White v. QUECHEE LAKES LANDOWNERS'ASS'N

Decision Date24 September 1999
Docket NumberNo. 98-243.,98-243.
PartiesAnthony G. WHITE, Individually and as Administrator of the Estate of Elizabeth L. White v. QUECHEE LAKES LANDOWNERS' ASSOCIATION, INC. v. Helo Factories, Ltd.
CourtVermont Supreme Court

Kaveh S. Shahi of Cleary Shahi Associates, P.C., Rutland, for Third-Party Plaintiff-Appellant.

Robert D. Rachlin, Walter E. Judge, Jr. and Eric A. Poehlmann of Downs Rachlin & Martin PLLC, Burlington, for Third-Party Defendant-Appellee.

Present AMESTOY, C.J., MORSE, JOHNSON and SKOGLUND, JJ., and GIBSON, J. (Ret.), Specially Assigned.

AMESTOY, C.J.

This is an indemnity case concerning the tragic death of a woman who lost consciousness in a sauna owned and operated by third-party plaintiff Quechee Lakes Landowners' Association. The plaintiff in the underlying action, Anthony White, obtained a $450,000 settlement from Quechee Lakes following the close of evidence in a wrongful death suit in which he claimed that Quechee Lakes's negligence caused his wife's death. Following the settlement, Quechee Lakes filed suit seeking indemnity from the manufacturer and distributor of the sauna heating unit and control panel, third-party defendant Helo Factories, Ltd. The superior court granted summary judgment in favor of Helo, and Quechee Lakes now appeals that judgment. We agree with the superior court that, as a matter of law, Quechee Lakes is not entitled to indemnification; accordingly, we affirm the court's judgment.

I. Facts and Procedural History

Quechee Lakes owns and operates a health club for the recreational use of its members. The club maintains saunas within its men's and women's locker room facilities. Helo manufactured the heating unit and control panel used in the women's sauna, but was not involved in designing or constructing the sauna itself. In 1973, before ownership of the resort was transferred to the Quechee Lakes Landowners' Association, the developer hired an independent contractor to construct the sauna. Quechee Lakes operated and maintained the sauna without incident until February 1, 1994, when Elizabeth White was found lying unconscious on the floor of the sauna. She died several days later as the result of irreversible hyperthermia, leaving behind her husband and three young children. Anthony White filed two wrongful death actions, one against Quechee Lakes in the superior court in January 1995, and the other against Helo in federal court approximately one year later. The federal case eventually settled. In the state court action, Mr. White alleged that Quechee Lakes failed to implement necessary safeguards concerning use of the women's sauna, including screening users, monitoring use, posting an adequate warning sign, and adding an automatic shutoff device, a timer, a clock, a thermometer, and a window in the sauna door. He also alleged that a Quechee Lakes employee negligently turned up the heat while his wife was in the sauna, without first checking to see if anyone was inside.

In turn, Quechee Lakes filed a third-party complaint against Helo, but the parties agreed to sever that complaint and postpone its resolution pending the outcome of the underlying action, which was contested in an eight-day trial in October 1997. Following the close of evidence in that trial, but before the case was submitted to the jury, the parties reached a $450,000 settlement agreement. The agreement explicitly reserved Quechee Lakes's right to seek indemnification from Helo, stating that the settlement was not for any active or independent negligence on Quechee Lakes's part.

After the underlying action settled, Helo and Quechee Lakes filed opposing motions for summary judgment regarding the third-party complaint. Relying on the Restatement of Restitution § 95 (1937), which this Court adopted in Bardwell Motor Inn, Inc. v. Accavallo, 135 Vt. 571, 573, 381 A.2d 1061, 1062 (1977), the superior court ruled that Helo was entitled to judgment as a matter of law on the implied indemnification claim because for twenty years preceding the accident Quechee Lakes had acquiesced in the continuation of any dangerous condition in the sauna attributable to Helo. After its motion for reconsideration was rejected, Quechee Lakes filed this appeal, arguing that the superior court erred by (1) basing its decision on grounds not raised in Helo's motion for summary judgment; (2) placing the burden on Quechee Lakes to prove that it had not acquiesced in any dangerous condition concerning the sauna; (3) relying on evidence not submitted by the parties with their summary judgment motions; (4) incorrectly applying § 95 of the Restatement of Restitution to the facts of this case; and (5) concluding that there were no material issues of disputed fact precluding summary judgment in Helo's favor.

