National Union Fire Ins. Co. v. A.A.R. Western Skyways, Inc.

• Decision Date: 12 December 1989
• Docket Number: No. 71858,71858
• Citation: 1989 OK 157,784 P.2d 52
• Parties: NATIONAL UNION FIRE INSURANCE COMPANY and Mid-States Aircraft Engines, Inc., Plaintiffs, v. A.A.R. WESTERN SKYWAYS, INC., and Teledyne, Inc., d/b/a Teledyne Continental Motors, Defendants.
• Court: Oklahoma Supreme Court

Page 52

784 P.2d 52

1989 OK 157

NATIONAL UNION FIRE INSURANCE COMPANY and Mid-States Aircraft Engines, Inc., Plaintiffs, v. A.A.R. WESTERN SKYWAYS, INC., and Teledyne, Inc., d/b/a Teledyne Continental Motors, Defendants.

No. 71858.

Supreme Court of Oklahoma.

Dec. 12, 1989.

Certified Question of Law from the United States District Court for the Northern District of Oklahoma.

Plaintiff seeks through right of indemnification or contribution recovery of monies paid in settlement for injuries and damages arising out of an airplane crash. Specifically plaintiff is requesting: whether there must be a contractual or vicarious liability between the parties before there is the right of indemnification; whether the rule of proportionate and several liability would apply to a contribution action; whether pure comparative negligence applies to a contribution action; whether one can recover attorney fees for both the underlying action and the contribution action; and finally, how will contribution be determined where plaintiff's settlements did not release other tortfeasors from liability.

CERTIFIED QUESTION ANSWERED.

Michael Atkinson, Best, Sharp, Thomas, Glass & Atkinson, Tulsa, David McDonald, McDonald & McDonald, Miami, Fla., Edward A. McConwell, Keith R. Lyman, Edward A. McConwell Law Firm, Overland Park, Kan., for plaintiffs.

Rocklin D. Lyons, Looney, Nichols, Johnson & Hayes, Oklahoma City, for defendants.

LAVENDER, Justice:

The United States District Court for the Northern District of Oklahoma certified the following questions pursuant to the Uniform Certification of Question of Law Act, 20 O.S.1981, §§ 1601 et seq.:

(1) whether indemnity is available to one who, without fault on his own part, has paid damages occasioned by the primary negligence of another, even where there exists no contractual or vicarious liability;

(2) whether the rule of proportionate and several liability applies in a contribution action under the Oklahoma Contribution Statute at 12 O.S.1981, § 832;

(3) whether liability is to be apportioned under the Oklahoma Contribution Statute at 12 O.S.1981, § 832 utilizing a pure comparative negligence method;

(4) whether attorney fees incurred both in the underlying actions and the contribution action are recoverable in a contribution claim under the Oklahoma contribution Statute at 12 O.S.1981, § 832;

(5) whether, in actions pursuant to the Oklahoma Contribution Statute at 12 O.S.1981, § 832, settlement agreements not releasing the liability of other tort-feasors bar the settlor from obtaining contribution from the unreleased tort-feasors to the extent of amounts paid in such settlement, in effect "reducing the claim" of the settling tort-feasors for contribution against such non-settling tort-feasors by the amounts paid in such settlements?

We hold that: (a) indemnity is not available to one who, has paid damages caused by the primary negligence of another unless there exists between them an enforceable contract or vicarious liability; (b) the rule of proportionate and several liability adopted by this court does not apply to a contribution action, however, under Oklahoma's contribution statute, 12 O.S.1981, § 832, each tortfeasor's share of contribution will be apportioned according to his degree of fault; (c) this court will not address the issue of whether pure comparative negligence applies to a contribution action since our answer in question two holds that a tortfeasor will pay proportionately his share of contribution; (d) Oklahoma's contribution statute 12 O.S.1981, § 832 makes no provision for recovery of attorney fees therefore, in a contribution action there is no right for recovery of attorney fees; (e) Oklahoma's contribution statute 12 O.S.1981, § 832 clearly states that settlement agreements not releasing the liability of other tortfeasors will bar the settlor from obtaining any contribution from the unreleased tortfeasors in a contribution action.

FACTS

On July 20, 1983 in Cleveland, Ohio, an Aero Commander aircraft crashed killing all on board and causing property damage to surrounding buildings. All of the cases were eventually settled although the cause of the accident has never been judicially determined. One theory puts the blame on a failed exhaust piece in the right engine of the plane that went undetected during previous repairs. Before the accident, the plane had been serviced by Carair, not a party to this action and two F.A.A. repair stations, Plaintiff Mid-States Aircraft Engines, Inc. (Mid-States) and Defendant A.A.R. Western Skyways, Inc. (A.A.R.).

