Court Opinion

ID: 9680000
Source: CourtListenerOpinion
Date Created: 2023-08-24 07:15:22.798063+00
Date Added: 2024-06-11T18:14:52.229616
License: Public Domain

Katherine C. Gay, Special Associate Justice, concurring. I concur in the decision of the court to reverse and remand this case, but write separately to state that the contracts before the court are against public policy, and if they are not, they should be. The facts of this case bring into sharp focus the problems that develop when a contracting party is able to obtain absolute indemnity when its own negligence is the sole proximate cause of damage. Graham was injured as a result of Nabholz’s total inattention to safety at its construction site for the Leisure Arts Building in Little Rock. The testimony in that regard is uncontradicted. On the day of the incident, a Nabholz employee cut a three-foot square hole in the floor of the second story of the building, for heating and cooling ductwork to pass through. He laid a sheet of plywood over the hole. The plywood was not fastened down in any way, although it would have been easy to do so. No warning was written on the plywood, although it would have been easy to do so. No signs were placed over the plywood to warn that it covered a hole, although Nabholz had such signs available to it at the work site. No one warned the workmen on the second floor that there was a hole under the plywood. Graham, a sheetrocker, was clearing debris from the floor in the area of the hole in order to place scaffolding to hang sheetrock. When he lifted the plywood and stepped forward to shove it aside, he fell through the hole in the floor. The public policy of the State of Arkansas as it relates to safety in the workplace is expressed in Ark. Code Ann. § 11-2-117(a) (1987): Every employer shall furnish employment which is safe for the employees therein and shall furnish and use safety devices and safeguards. He shall adopt and use methods and processes reasonably adequate to render such an employment and place of employment safe and shall do every other thing reasonably necessary to protect the life, health, safety, and welfare of the employees. The term “employer” includes a corporation having control of a place of employment. Ark. Code Ann. § 11-2-102. As general contractor, Nabholz had control of the construction site of the Leisure Arts Building in Little Rock, and therefore Nabholz is an “employer” to which Ark. Code Ann. § 11-2-117 applies. However, the contracts with Lashley and Action have the effect of absolving Nabholz from all financial responsibility to any injured party for failing to render that workplace safe. Where a contract removes all financial incentives to provide a safe place to work, that contract is in violation of public policy expressed by our legislature in enacting Ark. Code Ann. § 11-2-117. Nabholz argues that the type of contract at issue was common in the construction industry, and amounts to no more than an agreement as to which party would bear the cost of insurance. I find significant differences between the absolute indemnity Nabholz claims from Action and Lasley, and a contract of insurance. Insurance is governed by statute and heavily regulated. The availability and cost of indemnity offered by insurance is based on the experience rating of the insured. And the indemnity provided by an insured policy has a financial limit. In the case at bar, the only legal control imposed on the absolute indemnity contracts is found in a series of decisions of this court over the past twenty-five years, in all of which the court has strained mightily to avoid upholding such contracts. Nabholz did not have to demonstrate insurability or a history of safe practices to obtain the indemnity, and in fact did not have to pay for it at all — the agreement to indemnify was a price the subcontractors had to pay for the privilege of doing business with Nabholz. And the indemnity Nabholz acquired had no financial limit. Nabholz took the position at oral argument that if Graham’s injuries had been found compensable in the sum of $50,000,000 by the jury, Action and Lasley would have been liable to it for that sum, even though Nabholz was the sole cause of the damage and Action and Lasley were innocent of any wrongdoing. It is obvious from the record that Nabholz had no financial incentive to provide a safe place to work. The legislature in Ark. Code Ann. § 11-2-117, has expressed a public policy in favor of preventing workplace accidents. In terms of social benefit, prevention of injury is even more important than adequate compensation for injury. Yet the contracts at issue made Nabholz totally unaccountable for its creation of a dangerous place to work. Therefore the contracts are against public policy.