Court Opinion

ID: 3217235
Source: CourtListenerOpinion
Date Created: 2016-06-27 15:08:00.497981+00
Date Added: 2024-06-11T07:39:42.012141
License: Public Domain

FILED
                                                             Jun 27 2016, 6:19 am

                                                                  CLERK
                                                              Indiana Supreme Court
                                                                 Court of Appeals
                                                                   and Tax Court

          ATTORNEY FOR APPELLANT                                    ATTORNEY FOR APPELLEE
          Steven St. John                                           Francis A. Veltri
          Skiles Detrude                                            Travelers Staff Counsel
          Indianapolis, Indiana                                     Merrillville, Indiana

                                                     IN THE
            COURT OF APPEALS OF INDIANA

          BC Osaka, Inc. and City Inn,                                June 27, 2016
          Inc.,                                                       Court of Appeals Case No.
          Appellants-Petitioners,                                     45A03-1510-CT-1587
                                                                      Appeal from the Lake County
                  v.                                                  Superior Court
          Kainan Investment Groups,                                   The Honorable William E.
          Inc.1,                                                      Davis, Judge

          Appellee-Respondent.                                        Trial Court Cause No.
                                                                      45D05-1403-CT-34

      Mathias, Judge.

[1]   Angelica Magallanes (“Magallanes”) sustained personal injuries when she

      tripped and fell on a rod protruding from a cement bumper in the BC Osaka

      1
       The parties refer to Appellee as “Kainan Investment Group, Inc.” in the captions of their briefs, but review
      of the record reveals that the entity is called “Kainan Investment Groups, Inc.”

      Court of Appeals of Indiana | Opinion 45A03-1510-CT-1587 | June 27, 2016                          Page 1 of 12
      restaurant parking lot. Magallanes filed a complaint against BC Osaka, Inc.2

      and City Inn, Inc. (collectively “Tenant”) and Kainan Investment Groups, Inc.

      (“Landlord”). Landlord filed a cross-claim against Tenant and a motion for

      summary judgment, arguing that it was not liable to Magallanes based on the

      indemnity clause of the commercial lease agreement (“the Lease”). The trial

      court granted Landlord’s motion. Tenant now appeals and argues that the trial

      court erred in granting Landlord’s motion for summary judgment.

[2]   We reverse and remand for proceedings consistent with this opinion.

                                          Facts and Procedural History

[3]   On March 10, 2011, Tenant entered into the Lease with Landlord and Ji Guang

      Zheng as guarantor. The parties contracted for Tenant to lease a free-standing,

      single-story building and surrounding parking spaces from Landlord for

      purposes of operating an Asian-style restaurant.

[4]   Magallanes met her family for a meal at BC Osaka in Merrillville, Indiana3 on

      July 1, 2012. As Magallanes got out of her vehicle to walk into the restaurant,

      she tripped and fell on a rod sticking out of a cement bumper in the parking lot.

      Magallanes filed an amended complaint alleging personal injuries against

      Landlord and Tenant on June 2, 2014. Magallanes alleged that Defendants

      were responsible for maintaining and inspecting the parking lot and owed a

      2
          BC Osaka is the trade name used by City Inn in the operation of the restaurant.

      3
       Appellee’s brief incorrectly states that the restaurant is located in Hobart, Indiana. See Appellee’s Br. at 1;
      Appellant’s App. p. 54.

      Court of Appeals of Indiana | Opinion 45A03-1510-CT-1587 | June 27, 2016                             Page 2 of 12
      duty of care to customers and invitees. She further alleged that Defendants

      breached this duty and as a result Magallanes was injured. Both Landlord and

      Tenant filed separate answers denying that they owed a duty to Magallanes and

      denying that its own negligence was the proximate cause of her injuries.

