Roy v. Star Chopper Co., Inc.
| Decision Date | 03 November 1977 |
| Docket Number | Civ. A. No. 74-16. |
| Citation | 442 F. Supp. 1010 |
| Parties | Paula H. ROY v. STAR CHOPPER COMPANY, INC. v. ADVANCED MATERIALS SYSTEMS, INC. |
| Court | U.S. District Court — District of Rhode Island |
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Leonard Decof, Providence, R. I., for plaintiff.
Raymond A. LaFazia, Providence, R. I., for Star Chopper.
Harry W. Asquith, Providence, R. I., for Advanced Materials.
This Memorandum is published in further amplification of the Court's Order dated October 4, 1977, denying the third party defendant's motion for summary judgment on the issue of indemnity.
Paula Roy, a Massachusetts citizen, brought this suit against Star Chopper Company, Inc., a Rhode Island corporation, for injuries allegedly sustained in operating a machine manufactured by Star Chopper for Advanced Materials Systems, Inc. ("AMS"), a Rhode Island corporation with its place of business in Massachusetts. Plaintiff Roy contended that Defendant Star Chopper failed to include safety devices and proper warnings. Plaintiff Roy sought damages based on strict liability and breach of implied warranty. Defendant Star Chopper impleaded Plaintiff Roy's employer, AMS.1 The machine purchased by AMS was a "take-up" piece of equipment essentially constituted by two pinch rollers which pulled metal strips through a series of metal plating tanks and tank-like enclosures.
From the facts developed in the course of the trial the jury had to decide, if it first found Star Chopper liable to Plaintiff Paula Roy, whether or not AMS by words and deeds had undertaken sole responsibility for installing safety devices upon final assembly of the plating unit of which the machine in question was a part. If they did so find then, of course, AMS would be liable to Star Chopper for any judgment rendered against it on a theory of indemnity.2
It was not revealed to the jury that Paula Roy had received approximately $43,000 pursuant to the Massachusetts Workmens Compensation Act ("Act") M.G.L.A. C. 152 (1958). AMS contends that such award paid by AMS immunized it from claims for contribution and indemnity by Star Chopper.
Before commencement of trial, the Court read into the record a pre-trial Order. In that Order, the Court declared that Rhode Island substantive tort law would apply to the case in chief between plaintiff/employee Roy against defendant/manufacturer Star Chopper. The Court granted Third Party Defendant's motions for summary judgment with regard to Star Chopper's claim for contribution because of the immunity granted by the Massachusetts Act. The Court reserved ruling on Star Chopper's claim for indemnity until further facts were placed on the record.
Although unclear from the complaint, Star Chopper apparently bases its claim for indemnity on both a contractual and a noncontractual relationship between itself and Third Party Defendant. Star Chopper does not allege an express contract for indemnity; rather, the Court is urged to find that Third Party Defendant has an implied obligation to indemnify Star Chopper arising from the peculiar nature of the transaction for sale of the machinery in question.
In the trial Star Chopper presented evidence tending to show a relationship between itself and AMS resembling more co-manufacturers than vendor/vendee. Star Chopper claimed that Third Party Defendant imposed design specifications for the take-up machine in question, designs that omitted safety devices. In addition, the owner of Star Chopper, Mr. George LeToile, testified that he inquired about safety devices. He stated that AMS' corporate officer, Mr. Hingorany, expressly represented that AMS would be responsible for addition of safety devices upon final assembly in the plant. Mr. Hingorany denied this. Finally, Star Chopper presented evidence that AMS was solely responsible for assembly of the plating unit of which this machine was a part. This accumulation of evidence suggested that an implied contract to indemnify may have existed between Star Chopper and AMS. For the reasons discussed, infra, the Court felt this was a vital issue for jury determination.
Quite apart from the sales transaction, Star Chopper alleges a non-contractual relationship with AMS that, absent a workmen's compensation act, would arguably give rise to an indemnity claim under traditional equitable indemnity principles. Traditionally, a party found liable without fault to an injured party can recover indemnity from the party whose negligence primarily or solely caused the injury. Star Chopper contends that it may be found liable to the Plaintiff without fault under a strict liability theory for injuries caused by the negligence of AMS. In that event, indemnity rather than contribution between joint tortfeasors would be the more appropriate claim. However, we need not determine if, indeed, Star Chopper has stated a valid claim for indemnity if the jury found Star Chopper liable without fault and AMS negligent since, for reasons set forth in this Memorandum, we hold that AMS is immunized against all non-contractual indemnity claims because it paid a compensation award under the Massachusetts Act.
