Columbus Sch. Dist. v. Coop. Educ. Serv. Agency 10,
| Decision Date | 11 March 2021 |
| Docket Number | Appeal No. 2020AP1152 |
| Citation | 397 Wis.2d 244,2021 WI App 27,959 N.W.2d 95 (Table) |
| Parties | COLUMBUS SCHOOL DISTRICT, Plaintiff, v. COOPERATIVE EDUCATIONAL SERVICE AGENCY 10, Defendant-Third-Party Plaintiff-Appellant, v. North American Mechanical Inc., Third-Party Defendant-Respondent. |
| Court | Wisconsin Court of Appeals |
¶1 The Columbus School District sued Cooperative Educational Service Agency 10 (CESA 10) regarding alleged problems with the installation of new heating, ventilation, and air-conditioning (HVAC) systems at two schools. CESA 10 sought indemnification from North American Mechanical, Inc. (NAMI), a CESA 10 subcontractor. The circuit court granted NAMI's motion for summary judgment seeking dismissal of all claims against it because CESA 10 failed to present any evidence that NAMI "did anything wrong" and, therefore, NAMI could not as a matter of law be liable for indemnification under the terms of the contract between CESA 10 and NAMI. CESA 10 appeals.
¶2 We conclude, based on the language of the pertinent provision (the Indemnification Provision) in the contract between CESA 10 and NAMI, that NAMI's duty to indemnify CESA 10 applies only to claims for damages that were caused by NAMI, and that NAMI is entitled to summary judgment dismissing CESA 10's claims against it because CESA 10 points to no evidence that creates an issue of fact as to whether NAMI caused any damages giving rise to the District's claims against CESA 10. Accordingly, we affirm, and we remand to the circuit court for further proceedings on NAMI's motion for attorney's fees and costs.
¶3 The District hired CESA 10, a general contractor, to perform HVAC projects at two District schools. In addition to contracting for the performance of the work, the parties entered into a "guaranteed energy savings agreement" that promised certain minimum levels of energy cost savings for the District. CESA 10 in turn contracted with a number of subcontractors for different aspects of the projects. Pertinent here, CESA 10 contracted with one subcontractor to design the HVAC system at the high school and with subcontractor NAMI to provide materials for and install that HVAC system.
¶4 After discovering mold and high humidity in the schools, the District sued CESA 10 regarding alleged problems with the new HVAC systems and the District's failure to realize promised energy cost savings. CESA 10 filed a third-party complaint bringing claims against subcontractors, including claims for indemnification against NAMI.
¶5 After the parties had engaged in substantial discovery, NAMI moved for summary judgment seeking dismissal of CESA 10's claims against it. NAMI argued that it was entitled to summary judgment because, under the Indemnification Provision in its contract with CESA 10, NAMI's duty to indemnify CESA 10 was limited to damages caused by NAMI's conduct, and CESA 10 failed to adduce any evidence that NAMI's conduct caused any damages.
¶6 At the summary judgment hearing, the circuit court heard argument from the parties, including from the District's attorney, who explained that the District's experts did not "fault" NAMI and "offer[ed] no opinion critical of NAMI ... and [the District's] lay people are happy and satisfied with NAMI." The court also reviewed opinions offered by CESA 10's experts concluding that there was no wrongdoing by any subcontractor at the high school. The court determined that NAMI was entitled to summary judgment dismissing CESA 10's claims against NAMI because there was no dispute of material fact as to whether NAMI "did anything wrong," as required by the Indemnification Provision. Specifically, the court explained that there was no assertion by any expert that NAMI "did anything negligent" and there was no evidence that NAMI "did anything wrong in the acquisition of the [HVAC] equipment or in its installation."
¶7 NAMI subsequently filed a motion, which remains pending, seeking attorney's fees and costs pursuant to a fee-shifting provision in the contract between CESA 10 and NAMI.
¶8 CESA 10 appeals.
¶9 We first summarize the applicable standard of review and general legal principles. We next interpret the Indemnification Provision, conclude that it is triggered only insofar as NAMI caused the damages giving rise to the District's claims against CESA 10, and address and reject CESA 10's arguments to the contrary. Finally, we apply our interpretation of the Indemnification Provision to the record and conclude that NAMI is entitled to summary judgment dismissing CESA 10's claims against it.
