Safeway, Inc. v. Rooter 2000 Plumbing & Drain SSS

• Decision Date: 18 February 2016
• Docket Number: No. S–1–SC–33969.,S–1–SC–33969.
• Parties: SAFEWAY, INC., Defendant/Cross–Claimant–Respondent, v. ROOTER 2000 PLUMBING AND DRAIN SSS, Defendant/Cross–Defendant–Petitioner.
• Court: New Mexico Supreme Court

368 P.3d 389

SAFEWAY, INC., Defendant/Cross–Claimant–Respondent,

v.ROOTER 2000 PLUMBING AND DRAIN SSS, Defendant/Cross–Defendant–Petitioner.

No. S–1–SC–33969.

Supreme Court of New Mexico.

Feb. 18, 2016.

Butt Thornton & Baehr PC, Emily A. FrankeJane Laflin, Albuquerque, NM, for Petitioner.

Madison & Mroz, P.A., Gregory D. Steinman, Minal P. Unruh, Albuquerque, NM, for Respondent.

OPINION

MAES, Justice.

{1} This appeal arises out of a cross-claim for contractual and traditional indemnification. The complaint alleged that Plaintiffs, Briana Fierro and Jason Fierro, suffered injuries when a baby changing table collapsed in a Safeway store, and that the collapse was the result of negligence on the part of Safeway, Inc. (Safeway) and Rooter 2000 Plumbing and Drain SSS (Rooter). The central issue is whether the right to traditional indemnification is available notwithstanding New Mexico's adoption of comparative fault where the jury compared and apportioned fault among concurrent tortfeasors. After reviewing the genesis of traditional indemnification and the adoption of contribution and comparative negligence, we hold that traditional indemnity does not apply when the jury finds a tortfeasor actively at fault and apportions liability using comparative fault principles. The second issue on appeal is whether the duty to insure and defend provision of the Standard Service Provider Terms and Conditions Agreement (Agreement) between Rooter and Safeway is void and unenforceable under NMSA 1978, Section 56–7–1 (1971, amended 2005). We hold that it is. Therefore, we reverse the Court of Appeals and affirm the district court's grant of summary judgment in favor of Plaintiffs.

I. FACTS AND PROCEDURAL HISTORY

{2} Safeway owns and operates a grocery store in Gallup, New Mexico. Thirteen months after Rooter installed a diaper changing table in Safeway's Gallup store bathroom, Briana Fierro and her baby, Jaye Fierro (Plaintiffs), suffered personal injuries when the changing table became dislodged and fell from the wall because the butterfly bolts were apparently installed backwards. Plaintiffs' initial complaint against Safeway alleged negligence and personal injuries resulting from the faulty changing table. Plaintiffs filed a second amended complaint naming Rooter as a defendant and alleging that Rooter was negligent in its installation of the baby changing station. Plaintiffs further alleged negligence per se, strict liability, breach of implied warranty, and claims under the doctrine of respondeat superior against all defendants. Safeway filed a cross-claim against Rooter seeking defense, indemnification, contribution, and damages pursuant to both New Mexico common law and the Agreement signed by both parties. The relevant provision of the Agreement provides that:

[Rooter] shall indemnify, defend and hold [Safeway] harmless from and "against;" any and all claims, losses, damages, liabilities, and expenses (including the costs of investigation and attorney's fees) in connection with any claim or cause of action arising from any act or omission of [Rooter;], its employees, agents, and representatives, in the performance of its obligations under this Agreement, except where the claim, loss or damage is caused by the sole negligence of [Safeway].

The Agreement also stated that Rooter was to name Safeway as an additional insured under its insurance policy. Both Rooter and its insurance carrier refused to defend or indemnify Safeway. Rooter took the position that New Mexico's anti-indemnification statute, Section 56–7–1, voided any obligation it had to Safeway, and Rooter's insurance company denied coverage because it had not been named as an insured on the Rooter policy; thus the policy did not cover Safeway.

