Price v. AMOCO OIL COMPANY, IP 77-154-C.
| Decision Date | 09 September 1981 |
| Docket Number | No. IP 77-154-C.,IP 77-154-C. |
| Citation | 524 F. Supp. 364 |
| Parties | Buford K. PRICE, Jr., and Sherrie Price, Plaintiffs, v. AMOCO OIL COMPANY, Defendant and Third-Party Plaintiff, v. Charles Dudley FAIR, d/b/a Fair's Standard Service Station, Third-Party Defendant. |
| Court | U.S. District Court — Southern District of Indiana |
Jon D. Krahulik of Bingham, Summers, Welsh & Spilman, Indianapolis, Ind., for plaintiffs.
R. Stanley Lawton of Ice, Miller, Donadio & Ryan, Indianapolis, Ind., for defendant and third-party plaintiff.
Paul T. Brenton, Danville, Ind., for third-party defendant.
This cause is before the Court upon cross motions for summary judgment with respect to the third party complaint.
Whereupon the Court, having heard oral arguments on said motions, having considered the memoranda and affidavits filed in support of and opposition thereto, and being duly advised in the premises, hereby makes the following rulings:
1. The motion for summary judgment of third party defendant Fair is hereby DENIED.
2. The motion for summary judgment of third party plaintiff Amoco will be GRANTED; provided that the third party plaintiff can establish at a subsequent hearing that its settlement with plaintiffs Buford K. Price and Sherrie Price was fair and reasonable. At said hearing, Amoco need not prove its legal liability to the Prices, but only show its potential liability in negligence. See Missouri Pacific Railroad Co. v. International Paper Co., 618 F.2d 492, 497 (8th Cir. 1980); Tankrederiet Gefion A/S v. Hyman-Michaels Co., 406 F.2d 1039, 1042 (6th Cir. 1969).
3. That the Court withholds ruling on Amoco's request for costs and attorney's fees pending the outcome of the aforesaid hearing.
IT IS SO ORDERED.
On February 24, 1976, Buford K. Price, an employee at Fair's Standard Service Station, was severely injured when he attempted to repair a loose exhaust system on a 1970 Pontiac Catalina. As Price worked beneath the vehicle, which had been elevated atop a hydraulic lift, the Catalina rolled off the lift and fell onto him. The extensive injuries suffered by Price rendered him a paraplegic and resulted in the filing of the instant lawsuit.
In their complaint, Sherrie and Buford Price sought damages against Amoco Oil Company, the owner and lessor of the station leased and operated by Charles Dudley Fair. Amoco then proceeded to file a third party complaint against Fair, based upon an indemnification clause contained within the lease agreement between Fair and Amoco. Fair denied any liability under the lease and counterclaimed for monies paid to Price by Fair's insurer, Statesman Insurance Company, under a workmen's compensation policy.
In June of 1978, a settlement was entered into between the Prices and Amoco. This agreement provided that in exchange for a dismissal of all claims against Amoco, the Prices would receive $400,000. Prior to the presentation of said agreement to the Court, Amoco, by counsel, notified counsel for Fair of the proposed settlement and tendered the defense of the action to Fair in exchange for a hold harmless agreement. (See letter of July 19, 1978, from R. Stanley Lawton to Paul T. Brenton.) Fair rejected the offer and a formal entry of settlement between the Prices and Amoco was later filed on July 31, 1978. (See letter of July 28, 1978, from Paul T. Brenton to R. Stanley Lawton.)
Relying on the lease agreement previously mentioned, third party plaintiff Amoco (plaintiff) now seeks reimbursement from third party defendant Fair (defendant) for the total amount of the Price settlement, together with interest, costs, and attorney's fees. Cross motions for summary judgment having been filed on the third party complaint, the Court will now address the issues as set forth in defendant Fair's supporting memorandum.
ISSUE ONE — Was there a real and voluntary meeting of the minds between Amoco and Fair regarding an indemnification clause?
Defendant's initial argument that he should not be held liable to Amoco under the lease agreement is based upon a claim of unconscionability. Defendant points to the case of Weaver v. American Oil Co., 276 N.E.2d 144 (Ind.1971), as support for his position. In Weaver, an indemnity provision identical to the one at bar was at issue. Much like defendant Fair, Weaver, a filling station operator, argued that he was presented with a lease agreement on a "take it or leave it basis." Weaver maintained that he neither read the lease nor understood it. Because of the oil company's superior bargaining position, Weaver contended that he was "forced" to sign an unconscionable contract.
