Opinion ID: 1956871
Heading Depth: 1
Heading Rank: 1

Heading: The Arising-out-of-Work Provision.

Text: FabArc insists that the indemnity provisions in its subcontract with CCSI are clear and unambiguous and, as to the arising-out-of-work provision, CCSI agrees that it is clear and certain; nonetheless, they disagree as to the meaning of the provision. FabArc argues that the provision does not impose a common law tort standard of negligence, nor does it require that FabArc prove that CCSI was guilty of negligence. Rather, FabArc goes on to argue, because CCSI's responsibility for installing the angle clips constitutes the only link between FabArc and the collapse of the wall, that link is sufficient to meet the contract term that the claim `arise out of' CCSI's work. FabArc asserts that each element of the arising-out-of-work provision of the indemnity clause is either defined in the CCSI subcontract itself or is the subject of well-established caselaw precedent. Although the CCSI subcontract defines the work to be performed under it, it does not define in any way the phrase arising out of any work or operation performed by CCSI. As to well-established caselaw precedent, FabArc cites no Alabama cases and, in fact, cites only one case: Chicago, R.I. & P. R.R. v. Dobry Flour Mills, Inc., 211 F.2d 785, 788 (10th Cir.1954). We do not find that case instructive, however, because it did not involve an indemnification clause that included the term arising out of, but rather a clause indemnifying for loss, damage or injury from any act or omission of the [indemnitor]. The opinion did emphasize that the action by the indemnitor against the indemnitee was not predicated upon the general law of torts but upon an indemnity contract. Apart from that case, FabArc does not discuss or cite any other legal authority pertinent to the proper interpretation and construction of the phrase arising out of any work or operation performed by, for or on behalf of the Sub-contractor. Rule 28(a)(10), Ala. R.App. P., requires that argument in an appellant's (or a cross-appellant's) brief contain citations to the cases, statutes, other authorities, and parts of the record relied on. The effect of a failure to comply with Rule 28(a)(10) is well established: It is settled that a failure to comply with the requirements of Rule 28(a)([10]) requiring citation of authority for arguments provides the Court with a basis for disregarding those arguments: `When an appellant fails to cite any authority for an argument on a particular issue, this Court may affirm the judgment as to that issue, for it is neither this Court's duty nor its function to perform an appellant's legal research. Rule 28(a)([10]); Spradlin v. Birmingham Airport Authority, 613 So.2d 347 (Ala.1993).'  City of Birmingham v. Business Realty Inv. Co., 722 So.2d 747, 752 (Ala.1998). See also McLemore v. Fleming, 604 So.2d 353 (Ala.1992); Stover v. Alabama Farm Bureau Ins. Co., 467 So.2d 251 (Ala.1985); and Ex parte Riley, 464 So.2d 92 (Ala.1985). Ex parte Showers, 812 So.2d 277, 281 (Ala.2001). CCSI likewise does not cite in its brief any caselaw or legal authority discussing the meaning to be accorded to the arising-out-of-work provision, with the exception of the following quotation cited from 68 A.L.R.3d Indemnity § 13 (2003): The concept of indemnity, it has been held, does not include any and all liability without reference to cause or the indemnitor's work. Causation of loss is the touchstone of liability under a construction contract indemnity clause. An agreement to indemnify the contractor for liability for damages on account of any acts or omissions of the subcontractor clearly requires a causal connection between the damages and an act or omission of the subcontractor or some default of the subcontractor as an indemnity requirement. (Footnotes omitted.) CCSI's argument is that the arising-out-of-work provision in the subcontract requires that some causal connection be established between the work and operations it performed and Evodio Sanchez's death. It argues that because the evidence was undisputed that the wall that collapsed onto Evodio was not at the point of construction where it was appropriate for CCSI to weld angle clips onto the horizontal beam above the wall and, moreover, because CCSI had never been notified that it was time for it to weld any angle clips onto the beam, Sanchez's death could not have arisen from CCSI's work.... Our independent research has located only one Alabama case discussing in any way the meaning to be accorded to an indemnification clause similar to the one under consideration here. In Brown Mechanical Contractors, Inc. v. Centennial Insurance Co., 431 So.2d 932 (Ala.1983), this Court interpreted a provision indemnifying the subcontractor `as to and from all liability, claims, lawsuits and demands for personal injury and property damage arising out of work undertaken or to be performed by the Subcontractor, its employees, agents and subcontractors, and arising out of any other operation no matter by whom performed for and on behalf of the Subcontractor. 431 So.2d at 945 (emphasis omitted). This Court concluded that because the subcontractor's welding was the source of the fire that caused the property damage, the general contractor's liability could be viewed as `arising out of' [the subcontractor's] work in the sense that the fire and [the contractor's] related tort liability would not have come about but for [the subcontractor's] welding. 