Although we reject Star Chopper's claim that both contractual and non-contractual indemnity is available, we also reject AMS' contention that the Massachusetts Act immunizes it against both types of indemnity claims. Rather, the Court holds that Star Chopper can enforce an implied contract to indemnify even though AMS paid the injured employee, Paula Roy, a compensation award. The Court, therefore, granted Third Party Defendant AMS' Motion for Summary Judgment only with regard to claims for non-contractual indemnity. With regard to the implied contract for indemnity, the Court treated the original summary judgment motion in the nature of a motion for directed verdict at the close of Star Chopper's evidence. The Court refused to direct a verdict in favor of AMS and found as a matter of law that the evidence Star Chopper presented, if believed by the jury, gave rise to an implied contract to indemnify.
As a preliminary matter, the Court must decide essentially two conflict-of-law issues. Because jurisdiction is based on diversity, the resolution of these questions depends on Rhode Island's choice-of-law rules. Klaxon Co. v. Stentor Mfg. Co., 313 U.S. 487, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941). Third Party Plaintiff, Star Chopper, is a Rhode Island corporation. Third Party Defendant is a Rhode Island corporation with its place of business in Massachusetts. The injury, the injured employee and the employment relationship occurred in Massachusetts. The immunity Third Party Defendants claim was, as we now hold, created by the Massachusetts Act. Obviously, the scope of that immunity is a question of Massachusetts law requiring interpretation of a Massachusetts statute. However, the Court must determine whether Rhode Island courts would enforce the immunity created under Massachusetts law against a Rhode Island corporation's indemnity claim. To decide this question, the Court must first determine whether Rhode Island courts are required to give full faith and credit to the Massachusetts immunity. Even if they are not so required, the Court must apply Rhode Island conflict-of-law rules to determine whether Rhode Island courts would nonetheless enforce the Massachusetts immunity against indemnity claims urged by a Rhode Island corporation. The Court must also choose between Massachusetts and Rhode Island common law to decide a second question — whether Star Chopper has presented evidence sufficient to warrant a jury in finding that Third Party Defendants have an implied contractual obligation to indemnify Star Chopper.
One caveat to this discussion is necessary. Because of the silence of both states' legislatures and courts on the particular issues before us, the choice-of-law analysis is more an intellectual exercise than of practical significance. The Court has been forced to look outside both jurisdictions to develop satisfactory answers to the substantive issues in the case.
A forum state may refuse to give full faith and credit to a law of a sister state if to do so would offend the public policy of the forum state, Woodward v. Stewart, 104 R.I. 290, 295, 243 A.2d 917, 921 (1968). The forum state is not required by the full faith and credit clause to enforce the exclusive remedy provisions of a sister state's workmen's compensation statute. Carroll v. Lanza, 349 U.S. 408, 75 S.Ct. 804, 99 L.Ed. 1183 (1955). However, looking to what Rhode Island has done in tort questions we find the Rhode Island Supreme Court recognized that to permit tort actions despite immunity provisions would seriously undermine the compensation scheme of the sister state, Busby v. Perini Corp., 110 R.I. 49, 51, 290 A.2d 210, 211 (1972). Thus, in Busby, the Court followed the general principles of the Restatement (Second) of Conflict of Laws § 184, Comment b (1971) and enforced the immunity granted by the Massachusetts Act to the general contractor against suit by an injured employee of a subcontractor. The Massachusetts immunity was enforced in spite of the fact that, under the Rhode Island Workmen's Compensation Act, the general contractor would not be immune. In Busby, Rhode Island's only contact was at the locus of the work and injury; the parties were all Massachusetts citizens. By contrast, in the case before this Court, Rhode Island has a significant interest in protecting the indemnity rights of citizen corporations.3 However, Rhode Island does not have an announced policy permitting enforcement of non-contractual indemnity claims against employers who have paid compensation awards. In fact, Rhode Island courts have not decided whether even Rhode Island's compensation statute permits non-contractual indemnity claims against employers.4 Absent such a policy, we conclude that Rhode Island courts would give full faith and credit to the immunity the...
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