An Or. Corp.. v. Yearout Mech.al Inc.

• Decision Date: 17 June 2010
• Docket Number: No. 31,860.,31,860.
• Citation: 148 N.M. 426,237 P.3d 728
• Parties: UNITED RENTALS NORTHWEST, INC., an Oregon corporation, Plaintiff-Appellant, v. YEAROUT MECHANICAL, INC., a New Mexico corporation, Defendant-Appellee.
• Court: New Mexico Supreme Court

148 N.M. 426
237 P.3d 728

UNITED RENTALS NORTHWEST, INC., an Oregon corporation, Plaintiff-Appellant,
v.
YEAROUT MECHANICAL, INC., a New Mexico corporation, Defendant-Appellee.

No. 31,860.

Supreme Court of New Mexico.

June 17, 2010.

237 P.3d 729

237 P.3d 730

Rodey, Dickason, Sloan, Akin & Robb, P.A., Edward Ricco, Leslie McCarthy Apodaca, Charles J. Vigil, Albuquerque, NM, for Appellant.

Atwood, Malone, Turner & Sabin, P.A., Bryan D. Evans, Roswell, NM, for Appellee.

OPINION

DANIELS, Chief Justice.

{1} The New Mexico Legislature has mandated that any indemnity clause in a construction contract that seeks to shift tort liability from one party to another “is void, unenforceable and against the public policy of the state.” NMSA 1978, § 56-7-1(A) (2005). In this case, we answer a question that has been certified to us by the United States Court of Appeals for the Tenth Circuit: Is a contract for the rental of a scissor lift to be used in the construction of an aircraft hangar a “contract or agreement relating to construction, alteration, repair or maintenance of any real property,” and therefore a “construction contract” as defined in Section 56-7-1(E)? We hold that it is.

I. FACTUAL AND PROCEDURAL BACKGROUND

{2} In 2006, Yearout Mechanical, Inc., was a subcontractor installing duct work in the new Eclipse Aviation hangar at the Albuquerque International Sunport. To perform that work along the fifty-foot-high ceiling, Yearout rented a scissor lift on March 1 from an equipment rental company, United Rentals Northwest, Inc., which delivered the lift to the job site the same day.

{3} Under the terms of the rental contract, Yearout was not authorized to perform any repairs or maintenance on the scissor lift. The contract provided that “[s]hould the Equipment become unsafe, malfunction or require repair, Customer shall immediately cease using the Equipment and immediately notify United” and that “[i]f such condition is the result of normal operation, United will repair or replace the Equipment....” Yearout twice had to call United to the site to perform maintenance on the lift, once on March 28 and again on March 30.

{4} On April 1, two days after United's last repair, two employees of Yearout, Anthony Magoffe and Camerino Michel Ramirez, boarded the aerial platform of the scissor lift in order to install new sections of duct work on the hangar ceiling. Routine inspections of the lift detected nothing that appeared to be abnormal before the men went aloft. After completing their tasks, Magoffe and Ramirez began their final descent when the scissor lift began rocking back and forth and then fell over sideways. In an effort to save himself, Magoffe grabbed onto a ceiling beam, but he was struck by the falling lift and fell headfirst to his death on the concrete floor nearly fifty feet below. Ramirez remained on the scissor lift's platform during the fall but was ejected when the lift hit the ground. He died before he reached the hospital.

{5} The workers' personal representatives brought wrongful death actions against both United and the manufacturer of the scissor lift, JLG Industries, Inc. United ultimately settled with the workers' estates after several years of litigation. United then sued Yearout in federal court, arguing that Yearout should be required to reimburse United for its settlement of the workers' suit, not because of any wrongdoing on Yearout's part, but based instead on an “Indemnity/Hold Harmless” clause that was one of twenty-three “Additional Terms and Conditions” preprinted on the back side of United's “Rental Out Contract” signed by Yearout when it rented the scissor lift:

(approximate size of text in original).

{6} United argued that Yearout, by signing the rental contract, agreed to “indemnify, defend and hold United harmless from and against any and all liability ... relating to wrongful death” caused by (1) the operation “of the equipment, including ... [liability founded upon any] negligent act or omission of United,” (2) the provision of any “defective product by United,” or (3) any claims “based upon strict or product liability....” Yearout moved to dismiss the complaint on the ground that the indemnity clause was unenforceable under Section 56-7-1's provisions invalidating indemnification clauses in contracts related to construction that would shift responsibility for wrongdoing from a culpable party to an innocent party. The United States District Court agreed that Section 56-7-1 encompassed rental contracts related to construction projects and granted Yearout's motion to dismiss United's claim. United appealed to the Tenth Circuit Court of Appeals, which submitted the issue to this Court, pursuant to the certification procedures of Rule 12-607 NMRA under NMSA 1978, Section 39-7-4 (1997).

