City of St. Joseph v. Kaw Valley Tunneling, Inc.

• Decision Date: 11 October 1983
• Docket Number: No. WD,WD
• Citation: 660 S.W.2d 26
• Parties: CITY OF ST. JOSEPH, Appellant, v. KAW VALLEY TUNNELING, INC., Respondent. 33419.
• Court: Missouri Court of Appeals

Page 26

660 S.W.2d 26

CITY OF ST. JOSEPH, Appellant, v. KAW VALLEY TUNNELING, INC., Respondent.

No. WD 33419.

Missouri Court of Appeals Western District.

Oct. 11, 1983.

John D. Boeh, James O. Turner (argued), St. Joseph, for appellant.

F. Phillip Kirwan, G. Steven Ruprecht (argued), Kansas City, for respondent.

Before PRITCHARD, P.J., and MANFORD and NUGENT, JJ.

NUGENT, Judge.

The city of St. Joseph appeals from an order granting respondent's Motion for Summary Judgment on a cross claim for indemnity based on a judgment rendered against both parties in an earlier proceeding.

Rule 74.04(c) ¹ permits the entry of summary judgment when it is shown "that there is no genuine issue as to any material fact and that any party is entitled to judgment as a matter of law." Thus, on reviewing the grant of a motion for summary judgment, our duty is to scrutinize the record in the light most favorable to the party against whom the motion was filed and to accord such party every favorable intendment of the record. Thompson v. Parker, 608 S.W.2d 415 (Mo.1980); Perkins v. Schicker, 641 S.W.2d 432, 433 (Mo.App.1982). Doing so, we consider the following facts from the record.

In the underlying action giving rise to the controversy involved in the case at bar, the St. Joseph Light and Power Company (hereinafter "Power Company") instituted an action against Kaw Valley Tunneling, Inc., and I.V. Cunningham, Sr., as joint venturers (hereinafter "Kaw Valley"), the City of St. Joseph (hereinafter "city"), and the St. Joseph Water Company to recover for damages to Power Company buildings and facilities occasioned by the construction of an underground sewer system. St. Joseph Light & Power Co. v. Kaw Valley Tunneling, Inc., 589 S.W.2d 260 (Mo.1979) (en banc).

The opinion in that case reveals the following facts: The sewer was constructed for the city by Kaw Valley pursuant to a written construction contract. Under the terms of the contract, Kaw Valley assumed the duty to "repair or replace any damaged structures, work or materials" occasioned by the operation. The city alone assumed the duty to determine the adequacy of the soil conditions. During the construction, several pieces of the Power Company's property were damaged as a result of ground subsidence.

The Power Company's petition was filed in three counts. Counts I and II alleged damages resulting from the negligence of the named defendants. Both counts charged negligence on the part of Kaw Valley in (1) causing excessive vibration in the driving of piling, (2) inadequately investigating subsoil conditions, and (3) continuing to pursue an unsafe method of operation knowing it was likely to cause damage to property adjacent to the work. The city was charged with negligence in failing to exercise proper control over Kaw Valley and in failing to take proper steps to avoid damage to the property of others when it knew that continuation of the original method of construction would be likely to cause such damage. Under Count III of its petition, the Power Company sought to recover as a third party beneficiary of the contract between Kaw Valley and the city.

Although the city cross-claimed against Kaw Valley for indemnity, Kaw Valley asserted no cross-claim against the city at that stage of the proceedings.

The trial court, sitting without a jury, found the city liable for the damage to the property ² based on the city's negligent investigation of the construction site and negligent issuance of specifications and plans. The trial court ordered the city to pay $18,450 to plaintiff--$18,000 for damages to the Chessmore Building and $450 for damage to its steam line. Although the Power Company also produced evidence of damages in the form of the "cost of repair" of several other items damaged by the city's negligence, ³ the court refused to allow these claims because the plaintiff failed to offer evidence as to the "diminution in value" of these items. ⁴ As to the plaintiff's claims against Kaw Valley, the trial court found in favor of Kaw Valley on each count. Moreover the city's cross-claim against Kaw Valley was dismissed.

Both the city and the Power Company appealed from the decision of the trial court. The city appealed the dismissal of its cross-claim against Kaw Valley and the $18,450 judgment rendered against it in favor of the plaintiff, while the Power Company appealed the trial court's determination of damages against the city and its decision absolving Kaw Valley of any liability.

