Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_02-cv-02132/USCOURTS-azd-2_02-cv-02132-3/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1332 Diversity-Breach of Contract

---

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

General Motors Corporation; and its

Insurer, Associated Aviation 

Underwriters,

Plaintiffs, 

vs.

Maritz, Inc., Maritz Travel Company,

Defendants. 

)

)

)

)

)

)

)

)

)

)

)

)

)

)

No. 02-CV-2132-PHX-PGR

 

 ORDER

Pending before the Court is Defendants Maritz, Inc. and Maritz Travel Company’s

(collectively referred to hereinafter as “Maritz”) motion for summary judgment (Doc. 111)

on Count II, common law indemnification, (the only remaining count) of Plaintiffs General

Motors Corporation and Associated Aviation Underwriters’ (collectively “GM”) First

Amended Complaint. Maritz’s motion is based on the argument that pursuant to Arizona

law, GM does not have a right to common law indemnity when an express indemnity

agreement exists. After careful consideration of the papers submitted, the Court finds the

following.

/ / /

/ / /

Case 2:02-cv-02132-PGR Document 142 Filed 05/06/09 Page 1 of 7
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

- 2 -

I. BACKGROUND

The pending action commenced on October 24, 2002, following the conclusion of

Love, et al. v. Maritz, Inc., et al., filed in the Maricopa County Superior Court, wherein both

GM and Maritz were named defendants (hereinafter referred to as the “Underlying Case”).

Therein, GM filed an indemnification action against Maritz seeking both contractual and

common law indemnity (also known as implied indemnity). This Court found in favor of GM

on its contractual indemnity claim. However, on February 14, 2008, the Ninth Circuit

reversed this Court’s decision, holding that GM was not entitled to indemnification based on

the parties’ valid contractual indemnity provision, “Maritz is not required, under the terms

of the Purchase Order Agreement [the contract], to indemnify GM for the damages from the

hot air balloon accident.” (SOF ¶ 16.)

II. UNDERLYING FACTS

At the annual competition known as the Perkins Challenge Awards Event (“Awards

Event”), GM sponsored a sales competition for its top producing dealers. (SOF, ¶ 1.) GM

selected Maritz Travel Company as the supplier of services for the Awards Event (SOF ¶ 2)

and Maritz contracted with others to provide destination management services for the

program. (SOF ¶ 4.) The Awards Event occurred in Arizona on April 14-17, 1996. (SOF ¶

3.) GM's contract (called a Purchase Order) with Maritz contained the following express

indemnity provision:

16. INDEMNIFICATION: If Seller performs any work on Buyer’s premises

or utilizes the property of Buyer, whether on or off Buyer’s premises, Seller

shall indemnify and hold Buyer harmless from and against any liability,

claims, demands or expenses (including reasonable attorney fees) for damages

to the property of or injuries to Buyer, its employees or any other person

arising from or in connection with Seller’s performance of work or use of

Buyer’s property except for such liability, claim or demand arising out of the

sole negligence of Buyer.

(SOF ¶ 5.)

On April 5, 1996, during the Awards Event, a hot-air balloon accident occurred which

resulted in the deaths of passengers Julie Whisnant and John D. Love (SOF ¶ 7.)

Case 2:02-cv-02132-PGR Document 142 Filed 05/06/09 Page 2 of 7
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

- 3 -

Consequently, the National Transportation Safety Board investigated the accident and

attributed the cause of the accident to pilot error and inappropriate equipment. (SOF ¶¶ 8,9.)

 Thereafter, Mr. Love and Ms. Whisnant’s survivors filed suit in the Underlying Case

against Maritz, GM, and others who provided services for the program including hot-air

ballooning. (SOF ¶ 10.) The claim against GM and Maritz was for negligence. SOF ¶ 11.)

GM and Maritz settled with the survivors in the Underlying Case. (SOF ¶ 12.)

II. LEGAL STANDARD AND ANALYSIS

The standard for summary judgment is set forth in Rule 56(c) of the Federal Rules of

Civil Procedure. Summary judgment is properly granted when, after viewing the evidence

in the light most favorable to the non-moving party, no genuine issues of material fact remain

for trial. Fed. R. Civ. P. 56; Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986);

Eisenberg v. Ins. Co. of N. Am., 815 F.2d 1285, 1288-89 (9th Cir. 1987).

