Opinion ID: 2794497
Heading Depth: 1
Heading Rank: 1

Heading: Implied Indemnification

Text: ¶ 9. First, we address Frontier’s claim that the court erred in granting summary judgment to Navigant on Frontier’s claim for implied indemnification. Indemnity is “an exception to our longstanding rule barring contribution among joint tortfeasors.” White , 170 Vt. at 28, 742 A.2d at 736. Therefore, indemnity is “imputed only when equitable considerations concerning the nature of the parties’ obligations to one another or the significant difference in the kind or quality of their conduct demonstrate that it is fair to shift the entire loss occasioned by the injury from one party to another.” Id . at 29, 742 A.2d at 737 (citing W. Keeton, Prosser and Keeton on the Law of Torts § 51, at 344 (5th ed. 1984)). We have acknowledged the difficulty of articulating a general rule on implied indemnity, but have explained that usually it will apply only when the party seeking indemnity is vicariously or secondarily liable to the third person because of a legal relationship with the third person or because of the party’s failure to discover a dangerous condition caused by the indemnifying party, “who is primarily responsible for the condition.” Id . ¶ 10. Applying this definition, the trial court concluded that equity did not require shifting the loss from Frontier to Navigant. The trial court explained that the facts, when viewed in the light most favorable to Frontier, failed to show that Frontier’s liability to plaintiffs was only vicarious or secondary either because of a legal relationship between them or because Navigant was primarily responsible for creating the dangerous condition and Frontier failed to discover it. The court explained that there was no basis to conclude that Frontier might be vicariously liable to plaintiffs for Navigant’s negligence. Navigant acted as an independent contractor, and plaintiffs did not claim Navigant was primarily responsible for the condition that caused plaintiffs’ injuries or that Frontier failed to discover Navigant’s allegedly negligent act. Rather, the complaint alleged that Frontier was directly liable to plaintiffs for the injury. The court stated that the evidence, in the light most favorable to Frontier, showed that Navigant was hired to provide consulting work to assist Frontier in obtaining a CPG and the scope of this agreement did not require Navigant to take over the job of making the Richford substation safe. ¶ 11. On appeal, Frontier argues that summary judgment is not appropriate because there are disputed questions of fact regarding whether Navigant was responsible for ensuring the safety of the substation. Frontier asserts that Navigant was contracted to ensure that the redesigned system would meet the requirements for obtaining a CPG as defined in 30 V.S.A. § 248(b), including that the project would “not adversely affect system stability and reliability,” id . § 248(b)(3). Frontier argues that Navigant was negligent in providing testimony to the PSB that the system Frontier designed was reliable. Frontier contends that Navigant should have identified the air-break switch at Switch 14E as making the system unreliable because repairing it safely requires de-energizing the line and thus causes disruption in service. Frontier claims that Navigant’s failure to identify this switch as unreliable created the dangerous condition, which caused plaintiff’s accident because it was reasonably foreseeable that a future utility owner would operate the switch unsafely. ¶ 12. These claims fail to raise material disputes of fact on the issue of whether Frontier is entitled to implied indemnity. Even if Frontier’s version of these facts is accepted, no obligation to indemnify arises because Frontier has failed to show that its liability to plaintiffs was simply vicarious or secondary, or that it was not primarily responsible for the condition which caused the accident. ¶ 13. The outcome of the question raised is well illustrated using the rule articulated in the Restatement of Restitution, which provides: Where a person has become liable with another for harm caused to a third person because of his negligent failure to make safe a dangerous condition of land or chattels, which was created by the misconduct of the other or which, as between the two, it was the other’s duty to make safe , he is entitled to restitution from the other for expenditures properly made in the discharge of such liability, unless after discovery of the danger, he acquiesced in the continuation of the condition. Restatement (First) of Restitution § 95 (1937) (emphasis added). To obtain the substantial relief of implied indemnity Frontier would have to show that as between Navigant and Frontier, it was Navigant’s duty to keep the work environment safe or that Navigant’s misconduct created the dangerous condition. The undisputed facts support neither scenario. Frontier had a nondelegable duty to design a safe environment for foreseeable workers in the substation. See Knisely , 171 Vt. at 647, 769 A.2d at 9 (concluding hospital not entitled to indemnification from contractor where it had a nondelegable duty to provide safe work environment and violation of duty was not primary fault of contractor). Frontier submitted no facts to demonstrate that Navigant assumed this responsibility. The scope of the parties’ contract was limited to the reliability of the system for purposes of obtaining a CPG; it did not mention safety. ¶ 