Espaniola v. Cawdrey Mars Joint Venture, 9680

• Decision Date: 26 September 1985
• Docket Number: No. 9680,9680
• Citation: 707 P.2d 365,68 Haw. 171
• Parties: Teresa A. ESPANIOLA, Individually and as Special Administratrix of the Estate of Don P. Espaniola, Deceased, and Leolani A. Espaniola and Don P. Espaniola, Jr., minors, by their next friend, Teresa A. Espaniola, and Mr. and Mrs. Moses Espaniola, Plaintiffs, v. CAWDREY MARS JOINT VENTURE, a Partnership, Tedwill, Inc., Molokai Electric Company, Limited, Fritz, Inc., Fritz of Hawaii, Inc., Doe Corporations 3-10, and John and Jane Does 1-50, Defendants and Third-Party Plaintiff-Appellant, v. Joe E. LEMING, Third-Party Defendant-Appellee.
• Court: Hawaii Supreme Court

Page 365

707 P.2d 365

68 Haw. 171

Teresa A. ESPANIOLA, Individually and as Special

Administratrix of the Estate of Don P. Espaniola, Deceased,

and Leolani A. Espaniola and Don P. Espaniola, Jr., minors,

by their next friend, Teresa A. Espaniola, and Mr. and Mrs.

Moses Espaniola, Plaintiffs, v. CAWDREY MARS JOINT VENTURE, a Partnership, Tedwill, Inc.,

Molokai Electric Company, Limited, Fritz, Inc., Fritz of

Hawaii, Inc., Doe Corporations 3-10, and John and Jane Does

1-50, Defendants and Third-Party Plaintiff-Appellant,

v.

Joe E. LEMING, Third-Party Defendant-Appellee.

No. 9680.

Supreme Court of Hawai'i.

Sept. 26, 1985.

As Amended Oct. 15, 1985.

Syllabus by the Court

1. An employer covered by the Workers' Compensation Law can still be liable to a third party if he assumes liability under an indemnity agreement.

2. Even where a third party is found negligent, he can be indemnified by the employer if there has been a clear and unequivocal assumption of liability by the employer.

3. Hawaii Revised Statutes § 431-453 renders invalid any covenant, promise, or understanding in a construction contract purporting to indemnify the promisee against liability resulting from the sole negligence or wilful misconduct of the promisee, his agents or employees, or the indemnitee. Nothing on its face or in its history suggests a subcontractor's promise to indemnify the general contractor against liability resulting from the subcontractor's negligence may be void.

4. An object of Rule 14 of the Hawaii Rules of Civil Procedure is to avoid the situation that arises when a defendant has been held liable to plaintiff and then finds it necessary to bring a separate action against a third individual who may be liable to defendant for all or part of plaintiff's original claim. The rule is intended to provide a mechanism for disposing of multiple claims arising from a single set of facts in one action expeditiously and economically.

5. The public policy of the State is to allow the recovery of damages by a plaintiff whose negligence is no greater than that of the other negligent actors in the aggregate.

6. This court subscribes to the view that great consideration should always be accorded precedent, especially one of long standing and general acceptance. Yet, it doesn't necessarily follow that a rule established by precedent is infallible.

7. If unintended injury would result by following the previous decision, corrective action is in order; for this court cannot be unmindful of the lessons furnished by its own consciousness, as well as by judicial history, of the liability to error and the advantages of review.

8. Sugue v. F.L. Smithe Machine Co. is overruled; but the decision does not enlarge an employer's liability for a work injury. The "exclusive liability" provision in the Workers' Compensation Law still precludes the recovery of damages by an employee from his employer. The decision is meant to facilitate the determination of causal negligence, not liability, and to permit an injured worker to recover damages from a third party if the worker's negligence is no greater than the combined negligence of the third party and the employer.

Richard E. Stifel, Honolulu (Lawrence L. Tong, Honolulu, with him on the briefs; Goodsill, Anderson, Quinn & Stifel, Honolulu, of counsel), for defendants and third-party plaintiff-appellant.

William A. Bordner, Honolulu (Gary L. Miller, Honolulu, with him on the brief; Burke, Sakai, McPheeters, Bordner & Gilardy, Honolulu, of counsel), for third-party defendant-appellee.

Before LUM, C.J., and NAKAMURA, PADGETT, HAYASHI and WAKATSUKI, JJ.

NAKAMURA, Justice.

"The ... remedies ... granted [by the Workers' Compensation Law] to an employee or his dependents on account of a work injury ... exclude all other liability of the employer to the employee, his legal representative, spouse, dependents, next of kin, or anyone else entitled to recover damages from the employer ...." Hawaii Revised Statutes (HRS) § 386-5 (1976). ¹ The question is whether this "exclusive liability" clause precludes the assertion of a contractual claim for indemnity against an employer, who has paid benefits under the law on account of a fatal work injury, by a third-party tortfeasor from whom damages are sought for the same injury. The Circuit Court of the Second Circuit ruled the claim for indemnity was barred by virtue of HRS § 386-5. But we conclude it was not and vacate the award of summary judgment to the employer.