¶10 We review a grant of summary judgment de novo. Brey v. State Farm Mut. Auto. Ins. Co. , 2020 WI App 45, ¶12, 393 Wis. 2d 574, 947 N.W.2d 205. Summary judgment is proper, and the moving party is entitled to judgment as a matter of law "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." WIS. STAT. § 802.08(2) (2017-18); 1 Olson v. Town of Cottage Grove , 2008 WI 51, ¶34, 309 Wis. 2d 365, 749 N.W.2d 211.
¶11 Interpretation of a written contract presents a question of law that we also review de novo. Estate of Kriefall v. Sizzler USA Franchise, Inc. , 2012 WI 70, ¶14, 342 Wis. 2d 29, 816 N.W.2d 853 ; Admanco, Inc. v. 700 Stanton Drive, LLC , 2010 WI 76, ¶15, 326 Wis. 2d 586, 786 N.W.2d 759. In interpreting contracts, "our goal ‘is to ascertain the true intentions of the parties as expressed by the contractual language.’ " Town Bank v. City Real Estate Dev., LLC , 2010 WI 134, ¶33, 330 Wis. 2d 340, 793 N.W.2d 476 (quoted source omitted). "[T]he best indication of the parties’ intent is the language of the contract itself." Id. We presume the parties’ intentions are expressed in the language of the contract. Kriefall , 342 Wis. 2d 29, ¶21. " ‘Interpretation of an indemnification agreement, like any other written contract, begins with the language of the agreement.’ " Fabco Equip., Inc. v. Kreilkamp Trucking, Inc. , 2013 WI App 141, ¶6, 352 Wis. 2d 106, 841 N.W.2d 542 (quoted source omitted).
¶12 As we explain, we conclude that the Indemnification Provision requires NAMI to indemnify CESA 10 only to the extent that NAMI's conduct caused the damages giving rise to the District's claims against CESA 10.
¶13 The Indemnification Provision reads as follows:
To the fullest extent permitted by law, [NAMI] shall indemnify and hold harmless [CESA 10] ... from all claims for bodily injury and property damage that may arise from the performance of the Subcontract Work, including reasonable attorneys’ fees, costs and expenses, to the extent caused by the acts or omissions of [NAMI], [NAMI's] subcontractors or anyone employed directly or indirectly by any of them or by anyone for whose acts any of them may be liable.
¶14 Consistent with the legal principles stated above, we begin with the language of the Indemnification Provision. Fabco Equip., Inc. , 352 Wis. 2d 106, ¶6. The Provision sets three prerequisites for NAMI to indemnify CESA 10. First, the Provision requires that there be claims against CESA 10 for damages ("[NAMI] shall indemnify and hold harmless [CESA 10] ... from all claims for bodily injury and property damage"). Second, the Provision requires that the damages claimed arise from NAMI's work ("that may arise from the performance of [NAMI's] work"). Third, the Provision requires that the damages claimed be caused by NAMI or someone under its control ("to the extent caused by the acts or omissions of [NAMI], [NAMI's] subcontractors or anyone employed directly or indirectly by any of them or by anyone for whose acts any of them may be liable" (emphasis added)). This last "causation clause" imposes a causation requirement that limits the scope of the Indemnification Provision as a whole, by unambiguously stating that NAMI's duty to indemnify CESA 10 for claims for damages (and associated attorney fees and legal costs) is triggered only insofar as NAMI's conduct (or the conduct of someone under NAMI's control) caused the damages giving rise to the claims.
¶15 As NAMI notes, the causation clause in the Indemnification Provision stands in stark contrast to a separate, narrower provision in the contract that imposes on NAMI a duty to "indemnify, defend, and hold harmless" CESA 10 against any claims brought by NAMI's own employees or subcontractors. The difference in language between the two provisions shows that the parties knew how to draft an agreement for indemnification that is not conditioned on causation, and that they chose not do so with respect to the Indemnification Provision.
¶16 In apparent disregard of the causation clause, CESA 10 argues that it need not prove that NAMI caused the District's damages. CESA 10 argues that, instead, NAMI's duty to indemnify is triggered solely by a claim of wrongdoing by NAMI, which CESA 10 argues creates "potential liability" for CESA 10. CESA 10 frames all of its grounds for the argument that it need not prove that NAMI caused the District's damages within the concept of NAMI's "potential liability" as an apparent surrogate for its own "potential liability." As we explain, the case law on potential liability as a trigger for indemnification does not absolve CESA 10 of the duty, under the language of the Indemnification Provision, to show that NAMI caused CESA 10's potential liability to the District. In the next section, we address the various grounds CESA 10 offers for its potential liability argument and explain why none of them have merit.
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