14. Nor has Frontier shown that Navigant was primarily responsible for creating the dangerous condition. Even if as part of its contracted work to assist in obtaining a CPG Navigant was negligent in its reliability assessment, its negligence did not create the dangerous condition that caused the injury. Plaintiffs alleged that the injury resulted from negligent design of the station; improper choice, use and installation of the switch; and failure to ensure safety. Navigant’s scope of work did not include designing the system, choosing the switch, or ensuring the safety of the substation, all of which remained Frontier’s responsibility. See id . (holding that even if contractor, providing preventative maintenance of patient care equipment, negligently performed its duties of testing hospital’s air quality for waste anesthetic gas, this did not transform contractor’s obligations into duty to maintain safe premises). Any failure on Navigant’s part to identify that Switch 14E threatened system reliability did not primarily create the condition that caused plaintiffs’ injury. ¶ 15. Frontier further argues that there exists a question of fact to determine if it had an “active part” in causing plaintiffs’ injury. White , 170 Vt. at 29, 742 A.2d at 737 (explaining that “one who has taken an active part in negligently injuring another is not entitled to indemnification from a second tortfeasor who also negligently caused the injury”). Frontier asserts that even if it had a nondelegable duty to keep the transmission lines and switches safe, any failure to meet this obligation was not active because the switch selected was not inherently dangerous, it was dangerous only when operated in the manner that caused the injury. According to Frontier, indemnity is precluded when the indemnitee knows of a hazardous condition and fails to address it, but not when an indemnitee should have known of the hazard but fails to discover it. Frontier argues that because there was no evidence, or at least conflicting evidence, to show that it was aware of the hazard created by choosing that particular switch, indemnity was not precluded, and, at the very least, this was a disputed question that should be resolved by the jury. ¶ 16. Again, Frontier misses the point. Certainly, there are cases in which a party who is otherwise entitled to indemnity may lose that right because the party became aware of the dangerous condition and failed to make it safe. In those cases, it is important to know whether the party had knowledge of the dangerous condition. See White , 170 Vt. at 33, 742 A.2d at 739 (explaining that sauna owner could not seek indemnity from manufacturer where owner had acquiesced in any danger created by manufacturer). Here, however, Frontier failed to demonstrate that its liability was for a dangerous condition created by Navigant’s acts. As explained above, Frontier was responsible for ensuring the safety of the substation, for designing the upgrade, and for choosing, and installing the switch. Navigant did not assume these responsibilities. ¶ 17. The cases relied upon by Frontier do not support a different outcome. Frontier primarily cites Bardwell Motor Inn, Inc. v. Accavallo , 135 Vt. 571, 381 A.2d 1061 (1977), to support its position. In that case, a hotel contracted with the defendants to replace a glass panel in an exterior door, and without notice to the hotel, the defendants removed the glass panel and a metal push bar and left the premises without posting warning signs. After a third party was injured trying to open the door, the hotel sought indemnity from the defendants. This Court noted that indemnity could apply “to situations where, as here, a party has a nondelegable duty with respect to the condition of his premises, but has entrusted the performance of this duty to a third person, either a servant or an independent contractor. And a negligent failure to discover or remedy the defect does not bar indemnity.” Id . at 573, 381 A.2d at 1062 (citing Restatement (First) of Restitution § 95 cmt. a). We held that as between the hotel owner and the defendants, it was clearly the duty of the defendants to perform in a safe and workmanlike manner and to make the door safe and warn of any dangers created by their work, and affirmed the trial court’s denial of the defendants’ motion to dismiss. ¶ 18. Frontier asserts that just like the hotel owner, it had a nondelegable to keep the substation safe, and it entrusted this to a contractor. Therefore, Frontier contends that, like the hotel owner, its failure to discover the dangerous condition does not bar its ability to seek indemnification. But the difference between Bardwell and this case is the party responsible for creating the dangerous condition. In Bardwell , the undisputed facts were that the defendants’ own actions created the dangerous situation. See id . (explaining that as between hotel owner and defendants “it was clearly the duty of the defendants to make safe the door on which they were working or to warn of the danger they had created”). Here, however, it was Frontier’s own independent acts that created the dangerous condition. The parties agree in their statement of facts that Frontier chose the switch, and installed the switches. Navigant’s negligence, if any, was in failing to advise that the reliability of the system was reduced by use of Switch 14E. The undisputed facts fail to show that it was primarily Navigant’s acts which created the dangerous condition.