Indianapolis Power & Light Co. v. Brad Snodgrass, Inc.

Decision Date03 October 1991
Docket NumberNo. 30S02-9110-CV-782,30S02-9110-CV-782
Citation578 N.E.2d 669
CourtIndiana Supreme Court
PartiesINDIANAPOLIS POWER & LIGHT COMPANY, and J.A. House, Inc., Appellants (Third-Party Plaintiffs Below), v. BRAD SNODGRASS, INC., a/k/a Snodgrass Sheet Metal, Appellee (Third-Party Defendant Below).

Kent O. Stewart, Charles F. Miller, Jr., Stewart Due Miller & Pugh, Indianapolis, for appellant IPL.

James K. Wheeler, Jeffrey O. Meunier, Coots Henke & Wheeler, Carmel, for appellant House.

Lloyd H. Milliken, Jr., Locke Reynolds Boyd & Weisell, Indianapolis, for appellee Snodgrass.

DICKSON, Justice.

Should the Indiana Comparative Fault Act, Ind.Code Sec. 34-4-33-1 to -13, be judicially expanded to create a new species of vicarious liability and resulting indemnity rights? We grant transfer to consider this novel question.

On January 24, 1986, a construction accident resulted in injuries to Billie J. Gillespie, an employee of Brad Snodgrass, Inc., also known as Snodgrass Sheet Metal (Snodgrass), a subcontractor for J.A. House, Inc. (House), the general mechanical contractor in a project for Indianapolis Power & Light Company, Inc., (IPL), owner of the premises under renovation. Gillespie and his wife brought a damage action against IPL and House, alleging injuries proximately caused by the negligence of IPL and House, but not asserting any claim for vicarious liability against IPL or House resulting from any conduct of Snodgrass. IPL and House then initiated third-party actions against Snodgrass, seeking contractual and common law indemnification for any liability imposed on them because of negligence of Snodgrass.

The trial court granted summary judgment for Snodgrass and against IPL and House. The Court of Appeals reversed. Indianapolis Power & Light Co. v. Brad Snodgrass, Inc. (1990), Ind.App., 548 N.E.2d 1197.

Of the two contractual indemnification claims asserted as Counts I and II in the parallel third-party claims of IPL and House, the first is based on the following provision in the contract between House and Snodgrass:

Indemnity Agreement: The Subcontractor [Snodgrass] covenants to indemnify and save harmless and exonerate the Contractor [House] and the Owner [IPL] of and from all liability, claims and demands for bodily injury and property damage arising out of the work undertaken by the Subcontractor, its employees, agents or its subcontractors, and arising out of any other operation no matter by whom performed for and on behalf of the Subcontractor, whether or not due in whole or in part to the conditions, acts or omissions done or permitted by the Contractor or Owner.

The second contractual indemnification claim arises from language in the job specifications which required each contractor and subcontractor to:

indemnify, defend and save harmless the Owner ... against all suits, actions and claims of any character, name and description ... brought for or on account of any injuries or damages received or sustained by any person, persons or property, because of any act, omission, neglect or misconduct of the Contractor, a Subcontractor or anyone directly or indirectly employed by them, arising from, incident to or connected with the Work....

The rule in this state is that parties may by express contract lawfully bind themselves to indemnify against future acts of negligence, American States Ins. Co. v. Williams (1972), 151 Ind.App. 99, 278 N.E.2d 295; McClish v. Niagara Machine & Tool Works (S.D Ind.1967), 266 F.Supp. 987, except as to the sole negligence of the indemnitee, Ind.Code Sec. 26-2-5-1. 1 Thus IPL and House may, by sufficient express agreement, provide for indemnification as to liabilities imposed on them because of the sole negligence of Snodgrass or the concurrent negligence of Snodgrass and IPL or House. See Progressive Construction and Engineering Co., Inc. v. Ind. & Mich. Elec. Co., Inc. (1989), Ind.App., 533 N.E.2d 1279.

However, the contractual indemnity claims of IPL and House, as presented here, do not seek such conventional indemnification. Instead, they propose that a new form of indemnity be judicially engrafted upon the Indiana Comparative Fault Act. In rhetorical paragraphs 4 of their parallel Counts I and II for contractual indemnity, IPL and House assert their claims for indemnity "to the extent that such judgment represents damages proximately caused by the negligent acts or omissions of Snodgrass." However, the Gillespies' complaint against IPL and House does not allege any negligence of Snodgrass. It complains only of the conduct of IPL and House and does not seek to impute to them any negligence of Snodgrass. Furthermore, the third-party actions do not seek indemnification for damages proximately caused by concurrent negligence of both Snodgrass and IPL or House.

In its brief to this Court, IPL explains that it "seeks indemnity only for the vicarious liability IPL could absorb because of Snodgrass's negligence," and that "IPL's right of indemnity does not hinge upon the allegations of plaintiff's complaint, but rather arises as a natural by-product from the fault apportionment process." Brief of Appellant IPL in Opposition to Petition to Transfer at 14, 15. Similarly, House argues that it is seeking indemnity "only for the negligence of Snodgrass which may be chargeable to House ... because of the fact that Snodgrass cannot be named as a "nonparty" under the Comparative Fault Act." Brief of Appellant House to the Court of Appeals at 13. In asserting their claims for contractual indemnity, IPL and House expressly seek not the conventional indemnification which may properly be provided for by contract. Rather, they seek only indemnification for that portion of damages which may be imposed upon them by reason of the fault allocation process under the Indiana Comparative Fault Act. 2 Because of the express limitations thus asserted in the contractual indemnity claims of IPL and House, Counts I and II of their third-party actions may survive summary judgment only if it is determined that a new indemnity right arises under the Act, as they allege.

In Count III of the third-party actions, both IPL and House assert a theory of implied indemnity at common law, claiming that the Indiana Comparative Fault Act should be construed to create a new implied indemnity right. Absent this argument, it is clear that under existing law the claims of IPL and House for common law indemnity would not be cognizable. The right to indemnity may be implied at common law only in favor of one whose liability to a third person is solely derivative or constructive, and only as against one who has by his wrongful act caused such derivative or constructive liability to be imposed upon the indemnitee. Indiana State Highway Comm'n v. Thomas (1976), 169 Ind.App. 13, 346 N.E.2d 252, 259; McClish, 266 F.Supp. 987. Absent an adequate express contract, a party seeking indemnification from another must be free of fault. Elcona Homes Corp. v. McMillan Bloedell, Ltd. (1985), Ind.App., 475 N.E.2d 713; Coca-Cola Bottling Co.-Goshen v. Vendo Co. (1983), Ind.App., 455 N.E.2d 370. The Gillespies' complaint seeks to impose liability only for the direct negligence of IPL and/or House and not for any claim of imputed negligence from the conduct of Snodgrass. Therefore, any judgment against IPL or House would necessarily constitute a determination that they were not free from fault and thus not entitled to implied indemnity from Snodgrass under existing common law. To avoid this result, IPL and House urge judicial recognition of a new right of implied indemnity resulting from the comparative fault allocation process.

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