Kendall v. U.S. Dismantling Co.

• Decision Date: 27 November 1985
• Docket Number: No. 84-1776,84-1776
• Citation: 20 Ohio St.3d 61,485 N.E.2d 1047,20 OBR 360
• Parties: , 20 O.B.R. 360 KENDALL et al. v. U.S. DISMANTLING COMPANY, Appellee; American Cyanamid Company, Appellant.
• Court: Ohio Supreme Court

Page 61

20 Ohio St.3d 61

485 N.E.2d 1047, 20 O.B.R. 360

KENDALL et al. v. U.S. DISMANTLING COMPANY, Appellee American Cyanamid Company, Appellant.

No. 84-1776.

Supreme Court of Ohio.

Nov. 27, 1985.

Syllabus by the Court

1. R.C. 2305.31 prohibits indemnity agreements, in the construction-related contracts described therein, whereby the promisor agrees to indemnify the promisee for damages caused by or resulting from the negligence of the promisee, regardless of whether such negligence is sole or concurrent.

2. An employer in compliance with the workers' compensation laws of this state does not surrender its statutory and constitutional immunity from suits arising out of employment absent an express and specific waiver of that immunity. A general agreement of indemnity with a third party which does not specifically express the employer's intent to waive this particular immunity is ineffective for that purpose.

On April 12, 1979, defendant-appellee U.S. Dismantling Company entered into an agreement with defendant-appellant American Cyanamid Company whereby appellee was to perform the dismantlement of appellant's sulfuric acid plant at Hamilton, Ohio. Plaintiff Samuel Kendall, who is not a party to this appeal, was employed by appellee to work on this project. On May 21, 1979, Kendall was injured while disassembling certain pipelines at the work site. He and his wife subsequently brought this action for the injuries and damages allegedly caused by the negligence and/or intentional misconduct of one or both companies. Appellant filed a cross-claim for indemnification against appellee based upon an indemnity agreement in their contract.

The trial court dismissed plaintiffs' claim against appellee on the grounds that the company was immune from a negligence suit as a complying employer under Ohio workers' compensation law, and that plaintiffs' intentional misconduct claims were time-barred. The trial court further granted appellee's motion for summary judgment on appellant's cross-claim. This ruling is the subject of the instant appeal. The trial court reasoned that the constitutional and statutory immunity of a complying employer from actions arising out of employment may not be considered waived by an indemnification agreement with a third party unless the agreement specifically waives that immunity. Upon reconsideration of that decision, the trial court reaffirmed its original entry but added a holding that any indemnity agreement in a construction-related contract which attempts to absolve a promisee of liability for its own negligence is void as against public policy.

The court of appeals affirmed, rejecting appellant's argument that R.C. 2305.31 prohibits only those indemnity agreements whereby the promisor agrees to indemnify the promisee for damages resulting from the sole, rather than the merely concurrent, negligence of the promisee. The court reasoned that the legislature, by enacting R.C. 2305.31, clearly evinced an intention that parties be answerable for their negligence, whether sole or concurrent. The court also affirmed the trial court's holding that the indemnity agreement is not sufficiently specific to constitute an effective waiver of appellee's statutory and constitutional immunity as a complying employer.

The cause is now before this court pursuant to the allowance of a motion to certify the record.

Bloom & Greene Co., L.P.A., Gordon C. Greene and Stephen K. Shaw, Cincinnati, for appellee.

Millikin & Fitton, Stanley D. Rullman and William J. Desmond, Hamilton, for appellant.

CLIFFORD F. BROWN, Justice.

I

The first issue presented in this appeal is whether R.C. 2305.31 prohibits only those indemnity agreements in construction-related contracts whereby the promisor agrees to indemnify the promisee for damages caused by or resulting from the sole negligence of the promisee. We hold that this statute applies to such agreements regardless of whether the negligence is sole or concurrent.

R.C. 2305.31 provides in pertinent part:

"A covenant, promise, agreement, or understanding in, or in connection with or collateral to, a contract or agreement relative to the design, planning, construction, alteration, repair, or maintenance of a building, structure, highway, road, appurtenance, and appliance, including moving, demolition, and excavating connected therewith, pursuant to which contract or agreement the promisee, or its independent contractors, agents or employees has hired the promisor to perform work, purporting to indemnify the promisee, its independent contractors, agents, employees, or indemnities against liability for damages arising out of bodily injury to persons or damage to property initiated or proximately caused by or resulting from the negligence of the promisee, its independent contractors, agents, employees, or indemnities is against public policy and is void. * * * " (Emphasis added.)

Article 9 of the "Fixed Cost Dismantlement Contract" between appellant and appellee provides as follows:

"Subject to the terms and conditions of this contract, CONTRACTOR [appellee U.S. Dismantling] shall be liable for and protect, defend, indemnify and save CYANAMID, its officers, directors, and employees harmless against any and all claims, losses, demands, causes of action, and any and all related costs and expenses, of every kind and character (including reasonable attorneys fees) suffered by the parties hereto, their employees and/or any other person or corporation, on account of personal injuries or death, or damages to property occurring, growing out of, incident to, or resulting directly or indirectly from the performance by CONTRACTOR hereunder whether such loss, damage, injury or liability is contributed to by the negligence of CYANAMID or its employees and whether due to imperfections of any material furnished by CYANAMID, or by premises themselves or any equipment thereon, whether latent or patent, or from other causes whatsoever; except that CONTRACTOR shall have no liability for damages or the costs incident thereto caused by the sole negligence of CYANAMID." (Emphasis added.)

Appellant argues that R.C. 2305.31 is ambiguous and unclear as to whether it applies only to agreements indemnifying a party from claims arising out of its sole negligence, or more generally to agreements absolving a party from claims arising from any negligence of whatever degree. Appellant contends that several considerations militate in favor of the "sole negligence" interpretation, and that therefore the courts below erred in refusing to enforce the indemnity clause at bar.

First, appellant submits that the legislature intended to limit the statute's application to agreements indemnifying a party from its sole negligence. Appellant points to a comment to Am.H.B. No. 489, ¹ which enacted R.C. 2305.31, wherein it was stated that the statute would change Ohio case law which at that time permitted the enforcement of "hold harmless agreements" which require one party to pay for damages caused solely by the acts of the other party. ² Appellant asserts that this commentary clearly supports its position that R.C. 2305.31 does not prohibit such agreements unless they purport to indemnify a party from the consequences of its sole negligence.

This argument is without merit. R.C. 2305.31 is not ambiguous as proposed by appellant. The language employed is clear. There is no basis whatsoever for construing the phrase "initiated or proximately caused by or resulting from the negligence of the promisee" as meaning only the...