McGill v. Cochran-Sysco Foods
| Decision Date | 08 May 2002 |
| Docket Number | No. 35,898-CA.,35,898-CA. |
| Citation | 818 So.2d 301 |
| Parties | Dolly McGILL, Plaintiff-Appellee, v. COCHRAN-SYSCO FOODS, et al, Defendants-Appellants. |
| Court | Court of Appeal of Louisiana — District of US |
Crawford & Anzelmo, by Donald J. Anzelmo, Monroe, for Defendants-Appellants, Sysco Foods Corp. and Cochran-Sysco Foods.
Irwin, Fritchie, Urquhart & Moore, by Gus A. Fritchie, III, Slidell, for Third Party Defendant-Appellee, U.S. Fire Ins. Co.
Davenport, Files & Kelly, by William G. Kelly, Jr., Metairie, for Defendant-Appellee, Jet Spray Corp.
Before BROWN, STEWART and KOSTELKA, JJ.
After being named as defendants in a tort suit by Dolly McGill, Cochran-Sysco Foods and Sysco Corporation (hereinafter referred to jointly as "Sysco") filed a cross claim against Jet Spray Corporation ("Jet Spray"), also a defendant in McGill's suit, and a third party demand against Jet Spray's liability insurer, U.S. Fire Insurance Company ("U.S.Fire"). Sysco sought indemnification from Jet Spray and alleged a breach of contract due to Jet Spray's failure to maintain insurance naming Sysco as an additional insured. In its third party demand, Sysco alleged that the U.S. Fire policy provided coverage for it as to McGill's claims. The trial court rejected both Sysco's cross claim and third party demand upon finding that Sysco, through the acts of its employee, was solely at fault in causing McGill's injuries. Sysco appeals. For the reasons expressed, we affirm the trial court's judgment.
On September 18, 1992, Dolly McGill received an electrical shock when she inserted her hand inside the top compartment of an automatic tea dispenser while trying to adjust the strength of the iced tea. McGill was an employee of North Monroe Community Hospital ("NMCH") and was adjusting the tea strength as directed by Cynthia Posey, an operations supervisor in NMCH's dietary department. Adjusting the strength of the tea required the insertion of an Allen wrench into an opening consisting of interior and exterior holes on the tea side of the dispenser. Once inserted, the wrench was turned to strengthen or weaken the tea. However, the wrench could not be inserted into the holes on the tea side because the holes were not properly aligned. Sysco's marketing representative, Thomas West, was aware of the misaligned holes and demonstrated to Cynthia Posey how to insert the Allen wrench by lifting the top lid of the tea dispenser and pressing down on an interior receptacle to align the holes.
Following her accident, McGill filed suit for damages naming Jet Spray, Sysco, and Sysco's liability insurer, Employers' Insurance Company of Wausau, as defendants. The tea dispenser, a Model LT-12 tea jet, was manufactured by Jet Spray which sold it to Sysco. In turn, Sysco installed the tea dispenser at NMCH for its use so long as it purchased tea and lemonade mix from Sysco. Sysco retained ownership of the dispenser.
Sysco's cross claim against Jet Spray was based on a hold harmless agreement executed by Jet Spray on June 1, 1992. The hold harmless agreement provided for indemnification except for claims "caused by the negligence of Buyer," meaning Sysco, and required Jet Spray to name Sysco as "an additional insured with respect to comprehensive general, product, automobile and excess liability coverages." Sysco sought reimbursement from Jet Spray for all fees and costs incurred in defending against McGill's claims and indemnification for any liability it might incur. Sysco also sought damages for breach of contract by Jet Spray for its failure to obtain insurance and name Sysco as an additional insured as required by the hold harmless agreement.
In its third party demand against U.S. Fire, Sysco alleged that it was an additional insured under the policy and sought penalties and attorney fees for U.S. Fire's refusal to provide a defense and indemnification. Jet Spray's liability coverage with U.S. Fire included a vendor's endorsement.1
After the start of trial, the defendants in the principal demand settled with McGill for $150,000. The respective insurers of Sysco and Jet Spray each paid one-half of the settlement amount. As a part of the settlement, Sysco reserved the right to pursue its cross claim and third party demand. These incidental matters were submitted to the trial court for resolution based on exhibits, depositions, and testimony from the trial of McGill's claims.