It is Mid-States' contention that it was not negligent in performing the inspection of the aircraft. Mid-States claims it was only required to make a visual inspection of the exhaust system. However, Mid-States further contends that prior to the inspection, A.A.R. had overhauled the right engine of the aircraft and in doing so had failed to detect the defective exhaust piece. Mid-States alleges that in settling the cases it was actually fulfilling the responsibility of A.A.R. for its negligent acts and not those of Mid-States.

Therefore, Mid-States and its insurer National Union Fire Insurance Co. (National Union), also a Plaintiff in this action, seek to recover monies paid in the previous settlements by right of indemnification. In the alternative, if in the contribution suit, Mid-States is found liable in part for the airplane crash, then as a co-tortfeasor Mid-States seeks contribution from A.A.R.

Defendant A.A.R. has not contributed in any of the prior settlements. A.A.R. further denies that it was negligent or that it is liable for contribution.

I.

WHETHER INDEMNITY IS AVAILABLE TO ONE WHO, WITHOUT FAULT ON HIS OWN PART, HAS PAID DAMAGES OCCASIONED BY THE PRIMARY NEGLIGENCE OF ANOTHER, EVEN WHERE THERE EXISTS NO CONTRACTUAL OR VICARIOUS LIABILITY?

The general rule of indemnity is that one without fault, who is forced to pay on behalf of another, is entitled to indemnification. Mid-States is arguing that it was not negligent in servicing the aircraft and that the settlements were actually made on behalf of A.A.R. Since Mid-States would then be a "party without fault forced to pay on behalf of another," Mid-States should be entitled to indemnification from A.A.R.

In Travelers Insurance Company v. L.V. French Truck Service, Inc., 770 P.2d 551 (Okla.1988), this court, on reviewing the state of the law of indemnity in Oklahoma, said that:

'Indemnity is a contract by which one engages to save another from a legal consequence of the conduct of one of the parties, or of some other person.' 15 O.S.1981 § 421. It provides no remedy against a third party. Oppenheim v. National Surety Co., 105 Okl. 223, 231 P. 1076, 1077 [1925]. Noncontractual or equitable indemnity is similar to common-law contribution; one who is only constructively or vicariously obligated to pay damages because of another's tortious conduct may recover the sum paid from the tortfeasor. Braden v. Hendricks, Okl., 695 P.2d 1343, 1349 [1985] and Porter v. Norton-Stuart Pontiac-Cadillac of Enid, Okl., 405 P.2d 109, 113 [1965]. ¹

Therefore, the right of indemnity may arise out of an express (contractual) or implied (vicarious) liability. However, Oklahoma case law has always premised this right of indemnity on the understanding that a legal relationship exists between the parties. ² Beginning with Peak Drilling Co. v. Halliburton Oil Well Cementing Co. et al., 215 F.2d 368 (10th Cir.1954), cited with approval in Harter Concrete Products, Inc. v. Harris, 592 P.2d 526 (Okla.1979), the court held that indemnity ... "necessarily arises out of an independent legal relationship, under which the indemnitor owes a duty either in contract or tort to the indemnitee apart from the joint duty they owe to the injured party. ³ Moreover, the pivotal Oklahoma case on the law of indemnity was Porter v. Norton-Stuart Pontiac-Cadillac, 405 P.2d 109 (Okla.1965), and was decided within the context of the rule of respondeat superior. ⁴ Clearly then, there must exist a legal relationship arising out of either contractual or vicarious liability on which to base the remedy.

In reaching this conclusion, we are mindful of Oklahoma's Contribution Statute, 12 O.S.1981, § 832 preserving the right of indemnity. Section 832(F) reads:

This act does not impair any right of indemnity under existing law. When one tort-feasor is entitled to indemnity from another, the right of the indemnity obligee is for indemnity and not contribution, and the indemnity obligor is not entitled to contribution from the obligee for any portion of his indemnity obligation."

This statute however, did not create a right of indemnity where none had previously existed.

Finally, we cite with approval a sister state opinion that expressly states the law of indemnity as we perceive it. The language is from a case decided much earlier. The Pennsylvania court finds the principle still viable. We agree.

In the case of concurrent or joint tortfeasors, having no legal relation to one another, each of them owing the same duty to the injured party, and involved in an accident in which the injury occurs, there is complete unanimity among the authorities everywhere that no right of indemnity exists on behalf of either against the other; in such a case, there is only a common liability and not a primary and secondary one, even though one may have been very much more negligent than the other. ⁵

QUESTION II: WHETHER THE RULE OF PROPORTIONATE AND SEVERAL LIABILITY APPLIES IN A CONTRIBUTION ACTION UNDER THE OKLAHOMA CONTRIBUTION STATUTE AT 12 O.S.1981, § 832?

The rule of proportionate and several liability was adopted by this court for use in comparative negligence cases when there was a negligent plaintiff. Because it seemed fairer to allow a negligent plaintiff to recover only the tortfeasor's proportionate share, we abrogated joint and several liability in comparative negligence cases. It is Plaintiffs'...