Centex Golden Const. Co. v. Dale Tile Co.

• Decision Date: 01 March 2000
• Docket Number: No. D030452.,D030452.
• Citation: 78 Cal.App.4th 992,93 Cal.Rptr.2d 259
• Court: California Court of Appeals Court of Appeals
• Parties: CENTEX GOLDEN CONSTRUCTION COMPANY, Plaintiff and Respondent, v. DALE TILE COMPANY, Defendant and Appellant.

93 Cal.Rptr.2d 259

78 Cal.App.4th 992

CENTEX GOLDEN CONSTRUCTION COMPANY, Plaintiff and Respondent, v. DALE TILE COMPANY, Defendant and Appellant.

No. D030452.

Court of Appeal, Fourth District, Division 1.

March 1, 2000.

Rehearing Denied March 28, 2000.

Fredrickson, Mazeika & Grant, Dennis W. Fredrickson, Peter S. Gregorovic, Robert L. Friedenberg, San Diego, and Shari I. Weintraub, for Defendant and Appellant.

Deb C. Pedersdotter, San Diego; Hillyer & Irwin and Timothy C. Earl, San Diego, for Plaintiff and Respondent.

BENKE, Acting P.J.

An agreement by a subcontractor to indemnify a general contractor for any claim made with respect to the work covered by or incidental to their subcontract may require indemnity even if the claim is not meritorious and the subcontractor is not guilty of any negligence. Thus we affirm the trial court's judgment in favor of a general contractor against a subcontractor on the general contractor's claim for indemnity, even though a jury found that the subcontractor had not been guilty of any negligence.

SUMMARY

Plaintiff and respondent Centex Golden Construction Company (Golden) was the general contractor responsible for construction of a commercial building. Defendant and appellant Dale Tile Company (Dale) was the tile subcontractor on the project. Dale executed a subcontract which contained the following indemnity provision:

"B. General Indemnity—All work covered by this Agreement done at the site of construction or in preparing or delivering materials or equipment, or any or all of them, to the site shall be at the risk of SUBCONTRACTOR exclusively. SUBCONTRACTOR shall, with respect to all work which is covered by or incidental to this contract, indemnify and hold CONTRACTOR harmless from and against all of the following:

"1. Any claim, liability, loss, damage, cost, expenses, including reasonable attorneys' fees, awards, fines or judgments arising by reason of the death or bodily injury to persons, injury to property, design defects (if design originated by SUBCONTRACTOR), or other loss, damage or expense, including any if the same resulting from CONTRACTOR's alleged or actual negligent act or omission, regardless of whether such act or omission is active or passive.... However, SUBCONTRACTOR shall not be obligated under this Agreement to indemnify CONTRACTOR with respect to the sole negligence or willful misconduct of CONTRACTOR, his agents or servants or subcontractors who are directly responsible to CONTRACTOR, excluding SUBCONTRACTOR herein."

Following completion of the project, the owner made a number of claims against Golden, including a claim that the tile work was defective. Golden settled the claims made by the owner and demanded indemnity from the subcontractors whose work had given rise to the claim. With the exception of Dale, each of the subcontractors upon whom Golden made a demand eventually provided indemnity.

Golden filed an indemnity action against Dale in which it sought reimbursement for the $12,000 it had paid the owner on the owner's tile claim as well as a portion of the attorney fees it had incurred in defending the owner's claim.

At trial of Golden's indemnity action, Dale stipulated that the amount Golden had paid the owner on the tile claim was reasonable. The jury was asked to determine whether Dale had been negligent in performing work on the project and whether Golden had been negligent. The jury found that neither Dale nor Golden had been negligent. Following return of the jury's verdict, the trial court entered judgment in favor of Golden. The judgment included the $12,000 Golden had paid the owner, a portion of the attorney fees Golden had incurred in defending the owner's action and the attorney fees Golden had incurred in prosecuting the indemnity action.

Dale filed a timely notice of appeal.

ISSUES ON APPEAL

In its principal argument on appeal, Dale argues that it was not required to indemnify Golden in the absence of some showing that it had been negligent. Because the jury found that it was not negligent, it believes judgment should have been entered in its favor. Dale also argues the trial court erred in instructing the jury that Dale bore the burden of proving that the owner's claim arose out of Golden's sole negligence or willful misconduct.

