Court Opinion

ID: 2785327
Source: CourtListenerOpinion
Date Created: 2015-03-11 15:07:36.783433+00
Date Added: 2024-06-11T11:28:35.711987
License: Public Domain

IN THE COURT OF APPEALS OF IOWA

                                    No. 14-0032
                               Filed March 11, 2015

PAUL CRAIG JEFFRIES and GERALD JEFFRIES as
Administrators/Executors of the Estate of FANCHON B. JEFFRIES,
     Plaintiffs-Appellants,

vs.

GENERAL CASUALTY INSURANCE COMPANIES, et al.,
     Defendants-Appellees.
________________________________________________________________
     Appeal from the Iowa District Court for Jasper County, Darrell Goodhue,
Judge.
        The plaintiffs appeal from the district court’s grant of summary judgment to
all defendants. AFFIRMED.
        Erin Patrick Lyons and David J. Dutton of Dutton, Braun, Staack
& Hellman, P.L.C., Waterloo, for appellants.
        Douglas A. Haag of Patterson Law Firm, L.L.P., Des Moines, for appellee
General Casualty Insurance Company.
        Joseph M. Barron and John M. Wharton of Peddicord, Wharton, Spencer,
Hook, Barron & Wegman, L.L.P., West Des Moines, for appellees Interstate
Insurance Services, LTD.; Leonard Woythaler; David Lureman; and Josie Carter.
        Apryl Delange and Rebecca Reif of Hopkins & Huebner, P.C., Des
Moines, for appellees Jasper Construction Services, Inc.; Donald Van
Dusseldorf; and Steven Rhoads.
        Kimberly S. Bartosh of Whitfield & Eddy, P.L.C., Des Moines, for
appellees Heritage Mutual Insurance Company n/k/a Acuity Mutual Insurance
Company; and Heritage Insurance, Heritage Insurance Companies.
        Timothy N. Lilliwitz, Des Moines, for appellees Reed Construction Co.,
Inc., et al.
        Heard by Vaitheswaran, P.J., and Tabor and Mullins, JJ. Goodhue, S.J.,
takes no part.
                                          2

VAITHESWARAN, P.J.
         The primary issue in this appeal is whether a contractor and subcontractor
on a city construction project have a duty to indemnify a truck driver and the
truck’s owner for the truck driver’s negligence.
   I.       Background Facts and Proceedings
         Jasper Construction Services, Inc. contracted with the City of Centerville,

Iowa, to resurface streets. Jasper subcontracted with Reed Construction Co.,

Inc. to provide and lay the asphalt. Reed, in turn, contacted Larry Dean Reinier

to transport the asphalt. Orval Kopp drove a truck owned by Reinier. While

behind the wheel, Kopp failed to yield and crashed into a car in which Fanchon

B. Jeffries was a passenger. Jeffries died.

         The administrators of Jeffries’ estate sued Kopp and Reinier. The Jeffries

reached a settlement, which included an assignment to the estate of Reinier’s

and Kopp’s indemnification rights, if any. The Jeffries then sued Jasper, Reed,

their insurers, and the company retained to procure insurance for Jasper. The

district court granted summary judgment in favor of all the defendants.          The

Jeffries appealed.

   II.      Analysis

         Summary judgment is proper only if “the pleadings, depositions, answers

to interrogatories, and admissions on file, together with the affidavits, if any, show

that there is no genuine issue as to any material fact and that the moving party is

entitled to a judgment as a matter of law.” Iowa R. Civ. P. 1.981(3). Indemnity

questions are legal issues, appropriate for the court to decide as a matter of law.

Martin & Pitz Assocs., Inc. v. Hudson Constr. Servs., Inc., 602 N.W.2d 805, 808

(Iowa 1999).
                                         3

       The Jeffries contend defendants Jasper and Reed and their insurers

General Casualty Insurance Companies and Heritage Mutual Insurance

Company, “were required to indemnify Reinier and Kopp” for Kopp’s negligence

in failing to yield and, because Reinier and Kopp assigned their claims to the

estate, their summary judgment motions should not have been granted.

