Public Service Co. of Colorado v. United Cable Television of Jeffco, Inc.
| Decision Date | 13 April 1992 |
| Docket Number | No. 91SC245,91SC245 |
| Citation | 829 P.2d 1280 |
| Parties | PUBLIC SERVICE COMPANY OF COLORADO, a Colorado corporation, Petitioner, v. UNITED CABLE TELEVISION OF JEFFCO, INC., Respondent. |
| Court | Colorado Supreme Court |
Kelly, Stansfield & O'Donnell, Timothy J. Flanagan, Brent L. Backes, James R. McCotter, Denver, for petitioner.
Greengard, Senter, Goldfarb & Rice, William L. Senter, Floyd M. Youngblood, Peter H. Doherty, Denver, for respondent.
Daniel S. Maus, Walter M. Kelly, II, Denver, for amicus curiae US West Communications.
This case involves a dispute over the construction of an indemnity provision in an agreement between the petitioner, Public Service Company of Colorado (Public Service), and the respondent, United Cable Television of Jeffco, Inc. (United Cable). The trial court dismissed Public Service's indemnity claim against United Cable. The court of appeals affirmed, holding that an indemnity provision which purports to indemnify against "all claims" is insufficient to require indemnification for the negligence of the indemnitee. Public Service Co. v. United Cable Television of Jeffco, Inc., 816 P.2d 289 (Colo.App.1991). We disagree, and accordingly reverse.
In 1982, Public Service entered into a "License for Pole Usage" agreement (agreement) with Community TCI of Colorado, Inc. (TCI), entitling TCI to place its television cables on Public Service's utility poles. The agreement contained a provision requiring TCI to indemnify Public Service "from and against all claims" by third parties for injury or death "connected with or resulting from the exercise by licensee of the rights granted" under the agreement. With Public Service's permission, TCI subsequently assigned its interest under the agreement to its successor, United Cable.
In 1984, United Cable hired Montgomery Line Construction Company (Montgomery) to remove television cables attached to Public Service's utility poles. Lawrence Rose, an employee of Montgomery, was injured when the utility pole on which he was standing broke while he was removing television cables. Rose brought an action against Public Service claiming that his injuries were caused by Public Service's negligence in inspecting and maintaining its utility pole. Public Service argued at trial that Rose's injuries were a direct result of Rose's unsafe practices when removing television cables, and not a result of the maintenance and inspection of its utility poles. 1 The jury returned a verdict for Rose, attributing 85 percent negligence to Public Service and 15 percent negligence to Rose. The award was accordingly reduced by 15 percent.
During the Rose litigation, Public Service made no demand against United Cable for indemnification pursuant to the agreement. Six days after the trial, Public Service notified TCI that it was seeking indemnity under the agreement for the amount of the Rose judgment plus attorneys fees. 2 Receiving no response to the indemnity demand, Public Service settled with Rose and paid the claim. Public Service then brought this action against United Cable.
The trial court dismissed the indemnity claim finding that Public Service could not recover for its own negligence under the indemnity provision. The court of appeals affirmed, holding that the contractual language was too broad to evidence a clear and unambiguous intent by the parties that Public Service recover indemnification for its own negligence. 3 Judge Sternberg dissented, concluding that the language in the indemnity provision "unambiguously succeeds in holding Public Service Company harmless from all claims--including those arising from its own alleged negligence." United Cable, 816 P.2d at 297 (Sternberg, C.J., dissenting). We granted certiorari to determine whether the court of appeals erred in its determination that the plain meaning of an indemnity provision in a commercial agreement should not be enforced because it did not specifically include the negligent conduct of the indemnitee.
The indemnity provision in the agreement reads as follows:
Licensee shall indemnify and save and hold harmless Electric Company [Public Service] and third parties using Electric Company poles from and against all claims, liabilities, causes of action, or other legal proceedings by third parties for damage to property, violation of occupancy agreements or conditions, or injury or death of any person or persons in any way arising out of, connected with or resulting from the exercise by Licensee of the rights granted to it hereunder, the existence or operation of Licensee's facilities and any other use of Electric Company's poles or facilities by Licensee, its employees, agents or contractors, including, but not limited to, any claims by Licensee's subscribers for lack of or interruption of service. Indemnity shall include Licensee's obligation to defend any and all such actions, claims or other legal proceedings and to reimburse Electric Company and third parties using Electric Company poles for all expenses, including attorney fees, incurred in connection therewith.
