Fabarc Steel v. Composite Const. Systems

• Decision Date: 20 May 2005
• Docket Number: 1031890.
• Citation: 914 So.2d 344
• Parties: FabARC STEEL SUPPLY, INC. v. COMPOSITE CONSTRUCTION SYSTEMS, INC.
• Court: Alabama Supreme Court

Page 344

914 So.2d 344

FabARC STEEL SUPPLY, INC. v. COMPOSITE CONSTRUCTION SYSTEMS, INC.

1031890.

Supreme Court of Alabama.

May 20, 2005.

COPYRIGHT MATERIAL OMITTED

Carol Ann Smith, Brenen G. Ely, and Joel S. Isenberg of Smith & Ely, L.L.P., Birmingham, for appellant.

Philip R. Collins and Joseph R. Duncan, Jr., of Huie, Fernambucq & Stewart, Birmingham, for appellee.

HARWOOD, Justice.

FabArc Steel Supply, Inc. ("FabArc"), appeals a summary judgment entered by the Morgan Circuit Court for Composite Construction Systems, Inc. ("CCSI"), and the denial of FabArc's cross-motion for summary judgment against CCSI, all with respect to FabArc's third-party action against CCSI in litigation arising out of a death at a construction site. We affirm in part, reverse in part, and remand.

Shimizu America Corporation ("Shimizu") was the general contractor for a commercial construction project near Decatur, Alabama, known as the "Toray project." Evodio Sanchez, an employee of J & J Masonry, a subcontractor on the Toray project, was killed on April 13, 1998, when a masonry wall collapsed and fell on him following the removal of adjacent scaffolding. Cynthia Sanchez, as the personal representative of Evodio Sanchez's estate, filed a wrongful-death action against Shimizu, Don Chambers (the project superintendent for Shimizu), and various fictitiously named parties. By amendment filed seven months later, on December 7, 1999, Cynthia substituted FabArc, also a subcontractor on the Toray project, for one of the fictitiously named parties. Under its subcontract with Shimizu, FabArc had agreed to furnish and install the structural steel required for the job. Because FabArc was solely a steel fabricator, it had subcontracted to CCSI, a steel-erection company, the installation portion of FabArc's subcontract with Shimizu. Specifically, CCSI agreed "to furnish all labor, equipment, and insurance necessary to unload and complete the erection" of the structural steel called for by the subcontract between Shimizu and FabArc. Thus, as between FabArc and CCSI, FabArc retained responsibility for providing the steel components and delivering them to the job site, and CCSI assumed responsibility for unloading the steel and then installing it when and as called for by the Shimizu-FabArc subcontract.

The complaint alleged the following as to FabArc:

"Defendant FabArc and any employees and/or agents thereof, negligently or wantonly failed to provide and/or install proper and adequate supports, anchors, and fasteners to secure and stabilize the masonry wall which collapsed and killed Plaintiff's decedent, Evodio Sanchez. Said negligent and wanton conduct was a proximate cause of the wrongful death of Evodio Sanchez."

Shimizu asserted a cross-claim against FabArc for indemnity based on a clause in their contract under which FabArc had agreed to indemnify and hold harmless Shimizu

"from and against all claims, damages, loss and expenses, including but not limited to attorney's fees, arising out of or resulting from performance of the Subcontractor's Work provided that:

"(1) Any such claim, damage, loss, or expense is attributable to bodily injury, sickness, disease or death, or injury to or destruction of tangible property (other than the Subcontractor's Work itself) including the loss of use resulting therefrom to the extent caused or alleged to be caused in whole or in any part by any negligent act or omission of the Subcontractor or anyone directly or indirectly employed by the Subcontractor or anyone for whose acts the Subcontractor may be liable, regardless of whether it is caused in part by a party indemnified hereunder."

FabArc, in turn, filed a third-party complaint against CCSI seeking indemnification for any damages that might be directly imposed on FabArc in the action and any for indemnity FabArc might be determined to owe to Shimizu. Additionally, FabArc charged that CCSI had "breached its contractual duty by failing to name FabArc Steel an additional insured without exception(s) under its comprehensive liability policy." In those respects, FabArc relied on the following provisions of its subcontract with CCSI:

"The Sub-Contractor agrees to furnish all labor, equipment, and insurance necessary to unload and complete the erection of steel and decking studs to include but not necessarily limited to: Structural steel, bar joists and bridging, composite deck, shear connectors, roof deck, checker plate, expanded metal grating, moment connections.

"All items per Attachment `A.' (Contract between Shimizu and FabArc Steel).

"....

