Court Opinion

ID: 5162266
Source: CourtListenerOpinion
Date Created: 2022-01-02 02:58:14.699035+00
Date Added: 2024-06-11T08:25:40.731131
License: Public Domain

COMPTON, Justice,
with whom MOORE, Justice, joins, dissenting.
The state argues, and this court agrees, that “loss” as used in the indemnity clause is equated with “the amount of money actually paid by the state in settlement of the claim.” Since I believe this interpretation ignores the plain language of the indemnity clause, I dissent.
As it applies to this case, the indemnity clause reads:
The Purchaser [Schnabel Lumber Company] shall indemnify the state and hold it harmless for any and all claims, demands, suits, loss, liability and expense, for ... damage to or loss of property ... except for damages [to property], or loss [of property] proximately caused by negligence of the state.
The obvious purpose of the clause is to protect the state from vicarious liability for the result of conduct engaged in by a purchaser of state resources. However, the clause explicitly does not protect the state from liability for the result of its own wrongful conduct. The clause allocates responsibility on the basis of the comparative negligence, if any there be, of the state and the purchaser.
Manifestly, there is no reason why the amount of property damage or loss is necessarily equal to “the amount of money *721actually paid by the state in settlement of the claim.” Yet that is this court’s curious conclusion.
The property damaged or lost was Schnabel Lumber Company’s (Schnabel) Caterpillar (Cat) 235 Log Loader. That damage amounted to $158,400. That is the amount for which suit was brought by Pine Top Insurance Company (Pine Top), Schnabel’s subrogee,1 and the amount adopted by the state in calculating the value of the damage to the Cat.2 As all parties now agree, they are bound by the determination that 60% of the damage was proximately caused by the state’s negligence. Under the indemnity clause, Schnabel is responsible for holding the state harmless for any amount over that percentage. Since the state paid not a penny more than the 60% for which it is responsible, it is entitled to nothing from Schnabel.
The state argues that it wants only to be given the same treatment in the Pine Top suit as it was in the Higdon suit.3 However, significant circumstances are different.
In Higdon, plaintiff alleged that “damages to the estate and dependents ... amount to $1,000,000.00 or to such amount as will be proven at trial.” Plaintiff prayed “1. Por a judgment of $1,000,000.00 for compensatory damages caused to the estate and dependents of Bill Higdon;”. The state did not accept that figure as constituting the damages to the estate and dependents. The plaintiff and the state later settled upon a figure which the state did accept as the damages to the estate and dependents. That figure was $500,000. In exchange for receipt of that sum, the entire amount of which was paid by the state, the plaintiff released the state and “all other persons, firms and corporations who might be liable” from any further liability. Damages were thus irrevocably determined. Schnabel did not contest their reasonableness.4
In the case now before us, Pine Top, the subrogee of Schnabel, alleged damage to the Cat in the amount of $158,400, alleged that the reasonable value of the damage to the Cat was $158,400, and prayed for judgment in the principal amount of $158,400. Ultimately the state accepted that figure as constituting the damage to the Cat. As stated by state’s counsel during oral argument before the superior court: “Between myself and Mr. Hoffman [Pine Top’s counsel], we reached a settlement. It was sixty percent of the appraised-value damage to the Cat.” Instead of paying the entire amount to Pine Top and seeking 40% indemnity from Schnabel, the state simply paid 60% of the entire amount to Pine Top. The significant difference between this case and Higdon is that the loss was suffered by a party to the indemnity agreement.
It is also a significant difference that when the state arrived at a settlement in Higdon in January 1984, it did not know what interpretation was going to be given to the indemnity clause by the trial court. That was not determined until August 1984. More importantly, the relative re*722sponsibility of the state and Schnabel was not determined until the jury trial in March 1985.
The state’s offer of settlement with Pine Top was not made until April 1985. In January 1984, the only known factor in the indemnity computation was what property had been damaged or lost. That was Schnabel’s Cat. The trial court had not then interpreted the indemnification clause. The trial jury had not then allocated responsibility in terms of percentages of fault. The state had not then accepted $158,400 as the measure of damage to the Cat.
Contrary to this court’s conclusion, the trial court did not apportion damages in Pine Top “in the same manner in which it had apportioned them in Higdon.” The trial court’s own view that it did so is patently wrong. Furthermore, contrary to this court’s conclusion, it is construing the term “loss” “differently than in the earlier wrongful death action.”
In my view the trial court’s actual ruling in Higdon was correct. Applying that ruling to this case, Schnabel is liable under the indemnity clause for only that portion of its own loss which is not directly attributable to the negligence of the state. Schnabel, through its subrogee Pine Top, has paid its portion of the loss. The state is entitled to nothing.
FACSIMILE COPY
APPENDIX A
April 9, 1985
465-3603
Paul Hoffman
Robertson, Monagle, Eastaugh & Bradley
P.O. Box 1222
Juneau, AK 99802
Re: Pinetop v. State
Dear Paul:
Mike Lessmeier was unable to give me an answer concerning the willingness of his client to settle the Pinetop claim. I have received authorization from my client to offer 60% for a full settlement following which I will seek reimbursement from Schnabel Lumber Company. I calculate the value as follows:
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Let me know if this offer is acceptable to your client and I will order a check.
Sincerely,
NORMAN C. GORSUCH ATTORNEY GENERAL
By: Bill Mellow
Assistant Attorney General
WGM:jal

. It is well settled law that Pine Top stands in the shoes of its subrogor, Schnabel. Insurance Co. of N. Am. v. State Farm Mut. Auto. Ins. Co., 663 P.2d 953, 955 (Alaska 1983); Liberty Mut. Ins. Co. v. Fales, 8 Cal.3d 712, 106 Cal.Rptr. 21, 24, 505 P.2d 213, 216 (1973). The recovery sought by Pine Top was for the damage to Schnabel’s property, not Pine Top’s.

. See Appendix A.

. Barbara F. Higdon, Personal Representative of the Estate of Bill Higdon v. State of Alaska, 1 JU-82-955 Civ. In Higdon, the trial court ruled “Under this interpretation, Schnabel may still have to indemnify the State. It will be liable under the indemnity clause for that portion of plaintiff’s [Higdon’s] recovery [$500,000] which is found to be attributable to Schnabel’s negligence.” (Emphasis added). However, in Pine Top the same trial court ruled “This court concludes that, in this case as well as in Higdon, the ‘loss’ which is referred to in the indemnity clause ought to be defined as the amount actually paid out by the state." (Emphasis added). In my view only the first interpretation is correct. Both cannot be.

.See Parfait v. Jahncke Serv. Inc., 484 F.2d 296, 305 (5th Cir.1973), cert. denied sub nom., Ruppel v. Travelers Indem. Co., 415 U.S. 957, 94 S.Ct. 1485, 39 L.Ed.2d 572 (1974); Pan American Petroleum Corp. v. Maddux Well Serv., 586 P.2d 1220, 1225 (Wyo.1978); Prociw v. Baugh Constr. Co., 9 Wash.App. 750, 515 P.2d 518, 522 (1973).