Ryder Integrated v. Bellsouth Telecom., No. A05A1599.

• Decision Date: 23 January 2006
• Docket Number: No. A05A1599.
• Parties: RYDER INTEGRATED LOGISTICS, INC., et al. v. BELLSOUTH TELECOMMUNICATIONS, INC.
• Court: Georgia Court of Appeals

277 Ga. App. 679

Page 358

627 S.E.2d 358

RYDER INTEGRATED LOGISTICS, INC., et al. v. BELLSOUTH TELECOMMUNICATIONS, INC.

No. A05A1599.

Court of Appeals of Georgia.

January 23, 2006.

David Atkinson, Roger Martin, Magill & Atkinson LLP, Atlanta, for Appellants.

Christopher N. Shuman, J. Robert Persons, Carter & Ansley, Atlanta, for Appellee.

MIKELL, Judge.

Ryder Integrated Logistics, Inc. ("Ryder") and its insurer, Old Republic Insurance Co. ("Republic"), appeal a judgment requiring them to provide insurance coverage and indemnification to BellSouth Telecommunications, Inc. ("BellSouth") for a premises liability claim brought by Thomas Ray, a Ryder employee who was seriously injured while working at a BellSouth facility pursuant to a contract between Ryder and BellSouth. At issue are certain provisions of the Ryder/BellSouth contract as well as Ryder's commercial general liability ("CGL") policy with Republic and Republic's excess policy. Although the trial court erred in finding that the indemnity provision of the Ryder/BellSouth contract was enforceable, the court correctly determined that the insurance provision was valid and that BellSouth was covered as an additional insured under the CGL policy that Ryder obtained with Republic. However, the judgment is silent as to whether BellSouth is covered under Republic's excess policy. We decide in favor of Republic on that issue but hold that Ryder is liable for the difference between the CGL policy limits and the amount of the Ray claim. Accordingly, the judgment is affirmed in part and vacated in part, and the case is remanded for the entry of an order consistent with this opinion.

The relevant facts are undisputed. Ryder provided transportation and logistical services to BellSouth pursuant to a comprehensive contract between the companies. Ray, a truck driver employed by Ryder, was injured while unloading bags of scrap wire at a BellSouth facility in Smyrna. Ray was standing on metal grates which gave way, and he fell 16 feet onto a concrete slab. Ray and his wife filed a personal injury and loss of consortium action against BellSouth, alleging that Ray was injured as a result of BellSouth's sole negligence. BellSouth tendered defense of the lawsuit to Ryder and Republic and demanded indemnification pursuant to the following provision in the contract:

[Ryder] agrees to indemnify and hold [BellSouth] harmless from any and all liabilities, causes of action, lawsuits, penalties, claims or demands ... that may be made by:

1. Anyone for injuries of any kind, ... resulting from [Ryder's] negligent or willful acts or omissions or those of persons furnished by [Ryder], its agents or subcontractors, or resulting from the use of [Ryder's] Services, material, or software furnished hereunder or resulting from [Ryder's] failure to perform its obligations hereunder;

2. Any of ... [Ryder's] ... employees... for which [Ryder's] ... liability to such employee ... would otherwise be subject to payments under the state Worker's Compensation laws or ... premises liability principles....

[Ryder], at its own expense, shall defend [BellSouth], at [BellSouth's] request, against any such liability, cause of action, penalty, claim, demand, . . . or lawsuit, including any in which [BellSouth] is named as an "employer" or "joint employer" with [Ryder]. [BellSouth] shall notify [Ryder] promptly of any written claims or demands against [BellSouth] for which [Ryder] is responsible hereunder.

Ryder and Republic refused to defend or indemnify BellSouth, and BellSouth filed a third-party complaint against them, alleging breach of contract. Ryder and Republic ("third-party defendants") and BellSouth filed cross-motions for summary judgment on the third-party complaint.

BellSouth argued, in part, that because the underlying lawsuit was based on premises liability and was subject to workers' compensation payments, it triggered the second clause of the indemnity provision in the contract. Third-party defendants responded that the indemnity provision was unenforceable because it did not expressly cover losses solely attributable to the negligence of BellSouth.¹ BellSouth also argued that Ryder had agreed to make BellSouth an additional insured under the CGL policy obtained with Republic. In this regard, the contract contains an insurance provision requiring Ryder to "maintain all insurance, . . . including, but not limited to the following:"

1. Adequate Worker's Compensation and related insurance required by [BellSouth]. . . ;

2. Employer's liability insurance with limits of at least $1,000,000 per occurrence; and

3. Commercial general liability insurance... [which] shall have limits of at least $1,000,000 for bodily injury, including death, to any one person, [and] $1,000,000 as a result of any one occurrence.... All commercial general liability policies required herein shall name [BellSouth] as an additional insured with respect to work performed under this Agreement.

