Carl T. Madsen, Inc. v. Babler Bros., Inc., 3444-II

• Decision Date: 21 April 1980
• Docket Number: No. 3444-II,3444-II
• Citation: 25 Wn.App. 880,610 P.2d 958
• Parties: CARL T. MADSEN, INC., Respondent, v. BABLER BROTHERS, INC., and Harbor Insurance Company, Inc., Appellants.
• Court: Washington Court of Appeals

Page 880

25 Wn.App. 880

610 P.2d 958

CARL T. MADSEN, INC., Respondent, v. BABLER BROTHERS, INC., and Harbor Insurance Company, Inc., Appellants.

No. 3444-II.

Court of Appeals of Washington, Division 2.

April 21, 1980.

William P. Fite, Seattle, for appellants.

Richard J. Thorpe, Seattle, for respondent.

REED, Chief Judge.

Defendants Babler Brothers, Inc. (Babler) and Harbor Insurance Company, Inc., (Harbor) seek review of the trial court's grant of summary judgment in favor of plaintiff Carl T. Madsen, Inc. (Madsen). Madsen brought this action for declaratory judgment in an effort to absolve itself from liability under an alleged agreement to indemnify Babler. Upon cross motions for summary judgment the trial court concluded that plaintiff was entitled to judgment as a matter of law. It granted plaintiff's and denied defendants' motions for summary judgment. We affirm.

In early 1972, Babler contracted with the State of Washington to construct a bypass highway in the vicinity of Goldendale. Babler, acting as general contractor, subcontracted with Madsen for installation of the highway's illumination system. Gaynor Lorentzen, an employee of Madsen, was injured when a light pole he was installing came in contact with overhead power lines. Some time thereafter, Lorentzen brought an action against the State, Babler, and the Klickitat County Public Utilities District (PUD) to recover compensation for his injuries. Madsen was not made a party to the Lorentzen lawsuit, presumably because of its immunity from direct liability to employees under the Industrial Insurance Act. ¹

When the Lorentzen action was filed the State tendered the defense to Babler. Because Babler was obligated to hold the State harmless for Babler's own acts, the acts of its subcontractors or employees, ² Babler accepted the tendered defense. Babler, in turn, tendered the defense to Madsen under a claimed contract of indemnity running from Madsen to Babler. Madsen declined the tendered defense and brought this action for declaratory judgment.

On December 10, 1976, while the action for declaratory judgment was still pending in the trial court, the jury in the Lorentzen lawsuit returned a plaintiff's verdict for $350,000 against all three defendants. Babler's posttrial motion for a judgment NOV was granted because "there was no evidence of defendant Babler's negligence." Similar motions by the State and Klickitat County PUD were denied. Their liability apparently was predicated upon negligent failure to elevate the power lines to a height enabling safe installation of the roadside light posts. Despite the absence of Babler's direct liability to Lorentzen, Babler's insurer, Harbor, ³ settled Lorentzen's claim against the State for $115,000 in a posttrial settlement agreement. Babler and Harbor then counterclaimed in the declaratory judgment action, seeking indemnity from Madsen for the $115,000 settlement. The trial court reviewed the cross motions for summary judgment, and ruled in favor of Madsen and against Babler.

On appeal Babler contends that Madsen impliedly agreed to indemnify Babler. Madsen denies the existence of any such agreement and further asserts it is immune from liability under the State Industrial Insurance Act, RCW Chapter 51.04.010 et seq.

Although the Industrial Insurance Act "immunizes" participating employers from third-party claims arising out of negligent injury to their workers, our courts have recognized a right of action where the employer has voluntarily assumed an independent duty or obligation to indemnify such a third party. Seattle-First Nat'l Bank v. Shoreline Concrete Co., 91 Wash.2d 230, 588 P.2d 1308 (1978). See e. g. Redford v. Seattle, 24 Wash.App. 484, 602 P.2d 717 (1979). See also Davis v. Niagara Machine Co., 90 Wash.2d 342, 581 P.2d 1344 (1978); Olch v. Pacific Press & Shear Co., 19 Wash.App. 89, 573 P.2d 1355 (1978); Montoya v. Greenway Aluminum, Inc., 10 Wash.App. 630, 519 P.2d 22 (1974); and Tucci & Sons, Inc. v. Carl T. Madsen, Inc., 1 Wash.App. 1035, 467 P.2d 386 (1970). So long as the claim of indemnity arises on account of a separate obligation running from the employer to the third party and not merely because the employer's negligence caused the employee's injury, an action for indemnification is judicially cognizable. Seattle-First Nat'l Bank v. Shoreline Concrete Co., supra. See 2A A. Larson, The Law of Workmen's Compensation § 76.40 et seq. (1976). Although the independent duty running between an employer and third party cannot arise solely by implication, Olch v. Pacific Press & Shear Co., supra 19 Wash.App. at 94, 573 P.2d 1355; Montoya v. Greenway Aluminum, Inc., supra 10 Wash.App. at 635, 519 P.2d 22, where the independent duty is expressly provided for in the contract, the implied right to indemnification may be found. See Davis v. Niagara Machine Co., supra 90 Wash.2d at 347, 581 P.2d 1344.

It is conceded that the Babler-Madsen contract contains no express language of indemnification such as is found in the prime contract between the State and Babler. Babler argues, however, that an agreement to indemnify can be implied from the fact that Madsen undertook an independent duty to abide by certain federal safety and health regulations pertaining to the work. ⁴ See generally Ryan Stevedoring Co. v. Pan-Atlantic Steamship Corp., 350 U.S. 124, 76 S.Ct. 232, 100 L.Ed. 133 (1955); San Francisco Unified School Dist. v. California Bldg. Maintenance Co., 162 Cal.App.2d 434, 328 P.2d 785 (1958), and cases cited therein. According to Babler, Lorentzen's injury had to have occurred because of Madsen's violation of one or more of these regulations, ⁵ thus giving rise to Babler's right to reimbursement for its payment to the State.

Assuming, without deciding, that the circumstances surrounding the relationship between Babler and Madsen would support a finding of an implied contract of indemnity, it does not follow that Babler has a right to indemnification from Madsen in the circumstances of this case. If such an implied contract of indemnity exists, its foundation would rest upon Madsen's duty to exercise due care toward its employees by observing the safety regulations. The apparent intent of the parties was to protect Babler from imputed liability arising vis-a-vis Madsen's negligence. In the instant case, however, Babler's payment to the State was not occasioned by Babler's liability in tort. Rather, it stemmed from Babler's contractual undertaking to hold the State harmless from liability arising in whole or in part from the negligence of Babler's subcontractors. ⁶ Babler's independent contractual obligations to the State could not form the basis for Madsen's duty to indemnify Babler.

Madsen could be responsible for Babler's liability only it if had agreed to assume Babler's potential liability to both Madsen's employees and the State. The Babler-Madsen contract, however, incorporated only those requirements "pertinent to the work." In other words, Madsen was to follow prescribed methods of prosecuting its work for Babler, but it was not thereby obligated to assume Babler's contractual liability to the State. Such an undertaking would call for a more clear expression of intent. We find no indication of such an intent in the case at bar. ⁷ The scope of Madsen's implied contract, if found to exist, is not so broad as to exonerate Babler from its contractual liability to the State. As the Lorentzen lawsuit demonstrated, Babler's liability for...