Opinion ID: 1376736
Heading Depth: 1
Heading Rank: 4

Heading: Contractual Indemnity

Text: The Agency-Company Agreement provides that Gulf and Select will indemnify their agent for errors or alleged errors in handling business, except to the extent [their] Agent has caused, contributed to or compounded such error. Burns Motors alleges that the requirement that Gulf and Select have committed or are alleged to have committed errors in their handling and processing of its claims, resulting in the agent's liability, has been satisfied. As we said earlier, the court of appeals held that Gulf and Select's alleged error in misrepresenting coverage questions to Nash that were then passed on to Burns as a potential purchaser could well amount to an error in handling business by Gulf and Select. 975 S.W.2d at 814. Because Gulf and Select do not contest the court of appeals' conclusion, we assume for purposes of construing this indemnity provision, but do not decide, that an intentional misrepresentation of coverage by the insurance companies constitutes an error by the company in handling business. Concluding that the requirements for indemnification have been satisfied, we must now determine how the exception to indemnity coverage applies here. We construe indemnity agreements under normal rules of contract construction. See Associated Indem. Corp. v. CAT Contracting, Inc., 964 S.W.2d 276, 284 (Tex.1998). The primary goal is to ascertain and give effect to the parties' intent as expressed in the contract. See Ideal Lease Serv., Inc. v. Amoco Prod. Co., 662 S.W.2d 951, 953 (Tex.1983). Whether a contract is ambiguous is a question of law for the court to decide. See Coker v. Coker, 650 S.W.2d 391, 394 (Tex.1983). When the contract is worded so that it can be given a certain or definite legal meaning it is not ambiguous and the court will construe the contract as a matter of law. See Coker, 650 S.W.2d at 393. Here, we must determine whether the phrase except to the extent Agent has caused, contributed to or compounded such error is ambiguous when applied to these facts. The exclusion from liability for indemnification does not depend on the company's actions but rather on the agent's actions. Thus, we disagree with the court of appeals' conclusion that the fact that Nash merely passed on the misrepresentation to Burns does not necessarily mean that he caused, contributed to or compounded the error. 975 S.W.2d at 814. Burns Motors asserts that it should be indemnified under the Agency-Company Agreement based upon the agreed judgment rendered against Nash. But the agreed judgment established that Nash knowingly made the representations as defined by the DTPA. Thus, Nash knew that the representations he made to Burns Motors were either false, deceptive or unfair. Further, all of the misrepresentations that were made by Nash were made knowingly. Thus, there are no representations that Nash passed on innocently. Because Nash knowingly misrepresented all of the false statements made to Burns Motors, and because there is nothing in the record to show that Burns Motors did not rely solely on Nash's misrepresentations, we conclude that Nash fully caused, contributed to or compounded the error that caused Burns Motors damages. Thus, as a matter of law we hold that the Agency-Company Agreement language is not ambiguous and that the parties did not intend that the insurance companies would indemnify their agent who knowingly made misrepresentations about insurance coverage. The parties argue extensively about whether we should construe the Agency-Company Agreement by reference to the express negligence doctrine. That doctrine provides that parties seeking to indemnify the indemnitee from the consequences of its own negligence must express that intent in specific terms. Ethyl Corp. v. Daniel Constr. Co., 725 S.W.2d 705, 708 (Tex.1987). Further, the intent of the parties must be specifically stated within the four corners of the contract. Ethyl Corp., 725 S.W.2d at 708. Here, the Agency-Company Agreement provides that the agent is, under certain circumstances, indemnified except to the extent Agent has caused, contributed to or compounded such error. Burns Motors argues that even if the indemnity provision precludes recovery for Nash's wrongful conduct, it still should allow indemnity for the part of the wrong that Gulf and Select caused. Thus, Burns Motors is not asserting that Nash should be indemnified for his wrong acts but only that he should be indemnified for the part of the error that Gulf and Select caused. The Agency-Company Agreement does not contemplate indemnifying the indemnitee from consequences of his own negligence. Thus, the express negligence doctrine does not apply here. Finally, Nash's affidavit that he merely passed on misinformation from Gulf and Select does not create a fact issue. That possibility would be relevant if Burns Motors sued Gulf and Select directly for negligent claim handling or fraud. Here, however, we are only concerned with whether the parties intended in the Agency-Company Agreement to indemnify Nash for knowingly passing on erroneous information that misrepresented policy coverage to an insured. We conclude that the Agency-Company Agreement unambiguously excludes indemnification under these circumstances. C