Bonner County v. Panhandle Rodeo Ass'n, Inc.

• Decision Date: 15 December 1980
• Docket Number: No. 13253,13253
• Citation: 101 Idaho 772,620 P.2d 1102
• Parties: BONNER COUNTY, a political subdivision of the State of Idaho, and Bonner County Fair Association, Plaintiffs-Respondents, v. PANHANDLE RODEO ASSOCIATION, INC., Defendant-Respondent, and Sandpoint Lions Club, Inc., and Royal-Globe Insurance Company, Defendants-Appellants.
• Court: Idaho Supreme Court

Page 1102

620 P.2d 1102

101 Idaho 772

BONNER COUNTY, a political subdivision of the State of Idaho, and Bonner County Fair Association, Plaintiffs-Respondents, v. PANHANDLE RODEO ASSOCIATION, INC., Defendant-Respondent and Sandpoint Lions Club, Inc., and Royal-Globe Insurance Company, Defendants-Appellants.

No. 13253.

Supreme Court of Idaho.

Dec. 15, 1980.

James P. Connelly and Meriwether D. Williams, of Winston & Cashatt, Spokane, Wash., Roger M. Hanlon, Sandpoint, for defendants-appellants.

Stephen F. Smith, Sandpoint, Cooke & Lamanna, Priest River, for defendant-respondent Panhandle Rodeo Ass'n Inc.

E. L. Miller of Miller & Knudson, Coeur d'Alene, for plaintiff-respondent, Bonner County.

DONALDSON, Chief Justice.

This is an appeal from a declaratory judgment action in which plaintiffs-respondents Bonner County and Bonner County Fair Association (Bonner) sought an adjudication that defendants-appellants Sandpoint Lions Club, Inc. (Sandpoint Lions) and Royal-Globe Insurance Company (Royal-Globe) and defendant-respondent Panhandle Rodeo Association, Inc., (Panhandle) were obligated to defend and indemnify Bonner in a personal injury action filed against Bonner. The underlying action had been brought by a woman who suffered personal injuries in a fall from a bleacher seat on September 11, 1976, while attending a rodeo jointly sponsored by Sandpoint Lions and Panhandle on the premises provided by Bonner. Panhandle filed a crossclaim in the declaratory judgment action, seeking an adjudication that Sandpoint Lions and Royal-Globe were obligated to defend and indemnify it in the same personal injury action.

Beginning in 1974, Sandpoint Lions and Panhandle entered into a joint venture agreement to jointly sponsor a rodeo. Each year thereafter they entered into a lease agreement with Bonner for a nominal rental of the Bonner County Fairgrounds. In 1976 negotiations began regarding the annual lease, which contained, as usual, a provision which forms the center of this controversy:

"INSURANCE

"The tenant shall provide and procure extended insurance liability coverage in an amount of at least $250,000.00 per person and $500,000.00 aggregate, and Third Party property coverage of $250,000.00, and shall present proof of the same by filing a copy of the insurance policy with the landlord at least ten (10) days prior to the rodeo performance dates. The tenant shall hold harmless the landlord for any liability incurred as a result of the rodeo performances, and the landlord shall have no financial responsibility for any debt or obligation incurred by the tenant." (emphasis added)

Pursuant to the requirements of this provision, Royal-Globe issued a liability policy naming Sandpoint Lions as the insured and providing liability coverage for certain occurrences during the rodeo. The policy had attached endorsement no. 4 which provided:

"ADDITIONAL INSURED ENDORSEMENT

It is agreed that the 'persons insured' provision is amended to include as an insured any person or organization (public or private), but only with respect to liability arising out of:

1. The ownership, maintenance or use of premises or other facilities leased, loaned or donated to the named insured;

2. The existence, maintenance, repair, construction, erection or removal of advertising signs, awnings, canopies, marquees, street banners or decorations and similar exposures by the named insured:

And subject to the following additional exclusions: this insurance does not apply:

1. To any occurrence which takes place after the named insured ceases to have use of said premises, facilities or above items;

2. To structural alterations, new construction or demolition operations performed by or on behalf of the person or organization as described above.

3. To liability arising out of the sole negligence of the additional insured hereunder."

Attached endorsement no. 13 provided:

"The company will pay on behalf of the insured all sums which the insured, by reason of contractual liability assumed by him under any written contract of the type designated in the schedule for this insurance, shall become legally obligated to pay as damages because of bodily injury or property damage to which this insurance applies ..."

Endorsement no. 13 also provided that the insurance did not apply "to liability of the indemnitee resulting from his sole negligence."

