Delicious Foods Co., Inc. v. Millard Warehouse, Inc.

• Decision Date: 05 November 1993
• Docket Number: No. S-91-390,S-91-390
• Citation: 244 Neb. 449,507 N.W.2d 631
• Court: Nebraska Supreme Court
• Parties: DELICIOUS FOODS COMPANY, INC., a Nebraska Corporation, and Chef Francisco Foods, Inc., a California Corporation, Appellees, v. MILLARD WAREHOUSE, INC., a Nebraska Corporation, Appellee, and L & B Corporation, a Nebraska Corporation, Appellant.

Page 631

507 N.W.2d 631

244 Neb. 449

DELICIOUS FOODS COMPANY, INC., a Nebraska Corporation, and Chef Francisco Foods, Inc., a California Corporation, Appellees, v. MILLARD WAREHOUSE, INC., a Nebraska Corporation, Appellee, and L & B Corporation, a Nebraska Corporation, Appellant.

No. S-91-390.

Supreme Court of Nebraska.

Nov. 5, 1993.

Syllabus by the Court

1. Directed Verdict. A directed verdict is proper only where reasonable minds cannot differ and can draw but one conclusion from the evidence, that is to say, where an issue should be decided as a matter of law.

2. Directed Verdict. A motion for directed verdict must be treated as an admission of the truth of all competent evidence submitted on behalf of the party against whom the motion is directed.

3. Directed Verdict. The party against whom a motion for directed verdict is sought is entitled to have every controverted fact resolved in its favor and to have the benefit of every inference which can reasonably be deduced from the evidence.

4. Independent Contractor: Agents. The factors to be considered in distinguishing an agent and independent contractor are (1) the extent of control which, by the agreement, the employer may exercise over the details of the work; (2) whether the one employed is engaged in a distinct occupation or business; (3) the kind of occupation, with reference to whether, in the locality, the work is usually done under the direction of the employer or by a specialist without supervision; (4) the skill required in the particular occupation; (5) whether the employer or the one employed supplies the instrumentalities, the tools, and the place of work for the person doing the work; (6) the length of time for which the one employed is engaged; (7) the method of payment, whether by the time or by the job; (8) whether the work is a part of the regular business of the employer; (9) whether the parties believe they are creating an agency relationship; and (10) whether the employer is or is not in business.

5. Agency. Whether an agency exists depends on the facts underlying the relationship of the parties irrespective of the words or terminology used by the parties to characterize or describe their relationship.

6. Independent Contractor: Liability. An independent contractor is not liable for injuries to third parties after the contractor has completed his work and turned the project over to the owner or employer and it has been accepted by him unless the parties were dealing with inherently dangerous elements or the defect at issue was latent and could not have been discovered by the owner or employer.

7. Rules of Evidence. In proceedings governed by the Nebraska Evidence Rules, the admission and exclusion of evidence is controlled by those rules; judicial discretion comes into play only when the rules make discretion a factor.

8. Contracts: Intent. If the language used in a document is unambiguous, the intent of the parties must be gathered from the contents of the document alone.

9. Contracts: Parties. In order for those not named as parties to a contract to recover thereunder as third-party beneficiaries, it must appear by express stipulation or by reasonable intendment that the rights and interests of such unnamed parties were contemplated and provision was made for them.

10. Rules of Evidence: Insurance. Even when evidence of the existence of liability insurance is otherwise admissible, it may be excluded under the provisions of Neb.Rev.Stat. § 27-403 (Reissue 1989) if the probative value of the evidence is substantially outweighed by, among other things, the danger of unfair prejudice.

11. Rules of Evidence. What constitutes unfair prejudice is a matter the Nebraska Evidence Rules entrusts to the discretion of the trial judge.

12. Rules of Evidence. Neb.Rev.Stat. § 27-408 (Reissue 1989) excludes evidence that any party to a litigation has settled a claim with a third party concerning the same transaction or subject matter involved in litigation where such evidence is offered.

13. Jury Instructions. A trial court has the duty of instructing the jury on the issues presented by the pleadings and evidence, regardless of whether the court is requested to do so; this principle applies to theories of defense as well as those upon which the plaintiff's cause of action is founded, and the failure to so instruct constitutes prejudicial error.

John R. Douglas, of Cassem, Tierney, Adams, Gotch & Douglas, Omaha, for appellant.