In striking the indemnity provision as invalid, the Indiana Supreme Court emphasized Weaver's background and lack of education:
Weaver had left high school after one and a half years and spent his time, prior to leasing the service station, working at various skilled and unskilled labor oriented jobs. He was not one who should be expected to know the law or understand the meaning of technical terms, ... Weaver had never read the lease prior to signing and the clauses in the lease were never explained to him in a manner from which he could grasp their legal significance.
Id. at 145-56. The Court further observed:
The party seeking to enforce such a contract has the burden of showing that the provisions were explained to the other party and came to his knowledge and there was in fact a real and voluntary meeting of the minds and not merely an objective meeting. (Original emphasis.)
Id. at 148. However, in reaching its conclusion, the Court also stated:
We do not mean to say or infer that parties may not make contracts exculpating one of his negligence and providing for indemnification, but it must be done knowingly and willingly as in insurance contracts made for that very purpose. (Original emphasis.)
In the instant case, an examination of Fair's educational background reveals a record remarkably dissimilar to that of Weaver. Fair was a college graduate who had taken courses in business law. Upon graduation, Fair spent seventeen years with Amoco as a marketing representative. During this period, Fair was responsible for negotiating leases on behalf of Amoco, reviewing the leases with Amoco dealers, and answering or obtaining answers to any questions the dealers might have as to the lease provisions. Unlike Weaver, Fair had numerous opportunities to read and become familiar with the provisions of the lease.
Moreover, a review of the circumstances surrounding Fair's signing of the lease belies any contention that it was presented on a "take it or leave it basis." Not only did Fair object to a provision of the lease concerning a set rate for monthly rental payments, but Fair negotiated a different rental amount based on gallons of gasoline pumped per month. This fact alone negates any claim by Fair that he was the victim of an "adhesion contract."
However, the most significant factor supporting a conclusion that Fair was familiar with the provisions of the lease is evidenced by Fair's obtaining insurance coverage from Statesman to relieve his indemnity obligation. The fact that Fair may not have read the lease agreement in its entirety at the moment of signing is of little import. In contrast to Weaver, a station operator who "could not be expected to know the law or understand the meaning of technical terms," Fair's actions reflect those of a man who understood the lease agreement and was capable of grasping its legal significance. The Court necessarily concludes, therefore, that defendant Fair knowingly and willingly contracted with plaintiff Amoco.
ISSUE TWO — Was the settlement between Price and Amoco voluntary?
"As a general rule, a person making payment is a mere volunteer not entitled to indemnification if in making payment he has no right or interest of his own to protect and acts without obligation, moral or legal, and without being requested to do so by a person liable on the obligation.1 Ohio Casualty Group of Insurance Companies v. Royal-Globe Insurance Companies, 413 N.E.2d 678, 680 (Ind.App.1980). Applying this standard to the case at hand, there can be no question that Amoco's settlement with the Prices was not a voluntary one.
From the moment Buford K. Price filed his complaint, defendant and third party plaintiff Amoco was faced with the possibility of a legal obligation. This fact became even clearer when discovery revealed at least one specific instance of Amoco's failure to repair the broken lift a week prior to the accident. (See deposition testimony of Nolan Huckleberry.) Thus, it cannot be argued that Amoco had no right or interest of its own to protect.
Amoco sought to protect its interest through means of a settlement accepted by this Court on July 31, 1978. However, the settlement was not effected without notice to Fair and an opportunity to assume the defense of the action. That Amoco chose not to proceed to judgment provided no basis for Fair's assertion that Amoco's settlement constituted a voluntary payment.2 As the Court of Appeals stated in Allied Mutual Casualty Corp. v. General Motors Corp., 279 F.2d 455, 460 n. 15 (10th Cir. 1960);
The fact that the payment by the plaintiff here to the injured person was a voluntary one in the sense that the claim was not reduced to a judgment does not defeat the right of indemnification. If it appears that the party was legally liable and could have been compelled to satisfy the claim, that is sufficient.
What remains for consideration is the question of whether Amoco's settlement with the Prices was fair and reasonable. As noted in the Court's Order accompanying this Memorandum, a hearing on this issue will be held at a future date. At that time, deposition testimony may be introduced with respect to the potential liability of Amoco and any defenses which it might have asserted. It will also...
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