Ross v. Smith

• Decision Date: 19 August 1970
• Docket Number: No. PB 70-C-5.,PB 70-C-5.
• Citation: 315 F. Supp. 1064
• Parties: Freddie L. ROSS and Barbara Ann Ross, Plaintiffs, v. Herman J. SMITH, d/b/a Herman J. Smith & Company, a Sole Proprietorship, Defendant and Third-Party Plaintiff, v. LOCKE PLUMBING COMPANY, Inc., Third-Party Defendant.
• Court: U.S. District Court — Eastern District of Arkansas

315 F. Supp. 1064

Freddie L. ROSS and Barbara Ann Ross, Plaintiffs, v. Herman J. SMITH, d/b/a Herman J. Smith & Company, a Sole Proprietorship, Defendant and Third-Party Plaintiff, v. LOCKE PLUMBING COMPANY, Inc., Third-Party Defendant.

No. PB 70-C-5.

United States District Court, E. D. Arkansas, Pine Bluff Division.

August 19, 1970.

Bill Holland, Bridges, Young, Matthews & Davis, Pine Buff, Ark., for plaintiffs.

R. A. Eilbott, Jr., Reinberger, Eilbott, Smith & Staten, Pine Bluff, Ark., for defendant.

John B. Thurman, Barber, Henry, Thurman McCaskill & Amsler, Little Rock, Ark., for third-party defendant.

MEMORANDUM OPINION

OREN HARRIS, Chief Judge.

This tort proceeding was originally filed by Freddie L. Ross and Barbara Ann Ross, residents and citizens of Jefferson County, Arkansas, against Herman J. Smith, d/b/a Herman J. Smith & Company, A Sole Proprietorship, a resident and citizen of the State of Texas, with principal offices located in Fort Worth, Texas. The jurisdictional amount existing, the diversity action was properly removed by the defendant to this court from the Circuit Court of Jefferson County, Arkansas. The Defendant Smith responded in this court with an answer and subsequently filed a third party complaint against Locke Plumbing Company, Inc., alleging an indemnity agreement between Smith and Locke which would protect Smith as to the subject matter of the complaint filed against Smith. Even though Locke was a citizen of the State of Arkansas, the third party complaint against it did not defeat jurisdiction in that an independent basis of jurisdiction of the federal courts is not necessary to support a third party proceeding under Rule 14 of the Federal Rules of Civil Procedure. People of State of Illinois v. Maryland Casualty Company, D.C., 2 F.R.D. 241; 3 Moore's Federal Practice § 14.26; Williams, et al v. Keyes, et al., 125 F.2d 208 (C.A. 5th, 1942); Waylander-Peterson Co. v. Great Northern Ry., 201 F.2d 408, 415 (C.A. 8th 1953).

Locke responded to the third party complaint admitting the existence of the contract which was made an exhibit to the third party complaint, but denying its applicability and setting up the exclusiveness of the Arkansas Workmen's Compensation Act as to Smith's alleged cause of action. Ross was an employee of Locke at the time of the occurrence and received benefits under the Workmen's Compensation Act. Smith, after securing an appropriate order, amended its answer setting up certain other defenses as to Ross' claim and the case was tried to a jury on the 29th day of May, 1970, resulting in a verdict against Smith on behalf of Ross in the sum of $21,175.00.¹ The issues between Smith and Locke were not submitted to the jury but reserved to the Court, which is the subject of this opinion. Since all issues in the proceeding had not been fully adjudicated, judgment, pursuant to the verdict of the jury, has not been entered but withheld as provided by Rule 54(b) of the Federal Rules of Civil Procedure.

The primary question for the Court's determination is the meaning and effect of the indemnity agreement admittedly entered into between Smith and Locke as to the jury verdict rendered against Smith on behalf of Plaintiff Ross. Smith was the prime contractor for the construction of an apartment complex in Pine Bluff, Arkansas, and among the sub-contractors engaged by Smith was Locke who was to do all the plumbing work at the complex. Smith and Locke entered into certain contracts relevant to this work and the relative duties and obligations of each party, among which was the indemnity agreement to be construed by the Court relevant to the duties of Locke. During the course of the construction, Ross, an employee of Locke, while on duty for Locke and within the provisions of the Arkansas Workmen's Compensation Act, was injured in one of the rooms of the apartment complex which injuries were found by the jury to be due to the negligence of Smith in improperly stacking certain sheets of sheetrock. It was admitted that the agents of Smith stacked the sheetrock and it was found by the jury that such stacking was the proximate cause of the injury to Ross and a verdict in the amount of $21,175.00 was awarded Ross and against Smith.