[5]   On March 30, 2015, Landlord filed a cross-claim against Tenant, alleging that

      Tenant owed Landlord a contractual obligation to indemnify, hold harmless,

      and provide a legal defense against Magallanes’s claims. Tenant filed an answer

      denying such an obligation on April 24, 2015. On June 8, 2015, Landlord filed

      a motion for summary judgment, and Tenant filed its response on July 24,

      2015. The trial court held a hearing on Landlord’s motion on August 27, 2015,

      and took the issue under advisement. On September 15, 2015, the court entered

      an amended order granting Landlord’s motion for summary judgment and

      requiring Tenant to indemnify, hold harmless, and provide a legal defense to

      Landlord under the Lease. Tenant now appeals.

                                             Standard of Review

[6]   Our standard of review of summary judgment appeals is well-established:

              When reviewing a grant of summary judgment, our standard of
              review is the same as that of the trial court. Considering only
              those facts that the parties designated to the trial court, we must
              determine whether there is a genuine issue as to any material fact
              and whether the moving party is entitled to judgment as a matter
              of law. In answering these questions, the reviewing court
              construes all factual inferences in the nonmoving party’s favor
              and resolves all doubts as to the existence of a material issue
              against the moving party. The moving party bears the burden of

      Court of Appeals of Indiana | Opinion 45A03-1510-CT-1587 | June 27, 2016   Page 3 of 12
              making a prima facie showing that there are no genuine issues of
              material fact and that the movant is entitled to judgment as a
              matter of law. Once the movant satisfies the burden, the burden
              shifts to the nonmoving party to designate and produce evidence
              showing the existence of a genuine issue of material fact.

      Likens v. Prickett’s Properties, Inc., 943 N.E.2d 816, 820 (Ind. Ct. App. 2011)

      (citations and internal quotations omitted).

                                 Covenant to Hold Harmless Provision

[7]   When we review the trial court’s interpretation of a contract, we view the

      contract in the same manner as the trial court. GKN Co. v. Starnes Trucking, Inc.,

      798 N.E.2d 548, 552 (Ind. Ct. App. 2003) (citing Exide Corp. v. Millwright Rigger,

      Inc., 727 N.E.2d 473, 478 (Ind. Ct. App. 2000), trans. denied). The court should

      attempt to determine the intent of the parties at the time the contract was made

      by examining the language used to express their rights and duties. Id. Words

      used in a contract are to be given their usual and common meaning unless,

      from the contract and the subject matter thereof, it is clear that some other

      meaning was intended. Id. Words, phrases, sentences, paragraphs, and sections

      of a contract cannot be read alone. Id. The entire contract must be read together

      and given meaning, if possible. Id.

[8]   In Indiana, a party may contract to indemnify another for the other’s own

      negligence. Hagerman Constr. Co. v. Long Elec. Co., 741 N.E.2d 390, 392 (Ind. Ct.

      App. 2000). However, this may only be done if the party knowingly and

      willingly agrees to such indemnification. Id. Such provisions are strictly

      Court of Appeals of Indiana | Opinion 45A03-1510-CT-1587 | June 27, 2016   Page 4 of 12
       construed and will not be held to provide indemnification unless it is so stated

       in clear and unequivocal terms. Id. We disfavor indemnification clauses because

       we are mindful that to obligate one party for the negligence of another is a

       harsh burden that a party would not lightly accept. Id.

[9]    Our court has adopted a two-step analysis to determine whether a party has

       knowingly and willingly accepted this burden. Id. First, the indemnification

       clause must expressly state in clear and unequivocal terms that negligence is an

       area of application where the indemnitor has agreed to indemnify the

       indemnitee. Id. The second step determines to whom the indemnification clause

       applies. Id. Again, in clear and unequivocal terms, the clause must state that it

       applies to the indemnification of the indemnitee by the indemnitor for the

       indemnitee’s own negligence. Id.

