Russ v. Woodside Homes, Inc.

• Decision Date: 26 October 1995
• Docket Number: No. 950157-CA,950157-CA
• Citation: 905 P.2d 901
• Parties: Charles J. RUSS, Sr., Plaintiff and Appellant, v. WOODSIDE HOMES, INC., a Utah corporation; and Does I through XXX, inclusive, Defendants and Appellees.
• Court: Utah Court of Appeals

Page 901

905 P.2d 901

Charles J. RUSS, Sr., Plaintiff and Appellant, v. WOODSIDE HOMES, INC., a Utah corporation; and Does I through XXX, inclusive, Defendants and Appellees.

No. 950157-CA.

Court of Appeals of Utah.

Oct. 26, 1995.

Charles F. Abbott and Nelson Abbott, Abbott & Abbott, Provo, for Appellant.

Paul S. Felt and Robert O. Rice, Ray, Quinney & Nebeker, Salt Lake City, for Appellees.

Before BILLINGS, GREENWOOD and JACKSON, JJ.

OPINION

JACKSON, Judge:

Charles J. Russ, Sr. appeals the trial court's grant of Woodside Homes, Inc.'s motion for summary judgment. Woodside moved to dismiss Russ's wrongful death action on the basis of a hold harmless provision in the parties' agreement to commence construction. We affirm.

FACTS

On September 12, 1992, Charles J. Russ, Sr. and his wife, Rose Pauline Russ, signed a contract under which Woodside agreed to construct a home for the Russes. Linda Breinholt, a sales consultant for Woodside, signed the contract on September 11, 1992, and a vice president of Woodside accepted the contract on September 16, 1992.

Addendum B of that contract is an "Agreement to Commence Construction," containing a paragraph titled "Job Site Visits." The Job Site Visit paragraph reads as follows:

The construction site is a dangerous place to visit. Buyer agrees to exercise extreme caution if Buyer chooses to visit the site, to limit the number of such visits, and to refrain from allowing Buyer's or other children to accompany Buyer on such visits. Buyer, to the fullest extent permitted by law, agrees to hold harmless Woodside (including its affiliates and subsidiaries and other contractors and subcontractors and their agents and employees) from any and all claims, damages, loss and expenses, including but not limited to attorney's fees, arising out of any death, accident, injury or other occurrence resulting from visits to the job site by Buyer or Buyer's family or other guests.

The Russes visited the construction site a few days before Thanksgiving of 1992. While visiting the construction site, Mrs. Russ slipped and fell into a hole in the driveway in front of the house. Injuries from the fall resulted in a blood clot. Mrs. Russ died approximately two weeks later on December 12, 1992.

Russ filed the instant suit against Woodside on March 1, 1994, alleging survival of action for injury and wrongful death. Russ's claim sounded in negligence and sought both general and special damages. Woodside moved for summary judgment on the basis of the contract's hold harmless provision. The trial court granted Woodside's motion, and this appeal followed.

ISSUES

Russ's appeal presents two issues for our review: (1) whether the language of the provision is clear and unequivocal; and (2) whether the provision violates public policy and thus is rendered void.

STANDARD OF REVIEW

It is well established that Utah appellate courts review grants of summary judgment for correctness. Transamerica Cash Reserve, Inc. v. Dixie Power & Water, Inc., 789 P.2d 24, 25 (Utah 1990); Oquirrh Assocs. v. First Nat'l Leasing Co., 888 P.2d 659, 662 (Utah App.1994). Trial courts shall grant summary judgment only when the moving party has shown that "there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Utah R.Civ.P. 56(c). We do not defer to the trial court's conclusions on summary judgment. Higgins v. Salt Lake County, 855 P.2d 231, 235 (Utah 1993); Callahan v. Sheaffer, 877 P.2d 1259, 1260-61 (Utah App.1994).

ANALYSIS

I. The Hold Harmless Provision's Language

Russ argues that the hold harmless provision does not clearly and unequivocally release Woodside for potential negligence and that the provision is ambiguous on its face. Woodside responds that the hold harmless provision's language is clear, unequivocal, and covers Russ's claims against Woodside for potential negligence.

Generally, parties "not engaged in public service may properly bargain against liability for harm caused by their ordinary negligence in performance of contractual duty; but such an exemption is always invalid if it applies to harm wilfully inflicted or caused by gross or wanton negligence." 6A Arthur L. Corbin, Corbin on Contracts § 1472, at 596-97 (1962). Contractual provisions releasing parties from potential negligence usually fall into one of three genre.

First, parties may contract to release a party from potential liability after injuries have occurred. These kinds of release provisions typically are found in insurance settlement agreements. Utah courts have held that such releases are valid when their language is unambiguous and unequivocal. See, e.g., Simonson v. Travis, 728 P.2d 999, 1002 (Utah 1986) (observing releases are enforceable when they are unambiguous, explicit, and unequivocal); Krauss v. Utah State Dep't of Transp., 852 P.2d 1014, 1020 (Utah App.) (observing court first must assess whether release's language is unambiguous), cert. denied, 862 P.2d 1356 (Utah 1993); Palmer v. Davis, 808 P.2d 128, 132 (Utah App.) (observing interpretation of releases may begin and end with four corners of document when language is unambiguous), cert. denied, 817 P.2d 327 (Utah 1991).