The initial issue before the trial court was whether McGill's accident was due to any fault on the part of Sysco. In written reasons for judgment, the trial court found that the tea dispenser installed at NMCH by Sysco did not have properly aligned holes on the interior and exterior of the machine which would allow for the adjustment of the tea strength. The problem was reported by NMCH staff to Tom West, an employee of Sysco, who inspected the machine and found the alignment problem. Instead of repairing or replacing the machine, West demonstrated how to remedy the problem by opening the machine and depressing an interior portion of it to make the holes line up. The part of the machine opened by West contained electrical wiring and was never intended to be used for the purpose demonstrated by West. There was no evidence that the procedure shown by West was approved or authorized by the manufacturer. The trial court concluded that McGill was injured by following the procedure shown by West and by entering a portion of the machine not intended to be entered. Accordingly, the trial court found that the negligent acts of Sysco's employee caused McGill's injury. The trial court determined that Sysco was solely at fault in causing McGill's injuries and denied Sysco's cross claim against Jet Spray and third party demand against U.S. Fire.
Following the trial court's adverse judgment, Sysco filed the instant appeal and assigned four errors for review. Sysco asserts that (1) the trial court failed to consider its claim that the U.S. Fire policy insuring Jet Spray also provided coverage to Sysco for the claims of McGill; (2) the trial court failed to consider its breach of contract claim against Jet Spray; (3) the trial court erred in denying its claim for contractual defense and indemnity against Jet Spray in connection with McGill's claims; and (4) that it is entitled to recover additional attorney's fees, expenses, and costs associated with the instant appeal.
To address the issues raised by Sysco on appeal, we must first examine the applicable provisions of the hold harmless agreement, which is the basis of Sysco's claims. The agreement is entitled "HOLD HARMLESS AGREEMENT AND GUARANTY/WARRANTY OF PRODUCT" and was signed by a Jet Spray representative on June 1, 1992, approximately three months prior to McGill's accident. The four-part agreement provides, in relevant part, as follows:
The undersigned person or entity ("Seller"), for value received, hereby represents and agrees as follows:
2. Seller agrees to defend, indemnify and hold harmless Buyer and its employees officers, directors and customers (individually, an "Indemnitee") from all actions, suits, claims and proceedings ("Claims"), and any judgments, damages, fines, costs and expenses (including reasonable attorneys' fees) resulting therefrom:
* * * *
(ii) brought or commenced by any person or entity against any Indemnitee for the recovery of damages for the injury, illness and/or death of any person or damage to property arising out of or alleged to have arisen out of (a) the delivery, sale, resale, labeling, use or consumption of any Product, or (b) the negligent acts or omissions of Seller; provided, however, that Seller's indemnification obligations hereunder shall not apply to the extent that Claims are caused by the negligence of Buyer.
* * * *
3. Seller agrees to maintain in affect insurance coverage with reputable insurance companies covering worker's compensation and employers' liability, automobile liability, comprehensive general liability, including product liability and excess liability, all with such limits as are sufficient in Buyer's reasonable judgment, to protect Seller and Buyer from the liabilities insured against by such coverages. Seller shall furnish a certificate evidencing the obligation of its insurance carriers not to cancel or materially amend such policies without thirty (30) days prior written notice to Buyer. In addition, Buyer shall be named as an additional insured with respect to the comprehensive general, product, automobile and excess liability coverages specified herein and all such policies shall provide a waiver of subrogation in favor of Buyer.
4. This Guaranty and Agreement is continuing and shall be in full force and effect and shall be binding upon the Seller with respect to each and every Product shipped or delivered to Buyer by the Seller before the receipt by the Buyer of written notice of revocation thereof.
Sysco's appeal questions whether Jet Spray met its obligations under this agreement.
The first issue we will address is whether the trial court erred in denying Sysco's claim against Jet Spray for contractual defense and indemnity in connection with McGill's claim for damages. Sysco argues that the clear and unambiguous language in the second part of the hold harmless agreement entitles it to full indemnification from Jet Spray for the costs, expenses, and damages associated with McGills' claim. Moreover, Sysco argues that the trial court erred in finding it at fault in causing McGill's injuries. It is Sysco's contention that the injuries to McGill were caused by a defect in the tea dispenser and that the fault is Jet Spray's. In opposition, Jet Spray argues that the trial court was correct in finding Sysco at fault in causing McGill's injuries as it was due to the intervention of Sysco's employee that McGill was exposed to the risk of electrical shock. Because there is fault on the part of Sysco, Jet Spray asserts that it is not contractually...
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