431 So.2d at 945. FabArc does not contend in its briefs to this Court that any work or operation performed by CCSI caused the wall to collapse. FabArc acquiesces in CCSI's stated position that the wall had not reached the stage of completion where it was appropriate for angle clips to be welded to the overhead horizontal beam and that, independent of that fact, no one had ever notified CCSI that it was time to install the angle clips. CCSI adduced substantial evidence in support of its summary-judgment motion indicating that the collapse of the wall did not in fact arise out of any work or operation performed by it with respect to the installation of angle clips, because the time for the installation of those clips had not arrived. Our research of authority beyond this State has located discussions of the term arising out of in several legal treatises and texts, which, in turn, discuss cases from other jurisdictions. These include § 15 of the same A.L.R.3d annotation from which CCSI quoted § 13, i.e., Maurice T. Brunner, Annotation, Liability of Subcontractor upon Bond or Other Agreement Indemnifying General Contractor Against Liability for Damage to Person or Property, 68 A.L.R.3d 7 (1976); 3 Philip L. Bruner & Patrick J. O'Connor, Jr., Bruner and O'Connor on Construction Law §§ 10:58, 10:61, 10:63, 10:65, and 10:67 (2002); Dwight G. Congra et al., Construction Accident Litigation § 7:4 (2d ed.2002); Debra S.P. Cheng, Recent Decisions: The Maryland Court of Appeals (pt. III), 58 Md. L.Rev. 604, 681 (1999); Joseph P. Musacchio, Contribution and Indemnity, in 2 Massachusetts Tort Law Manual, Ch. 16 (2002); and George Chamberlin, Cause of Action to Enforce Contractual Right to Indemnification Respecting Personal Injury Claim, in 7 Causes of Action 509 (2d ed.1995). These sources reflect that different courts have accorded different treatment to so-called work-related indemnity clauses, using some version of the phrase arising out of the performance of the work, which have required different levels of, or even dispensed with the necessity for, a causal connection between an injury or death and the performance of the work. It is the appellant's obligation to demonstrate error on the part of the trial court and, as noted above, that includes providing this Court with citations to pertinent cases, statutes, and other authorities. Other than noting our awareness of the existence of caselaw and other authorities that address the arising out of work concept in indemnity clauses, we will not go further and attempt to analyze that caselaw and those authorities for the purpose of reversing the judgment of the trial court. Under the facts of this case, the trial court could well have concluded that the death of Evodio Sanchez did not arise out of any work or operation performed by CCSI, inasmuch as CCSI never performed any work or operation relating to angle clips with respect to the wall that collapsed, because the time for its performance of that task never arose. FabArc argues that under the combined effect of Stone Building Co. v. Star Electrical Contractors, Inc., 796 So.2d 1076 (Ala.2000) ( Stone I ), and Star Electrical Contractors, Inc. v. Stone Building Co., 863 So.2d 1071 (Ala.2003) ( Stone II ), the indemnitee need not prove its actual liability in the underlying suit. Rather, the indemnitee need only prove that it (the indemnitee) had potential liability in the underlying suit. The pertinent passage in Stone I, representing a portion of its lengthy quote from 41 Am.Jur.2d Indemnity § 46 (1995), is as follows: `A person legally liable for damages who is entitled to indemnity may settle the claim and recover over against the indemnitor, even though he has not been compelled by judgment to pay the loss. In order to recover, the indemnitee settling the claim must show that the indemnitor was legally liable, and that the settlement was reasonable. In the event that an indemnitor is not afforded the alternative of participating in a settlement or conducting the defense against the original claim, an indemnitee settling the claim will have the burden of establishing actual liability to the original plaintiff rather than the lesser burden of showing potential liability. `However, when the indemnitor has notice of the claim and refuses to defend, the indemnitor is bound by any good faith reasonable settlement, and the indemnitee need only show potential liability.' 796 So.2d at 1090 (emphasis omitted; emphasis added). CCSI counters to argue that the potential liability concept is not an issue in this case because the trial court concluded that CCSI was not legally liable for indemnification of FabArc in that the indemnity provisions were not triggered. FabArc acknowledges that the indemnitee must first be entitled to indemnity before the potential liability rule comes into play, citing numerous cases to that effect in a footnote to its principal brief, the holdings of the first two of which, as summarized by FabArc, are representative of the entire group:  Accord, Southern Ry. Co. v. Georgia Kraft Co., 823 F.2d 478, [481] (11th Cir.1987) (even if the indemnitee reasonably settled with the injured party, `but the injury is not covered by the indemnity agreement, then the indemnitor is not libel to the indemnitee.'); Consolidated Rail Corp. v. Ford Motor Co., 751 F.Supp. 674, 676 (E.D.Mich.1990) (an indemnitee must show that the `fact situation of the original claim was covered by the contract of indemnity'). CCSI states in its brief that it is not at this time challenging the reasonableness of FabArc's settlement, or even FabArc's liability indemnity to Shimizu (Great American). We agree with CCSI that if none of the triggering circumstances was shown by FabArc to exist, FabArc never established that it was entitled to indemnity from CCSI or that CCSI otherwise was legally liable to provide indemnity. This, despite the holding of Stone I, as summarized in Stone II, that the jury's finding that [the indemnitor] was not liable to the [underlying plaintiffs] under a theory of negligence could not resolve the issue whether [the indemnitor] was liable under the indemnity agreement.... 863 So.2d at 1075. Accordingly, we would not reverse the summary judgment for CCSI to the extent it was predicated upon a finding that FabArc had failed to establish that its liability for the death of Evodio Sanchez arose out of any work or operation performed by CCSI.