[10]   The Covenant to Hold Harmless of the Lease provides in relevant part:

               Tenant agrees to indemnify and save Landlord harmless against
               and from any and all claims, damages, costs, and expenses,
               including reasonable attorneys’ fees, arising from the conduct or
               management of the business conducted by Tenant in the Leased
               Premises, or from any breach or default on the part of Tenant in
               the performance of any covenant or agreement on the part of the
               Tenant to be performed pursuant to the terms of this Lease, or
               from any act or negligence of Tenant, its agents, contractors,
               servants, employees, sub lessees, concessionaires or licensees in
               or about the Lease Premises. In case any action or proceeding be
               brought against Landlord by reason of such claim, Tenant, upon
               notice from Landlord, covenants to defend such action or
               proceeding by counsel reasonably satisfactory to Landlord.

       Court of Appeals of Indiana | Opinion 45A03-1510-CT-1587 | June 27, 2016   Page 5 of 12
               Neither Landlord, nor Landlord’s agents, employees,
               beneficiaries, officers, or directors shall be liable, and the Tenant
               waives and releases all claims for damage to person or property
               sustained by Tenant, or by Tenant’s employees, agents, servants,
               invitees and customers, or by any other occupant of the building
               in which the Leased Premises are located, or by any other
               person, resulting from said Building or any part of it, or any
               equipment or appurtenance becoming out of repair, or resulting
               from any accident in or about the Leased Premises or said
               Building, or resulting directly, or indirectly, from any act or
               neglect of any other tenant or occupant of said Building, or of
               any other person. This Article shall apply especially, but not
               exclusively, to damage caused by refrigerators, sprinkling
               devices, air-conditioning apparatus, water, snow, frost, steam,
               excessive heat or cold, sewage, gas, odors, or noise, or the
               bursting or leading of pipes or plumbing fixtures, and shall apply
               equally whether any such damage results from the act or neglect
               of other tenants, occupants, or servants in said Building, or of
               any other person, and whether such damage be caused, or result
               from, any thing or circumstance above-mentioned or referred to,
               or any other thing or circumstance, whether of a like nature or of
               a wholly different nature. If any such damage result from any act
               or neglect of Tenant, Landlord may, at Landlord’s option, repair
               such damage, whether caused to the building or to tenants
               thereof, and Tenant shall thereupon pay to Landlord the total
               cost of such repairs and damages, both to the building and to the
               tenants thereof.

       Appellant’s App. p. 73.

[11]   In this case, the indemnification provision includes: “Tenant agrees to

       indemnify and save Landlord harmless against and from. . . any act or

       negligence of Tenant.” Id. Therefore, the clause states in clear and unequivocal

       Court of Appeals of Indiana | Opinion 45A03-1510-CT-1587 | June 27, 2016    Page 6 of 12
       terms that negligence is an area of application where Tenant has agreed to

       indemnify Landlord and satisfies the first step of the analysis.

[12]   In applying the second step of the test, we must determine if the

       indemnification clause clearly applies to indemnification of Landlord by Tenant

       for Landlord’s own negligence. In Hagerman Constr. Co. v. Long Elec. Co., an

       injured employee of a subcontractor sued the general contractor and the general

       contractor filed a third-party indemnification claim against the subcontractor.

       741 N.E.2d 390, 391(Ind. Ct. App. 2000). The indemnification clause in

       Hagerman provided:

               To the fullest extent permitted by law, the Subcontractor shall
               indemnify and hold harmless the Owner, Contractor, Architect,
               Architect's consultants, and agents and employees of any of them
               from and against claims, damages, losses and expenses, including
               but not limited to attorney's fees, arising out of or resulting from
               performance of the Subcontractor's Work under this Subcontract,
               provided that such claim, damage, loss or expense is attributable
               to bodily injury, sickness, disease or death, or to injury to or
               destruction of tangible property (other than the Work itself)
               including loss of use resulting therefrom, but only to the extent
               caused in whole or in part by negligent acts or omissions of the
               Subcontractor, the Subcontractor's Sub-subcontractors, anyone
               directly or indirectly employed by them or anyone for whose acts
               they may be liable, regardless of whether or not such claim,
               damage, loss or expense is caused in part by a party indemnified
               hereunder. Such obligation shall not be construed to negate,
               abridge, or otherwise reduce other rights or obligations of
               indemnity which would otherwise exist as to a party or person
               described in [this paragraph].