"3. It shall be the obligation of the Sub-Contractor under this agreement ... to obtain public and general liability insurance covering property and personal injury damages. . . . The general liability insurance coverage should be for a minimum of $1,000,000/occurrence and $1,000,000/aggregate. As a condition precedent of Sub-Contractor beginning work on the project, Sub-Contractor shall furnish a certificate satisfactory to FabArc from each insurance company showing the required insurance is in force and effect.... In the event Sub-Contractor fails to furnish or maintain the agreed to insurance, FabArc may obtain said insurance for the Sub-Contractor and FabArc shall be reimbursed out of monies otherwise due the Sub-Contractor for the premiums, overhead and other costs that may be incurred by FabArc by reason of FabArc obtaining such insurance for the Sub-Contractor.

"4. The Sub-Contractor hereby covenants and agrees to defend, indemnify and exonerate FabArc from all liability claims, actions, causes of action, lawsuits, and demands (including all judgments and settlements made at arms length and all attorney fees and litigation expense connected therewith) for, personal injury or death ... arising out of any work or operation performed by, for and on behalf of the Sub-Contractor or arising out of Sub-Contractor's negligence, even if Sub-Contractor is only partly negligent for the damage or injury. The foregoing covenant and agreement shall include all such liabilities, claims, lawsuits and demands where it is charged, alleged or proven that the Sub-Contractor (or its agents or employees) was in any way at fault in causing or contributing to such injury, death or property damage. The Sub-Contractor's liability insurance policies shall each contain contractual insurance coverage as to the covenant contained in this section. The contractor shall be named as an additional insured in the Sub-Contractor's general comprehensive and public liability policy. A copy of said general comprehensive and public liability insurance policy showing FabArc as an additional insured shall be furnished to FabArc prior to Sub-Contractor beginning performance. . . .

"5. Sub-Contractor's Work shall be performed in accordance with the requirements of this Agreement and Contract Documents. With respect to Subcontractor's Work, Sub-Contractor agrees to be bound to FabArc by all of the terms and provisions of the Contractor Documents, and to assume toward FabArc all of the duties, obligations, and responsibilities that FabArc, by those Contract Documents, assumes toward the Owner and/or the General Contractor, including all obligation of owners' and/or general contractors' safety program."

CCSI has never been named as a defendant in the Sanchez action.

Early in 2001 Shimizu's insurers, including its excess insurer, Great American Assurance Company ("Great American"), settled Cynthia's claims against Shimizu. Shimizu's primary carrier contributed $1,000,000 to the settlement and Great American contributed $2,500,000. FabArc also participated in the settlement, paying $600,000 to settle Cynthia's claims against Shimizu. Neither FabArc nor its liability insurance carrier contributed any money on behalf of Shimizu to settle Cynthia's claims against Shimizu, despite demands on them to do so; and neither CCSI nor its liability insurer carrier contributed any money on behalf of FabArc to settle either Cynthia's or Shimizu's claims against it, despite demands on them to do so.

In October 2001 Great American, proceeding as subrogee of Shimizu, filed its "complaint in intervention" in the action, seeking indemnification from FabArc and CCSI under the terms of the indemnification clause in the subcontract between Shimizu and FabArc. As noted earlier, that indemnification clause obligated FabArc to indemnify Shimizu against all claims that, among other things, arose out of FabArc's work, "to the extent [Evodio's death was] caused or alleged to be caused in whole or in part by any negligent act of [FabArc] or anyone directly or indirectly employed by [FabArc] or anyone for whose acts [FabArc] may be liable. . . ." (Emphasis supplied.) The trial court entered a summary judgment in favor of Great American against FabArc, reasoning, in pertinent part:

"The indemnity provision [in the subcontract between Shimizu and FabArc] is not ambiguous as a matter of law. The plain language of the provision provides an `either-or' event which triggers FabArc's obligation to indemnify. . . . At the time the plaintiff amended her complaint and alleged that the death was proximately caused by the negligent or wanton acts of FabArc and any employees and/or agents of FabArc, FabArc was obligated to indemnify Shimizu from and against the claim of the plaintiff for the death of Evodio Sanchez, including but not limited to attorney's fee."

(Emphasis in original.)

Conversely, the trial court entered summary judgment in favor of CCSI and against Great American, holding that Great American's claim against CCSI was dependent on the theory that Shimizu was an intended third-party beneficiary of FabArc's subcontract with CCSI, whereas Shimizu's contract with FabArc expressly provided that nothing in it would "create any subcontractual relationship between [Shimizu] ... and any lower-tier subcontractor." Accordingly, the trial court held, CCSI owed no duty...