Rupp v. American Crystal Sugar Co.

Decision Date16 January 1991
Docket Number900111,Nos. 900110,s. 900110
Citation465 N.W.2d 614
PartiesKevin RUPP, Plaintiff, v. AMERICAN CRYSTAL SUGAR COMPANY, a corporation, Defendant, Third-Party Plaintiff and Appellee, v. GREENBERG ROOFING AND SHEET METAL COMPANY, a corporation, Third-Party Defendant and Appellant. Sterling J. ROMFO, Sr., Plaintiff, v. AMERICAN CRYSTAL SUGAR COMPANY, a corporation, Defendant, Third-Party Plaintiff and Appellee, v. GREENBERG ROOFING AND SHEET METAL COMPANY, a corporation, Third-Party Defendant and Appellant. Civ.
CourtNorth Dakota Supreme Court

Vaaler, Gillig, Warcup, Woutat, Zimney & Foster, Grand Forks, for defendant, third-party plaintiff and appellee; argued by Gregory Lee Wolsky.

McConn, Fisher, Olson & Daley, Grand Forks, for third-party defendant and appellant; argued by Michael F. Daley.

GIERKE, Justice.

Greenberg Roofing and Sheet Metal Company (Greenberg) has appealed from an indemnification judgment in favor of American Crystal Sugar Company (American). We affirm in part, reverse in part, and remand for entry of an amended judgment.

Kevin Rupp and Sterling Romfo fell approximately 60 feet when a section of metal decking gave way while they were working as Greenberg employees on a re-roofing project at American's Drayton plant. Romfo was killed and Rupp was rendered paraplegic. Suits were brought against American for damages resulting from the death and injury of Romfo and Rupp. Relying on indemnity provisions in its construction agreement with Greenberg, American tendered defense of the suits to Greenberg and its insurer. Greenberg's insurer rejected the tender of defense. American then brought third-party actions against Greenberg, alleging a contractual right to indemnity for any sums that might be adjudged against American in the Romfo and Rupp actions against American.

American paid $600,000 in settling the Rupp suit and $24,000 in settling the Romfo suit. The district court granted American's motion for summary judgment of indemnity and awarded American $666,622.85. Greenberg appealed, raising issues with regard to whether or not American was to be indemnified for the consequences of its own negligence; the district court's consideration of Greenberg's insurance policies; the measure of damages applied by the district court; and the district court's award of costs and attorney fees American incurred in establishing the existence of a right to indemnity.

Greenberg and American contracted for the re-roofing of an American building. The contract provided in part:

"INSURANCE CLAUSE

"The CONTRACTOR with whom this purchase order is placed shall carry liability insurance as follows: Property Damage liability coverage with XCU exclusion removed and limits of not less than $500,000 aggregate per occurrence for personal injury, bodily injury, death, and of not less than $250,000 for property damage liability. If per person limits are specified, they shall be for not less than $250,000 per person and be for the same coverages.... LIABILITY coverages shall include: CONTRACTOR'S public liability--premises and operations, including elevator, if any; CONTRACTOR'S and OWNER'S protective contingent liability; Personal injury: OWNED, non-owned and hired vehicles; Contractual liability covering the hold harmless agreement contained herein and this construction order; Products and completed operations coverage....

* * * * * *

"Certificates of insurance acceptable to the OWNER and in which the OWNER is named as additionally insured, shall be filed with the office manager at our factory where this work will be performed as shown above prior to commencement of the work....

"HOLD HARMLESS

"The CONTRACTOR agrees to pay on behalf of and hold harmless American Crystal Sugar Company, OWNER, its directors, officers, and employees from all loss, costs, damage and/or expense arising out of any demand, claim, suit or judgment for damages or injuries to any person, firm or corporation whatsoever ... or for the death of any person, or for injury or damage to property (including but not limited to adjoining and adjacent property, buildings, driveways, walks, yards) caused or alleged to have been caused by the CONTRACTOR or any of CONTRACTOR'S subcontractors, or the employees or agents of either or any of them in connection with work performed by reason of this order."