Second, parties may contract to shift potential liability from one party to another. Such indemnity provisions are designed to allocate fairly the risk of loss or injury resulting from a particular venture between the parties. Utah courts have held that indemnity agreements, like releases, are valid only if the contract language clearly and unequivocally expresses the parties' intent to indemnify one another. See, e.g., Freund v. Utah Power & Light Co., 793 P.2d 362, 371-72 (Utah 1990) (upholding indemnity provision whose language clearly and unequivocally expressed licensee's intent to indemnify licensor). Historically, Utah courts applied a strict construction rule for indemnity provisions. See Shell Oil Co. v. Brinkerhoff-Signal Drilling Co., 658 P.2d 1187, 1189 (Utah 1983); Union Pac. R.R. v. Intermountain Farmers Ass'n, 568 P.2d 724, 725-26 (Utah 1977); Howe Rents Corp. v. Worthen, 18 Utah 2d 263, 265, 420 P.2d 848, 849 (1966); Union Pac. R.R. v. El Paso Natural Gas Co., 17 Utah 2d 255, 260, 408 P.2d 910, 913-14 (1965); Jankele v. Texas Co., 88 Utah 325, 329-30, 54 P.2d 425, 427 (1936). However, the Utah Supreme Court has relaxed the rule of strict construction and adopted a more lenient clear and unequivocal test for enforcing indemnity agreements. Freund, 793 P.2d at 370-71; see also Pickhover v. Smith's Management Corp., 771 P.2d 664, 667-68 (Utah App.1989) (discussing trend to limit rule of strict construction for indemnity agreements), cert. denied, 795 P.2d 1138 (Utah 1990).

Third, parties may contract to avoid a party's potential liability before injuries have occurred. Often described as exculpatory clauses, such provisions relieve one party from the risk of loss or injury in a particular transaction or occurrence and deprive the other party of the right to recover damages for loss or injury. Such exculpatory or hold harmless provisions may release parties from liability for their ordinary negligence. The instant hold harmless provision represents this third genre. Although Utah courts have not yet addressed hold harmless provisions exactly like the one before us, Utah courts have previously addressed contractual provisions limiting a party's remedy. They have applied the same clear and unequivocal standard for enforcing such clauses as that employed when enforcing release and indemnity provisions. See, e.g., DCR Inc. v. Peak Alarm Co., 663 P.2d 433, 438 (Utah 1983) (requiring clear and unequivocal expression of intent limiting tort liability to enforce liquidated damages clause); DuBois v. Nye, 584 P.2d 823, 824-25 (Utah 1978) (observing risk of loss agreement must be construed to give effect to parties' intent).

Utah courts thus apply the same test to contracts that release, shift, or avoid potential liability for negligence. When the intent to relieve a party from liability for alleged negligence is clearly and unequivocally expressed in a contractual provision, we will enforce that provision. Freund, 793 P.2d at 370. Utah's rule for enforcing release, indemnity, and exculpatory agreements has been articulated as follows:

[T]o constitute a clear and unequivocal expression of intent to indemnify for a party's own negligence, an indemnity agreement need not contain specific language to that effect; rather, the language and purpose of the entire agreement, together with the surrounding facts and circumstances, may provide a sufficiently clear and unequivocal expression of the parties' intent.

Healey v. J.B. Sheet Metal, Inc., 892 P.2d 1047, 1049 (Utah App.1995). In other words, " 'it is not necessary that the exculpatory language refers expressly to the negligence of the indemnitee, so long as the intention to indemnify can be "clearly implied from the language and purposes of the entire agreement." ' " Freund, 793 P.2d at 370 (quoting Niagara Frontier Transp. Auth. v. Tri-Delta Constr. Corp., 107 A.D.2d 450, 487 N.Y.S.2d 428, 430 (1985) (quoting Margolin v. New York Life Ins. Co., 32 N.Y.2d 149, 344 N.Y.S.2d 336, 338, 297 N.E.2d 80, 82 (1973))). Although this rule has developed in the context of indemnity agreements, it applies with equal force to releases and exculpatory or hold harmless agreements.

The instant hold harmless provision does not include the word "negligence," and Russ contends that the provision therefore is not sufficiently clear to bar his negligence claim. The Freund court made clear that the word "negligence" is not a talisman to enforce contracts avoiding potential liability. Id. A hold harmless provision is enforceable when "the broad sweep of the language employed by the parties clearly covers those instances in which [a party] may be negligent." Id. at 371.

The Freund court held that language releasing an indemnitee from "any claims for...