Court Opinion

ID: 879056
Source: CourtListenerOpinion
Date Created: 2013-06-04 23:08:01.759175+00
Date Added: 2024-06-11T09:07:28.696490
License: Public Domain

No. 86-319
                IN THE SUPREME COURT OF THE STATE OF MONTANA
                                       1986

JOHN DWIGHT LASAR and BARBARA LASAR,
                 Plaintiffs,

BECHTEL POWER CORPORATION,
                 Defendant,
         and
BECHTEL POWER CORPORATION,
                 Third-Party Plaintiff and Respondent,
         -vs-
E. H. OFTEDAL     &   SONS, INC.,
                 Third-Party Defendant and Appel-lant.

APPEAL FROM:     District Court of the Thirteenth Judicial District,
                 In a.nd for the County of Yellowstone,
                 The Honorable Diane G. Barz, Judge presiding.

COUNSEL OF RECORD:

         For Appellant:
                 Lucas & Monaghan; Thomas M. Monaghan, Miles City,
                 Montana

         For Respondent:
                 Moulton Law Firm; John T. Jones, Billings, Montana
                 Goetz, Madden & Dunn, Bozeman, Montana

                                       Submitted on Briefs:   August 28, 1986
                                        Decided: October 24, 1986

Filed:   OCT 2 4 1986

                                       Clerk
Mr. Justtce John C. Sheehy delivered the Opinion of the
Court.

