Mid-America Sound Corp. v. Ind. State Fair Comm'n (In re Ind. State Fair Litig.)

• Decision Date: 28 January 2016
• Docket Number: No. 49S02–1601–CT–51.,49S02–1601–CT–51.
• Citation: 49 N.E.3d 545
• Parties: In re INDIANA STATE FAIR LITIGATION. Mid–America Sound Corporation, Appellant/Defendant, v. Indiana State Fair Commission, et al., Appellees/Defendants, Jill Polet, et al., Appellees/Plaintiffs.
• Court: Indiana Supreme Court

49 N.E.3d 545

In re INDIANA STATE FAIR LITIGATION.Mid–America Sound Corporation, Appellant/Defendant

v. Indiana State Fair Commission, et al., Appellees/DefendantsJill Polet, et al., Appellees/Plaintiffs.^*

No. 49S02–1601–CT–51.

Supreme Court of Indiana.

Jan. 28, 2016.

Gregory F. Zoeller, Attorney General of Indiana, Thomas M. Fisher, Solicitor General, Heather H. McVeigh, Deputy Attorney General, John C. Trimble, Lewis S. Wooton, Lewis Wagner, LLP, Indianapolis, IN, Attorneys for Appellee.

Robert D. MacGill, Michael D. Moon, Jr., Kara M. Kapke, Matthew B. Barr, Barnes & Thornburg LLP, Indianapolis, IN, Attorneys for Appellant.

On Petition to Transfer from the Indiana Court of Appeals, No. 49A02–1404–CT–288

RUSH, Chief Justice.

Indiana courts strictly construe contracts to indemnify a party against its own negligence—recognizing that a party would not lightly accept liability for someone else's negligence. Thus, indemnity clauses must state the parties' intent to indemnify in clear and unequivocal language. Otherwise, we will not find a knowing and willing agreement to indemnify. And the need for explicit language is especially important when an agreement involves retroactive indemnity—since even in insurance contracts, where indemnity is the central purpose, we presume that insurers would not accept liability for a known, existing loss.

Here, Mid–America Sound argues that the Indiana State Fair Commission accepted liability for an existing, catastrophic loss—not through explicit contract language calling for retroactive indemnification, but through a years-long course of conduct in paying invoices that had standard indemnity language on the back. But as a matter of law, a form of liability so disfavored (especially when retroactive) cannot be implied from a course of dealing when it is not expressed by clear and unequivocal contract language. We therefore grant transfer and affirm the trial court's grant of summary judgment for the Commission.

Facts and Procedural History

Indiana has held its famed State Fair nearly every year since 1852. An evolving Hoosier tradition, the Fair has become more than just an agricultural exposition. It is now a major commercial event for the general public, attracting rural and urban Hoosiers alike—featuring concerts, tractor pulls, demolition derbies, monster truck shows, and a seemingly boundless supply of food.

The Indiana State Fair Commission (the “Commission”) manages the Fair, and by extension, the concerts and other major events that take place at the Fair. Since the 1990s, the Commission utilized Mid–America Sound (“Mid–America”) to provide equipment and services for those concerts and events. That equipment often included a temporary roof for the grandstand stage, speakers, and lights.

During the last ten years of their relationship, the Commission and Mid–America followed a standard routine. Before each Fair, they agreed on the equipment to be delivered and the corresponding prices. Then after the Fair, Mid–America would collect the equipment and submit a blank claim voucher form,¹ with invoices for the rentals attached. The Commission would then verify whether all the invoiced items had actually been provided and, if so, sign the claim voucher to authorize payment. All told, the parties followed this course of dealing more than a hundred times over those ten years.

Tragedy struck on the night of August 13, 2011. Just prior to the Sugarland concert at the grandstand stage, strong winds approached the Fairgrounds. While Mid–America's on-site technicians worked to remove equipment hanging from Mid–America's roof, the roof collapsed, killing seven people and injuring many more. Shortly thereafter, the victims and families filed lawsuits naming several defendants, including Mid–America and the Commission. Then, on December 7, 2011, while those lawsuits were still pending, Mid–America sent the Commission a two-sided invoice for the lease of the collapsed roof and services provided, along with the single-sided claim voucher form. Above the Commission's signature, the voucher contained certifications “that the attached invoice is true and correct” and “in accordance with contract.” The Commission signed the voucher and authorized payment, which it remitted via check.

In March 2012, Mid–America filed a third-party lawsuit against the Commission, claiming that two sentences located on the back of the December 2011 invoice entitled it to indemnification for its own negligence in relation to the August 2011 roof collapse. One of the two sentences, located under a heading entitled “Rentals,” read as follows:

[The Commission] assumes risks inherent in the operation and use of the equipment and agrees to assume the entire responsibility for the defense of, and to pay, indemnify and hold [Mid–America] harmless from and hereby releases [Mid–America] from any and all claims for damage to property or bodily injury (including loss of life) resulting from the use, operation or possession of the equipment, whether or not it be claimed or held that such damage or injury resulted in whole or in part from [Mid–America's] negligence, from the condition of the equipment or from any cause, [the Commission] agrees that no warranties, expressed or implied have been made in connection with this rental.

