Link-Belt Co. v. Star Iron & Steel Co.

• Citation: 135 Cal.Rptr. 134,65 Cal.App.3d 24
• Decision Date: 20 December 1976
• Docket Number: LINK-BELT
• Court: California Court of Appeals Court of Appeals
• Parties: COMPANY, a Division of FMC Corporation, a corporation, Plaintiff and Appellant, v. STAR IRON & STEEL CO., a corporation, Defendant and Respondent. Civ. 47517.

Page 134

135 Cal.Rptr. 134

65 Cal.App.3d 24

LINK-BELT COMPANY, a Division of FMC Corporation, a corporation, Plaintiff and Appellant, v. STAR IRON & STEEL CO., a corporation, Defendant and Respondent.

Civ. 47517.

Court of Appeal, Second District, Division 4, California.

Dec. 20, 1976.

Rehearing Denied Jan. 7, 1977.

Hearing Denied Feb. 17, 1977.

Virgil R. Wells, Los Angeles, for plaintiff and appellant.

Gibson, Dunn & Crutcher, Wesley G. Howell, Jr., Los Angeles, and Dennis A. Gladwell, Newport Beach, for defendant and respondent.

FILES, Presiding Justice.

This is an action by Lin-Belt Company, a division of FMC Corporation (hereinafter Link-Belt) against Star Iron & Steel Co. (hereinafter Star) to recover the amount of a judgment which Link-Belt has been required to pay on account of the wrongful death of a man named Green and the personal injuries suffered by a man named Harris. Star moved for summary judgment upon the principle that a party who has been found actively negligent in causing a particular occurrence has no cause of action for implied indemnification. ¹ The motion was granted and judgment for Star was entered, from which Link-Belt appeals.

The action for personal injuries and wrongful death (hereinafter the Green-Harris case) arose out of the collapse of a crane owned by the City of Los Angeles and used at Los Angeles Harbor. In 1959 Link-Belt acquired the crane, used, for the purpose of modifying and reselling it to the city. Link-Belt entered into a written contract with Star, whereby Star, for a price of $22,000, agreed to remodel and repair the crane in certain respects, replace certain parts and restore the crane 'to good running condition.' After Star completed its work at Tacoma, Washington, the crane was shipped to Los Angeles, where Link-Belt made further modifications and repairs before the crane and accepted by the city. The Green-Harris accident occurred on March 30, 1968, while the crane was being used in loading a ship at Los Angeles Harbor.

The Green-Harris action was tried to the court, sitting without a jury. With respect to the liability of Link-Belt the trial court found the following among other things: following the work done by Star under its 1959 contract the crane was delivered to Los Angeles Harbor in an unassembled condition, During the course of reassembly of the crane Link-Belt made modifications in the luffing drum assembly and introduced a 'Link Belt gear reduction system.' Link-Belt replaced the original 50 foot boom with a 70 foot boom and installed new electrical controls, motors and gear drives. Link-Belt also attempted to increase the load capacity of the crane by adding approximately 3000 additional pounds to the counterweight; and, after a series of tipping tests, rated the capacity of the crane at 7.5 tons at a 51-foot load radius. Although it was proper practice to conduct visual and scientific tests of the critical components, including the luffing drum shaft, Link-Belt failed to make any such tests during that period.

The injury to Harris and the death of Green occurred because a shaft in the luffing drum assembly failed due to a fatigue crack which had started several years prior to March 30, 1968. The failure of the shaft permitted the boom to fall.

The trial court's conclusion of law declared: 'City is entitled to be indemnified by Link Belt by reason of City's relation to the plaintiff's as an owner of said water-front facility and appurtenances thereto making City secondarily and passively liable for the active and primary wrongdoing and negligence of Link Belt.'

The court awarded judgments totalling $251,213.93 against Link-Belt and the owner of the ship. The shipowner was given judgment against Link-Belt, the city and two other parties for indemnification in whatever amount the shipowner was required to pay to plaintiffs. The city and the other defendants were given judgment of indemnification against Link-Belt in whatever amount they were required to pay plaintiffs.

An appeal was taken by Link-Belt and the judgment was affirmed. (Green v. City of Los Angeles (1974) 40 Cal.App.3d 819, 115 Cal.Rptr. 685.)

Star was not a party to the Green-Harris case. Link-Belt's motion to join Star as a cross-defendant in that case was denied as untimely. Link-Belt thereupon commenced this action against Star by filing its 'complaint for indemnification.' This complaint, which was filed before the Green-Harris case was tried, alleged that if Link-Belt was held liable in the Green-Harris action, 'the basis of such liability is and will be (Link-Belt's) passive, indirect or secondary negligence as distinguished from the active, direct or primary negligence' of Star.

