Hamelin v. Simpson Paper (Vermont) Co., 96-028

• Decision Date: 01 August 1997
• Docket Number: No. 96-028,96-028
• Citation: 702 A.2d 86,167 Vt. 17
• Court: Vermont Supreme Court
• Parties: Robert E. HAMELIN v. SIMPSON PAPER (VERMONT) CO. & Simpson Paper Co. v. VESCOM CORP. & National Union Fire Insurance Co.

Page 86

702 A.2d 86

167 Vt. 17

Robert E. HAMELIN v. SIMPSON PAPER (VERMONT) CO. & Simpson Paper Co. v. VESCOM CORP. & National Union Fire Insurance Co.

No. 96-028.

Supreme Court of Vermont.

Aug. 1, 1997.

Barney L. Brannen of Plante, Hanley & Gerety, P.C., White River Junction, for third-party plaintiff-appellant Simpson Paper Co.

Kaveh S. Shahi of David L. Cleary Associates, P.C., Rutland, for third-party defendants-appellees.

Before ALLEN, C.J., and GIBSON, DOOLEY, MORSE and JOHNSON, JJ.

JOHNSON, Justice.

Simpson Paper Company (Simpson) appeals an order of the Essex Superior Court granting summary judgment in favor of Vescom Corp. (Vescom) and National Union Fire Insurance Co. (National Union). Simpson contends the court erred in ruling that Vescom is not required to indemnify Simpson for damages paid to an injured Vescom security guard and that National Union is not required to indemnify or defend Simpson under Vescom's insurance policy. We conclude that the contract between Vescom and Simpson requires Vescom to indemnify Simpson under these circumstances and accordingly, reverse.

The events leading to the suit were stipulated to by the parties. In January 1992, Vescom and Simpson entered a contract in which Vescom agreed to provide security services at Simpson's plant in Gilman, Vermont. In July 1992, Robert Hamelin, a Vescom security guard, was injured at the Simpson facility. As Hamelin was making his rounds, he stepped on a wooden stair that gave way. He received workers' compensation benefits through Vescom, and then filed suit in Essex Superior Court against Simpson. Hamelin claimed his injuries were caused by Simpson's negligent failure to inspect, maintain, and repair the stairway.

Simpson, in turn, brought a third-party action against Vescom and National Union. It claimed that Vescom was required to indemnify Simpson under the contract, even if the damages were the result of Simpson's own negligence. Simpson also alleged that National Union was obligated to defend and indemnify Simpson, because Vescom's insurance policy with National Union named Simpson as an additional insured.

The parties settled Hamelin's claim by stipulation, leaving the claims between Simpson, Vescom, and National Union to be resolved by the court. In return for a general release, Hamelin and the workers' compensation carrier received $55,000, paid equally by National Union and Simpson's insurance carrier. All parties agreed the settlement was not a concession on the merits, and each insurance carrier agreed to compensate the other depending on the outcome of the litigation. Simpson and Vescom/National Union then filed cross-motions for summary judgment. In November 1995, the trial court denied Simpson's summary judgment motion and granted Vescom's and National Union's. This appeal followed.

When reviewing a grant of summary judgment, this Court examines the record to determine independently whether it supports the conclusion that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. V.R.C.P. 56(c)(3); see also Security Pac. Nat'l Trust Co. v. Reid, 615 A.2d 241, 243 (Me.1992). In this dispute over parties' contractual obligations, the record consists primarily of the contract itself. We interpret the indemnification provisions of this document as we do all contract provisions--to give effect to the intent of the parties as that intent is expressed in their writing. See Ejnes v. Carinthia Trailside Assocs., 153 Vt. 355, 359 n. 3, 571 A.2d 49, 52 n. 3 (1989). When the contract language is clear, the intent of the parties is taken to be what the agreement declares. Karlen Communications, Inc. v. Mt. Mansfield Television, Inc., 139 Vt. 615, 617, 433 A.2d 290, 292 (1981).

In support of its claim, Simpson relies on § 2(g) of the contract. ^* In that section, Vescom agreed to:

[a]ssume all risk of injury to persons, including himself, his employees and agents, and or damage to property in any manner resulting from or arising out of or in any manner connected with [Vescom's] operations hereunder, and [Vescom] agrees to indemnify and save Simpson harmless from any and all loss ... caused by or resulting from any such injury or damage.

Simpson argues that this broad language requires Vescom to defend and indemnify Simpson against Hamelin's claims, even if Hamelin's injuries were caused by Simpson's own negligence.