The other sentence, located under the “Shows” heading, set forth essentially the same language.

Mid–America and the Commission proceeded to file cross-motions for summary judgment, taking opposite positions about whether the December 2011 invoice's indemnity language applied retroactively to the August 2011 roof collapse. The trial court granted the Commission's motion, and Mid–America appealed. A divided Court of Appeals reversed and remanded, finding that genuine issues of material fact existed regarding whether the Commission knowingly and willingly agreed to indemnify Mid–America for the roof collapse. In re Ind. State Fair Litigation, 28 N.E.3d 333, 343 (Ind.Ct.App.2015)

.

Standard of Review

As we have recently reiterated, summary judgment imposes a heavy factual burden on the moving party—and a correspondingly light burden for the non-movant's response—because “Indiana consciously errs on the side of letting marginal cases proceed to trial on the merits, rather than risk short-circuiting meritorious claims.” Hughley v. State, 15 N.E.3d 1000, 1004 (Ind.2014)

. By definition, cases that hinge upon disputed facts are inappropriate for summary judgment, because “weighing [evidence]—no matter how decisively the scales may seem to tip—[is] a matter for trial, not summary judgment.” Id. at 1005–06.

By contrast, matters of contract interpretation are “particularly well-suited for de novo appellate review,” because they “generally present[ ] questions purely of law.” Holiday Hospitality Franchising, Inc. v. AMCO Ins. Co., 983 N.E.2d 574, 577 (Ind.2013)

. A contract may be construed on summary judgment if it “is not ambiguous or uncertain,” or if “the contract ambiguity, if one exists, can be resolved without the aid of a factual determination.” Warrick County ex rel. Conner v. Hill, 973 N.E.2d 1138, 1144 (Ind.Ct.App.2012), trans. denied. The meaning of a contract is a question for the factfinder, precluding summary judgment, only where interpreting an ambiguity requires extrinsic evidence. Tate v. Secura Ins., 587 N.E.2d 665, 668 (Ind.1992).

Moreover, our standard of review remains unchanged when, as here, the parties file cross-motions for summary judgment—we simply “consider each motion separately to determine whether the moving party is entitled to judgment as a matter of law.” SCI Propane, LLC v. Frederick, 39 N.E.3d 675, 677 (Ind.2015)

(quoting Reed v. Reid, 980 N.E.2d 277, 285 (Ind.2012) ).

Discussion

I. Indiana Enforces Indemnity Provisions With Skepticism, Recognizing That Parties Would Not Lightly Accept Liability for Someone Else's Negligence—Especially for Existing Losses.

A. Indiana requires “clear and unequivocal” language to indemnify for another's own negligence—tacitly recognizing that retroactive indemnity for existing losses is a burden few would willingly accept.

Our analysis begins with a dim view of indemnity clauses like the one at issue here. At one time, Indiana flatly prohibited at least some contracts for indemnity against a party's own negligence. See, e.g., Freigy v. Gargaro Co., 223 Ind. 342, 352, 60 N.E.2d 288, 292 (1945)

; Penn. R. Co. v. Kent, 136 Ind.App. 551, 560, 198 N.E.2d 615, 619 (1964) (“[A] railway company acting as a common carrier may not contract for indemnity against its own tort liability when it is performing either a public or quasi public duty such as that owing to a shipper, passenger, or servant, and ... such contracts are void as against public policy.” (emphases omitted)). We later retreated from that prohibition and now generally allow parties, as a matter of freedom of contract, “to allocate risk by contract”—including by agreeing to “indemnification for one's own negligence.” Fresh Cut, Inc. v. Fazli, 650 N.E.2d 1126, 1130 (Ind.1995)

(citing Indianapolis Power & Light Co. v. Brad Snodgrass, Inc., 578 N.E.2d 669, 670 (Ind.1991) ). Even so, indemnity provisions are strictly construed—we treat them as “disfavor[ed] ... because we are mindful that to obligate one party to pay for the negligence of another is a harsh burden that no party would lightly accept.” Henthorne v. Legacy Healthcare, Inc., 764 N.E.2d 751, 757 (Ind.Ct.App.2002). Accordingly, indemnity is permissible only if the contract language shows in “clear and unequivocal terms” that the obligated party “knowingly and willingly agrees to such indemnification.” Id.

Moreover, our courts have generally taken for granted that the parties would be bargaining about prospective liability, by referring to “future acts of negligence” or making the agreement “in advance.” E.g., Indianapolis Power & Light Co., 578 N.E.2d at 670

(“The rule in this state is that parties may by express contract lawfully indemnify...