Court Opinion

ID: 158035
Source: CourtListenerOpinion
Date Created: 2010-08-14 05:11:34+00
Date Added: 2024-06-11T15:01:14.730801
License: Public Domain

F I L E D
                                                     United States Court of Appeals
                                                             Tenth Circuit
                 UNITED STATES COURT OF APPEALS
                                                             JUN 4 1999
                        FOR THE TENTH CIRCUIT
                                                       PATRICK FISHER
                                                                 Clerk

In re: COOPER
MANUFACTURING CORP., and
its Affiliates; CHALLENGER RIG
& MANUFACTURING, INC.;
COOPER OFFSHORE SYSTEMS,
INC.; COOPER SALES CORP.,

          Debtors,

_____________________________

JON A. BARTON, Liquidating
Trustee,

          Plaintiff,

v.                                             No. 98-5080
                                        (D.C. No. 94-CV-901-BU)
THE HOME INDEMNITY                             (N.D. Okla.)
COMPANY; THE CONTINENTAL
INSURANCE COMPANY; HARBOR
INSURANCE COMPANY;
GREENWICH INSURANCE
COMPANY,

          Defendants,

v.

THE HOME INDEMNITY
COMPANY,

          Third-Party-Plaintiff-
          Appellant,

v.
THE HOLMES ORGANISATION,
INC.,

               Third-Party-Defendant-
               Appellee.

                            ORDER AND JUDGMENT           *

Before BRORBY , EBEL , and LUCERO , Circuit Judges.

       After examining the briefs and appellate record, this panel has determined

unanimously that oral argument would not materially assist the determination of

this appeal.   See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is

therefore ordered submitted without oral argument.

       The Home Indemnity Company (Home) appeals from the        district court’s

grant of summary judgment to The Holmes Organisation, Inc. (Holmes) on

cross-claims of indemnity and contribution. In the underlying lawsuit, the trustee

in bankruptcy for the debtors asserted claims against Home and other insurance

companies, alleging violations of the Texas Deceptive Trade Practices Act, bad

faith, and breach of the duty of fair dealing. Home asserted cross-claims against

*
      This order and judgment is not binding precedent, except under the
doctrines of law of the case, res judicata, and collateral estoppel. The court
generally disfavors the citation of orders and judgments; nevertheless, an order
and judgment may be cited under the terms and conditions of 10th Cir. R. 36.3.

                                          -2-
its insurance agent, Holmes. Holmes sold liability insurance policies to the

debtors for Home, and handled various insurance matters between Home and

the debtors. When Home and the trustee settled the underlying claims, the

cross-claims against Holmes remained. Holmes filed a motion to dismiss the

claims, which the district court converted to a motion for summary judgment.

After briefing, the district court granted summary judgment to Holmes,

concluding that, as a matter of law, Home could not bring indemnity and

contribution claims against Holmes on these facts. The        district court also

denied as futile Home’s motion for leave to amend its third-party complaint.

       Our jurisdiction over this appeal arises from 28 U.S.C. § 1291. “We review

the grant or denial of summary judgment de novo, applying the same legal

standard used by the district court pursuant to Fed. R. Civ. P. 56(c).”      Kaul v.

Stephan , 83 F.3d 1208, 1212 (10th Cir. 1996). The parties do not contend that the

facts are disputed, therefore our review is limited to determining if the     district

court correctly applied the substantive law. Although the        district court analyzed

Home’s indemnity and contribution claims under both Oklahoma and Texas law,

Home contends that Oklahoma law applies here. Further, Home’s arguments are

based solely on Oklahoma law. Without deciding which law controls, we

conclude that Home’s challenges to the      district court’s ruling based on Oklahoma

law have merit.

                                             -3-
      The trustee’s claims against Home alleged that Home failed to investigate,

negotiate, defend, or indemnify the debtors against numerous product liability

claims asserted against them in 1984. As a result of the product liability claims,

debtors filed for protection under Chapter 11 of the Bankruptcy Code in 1984,

and liquidated their businesses in December of 1985. The trustee’s suit sought

damages equal to the lost value of the businesses, together with punitive damages,

treble damages on the alleged Texas statutory violations, interest, and attorney’s

fees. In its amended answer to the suit, Home contended that it did not receive

notice from either the debtors or its agent, Holmes, of any claims against the

debtors until well after the product liability suits were filed.