     E.   H.   Oftedal   &   Sons, Inc.       (Oftedal) appeal from a
decision by the District Court of the Thirteenth Judicial
District, Yellowstone County, ruling that Oftedal wa-s not
entitled to     attorney's       fees under       28-3-704, MCA.            We
affirm.
     The issue raised on appeal is whether the District Court
erred in reaching the conclusion that attorney's fees should
not be awarded under the reciprocal fee statute,                 §    28-3-704,
MCA, in suits based on indemnity contract clauses.
     Appellant Oftedal is third party defendant in a personal
injury action brought by           John and Barbara Lasar against
Bechtel   Power   Corporation.        John Lasar was         employed       by
Oftedal, a subcontractor of Bechtel, hence Bechtel brought an
action against Oftedal by way of a third party complaint
requesting indemnificat.ion for the Lasar v. Bechtel action.
Oftedal moved to dismiss the third party complaint, but that
motion was denied by the District Court.           An application for
writ of supervisory control to this Court was also denied.
Hence, Oftedal participated in the action as a third party
defendant responsible for the indemnification of Bechtel.
     In   December,      1985,    this   Court    decided        Raisler    v.
Burlington Northern R. Co.          (Mont. 1985), 717 P.2d 535, 42
St.Rep.   1997, which held that application of the Workers'
Compensation Act's exclusive remedy provision               ($       39-71-411,
MCA) as a defense against a third party's claim for indemnity
did not violate substantive due process under the state's
constitution.     As this issue was central to the third party
action brought by Bechtel against Oftedal, Oftedal moved the
District Court for summary judgment.           The motion sought to
dismiss Bechtel's third party indemnity claim and requested
attorney's fees under the reciprocal fee statute, S 28-3-704,
MCA.     The District Court granted Oftedal's motion as to the
indemnity issue, but denied Oftedal's claim against Bechtel
for attorney's fees.          Oftedal appeals the District Court's
denial of attorney's fees.            We affirm the District Court's
decision.
        The reciprocal attorney fee statute, 5 28-3-704, MCA
states:
        Contractual right to attorney fees treated as
        reciprocal. Whenever, by virtue of the provisions
        of any contract or obligation in the nature of a
        contract made and entered into at any time after
        July 1, 1971, one party to such contract or
        obligation has an express right to recover attorney
        fees from any other party to the contract or
        obligation in the event the party having that right
        shall bring an action upon the contract or
        obligation, then in any action on such contract or
        obligation all parties to the contract or
        obligation shall be deemed to have the same right
        to recover attorney fees and the prevailing party
        in any such action, whether by virtue of the
        express contractual right or by virtue of this
        section, shall be      entitled   to recover his
        reasonable attorney fees from the losing party or
        parties.
        Oftedal maintains that since Bechtel sought attorney's
fees in its indemnification clause in the Oftedal-Bechtel
subcontract, the reciprocal attorney's fees statute should
allow Oftedal to recover the            fees it incurred defending
itself against Bechtel's failed claim for indemnity.           Oftedal
asserts that support for the applicability of the reciprocal
fee statute comes from Bechtel's allegations, in its third
party     complaint,   that     the    indemnity   provision   in   the
subcontract obligated Oftedal to pay Bechtel's             attorney's
fees for the original Lasar v. Bechtel action as well as for
Bechtel's       fees    in prosecuting      the     third party        complaint
against Oftedal.
     Bechtel responds by reiterating the District Court's
decision holding that the attorney's fees clause in the
indemnity provision was not the type of provision intended to
be protected by the reciprocal fee statute.                     The District
Court,     in    its    memorandum     supporting       its    order    denying
Oftedal's motion for summary judgment explained:
     .    ..
           indemnity and hold harmless provisions are,
     by their very nature, somewhat                 ...
                                             a one-sided
     proposition.   The shifting of the obligation to
     defend or indemnify does not anticipate the raising
     of defenses as occasioned by a suit to recover a
     debt.
     The    District      Court was       correct in determining that
Oftedal was       not    entitled    to    attorney      fees from Bechtel
because of the third party action.                     The language of the
indemnity provision in the Bechtel-Oftedal subcontract does
not permit this Court to reach any other conclusion.                        The
subcontract provides:
    Indemnity:       Subcontractor    [Oftedal]   shall
    indemnify, defend and hold harmless Owner and
    Contractor [Bechtel],            ...
                                  against any and all
    suits,    actions,    legal    or    administrative
    proceedings, claims, demands, damages, liabilities,
    interest, attorney's fees, costs and expenses of
    whatsoever kind or nature whether arising before or
    after completion of the work hereunder and in any
    manner directly or indirectly caused, occasioned or
    contributed to in whole or in part, by reason of
    any action, omission, fault or negligence of anyone
    acting under its direction, control or on its
    behalf in connection with or incident to the work
    performed under this subcontract. Subcontractor's
    aforesaid indemnity and hold harmless agreement
    shall not be applicable to any liability caused by
    the sole action negligence of Contractor or Owner.
    The        indemnification      provided      by    this    language     is
designed to protect Bechtel from bearing the responsibility
for any wrongdoing by Oftedal.              By way of its third party
action,     Bechtel      sought   to      enforce      the    indemnification
provision against Oftedal for the Lasars' claim.                But for the
applicability of the Raisler decision, enforcement of the
indemnification provision would have been proper.                    However,
because       Raisler    precluded     Bechtel's     third   party   action,
Oftedal was not required to indemnify Bechtel against the
Lasars' claim.
      The immediate action            (Bechtel, third party plaintiff,
vs. Oftedal, third party defendant) , is not one indemnified
under the language of the subcontract.                The indemnification
language protects Bechtel from claims made by someone other
than the contracting parties.               The protection is in Bechtel's
"behalf in connection with or incident to the work performed
under the subcontract."          Hence, the attorney's fees Bechtel
incurred in its suit against Oftedal seeking indemnification
were not within the subject matter of this contract.                 This in
turn means that S          28-3-704, MCA has no applicability, as
there was never a requirement that Oftedal pay Bechtel's
attorney's fees for enforcement of the indemnity agreement in
the third party action.
      Section 28-3-704, MCA, grants a reciprocal right to
attorney's fees when the party from whom one is requesting
fees has an express right to attorney's fees.                When plaintiff
in a suit for indemnity does not have an express right to
attorney's fees for that action, and no agreement otherwise
exists    between       them,   the    defendant    is   not   entitled   to
reciprocal attorney fees.         Town Pump v.       itema an (~ont.3.981),
622 P . 2 d   212, 38 St.Rep.         54.     This case is ruled by the
decision in Town Pump.
      Therefore, we affirm the

                                                      Justice

                                        4
                                      -d-
We Concur: