Court Opinion

ID: 9850023
Source: CourtListenerOpinion
Date Created: 2023-09-24 04:51:08.610942+00
Date Added: 2024-06-11T09:20:30.505653
License: Public Domain

BISTLINE, Justice,
concurring in the judgment to affirm, but not in the opinion of the Court.
The holding of the Court’s opinion is “that the word ‘brought’ signifies that the *680duty to indemnify is triggered when the claim is made and not when it is successfully concluded.” I do not comprehend the rationale by which this conclusion is reached, but see it as a mere ipse dixit, unsupported by any authority. Having uttered such pronunciado, the Court’s opinion terminates with a quotation from International Harvester Co. v. TRW Co., No. 14282 in this Court1 to the effect that once the right to indemnification is established, the indemnitee is entitled to expenses and attorney’s fees sustained in providing the defense which the indemnitor decline to provide, the latter having been notified of the claim and offered the opportunity to take over the defense. This is a sound proposition, but the sole issue presented here was whether the contract of indemnity did in fact so obligate the indemnitor. Contrary to my reading of the Court’s “holding,” supra, the bringing of a claim does not trigger the obligation of the indemnitor unless the contract of indemnity so provides. What is at stake here is the construction of the written agreement.
The issue here addressed in the appellant’s brief, and avoided in the Court’s opinion, is whether the contractual provision in question created a duty to defend. Appellant’s Brief, p. 15. It must be conceded that the agreement does not contain any language speaking in terms of a duty to defend. Properly read it does state that the contractor shall indemnify the State of Idaho for damages sustained. In an inartfully drawn agreement those underscored words are there, and do constitute an agreement to indemnify. As the case turned out, however, no damages were awarded the Farbers, and no judgment was entered against the State — hence leaving nothing to indemnify in that regard. As urged by appellant, “If the State had wanted to require contractors to defend the State from all claims based in part on allegations of the contractor’s negligence, regardless of the outcome of those claims, the State could have easily made this an express term of its contract.” Appellant’s Brief, p. 15. This is strong argument. The State could have done so, and had it done so, this litigation could have been avoided. Most liability policies are found to include language which not only promises to indemnify the insured as to any judgment taken against the insured, but also to “provide the defense.” Much of the appellant’s argument is devoted to the proposition that, absent its having undertaken by the written agreement the duty to defend, and absent there being any judgment to indemnify, it cannot be held liable for the State’s expenses in defending against the Farmers' claim.2
It becomes in order, then, to ascertain, as the Court’s opinion does not, the rationale by which the district court concluded that the State could recover:
“An agreement to ‘hold harmless’ is generally held to include an obligation to defend, or to reimburse for costs of defense, when an action within the terms of the agreement is filed against the indemnitee. United States Fire Insurance Co. v. Chrysler Motors Corp., (1973) [264 Or. 362] 505 P.2d 1137. The State is not held harmless if it must incur costs and attorneys’ fees in defending itself in this action.
“The intent of the parties in making an agreement is of paramount importance, and such agreement must be interpreted in accordance with the plain, ordinary and popular sense of the language used in the agreement and by giving consideration on a practical, reasonable and fair basis to the instrument in its entirely. To state that the contract is for judg*681ment indemnity only would be to read into the contract a limitation which is not present nor intended. The indemnity clause specifies ‘all suits, actions or claims of character ...’
“The fact that the law suit is brought because of an injury or damage received or sustained does not mean there is liability, and to give the construction to the contract requested by Asphalt would put the indemnitee in a position where he would have to defend every law suit even though the indemnitor might be in a more knowledgable position to defend, and then find the same to be counterproductive if he (the indemnitee) wins since the indemnitee’s recovery of costs and expenses would be limited only to those cases where there is a Judgment against him. This is a strained construction and, in my opinion, not realistic in light of the facts of this case.
“The contract before the Court does not require that anyone be held liable or found to be guilty of some wrongdoing before the contractor is obligated to hold the State of Idaho harmless. Rather, the express terms for the contract obligate the contractor to save harmless the State from all suits, actions, or claims of any character. There is no stipulation that these claims be well founded, or that they result in a finding that any party is legally liable to the claimant. The contractor must simply hold the State harmless where a claim is made. Unless the contractor either undertakes the defense of the State in this context or reimburses it for its costs of defense, it has not complied with this obligation.”
Memorandum Decision of Judge Lodge, R., pp. 21-23.
I find myself in accord with the views of the district court, which in my opinion should have been adopted by this Court. Where today’s opinion for the Court holds that the duty to indemnify is triggered when the claim is made, a fortiori, there first must be found to exist a duty to indemnify. The district court, Judge Lodge, found that duty in the “save harmless” language of the written agreement. Apparently my experience over the years has paralleled his. While it might be said that one does not indemnify from suits, actions, or claims, there is little problem in saying that one may very well agree to save harmless from suits, actions, or claims. As is a well-known fact of life, lawsuits are expensive, and the very cost of being put to a lawsuit may in many instances exceed the judgment against which there is the protection of an agreement couched in terms of indemnity. Perhaps it would have been better that the agreement in question spoke to saving harmless from the expenses of suits, actions, or claims, but if it is not implicit therein that it is expenses which are being protected against, whatever else could have been in mind by the inept drafters of that provision?
The Oregon case relied upon by Judge Lodge sets forth the same view which I thought prevailed where “save harmless” language is used in an agreement. “An agreement to ‘hold harmless’ is generally held to include an obligation to defend, or to reimburse for the costs of defense, when an action within the terms of the agreement is filed against the indemnitee.” United States Fire Insurance Co. v. Chrysler Motors Corp., 505 P.2d at 1141.
Finally, as a closing note, by way of caveat, making reference to that exact excerpt quoted in the Court’s opinion out of St. Paul Fire and Marine Insurance Co. v. Crosetti Bros., the Oregon Supreme Court later declared in United States Fire Insurance Co. v. Chrysler Motors Corp., that it was an “overbroad statement,” 505 P.2d at 1140, saying of it that “by its terms the statement applies only to claims against an indemnitee for which he is entitled to indemnification.” 505 P.2d at 1141.

. A petition for rehearing was granted in this case. It had been my impression over the last eight years that an opinion of this Court did not rely upon a prior decision which was not wholly a final judgment, i.e., that the remittitur had issued.

. "While the basic concepts are not identical and each has varied legal usages, indemnity and insurance have common elements. Fundamentally each involves contractual security against anticipated loss, and in each case there must be a risk of loss to which one party may be subjected by contingent or future events,____”
42 CJ.S. 566, Indemnity, § 3.