Rex A. Rezac, of Fraser, Stryker, Vaughn, Meusey, Olson, Boyer & Bloch, P.C., Omaha, and James T. Ferrini, Thomas A. McDonald, George C. Ellison, and Susan Condon, of Clausen, Miller, Gorman, Caffrey & Witous, P.C., Chicago, IL, for appellees Delicious Foods and Chef Francisco Foods.

HASTINGS, C.J., and BOSLAUGH, WHITE, CAPORALE, SHANAHAN, FAHRNBRUCH, and LANPHIER, JJ.

PER CURIAM.

This negligence action appeal arises from the district court's $2,192,733.37 judgment on the verdict in favor of the plaintiff-appellee Delicious Foods Company, Inc., and its $7,132.94 judgment on the verdict in favor of the plaintiff-appellee Chef Francisco Foods, Inc., against the defendant-appellant, L & B Corporation, for damages suffered as the result of a refrigeration system ammonia leak.

We note at the outset that the record does not disclose the reason Millard Warehouse, Inc., is named a party defendant, nor does it disclose the relationship, if any, of Chef Francisco Foods to either L & B or Delicious Foods. However, because the parties have treated the matter as if Chef Francisco's fate rises or falls with Delicious Foods', we do the same.

One Larry Larsen is engaged in the refrigerated storage business and is the president and sole shareholder of L & B. Larsen had built a warehouse in Lincoln, Nebraska, in which Delicious Foods subsequently leased storage space from L & B. Delicious Foods later expressed an interest in leasing cold storage space in Grand Island, Nebraska. Larsen then formed a partnership named Millard Warehouse, Grand Island, of which he owns a majority interest, for the purpose of building a warehouse there.

Delicious Foods subsequently entered into an agreement with the partnership, which agreement provided that the partnership would obtain a suitable site and build a warehouse in Grand Island which Delicious Foods agreed to, and did, lease.

The lease requires, in relevant part, that the partnership maintain and keep in good repair all portions of the warehouse, including, without limitation, all of the mechanical equipment. The lease further contains a waiver provision, which reads:

Lessor and Lessee agree that neither shall be liable to the other for damages to the premises or to any of the contents of the premises, whether owned by Lessee or Lessor, by perils insured against by the party owning such damaged or destroyed property; the Lessor hereby waives any and all rights of recovery from the Lessee for loss caused by the perils of fire and other perils included in the definition of extended coverage, and the Lessee hereby waives any and all right of recovery from the Lessor for loss caused by the perils of fire and other perils included in the definition of extended coverage. Each party hereto shall provide the other party with documentary evidence of the concurrence of their respective insurance carriers with the provisions of this clause.

Delicious Foods did insure itself against the loss occasioned by the ammonia leak.

The partnership also entered into an "Administrative Service Agreement" with L & B whereunder L & B agreed to provide accounting, administrative, marketing, and engineering services to the partnership. In exchange, the partnership pays L & B a fixed monthly fee per square foot of warehouse space.

Roger Kirschenman is L & B's corporate engineer and, through administrative service agreements, provides engineering services to all of the 18 warehouses in which Larsen has an interest. Kirschenman is not a registered engineer, and his experience in refrigeration prior to employment with L & B in 1971 was limited to the repair of refrigeration systems on semi-trailers while employed as a diesel engine mechanic for 9 1/2 months. His formal training consisted of a 1-week workshop in refrigeration systems.

Kirschenman is responsible for engineering the refrigeration systems and has ultimate responsibility for their operation. He supervised the construction of the ammonia refrigeration system for the partnership's warehouse, and interviewed and hired Richard Christianson as the plant engineer of the partnership's warehouse. While the partnership's plant manager was Christianson's immediate supervisor and Christianson addressed routine refrigeration questions to the plant manager, Kirschenman responded to Christianson's questions regarding problems with the system. Although Christianson's paycheck was issued by L & B, the partnership was charged for those wages under the terms of its administrative service agreement with L & B.

Christianson had graduated from an 18-month program in refrigeration, air conditioning, and heating at a trade school in the Omaha area in 1980, which is typical of the training possessed by those hired as refrigeration mechanics by Millard Warehouse and in the industry. He had worked since 1978 servicing refrigeration units while employed by a packinghouse, and continued his employment there until 1984, when the plant closed.

According to Delicious Foods' expert, although one can become qualified as a refrigeration mechanic without a college education, it is the custom and practice of the refrigeration industry that a refrigeration mechanic undergo a 6-month apprenticeship under the supervision of someone engaged in operating a plant as an operating engineer of an ammonia refrigeration unit. However, Christianson did not undergo such an apprenticeship; rather, Kirschenman provided him with operating manuals for the compressors but did not review...