Holly Sugar Corp. v. Union Supply Co.

• Decision Date: 05 December 1977
• Docket Number: No. C-1175,C-1175
• Citation: 572 P.2d 148,194 Colo. 316
• Parties: HOLLY SUGAR CORPORATION, a New York Corporation, Petitioner, v. The UNION SUPPLY COMPANY, a Colorado Corporation, Respondent.
• Court: Colorado Supreme Court

Page 148

572 P.2d 148

194 Colo. 316

HOLLY SUGAR CORPORATION, a New York Corporation, Petitioner, v. The UNION SUPPLY COMPANY, a Colorado Corporation, Respondent.

No. C-1175.

Supreme Court of Colorado, En Banc.

Dec. 5, 1977.

Rehearing Denied Dec. 27, 1977.

Zarlengo, Mott & Zarlengo, John C. Mott, Denver, for petitioner.

Yegge, Hall & Evans, John R. Trigg, Jeffery B. Stalder, Denver, for respondent.

PRINGLE, Chief Justice.

This is an action seeking a dismissal on the merits of a third-party complaint brought by the Union Supply Company (Union) as third-party plaintiff, against the Holly Sugar Corporation (Holly) as third-party defendant. The district court dismissed the third-party complaint without prejudice on purely procedural grounds. The court of appeals, however, ruled that the trial court had erred in dismissing Union's third-party action against Holly. Colo.App., 561 P.2d 355 (1976). We reversed the judgment of the court of appeals.

Holly is a New York corporation with its principal place of business in Colorado Springs. Union is a Colorado corporation with its principal place of business in Denver. Following negotiations which began in October 1967, in Colorado, Holly and Union signed a contract by which Union was to supply a wet pulp conveyor system for use in a plant which Holly owned in Montana. The contract was fulfilled and the conveyor was installed.

An employee of Holly, Larry E. Pust, was injured by the conveyor system in the Montana plant. He was paid personal injury benefits by Holly under the Montana Workmen's Compensation Act. Montana's Act, like Colorado's, is an exclusive remedy statute immunizing the employer from "any other liability whatsoever" for the injury. See section 92-204, R.C.M.1947. ¹

After his settlement with Holly, employee Pust proceeded against Union on various product liability theories in Denver District Court. Union responded by joining Holly as a third-party defendant, seeking indemnification for any liability which it might incur. Holly's motion for summary judgment, based upon the "exclusive remedy" provision of the Montana Workmen's Compensation Act, was denied by the trial court. The court did, however, dismiss Holly without prejudice on the basis of C.R.C.P. 14(a). It held that since Mr. Pust could not sue his employer, Holly, directly under the Montana Act, Holly could not be joined indirectly as a third-party defendant.

After a full trial, the district court granted Union's motion to dismiss against Pust. That ruling is the subject of a separate matter now pending before this court.

The court of appeals reversed the dismissal of Holly. In pertinent part, the court held that Montana law governed Union's third-party claim for indemnity. Further, the court interpreted Montana law as permitting Union to collect from Holly despite the fact that Holly paid Pust under the "exclusive remedy" provision of the Montana Act.

There is a threshold issue in this case as to whether Montana law or Colorado law should govern Union's third-party indemnity claim. However, since it seems to us that either under the law of Montana or Colorado, Union's attempted third-party action against Holly would be prohibited, we need not presently decide this choice of law question.

In Hilzer v. MacDonald, 169 Colo. 230, 454 P.2d 928 (1969), this court indicated that an employer who had paid an employee compensation under the Colorado Workmen's Compensation Act was immune from any third-party indemnity claims arising out of the same incident:

"It is undisputed that Hilzer received workmen's compensation for his injuries. When an employer has brought itself within the ambit of the Workmen's Compensation Act, it is not subject to a common law action for damages, and the employee is limited to the remedies specified in the Act. (citations omitted) The terms of C.R.S.1963, 81-3-2 not only limit the employer's liability to his employee, but also preclude liability, to third persons for indemnification. (citations omitted)" 169 Colo. at 237, 454 P.2d at 931-932.

There can be no doubt, therefore, that under the law of Colorado, Union's third-party claim against Holly should be dismissed.

Respondent takes the position that Montana, however, has held the other way and cites DeShaw v. Johnson, 155 Mont. 355, 472 P.2d 298 (1970), in support. We find DeShaw completely irrelevant to the issue here. In DeShaw, the plaintiff was an employee of DeShaw Construction Company. He was injured on the job through the alleged negligence of Interbel, a separate organization, not a party to the employment. The employer responded in workmen's compensation benefits. Plaintiff then sued Interbel for damages in consequence of the injuries received by him in the accident. Interbel joined plaintiff's employer as a third-party defendant, seeking indemnity or, in the alternative, contribution. However, Interbel's indemnity claim against plaintiff's employer was based upon an express indemnification provision in a written...