DISCUSSION

I

"[W]here, as here, the trial court construed the indemnity provision at issue without the aid of extrinsic evidence the interpretation of this provision is a question of law subject to our de novo review. [Citation.]" (Continental Heller Corp. v. Amtech Mechanical Services, Inc. (1997) 53 Cal.App.4th 500, 504, 61 Cal.Rptr.2d 668 (Continental Heller).)

"[T]he question whether an indemnity agreement covers a given case turns primarily on contractual interpretation, and it is the intent of the parties as expressed in the agreement that should control. When the parties knowingly bargain for the protection at issue, the protection should be afforded. This requires an inquiry into the circumstances of the damage or injury and the language of the contract; of necessity, each case will turn on its own facts." (Rossmoor Sanitation, Inc. v. Pylon, Inc. (1975) 13 Cal.3d 622, 633, 119 Cal.Rptr. 449, 532 P.2d 97 (Rossmoor).)

"The intention of the parties is to be ascertained from the `clear and explicit' language of the contract. [Citation.] And, unless given some special meaning by the parties, the words of a contract are to be understood in their `ordinary and popular sense.' [Citation.] [¶] `In interpreting an express indemnity agreement, the courts look first to the words of the contract to determine the intended scope of the indemnity agreement.' [Citation.]" (Continental Heller, supra, 53 Cal.App.4th at p. 504, 61 Cal.Rptr.2d 668.)

As we have set forth, by way of the subcontract, Dale promised to indemnify Golden "with respect to all work which is covered by or incidental to this subcontract." In Continental Heller the court considered very similar language by which a subcontractor agreed to indemnify a contractor for any loss which" 'arises out of or is in any way connected with the performance of work under this Subcontract.'" (Continental Heller, supra, 53 Cal.App.4th at p. 505, 61 Cal.Rptr.2d 668.)

Like the trial court here, the trial court in Continental Heller found the subcontractor had not been at fault in performing the work which had given rise to third party claims against the general contractor. Nonetheless the court in Continental Heller found the broad language of indemnity did not require that the general contractor prove that the subcontractor bore any responsibility for those claims. (Continental Heller, supra, 53 Cal.App.4th at p. 505, 61 Cal.Rptr.2d 668.) "There is no merit to [the subcontractor's] contention that every cause of action for indemnity requires a showing of fault on the part of the indemnitor. On the contrary, courts will enforce indemnity agreements even for losses caused by acts over which the indemnitor had no control. [Citation.] ... The language of the agreement leaves no doubt the parties intended [the subcontractor] should indemnify [the general contractor] irrespective of whether [the general contractor's] loss arose by reason of [the subcontractor's] negligence or for any other reason except for the sole negligence or willful misconduct of [the general contractor]. [Citation.]" (Ibid. at p. 505, 61 Cal. Rptr .2d 668.)¹ Thus the court found that the contract, like the one here, excluded indemnity only if the claim was caused by the sole negligence or willful misconduct of the general contractor. (53 Cal.App.4th at p. 505, 61 Cal.Rptr.2d 668.)

Like the court in Continental Heller, we find that the language of the parties' contract imposes no requirement that Golden prove that Dale was negligent. We recognize that such an allocation of risk to an indemnitor requires some expression in the agreement which indicates that "the indemnitor's conduct or fault is of no consequence in determining whether the indemnity obligation is triggered." (Heppler v. J.M. Peters Co. (1999) 73 Cal. App.4th 1265, 1280, 87 Cal.Rptr.2d 497 (Heppler).) In Continental Heller that expression could be found in contract language by which the indemnity applied to "`... any acts or omissions, willful misconduct or negligent conduct, whether active or passive, on the part of the Subcontractor.' " (Continental Heller Corp., supra, 53 Cal.App.4th at p. 505, 61 Cal. Rptr.2d 668; see also Heppler, supra, 73 Cal.App.4th at p. 1280, 87 Cal.Rptr.2d 497.) Here the expression of the subcontractor's agreement to provide indemnity in the absence of any fault is even clearer. The indemnity clause of the contract begins by providing that all work performed by Dale "shall be at the risk of SUBCONTRACTOR exclusively" and goes on to require indemnity for all claims covered by or incidental to the subcontract, even those which involve the "alleged or actual negligent act or omission" of the general contractor. More than the language considered in Continental Heller, the express and exclusive assumption by Dale of "the risk" attendant to its work on the project, including allegations of negligence, plainly contemplates more than the narrow risk of its own actual negligence or fault.² This language includes the obvious risk of unmeritorious claims made by third parties.

Importantly, this interpretation of the contract is consistent with the particular commercial setting in which...