       “Under a contract for indemnification, ‘one party (the indemnitor) promises

to hold another party (the indemnitee) harmless for loss or damage of some

kind.’” McNally & Nimergood v. Neumann-Kiewit Constructors, Inc., 648 N.W.2d
564, 570 (Iowa 2002) (quoting II E. Allan Farnsworth, Farnsworth on Contracts

§ 6.3, at 108 (2d ed. 1998)). Indemnity agreements are generally held to the

same standards of construction as other contracts. Campbell v. Mid-Am. Constr.

Co. of Iowa, 567 N.W.2d 667, 669 (Iowa Ct. App. 1997). However, “we have

crafted a special rule of construction for indemnification contracts when the

contract is claimed to relieve the indemnitee from liability for its own negligence.”

McNally, 648 N.W.2d at 571. “This rule provides that indemnification contracts

will not be construed to permit an indemnitee to recover for its own negligence

unless the intention of the parties is clearly and unambiguously expressed.” Id.

“Thus, indemnification contracts claimed to contain these provisions are

construed more strictly than other contracts.”       Id.   Additionally, “‘where an

indemnification is not given by one in the insurance business but is given incident

to a contract whose main purpose is not indemnification, the indemnity provision

must be construed strictly in favor of the indemnitor.’” Martin & Pitz, Inc., 602
N.W.2d at 809 (quoting 41 Am.Jur.2d Indemnity § 13, at 356 (1995)).
                                              4

     A. Jasper-Centerville Contract

        The Jeffries begin with section 2.20(d) of the contract between Jasper and

the city, which states:

        The Contractor shall be fully responsible for all acts and omissions
        of his Subcontractors and of persons and organizations directly or
        indirectly employed by them and of persons and organizations for
        whose acts any of them may be liable to the same extent that he is
        responsible for the acts and omissions of persons directly
        employed by him. Nothing contained in this Contract shall create
        any contractual relation between any Subcontractor and the Owner.

They contend this provision holds Jasper responsible for the acts of Reinier and

Kopp.

        In isolation, section 2.20(d) could be read as the Jeffries request. But

“‘meaning can almost never be plain except in context.’” Fausel v. JRJ Enters.,

Inc., 603 N.W.2d 612, 618 (Iowa 1999) (quoting Restatement (Second) of

Contracts § 212 cmt. b (1981)). “A writing is interpreted as a whole, and all

writings that are part of the same transaction are interpreted together.”

Restatement (Second) of Contracts § 202 (1981). This rule does “‘not depend

upon any determination that there is an ambiguity, but [is] used in determining

what meanings are reasonably possible as well as in choosing among possible

meanings.’”       Fausel, 603 N.W.2d at 618 (quoting Restatement (Second) of

Contracts § 202 cmt. a (1981)).

        Section     2.20(d)   falls   under   the   heading   “Superintendence   and

Workmanship,” within the “General Conditions of Contract.” In context, there is

simply no question the cited language delineates Jasper’s responsibilities to the

City of Centerville. As the district court stated, the estate is “attempting to make
                                              5

language obviously included to protect the City into an indemnification clause to

protect a third party for their own fault.”

       The Jeffries nonetheless argue a separate indemnification clause running

to the city, section 2.10(a) would render section 2.20(d) superfluous if section

2.20(d) is also read as an indemnification clause running to the city.     See Alta

Vista Props., LLC v. Mauer Vision Ctr., PC, 855 N.W.2d 722, 727 (Iowa 2014)

(“‘[A]n interpretation which gives a reasonable, lawful, and effective meaning to

all terms is preferred to an interpretation which leaves a part unreasonable,

unlawful, or of no effect.’” (citation omitted)).

