Center Tp. of Porter County v. City of Valparaiso, No. 3-780A211

• Docket Nº: No. 3-780A211
• Citation: 420 N.E.2d 1272
• Case Date: May 21, 1981
• Court: Court of Appeals of Indiana

Page 1272

420 N.E.2d 1272 CENTER TOWNSHIP OF PORTER COUNTY, Indiana, Appellant
(Third-Party Defendant Below),
v.
CITY OF VALPARAISO, Appellee (Third-Party Plaintiff Below). No. 3-780A211. Court of Appeals of Indiana, Third District. May 21, 1981.

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David L. Hollenbeck and Thomas F. Macke, Blachly, Tabor, Bozik & Hartman, Valparaiso, for appellant (third-party defendant below).

John E. Hughes and Richard A. Browne, Hoeppner, Wagner & Evans, Lowell, for appellee (third-party plaintiff below).

HOFFMAN, Presiding Judge.

The City of Valparaiso, in a third-party complaint, brought an action seeking indemnification against the Center Township of Porter County, Indiana. The trial court granted the City's motion for summary judgment and found that it is entitled to indemnification from the Township. Although this decision is on less than all the issues, the trial court certified the judgment as final and appealable, pursuant to Ind.Rules of Procedure, Trial Rule 54(B).

The action originally commenced with Mrs. Ruth Herak's complaint for personal injuries allegedly resulting from a fire which occurred in September of 1976 in Center Township, Porter County, Indiana. Mrs. Herak contends that the City was responsible for extinguishing the fire and its failure to do so was the proximate cause of a traffic accident in which her husband was killed and she was injured. The City filed a third-party complaint against the Township based on a fire protection agreement. Under the terms of that agreement, the City contracted to provide fire protection to the property and residents of Center Township for the calendar year 1976. In consideration therefore, the Township agreed to pay

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the non-refundable sum of $35,000. The City's claim of indemnity rests on paragraph 8 of the agreement which reads:

"That the City of Valparaiso, Indiana, its agents, departments, officials, and governing boards shall be held harmless from any and all negligence, misconduct, malfeasance or misfeasance resulting under its performance of this contract, whether or not caused by or resulting from the activity of the Fire Department or any other participating agency or department or official of the City of Valparaiso, Indiana. The City is not a guarantor nor an insurer of the lives and property of the said Center Township and is responsible and bound only to the good faith performance of the terms and obligations of this contract."

The City successfully argued that, pursuant to this provision, the Township must defend against Mrs. Herak's complaint, pay all costs including attorney's fees, and indemnify the City in the amount of any judgment rendered against it. In opposition, the Township contends that paragraph 8 is an exculpatory clause, not an indemnity agreement. The Township further asserts that paragraph 8 is void as against public policy and that genuine issues of material fact exist which render summary judgment inappropriate.

Contracts which provide indemnification for one's own negligence may be valid in Indiana if "knowingly and willingly" made. Weaver v. American Oil Co. (1971), 257 Ind. 458, 276 N.E.2d 144. Such agreements will be strictly construed and indemnity will not be permitted unless the circumstances under which the indemnity would be required are set forth in "clear and unequivocal" terms. In Vernon Fire & Cas. Ins. Co. v. Graham (1975), 166 Ind.App. 509, 336 N.E.2d 829, the challenged clause stated that "the lessee will save lessor harmless from any liability." In finding this clause insufficient, the Court found that an explicit reference to the indemnitee's negligence is required in a contract provision which purports to require indemnification therefore. Other recent cases in which indemnification has been denied have also failed to clearly refer to losses arising from the negligence of the alleged indemnitee. For example in Gen. Acc. & Fire, etc. v. New Era Corp. (1966), 138 Ind.App. 349, 213 N.E.2d 329, the provision in question merely imposed an obligation "to protect and indemnify against all claims." In State v. Thomas et al. (1976), 169 Ind.App. 13, 346 N.E.2d 252 the contract recited that "the contractor shall indemnify the state because of any neglect of said contractor." And in State v. Thompson (1979), Ind.App., 385 N.E.2d 198 the parties agreed that "permittee shall assume all responsibility for any injury or damage." Accordingly these cases uniformly held that the "clear and unequivocal" test was not met.

By contrast, in the only recent case in which our courts have permitted indemnification against one's own negligence a specific reference to the indemnitee's own negligence was present. Loper v. Standard Oil Company et al. (1965), 138 Ind.App. 84, 211 N.E.2d 797. There the crucial language provided:

" '3. Lessor, its agent and employees shall not be liable for any loss, damage, injuries, or other casualty of whatsoever kind or by whomsoever caused to the person or property of anyone (including the lessee) on or off the premises, arising out of or resulting from the Lessee's use, possession or operation thereof, or from the installation, existence, use, maintenance, condition, repair, alteration or removal of any equipment thereon whether due in whole or in part to negligent acts or omissions of the Lessor, its agents or employees; and the Lessee for himself, his heirs, executors, administrators, successors and assigns, hereby agrees to indemnify and hold Lessor, its agents and employees, harmless from and against all claims, demands, liabilities, suits or actions (including all reasonable expenses and attorneys' fees incurred by or imposed on the Lessor in connection therewith) for such loss, damage, injury or other casualty. The Lessee also agrees to pay all reasonable expenses and attorneys'

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fees incurred by the Lessor in the event that the Lessee shall default under the provisions of this paragraph.' " (Emphasis added.)

211 N.E.2d at 798-799.

Likewise in the instant case the language of the contract clearly put the parties on notice that the indemnitor (Center Township) is liable for loss arising from the negligence of the indemnitee (City).

Disregarding irrelevant portions, the indemnity provision requires that the City "shall be held harmless from any and all negligence ... resulting under its performance of this contract, whether or not caused by or resulting from the activity of the Fire Department or any other participating agency or department or official of the City of Valparaiso, Indiana." (Emphasis added.) This provision does indemnify the City against its own negligence in clear and unequivocal terms. To hold otherwise is to strip the underlined portion of any meaning or significance. Bland v. L'Enfant Plaza North, Inc. (1972 D.D.Cir.) 473 F.2d 156; Lee v. Allied Chemical Corporation (1976) La.App., 331 So.2d 608. See also : Indemnity Insurance Co. v. Koontz-Wagner Electric Co. (1955 N.D. Ind.) 131 F.Supp. 432; Westinghouse Electric Co. v. Murphy, Inc. (1967) 425 Pa. 166, 228 A.2d 656.

The Township next argues that the clause in question is void as against public policy. A two-pronged attack is launched, contending (1) the Township was in an unequal bargaining position with the City and (2) any exemption from liability is invalid if a party is charged with the performance of a public duty. It must be noted that in the absence of legislation to the contrary, there is ordinarily no public policy which prevents parties from contracting as they see fit. La Frenz, Adm. v. Lake Co. Fair Bd...