The relevant portions of the indemnity agreement are as follows:

"You are responsible for all damage or claims for damage arising out of your operations under this contract. If Herman Smith & Co. furnishes tools, equipment, scaffolds, or any other material of any nature to you or your employees or if you and your employees work on structures erected or controlled by Herman Smith & Co. or others, you agree to assume the duty of inspecting the premises, structures, scaffolds, tools, equipment or any other material of any nature to satisfy yourselves as to their safety and to take such corrective action you deem advisable or necessary.

"You agree to indemnity and forever hold Herman Smith & Co. harmless and to reimburse Herman Smith & Co. for any loss, expense, or payment of any nature resulting from claims by your employees or any other persons due to injury or death or damage to property occuring on the job, or the ways and means adjoining thereto, in any way arising out of your work or connected therewith, whether or not caused by hidden defects or negligence or alleged negligence of Herman Smith & Co. or its employees." (Emphasis supplied)

As previously stated, the sole question to be decided by the Court is whether or not the indemnity agreement above referred to is enforceable by Smith against Locke as to the injuries sustained by Ross and more particularly the judgment obtained by Ross against Smith along with the attendant costs and expenses incurred and to be incurred.

Smith contends that Locke is bound by the terms of the indemnity agreement as to the judgment rendered against Smith on behalf of Ross and prays an order of the Court relieving Smith from further duties and obligations as to said judgment or any duties and obligations arising out of the same and further prays for a judgment against Locke for all of its costs previously expended, including but not limited to deposition costs, attorneys' fees and loss of time by its employees in the preparation and trial of the lawsuit in issue.

Locke, in its answer and brief interposes three defenses to the position taken by Smith which are, stated briefly, as follows:

(a) The third party complaint does not state facts upon which relief can be granted, Locke's sole legal responsibility for any injury sustained by Ross, being restricted to benefits under the Arkansas Workmen's Compensation Act, Ross being an employee of Locke.

(b) The indemnity agreement entered into between Locke and Smith does not protect Smith against an incident which was occasioned solely and proximately by the negligence of Smith.

(c) Even if Smith can maintain its action for indemnity against Locke as to the injuries sustained by Ross and even if the Court finds that the indemnity agreement is applicable and binds Locke as to the judgment rendered against Smith, Smith is not entitled to be relieved from further duties or obligations relevant to the judgment, at this stage of the proceedings, nor is Smith entitled to any attorney's fees he has incurred.

Since the instant question arises from a contractual agreement between Smith and Locke, there is no fact question in dispute. In construing the terms of the contract the Court will, therefore, consider the posture of the parties as disclosed by the record as its findings and conclusions of law incorporated in this opinion.

First, considering the contentions of Locke, it is admitted by Locke in its brief that under the authority of C. & L. Electric Rural Electric Co-op Corp. v. Kincaid, 221 Ark. 450, 256 S.W. 2d 337, that it can be held liable to indemnify a tortfeasor for injury to its own employee. The Court agrees. The indemnity agreement entered into between Smith and Locke meets all the requirements of the Arkansas court in C. & L. v. Kincaid. In fact, the indemnity agreement involved here affords even greater protection to the indemnitee (Smith) than did the one construed by the court in Kincaid. There, the indemnitor bound itself only as to the negligence on its own part, whereas here, the indemnitor (Locke) bound itself even as to the negligence of the indemnitee (Smith).

The Court, therefore, concludes that the first contention of Locke that the third party complaint does not state facts upon which relief can be granted, for the reasons stated therein, is without merit.

The second contention by Locke reaches the very heart of the issue involved here and that is whether the indemnity agreement protects Smith as to the judgment rendered against it on behalf of Ross in view of the verdict finding that Ross' injuries were due solely to the negligence of Smith. There is no contention that Locke was guilty of any independent act of negligence that caused or contributed to the injuries of Ross. On this contention the Court must look to the terms of the contract, giving effect to all of its applicable provisions. The Court is convinced that when read in context with its meaning the terms of the contract are clear and unequivocal in that Locke not only had a duty to inspect the premises to satisfy itself as to their safety and to take such corrective action as it deemed necessary or advisable, but further agreed as follows:

"You agree to indemnify and forever hold Herman Smith & Company harmless and to reimburse Herman Smith & Company for any loss, expense, or payment of any nature resulting from claims by your employees or any other person due to the injury or death or damage to property occurring on the job, or the

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