I.

Joe E. Leming, a building contractor, entered into a contract with Cawdrey-Mars Joint Venture, the general contractor, to perform the rough framing work for the Paniolo Hale, a condominium apartment project on Molokai. Leming agreed therein to protect and indemnify the general contractor against any loss or damage sustained by anyone arising from his negligence. ² Don P. Espaniola, an apprentice carpenter employed by the subcontractor, suffered a fatal work injury at the project site when he fell from the roof of a building under construction after he accidentally backed into a high-tension wire. His dependents therefore became entitled to benefits under the Workers' Compensation Law. Since the statute also allows dependents of a deceased employee to recover damages from someone other than the employer when a fatal injury occurs under circumstances creating a legal liability for damages in the third party, ³ the decedent's surviving spouse, suing as the administratrix of his estate and on behalf of herself and his minor children, and his parents brought a tort action against the general contractor, the owner-developer of the project (Tedwill, Inc.), the Molokai Electric Company, Limited, and other unidentified defendants. ⁴

Cawdrey-Mars and Tedwill answered the complaint by denying they were negligent and filed cross-claims against Molokai Electric; the utility company likewise disaffirmed liability and blamed the other defendants for Don P. Espaniola's death; and when Fritz, Inc., the project's electrical subcontractor, was identified as a defendant, it predictably disclaimed responsibility for the accident and cast the blame for the fatal work accident on the other defendants.

Cawdrey-Mars subsequently filed a third-party complaint seeking contribution from Leming for any damages awardable to the plaintiffs, as well as indemnification for any damages resulting from his negligence. Contribution was sought on grounds that the employer's wilful or wanton conduct was the cause of the employee's death and indemnification was sought pursuant to the contract between the general contractor and the subcontractor. Fritz, Inc. also sought "indemnification, contribution and/or reimbursement" from Leming. Its prayer for indemnification was purportedly "based upon, among other things, common law active and passive negligence." When Leming moved for summary judgments on the third-party complaints, the circuit court awarded him judgment on the claims for contribution based on negligence and for indemnification under the contract but denied him judgment on the claim for contribution premised on allegations of wilful or wanton conduct and on the common law indemnity claim purportedly grounded on active-passive negligence. ⁵

The damage claims against Cawdrey-Mars, Tedwill, and Fritz, Inc. were either settled or dismissed, and the plaintiffs proceeded to trial against the remaining defendant. However, they also reached settlement with Molokai Electric before its completion. Cawdrey-Mars then perfected a timely appeal from the order awarding Leming summary judgment on the claims it asserted for contribution and indemnification. But the arguments addressed to this court deal only with the issue of Leming's contractual obligation to protect and indemnify Cawdrey-Mars "against any loss or damage suffered by any one arising through the negligence of the Sub-contractor."

II.

A.

Our first brush with the issue posed for decision was in Kamali v. Hawaiian Electric Co., 54 Haw. 153, 504 P.2d 861 (1972), where an employee of a house moving contractor was severely burned when he unintentionally touched several uninsulated high-tension lines while standing on the roof of a house that was being hauled down a public street on a trailer. The injured worker received workers' compensation benefits but chose also to seek damages for the injury. He charged Hawaiian Electric Company, the owner of the electric lines, was responsible for the mishap, averring it was negligent in constructing and maintaining the wires.

The utility company in turn brought suit against the house mover and the driver of the truck that pulled the trailer. The third-party complaint sought contribution for damages from the third-party defendants on averments that they were joint tortfeasors. It sought indemnification on the basis of the permit obtained by the house mover from the Joint Pole Committee in accord with an ordinance of the City and County of Honolulu and on allegations that the house mover owed Hawaiian Electric an independent duty of indemnity. Though we saw equity in a rule of limited contribution followed by a minority of states, we concluded the clear language of HRS § 386-5 precluded contribution "on the theory that the employer was a joint tortfeasor." Id. at 159, 504 P.2d at 865. "The adoption of any theory allowing contribution," in our opinion, was "a situation for legislative consideration." Id.

We did not view the indemnity claim in the same light. Citing Ryan Stevedoring Co. v. Pan-Atlantic Steamship Corp., 350 U.S. 124, 76 S.Ct. 232, 100 L.Ed. 133 (1955), we said an employer covered by the Workers' Compensation Law could still be liable to a third party if he assumed liability under an indemnity agreement. Kamali, 54 Haw. at 159, 504 P.2d at 865. ⁶ Still, we recognized that such agreements should be construed strictly. And upon reviewing the permit upon which Hawaiian Electric relied, we ruled the language in the permit...