Opinion ID: 1858836
Heading Depth: 2
Heading Rank: 1

Heading: whether 3m is entitled to indemnification for attorneys' fees

Text: ¶ 7. We first consider the issue of whether 3M is entitled to Microtek's indemnification under the contract as a result of the attorneys' fees incurred by 3M in defending the Pennsylvania lawsuit. The contract clause in question states: Seller shall be responsible for and shall indemnify Buyer against all losses, claims, expenses, or damages which may result in any way from any accident, injury, or damage to either person or property or from death of any persons by reason of Seller's breach of warranty described in Article 11 or any negligent act or omission on the part of Seller, its agent, employees, or subcontractors except to the extent that the accident, injury, damage, or death is due to negligence of Buyer. ¶ 8. Microtek argues that the plain language of the contract requires that Microtek be held liable for breach of warranty or negligence before it is responsible for indemnification; therefore, summary judgment does not trigger indemnification because there was no finding of wrongdoing on the part of Microtek. Specifically, Microtek states that a judgment or settlement must be by reason of Microtek's breach of warranty or negligence. ¶ 9. Conversely, 3M argues that the plain language of the contract requires that Microtek is responsible for and must indemnify all losses, claims, expenses, or damages . . . by reason of [Microtek's] breach of warranty or negligence. In other words, 3M argues that Microtek is required to defend 3M in any claim of breach of warranty or negligence resulting from the products themselves and not 3M's own negligence. 3M further asserts that Microtek must indemnify 3M for any judgment or settlement and also reimburse 3M for any fees or expenses incurred. ¶ 10. The parties agree that since summary judgment was granted, no damages were awarded in favor of the Pennsylvania plaintiff requiring indemnification by Microtek. Therefore, the true issue on appeal is not whether Microtek had to indemnify damages, but instead, whether 3M is entitled to reimbursement for attorneys fees when the Pennsylvania summary judgment was granted in its favor. Stated differently, based on the language of the contract, this Court must decide whether the phrase shall be responsible for is synonymous with defend. ¶ 11. In considering Minnesota law, a contract is interpreted according to its plain and ordinary meaning. Turner v. Alpha Phi Sorority House, 276 N.W.2d 63, 67 (Minn.1979) (citing Employers Mut. Liab. Ins. Co. v. Eagles Lodge, 282 Minn. 477, 479, 165 N.W.2d 554, 556 (1969); Bass v. Ring, 215 Minn. 11, 15, 9 N.W.2d 234, 236 (1943)). Furthermore, the intent of the parties should be ascertained . . . in accordance with the obvious purpose of the contract . . . as a whole. Republic Nat'l Life Co. v. Lorraine Realty Corp., 279 N.W.2d 349, 354 (Minn.1979) (citing Cement, Sand & Gravel Co. v. Agricultural Ins. Co., 225 Minn. 211, 216, 30 N.W.2d 341, 345 (1947)). When parties enter into contracts, they intend for every provision to have some effect. Therefore, any interpretation which would render a provision meaningless should be avoided. Indep. Sch. Dist. No. 877 v. Loberg Plumbing & Heating Co., 266 Minn. 426, 123 N.W.2d 793, 799-800 (1963); Casey v. Brotherhood, 197 Minn. 189, 266 N.W. 737 (1936); Commercial Union Assur. Co. Ltd. v. Foley Brothers, 141 Minn. 258, 169 N.W. 793 (1918). ¶ 12. We are not directed by the parties to any case on point in Minnesota or Mississippi which states that an indemnitee is entitled to attorneys fees upon the grant of summary judgment in its favor. The parties cite numerous Minnesota cases which are not wholly applicable to the case sub judice; however, these cases offer valuable guidance as we consider these critical issues. ¶ 13. In his order granting summary judgment, the Lowndes County chancellor made the following conclusions of law: The rules governing requisites, validity and construction of contracts generally apply to indemnity contracts. Sorenson v. Safety Flate, Inc. 306 Minn. 300, 235 N.W.2d 848 (1975). The intent of the parties whose contract is to be ascertained so as to give the contract a meaning in accordance with the obvious purpose of the contract. Republic Nat'l Life Co. v. Lorraine Realty Corp., 279 N.W.2d 349, 354 (Minn. 1979). Indemnity language to be given a fair construction and will accomplish its stated purpose. Sorenson v. Safety Flate, Inc. 306 Minn. 300, 235 N.W.2d 848, 852 (1975). The 1997 contract required Microtek to purchase liability insurance including products liability. An insurer has the duty to defend and a duty to indemnify. St. Paul Fire & Marine Ins. Co. v. Nat'l Chiropractic Mut. Ins. Co., 496 N.W.2d 411, 415 (Minn.Ct.App.1993). The chancellor concluded: Although an excellent argument in opposite was made by Microtek, the Court concludes that the 1997 contract was to protect 3M from the cost of expenses arising out of claims such as Ms. Chapley's. Microtek and its insurer were offered the opportunity to defend the Chapley claim. ¶ 14. We agree with the chancellor. The plain language of the contract stated that Microtek was responsible for . . . all losses, claims, expenses, or damages . . . by reason of [Microtek's] breach of warranty . . . or . . . negligent act. Based upon the plain language of the contract, and giving every part meaning as required by Minnesota law, we are firmly convinced that the phrase responsible for is synonymous with defend in order to avoid an interpretation that would render part of the contract meaningless. The chancellor ruled that the purpose of the contract, as a whole, was to hold 3M harmless in all claims of negligence and strict liability concerning the surgical drapes. We agree. ¶ 15. Microtek also requests this Court to reverse the chancellor's grant of summary judgment because, as it cites in its brief, the chancellor confused an insurer's duty to defend and indemnify with regular contractual principles. In other words, Microtek argues that the chancellor wrongly ruled that Microtek should act like an insurance company because it had entered into an indemnification agreement. It is obvious that Microtek misinterprets the chancellor's order. Pursuant to the contract, Microtek was required to purchase liability insurance to cover any claims worldwide. 