We agree. This provision explicitly contemplates claims by security guards, who are employees of Vescom. Moreover, the parties used expansive and unambiguous language to define Vescom's obligation under this provision. Specifically, Vescom agreed to indemnify Simpson for losses resulting from or caused by injuries "in any manner connected with" the security services that Vescom provided for Simpson. An injury suffered by a security guard while the guard is on duty and on Simpson's premises is without question "connected with" Vescom's security operation.

Vescom presents two counterarguments, neither of which we find persuasive. Vescom first argues that the meaning of § 2(g) is ambiguous, because it appears to conflict with § 10 of the contract. In § 10, the parties attempted to limit Simpson's potential liability by affording Simpson the employer-immunity advantages of Vermont's workers' compensation law. See Candido v. Polymers, Inc., 166 Vt. 15, ----, 687 A.2d 476, 478-79 (1996) (addressing issue of multiple employers in workers' compensation context). The contract designated security guards as Simpson's "special employees" and required Vescom employees to agree to this classification in writing. According to Vescom, Simpson did not intend that any claim for damages by an injured security guard would be brought outside the workers' compensation system. Thus, the parties could not have intended Vescom to indemnify Simpson for a claim such as Hamelin's. We do not accept this reasoning. Although the parties attempted to take advantage of the workers' compensation limited-liability provisions, they could not guarantee that the courts would treat Simpson as an employer for purposes of workers' compensation. At the time the contract was drafted, this Court had not yet addressed the issue. Cf. id. at ---, 687 A.2d at 478 (where employee is hired and paid by employment agency, but works on premises of, and is supervised by, manufacturing company, manufacturing company qualifies as statutory employer under workers' compensation act). The parties almost certainly would have considered the possibility that § 10 would not be effective in preventing claims such as this one, and allocated liability accordingly.

Next, Vescom argues that requiring it to indemnify Simpson for Simpson's own negligence offends the public policy underlying the law of premises liability. See Dalury v. S-K-I, Ltd., 164 Vt. 329, 334-35, 670 A.2d 795, 799 (1995) (by placing responsibility for maintenance of land on those who own or control it, law of premises liability supports ultimate goal of reducing accidents). Citing such public policy concerns, a number of jurisdictions have held that "an indemnification clause does not cover liability for the indemnitee's own negligence unless it expressly so states." Furlon v. Haystack Mountain Ski Area, Inc., 136 Vt. 266, 269, 388 A.2d 403, 405 (1978); see, e.g., Davis Constructors & Eng'rs, Inc. v. Hartford Accident & Indem. Co., 308 F.Supp. 792, 794-95 (M.D.Ala.1968); Heat & Power Corp. v. Air Prods. & Chems., Inc., 320 Md. 584, 578 A.2d 1202, 1206 (1990). In Furlon, however, we noted that "the question is an open one in Vermont." Furlon, 136 Vt. at 269, 388 A.2d at 405. We declined to apply the rule in that case, where the parties, a ski resort and a manufacturer of ski lifts, were not marked by a disparity in bargaining power, and the contract merely allocated the cost of liability insurance. Id. at 269-70, 388 A.2d at 405.

Our decision in Furlon controls this case. Here, as in Furlon, this contract reflects an arms-length business deal, in which corporate parties divided certain risks and responsibilities. The indemnification clause at issue did nothing more than allocate to Vescom the cost of purchasing insurance to cover the risk. The language of the contract reflects this; the contract requires Vescom to "procure and maintain, solely at [Vescom's] expense, insurance policies ... covering legal, contractual and assumed liability" and also mandates that "[c]ertificates of such coverage ... make specific reference to the hold-harmless clause."

In short, Vescom's reliance on our decision in Dalury is misplaced. The considerations of public policy that motivated us in Dalury, such as unequal bargaining power, fairness, and the benefits of risk-spreading, are not present here. See Dalury, 164 Vt. at 332-33, 335, 670 A.2d at 797-98. Moreover, allocating liability for injuries suffered by security guards to Vescom does not significantly undermine Simpson's incentives to keep its premises reasonably safe. The contract with Vescom does not affect Simpson's liability for injuries suffered by other individuals at the plant, including Simpson's own employees and guests. Cf. id. at 335, 670 A.2d at 799 (if ski areas were permitted to obtain broad waivers of their liability from skiers, important incentive for ski areas to manage risk would be removed).

Although Simpson is listed as an additional insured on Vescom's insurance policy, National Union argues that it has no obligation to defend or indemnify Simpson for this claim. As we hold that Vescom is obligated to indemnify Simpson based on the terms of the contract, we need not address National Union's independent obligation to Simpson, if any, under the insurance policy. National Union does not dispute its obligation to defend and indemnify Vescom in this matter; indeed, National Union and Vescom appear here represented by the same counsel. We therefore reverse and remand with...