 Document: 010110040725 Date Filed: 08/08/1990 Page: 19 
contracts, the court must give effect to the parties' 

intentions. If possible, those intentions must: be determined 

from an examination of the text of the agreement). A 

heightened rule of construction is not warranted. ~ 

Pickhover v. Smith's Management Coro., 771 P.2d at 667-68, 

and cases cited therein. 

V 

We next answer whether the language of paragraph 22 

of the FAA requires Jones to obtain insurance against UP&L's 

own negligence. Paragraph 22 provides that the licensee 

shall maintain (a) workers' compensation insurance, ~b) bodily 

injury insurance, and (c) property damage insurance. The 

2. 22. Throughout the life of this 

agreement, Licensee shall, in addition to 

and consistent with the provisions of 

Paragraph 21, maintain in full force and 

effect with the carrier or carriers 

selected by Licensee and satisfactory to 

the Licensor: (a) [c]ompensation 

insurance in compliance with all workmen's 

compensation insurance and safety laws of 

the State of Utah and amendments thereto[;] 

and (b) [b]odily injury insurance with 

limits of $500,000 for each person and 

$1,000,000 for each occurence [sic]; and 

(c) [p]roperty damage liability insurance 

with limits of $250,000 for each accident 

and $300,000 aggregate. 

The insurance described in (b) and 

(c) above shall also provide contractual 

liability coverage satisfactory to 

Licensor with respect to all liabilities 

assumed by Licensee under the provisions 

of this agreement. Policies of insurance 

obtained in compliance with the requirements of this Paragraph 22 shall name 

Licensor as an additional insured, and 

shall be sufficient to satisfy the 

indemnification provisions of Paragraph 21 

and protect Licensor against any and all 

claims for personal injury, death, or 

property damage arising out of or resulting from this agreement. Licensee shall 

furnish to Licensor copies of all policies 

of insurance obtained in compliance with 

this agreement prior to the installation 

of any of Licensee's equipment upon said 

poles and prior to the expiration of each 

policy year thereafter. In addition, the 

(Continued on page 17.) 

No. 880261 16 

Appellate Case: 86-1431 Document: 010110040725 Date Filed: 08/08/1990 Page: 20 
.. 

latter two insurances are also required to provide ''contractual liability coverage" with respect to all liabilities 

assumed by the licensee under the agreement, and the licensor 

is to be named an additional insured. Also, the insurance 

coverage is required to be "sufficient to satisfy the 

indemnification provisions of Paragraph 21." 

It is significant that the coverage required by 

paragraph 22 must be at least co-extensive with the 

undertaking assumed by the licensee in paragraph 21. That 

requirement for coverage harmonizes with the requirement that 

the licensor be named as an additional insured. One reason, 

at least, why the licensor wanted to be an additional insured 

was to have coverage for its own negligence. See Bartlett v. 

Davis Corp., 219 Kan. at 159, 547 P.2d at 810. We therefore 

conclude that paragraph 22 required Jones to obtain insurance 

coverage to cover liability arising from UP&L's negligence. 

WE CONCUR: 

Gordon R. Hall, Chief Justice 

I. Daniel Stewart, Justice 

Christine M. Durham, Justice 

Michael D. Zimmerman, Justice 

(Footnote 2 continued.) 

Licensee shall submit to Licensor 

certificates by each company insuring 

Licensee to the effect that it has insured 

Licensee under this agreement and that it 

will not cancel or change any policy of 

insurance issued to Licensee except after 

thirty (30) days['] notice to Licensor. 

17 No. 880261 

Appellate Case: 86-1431 Document: 010110040725 Date Filed: 08/08/1990 Page: 21