Action, Inc. v. Mcqueeny Grp., Inc.
| Decision Date | 01 June 2022 |
| Docket Number | CV-20-12 |
| Citation | 2022 Ark. App. 297,646 S.W.3d 672 |
| Parties | ACTION, INC., Appellant v. MCQUEENY GROUP, INC., Appellee |
| Court | Arkansas Court of Appeals |
Newland & Associates, PLLC, by: Joel Hoover, for appellant.
Barber Law Firm, Little Rock, by: Michael J. Emerson, M. Evan Stallings, and Rachel E. Hildebrand, for appellee.
Action, Inc., brings this appeal from the judgment of the Pulaski County Circuit Court rejecting its claim for implied indemnity against McQueeny Group, Inc., after a jury found Action negligent. On appeal, Action argues that its negligence does not bar its claim and that it was entitled to a new trial. We affirm.
This case has a complicated procedural history. For purposes of this opinion, we provide the following background. Action was the mechanical subcontractor on a construction project at the University of Arkansas in Fayetteville in 2011. Clark Contractors, LLC, was the general contractor on the project. Action's work included the installation of a variable refrigerant flow HVAC system. The original plans and specifications called for the installation of a Mitsubishi HVAC system; however, the cost of that system exceeded the University's budget, so Action proposed—and the University accepted—installation of a less expensive system manufactured by LG Electronics U.S.A. Action agreed to pay for the design changes for this alternative system in its bid. However, no changes were made to the design or specifications to accommodate the differences between the two systems. Action then contracted with McQueeny, LG's Arkansas representative, for the purchase of the LG system.
Action experienced significant problems with the system after installation, and troubleshooting efforts by Action failed to fix the problems. Clark decided to engage another mechanical contractor to resolve the problems with the system. It was determined that Action incorrectly installed thousands of feet of pipe in the system. Action's failure to properly install the piping in the system forced Clark to have the system rebuilt. As the piping was replaced, additional installation errors were discovered. Clark would later demand that Action pay approximately $650,000 for the remedial work on the project.
After Action finished its work on the project and was paid for that work, it contracted with Clark for other, unrelated projects. Clark set off amounts owed to Action on these other projects to recoup the cost of the remedial work on the original project.
In January 2016, Action filed suit against Clark to collect the amounts owed Action for the other projects. Clark answered and counterclaimed, asserting claims for breach of contract, unjust enrichment, and negligence. Action filed a third-party complaint against McQueeny, LG, the architect, the engineer, the commissioning agent, and LG's Texas representative, asserting claims for contribution, apportionment of fault, negligence, and implied indemnity. The claims between Action and Clark were settled prior to trial, as were Action's claims against the architect, the engineer, the commissioning agent, and the Texas representative.
The claims against McQueeny and LG were tried by a jury. After one of the claims against LG was dismissed on a motion for directed verdict, Action nonsuited its remaining claims against LG. Action elected to submit its indemnity claim against McQueeny to the jury and dismissed its claims for contribution and negligence. The case was submitted to the jury on interrogatories. In the first interrogatory, the jury found that Action was negligent and that its negligence was a proximate cause of its damages. In the second and third interrogatories, the jury found that Action was entitled to implied indemnity from McQueeny and fixed its damages at $255,000. The circuit court declined to enter a judgment based on the jury's answers to the interrogatories. Instead, the court held that a negligent party was not entitled to indemnity and that contributory negligence was a complete bar to an indemnity claim. The court dismissed Action's complaint against McQueeny with prejudice. After Action's motion for new trial was deemed denied, this appeal followed.
On appeal, Action argues that the circuit court erred in failing to enter judgment in conformity with the jury's verdict and in denying its motion for new trial.
The primary issue is whether Action's negligence in its installation of the LG HVAC system bars its claim for implied indemnity from McQueeny. We hold that it does.
The Restatement (Second) of Torts1 sets out the general rule of indemnity as follows: "If two persons are liable in tort to a third person for the same harm and one of them discharges the liability of both, he is entitled to indemnity from the other if the other would be unjustly enriched at his expense by the discharge of the liability." Section 886B(2) gives examples of typical indemnity situations. In all of these situations, the indemnitee is liable as a matter of law, but the loss is primarily caused by the indemnitor, not the indemnitee.
The basis for indemnity when, as here, there is no express contract of indemnity is liability based on an implied or quasi-contract.2 The Larson Machine court held that the theory of indemnity is based on the equitable principles of restitution that permit one who is compelled to pay money—which, in justice, ought to be paid by another—to recover the sums so paid unless the payor is barred by the wrongful nature of his own conduct. However, Arkansas courts have applied the doctrine of implied indemnity only in limited situations where there is no express-indemnity contract, such as imputed or vicarious liability or product liability where a supplier seeks indemnity against the product manufacturer.3 Action's claim does not arise under either of these theories. First, this is not a case involving vicarious liability: Clark sued Action for Action's own negligence in installing the HVAC system; it did not sue McQueeny, LG, or the other entities involved in the installation. Thus, Action did not discharge McQueeny's liability to Clark. Second, this obviously is not a product-liability case.
Arkansas cases make clear that the right of indemnity cannot exist when the party seeking indemnity has proximately caused the harm.4 This is because the justification for indemnity disappears when the indemnitee has proximately caused the harm.5 The jury's finding that Action was negligent and that its negligence proximately caused its damage renders the problem one of contribution, not of indemnity.6 The jury was not asked directly to determine whether McQueeny was at fault in the installation of the HVAC system in the original project. Nor was the jury asked to allocate fault between Action and McQueeny in that installation.
While some jurisdictions have blurred the differences, there is an important substantive difference between contribution and indemnity. Contribution refers to an order distributing loss among tortfeasors by requiring each to pay a proportionate share, while indemnity shifts the entire loss from the party found liable to a party who should bear the entire loss.7 Action has lost sight of this distinction. The circuit court did not err in entering judgment in favor of McQueeny on the basis of its determination that Action's own negligence barred its claim for indemnity.
Next, Action asserts that the circuit court should have submitted the case to the jury on a general verdict form instead of on interrogatories. Submission of a case on interrogatories alone is within the discretion of the circuit court.8 Action's argument presupposes that its own negligence does not bar its claim for indemnity, and it offers no convincing argument as to how the trial court abused its discretion in the matter.9 It is the appellant's burden to demonstrate reversible error.10 Points asserted without citation to authority or convincing argument will not be considered.11
This brings us to Action's arguments concerning its motion for new trial. As its first ground, Action argues that the circuit court erred in requiring it to elect the theory of implied indemnity for submission to the jury instead of submitting both indemnity and contribution theories to the jury. The court did not err.
A plaintiff may pursue multiple and inconsistent remedies until the jury is instructed; at that point the plaintiff must make an election.12 The record shows that Action waited until the court decided what jury instructions would be given before making its election. After further discussion of the jury instructions, Action elected to proceed without objection under the implied-indemnity theory. Because Action did not object, we cannot say that the circuit court erred in the timing of the election.13 The fact that a party elects a certain remedy does not guarantee that the court will afford relief to the party making the election.14 Nor does the lack of...
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