Greenberg argues that the hold harmless clause limits indemnity to damages caused by Greenberg and does not cover damages caused by American's own negligence and that the district court erred in not considering the parties' prior course of dealing in construing the ambiguous contract.

"It is almost universally held that an indemnity agreement will not be interpreted to indemnify a party against the consequences of his own negligence unless that construction is very clearly intended." Bridston v. Dover Corp., 352 N.W.2d 194, 196 (N.D.1984). See also, Barsness v. General Diesel & Equipment Co., Inc., 422 N.W.2d 819 (N.D.1988); Vanderhoof v. Gravel Products, Inc., 404 N.W.2d 485 (N.D.1987).

In Bridston, supra, the YMCA leased the Chester Fritz Auditorium from the University of North Dakota to present a dance performance. Paragraph 22 of the lease provided:

" '22. INDEMNITY--PERMITTEE agrees to ... indemnify and save harmless the UNIVERSITY against any and all claims for loss, injury or damage ... arising out of the activities conducted by the PERMITTEE, its agents, members, or guests. The PERMITTEE shall be required to furnish satisfactory evidence of liability insurance, including a copy of the endorsement adding the UNIVERSITY as an additional insured.' "

352 N.W.2d at 196. A dancer was injured when a UND employee raised the hydraulic stage lift on which she was standing. The YMCA argued that UND was not entitled to indemnification because "paragraph 22 fails to state clearly and unambiguously that UND is to be indemnified against the consequences of its own negligence." Id., at 196. We held that the parties intended that UND be indemnified for liability arising from its own negligence for, among others, the following reasons:

"Second, the clause clearly states that UND is to be saved harmless 'against any and all claims for loss, injury or damage'. There is no language of limitation or qualification excepting claims arising from UND's negligence. Nor does the paragraph contain any provision limiting indemnity to those claims against UND which might arise from YMCA's acts of negligence.

"Third, the indemnity paragraph contains a specific provision that YMCA procure liability insurance, including an endorsement adding UND as an additional insured. The provision also specifically sets forth minimum limits of liability to be insured against. There could be no purpose for the insurance provision other than to protect UND from the consequences of its own negligent acts.... The requirement that the YMCA obtain liability insurance in an amount satisfactory to UND is clearly meant to provide further assurance to UND of indemnity from the YMCA in the event an action is brought against the UND for the negligent acts of either or both UND and YMCA." (Citation omitted.)

352 N.W.2d at 197.

In Vanderhoof v. Gravel Products, Inc., 404 N.W.2d 485 (N.D.1987), we held that the trial court erred in determining that a hold harmless clause clearly and unambiguously provided indemnification for the consequences of the lessors' own acts. We distinguished Bridston:

"[T]he indemnity clause in Bridston included a requirement that the lessee procure liability insurance in specified amounts naming the lessor as an additional insured. That requirement was particularly significant to our conclusion that the agreement was intended by the parties to indemnify the lessor for its own acts: 'There could be no purpose for the insurance provision other than to protect [the lessor] from the consequences of its own negligent acts.' Bridston v. Dover Corp., supra, 352 N.W.2d at 197."

Vanderhoof, supra, 404 N.W.2d at 492.

In Barsness v. General Diesel & Equipment Co., Inc., supra, 422 N.W.2d at 826, we again distinguished Bridston:

"The second sentence [of the insurance clause] requires that '[s]atisfactory evidence of ... public and property damage liability coverage with minimum limits of 250/500/250 will be furnished' to General Diesel. That language is distinguishable from Bridston, supra, because it does not require First Assembly to add General Diesel as an additional insured. As we stated in Vanderhoof, supra, that was a factor that we considered significant in Bridston, supra."

The hold harmless provision in this case, as in Bridston, contains language requiring one party to carry liability insurance with specified minimum limits and to name the other party as additionally insured. Here, as in Bridston, "[t]here could be no purpose for the insurance provision other than to protect [American] from the consequences of its own negligent acts." 352 N.W.2d at 197. Construing the hold harmless and insurance provisions together, we conclude that the parties clearly intended that American would be...

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