       Section 2.20(d) is a clause outlining Jasper’s responsibilities with respect

to “superintendence and workmanship,” whereas section 2.10(a) is a general

indemnification clause holding the owner harmless “from any and all liability

claims, losses or damage arising or alleged to arise from the performance of the

work” except those arising from the “sole negligence of the Owner or the

Engineer.” See Thomas v. Progressive Cas. Ins. Co., 749 N.W.2d 678, 685

(Iowa 2008) (notwithstanding rule to interpret policy so as not to render any

provision superfluous, “‘we will not do so when that [interpretation] is inconsistent

with the structure and format of the [provision] and when that [interpretation] is

otherwise unreasonable’” (citation omitted)). The provisions are not coextensive

and, therefore, not redundant. Accordingly, we find this argument unpersuasive.

       Other contract language cited by the Jeffries also does not alter our

conclusion. For example, section 2.21(e), which states, “[t]he contractor shall be

responsible for all accidents that occur through negligence of himself, his

employees, or subcontractors,” is preceded by a reference to maintaining
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“sufficient warning signs, lights, and barricades on the work to mark all

excavations and places dangerous to traffic and pedestrians.” The entire section

falls under the heading “Protection of Property.” Again, there can be no question

the section relates to the city’s work site and Jasper’s responsibilities on the work

site.

         We conclude the contract between Jasper and the City of Centerville does

not express a clear and unambiguous intent to indemnify Reinier and Kopp for

Kopp’s negligence in striking the vehicle in which Jeffries was a passenger. See

McNally, 648 N.W.2d at 571. Accordingly, the district court correctly granted

Jasper’s motion for summary judgment. Our conclusion necessarily resolves the

Jeffries’ claims against Jasper’s insurers, the General Casualty Companies.

        B. Jasper-Reed Subcontract Agreement

         The Jeffries next contend Reed “agreed to step into Jasper’s shoes with

respect to Reinier’s and Kopp’s liability to” them. They rely on section 15 of the

Jasper-Reed subcontractor agreement, which states:

         A. To the fullest extent permitted by law, the Subcontractor shall
         indemnify, defend and hold harmless the Owner, Contractor,
         Engineer, Engineer’s consultants, their agents and employees,
         from and against claims damages, losses, and expenses including
         but not limited to attorney’s fees and expenses 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 injury to
         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 party by the negligent act or omission of the
         Subcontractor, the Subcontractor’s 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 covered in part by a party indemnified hereunder. Such
         obligations shall not be construed to negate, abridge, or otherwise
                                          7

       reduce other rights or obligations of indemnity which would
       otherwise exist as to a party or person described in this action.

In the Jeffries’ view, this provision required Reed to “(1) assume[] ‘all’ of Jasper’s

‘obligations and responsibilities,’ and (2) agree[] to indemnify Jasper for claims

against it arising out of ‘the negligent act or omission of [Reed], [Reed’s]

subcontractors, anyone directly or indirectly employed by them.’”

       Like the district court, we believe the Jeffries’ arguments as to Reed’s

responsibilities fail based on our conclusion concerning Jasper’s obligations: if

Jasper had no obligation to indemnify Reinier and Kopp, neither did Reed. But,

even if this were not the case, the district court correctly concluded a separate

provision in Reed’s subcontractor agreement, section 12, “limits Reed’s

obligation[s under section 15A] . . . to those obligations and responsibilities that

the contractor had assumed towards the owner.”

       The district court did not err in granting Reed summary judgment.

Accordingly, the court also did not err in granting Reed’s insurance carrier,

Heritage, summary judgment.

     C. Third-Party Beneficiary

       The Jeffries alternatively contend Reinier and Kopp were third-party

beneficiaries of the Jasper-Centerville contract and the Jasper-Reed contract. In

deciding this issue, we focus on “whether the contract manifests an intent to

benefit a third party.” Midwest Dredging v. McAninch Corp., 424 N.W.2d 216,

224 (Iowa 1988) (adopting the Restatement (Second) of Contracts § 302 (1981)

relating to third-party beneficiaries).
                                          8

       The Jasper-Centerville contract unambiguously disclaims third-party

beneficiary status. The contract incorporates a standard Iowa Department of

Transportation (DOT) provision, section 1107.12, which states:

       [I]t is specifically agreed between the parties executing this contract
       that it is not intended by any of the provisions of any part of the
       contract documents to create in the public or any member thereof a
       third-party beneficiary hereunder, or to authorize anyone not a party
       to this contract to maintain a suit for personal injuries or property
       damage pursuant to the terms or provisions of this contract. The
       duties, obligations, and responsibilities of the parties to this contract
       with respect to third parties shall remain as imposed by law.

