Bakowski v. Mountain States Steel, Inc.

• Decision Date: 09 July 2002
• Docket Number: No. 20000608.,20000608.
• Citation: 52 P.3d 1179,2002 UT 62
• Court: Utah Supreme Court
• Parties: Mark BAKOWSKI, Plaintiff, v. MOUNTAIN STATES STEEL, INC., Defendant, Third-Party Plaintiff, Appellant, and Cross-Appellee, v. Voest-Alpine Services & Technologies Corp., Third-Party Defendant, Appellee, and Cross-Appellant.

52 P.3d 1179

2002 UT 62

Mark BAKOWSKI, Plaintiff, v. MOUNTAIN STATES STEEL, INC., Defendant, Third-Party Plaintiff, Appellant, and Cross-Appellee, v. Voest-Alpine Services & Technologies Corp., Third-Party Defendant, Appellee, and Cross-Appellant.

No. 20000608.

Supreme Court of Utah.

July 9, 2002.

Mark Bakowski, pro se.

Donald L. Dalton, Salt Lake City, for Mountain States.

Terry M. Plant, H. Justin Hitt, Jason M. Kerr, Salt Lake City, for Voest-Alpine.

RUSSON, Justice.

¶ 1 Third-party plaintiff Mountain States Steel, Inc. ("Mountain States"), appeals from an order granting summary judgment to third-party defendant Voest-Alpine Services & Technologies Corporation ("Voest-Alpine"). Voest-Alpine cross-appeals the denial of its first motion for summary judgment and the trial court's refusal to award Voest-Alpine additional attorney fees. We affirm.

BACKGROUND

¶ 2 On January 19, 1994, Voest-Alpine entered into an agreement to lease a commercial building from Mountain States, said lease to commence on March 1, 1994, and to terminate twelve months later unless terminated sooner or extended pursuant to any provision of the lease agreement. The lease agreement obligated Mountain States to complete by March 1, 1994, fifteen designated improvements essential to Voest-Alpine's tenancy. Further, the lease agreement required Voest-Alpine to obtain and keep in force during the term of the lease an insurance policy insuring both Mountain States and Voest-Alpine against any liability arising out of the ownership, use, or occupancy of the leased building.

¶ 3 The agreement provided that if Mountain States failed to complete the improvements to the premises on time as agreed, Voest-Alpine had the option to perform the work itself or to assist in order to keep the Mountain States improvements on time, and if Mountain States could not deliver the premises on March 1, 1994, Voest-Alpine would not be obligated to pay rent until the premises were delivered.

¶ 4 The agreement also provided that if Voest-Alpine failed to procure and maintain the required insurance, Mountain States had the option to procure and maintain such insurance at the expense of Voest-Alpine or, in the alternative, to declare Voest-Alpine's failure to procure insurance a material breach of the lease.

¶ 5 In a subparagraph entitled "Waiver of Subrogation," the lease agreement provided that Mountain States and Voest-Alpine waived any and all rights of recovery against each other for loss or damage where such loss or damage was insured against "under any insurance policy in force at the time of such loss or damage." It further provided that upon obtaining the required policy of insurance, notice would be given to the insurance carrier of the "waiver of subrogation" and endorsements to the policy recognizing the same would be procured.

¶ 6 March 1, 1994, came and went, and Mountain States had not completed the required improvements, thus precluding Voest-Alpine from taking possession of the leased property at that time, and Voest-Alpine had not procured the required insurance. Voest-Alpine finally took possession of the premises on April 6, 1994.

¶ 7 Meanwhile, on March 4, 1994, an accident on the subject premises seriously injured two of Voest-Alpine's employees, Mark Bakowski ("Bakowski") and Alfonse Ramirez ("Ramirez"), resulting in liability claims against Mountain States. Voest-Alpine had directed those employees to assist Mountain States in completing the required improvements on the lease premises for Voest-Alpine's occupancy. The accident occurred while Bakowski and Ramirez were working in a "man-basket" suspended by a cable about forty feet above a concrete floor. The cable snapped, and the men plummeted to the floor, sustaining severe and permanently disabling injuries.

¶ 8 Bakowski and Ramirez made claims against Mountain States. Mountain States tendered the defense of these claims to Voest-Alpine under the lease agreement that obligated Voest-Alpine to provide insurance for Mountain States. Voest-Alpine refused to defend Mountain States, denying any liability and any obligation to indemnify Mountain States.