After the Green-Harris judgment had become final, Star made a motion for summary judgment in this action, based upon the findings of fact and conclusions of law and the appellate court opinion in the Green-Harris case. Copies of those documents were attached to the notice of motion.

In opposition to the motion Link-Belt submitted a copy of Star's 1959 repair proposal and some excerpts from deposition testimony.

At the hearing of the motion the attorney for Link-Belt stated that he was proceeding upon a warranty theory, and that the negligence of Link-Belt was immaterial. ²

Link-Belt does not dispute that some species of active negligence on its part was adjudicated in the Green-Harris case. (See Burlingame Motor Co. v. Peninsula Activities, Inc., supra, 15 Cal.App.3d 656, 662, 93 Cal.Rptr. 376.) Rather it contends that, upon each of two theories, this finding does not bar a recovery against Star. One is that the action is based upon a breach of warranty. The other theory is that the law of implied indemnity should be reexamined in the light of the new comparative negligence rule established in Li v. Yellow Cab Co. (1975) 13 Cal.3d 804, 119 Cal.Rptr. 858, 532 P.2d 1226.

The contention that this action is not one for indemnification confuses the source of the underlying right with the nature of the remedy.

Indemnification, as a form of relief, may be based upon a contractual obligation (see Civ.Code, § 2772) or it may be based upon equitable considerations without a contractual relationship between the parties. Thus, in Rossmoor Sanitation, Inc. v. Pylon, Inc., supra, 13 Cal.3d 622, at page 628, 119 Cal.Rptr. 449, at page 452, 532 P.2d 97, at page 100, the court said:

'Indemnity may be defined as the obligation resting on one party to make good a loss or damage another party has incurred. (Citation.) This obligation may be expressly provided for by contract (citation), it may be implied from a contract not specifically mentioning indemnity (citation), or it may arise from the equities of particular circumstances . . ..'

In the present case there is no contention that Star ever promised expressly to indemnify Link-Belt against loss or liability. If Star is under any duty to indemnify, it must arise by implication from the contract, or from the equities of the situation. Link-Belt's theory appears to be in essence, that Star warranted the crane to be free from defects, that this warranty was breached in that the crane contained a defective part, and that by reason of that breach Link-Belt was damaged to the extent that it was required to pay the Green-Harris judgment. The relief sought is that Star make good the loss which Link-Belt incurred by reason of the Green-Harris judgment. That is a demand for indemnification pure and simple, even though Star's duty is alleged to have arisen out of the 1959 contract to repair the crane. The right to recover is thus subject to the limitations which the case law has established precluding indemnification for the consequences of one's own negligence.

A contention similar to that made by Link-Belt here was rejected by the Supreme Court in County of Alameda v. Southern Pacific Co. (1961) 55 Cal.2d 479, 11 Cal.Rptr. 751, 360 P.2d 327. In that case a rock company had made an agreement with the railroad which included a promise by the rosk company to maintain a grade crossing. The railroad was under a common-law duty to maintain it. The crossing was not properly maintained. A truck attempting to use the crossing was damaged, and its owner recovered a judgment against the railroad, which then sought to recover from the rock company. The Supreme Court said (at p. 487, 11 Cal.Rptr. at p. 756, 360 P.2d at p. 332):

'It is Southern Pacific's theory, which was adopted by the trial court, that the breach of this contractual duty by Rock proximately and foreseeably led to the accident to the Cali truck and the necessity of Southern Pacific's responding in damages therefor. Southern Pacific therefore argues that it is not an action for indemnification but rather a simple contract action for the damages proximately resulting to it from Rock's breach of the contract to maintain. But the cases in California upon which Southern Pacific relies have treated such an action based upon the violation of a contract duty to the plaintiff by the defendant which resulted in a tort judgment against the plaintiff by a third person as being upon a cause of action on an implied promise to indemnify. (De La Forest v. Yandle, 171 Cal.App.2d 59, 61--62, 340 P.2d 52; San Francisco Unified School Dist. v. California Bldg. etc., Co., 162 Cal.App.2d 434, 440, 449, 328 P.2d 785) and the cases cited and discussed in the latter case (162 Cal.App.2d 444--448, 328 P.2d (785) 791--794) indicate that courts generally, where they allow such an action, treat it as one for recovery on an implied promise to indemnify the promisee for damages which the promisee is compelled to pay because of the breach by the promisor of his express promise.'

The trial court judgment in favor of the railroad against the rock company was reversed upon the ground that the contract between those parties contained no language expressly calling for indemnification of the railroad against its own negligence.

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