The moving party bears the burden of demonstrating that it is entitled to summary

judgment. Mur-ray Mgmt. Corp. v. Founders Title Co., 819 P.2d 1003, 1005 (Ariz. Ct.

App.1991). If the moving party makes a prima facie case showing that no genuine issue of

material fact exists, the burden shifts to the opposing party to produce sufficient competent

evidence to show that a triable issue of fact does remain. Ancell v. United Station Assocs.,

Inc., 803 P.2d 450, 452 (Ariz. Ct. App. 1990). The Court must regard as true the non-moving

party's evidence, if it is supported by affidavits or other evidentiary material. Celotex, 477

U.S. at 324. However, the non-moving party may not merely rest on its pleadings, it must

produce some significant probative evidence tending to contradict the moving party's

allegations, thereby creating a material question of fact. Anderson v. Liberty Lobby, Inc.,

477 U.S. 242, 256-57(1986)(holding that the plaintiff must present affirmative evidence in

order to defeat a properly supported motion for summary judgment); First Nat'l Bank of Ariz.

v. Cities Serv. Co., 391 U.S. 253, 289 (1968).

Case 2:02-cv-02132-PGR Document 142 Filed 05/06/09 Page 3 of 7
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

1 According to the record, the Stipulation (Doc. 48.) was filed on March 11, 2004.

2 GM notes that Count II states, “GM’s second claim for relief is a request for relief

based on common law principles of equity.” 

- 4 -

As a preliminary matter, the Court must address the issue of whether Arizona or

Michigan law applies to the pending issue. According to the express stipulation of the

parties, Arizona law will be applied to Plaintiff’s common law indemnity claim (Count II).

GM and Maritz previously stipulated that “the law of Michigan should apply to Plaintiff’s

contractual indemnity claim (Count I) and Arizona law should apply to Plaintiff’s common

law indemnity claim (Count II).”1

 

Maritz contends that as a matter of Arizona law, GM is not entitled to seek common

law indemnity because the existence of an express indemnity agreement prohibits the right

to common law indemnification. See First National Bank v. Otis Elevator Co., 2 Ariz.App.

596 (1966); Restatement (First) of Restitution § 76 (1937). Furthermore, Maritz argues that

a party is not entitled to common law indemnity after the contractual indemnity claim fails.

Grubb & Ellis Mgmt. Serv., 213 Ariz. 83,89 (Ariz. App. 2006).

To the contrary, it is GM’s contention that there are three distinct types of indemnity:

(1) contractual, where an express provision in a contract defines the obligation; (2) implied,

where there is no express indemnity provision, but one can be implied from the terms of the

contract; and (3) equitable, where the indemnity obligation arises based on the relative fault

of the parties for the wrong, regardless of the existence of a contract. GM argues that Maritz

confuses implied and equitable indemnity. GM concedes that the existence of an express

indemnity provision precludes the finding of implied contractual indemnity, however, it

argues that the existence of an express indemnity provision does not preclude a claim based

on equitable indemnity.2

 GM argues that the right to equitable indemnity exists whenever

“in law or in equity there is an obligation on one party to indemnify the other, as where one

Case 2:02-cv-02132-PGR Document 142 Filed 05/06/09 Page 4 of 7
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

- 5 -

person is exposed to liability for the unlawful act of another in which he does not join.” First

Bank of Ariz. V. Otis Elevator, 2 Ariz.App. 596, 597 (1966). 

GM cites Herstam et al. v. Deloitte & Touche LLP et al., 186 Ariz. 110, 117-18 (App.

1996) for the proposition that Arizona courts recognize various forms of indemnity. It

argues that Maritz’s motion is based on the false premise that there are only two forms of

indemnity, express contractual indemnity and a catch-all category of “common law

indemnity.” GM continues that a claim for equitable indemnity referred to by GM is not

precluded by the existence of an express contractual indemnity provision. The difficulty the

Court finds with GM’s contention is that it fails to articulate the alleged enumerated

situations, nor does it provide legitimate authority supporting the theory of such enumerated

situations. GM based its claim upon a common law theory based on a distinction between

active and passive joint tortfeasors. However, the Court in Herstam did not adopt this theory.