       Court of Appeals of Indiana | Opinion 45A03-1510-CT-1587 | June 27, 2016   Page 7 of 12
       Id. at 392-93. Our court held that the indemnification clause did not

       clearly and unequivocally state that subcontractor was to indemnify

       general contractor for its own negligent acts. Id. at 393.

[13]   To contrast, in GKN Co. v. Starnes Trucking, Inc., our court determined that the

       language of the indemnification clause did clearly and unequivocally state that

       subcontractor was required to indemnify general contractor for its own

       negligent acts. 798 N.E.2d 548, 553 (Ind. Ct. App. 2003). The indemnity

       provision in GKN provided:

               [Starnes] shall indemnify and hold harmless the Owner, the
               Architect Engineer, and [GKN] and their agents and employees
               from and against all claims, damages, causes of action, losses and
               expenses, including attorney's fees, arising out of or resulting
               from the performance of the work, provided that such claim,
               damage, loss or expense (1) is attributable to bodily injury,
               sickness, disease or death, or to injury to or destruction of
               tangible property (other than the work itself) including the loss of
               use resulting therefrom; and (2) is caused in whole or in part by
               any negligent act or omission of [Starnes] or any of his
               subcontractor's [sic], anyone directly or indirectly employed by
               any of them or for anyone for whose acts any of them may be
               liable, regardless of whether it is caused in part by a party indemnified
               hereunder.

       Id. at 550 (emphasis added). The language in the GKN indemnity provision

       required subcontractor to indemnify general contractor even in situations where

       general contractor is negligent.

       Court of Appeals of Indiana | Opinion 45A03-1510-CT-1587 | June 27, 2016       Page 8 of 12
[14]   The language of the indemnity provision in this situation is analogous to the

       language of the provision in Hagerman because no clear and unequivocal

       language exists that would require Tenant to indemnify Landlord for

       Landlord’s own negligence. The clause discusses that Tenant must indemnify

       Landlord for Tenant’s own negligence but makes no statement related to

       negligence on the part of Landlord. Because the provision does not explicitly

       state that Tenant was required to indemnify Landlord for its own negligent acts,

       we conclude that it is inapplicable here. See Hagerman, 741 N.E.2d at 393.

                        Landlord’s Possession and Control of Parking Areas

[15]   Even if we concluded that the indemnity provision of the Lease might be

       applicable, Landlord expressly reserved the right to control and maintain

       parking areas. As a general rule, in absence of statute, covenant, fraud or

       concealment, a landlord who gives a tenant full control and possession of the

       leased property will not be liable for personal injuries sustained by the tenant or

       other persons lawfully upon the leased property. Pitcock v. Worldwide Recycling,

       Inc., 582 N.E.2d 412, 414 (Ind. Ct. App. 1991) (citations omitted). Further, a

       landlord is held liable for rented premises inasmuch as those premises contain

       common areas or the landlord assumes responsibility for the premises under the

       lease or by operation of law. Olds v. Noel, 857 N.E.2d 1041, 1047 (Ind. Ct. App.

       2006). Otherwise and to the extent that a landlord has transferred control and

       possession of the premises to a tenant, the tenant is liable. Id.

       Court of Appeals of Indiana | Opinion 45A03-1510-CT-1587 | June 27, 2016   Page 9 of 12
[16]   In the Lease, Landlord retained rights and authority to the premises, specifically

       the parking areas. Article VI of the Lease provides in relevant part:

               The Premises and facilities provided by Landlord, and forming a
               part of said Building as constituted from time to time, shall be
               available to the tenant, their employees, agents, customers and
               invitees, subject to the following:

               (a) The right of the Landlord to substitute, from time to time, for
               any parking area or part thereof, other parking space
               substantially equal to or greater in area, and reasonably
               accessible to the tenants of said Building and their employees,
               agents, customers and invitees.

