Barnes v. Lone Star Steel Co.
| Decision Date | 17 April 1981 |
| Docket Number | SEVEN-O,No. 79-4082,79-4082 |
| Citation | 642 F.2d 993 |
| Parties | Roy BARNES and wife, Bonnie Lee Barnes, Plaintiffs, v. LONE STAR STEEL COMPANY, Defendant and Third-Party Plaintiff-Appellant, v.CORPORATION, Third-Party Defendant-Appellee. . Unit A |
| Court | U.S. Court of Appeals — Fifth Circuit |
Strasburger & Price, Royal H. Brin, Jr., Dallas, Tex., for defendant and third-party plaintiff-appellant.
Nichols & Parker, E. Lawrence Merriman and Rex A. Nichols, Longview, Tex., for third-party defendant-appellee.
Appeal from the United States District Court for the Eastern District of Texas.
Before CHARLES CLARK, TATE and WILLIAMS, Circuit Judges.
In this appeal, Lone Star Steel Company challenges the denial of its third-party claim for indemnity against Seven-O Corporation. We reverse.
Lone Star Steel Company contracted with Seven-O Corporation for needed repairs to the roof on its central maintenance shop, located in Lone Star, Texas. During the course of this work, Roy Barnes, an employee of Seven-O, fell through the roof and was injured. Barnes sued Lone Star in the district court. Lone Star filed a third-party complaint against Seven-O asserting a contractual right to indemnity. Although the Texas Worker's Compensation Law precludes a suit by Barnes against his employer, it does not preclude an indemnity claim by a third party against the employer pursuant to a written indemnity agreement existing before the injury. Tex.Rev.Civ.Stat.Ann. art. 8306, § 3 (Vernon 1967).
Barnes claimed that Lone Star was negligent in allowing Seven-O to begin, and to continue, work on the roof when Lone Star knew that Seven-O was not complying with the safety requirements of the contract, in which Seven-O undertook to abide by incorporated federal and state safety and health regulations. The jury returned a verdict for Barnes, finding by special verdict that Lone Star was 100% negligent and that Barnes and Seven-O were not negligent. The jury awarded Barnes $1.5 million in compensatory damages and $1 million in punitive damages. After remittitur, judgment was entered for $1.9 million in favor of Barnes against Lone Star. Seven-O was awarded judgment in Lone Star's third-party action. Lone Star settled with Barnes, reserving the right to appeal as against Seven-O, as they have done.
Our holding that Lone Star is entitled to indemnity under its contract with Seven-O obviates the need to address other issues it raises.
The provisions of the "Purchase Order" pertinent to the indemnity claim include: 1
THIS PURCHASE ORDER IS CONDITIONED UPON RECEIPT OF SIGNED COPY OF PURCHASE ORDER ACKNOWLEDGMENT, WHICH INCLUDES GENERAL CONDITIONS COVERING WORK ON PURCHASER'S PREMISES, COPIES ATTACHED.
LONE STAR STEEL PLANT RULES AND SAFETY REGULATIONS WILL APPLY TO ALL VENDOR EMPLOYEES. COPY OF PLANT RULES AND SAFETY REQUIREMENTS ARE ATTACHED.
Article 13 of the "General Conditions" provides:
13... Seller (Seven-O) shall be responsible for all damages and shall indemnify and save Purchaser (Lone Star) harmless from and against all damages and liability, which may arise out of the failure of Seller to secure and pay for any such licenses and permits or to comply fully with any and all applicable laws, ordinances and regulations.
Further, a letter attached to the contract addressed to "All Contract Personnel" from Lone Star's Works Manager states:
Finally, the "General Plant Rules and Basic Safety Rules for Contractors and sub-Contractors at Lone Star Steel Company" provide in part: "Contractors shall comply with all applicable State and Federal Safety Laws enacted by the Texas Occupational Safety Board and the Occupational Safety and Health Act."
The parties have analyzed the issue in this appeal as coming under the well-developed Texas law on indemnification for the indemnitee's negligence. Such agreements are not against public policy in Texas. The determinative question is interpretation, not enforceability. Spence & Howe Construction Co. v. Gulf Oil Corp., 365 S.W.2d 631, 633 (Tex.1963). The recent case of Eastman Kodak Co. v. Exxon Corp., 603 S.W.2d 208 (Tex.1980), indicates that as a general rule Texas requires that an agreement to indemnify another on account of his own negligence be expressed in those words. See McClane v. Sun Oil Co., 634 F.2d 855, 857 (5th Cir. 1981). For reasons discussed below, we do not believe that a Texas court would analyze this case under the Eastman Kodak line of cases.
Seven-O argues, and Lone Star seems to assume, that the existence of the jury finding that Seven-O was not negligent and Lone Star was 100% negligent brings this case under the Texas law regarding indemnification for the indemnitee's negligence. Texas regards its requirement of clear expression as a defense to an indemnity contract. In order to invoke this defense, the indemnitor must establish that the injury was caused by the indemnitee's negligence. Copeland Well Service, Inc. v. Shell Oil Co., 528 S.W.2d 317 (Tex.Civ.App. Tyler 1975, no writ.) Seven-O's position is that the...
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