Richardson v. Econo-Travel Motor Hotel Corp., Civ. A. No. 82-0280-A.

• Decision Date: 21 December 1982
• Docket Number: Civ. A. No. 82-0280-A.
• Citation: 553 F. Supp. 320
• Court: U.S. District Court — Eastern District of Virginia
• Parties: Marvin L. RICHARDSON, Plaintiff, v. ECONO-TRAVEL MOTOR HOTEL CORPORATION, et al., Defendants, and ECONO-TRAVEL MOTOR HOTEL CORP., Cross-Claimant, v. LARK INVESTMENT COMPANY, A. Lewis Allen, t/a Lark Investment Company & Allen Management, Inc., Cross-Defendants.

553 F. Supp. 320

Marvin L. RICHARDSON, Plaintiff, v. ECONO-TRAVEL MOTOR HOTEL CORPORATION, et al., Defendants, and ECONO-TRAVEL MOTOR HOTEL CORP., Cross-Claimant, v. LARK INVESTMENT COMPANY, A. Lewis Allen, t/a Lark Investment Company & Allen Management, Inc., Cross-Defendants.

Civ. A. No. 82-0280-A.

United States District Court, E.D. Virginia, Alexandria Division.

December 21, 1982.

Alfred S. Bryant, William G. Ellyson, Richmond, Va., for plaintiff.

Joseph D. Roberts, Arlington, Va., for Econo-Travel Motor Hotel Corp.

Anthony E. Grimaldi, Fairfax, Va., for Lark Inv. Co., A. Lewis Allen and Allen Management, Inc.

Benjamin J. Trichilo, Fairfax, Va., for A. Lewis Allen.

MEMORANDUM OPINION

CACHERIS, District Judge.

I

This court is asked to interpret the indemnity provisions of a franchise agreement. The issue arises out of the lawsuit brought by Marvin Richardson against Econo-Travel Motor Hotel Corp., and its licensee, Lark Investment Co.

Richardson registered at the Econo-Travel Motor Hotel in Woodbridge, Virginia, in March, 1981. He was assaulted by unidentified assailants during his stay at the hotel. Richardson charged Econo and Lark with negligence, breach of implied warranty, and breach of statutory duty.¹ Econo filed a crossclaim against Lark seeking indemnification for any amounts adjudged against Econo as a result of the lawsuit. The crossclaim was based on indemnity provisions of the License Agreement between Econo and Lark dated April 4, 1976. Interpretation of the indemnity provisions must be governed by the laws of Virginia.² Econo filed a motion for summary judgment on the cross-claim. On September 3, 1982, counsel agreed to sever the crossclaim from the main case and that the issue raised in the crossclaim would be decided by the court. For reasons which follow, this court finds that judgment should be entered in Econo's favor.

On September 9, 1982, Econo and Richardson entered into a Covenant-Not-to-Sue. The covenant required Econo to pay Richardson $17,500.00 and in return, Econo was dismissed with prejudice as a defendant in the lawsuit. The jury, in the trial of the remaining defendants, returned a general verdict awarding Richardson compensatory damages in the amount of $450,000.00.

The indemnity clauses of the license agreement are paragraphs 17, titled "Insurance and Indemnity" and 29, titled "Relationship."

Paragraph 17:

Licensee shall indemnify Company and save it harmless from and against any and all claims for damage to persons or property arising from, out of or relating to any occurrence on the Premises. Licensee shall pay all costs, expenses, and reasonable attorney's fees incurred by Company in connection with such claims.

Paragraph 29:

Licensee shall indemnify and save Company harmless from and against any and all claims, demands, costs and expenses arising from, out of or in any way relating to the operation of Licensee's Econo-Travel Motor Hotel; Company shall be entitled to such indemnification in addition to any agreed and liquidated damages pursuant to Article 22 above.

Econo and Lark agree that the License Agreement was in effect at the time of the assault on Richardson. Econo claims it is entitled to indemnification from Lark for the $17,500.00 paid to Richardson and the costs and attorney's fees incurred in defending the Richardson lawsuit. Lark denies any liability to Econo for this money, arguing the language of the indemnity clauses was not intended to cover all situations and particularly not the situation presented in the Richardson lawsuit.

