Fresh Cut, Inc. v. Fazli, No. 49A02-9307-CV-334

• Docket Nº: No. 49A02-9307-CV-334
• Citation: 630 N.E.2d 575
• Case Date: March 21, 1994
• Court: Court of Appeals of Indiana

Page 575

630 N.E.2d 575 FRESH CUT, INC. Appellant-Defendant,
v.
Bert FAZLI, Appellee-Plaintiff,
and
State Farm Fire & Casualty Co., Appellee-Plaintiff. No. 49A02-9307-CV-334. Court of Appeals of Indiana,
First District. March 21, 1994.
Rehearing Denied May 18, 1994.

Page 576

John S. Beeman, Douglas A. Tresslar, Ronald W. Frazier, Harrison & Moberly, Indianapolis, for appellant.

Timothy E. Hollingsworth, James P. Cavanaugh, III, Martin, Wade, Hartley & Hollingsworth, Indianapolis, for appellee.

ROBERTSON, Judge.

Fresh Cut, Inc. appeals the denial of its motion for summary judgment on lessor Bert Fazli's counterclaim for breach of contract. We affirm.

Page 577

Fresh Cut and State Farm Fire & Casualty Co. sued Fazli in a four-count complaint for damages sustained when, on August 5, 1989, a fire occurred in the portion of the premises leased by Fresh Cut, resulting in considerable damage to the building and its contents. ¹ There was no water in the building's sprinkler system on the day of the fire. Fazli avers in his counterclaim against Fresh Cut that under the terms of his lease with Fresh Cut, Fresh Cut had agreed to comply with the law, maintain the premises in good condition, and repair the leased premises, including but not limited to the electrical systems, heating and air conditioning systems, and the structural frame of the building. Thus, Fazli alleges, Fresh Cut had agreed to accept responsibility for the operation of the sprinkler system and that in failing to do so, Fresh Cut breached the terms of the lease.

Fresh Cut argues in its motion for summary judgment and on appeal that the duty imposed by municipal ordinance upon Fazli to maintain the sprinkler system which it alleges as the basis for its suit in negligence against Fazli is nondelegable and therefore, the parties may not shift that duty by contract. To the extent that the parties' agreement attempts to place the duty to ensure that the sprinkler system is operational upon Fresh Cut, the agreement is unenforceable because it is in contravention of the law and violates public policy. In any event, Fresh Cut argues that the lease simply does not place upon Fresh Cut the duty to render the sprinkler system operable.

On appeal from the grant or denial of summary judgment, we use the same standard in ascertaining the propriety of summary judgment as does the trial court. Newhouse v. Farmers National Bank of Shelbyville (1989), Ind.App., 532 N.E.2d 26, 28. Summary judgment is appropriate only when the evidentiary matter designated by the parties shows 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. Ind.Trial Rule 56(C). No judgment rendered on the motion shall be reversed on the ground that there is a genuine issue of material fact unless the material fact and the evidence relevant thereto shall have been specifically designated to the trial court. T.R. 56(H). The movant bears the burden of establishing the propriety of summary judgment, and all facts and inferences to be drawn therefrom are viewed in a light most favorable to the non-movant. Newhouse, 532 N.E.2d at 28. On appeal, the party which lost in the trial court has the burden of persuading the appellate tribunal that the trial court's decision was erroneous. Oelling v. Rao (1992), Ind., 593 N.E.2d 189. Whether or not a contract is against public policy is a question of law for the court to determine from all of the circumstances in a particular case. Stampco Construction Co. v. Guffey (1991), Ind.App., 572 N.E.2d 510, 513.

A contract is thought to be the product of the free bargaining of the parties. Weaver v. American Oil Co. (1970), Ind.App., 261 N.E.2d 99, 103, superseded, 257 Ind. 458, 276 N.E.2d 144. As a general rule, the law allows persons of full age and competent understanding the utmost liberty of contracting and their contracts, when entered into freely and voluntarily, are enforced by the courts. Id. This is so because it is in the best interest of the public that persons should not be unnecessarily restricted in their freedom of contract. Hodnick v. Fidelity Trust Co. (1932), 96 Ind.App. 342, 350, 183 N.E. 488. Accordingly, the parties to a contract are free to include in the agreement any provisions they desire so long as such provisions do not offend the public policy of this state. University Casework Systems, Inc. v. Bahre (1977), 172 Ind.App. 624, 362 N.E.2d 155, 159.

Just as the parties are free to impose new duties upon each other by agreement,

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in the absence of legislation to the contrary, they are also generally free to modify existing duties that they owe each other as a matter of law. See Restatement (Second) of Contracts § 192 Introductory Note (1979). In Indiana, the parties may agree to cover the risk of harm which may be sustained by third persons by agreeing through an indemnity clause to shift the financial burden from the indemnitee to the indemnitor. As a general rule, indemnification clauses are not void as against public policy, though they will be strictly construed and the intent to indemnify the indemnitee for its own negligence must be stated in clear and unequivocal terms. ² Weaver v. American Oil Co. (1971), 257 Ind. 458, 276 N.E.2d 144, 148; Ogilvie v. Steele (1983), Ind.App., 452 N.E.2d 167. An indemnification clause in a lease is not void or voidable as against public policy simply because the indemnitee is charged with a nondelegable duty to the public or third persons. In its role as lessor, an indemnitee may rightfully demand as part of the consideration for the lease that its lessee bear the entire financial burden, particularly when the lessee contributes to the risk of loss. Penn Central Co. v. Youngstown Sheet & Tube Co. (1969), 146 Ind.App. 216, 253 N.E.2d 704.

Similarly, in the absence of legislation, a party can ordinarily contract out of his duty to exercise reasonable...