Opinion ID: 2170484
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Heading: IE's Claim Against GE for Indemnity.

Text: IE appeals from the trial court's denial of its claim against GE for indemnity. Indemnity is a form of restitution that is founded on equitable principles, placing the final responsibility between two obligated persons where equity would lay the ultimate burden. Hunt v. Ernzen, 252 N.W.2d at 447-48. We have recognized four possible grounds for indemnity: (1) express contract; (2) vicarious liability; (3) breach of independent duty of indemnitor to indemnitee; and (4) secondary as opposed to primary liability. Sweeny v. Pease, 294 N.W.2d 819, 821 (Iowa 1980); Iowa Power & Light Co. v. Abild Construction Co., 259 Iowa 314, 322-23, 144 N.W.2d 303, 308 (1966). IE contends that GE's liability for indemnity can properly be grounded on GE's strict liability in tort. It asserts its strict-liability basis for indemnity is an offshoot of the secondary-primary liability basis for indemnity. IE contends that its negligence does not preclude recovery of indemnity under this theory because contributory negligence is not a defense to an action based on strict liability in tort. See Franken v. City of Sioux Center, 272 N.W.2d 422, 425 (Iowa 1978); Hawkeye Security Insurance Co. v. Ford Motor Co., 199 N.W.2d 373, 380-81 (Iowa 1972); Restatement (Second) of Torts § 515, comment (b) (1965). In Hawkeye-Security we held that a party whose negligence consisted of failing to discover a vehicle's defective brakes and failing to guard against that condition might still prevail in an action for indemnity against a strictly liable seller. 199 N.W.2d at 380. We did not there decide, however, whether a party whose negligence constitutes a concurring independent cause of the harm would still be entitled to be indemnified from a strictly liable seller. We said: Indemnity is not barred here by the failure of Kolby or Tri-B to discover the defective brakes, even if they were negligent in such respect. We need not decide whether indemnity would be barred, as distinguished from contribution, if Kolby or Tri-B were negligent in a respect independent of the brakes, which was a concurring proximate cause of the collision. 199 N.W.2d at 380. One case we there cited was Northwestern Mutual Insurance Co. v. Stromme, which used the following test for determining when a strictly-liable seller can be held liable for indemnity: [I]f the tortious conduct of the wrongdoer, regardless of the underlying theory of liability, does nothing more than furnish a condition through which a subsequent independent act of a co-wrongdoer occurs, the tort-feasors are not in pari delicto and indemnity may be allowed. Conversely, if each of the tortfeasors' acts although independent concur in establishing the basis for the actual liability, they are in pari delicto and indemnity will not be allowed. 4 Wash.App. 85, 89, 479 P.2d 554, 556-57 (1971). The facts of this case do present the legal issue which Hawkeye-Security did not decide, and we approve the quoted passage from the Washington case as a useful guide in determining whether IE should obtain indemnity from GE in this case. The trial court determined that GE would be liable to Trevallis on two theoriesnegligence for failing to warn and strict liability for selling an unreasonably dangerous product. Substantial legal authority supports those determinations. See Borel v. Fibreboard Paper Products Corp., 493 F.2d 1076, 1087-89 (5th Cir. 1973) cert. denied, 419 U.S. 869, 95 S.Ct. 127, 42 L.Ed.2d 107 (1974) (strict liability based on inadequate failure to warn of product's unreasonably dangerous condition); West v. Broderick and Bascom Rope Co., 197 N.W.2d 202, 209 (Iowa 1972) (negligent failure to warn of danger); LaCoste v. Ford Motor Co., 322 N.W.2d 898, 900-01 (Iowa Ct.App.1982) (inadequate warning of dangerous condition supported strict liability claim). See generally J. Beasley, Products Liability and the Unreasonably Dangerous Requirement 421-43 (1981). GE's liability was thus premised on its inadequate warning of the dangerous condition of the transformer. IE, however, had actual knowledge of that dangerous condition and was itself negligent in respects independent of the condition created by GE's conduct. IE, a supplier of electricity, is held to the highest degree of care consistent with the conduct and operation of its business. Nelson v. Iowa-Illinois Gas & Electric Co., 160 N.W.2d 448, 452 (Iowa 1968); Cronk v. Iowa Power & Light Co., 258 Iowa 603, 611, 138 N.W.2d 843, 847-48 (1965). IE was found negligent not only for failing to warn about the transformer's dangerous condition but also for failing to keep the transformer padlocked. IE's breaches of duties owed to Trevallis were positive acts, the negligent conduct of active operations. See Sweeny v. Pease, 294 N.W.2d at 823. As the trial court stated: IE's negligence in this case is much more than a failure to discover the defective nature of the transformer. It was aware of the absence of warnings on the transformer it purchased from GE and did not attach any warnings despite such knowledge and further knowing the relative ease or likelihood of public access to pad-mounted transformers. Where there is a negligent failure to warn of a defective condition by one who has knowledge of the defect and an opportunity to issue a warning, the distinction between strict liability by a manufacturer and negligence by a purchaser or user is one of form rather than substance. IE's failure to secure the transformer only compounds the equitable reasons for denying indemnity. . . . . IE knew of the danger created by the defect and yet acquiesced in the continuation of the condition. In so doing its culpability is not qualitatively different from that of GE. The trial court correctly recognized that indemnity is founded on equitable principles and that it therefore should analyze and compare qualitatively the conduct of both concurrently liable parties, IE and GE. We agree with the trial court that IE was not entitled to indemnity. The facts found by the trial court establish that IE's negligent acts, which concurred with GE's conduct to cause harm, were sufficiently independent of the defective condition of GE's product to bar its claim for indemnity. The trial court's findings of fact on this issue were supported by the record, and its qualitative comparison of the conduct of IE and GE was sound. Consequently, IE was not entitled to indemnity even though GE would have been liable to Trevallis on a theory of strict liability in tort.