      While Home denied liability for the trustee’s claims, it also asserted

cross-claims against Holmes should Home be found liable to the trustee. Home

alleged that its agent failed to give it proper notice of the product liability claims.

In its proposed amended third-party complaint, Home also contends that 1) it did

not receive notice of the product liability claims until after the liquidation of the

debtors, 2) it was exposed to liability on the trustee’s claims because Holmes

failed to forward notice of the product liability claims and because Holmes told

the debtors that the Home policies would not cover those claims, inducing the

debtors not to forward claims to Home or demand a defense to those claims, and

3) Holmes was an agent for Home and also for the debtors.

                                           -4-
       Noting that Home could not delegate its duties of good faith and fair

dealing under Oklahoma law, the        district court held that Home could not seek

indemnity against its agent because it could not prove that Holmes was also

directly liable to the debtors for the trustee’s claims against Home. On appeal,

Home argues that the district court has construed the common law of indemnity

too narrowly. We agree.

       In sole support of its point that tort liability for the trustee’s claims must

also lie between Holmes and the debtors, the       district court cited to Albany

Insurance Co. v. Rose-Tillmann, Inc.      , 883 F. Supp. 1459 (D. Or. 1995). In that

case, the district court held that an underwriting agent could not be held liable on

an indemnity claim by a retail insurance agent because the underwriting agent was

not liable to the plaintiff insured.   Albany is distinguishable, however, because

there the court concluded that the underwriting agent had no active fault resulting

in the insurer’s liability to the plaintiff insured. Here, in contrast, Home contends

that Holmes’ acts and omissions directly caused its potential liability to the

trustee. In the face of these allegations, and absent any determination of fault as

between Home and Holmes,         Albany provides no guidance.

       Further, Home points to three Oklahoma cases where indemnity was found

to lie based on a special or contractual relationship between the parties, even

where the indemnity defendant was not liable either directly or in tort to the

                                             -5-
injured party. The Oklahoma court in these cases did not mention, much less

discuss, a requirement that the indemnity defendant be liable in tort on the same

theory under which the indemnity plaintiff was liable to the injured party.     See

Biggs v. Surrey Broadcasting Co.,      811 P.2d 111 (Okla. Ct. App. 1991);

Daugherty v. Farmers Coop. Ass’n       , 790 P.2d 1118 (Okla. Ct. App. 1989);   Central

Nat’l Bank v. McDaniel , 734 P.2d 1314 (Okla. Ct. App. 1986). Holmes, while

asserting that the district court was correct in requiring liability between it and

the debtors, did not address these cases on appeal. We conclude that these cases,

and the common law of indemnity in general, substantially undermine the         district

court’s legal conclusion.

       The district court also ruled that Home’s contribution claim should be

denied because, as an agent for Home, Holmes could not be shown to have owed

or breached any duties to the debtors such that the parties could be joint

tortfeasors. Again, we disagree. Home’s proposed amended complaint against

Holmes contends that Holmes was an agent for both Home and the debtor.

Further, Oklahoma law does not preclude dual agency in this factual setting where

there is no conflict of interest.   See Home Ins. Co. v. Southern Motor Coach

Corp. , 41 P.2d 870, 873 (Okla. Ct. App. 1935).      Accordingly, the district court’s

legal decision on this point does not comport with Oklahoma law.

                                            -6-
      The judgment of the United States District Court for the Northern District

of Oklahoma is REVERSED. In light of the above analysis, and because this

court is of the opinion that further factual development is required before

determination of Home’s indemnity and contribution claims is possible, the case

is REMANDED to the district court for further proceedings, including

reconsideration of Home’s motion for leave to amend its third-party complaint

against Holmes.

                                                    Entered for the Court

                                                    Wade Brorby
                                                    Circuit Judge

                                         -7-