                                                         ***

               (c) Landlord reserves the right at any time, and from time to
               time, without incurring liability to Tenant and without
               constituting an eviction, to change the appearance size,
               composition, number, arrangement or location of the public
               entranceways, doors, doorways, loading docks, and other
               portions of said Building as Landlord in its sole discretion deems
               necessary or desirable, except for the Leased Premises.

               For the good and welfare of the tenants in said Building, their
               employees, agents, customers, and invitees, Landlord expressly
               reserves the right to determine the manner in which said
               Premises shall be maintained and to promulgate reasonable rules
               and regulations relating to their use.

                                                         ***

               Landlord may, from time to time, provide parking areas outside
               of said Building for the use of Tenant of said Building, their

       Court of Appeals of Indiana | Opinion 45A03-1510-CT-1587 | June 27, 2016   Page 10 of 12
               employees, agents, customers and invitees, but all outside
               parking areas shall be subject to withdrawal at any time by the
               Landlord. The rules and regulations relating to the use of
               Premises within said Building shall likewise apply to the parking
               areas outside of the Building. Tenant shall also pay, as additional
               Rental and in a similar manner, the entire amount of the cost
               pertaining to the Premises within said Building of all costs
               incurred in the operation, maintenance, repair and improvement
               of said Outside Parking Areas, including, but without limiting the
               generality of the foregoing, the cost of fencing, paving, snow
               removal, landscaping maintenance, and replacement, rentals and
               other expenditures pertaining to said Parking Areas outside the
               Building, all as determined by Landlord from time to time.

       Appellant’s App. pp. 65-67 (emphasis added).

[17]   Article XV of the Lease further states:

               Landlord reserves the right to designate specific parking areas for
               the use of Tenant and its employees from parking solely, or in
               conjunction with, other tenants and their employees, and to
               restrict Tenant and its employees from parking areas designated
               for customers. Tenant and its employees shall park their
               automobiles only in areas designated by Landlord, from time to
               time, either in the parking areas forming a part of said Building
               or parking areas outside of said Building. Landlord shall have the
               right to have the automobiles of Tenant, or of any of its agents or
               employees, removed from any area that is not designated by
               Landlord for the parking thereof, or to take any other action to
               effect such removal and to charge Tenant, as additional Rental,
               for all expenses in connection with such removal.

       Appellant’s App. p. 73.

       Court of Appeals of Indiana | Opinion 45A03-1510-CT-1587 | June 27, 2016   Page 11 of 12
[18]   Thus, pursuant to the Lease, Landlord expressly reserved the right to determine

       how the parking areas should be maintained, establish rules related to the use of

       parking areas, change the designated parking areas, withdraw parking areas

       from Tenant at any time, and remove Tenant’s automobiles from any area not

       designated for parking by Landlord. At the very least, these provisions create an

       issue of material fact as to whether Tenant had full control and possession of

       the leased premises. As such, the issue of Landlord’s liability to Magallanes

       should not be disposed of on summary judgment.

                                                    Conclusion

[19]   Because the Lease’s indemnification provision did not state in clear and

       unequivocal terms that Tenant would indemnify Landlord for Landlord’s own

       negligence, we cannot conclude that the clause is applicable here. Further,

       Landlord reserved specific rights to possess and control parking areas in the

       Lease. For all of these reasons, a genuine issue of material fact exists whether

       Landlord is liable to Magallanes for her injuries. The trial court erred by

       granting Landlord’s motion for summary judgment and ordering Tenant to

       indemnify, hold harmless, and provide a legal defense to Landlord. We

       therefore reverse and remand with instructions for the trial court to hold a jury

       trial on the matter.

[20]   Reversed and remanded for proceedings consistent with this opinion.

       Vaidik, C.J., and Barnes, J., concur.

       Court of Appeals of Indiana | Opinion 45A03-1510-CT-1587 | June 27, 2016   Page 12 of 12