Day v. Toman

• Citation: 266 F.3d 831
• Decision Date: 21 August 2001
• Docket Number: No. 00-3237,00-3237
• Parties: (8th Cir. 2001) ROSE MARIE DAY, PERSONAL REPRESENTATIVE OF THE ESTATE OF JASON DAVID DAY, DECEASED; ROSE MARIE DAY, PERSONAL REPRESENTATIVE OF THE ESTATE OF DAVID GEOFFREY DAY, DECEASED, ASSIGNEE OF, PLAINTIFFS/APPELLEES, STEWART CONSTRUCTION, INC., A NEBRASKA CORPORATION; DOUG STEWART, DOING BUSINESS AS STEWART'S CAT SERVICE AND STEWART CONSTRUCTION, INC., PLAINTIFFS, v. GERALD TOMAN; INDIANOLA INSURANCE COMPANY, DEFENDANTS/APPELLANTS. Submitted:
• Court: United States Courts of Appeals. United States Court of Appeals (8th Circuit)

Page 831

266 F.3d 831 (8th Cir. 2001)

ROSE MARIE DAY, PERSONAL REPRESENTATIVE OF THE ESTATE OF JASON DAVID DAY, DECEASED; ROSE MARIE DAY, PERSONAL REPRESENTATIVE OF THE ESTATE OF DAVID GEOFFREY DAY, DECEASED, ASSIGNEE OF, PLAINTIFFS/APPELLEES, STEWART CONSTRUCTION, INC., A NEBRASKA CORPORATION; DOUG STEWART, DOING BUSINESS AS STEWART'S CAT SERVICE AND STEWART CONSTRUCTION, INC., PLAINTIFFS, v. GERALD TOMAN; INDIANOLA INSURANCE COMPANY, DEFENDANTS/APPELLANTS.

No. 00-3237

UNITED STATES COURT OF APPEALS FOR THE EIGHTH CIRCUIT

Submitted: August 21, 2001

Filed: September 17, 2001

Appeal from the United States District Court for the District of Nebraska. [Copyrighted Material Omitted]

Before Ross, Fagg, and Beam, Circuit Judges.

Beam, Circuit Judge.

Appellant, Gerald Toman, appeals the district court's¹ judgment overruling his motion for judgment notwithstanding the verdict, or in the alternative, a motion for a new trial. For the reasons set forth below, we affirm.

I. BACKGROUND

A. Alignment of the Parties

Appellee, Rose Marie Day, brought this case against Toman pursuant to an assignment by Doug Stewart of his claim against Toman and Indianola Insurance Agency for negligently failing to procure commercial liability insurance for Stewart's business, Stewart Construction, Inc.

Day's husband and son were killed while working for Stewart Construction at a water injection plant then owned by Convest Energy Corporation, and Day is the personal representative of their estates. Several lawsuits ensued following the deaths: Day v. Convest Energy Corporation for wrongful death; Day v. Doug Stewart and Stewart Construction, Inc. for workers' compensation; Continental Western v. Rose Marie Day, Convest Energy Corporation, Doug Stewart and Stewart Construction, Inc. for a declaratory judgment as to the terms of the insurance policy at issue; Convest Energy Corporation v. Doug Stewart and Stewart Construction, Inc., as third-party defendants, seeking indemnification under a Master Service Contract; and Doug Stewart and Stewart Construction, Inc. v. Gerald Toman and Indianola Insurance Co. under a cross-claim for failure to procure insurance.

A settlement agreement was entered into by Day, Convest, Doug Stewart, Stewart Construction, Inc., and Continental Western Insurance Corporation, whereby Day received a sum of money in excess of $300,000 and an assignment from Convest of the right to pursue an additional sum of $300,000 from Stewart pursuant to the Master Contract indemnification clause. In turn, Stewart assigned Day his claim against Toman and Indianola Insurance Agency for negligently failing to procure commercial liability insurance.

All other claims were dismissed in this settlement agreement except, as indicated, Convest's claim against Stewart for indemnification under the Master Service Contract and Stewart's claim against Toman for negligence, both of which were assigned to Day in exchange for a release of all remaining claims and a covenant not to execute.

B. Background

Day's husband and son were killed on February 28, 1996. For many years Stewart had operated his business as Stewart's Cat Service, a proprietorship. On September 11, 1995, Stewart incorporated in Nebraska under the name of Stewart Construction, Inc., and proceeded to meet with his insurance agent, Toman, on September 27 regarding commercial insurance coverage. Toman was an insurance agent acting on behalf of Indianola Insurance Agency and Continental Western Insurance Company. As a result of this meeting, Stewart procured workers' compensation insurance for his company. At issue is whether Stewart did in fact request certain coverage and whether he advised Toman of his new corporate status.

