Peerless Co. v. Haleyville Solid Waste

• Decision Date: 05 May 2006
• Docket Number: 2040734.
• Citation: 941 So.2d 312
• Parties: PEERLESS LANDFILL COMPANY, INC., and Waste Management, Inc. v. HALEYVILLE SOLID WASTE DISPOSAL AUTHORITY.
• Court: Alabama Court of Civil Appeals

941 So.2d 312

PEERLESS LANDFILL COMPANY, INC., and Waste Management, Inc. v. HALEYVILLE SOLID WASTE DISPOSAL AUTHORITY.

2040734.

Court of Civil Appeals of Alabama.

May 5, 2006.

Anthony N. Fox of Scott, Sullivan, Streetman & Fox, P.C., Birmingham, for appellants.

Jeffery A. Mobley and Michael E. Newell of Lowe, Mobley & Lowe, Haleyville, for appellee.

BRYAN, Judge.

Peerless Landfill Company, Inc. ("Peerless"), and Waste Management, Inc. ("Waste Management"), appeal a summary judgment in favor of the Haleyville Solid Waste Disposal Authority ("the Authority"). We reverse and remand.

The Authority controls a landfill in Winston County. In March 1994, Peerless and the Authority entered into a contract ("the Peerless contract") in which Peerless agreed to operate the landfill for the Authority. Section 6.1 of the Peerless contract contained the following indemnity provision:

"6.1 Hold Harmless. The CONTRACTOR shall hold harmless, indemnify and defend the AUTHORITY, its officers, employees, representatives and agents, from and against any claim, action, loss, damage, injury, liability, cost and expense of whatsoever kind or nature arising out of injury to persons, including death, or damage to property, including any and all costs resulting from environmental contamination, arising out of or incidental to any negligent or intentional act or omission of the CONTRACTOR in the operation of the facility. In the event of joint negligence on the part of the AUTHORITY and the CONTRACTOR, any loss shall be apportioned."

(Emphasis added.) Peerless operated the landfill until April 10, 1996. On April 10, 1996, TransAmerican Waste Industries, Inc. ("TransAmerican"), and the Authority entered into a contract ("the TransAmerican contract") in which TransAmerican agreed to assume Peerless's rights and obligations under the Peerless contract.¹ TransAmerican and the Authority also agreed, among other things, to amend the indemnity provision in the Peerless contract so that it provided, in pertinent part:

"Hold Harmless. The CONTRACTOR shall hold harmless, indemnify and defend the AUTHORITY, including without limitation the members of its board, its officers, employees, representatives and agents, from and against any claim, action, loss, damage, injury, liability, cost and expense of whatsoever kind or nature (`Claims'), including Claims alleging injury to persons (including death), or damage to property (including without, limitation environmental contamination or alleged contamination), to the extent such Claim arises out of or [is] related or is incidental to any negligent or intentional act or omission of the CONTRACTOR in the operation of the Facility."

(Emphasis added.) Subsequent to TransAmerican's assumption of Peerless's rights and obligations under the Peerless contract, TransAmerican became Waste Management.

Waste Management was operating the landfill on October 9, 1999, when a fire occurred there. Two years later, on October 9, 2001, several individuals who owned property near the landfill ("the individual plaintiffs") sued the Authority, Peerless, and Waste Management, alleging, among other things, that negligence on the part of the Authority, Peerless, and Waste Management proximately caused the fire to damage the individual plaintiffs' property. The Authority sent Waste Management a letter demanding that Waste Management defend and indemnify it against the individual plaintiffs' claims; however, Waste Management did not respond. Therefore, the Authority paid its own attorneys to defend it against the individual plaintiffs' claims. The Authority also filed a cross-claim against Peerless and Waste Management in which the Authority sought, among other things, contractual indemnity for the amount it had paid its attorneys to defend it against the claims of the individual plaintiffs.

Thereafter, the Authority, Peerless, and Waste Management moved the trial court for summary judgments on the claims of the individual plaintiffs. The trial court granted the Authority's summary-judgment motion with respect to all of the individual plaintiffs' claims and granted Peerless and Waste Management's summary-judgment motion with respect to all of the individual plaintiffs' claims other than their negligence claim. Subsequently, Peerless and Waste Management paid the individual plaintiffs a sum of money to settle their negligence claim, although Peerless and Waste Management disclaimed liability in the settlement documents.

The Authority then moved the trial court to enter a partial summary judgment in its favor on its cross-claim against Peerless and Waste Management. Specifically, the Authority sought a summary judgment on the issue of liability with respect to its contractual-indemnity claim. The Authority argued that the indemnity provision of the Peerless contract, as amended by the TransAmerican contract, clearly and unambiguously obligated Peerless and Waste Management to provide the Authority with a defense against the individual plaintiffs' claims because those claims arose from the operation of the landfill and, therefore, entitled the Authority to recover the attorneys' fees it had incurred in defending itself against the individual plaintiffs' claims.

Peerless and Waste Management argued that the Authority was not entitled to the partial summary judgment it sought because: (1) the individual plaintiffs had claimed that the Authority was directly liable for its own negligence rather than claiming that it was vicariously liable for the negligence of Peerless or Waste Management and the indemnity provision did not require Peerless and Waste Management to defend the Authority against claims based on its own negligence; and (2) the indemnity agreement only required Peerless and Waste Management to defend the Authority if Peerless and Waste Management committed negligence or an intentional tort and a genuine issue of material fact existed regarding whether Peerless and Waste Management had committed negligence or an intentional tort in connection with the fire.

The trial court held a hearing and allowed the parties to submit additional evidence in support of, and in opposition to, the partial-summary-judgment motion. On March 16, 2005, the trial court entered an order granting the Authority's partial-summary-judgment motion without stating its rationale. Thereafter, the trial court received evidence ore tenus regarding the issue of damages and, on April 22, 2005, entered a judgment in favor of the Authority in the amount of $43,238.81, the amount the Authority had paid its attorneys to defend it against the individual plaintiffs' claims. Subsequently, Peerless and Waste Management timely appealed to this court.

On appeal, Peerless and Waste Management first argue that the trial court erred in entering a partial summary judgment in favor of the Authority with regard to liability on its contractual-indemnity claim because: (1) the clear and unambiguous language of the indemnity agreement conditioned their obligation to indemnify the Authority on Peerless's or Waste Management's having committed negligence or an intentional tort; and (2) a genuine issue of material fact existed regarding whether Peerless or Waste Management had committed negligence or an intentional tort in connection with the fire.

In response, the Authority argues that the clear and unambiguous language of the indemnity agreement obligates Peerless and Waste Management to provide the Authority with a defense against all claims arising from the operation of the landfill regardless of whether Peerless or Waste Management had committed negligence or an intentional tort. In the alternative, the Authority, citing Star Electrical Contractors, Inc. v. Stone Building Co., 863 So.2d 1071 (Ala.2003), argues that, regardless of whether the indemnity provision conditions Peerless's and Waste Management's obligation to indemnify on their having committed negligence or an intentional tort, their refusal to defend the Authority after the Authority gave them notice of the individual plaintiffs' claims precludes them from asserting that that condition has not been met.

"Appellate review of a...