Ethyl Corp. v. Daniel Const. Co.

• Decision Date: 25 February 1987
• Docket Number: No. C-5621,C-5621
• Citation: 725 S.W.2d 705
• Parties: ETHYL CORPORATION & Donald Metcalf, et ux., Petitioners, v. DANIEL CONSTRUCTION COMPANY, Respondent.
• Court: Texas Supreme Court

Page 705

725 S.W.2d 705

ETHYL CORPORATION & Donald Metcalf, et ux., Petitioners, v. DANIEL CONSTRUCTION COMPANY, Respondent.

No. C-5621.

Supreme Court of Texas.

Feb. 25, 1987.

Rehearing Denied April 1, 1987.

Michael S. Hays and Susan E. Crowley, Hays, McConn, Price & Pickering, Richard Warren Mithoff, P.C., Tommy Jacks, Doggett, Jacks, Marston & Perimutter, Houston, for petitioners.

Randy G. Donato, Weitinger, Steelhammer & Tucker, W. James Kronzer, Jr., Houston, for respondent.

Ronald D. Secrest, Houston, for Northwest Sweepers, Inc., amicus curiae in opposition to petitioners' application for a writ of error.

WALLACE, Justice.

This is a suit on an indemnity contract between an owner and contractor. The case originated from a worker's compensation claimant's third-party personal injury claim. The trial court granted indemnity to Ethyl Corporation, the owner. The court of appeals reversed and absolved Daniel Construction Company, the contractor, from any liability for indemnity. 714 S.W.2d 51. We affirm the judgment of the court of appeals and adopt the express negligence test for determining whether the parties to an indemnity contract intend to exculpate the indemnitee from the consequences of its own negligence.

Donald Metcalf was employed by Daniel which was performing construction on Ethyl's premises. The contract between Ethyl and Daniel provided for the construction of tie-in lines carrying aluminum alkyls, a highly volatile and inflammable substance. The lines connected an existing facility with a newly constructed facility. The contract provided that Ethyl would purge the existing lines of alkyls prior to the tie-in. As an added protection, all valve handles were to be removed from the existing lines so as to prevent an accidental opening of the lines. Removal of the valve handles was the contractual duty of Daniel.

The incident made the basis of this suit arose from Ethyl's failure to purge the existing lines and Daniel's failure to remove the valve handles. As a result, Metcalf was seriously burned when alkyls escaped and ignited.

After settling his claim for worker's compensation benefits, Metcalf sued Ethyl who in turn sued Daniel seeking indemnity. The jury found Ethyl negligent in failing to purge the existing lines and in failing to provide Metcalf with a safe place to work. The jury also found Daniel negligent in failing to remove the valve handles. The jury apportioned the negligence 90% to Ethyl and 10% to Daniel. The contract between Ethyl and Daniel contained the following indemnity provision:

Contractor shall indemnify and hold Owner harmless against any loss or damage to persons or property as a result of operations growing out of the performance of this contract and caused by the negligence or carelessness of Contractor, Contractor's employees, Subcontractors, and agents or licensees.

In reversing the trial court, the court of appeals found the above quoted indemnity provision did not clearly and unequivocally require Daniel to indemnify Ethyl for Ethyl's own negligence or for the parties' concurrent negligence. Ethyl attacks the judgment of the court of appeals in two ways: (1) it contends the negligence attributed to it is derivative of Daniel's negligence so that indemnity is not barred, and (2) it argues that the contract meets the clear and unequivocal test.

First, Ethyl relies on Barnes v. Lone Star Steel Co., 642 F.2d 993 (5th Cir.1981). Specifically, Ethyl relies on that portion of Barnes which states in order to deny indemnity, an indemnitor must show the injury or damage was caused, at least in part, by some negligence of the indemnitee other than that derived from the indemnitor's negligence. Ethyl argues its own negligence in failing to purge the lines was derivative of Daniel's negligence in not removing the valve handles. We hold Ethyl's negligence is not solely derivative of Daniel's failure to remove the valve handles; therefore, the Barnes case is inapplicable. Also, our adoption of the express negligence test necessarily rejects the reasoning of Barnes.

Ethyl's second contention is that the indemnity agreement meets the "clear and unequivocal" test expressed by this court in Joe Adams & Son v. McCann Construction Co., 475 S.W.2d 721 (Tex.1971) and followed in Sira & Payne, Inc. v. Wallace & Riddle, 484 S.W.2d 559 (Tex.1972) and Eastman Kodak Co. v. Exxon Corp., 603 S.W.2d 208 (Tex.1980). That test is whether the contract between the parties expresses in clear and unequivocal language the intent of the indemnitor to indemnify the indemnitee against the consequences of the indemnitee's own negligence whether such negligence was the sole proximate cause of the injury or a proximate cause jointly and concurrently with the indemnitor's negligence. Sira & Payne, 484 S.W.2d at 561.

An examination of cases from this court reveals its trend toward more strict construction of indemnity contracts. In prior cases we recognized that Texas has come as close as possible to adopting the express negligence doctrine without doing so. Eastman Kodak Co. v. Exxon Corp., 603 S.W.2d 208, 211 (Tex.1980); Goodyear Tire & Rubber Co. v. Jefferson Construction Co., 565 S.W.2d 916, 920 (Tex.1978); Fireman's Fund Ins. Co. v. Commercial Standard Ins. Co., 490 S.W.2d 818, 822 (Tex.1972).

As we have moved closer to the express negligence doctrine, the scriveners of indemnity agreements have devised novel ways of writing provisions which fail to expressly state the true intent of those provisions. The intent of the scriveners is to indemnify the indemnitee for its negligence, yet be just ambiguous enough to conceal that intent from...