II. The Standard of Review

In reviewing a decision to grant summary judgment, we apply the same standard as the trial court, requiring the moving party to prove both that there is no genuine issue of material fact and that it is entitled to judgment as a matter of law. See V.R.C.P. 56(c); Chapman v. Sparta, 167 Vt. 157, 159, 702 A.2d 132, 134 (1997); Peters v. Mindell, 159 Vt. 424, 426, 620 A.2d 1268, 1269 (1992). In determining whether a dispute over material facts exists, we accept as true allegations made in opposition to the motion for summary judgment, so long as they are supported by affidavits or other evidentiary material. See Chapman, 167 Vt. at 159, 702 A.2d at 134. Nevertheless, the party opposing summary judgment may not rest upon the mere allegations or denials in its pleadings, "but ... must set forth specific facts showing that there is a genuine issue for trial." V.R.C.P. 56(e). Thus, mere conclusory allegations without facts to support them are "insufficient to sustain a complaint for indemnity." Central Hudson G. & E. Corp. v. Hatzel & Beuhler, Inc., 24 Misc.2d 434, 202 N.Y.S.2d 818, 822 (Sup.Ct.1956), aff'd, 11 A.D.2d 707, 205 N.Y.S.2d 864 (1960).

III. The Law of Indemnity

The right to indemnity, which is an exception to our longstanding rule barring contribution among joint tortfeasors, see Chapman, 167 Vt. at 159,702 A.2d at 134, exists only when one party has expressly agreed to indemnify another, or when the circumstances are such that the law will imply such an undertaking. See id.; Bardwell, 135 Vt. at 572,

381 A.2d at 1062. Because of the rule against contribution among joint tortfeasors and the fact that indemnification shifts the entire loss from one party to another, see Peters, 159 Vt. at 428,

620 A.2d at 1270, one who has taken an active part in negligently injuring another is not entitled to indemnification from a second tortfeasor who also negligently caused the injury. See Fireside Motors, Inc. v. Nissan Motor Corp., 395 Mass. 366, 479 N.E.2d 1386, 1389 (1985). Rather, indemnification accrues "to a party who, without active fault, has been compelled by some legal obligation, such as a finding of vicarious liability, to pay damages occasioned by the negligence of another." Morris v. American Motors Corp., 142 Vt. 566, 576, 459 A.2d 968, 974 (1982). Generally, indemnity will be imputed only when equitable considerations concerning the nature of the parties' obligations to one another or the significant difference in the kind or quality of their conduct demonstrate that it is fair to shift the entire loss occasioned by the injury from one party to another. See W. Keeton, Prosser and Keeton on the Law of Torts § 51, at 344 (5th ed.1984).

While it is difficult to state a general rule that will cover all cases, see id. at 343, implied indemnification is usually appropriate only when the indemnitee is vicariously or secondarily liable to a third person because of some legal relationship with that person or because of the indemnitee's failure to discover a dangerous condition caused by the act of the indemnitor, who is primarily responsible for the condition. See id. at 341-43; Viens v. Anthony Co., 282 F.Supp. 983, 986 (D.Vt.1968). This latter principle is set forth in Restatement of Restitution § 95 (1937), which provides:

Where a person has become liable with another for harm caused to a third person because of his negligent failure to make safe a dangerous condition of land or chattels, which was created by the misconduct of the other or which, as between the two, it was the other's duty to make safe, he is entitled to restitution from the other for expenditures properly made in the discharge of such liability, unless after discovery of the danger, he acquiesced in the continuation of the condition.

Applying this and the other principles stated above, this Court has held that (1) an engineering company that contracted with the sellers of a home to design and build a septic system would have to indemnify the sellers should they be found liable to the buyers for a defective condition in the system, so long as the sellers did not acquiesce in that condition, see Peters, 159 Vt. at 429, 620 A.2d at 1272; (2) the manufacturer of a defective automobile part was required to indemnify the automobile manufacturer for injuries sustained as a result of the defect, see Morris, 142 Vt. at 577, 459 A.2d at 974; (3) an independent contractor was required to indemnify a hotel operator for injuries sustained when a patron was struck by an automatic door that the operator had hired the contractor to repair, see Bardwell, 135 Vt. at 574, 381 A.2d at 1063; and (4) a wholesaler whose employee had inserted a glass thermometer into a banana was required to indemnify the owners of a market after a customer was injured biting into the banana. See Digregorio v. Champlain Valley Fruit Co., 127 Vt. 562, 566, 255 A.2d 183, 186 (1969).

On the other hand, this Court has held that (1) the employer of an employee injured delivering a refrigerator to a private home was not required to indemnify the homeowners for the employee's injuries, which were allegedly caused by the defective condition of the...

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