Ryder obtained a CGL policy containing an additional insured endorsement that named as an insured "any organization" for whom Ryder "is obligated by written agreement to provide liability insurance."

The trial court granted BellSouth's motion and denied that of the third-party defendants. The court reasoned that because Ray's complaint was based on premises liability, and the additional insured endorsement afforded coverage for premises liability claims, Republic had a duty to defend BellSouth and to indemnify it to the extent of the coverage provided by the policy. In addition, the trial court found enforceable the insurance and indemnity provisions of the Ryder/BellSouth contract. Thus, the court determined that even if Republic failed to provide coverage, Ryder would be liable for the claim. Finally, the court stated that, because Ryder had also agreed to provide BellSouth with insurance coverage for liability with respect to work performed under the contract, Ryder would be liable for breach of contract for Republic's failure to provide the required coverage even if the indemnity provision were unenforceable. Third-party defendants moved for reconsideration, which the trial court denied.

Ray and his wife subsequently settled their claims against BellSouth for a confidential sum that exceeded the CGL policy limit of $1,000,000 but was within the $6,000,000 limit of Republic's excess policy. The court dismissed Ray's complaint and entered final judgment in favor of BellSouth on its third-party complaint. The court declined to determine the amount of coverage available to BellSouth as an additional insured. Third-party defendants then filed the instant appeal.

1. Third-party defendants first enumerate as error the grant of summary judgment to BellSouth on its contractual indemnity claim. Specifically, they argue that the trial court erred in construing the indemnity and insurance provisions of the Ryder/BellSouth contract together to mean that the parties intended to shift the risk of loss for work performed under the contract from BellSouth to Ryder. They argue that the true issue is whether Ryder agreed to indemnify BellSouth for losses attributable to BellSouth's sole negligence.

Third-party defendants are correct that the indemnity provision is unenforceable. The trial court's ruling to the contrary was based on McAbee Constr. Co. v. Ga. Kraft Co.;² however, that case is distinguishable. In McAbee, we held that an indemnity clause whereby a general contractor agreed to indemnify a property owner from claims, including death, arising out of the owner's sole negligence, was not rendered void by OCGA § 13-8-2(b)³ because the contract also contained a provision requiring the contractor to maintain liability insurance specifically covering the indemnity clause.⁴ Construing these provisions together, we concluded that "the parties intended coverage by insurance, not ultimately indemnification of the `indemnitee' ... against its own negligence."⁵ Thus, we determined that the insurance clause shifted the risk of loss to the insurance company regardless of which party was at fault.⁶ In the case at bar, however, OCGA § 13-8-2(b) is not at issue, and the indemnity clause in the Ryder/BellSouth contract does not expressly hold the indemnitee harmless for claims based on its sole negligence. It follows that McAbee does not govern the contractual indemnity issue.

Rather, the indemnity provision succumbs to the general rule that unless it is explicitly stated in the agreement, the indemnitor will not be held responsible for acts attributable to the indemnitee's own negligence.⁷

[I]t is well established in Georgia that contractual indemnities do not extend to losses caused by an indemnitee's own negligence unless the contract expressly states that the negligence of the indemnitee is covered. The words of the contract will be scrutinized closely to discover whether such an intent is actually revealed in them and every presumption is against such intention. In the absence of explicit language to the contrary, [Georgia] courts will not interpret an indemnity agreement as a promise by the indemnitor to save the indemnitee harmless on account of the latter's own negligence.⁸

The rule that a party cannot be indemnified against its sole negligence unless the contracting parties expressly so agree is grounded in public policy concerns. "Public policy is reluctant to cast the burden for negligent actions upon those who are not actually at fault."⁹ As BellSouth does not dispute that the claim was based on its sole negligence, the indemnity provision at issue is unenforceable.

2. However, that does not end our inquiry. As noted above, the Ryder/BellSouth contract also requires Ryder to procure and maintain a CGL insurance policy naming BellSouth as an additional insured with respect to work performed under the contract. The unenforceability of the indemnity provision does not affect the validity of the insurance...