II

Lark characterizes the issue in terms of Econo's negligence: "Whether under Virginia law a general indemnity extends to the negligent, intentional, or reckless omissions of the indemnitee." Lark asks the court to consider National Motels, Inc. v. Howard Johnson, Inc. of Washington, 373 F.2d 375 (4th Cir.1967) in support of its argument that it is relieved from liability because of the allegations of Econo's negligence in the Richardson complaint. In the National case Howard Johnson had agreed to indemnify National from any and all loss, damage or liability incurred by the lessee. Another clause in the agreement required the lessor to repair or rebuild the leased premises if they were destroyed or damaged. Initially, the District Court found Howard Johnson was not liable for its own negligent acts because the lessor was required to rebuild or repair the premises. Upon reconsideration, the court decided that Howard Johnson was partially liable. When the case was reviewed by the Fourth Circuit, the court said:

It is apparently not against the public policy of Virginia for one to contract against his own negligence in some situations. But neither is there a strong policy supporting such agreements to the extent that they should be read into a contract which shows no ambiguity on its face. (citations omitted) (footnote omitted) Id. at 379.

The facts in National are readily distinguishable from the facts in this case. The major difference is that the indemnitee, Howard Johnson, was found negligent. Econo has not been found negligent. Another difference between the two cases is that court said Howard Johnson's conduct "approached recklessness".³ Lark has stated that at the time Lark and Econo signed their agreement, they were unaware that any highly dangerous conditions were included in the "subject matter" of their relationship. There has been no showing of any reckless acts on the part of Econo.

In addition, Lark relies upon Daniel Construction Co. v. Welch Contracting Corp., 335 F.Supp. 303 (E.D.Va.1971). It is true that the opinion mentions the Virginia rule that indemnity agreements are to be strictly interpreted. However, if the opinion is read in its entirety, it is clear that Daniel was not a case where the party seeking indemnity was unaware of a situation or, "even simply allowed such work to be done." In fact, it was a situation in which the indemnitee had actual direction and control of the occurrences that led to the lawsuit.

Lark also cites Fairfax Gas & Supply Co. v. Hadary, 151 F.2d 939 (4th Cir.1945). Fairfax, a dealer in highly dangerous gas, had knowledge of a gas leak in Hadary's home, failed to tell him about the leak and left instructions for him to turn on the gas. When he tried to do so, there was an explosion and he was injured. In its opinion, the court observed that although courts vary in their decisions about the power of a private contractor to contract "against liability for negligence", courts seem to agree that these contracts are not favored and they must be strictly construed. Once again, it must be made clear that this is another case that is clearly distinguishable from the Econo/Lark situation. The court in Fairfax said: "Again we have here no mere case of what has been called negative negligence." The court characterized the conduct of Fairfax as grossly negligent and stated that it "closely verges on, if it does not actually attain, the quality of wantonness." Id. at 941, 942.

III

Econo challenges Lark's public policy defense with Chesapeake & O. Ry. v. Clifton Forge-Waynesboro Tel. Co., 216 Va. 858, 224 S.E.2d 317 (1976). Econo considers the language of the indemnity clause in that case, which is similar to the clauses in issue here, as pertinent to their argument. The court found that even though a common carrier, acting in that capacity, cannot validly contract to be exempted from liability for negligence, it may do so when not acting in that capacity. Of more importance to this case is the reason for the decision in Chesapeake. The court said, "each was free to make or refuse to make the contract and to bargain `at arms length' over terms and conditions." 224 S.E.2d at 322. Econo and Lark had the same freedom. The agreement was negotiated by representatives of both parties.⁴ Both Econo and Lark are conversant with the hotel business. Each party was capable of protecting its own interests at the time the agreement was made. Lark was under no compulsion to accept the contract. This type of franchise agreement is standard in the hotel business and contains typical provisions.

The burden of proving there are no material facts in dispute is on the moving party. Econo has met this burden. Richardson was injured on Lark's premises, the lease agreement was in effect at the time of the injury and the only question is the interpretation of the language of the indemnity clauses. Therefore, this court is now called upon to determine what was meant by the terms of the agreement at the time it was executed and accepted by both parties.

IV

Econo and Lark lawfully contracted. Their agreement states their intention at the time it was executed. The language is clear and unambiguous. Agreements are not necessarily ambiguous because the parties disagree as to the meaning of the language of the agreement.⁵ In considering the purpose of the indemnity clauses, it is clear they were meant to safeguard Econo from liability for the type of events or occurrences found in the underlying lawsuit. Physical conditions of the Woodbridge hotel were under the day-to-day control of Lark.⁶ It follows that the parties intended Lark to be responsible for any...