International Paper Co. v. Corporex Constructors, Inc.

• Decision Date: 21 November 1989
• Docket Number: No. 8910SC236,8910SC236
• Court: North Carolina Court of Appeals
• Parties: INTERNATIONAL PAPER COMPANY v. CORPOREX CONSTRUCTORS, INC.

Page 553

385 S.E.2d 553

96 N.C.App. 312

INTERNATIONAL PAPER COMPANY v. CORPOREX CONSTRUCTORS, INC.

No. 8910SC236.

Court of Appeals of North Carolina.

Nov. 21, 1989.

Patterson, Dilthey, Clay, Cranfill, Sumner & Hartzog by Reid Russell and Kari L. Russwurm, Raleigh, for plaintiff-appellant.

Young, Moore, Henderson & Alvis, P.A. by Walter E. Brock, Jr. and Evelyn M. Coman, Raleigh, for defendant-appellee.

WELLS, Judge.

On 6 April 1983 plaintiff and defendant entered into a contract by which defendant agreed to design and construct the expansion of plaintiff's facility in Raleigh, North Carolina. The contract embodied the full and complete agreement between the parties as to insurance and indemnification in relation to the expansion of the facility. Indemnity provisions appear in two different places in the contract. One indemnity provision appears in Article 9, Section 4 of the agreement which was set out on a form regularly used by International Paper. The other indemnity clause is Article 3.16.1 of the general conditions section which was incorporated into the contract as part of an addendum. The indemnity provisions are not identical; specifically, the clause in Article 9, Section 4 does not cover negligent acts of subcontractors while the clause in Article 3.16.1 does cover the negligent acts of both contractor and any subcontractors hired to work on the project.

Corporex subcontracted the roofing portion of the work to Mid-Western Commercial Roofers, Inc. On 13 October 1983, while performing roofing work at the Raleigh facility, an employee of the subcontractor fell through the roof and was injured. The employee, Douglas Wayne Williams, through his guardian ad litem brought suit against plaintiff, defendant, and others for his personal injuries.

International Paper demanded that Corporex assume the defense of the Williams action against International Paper. Corporex refused. International Paper then employed counsel at its own expense to defend the Williams action. The Williams action against International Paper was eventually dismissed. International Paper subsequently brought this suit against Corporex seeking indemnification for $16,372.85 in attorney's fees it incurred in defending the Williams suit. The parties stipulated, among other things, that Douglas Wayne Williams' damages and injuries were not due to an act of, or the neglect of, International Paper. The parties further stipulated that Williams' damages and injuries were caused in whole or in part by a negligent act or omission of a subcontractor, or by someone directly or indirectly employed by a subcontractor.

Plaintiff assigns as error the trial court's grant of defendant's motion for summary judgment and its denial of plaintiff's summary judgment motion. Plaintiff asserts that the indemnification provision in Article 3.16.1 of the contract allows for the recovery of its attorney's fees. Defendant counters that the provision in Article 3.16.1 is void because it contains a clause which violates N.C.Gen.Stat. § 22B-1 (1986). G.S. § 22B-1 in pertinent part provides as follows:

Any promise or agreement in, or in connection with, a contract or agreement relative to the design, planning, construction, alteration, repair or maintenance of a building, structure, highway, road, appurtenance or appliance, including moving, demolition and excavating connected therewith, purporting to indemnify or hold harmless the promisee, the promisee's independent contractors, agents, employees, or indemnitees against liability for damages arising out of bodily injury to persons or damage to property proximately caused by or resulting from the negligence, in whole or in part, of the promisee, its independent contractors, agents, employees, or indemnitees, is against public policy and is void and unenforceable.

The defendant further argues that because the contract provision in Article 9, Section 4 is clear and unambiguous it establishes as a matter of law that defendant is not obligated to indemnify the plaintiff, including the cost of attorney's fees, for the negligence of subcontractors. In the alternative defendant argues that if both indemnity clauses are valid, then the clause in Article 9, Section 4 takes precedence over the clause in the general conditions. Plaintiff maintains that the offending language is severable and, therefore, the indemnity provision in Article 3.16.1 is valid and controlling on these facts. We first address the issue of severability.

The indemnity provision in Article 3.16.1 of the contract's general conditions section provides as follows:

The Builder shall indemnify and hold harmless the Owner and his agents and employees from and against all claims, losses, and expenses, including attorney's fees arising out of or resulting from the performance of the work, provided that any such claim, damage, loss or expense (1) is attributable to bodily injury, sickness, disease or death, or to injury to or destruction of tangible property (other than the Work itself) including the loss of use resulting therefrom, and (2) is caused in whole or in part by any negligent act or omission of the Builder, any Subcontractor, anyone directly or indirectly employed by any of them or anyone for whose acts any of them may be liable, regardless of whether or not it is caused in part by a party indemnified hereunder.

The last clause of the indemnity provision violates the provisions of G.S. § 22B-1. It is therefore against public policy and is void and unenforceable. This does not end the inquiry, however. When a contract contains a provision which is severable from an illegal provision and is in no way dependent upon the enforcement of the illegal provision for its validity, such a provision may be enforced. Rose v. Vulcan Materials Co., 282 N.C. 643, 194 S.E.2d 521 (1973). Severability may apply to terms within a particular provision as well as to entire contract provisions if the party seeking to enforce the term obtained it in good faith and in accordance with reasonable standards of fair dealing. Restatement (Second) of Contracts § 184 (1981).

The indemnity provisions to which G.S. § 22B-1 apply are those construction indemnity provisions which attempt to hold one party responsible for the negligence of another. The parties in this case have stipulated that Douglas Wayne Williams' damages and injuries were not due to an act of, or the neglect of, International Paper. The statute specifically does not apply to a contract, promise, or agreement in which one agrees to indemnify another "against liability for damages resulting from the sole negligence of the promisor, its agents or employees." (Emphasis added.) G.S. § 22B-1.

Moreover, the offending term in this indemnity provision is not a central feature of the contract or even of the provision. It is easily severed...