(Emphasis added.) Public Service asserts that the language in the agreement clearly and unambiguously expresses the intent of the parties to protect Public Service from all legal liabilities incurred due to the utility pole usage rights granted to United Cable. Public Service further contends that the rule of strict construction of indemnity agreements should not apply under the facts and circumstances surrounding this case, because the agreement was entered into in a commercial context following arms-length negotiations between two sophisticated corporations.
United Cable argues that the indemnity agreement is insufficient to sustain a duty to indemnify Public Service for its own negligence because Colorado case law requires clear and unequivocal language that indemnification is expected for the indemnitee's own negligent conduct.
Neither party argues that agreements indemnifying the indemnitee against loss caused by its own negligence are invalid. The dispute arises over whether the language in this agreement is sufficient to require indemnification for Public Service's own negligence.
While indemnity contracts are generally construed to effectuate the parties' intentions, under the rule of strict construction, "indemnity contracts holding indemnitees harmless for their own negligent acts must contain clear and unequivocal language to that effect." Williams v. White Mountain Constr. Co., 749 P.2d 423, 426 (Colo.1988).
The indemnity provision begins by requiring United Cable to "indemnify and save and hold harmless" Public Service from and against all claims and liabilities in any way arising out of the rights granted United Cable. While the provision does not specifically mention the effect of any negligence on the part of Public Service, the language covers "all claims, liabilities, causes of action, or other legal proceedings." This indicates an intent to include claims arising from Public Service's negligence. The use of the word "liabilities" is significant because it covers those instances where Public Service is legally liable for damages, including those where liability arises because of its own negligence. Freund v. Utah Power & Light Co., 793 P.2d 362, 371 (Utah 1990).
The indemnity provision also includes the language, "in any way arising out of, connected with or resulting from the exercise" by United Cable of the rights granted to it. The breadth of the language "in any way" supports an interpretation that the parties intended that Public Service be indemnified for its own negligence.
The second sentence of the indemnity provision requires United Cable to "defend any and all such actions, claims or other legal proceedings" against Public Service incurred in connection with its rights under the indemnity provision. This language, requiring indemnification for costs of defense, further strengthens an interpretation that the parties intended to indemnify Public Service from all risks and costs, including those arising from its own negligence. The obvious purpose of the indemnity provision is to allocate to United Cable the entire burden of additional risk stemming from the rights granted United Cable. If the language in the provision is not interpreted to include instances in which Public Service is negligent, the risks arising from United Cable's rights under the agreement would not be fully allocated to United Cable, as intended by the parties.
In United States v. Seckinger, 397 U.S. 203, 211, 90 S.Ct. 880, 885, 25 L.Ed.2d 224 (1970), the Court stated that "a contractual provision should not be construed to permit an indemnitee to recover for his own negligence unless the court is firmly convinced that such an interpretation reflects the intention of the parties." 4 Under the circumstances here, we are convinced that this indemnity provision reflects an intent to hold Public Service harmless for all claims, including claims arising from its own negligence. 5
We do not find that the failure to specifically refer to the negligent conduct of the indemnitee in the agreement renders an otherwise unambiguous indemnity provision insufficient to indemnify the indemnitee from its own negligence. In Heil Valley Ranch, Inc. v. Simkin, 784 P.2d 781 (Colo.1989), the plaintiff, a horseback rider, sustained injuries in a fall from her rented horse. Prior to riding the horse, she signed a release agreement waiving any claims she might have against Heil Valley Ranch as a result of physical injury incurred while riding. Holding the release agreement valid, we found that use of the word "negligence" was not always required for an agreement to shield a party from claims based on negligence. Id. at 785. Following the rule of strict construction, we stated that the "inquiry should be whether the intent of the parties was to...
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