LAURENS EMS v. MS BAILEY & SONS
Decision Date | 28 July 2003 |
Docket Number | No. 25683.,25683. |
Citation | 355 S.C. 104,584 S.E.2d 375 |
Court | South Carolina Supreme Court |
Parties | LAURENS EMERGENCY MEDICAL SPECIALISTS, PA, Respondent, v. M.S. BAILEY & SONS BANKERS, and Laurens County Health Care System, Defendants, Of which Laurens County Health Care System is Petitioner. |
J. Michael Turner and Rhett D. Burney, both of Turner, Able & Burney, LLP, of Laurens, for Petitioner.
A. Camden Lewis and Thomas Pendarvis, both of Lewis, Babcock & Hawkins, of Columbia, for Respondent.
This Court granted certiorari to review the Court of Appeals' decision affirming summary judgment in favor of Respondent, Laurens Emergency Medical Specialists, P.A. ("EMS").
On November 1, 1992, EMS and Laurens County Health Care System ("Hospital") entered into a contract in which EMS agreed to provide emergency services for the Hospital. Under the contract, EMS was responsible for employing emergency room physicians and a medical director for the Hospital's emergency department. The contract required the Hospital to employ and assign non-physician personnel to the emergency department to perform the department's administrative work.
Hospital admitted Raines was its employee, but asserted several defenses, including that EMS was contributorily negligent in failing to procedurally safeguard against theft or detect it once it occurred. EMS moved for summary judgment on the indemnification cause of action. Hospital moved for summary judgment on all causes of action. Hospital argued any losses suffered by EMS were the result of EMS' failure to properly monitor its own affairs and Raines, and, therefore, that it was not obligated to indemnify EMS.
The trial court granted EMS' motion for summary judgment, finding that EMS was entitled to indemnification by the Hospital for the wrongful acts of Raines, as the Hospital's employee. The trial court went on to award EMS $76,709.32 in damages. Upon the Hospital's motion for reconsideration, however, the trial court reversed summary judgment on the damages issue, finding that the amount of damages was a question of fact for the jury to decide.
The Hospital appealed, arguing that the absence of a third party claim against EMS relieves the Hospital from indemnifying EMS. The Court of Appeals disagreed, and found that the parties to a contract may agree to indemnify each other even when no third party claim has been filed. Laurens Emergency Med. Specialist, P.A. v. M.S. Bailey & Sons Bankers, 348 S.C. 191, 558 S.E.2d 531 (Ct.App.2002).2 Applying the general principles of contract interpretation, the Court of Appeals held that the parties intended for the Hospital to indemnify EMS for losses suffered at the hands of the Hospital's employees, and that embezzlement counted as an expense, a term used in the indemnification clause of the contract. Id. The Court of Appeals found the absence of language restricting the obligation to indemnify EMS for losses resulting form third party claims to be significant. Id. Similarly, the Court of Appeals found that any negligence on the part of EMS was irrelevant because the contract did not condition indemnification on a lack of negligence. Id. (citing United States v. Hollis, 424 F.2d 188, 190 (4th Cir.1970)).
The Court granted certiorari to review the following issues:
Hospital argues that EMS is not entitled to indemnification for the money Raines embezzled in the absence of a third party claim. We agree.
In reviewing a summary judgment motion, the facts and circumstances must be viewed in the light most favorable to the non-moving party. City of Columbia v. Town of Irmo, 316 S.C. 193, 447 S.E.2d 855 (1994). Summary judgment is appropriate when it is clear there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law. Caf'e Assocs., Ltd. v. Gerngross, 305 S.C. 6, 406 S.E.2d 162 (1991). Summary judgment should not be granted even when there is no dispute as to the evidentiary facts, if there is a dispute as to the conclusions to be drawn therefrom. MacFarlane v. Manly, 274 S.C. 392, 264 S.E.2d 838 (1980). Upon review, an appellate court reviews the grant of summary judgment under the same standard as the trial court. George v. Fabri, 345 S.C. 440, 548 S.E.2d 868 (2001).
853 S.W.2d at 506-07 (emphasis added).
There is no such provision for second party indemnification in the indemnity agreement between EMS and Hospital presently before the Court. Infra, page 2. This Court's decision in Smoak indicates that the default rule of interpretation for indemnity clauses is that third party claims are a prerequisite to indemnification. 319 S.C. at 224, 460 S.E.2d at 383. In Smoak, the Court concluded that the indemnification provision was limited to reimbursement for expenses incurred in third party actions based on the clause itself and on a reading of the entire agreement between the parties. Id.
In our opinion, the clause at issue in this case is a typical indemnity agreement, much like the clause presented in Smoak. The contract between EMS and the Hospital contains reciprocal indemnification provisions; both parties agreed to indemnify each other under the same circumstances. In our view, the circumstance EMS and the Hospital contemplated in including an indemnity provision in their contract was a third party claim brought against one of them for the wrongful acts of the other. As such, we find that it cannot be invoked absent a third party claim against the second party, EMS.
We base this conclusion on the language of the clause itself: The Hospital will indemnify and hold [EMS] and the Emergency Physicians harmless from...
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