¶ 9 Mountain States, through its own insurers, settled with Ramirez for $1,182,500 in exchange for a release of any claims Ramirez could assert against Mountain States arising from the accident. However, Bakowski filed this action against Mountain States to recover for his injuries resulting from the man-basket incident. Mountain States answered the complaint and filed a third-party action against Voest-Alpine, alleging breach of contract and indemnification because of its failure to procure insurance protecting Mountain States against such claims as agreed in the lease agreement. After mediating Bakowski's claims, Mountain States, through its own insurers, settled with Bakowski for $503,714, but Mountain States' third-party claim against Voest-Alpine remained pending before the trial court.¹

¶ 10 Initially, both Mountain States and Voest-Alpine moved for summary judgment. The trial court granted Mountain States' summary judgment motion and denied Voest-Alpine's summary judgment motion, concluding that the lease commenced on March 1, 1994, and that any duties under the lease to procure insurance commenced on that date. Subsequently, both parties again moved for summary judgment. On these motions, the trial court granted summary judgment to Voest-Alpine, concluding that the "waiver of subrogation" provision contained in the lease agreement barred Mountain States' claims.

¶ 11 Subsequently, pursuant to a provision in the lease agreement, Voest-Alpine moved for attorney fees as the prevailing party. Voest-Alpine sought an award of $30,206.45 for fees paid to its Salt Lake attorneys and $23,637.50 paid to its Pittsburgh, Pennsylvania, attorneys. The trial court granted Voest-Alpine's motion for attorney fees in part, concluding that only $30,206.45 was reasonable, and ordered Voest-Alpine's counsel to prepare a proposed judgment awarding the fees. Preparing the proposed judgment, counsel discovered that Voest-Alpine actually paid $38,380 to its Salt Lake counsel, and because of an arithmetic error, Voest-Alpine undervalued the attorney fees it claimed. Thereupon, counsel prepared both a proposed findings of fact and conclusions of law and a proposed judgment that awarded Voest-Alpine $38,380. The trial court signed the proposed award but crossed out the increased amount and replaced it with the original amount of $30,206.45, consistent with its previous determinations.

¶ 12 Mountain States appeals, contending that the trial court erred in granting Voest-Alpine summary judgment because the waiver of subrogation provision contained in the lease agreement did not bar Mountain States' claim. Specifically, Mountain States contends that the waiver of subrogation provision is conditional, applying in this case only if Mountain States' insurers were notified that the lease contained the waiver of subrogation provision and recognized it in an endorsement to Mountain States' policy, and Mountain States contends that the waiver is inapplicable because these required conditions were unsatisfied.

¶ 13 Voest-Alpine cross-appeals, asserting that the trial court erred in denying its first motion for summary judgment by concluding that the lease term commenced on March 1, 1994, instead of April 6, 1994, when Voest-Alpine took possession of the leased premises. Specifically, Voest-Alpine contends that because the lease did not actually commence until Voest-Alpine took possession on April 6, 1994, it was not required to procure insurance until that date, and Voest-Alpine is therefore not contractually liable to Mountain States for the settlement amounts Mountain States paid to Bakowski and Ramirez. Additionally, Voest-Alpine argues that the trial court abused its discretion in reducing the attorney fee award contained in the proposed judgment when the proposed judgment was supported by an affidavit.

STANDARD OF REVIEW

¶ 14 Summary judgment is appropriate when "there is no genuine issue as to any material fact and . . . the moving party is entitled to a judgment as a matter of law." Utah R. Civ. P. 56(c); see also Ault v. Holden, 2002 UT 33, ¶ 15, 44 P.3d 781. Whether the trial court properly granted summary judgment is a question of law that we review for correctness, according no deference to the trial court's legal conclusions. Holmes Dev., LLC v. Cook, 2002 UT 38, ¶ 21, 48 P.3d 895. In making that determination, "`we view the facts and all reasonable inferences drawn therefrom in the light most favorable to the nonmoving party.'" Ault, 2002 UT 33 at ¶ 15, 44 P.3d 781 (quoting DCM Inv. Corp. v. Pinecrest Inv. Co., 2001 UT 91, ¶ 6, 34 P.3d 785).

ANALYSIS

I. DATE LEASE COMMENCED

¶ 15 The first issue on appeal is whether the trial court erred in holding that the lease agreement executed by Voest-Alpine and Mountain States commenced on March 1, 1994. According to the lease agreement, Voest-Alpine was required to "obtain and keep in force during the term of this lease" an insurance policy that insured both Mountain States and Voest-Alpine against any liability arising out of the ownership, use, or occupancy of the leased premises, which the trial court concluded would have covered the injuries of Bakowski and Ramirez.² (Emphasis added.) If the lease term did not commence on or before March 4, 1994, the date of the man-basket incident that injured Bakowski and Ramirez, then Voest-Alpine would have no obligation to Mountain States for the settlement amounts paid to Bakowski and Ramirez because Voest-Alpine's contractual obligation to purchase liability insurance would not have been in effect on that date. Voest-Alpine contends that the lease term did not commence until Mountain States actually delivered possession of the premises. The parties do not dispute that Mountain States did not deliver possession of the premises until April 6, 1994, after...