The provision further states:

       It is understood that no subcontractor is a third-party beneficiary to
       any contract between the Contracting Authority and the prime
       contractor. Nothing in any special provision or any supplemental
       specification shall be construed as eliminating or superseding the
       requirements of this section.

The contractual intent could not be clearer.

       The Jeffries, however, point to another portion of the DOT specifications

stating “Unless otherwise specified in the Special Provisions, the Department of

Transportation Specifications shall not apply to General Conditions of Contract,

definition of Pay Items, measurement of quantities, or payment.” In their view,

section 1107.12 is inapplicable to section 2.20(d) which, as noted, appears under

the general conditions section of Jasper’s contract with the city. This argument

overlooks the “[u]nless otherwise specified” language.         By its terms, section

1107.12 applies to “any of the provisions of any part of the contract documents.”

This language is dispositive. See RPC Liquidation v. Iowa Dep’t of Transp., 717
N.W.2d 317, 322 (Iowa 2006) (construing section 1107.12 to mean “there are no
                                          9

third-party beneficiaries to the contracts”). The district court correctly refused to

find Reinier and Kopp to be third-party beneficiaries of the contracts.

     D. Iowa Rule of Civil Procedure Claim

       The Jeffries also seek to hold Jasper and Reed accountable under Iowa

Rule of Civil Procedure 1.202. The rule states:

       When a bond or other instrument given to the state, county, school
       or other municipal corporation, or to any officer or person, is
       intended for the security of the public generally, or of particular
       individuals, action may be brought thereon, in the name of any
       person intended to be thus secured, who has sustained an injury in
       consequence of a breach thereof, except when otherwise provided.

Iowa R. Civ. P. 1.202. The district court rejected this argument, reasoning “[t]he

bond is limited in its obligation to claims for performing any work or labor in

furnishing materials. It assumes no obligation beyond that stated. . . . Plaintiff’s

claims do not fit under any of the classifications covered and included in the

bond.” We discern no error in this ruling.

     E. Interstate

       The Jeffries’ claim against Interstate Insurance Services is based on

Jasper’s request to have Interstate procure insurance for it. The Jeffries contend

Interstate breached a general duty to “use reasonable care, diligence, and

judgment in procuring the insurance requested by an insured.” In their view,

Interstate should have procured insurance covering Reinier and Kopp.

       Before a plaintiff may prevail on a claim that an insurance agent was

negligent in providing insurance to a third-party,

     a plaintiff [must] show that he or she was the “direct, intended, and
     specifically identifiable beneficiar[y]” of the policy as well as the other
     elements of negligence. Further, the plaintiff must produce evidence
     from the written instrument itself that indicates the plaintiff is the
                                           10

     intended beneficiary of the policy. If the plaintiff cannot show that he
     or she is the intended beneficiary of the policy, then the insurance
     agent does not owe that plaintiff a duty of care

Pitts v. Farm Bureau Life Ins. Co., 818 N.W.2d 91, 106 (Iowa 2012) (citations

omitted).     The Jeffries could not make this showing.      As noted, the direct,

intended, and specifically identifiable beneficiary of Jasper’s insurance policies

was the City of Centerville. Nowhere is there an indication Jasper also intended

to cover unknown individuals who might, through their own negligence, injure

other unknown individuals.

   III.      Disposition

          We affirm the summary judgment rulings in favor of the defendants.

Based on our manner of disposition, we find it unnecessary to address the

Jeffries’ argument that Reinier and Kopp were Jasper’s and Reed’s

subcontractors.    We also find it unnecessary to address their argument that

Jasper and Reed assumed liability for their negligence under their contracts

(assuming this is a different argument than the indemnification argument

discussed in Part II, section A, above).

          AFFIRMED.