Henthorne v. Legacy Healthcare, Inc.

• Citation: 764 N.E.2d 751
• Decision Date: 13 March 2002
• Docket Number: No. 36A01-0106-CV-244.,36A01-0106-CV-244.
• Parties: Geneva HENTHORNE, as Personal Representative of the Estate of Edward Heideman, Plaintiff, v. LEGACY HEALTHCARE, INC., d/b/a Community Care Center of Seymour; Sunshine Rehab Services, Inc.; Healthstar International, Inc.; and Southwest Technologies, Inc., Defendants. Legacy Healthcare, Inc., d/b/a Community Care Center of Seymour, Appellant/Cross-Claim Plaintiff, v. Sunshine Rehab Services, Inc., Appellee/Cross-Claim Defendant.
• Court: Court of Appeals of Indiana

764 N.E.2d 751

Geneva HENTHORNE, as Personal Representative of the Estate of Edward Heideman, Plaintiff, v. LEGACY HEALTHCARE, INC., d/b/a Community Care Center of Seymour; Sunshine Rehab Services, Inc.; Healthstar International, Inc.; and Southwest Technologies, Inc., Defendants.

Legacy Healthcare, Inc., d/b/a Community Care Center of Seymour, Appellant/Cross-Claim Plaintiff, v. Sunshine Rehab Services, Inc., Appellee/Cross-Claim Defendant.

No. 36A01-0106-CV-244.

Court of Appeals of Indiana.

March 13, 2002.

Kevin C. Schiferl, Julia Blackwell Gelinas, Allison S. Avery, Locke Reynolds, Indianapolis, IN, Attorneys for Appellant.

Alastair J. Warr, Mark W. Pfeiffer, Harrison & Moberly, Indianapolis, IN, Attorneys for Appellee.

OPINION

BAKER, Judge.

Appellant/cross-claim plaintiff Legacy Healthcare, Inc., d/b/a Community Care Center of Seymour ("Legacy Healthcare") appeals the trial court's denial of its motion for summary judgment in favor of appellee/cross-claim defendant Sunshine Rehab Services, Inc. ("Sunshine Rehab"). Legacy Healthcare contends that it was entitled to summary judgment on its claims enforcing Sunshine Rehab's duties to defend and indemnify it upon Geneva Henthorne's suit for negligence resulting in personal injury.

FACTS

The undisputed designated facts are as follows. Sunshine Rehab provides physical, occupational, and speech therapy services to nursing facility residents. Legacy Healthcare hired Sunshine Rehab to provide such services at ten of Legacy Healthcare's nursing facilities, including Community Care Center of Seymour. Legacy Healthcare and Sunshine Rehab signed separate agreements for each nursing care facility. The parties signed a one-year Service Agreement, providing for Sunshine Rehab's therapy services, which commenced on March 1, 1997.

The Service Agreement included the following indemnity clause:¹

[Sunshine Rehab] agrees to maintain such insurance as will protect [Sunshine Rehab] from any and all claims of any nature for the damage to property or from personal injury, including death, made by anyone which may arise from operations carried on ... by [Sunshine Rehab], any subcontractor, or by anyone directly or indirectly engaged or employed by [Sunshine Rehab]. [Sunshine Rehab] agrees to save defend indemnify an [sic] hold [Legacy Healthcare] harmless of and from any and all liability, loss, cost or expenses incurred directly or indirectly from any act or [o]mission by [Sunshine Rehab] or [Sunshine Rehab's] agents, employees or invitees from any cause or causes arising from or relating to [Sunshine Rehab's] performance under this agreement.

Appellant's App. at 61-62 (emphasis in original).

In exchange for Sunshine Rehab's services, Legacy Healthcare agreed to pay for those services within sixty days from the receipt of invoice. By June 1998, Legacy Healthcare had missed several payments and owed Sunshine Rehab $38,186.95 for services rendered to Community Care Center of Seymour, in addition to payment for services rendered to the other nursing care facilities. Accordingly, on June 1, 1998, the parties executed a promissory note for payment of services Sunshine Rehab had rendered to all ten of Legacy Healthcare's nursing facilities including Community Care Center of Seymour. Appellant's App. at 127. Legacy Healthcare owed a total of $1,350,000 and eventually paid all but $474,982.66 in principal before Sunshine Rehab claimed default on the note on September 1, 2000. Appellant's App. at 104, 106.

The instant case involves the application of the indemnity clause to a suit brought for injuries to a Legacy Healthcare resident. On October 23, 1997, Edward Heideman was a resident at Community Care Center of Seymour. That same day, an occupational therapist employed by Sunshine Rehab caused severe burns to Heideman's hand, abdomen, and face when the therapist applied "gel-mitt" heat pads to him. Appellant's App. at 62-63 (citing Sunshine Rehab's "Progress Notes" for Heideman's occupational therapy and paragraph 11 of Henthorne's Complaint); Appellee's App. at 151; Appellee's brief at 1 n. 1. Nearly two years later, Geneva Henthorne, on behalf of Heideman's estate, sued both Legacy Healthcare and Sunshine Rehab, among others, for Heideman's injuries. Legacy Healthcare, in turn, filed a cross-claim against Sunshine Rehab, seeking a right of indemnification for any damages entered against it on account of Heideman's injuries and a right of defense against any claims. Sunshine Rehab filed a counter cross-claim against Legacy Healthcare, seeking damages for nonpayment of services in violation of the Service Agreement.

