Freund v. Utah Power & Light Co.

• Decision Date: 18 May 1990
• Docket Number: No. 880261,880261
• Citation: 793 P.2d 362
• Parties: Donald R. FREUND, Plaintiff, v. UTAH POWER & LIGHT COMPANY and Cablemain, Inc., Defendants, Third-Party Plaintiffs, and Appellants, v. JONES INTERCABLE, INC., Third-Party Defendant and Appellee, and C.P. National Corporation, Third-Party Defendant and Appellant.
• Court: Utah Supreme Court

Page 362

793 P.2d 362

Donald R. FREUND, Plaintiff, v. UTAH POWER & LIGHT COMPANY and Cablemain, Inc., Defendants, Third-Party Plaintiffs, and Appellants, v. JONES INTERCABLE, INC., Third-Party Defendant and Appellee, and C.P. National Corporation, Third-Party Defendant and Appellant.

No. 880261.

Supreme Court of Utah.

May 18, 1990.

Robert Gordon, David A. Westerby, Stephen B. Nebeker, Anthony B. Quinn, Jeffrey D. Eisenberg, Salt Lake City, for Utah Power & Light Co.

Allan L. Larson, Jerry D. Fenn, Salt Lake City, for Cablemain.

Robert W. Brandt, Robert G. Gilchrist, Michael P. Zaccheo, Gary L. Johnson, Salt Lake City, for C.P. National.

Scott W. Christensen, Salt Lake City, for The Home Ins. Co.

Glenn C. Hanni, Paul M. Belnap, Mark J. Taylor, Salt Lake City, for Jones Intercable, Cable TV Fund VIII-B, and Konocti TV, Inc.

HOWE, Associate Chief Justice:

The United States Court of Appeals for the Tenth Circuit, pursuant to rule 41 of the Rules of the Utah Supreme Court, has certified to us the following questions of Utah law: (1) whether the exclusive remedy provision of the Utah Workers' Compensation Act, Utah Code Ann. § 35-1-60, bars a claim by a third party that a statutory employer impliedly agreed to indemnify the third party against claims for injuries sustained by an employee; (2) whether, under Utah law, the indemnification provision of paragraph 21 of the "Facilities Attachment Agreement" is a sufficiently clear and unequivocal agreement by Jones Intercable, Inc., to indemnify Utah Power & Light Co. for its own negligence which resulted in injuries to a Jones employee in connection with the "erection, maintenance, presence, use or removal of Jones' equipment"; (3) whether, in view of the exclusive remedy provision of the Utah Workers' Compensation Act, the language set out in paragraph 21 of the "Facilities Attachment Agreement" is explicit enough to be an enforceable agreement on the part of Jones (the employer) to indemnify Utah Power for amounts paid to Jones's employee as a result of injuries sustained by the employee; (4) whether it is a correct interpretation of Utah law that an agreement to purchase insurance to cover a third party's own negligence is governed by the same rule of construction as an indemnification agreement to indemnify a third party for its own negligence according to the Tenth Circuit's decision in Kennecott Copper Corp. v. General Motors Corp., 730 F.2d 1380, 1382 (10th Cir.1984); and (5) assuming the rule of construction which governs an agreement to purchase insurance to cover a third party's own negligence is the same rule which governs an indemnification agreement, whether the language of paragraph 22 of the "Facilities Attachment Agreement" is a sufficiently clear and unequivocal agreement by Jones to obtain insurance against Utah Power's own negligence which resulted in injuries to a Jones employee.

The factual and procedural background of this case is stated in the opinion of the United States District Court for the District of Utah reported at Freund v. Utah Power & Light, 625 F.Supp. 272 (D.Utah 1985). In October 1981, plaintiff Donald R. Freund was injured when he came in contact with an electrical power line as he was splicing amplifiers into a television cable previously hung by Cablemain, Inc., on utility poles owned by Utah Power & Light Co. ("UP & L"). At the time of the accident, Freund was working for Jones Intercable, Inc., and Fund VIII-B, a limited partner of Jones, in the construction of a cable TV system in Washington City, Utah. He received workmen's compensation benefits from Jones.

Freund brought suit against Cablemain and UP & L, who, in turn, asserted claims for indemnity against third-party defendants Jones, Fund VIII-B, and Konocti, a subsidiary of Jones. Cablemain's claim was for implied indemnity, based on Jones's alleged breach of an independent duty owed to Cablemain. UP & L based its claim upon a written agreement known as the "Facilities Attachment Agreement" ("FAA"), which had been entered into between C.P. National and Summit Communications, the predecessors in interest of UP & L and Jones, respectively. Under the terms of the FAA, Summit Communications was permitted to attach cables to C.P. National's utility poles, provided it agreed to indemnify C.P. National for damages and injuries which might result and to obtain liability insurance for C.P. National's protection. We shall hereafter assume, as did the federal district court, that UP & L and Jones are entitled to the benefits of and are bound by the terms of the FAA.