One month before incorporation, in August 1995, Stewart and Convest entered into a "Master Service Contract" (Master Contract) that specifically contained a provision requiring Stewart to indemnify Convest in the amount of $300,000. The language of the indemnification clause states that Stewart will indemnify Convest "against any and all losses, claims, demands, liabilities or causes of action of every kind and character, in favor of any person or party, for which injury, illness or death arises out of or is incident to the work performed under [the] Contract." As part of this Master Contract, Stewart agreed to indemnify Convest even if such injury, illness or death was caused in whole or part by a pre-existing defect, Convest's negligence or strict liability, or other legal fault of Convest.

Following the deaths of Day's husband and son, Stewart notified Toman of the accident. Continental Western denied coverage for claims relating to the deaths because, among other reasons, the policy did not list Stewart's new corporate name as the named insured on the policy.

The district court specifically reserved resolution of the issue concerning Stewart's liability to Convest under the Master Contract until after the trial regarding Toman's alleged negligence had concluded. The issue before the district court at trial, then, was Day's claim, as Stewart's assignee, for Toman's negligent failure to procure insurance. The jury entered judgment in favor of Day in the amount of $320,072.

II. DISCUSSION

A. Statutory Prohibition

Toman argues that under Neb. Rev. Stat. § 25-21,187 (Reissue 1995), the Master Contract between Convest and Stewart is wholly void as against public policy. The statute states in relevant part:

In the event that a public or private contract or agreement for the construction, alteration, repair, or maintenance of a building, structure... or other work dealing with construction... contains a covenant, promise, agreement, or combination thereof to indemnify or hold harmless another person from such person's own negligence, then such covenant, promise, agreement, or combination thereof shall be void as against public policy and wholly unenforceable.

Toman's argument fails because even if a party holds the other harmless for the other's own negligence, thereby falling under the section 25-21,187 prohibition, the entire indemnification provision is not void and unenforceable. Hiway 20 Terminal, Inc. v. Tri-County Agri-Supply, Inc., 443 N.W.2d 872, 875-76 (Neb. 1989). Under Nebraska law, only the portion prohibited by section 25-21,187 is stricken from the indemnification clause and the language remaining may be interpreted to impose liability on the indemnitor. Id. As applied to the facts before us, Stewart could, depending upon extant circumstances, remain liable to Convest for indemnification of all claims that do not arise as a result of Convest's own negligence.

However, this statutory issue is not properly before us. The district court held that Toman waived this defense. We agree. Toman did not raise the section 25-21,187 defense in his pre-verdict, Rule 50(a) motion for judgment as a matter of law and may not now raise it on appeal after having raised it for the first time in his post-verdict, Rule 50(b) motion. See Browning v. President Riverboat Casino-Missouri, Inc., 139 F. 3d 631, 636 (8th Cir. 1998) (stating that in making a renewed motion for judgment as a matter of law, a movant generally must assert only those grounds previously raised in the pre-verdict motion for judgment). Accordingly, Toman waived this matter.

B. Commercial Liability Policy Coverage

Toman further argues that even if the Master Contract is enforceable as between Stewart and Convest, the commercial policy provided by Continental Western excludes coverage for this type of indemnification. The interpretation of an insurance policy and the construction of the terms of an insurance contract are questions of law subject to de novo review on appeal. State Farm Mut. Auto. Ins. Co. v. Cheeper's Rent-A-Car, Inc., 614 N.W.2d 302, 307 (Neb. 2000); Fraternal Order of Police, Lodge No. 2 v. County of Douglas, 612 N.W.2d 483, 486 (Neb. 2000).

The commercial policy language excludes contractual liability assumed by the insured. However, liability for damages assumed in an "insured contract" is specifically covered and is an exception to such exclusion. An "insured contract" is defined under the policy as "[t]hat part of any other contract or agreement pertaining to your business... under which you assume the tort liability of another party to pay for 'bodily injury' or 'property damage' to a third person or organization." In other words, the commercial liability policy excludes most indemnification agreements unless they fall within the definition of an "insured contract." The essential question is whether the indemnification clause found in the Master Contract qualifies as an "insured contract".

We agree with the district court's judgment that the Master Contract is covered by Continental Western's commercial liability coverage. The Master Contract falls within the "insured contract" exception from the general policy exclusion.

"In interpreting a contract, a court must first determine, as a matter of law, whether the contract is ambiguous." Fraternal Order of Police, 612 N.W.2d at 486 (citations omitted).

A determination as to whether ambiguity exists in a contract is to be made on an objective basis, not by the subjective contentions of the parties; thus, the fact that the parties have suggested opposing meanings of the disputed instrument does not necessarily compel the conclusion that the instrument is ambiguous.

Id. at 487 (citations omitted). The court must give the terms of the contract their plain and ordinary meaning as ordinary, average, or reasonable persons would understand them. Id.

Following the analysis of the district court, we find no ambiguity in the "insured contract" exception to the commercial general liability policy exclusion. If the properly named insured had been included on the policy at issue, there...