Opinion ID: 2596761
Heading Depth: 3
Heading Rank: 5

Heading: The district court erred by granting summary judgment on the Golds' cross-claim for indemnification.

Text: Finally, Vreeken argues that the district court erred in granting summary judgment on the Golds' claim for indemnification. The district court determined that the drafters of the MOU intended for Vreeken to indemnify Richard Gold on the Citizens Bank loan and to indemnify Thomas Gold on the EIEDC loan. Vreeken asserts that the district court wrongly determined that the Golds had an unqualified right of indemnification, rather than a limited one. As set forth above, the MOU is governed by Massachusetts law. The principal guide to contract interpretation under Massachusetts law is the contract itself. Where there is no ambiguity in the contract language, the contract must be enforced according to its terms. Freelander v. G. & K. Realty Corp., 357 Mass. 512, 258 N.E.2d 786, 788 (1970). In this case, the parties do not argue that the language under section 2(c) of the contract is ambiguous. Therefore, the Court must enforce section 2(c) in accordance with the express terms. In Massachusetts, a right to indemnification may either be express or implied. See Fall River Hous. Auth. v. H.V. Collins Co., 414 Mass. 10, 604 N.E.2d 1310, 1312-13 (1992). An implied right to contractual indemnity is only recognized where there are special factors surrounding the contractual relationship that indicate an intention by one party to indemnify another in a particular situation. Id. at 1313. Section 2(c) of the MOU states in pertinent part: The Lockwood Entities will use their best efforts to effect the release of: (i) [Thomas Gold] and [Richard Gold] from certain personal guarantees they have made with regard to the following loans and (ii) certain securities pledged by [Richard Gold] which is being held as collateral for the Citizen's Loan, as defined below. If necessary to effect such releases, Vreeken agrees to personally guarantee such loans. If the Lockwood Entities fail to provide such release by the earlier of: (w) three (3) months after all audited financials for fiscal years 1999 and 2000 are completed or (x) March 1, 2001, then [the Golds] shall have the option of terminating this Agreement as provided in Section 11 hereof, unless Vreeken shall expressly opt to indemnify [the Golds] from any damages they may incur as a result of such personal guarantees. Until the earlier of: (y) the releases pursuant to this Section 2(c) are effected or (z) this Agreement is terminated as provided herein, any damage [the Golds] may incur as a result of such personal guarantees not being released shall be secured by the assets of [LP] and [LPI]. (Emphasis added). The loans listed in section 2(c) included the Citizen's Bank loan in the principal amount of $225,000, and the EIEDC loan in the principal amount of $262,500. There are only two other references to indemnity in the agreement. Under Section 1(c), the respondents agreed not to compete, directly or indirectly, with LP or LPI for a period of three years, unless [the Golds] are not being indemnified by Vreeken with regard to their personal guarantees as specified in Section 2(c).  (Emphasis added). The MOU also provides that [t]he Lockwood entities will indemnify [the Golds] against suits from third parties. (Emphasis added). Based on the plain language of section 2(c), and the other references to indemnification in the MOU, Vreeken is correct that the Golds do not have an unqualified right to indemnification for the Citizens Bank and EIEDC loans. Section 2(c) states that if Lockwood, LP, and LPI fail to release the Golds from their personal obligations under the loans, and Vreeken does not personally effectuate such releases, then the Golds have the option to terminate the contract unless Vreeken expressly opts to indemnify the Golds from any damages they may incur as a result of their personal guarantees. It is undisputed that Lockwood, LP, and LPI did not obtain the releases and that Vreeken was ordered to effectuate personal guarantees on the Citizens Bank and EIEDC loans; however, there is no evidence in the record that Vreeken expressly opted to indemnify the Golds. The district court found [i]mplicit in the agreement to use best efforts [was] the undertaking that Vreeken and the Lockwood [E]ntities [would] hold the Golds harmless in the agreement. In other words, the district court found that an implied right to indemnification existed under the contract. This finding was in error as section 2(c) had already provided an express right to indemnification. The express right was subject to the condition that Vreeken elect to indemnify the Golds. In essence, the district court awarded indemnification as an equitable remedy. In order for the doctrine of equitable indemnity to apply, there must be some basis for tort liability against the proposed indemnitor. 41 Am.Jur.2d Indemnity § 20 (2005). [An] implied contractual indemnity between the indemnitor and the indemnitee can provide a basis for equitable indemnity. Id. Here, the district court erred in granting equitable indemnification for two reasons. First, there was no basis for tort liability in this case since the Golds did not have an implied contractual right to indemnification. In addition, the Golds had an adequate remedy at law. Lockwood, LP, and LPI's failure to use their best efforts to release the Golds from their obligations under the bank loans interfered with the Golds' rights under the contract. Their conduct was attributable to Vreeken as the individual in control of the entities. Thus, the Golds had an adequate remedy available to them under the contract for breach of the implied covenant of good faith and fair dealing. It is well-established that equitable remedies will not be allowed if adequate remedies are available at law. Meikle v. Watson, 138 Idaho 680, 683, 69 P.3d 100, 103 (2003). Therefore, we reverse the district court's award of summary judgment on the Golds' claim for indemnification. Because the issue of indemnification was not related to the issues presented at trial, we will consider Vreeken's arguments regarding the district court's judgment after trial before remanding the case.