Sunshine Rehab later filed a motion for partial summary judgment against Legacy Healthcare, seeking payment for services rendered in the amount of $474,982.66 for breach of the Promissory Note. Although Legacy Healthcare did not file a response to Sunshine Rehab's motion, it subsequently filed its own motion for summary judgment bringing claims for indemnification and defense. Arguing that the Service Agreement was valid and enforceable, Legacy Healthcare claimed that Sunshine Rehab had breached the agreement by failing to indemnify it for Heideman's injuries and for failing to defend it against Henthorne's claim. Sunshine Rehab filed a response to Legacy Healthcare's motion for summary judgment, contending that Legacy Healthcare had breached the agreement and so was not entitled to enforce the indemnity clause. The trial court heard argument on both motions on the same day and ultimately granted Sunshine Rehab's motion for summary judgment while denying Legacy Healthcare's. The trial court determined that, because Legacy Healthcare had "breached the Service Agreement by failing to pay Sunshine Rehab," it was not entitled to indemnification. Appellant's App. at 13. Legacy Healthcare now appeals the denial of its motion for summary judgment.

DISCUSSION AND DECISION

I. Standard of Review

On appeal, the standard of review of a summary judgment motion is the same as that used in the trial court. Summary judgment is appropriate only where the evidence shows that there is no genuine issue of material fact and that the moving party is entitled to a judgment as a matter of law. Ind.Trial Rule 56(C). The party seeking summary judgment has the burden of demonstrating that no question of fact exists as to any material issue and that it is entitled to judgment as a matter of law. Cavinder Elevators, Inc. v. Hall, 726 N.E.2d 285, 290 (Ind.2000). All facts and reasonable inferences drawn from those facts are construed in favor of the nonmoving party. Durham ex rel. Estate of Wade v. U-Haul Int'l, 745 N.E.2d 755, 758 (Ind.2001). The review of a summary judgment motion is limited to those materials designated to the trial court. T.R. 56(H); Durham ex rel. Estate of Wade, 745 N.E.2d at 758.

The trial court here entered specific findings and conclusions. However, our standard of review is unchanged by the entry of findings of fact and conclusions thereon. Grzan v. Charter Hosp. of Northwest Ind., 702 N.E.2d 786, 790 (Ind. Ct.App.1998). Specific findings and conclusions are not required in the summary judgment context, and although they offer valuable insight into the trial court's rationale for its judgment and facilitate appellate review, they are not binding on this court. See id.

II. Legacy Healthcare's Claims

Legacy Healthcare does not challenge the trial court's grant of Sunshine Rehab's motion for summary judgment. Rather, Legacy Healthcare contends that it has rights to defense and indemnity, as a matter of law, from Sunshine Rehab. Sunshine Rehab, on the other hand, maintains that Legacy Healthcare had breached the agreement before these duties accrued and that such breach excuses Sunshine's indemnification and defense of Legacy Healthcare. To address these arguments, we first turn to law of contractual indemnity between parties who are neither insurers nor insureds.

In general, an indemnity agreement involves a promise by one party (indemnitor) to reimburse another party (the indemnitee) for the indemnitee's loss, damage, or liability. See Maurice T. Brunner, Annotation, Liability of Subcontractor upon Bond or Other Agreement Indemnifying General Contractor Against Liability for Damage to Person or Property, 68 A.L.R.3d 7, 24 (1976); Black's Law Dictionary 772 (7th ed.1999); see also 41 Am. Jur.2d Indemnity § 1, at 348 (1995) ("Indemnity requires full reimbursement, and transfers liability from one who has been compelled to pay damages to another who should bear the entire loss"). Indemnity agreements are contracts subject to the rules and principles of contract construction. TLB Plastics Corp. v. Procter & Gamble Paper Prods. Co., 542 N.E.2d 1373, 1377 (Ind.Ct.App.1989). If the words of an indemnity agreement are clear and unambiguous, they are to be given their plain and ordinary meaning. Id. Hence, we will construe an indemnity agreement to cover all losses and damages to which it reasonably appears the parties intended it to apply. Essex Group, Inc. v. Nill, 594 N.E.2d 503, 506 (Ind.Ct.App. 1992) (Essex IV ).

The indemnity agreement here omitted serial commas between key verbs imposing duties but is still intelligible: Sunshine Rehab "agrees to save defend indemnify an [sic] hold [Legacy Healthcare] harmless of and from any and all liability, loss, cost or expenses." Appellant's App. at 61 (emphasis in original). "Save harmless" and "hold harmless" are synonymous with "indemnify" and thus signify no separate duties. See Bryan A. Garner, A Dictionary of Modern Legal Usage 436 (2d ed.1995) (citing Brentnal v. Holmes, 1 Root (Conn.) 291, 1 Am. Dec. 44, 1791 WL 252 (1791)). However, the duty to defend is a duty independent of the duty to indemnify against loss or liability. See Ozinga Transp. Sys., Inc. v. Mich. Ash Sales, Inc., 676 N.E.2d 379, 388 (Ind.Ct. App.1997) (holding that the indemnity contract required indemnitor to "defend and indemnify" the...