A copy of this 1976 insurance policy was not filed with Bonner as required by the lease agreement. Historically, Sandpoint Lions instead filed a Certificate of Insurance, but never the policy itself. In line with this past practice, but prior to consummation of the lease agreement, Bonner received a photostatic copy of a Certificate of Insurance dated July 14, 1976. Bonner expressed dissatisfaction with a photocopy, but subsequent telephone communication with the insurance agent in Illinois brought assurance that the photocopy was a true and correct copy and that an original would be forthcoming. Thereafter, the lease agreement was signed on September 7, the rodeo was held on September 11 and 12, and sometime following, Bonner received an original Certificate of Insurance dated November 5, 1976.

Both photocopy and original of the 1976 certificate contained language stating that the certificate was informational only and that an underlying policy controlled the coverage and limits of liability. However, both photocopy and original indicated that there was insurance covering "contractual blanket written agreements." Additionally, the July 14 photocopy stated that it was issued at the request of "Bonner County State of Idaho" and provided:

"Provisions of the policy apply to the annual 'Sandpoint Lions Club Panhandle Rodeo,' September 11th and 12th, 1976."

The November 5 original stated that it was issued at the request of "Sandpoint Lions Club Panhandle Rodeo Washington" and provided:

"Provisions of the policy apply to activities of the Sandpoint Lions Club and their rodeo."

The personal injury action was filed against Bonner. Bonner tendered the defense to Panhandle, Sandpoint Lions and Royal-Globe. Panhandle tendered the defense of the action to Sandpoint Lions and Royal-Globe. All tenders were refused; Bonner filed the declaratory relief action in which Panhandle cross-claimed.

Following trial in the declaratory action, the district court made the following conclusions pertinent to this appeal:

1. Sandpoint Lions and Panhandle, under the indemnity language in the lease agreement, were responsible to indemnify Bonner from any liability arising out of the operation of the rodeo.

2. Bonner and Panhandle both came under insurance coverage as additional insureds pursuant to endorsement no. 4 of the policy.

3. Royal-Globe and Sandpoint Lions, because of the omission of the sole negligence exclusion on the 1976 Certificate of Insurance, were estopped from denying coverage;

4. Royal-Globe was estopped from denying coverage to Panhandle as an additional insured.

5. Royal-Globe was liable for the indemnification and defense of Bonner and Panhandle in the underlying action.

6. Awaiting the verdict of the underlying personal injury action before deciding the declaratory judgment action was unnecessary. ¹

Attorney fees were granted Bonner and Panhandle under I.C. § 41-1839 for work spent on the instant action, but not on the pending injury action. Sandpoint Lions and Royal-Globe appeal.

The first issue presented is whether the indemnity language in the lease agreement entered into with Bonner requires Sandpoint Lions ² to indemnify Bonner for liability arising out of Bonner's own negligence. The indemnity language says: "The tenant shall hold harmless the landlord for any liability as a result of the rodeo performances...." The language could not be more clear. We agree with the district court's conclusion as to Sandpoint Lions' responsibility to indemnify Bonner from any liability arising out of operation of the rodeo, including that which might arise out of the underlying personal injury action.

In so agreeing, we are not unmindful of the general policy as articulated in United States v. Seckinger, 397 U.S. 203, 90 S.Ct. 880, 25 L.Ed.2d 224 (1970), that "a contractual provision should not be construed to permit an indemnitee to recover for his own negligence...." Id. at 212, 90 S.Ct. at 885. However, there are several reasons which cut against this policy in the instant case. First, the indemnification clause contains the "hold harmless" language which, although not talismanic, ³ is nonetheless indicative of a specific intent to encompass indemnification for the indemnitee's negligence. Second, the clause obligates the tenant to hold harmless the landlord for any liability incurred as a result of the rodeo. There are no express exceptions to this broad mandate and there is no accompanying qualifying or limiting language. Third, the indemnity clause directly follows a specific provision for insurance. Clearly, this is indicative of an intent to place the onus of indemnification upon the tenant by requiring him to purchase insurance to fund the indemnity. Fourth, and finally, the lease agreement is supported by nominal consideration-one dollar only. This is not the case wherein there is a large disparity in bargaining power between parties. Rather, this is a situation in which a county, in the public interest, has made available to civic organizations its fairground facilities for a nominal sum with but the obvious requirement that it be held harmless in the event of mishap. Certainly an explicit reference to indemnification for the indemnitee's negligence would be dispositive; but, such explicit reference is not required. See Gibbs v. United States, 599 F.2d 36 (2d Cir. 1979) for discussion and application of Seckinger, supra. Thus, we find no error in the district court's conclusion that Sandpoint Lions hold harmless Bonner for any liability of Bonner including Bonner's own negligence.

The next issue is...