The federal district court granted summary judgment in favor of Jones and against Cablemain in light of the exclusive remedy provision, section 35-1-60, and the lack of controlling law in Utah as to whether an implied indemnity agreement survives that provision. The court also determined that paragraph 21 of the FAA was not sufficiently clear and unequivocal to require Jones to indemnify Utah Power against claims for injuries sustained by Jones's employees caused in whole or in part by UP & L's negligence in view of Utah case law and in view of the exclusive remedy provision. Relying on Kennecott Copper Corp. v. General Motors Corp., 730 F.2d 1380, 1382 (10th Cir.1984), the court also determined that Jones's agreement in section 22 of the FAA to procure insurance was not sufficiently clear and unequivocal that it was intended to provide insurance for injuries sustained by Jones's employees as a result of UP & L's negligence.

I

The first question is whether section 35-1-60, the exclusive remedy provision of the Utah Workers' Compensation Act, bars a claim by a third party (Cablemain) that a statutory employer (Jones) impliedly agreed to indemnify Cablemain against a claim made by Jones's employee for injuries sustained. This question was left open in our decision in Shell Oil Co. v. Brinkerhoff-Signal Drilling Co., 658 P.2d 1187, 1191 n. 3 (Utah 1983), which dealt with an express contract for indemnity. We held that the enforcement of the written contract was not barred by the exclusive remedy provision because the employer had voluntarily undertaken liability separate from and in addition to that owed to his employees which were imposed by the Workers' Compensation Act. This decision accords with a statement by A. Larson, in volume 2B, section 76.42 of his treatise, The Law of Workmen's Compensation (1989) [hereinafter 2B Larson]: "The clearest exception to the exclusive-liability clause is the third party's right to enforce an express contract in which the employer agrees to indemnify the third party for the very kind of loss that the third party has been made to pay to the employee." See also 2B Larson, § 76.42 n. 37 (Cum.Supp.1989); Larson, Third-Party Action Over Against Workers' Compensation Employer, 1982 Duke L.J. 483, 500 & n. 79.

Cablemain contends that although Jones did not expressly agree to indemnify it, an implied agreement of indemnity arises from the contractual relationship between the parties out of which Cablemain hung a television cable for Jones on utility poles owned by UP & L. Briefly, Cablemain contends that Jones gave it a sketch showing the height at which it wanted the television cable to be attached to the poles; that Cablemain expressed concern to Jones that it could not maintain the minimum clearance between the power lines and the cable required by the National Electrical Safety Code and the FAA and that Cablemain did not want to be held responsible if the lack of clearance later caused problems; that Jones represented that C.P. National had given its written permission as required by the FAA for the cable to be attached, whereas in fact it had never given such permission; and that Jones assured Cablemain that it would take responsibility to straighten out the lack-of-clearance problem. Based on these assurances, Cablemain consented to attach the cable as directed by Jones.

Cablemain urges that if it can prove that the foregoing representations and assurances were made to it, the law should imply an agreement on the part of Jones to indemnify it against Freund's claim for damages and that such an implied agreement should not be foreclosed by section 35-1-60, which provides:

The right to recover compensation pursuant to the provisions of this title for injuries sustained by an employee, whether resulting in death or not, shall be the exclusive remedy against the employer and shall be the exclusive remedy against any officer, agent or employee of the employer and the liabilities of the employer imposed by this act shall be in place of any and all other civil liability whatsoever, at common law or otherwise, to such employee or to his spouse, widow, children, parents, dependents, next of kin, heirs, personal representatives, guardian, or any other person whomsoever, on account of any accident or injury or death, in any way contracted, sustained, aggravated or incurred by such employee in the course of or because of or arising out of his employment, and no action at law may be maintained against an employer or against any officer, agent or employee of the employer based upon any accident, injury or death of an employee.

(Italics added.) As we consider this question, we will assume but not decide for purposes of this opinion that absent section 35-1-60, implied indemnity would lie although none of the parties cite any Utah case law on that question. The question as certified queries only whether implied indemnity survives section 35-1-60.

In his treatise at volume 2B, section 76.11, Larson comments on the issue before us as follows: "Perhaps the most evenly-balanced controversy in all of compensation law is the question whether a third party in an action by the employee can get contribution or indemnity from the employer, when the employer's negligence has caused or contributed to the injury." The author demonstrates his point by reference to American District Telegraph...