Instead it rejected the common law indemnity theories. Herstram, 186 Ariz. at 118.

Significantly, according to Arizona law, GM has the ultimate burden of establishing that it

is entitled to common law indemnity which clearly was not established.

In response, Maritz contends that Arizona law clearly prohibits a claim for equitable

indemnity when an express contractual indemnity provision exists. “When there is an

express indemnity contract, the extent of the duty to indemnify must be determined from the

contract.” INA Ins. Co. of North America v. Valley Forge Ins. Co., 150 Ariz. 248, 252 (App.

1986) (citing Skousen and Pecan Centers of Ariz. v. Olsen Investment, 149 Ariz. 251(App.

1986); Estes Co. v. Aztec Construction Inc., 139 Ariz. 166, 168 (App. 1983)). In Arizona,

an express indemnification agreement preempts any common law theories. INA Ins. Co., 150

Ariz. at 252. “Recovery under a contract providing for indemnity obviates any right to

recover under the common law theory of implied indemnity since by such an express contract

the parties have already themselves determined how and under what circumstances losses

Case 2:02-cv-02132-PGR Document 142 Filed 05/06/09 Page 5 of 7
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

- 6 -

shall be allocated.” Id.; accord Booth-Kelley Lumber Co. v. Southern Pacific Co., 183 F.2d

902 (9th Cir.1950). 

Implied indemnity is a concept based upon the equitable principles stated in section

76 of the Restatement. Schaefer Electronics v. National Semiconductor Corp., 174 Ariz. 406,

410, (App. 1992). Pursuant to the Restatement and equitable principles of restitution, only

“[i]n the absence of an express indemnity agreement, a party has a right to indemnity when

there is an implied contract for indemnity or when justice demands there be the right.” Id.

(Emphasis added). 

In Schaefer Electronics, the indemnitor moved for summary judgment on common law

indemnity. The Court stated: “[i]n [INA Ins. Co.] we held that the existence of an indemnity

contract, or an indemnity provision in a contract, precluded application of implied indemnity

principles. Schaefer Electronics, 174 Ariz. at 410; Superior Companies v. Kaiser Cement

Corp., 152 Ariz. 575, 577 (App. 1986) (“The extent of a contract duty to indemnity must be

determined from the contract itself”). In Grubb & Ellis Mgmt. Serv., the Arizona Court of

Appeals further supported the INA Ins. Co., by precluding the would-be indemnitee from

common law indemnification “because the parties expressly agreed upon an indemnity

provision in their contract.” Grubb & Ellis Mgmt. Serv. v. 407417 B.C., L.L.C., 213 Ariz.

83, 89 (App. 2006).

Maritz argues and the Court agrees that permitting GM to pursue common law

indemnification, despite the express intent of the parties, would render moot the purpose of

the written contract. If the parties to a contract specifically and expressly agree to the terms

of indemnification, Courts should not arbitrarily alter the agreed upon indemnification

previously negotiated by the parties. Equitable considerations are simply not the standard

in determining common law indemnification in Arizona. Transcon Lines v. Barnes, 17 Ariz,

428, 436 (App. 1972) “We do not believe [that a court’s] notion of what is ‘equitable and

Case 2:02-cv-02132-PGR Document 142 Filed 05/06/09 Page 6 of 7
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

- 7 -

just’ should interfere with its determination of whether one tortfeasor should recover

indemnity against another.” Id.

It is undisputed that the indemnity provision exists in the contract between GM and

Maritz. It is also undisputed that the Ninth Circuit previously ruled that the indemnity

agreement does not provide GM with indemnification based on the express language and

intent of the written provision. Thus, GM cannot, as a matter of law, prevail on a common

law claim after the Ninth Circuit has ruled that an express indemnity provision does exist but

it does not provide GM with a remedy in the pending matter.

Accordingly,

IT IS HEREBY ORDERED GRANTING Maritz’s Motion for Summary Judgment

in its favor and against GM. (Doc. 111.)

IT IS FURTHER ORDERED DENYING as MOOT Maritz’s Motions in Limine.

(Docs. 124 and 130.) 

IT IS FURTHER ORDERED that the Clerk of Court shall close this case accordingly.

DATED this 6th day of May, 2009.

Case 2:02-cv-02132-PGR Document 142 Filed 05/06/09 Page 7 of 7