Opinion ID: 1097817
Heading Depth: 2
Heading Rank: 3

Heading: marley's contract liability

Text: The impasse over the insurance claim arose because Marley and Republic could not agree on the meaning of paragraphs 12(a) and 16(d) of their contract. Paragraph 12(a) was entitled Responsibility for Work and Insurance and provided: Prior to the completion of the work by Contractor and the acceptance thereof by Republic, the work shall remain at the risk of Contractor and unless otherwise specified Contractor shall be responsible for all loss and damage to the work and shall repair, renew and make good, at its own expense, all such loss and damage, however caused, whether or not due to the fault of Contractor. Paragraph 16 was entitled Safety of Persons and Property and subparagraph (d) provided: Contractor shall take all necessary measures and precautions to protect and to avoid damage to or loss of any property while on Republic's premises. Such measures and precautions shall include, but shall not be limited to, all necessary safeguards for warning and protecting workmen and others against hazards and to prevent accidents of any kind whenever work is being performed in proximity to any moving or operating machinery, equipment or facilities. The trial court rejected the contention of Marley and the insurers that Marley was responsible only for the loss of the cooling tower. The trial court found that the first sentence of paragraph 16(d) made Marley responsible for the foundation damages as well. The trial court further held that the work in paragraph 12(a) for which Marley was responsible included both the cooling tower and the foundation. The scope of our review of the trial court's conclusion depends on the role that court assumed in construing the contract. Alabama law requires the trial court to determine whether a contract is ambiguous, and if it is not, to determine the force and effect of the terms of the contract as a matter of law.... Extrinsic evidence may be admitted to interpret a contract only if the trial judge finds as a matter of law that the contract is ambiguous.... (Citations omitted.) Wigington v. Hill-Soberg Company, Inc., 396 So.2d 97, 98 (Ala.1981). The threshold issuewhether or not the contract is ambiguousis itself a question of law. Holt v. Davidson, 388 So.2d 548 (Ala.1980). In answering this threshold question, the trial court may consider extrinsic evidence in order to determine whether there is a latent ambiguity arising from some collateral matter outside the writing. Mass Appraisal Services, Inc., v. Carmichael, 404 So.2d 666, 672 (Ala.1981); Gibson v. Anderson, 265 Ala. 553, 92 So.2d 692 (1957). Here, the trial court did not address the threshold issue. We find as a matter of law that the contract is not ambiguous and that the trial court erred in its interpretation. Marley signed a contract to build a cooling tower on land of Republic. Presumably, the work in paragraph 12(a) refers only to the subject matter of the contractthe cooling tower. Nothing in the contract suggests otherwise; no ambiguity is apparent. Conceivably, however, the parties understood this language to mean all of the work at the construction site, including Goodner's work on the foundation. To determine whether that was the understanding, the trial court could have compared the provisions of Goodner's contract. Consideration of such extrinsic evidence is necessary to determine whether there is a latent ambiguity in contractual language clear on its face. Goodner's contract contains the same paragraphs 12(a) and 16(d). (Republic used the same preprinted form for both Marley's and Goodner's contracts.) Clearly, then, the only plausible interpretation of paragraph 12(a) is that each contractor bore the risk of loss for its own work. Similar reasoning applies to paragraph 16(d). Viewed in isolation that paragraph makes Marley responsible only for losses resulting from its own negligence. The paragraph's literal meaningthat Marley is responsible for all of Republic's property losses from whatever causeis obviously not intended. And, when one compares Goodner's contract and finds the identical provision, it is equally obvious that Marley is not liable for the damages to Goodner's construction. No basis whatsoever exists in the contract or elsewhere for making Marley bear the loss of anything other than its own work, the cooling tower. Marley never agreed to insure Republic's entire plant which is in effect what Republic contends. In view of the identical contract provisions and the absence of any contention that Marley caused the fire, it is arbitrary to throw the foundation loss on Marley simply because the fire apparently began in its cooling tower. [4] The insurers agree that they must pay the cooling tower loss to Marley. We need not address the insurers' refusal to cover the foundation damages since we find their insured is not liable for those damages.