The court of appeals affirmed the trial court's ruling in all respects except with regard to the Power Company's claim against Kaw Valley. The court found that the plaintiff was indeed a third party beneficiary of the construction contract between Kaw Valley and the city and remanded the case to the trial court for an entry of judgment in favor of the Power Company and against Kaw Valley in the amount of $18,450 under Count III of the original petition.

Upon application of the Power Company and the city, the case was transferred to the Supreme Court. In St. Joseph Power and Light Company v. Kaw Valley Tunneling, supra, the Court dealt primarily with the following two issues:

First, whether Kaw Valley is liable to a third party beneficiary of its contract with the city in the face of a trial court finding that Kaw Valley did not breach any provisions of that contract. Second, whether the measure of damages applied by the trial court, diminution of value, is the proper measure or whether the cost of repair or replacement (including cost of razing plaintiff's damaged building), which the Power Company alleges is provided for under the contract, is appropriate.

Id. at 264.

The Supreme Court held that the Power Company was entitled to recover against Kaw Valley as a third party beneficiary of the contract between the city and Kaw Valley. The Court held Kaw Valley liable for the full measure of damages ($86,524.46) demonstrated by the plaintiff at trial since under the terms of its contract with the city Kaw Valley was liable for "repair and replacement" costs. ⁵ Because the Power Company failed to prove the "diminution in value" as to any of its damages except those relating to the Chessmore Building and its steam line, the liability of the city was limited to $30,450. The court arrived at this figure by stating that the $12,000 which the Power Company showed was needed to demolish the Chessmore Building should have been treated as "diminution in value" by the trial court since this expenditure was necessary to put the land to an economic use. This amount, added to the $18,450 judgment already leveled against the city, increased the city's liability to the plaintiff to $30,450. Finally, the court affirmed the trial court's ruling that the plaintiff failed in its burden of proof regarding the balance of its damages.

The Supreme Court let stand the trial court's findings that (1) Kaw Valley was not negligent and (2) it was the negligence of the city which was the sole cause of the damage to the plaintiff.

On remand, in accordance with the Supreme Court opinion, the trial court entered a judgment in favor of plaintiff Power Company in the sum of $86,524.46--$30,450 as a joint judgment against both Kaw Valley and the city and the balance ($56,074.46) against Kaw Valley alone. Kaw Valley immediately filed a cross-petition for indemnity against the city as to all amounts it would be obligated to pay the plaintiff pursuant to the aforementioned judgment on the theory that it was the city's negligence alone which caused the plaintiff's damages. Kaw Valley moved for summary judgment on its claim for indemnity, and on November 18, 1981, the court granted the motion. The city appeals from the granting of Kaw Valley's motion.

The city, in its sole point on appeal, contends that the trial court's granting of the motion is inconsistent with the Supreme Court's opinion in St. Joseph Light and Power Company v. Kaw Valley Tunneling, supra. That opinion found the city liable to Power Company for city's negligence in the amount of $30,450, and Kaw Valley liable to Power Company for Kaw's breach of contract in the amount of $86,524.46. The city argues that Kaw Valley's duty to Power Company is not co-extensive or identical with Kaw Valley's duty to the plaintiff. City's liability to the Power Company is based on its negligence; Kaw Valley's liability to the plaintiff is based on its contract with the city. The city contends that Kaw Valley's contractual duty extended to the "repair and replacement" of any items damaged by virtue of the construction; the city's duty was limited to the prevention of any damages proximately caused by its own negligence. In order for a right of full indemnity to arise, city argues, the obligation or duty to be discharged by the indemnitee (Kaw Valley) must be co-extensive or identical with that owed by the indemnitor (city). Thus, the city maintains that its duty to "indemnify" Kaw Valley extends only to the $30,450 joint judgment which Kaw Valley may be forced to satisfy. The city argues that its duty to indemnify Kaw Valley is limited to the extent of city's liability for negligence as determined by the joint judgment rendered in the prior proceeding.

Kaw Valley responds that the trial court properly sustained Kaw Valley's motion for summary judgment on its cross-claim against the city. Kaw Valley contends that its duties and obligations are identical to those of the city. Kaw Valley argues that but for the city's negligence, Kaw Valley would have no contractual liability to the plaintiff. Thus, Kaw Valley contends, that the "fortuitous circumstance" of differing judgment amounts should not preclude Kaw Valley its right to indemnity from the city for the damage the city's negligence caused.

Two primary issues must be resolved in order to determine whether the trial court's grant of summary judgment was proper: (1) whether Kaw Valley is entitled to indemnity as a...