3M tendered defense of the claim in Chapley to both Microtek and its insurer. In his ruling the chancellor was obviously referring to his belief that Microtek's insurer's had a duty to defend 3M in Chapley. ¶ 16. Microtek also argues that 3M is equitably estopped from seeking indemnity in this case because 3M received summary judgment in its favor in Chapley, and thus there was no finding of liability for which Microtek was responsible. In relying on Koyot v. Cont. Ins. Co., 1980 U.S. Dist. LEXIS 15105 (D.Minn.1980), Microtek argues that it is entitled to the benefit of the Pennsylvania summary judgment in 3M's favor and that this issue cannot be relitigated. However, the doctrine of equitable estoppel is wholly inapplicable to today's case. See B.C. Rogers Poultry, Inc. v. Wedgeworth, 911 So.2d 483, 492-93 (Miss. 2005); Rawls Springs Utility Dist. v. Novak, 765 So.2d 1288, 1292 (Miss.2000); Trosclair v. Miss. Dep't of Transp., 757 So.2d 178, 181 (Miss.2000). The issue in today's case is whether Microtek is liable for attorneys fees based on the language of the contract between Microtek and 3M. The issues in Chapley were negligence and strict liability. ¶ 17. Finally, Microtek argues that 3M was sued for its own negligence; therefore, under the specific contract language, Microtek cannot be held liable for 3M's own negligence. The parties cite in their briefs Sorenson v. Safety Flate, Inc., 306 Minn. 300, 235 N.W.2d 848 (1975) and Farr v. Armstrong, 288 Minn. 83, 179 N.W.2d 64 (1970); however, both of these cases have been overruled where formerly applicable to the case sub judice. Where there is an indemnification agreement, it is the parties' intent which controls the propriety of attorney fees. Mortgage Guar. Ins. Corp. v. Forsythe Appraisers, Inc., 1992 WL 77523 at , 1992 Minn.App. LEXIS 408, at  (Minn.Ct.App. Apr. 21, 1992); see also Tolbert v. Gerber Indus., Inc., 255 N.W.2d 362 (Minn.1977). ¶ 18. Microtek agreed to be responsible for the warranty and inspection of the ArthroSteri surgical drapes. The warranty clause of the contract between Microtek and 3M states in pertinent part: In addition to any warranty implied by fact or law, [Microtek] expressly warrants all Product(s) are free from defects in design, materials, and workmanship; conform strictly to specifications and approved samples, if any; are fit and sufficient for the purpose intended; and are merchantable. Furthermore, the inspection clause states in part: [Microtek] acknowledges [3M] will not perform any regular inspection of Product(s) upon receipt, but will rely on [Microtek] to specifically meet the Product(s) specifications. Thus, it is clear that the parties intended for Microtek to have sole control of and responsibility for the safety of the surgical drapes. ¶ 19. The plaintiff in Chapley asserted a myriad of allegations in her complaint. It is Microtek's contention that if the plaintiff asserted even one allegation from which 3M might be independently responsible, then 3M had the duty to defend itself in the suit. However, a review of the allegations in the complaint causes us to conclude that all of the allegations would have been attributed to Microtek had it been a joint tortfeasor in Chapley. ¶ 20. Chapley's negligence claims were: 1. Failing to properly design, manufacture, assemble, inspect and/or distribute the ArthroSteri surgical drape; 2. Failing to include with the surgical drape the appropriate warnings and/or instructions regarding the correct use of the drape, including, but not limited to, the proper placement of the drape to avoid neurovascular compromise and damages; 3. Failing to advise the operating room staff about the proper placement of the drape to avoid neurovascular compromise and damage; 4. Failing to disclose information it knew or should have known about problems with and/or defects in the ArthroSteri surgical drape. 5. Failing to warn the Plaintiffs of the risk imposed by the use of the ArthroSteri surgical drape; 6. Negligence per se; 7. Res ipsa loquitur; and 8. Such other acts of negligence and carelessness as shall appear during the course of discovery. ¶ 21. Chapley's strict liability claim includes the following: 1. The ArthroSteri surgical drape was defectively designed; 2. The ArthroSteri surgical drape was defectively manufactured; 3. The ArthroSteri surgical drape lacked an element to make it safe; 4. The ArthroSteri surgical drape lacked an adequate and appropriate warning; 5. The ArthroSteri surgical drape was manufactured and sold in an unreasonably dangerous condition; and 6. Such other defects as shall appear during the course of discovery. ¶ 22. The allegations are based on negligence and strict liability for the design, manufacture, assembly, inspection, and distribution of the ArthroSteri surgical drapes. [3] 3M simply marketed the product using its name. 3M was the named party in Chapley because its name, not Microtek's name, appears on the surgical drapes. Therefore, it is apparent that the allegations are not based on 3M's own negligence, even though 3M was the party named in the suit rather than Microtek. Because the parties intended Microtek to be responsible for warranties and inspections of the surgical drapes, 3M should not be held liable because the allegations do not stem from 3M's own negligence. Therefore, 3M did not have a duty to defend itself in this suit. ¶ 23. After applying Minnesota case law to the facts of today's case, we find that the chancellor properly granted summary judgment in favor of 3M. This issue is thus without merit.