II. DISCUSSION A. Standard of Review

{7} This case presents a pure question of statutory interpretation. “The meaning of language used in a statute is a question of law that we review de novo.” Cooper v. Chevron U.S.A., Inc., 2002-NMSC-020, ¶ 16, 132 N.M. 382, 49 P.3d 61.

B. The Relevant Statutory Provisions

{8} The resolution of this case hinges on the interpretation and application of a statutory bar to indemnity clauses contained in “construction contracts”:

A provision in a construction contract that requires one party to the contract to indemnify, hold harmless, insure or defend the other party to the contract, including the other party's employees or agents, against liability, claims, damages, losses or expenses, including attorney fees, arising out of bodily injury to persons or damage to property caused by or resulting from, in whole or in part, the negligence, act or omission of the indemnitee, its officers, employees or agents, is void, unenforceable and against the public policy of the state.

Section 56-7-1(A) (emphasis added). The Legislature has provided further guidance by defining the statutory term “construction contract”:

“[C]onstruction contract” means a public, private, foreign or domestic contract or agreement relating to construction, alteration, repair or maintenance of any real property in New Mexico and includes agreements for architectural services, demolition, design services, development, engineering services, excavation or other improvement to real property, including buildings, shafts, wells and structures, whether on, above or under real property.

Section 56-7-1(E) (emphasis added). In order to answer the question certified to us, we therefore must determine whether a contract for rental of equipment to be used in a construction project is a “contract or agreement relating to construction” within the scope of the statute. ¹

237 P.3d 732

C. Facial Language Analysis

{9} The first guiding principle in statutory construction dictates that we look to the wording of the statute and attempt to apply “the plain meaning rule, recognizing that ‘[w]hen a statute contains language which is clear and unambiguous, we must give effect to that language and refrain from further statutory interpretation.’ ” Truong v. Allstate Ins. Co., 2010-NMSC-009, ¶ 37, 147 N.M. 583, 227 P.3d 73 (alteration in original) (citation omitted); State v. Johnson, 2009-NMSC-049, ¶ 10, 147 N.M. 177, 218 P.3d 863 (“The primary indicator of legislative intent is the plain language of the statute.”). The Legislature itself has codified the plain meaning rule in the Uniform Statute and Rule Construction Act: “The text of a statute or rule is the primary, essential source of its meaning.” NMSA 1978, § 12-2A-19 (1997).

{10} Instead of writing a narrow anti-indemnification statute that addressed only contracts for construction, the Legislature defined the statutory scope as including all contracts relating to construction. “Relating to” is defined as “hav[ing] connection, relation, or reference [to.]” The American Heritage Dictionary of the English Language 1472 (4th ed., Houghton Mifflin Co. 2000); see also Bettini v. City of Las Cruces, 82 N.M. 633, 634, 485 P.2d 967, 968 (1971) (stating that “[s]tatutory words are presumed to be used in their ordinary and usual sense”). A contract to rent equipment that is designed and intended for use in a construction project certainly has a connection, relation, and reference to the construction project and is therefore in literal terms a contract “relating to construction.” See Elliott Crane Serv., Inc. v. H.G. Hill Stores, Inc., 840 S.W.2d 376, 380 (Tenn.Ct.App.1992) (holding that a rental agreement for a construction crane was, in the terms of the Tennessee anti-indemnification statute, an agreement “relative to the alteration, repair or maintenance of a building, structure or appliance” (internal quotation marks and citation omitted)).

{11} The facts of this case demonstrate the relationship between the construction equipment rental contract and the construction project in which the scissor lift was to be used. The rental contract written by United specifically recited on its face the name of the construction project, its location, its job number, and the particular phase of construction. United employees delivered the commercial-sized scissor lift to the construction site where it was to be used. United knew it was contracting with Yearout Mechanical, a licensed subcontractor with purchase order credit privileges allowing for payment of charges within 30 days after the rental date. All concerned had to have known the lift was rented for use in relation to construction activities.

{12} Despite all those factors, we share United's concern that the term “relating to,” standing alone, can be an uncertain term with no clear end to its reach. See Cal. Div. of Labor Standards Enforcement v. Dillingham Constr., N.A., Inc., 519 U.S. 316, 335, 117 S.Ct. 832, 136 L.Ed.2d 791 (1997) (Scalia, J., concurring) (“[A]pplying the ‘relate to’ provision according to its terms was a project doomed to failure, since, as many a curbstone philosopher has...