{3} Rooter then filed a motion for summary judgment on Safeway's cross-claim, asserting that Safeway had no right to indemnification. The district court found as a matter of law that there is no dispute that Safeway will not have to pay for any negligence that is found to have been committed by Rooter. Safeway did not object to or dispute the district court's finding. The district court granted Rooter's motion for summary judgment, finding that the Agreement's contractual indemnification requirements were void and unenforceable as a matter of New Mexico law, foreclosing Safeway's rights to indemnity, defense, and insurance. In granting Rooter's motion for summary judgment, the district court thereby dismissed Safeway's claim for contractual indemnification. "The district court did not indicate whether it applied the original 1971 of the anti-indemnification statute, or the version as amended in 2003 that specifically invalidates agreements to insure and defend against an indemnitee's negligence, when it concluded that the contractual indemnification was void. See NMSA 1978, Section 56–7–1(A) (2003, as amended in 2005)." The district court further found that Plaintiffs were not seeking liability or damages from Safeway for Rooter's acts or omissions and thus similarly dismissed Safeway's claim for common law indemnification. The district court determined that Safeway could request that Rooter be included on a special verdict form for the purpose of allocating fault.

{4} Plaintiffs ultimately settled all of their claims against Rooter, so those two parties filed a joint motion to dismiss all claims against Rooter, which the district court granted. The case then proceeded to trial on Plaintiff's claims against Safeway. At the close of evidence, the jury returned a comparative fault special verdict form.

{5} The special verdict form submitted to the jury asked four questions. The first asked, "[w]as [Safeway] negligent?" The jury answered yes. The second question asked, "[w]as any negligence of [Safeway] a cause of Plaintiff's injuries and damages?" Again, the jury answered yes. The third question and answer established the total damages suffered by Plaintiff to be $450,000. The fourth question asked the jury to do the following:

Question No. 4: Compare the negligence of the following persons or entities and find a percentage for each. The total of the percentages must equal 100%, but the percentage for any one or more of the persons or entities named may be zero [if] you find that such person or entity was not negligent or that any negligence on the part of such person or entity was not a cause of damage.

Safeway	%
Rooter 2000	%
100% TOTAL

The jury entered "40" for Safeway's negligence because as alleged in Plaintiff's Uniform Jury Instruction 13–302 NMRA, Safeway either failed to exercise ordinary care to (1) provide proper hardware to Rooter, (2) supervise the installation of the baby changing table, or (3) conduct reasonable inspection of the table during the ensuing thirteen months. The jury entered "60" for Rooter's negligence.

{6} Safeway appealed to the Court of Appeals for review of the district court's order granting summary judgment in favor of Rooter, thus denying Safeway's cross-claim against Rooter for common law indemnification, as well as Safeway's cross-claims alleging Rooter had a contractual duty to indemnify, defend, and insure Safeway. The Court of Appeals, considering New Mexico's common law of indemnity, and the importance of the instant jury's apportionment of fault amongst Safeway and Rooter, determined that "[t]he fact that the jury apportioned fault between the parties at trial does not strip away Safeway's common law right of indemnification to obtain full recovery for damages assessed against it from Rooter, assuming that Safeway is found by the jury to be a passive tortfeasor." Safeway, Inc. v. Rooter 2000 Plumbing & Drain SSS, 2013–NMCA–021, ¶ 23, 297 P.3d 347 (citations omitted). Because the Court of Appeals determined that there were still genuine issues of material fact regarding whether Rooter owed Safeway a common law right of indemnification, and whether Rooter's duty to insure Safeway was breached, it reversed the district court's grant of summary judgment. See Id. ¶¶ 24, 30–31.The Court of Appeals also held that the 1971 version of Section 56–7–1 applied to the parties' contract and that the statute voided Rooter's "agreement to indemnify but not its agreement to defend and insure." Safeway, 2013–NMCA–021, ¶¶ 1, 26–27, 297 P.3d 347.

{7} Rooter appealed the following two issues to this Court pursuant to Rule 12–502 NMRA : (1) whether the Court of Appeals erred in holding that there are genuine issues of material fact regarding whether Safeway has any common law right to indemnification against Rooter where Rooter had settled and satisfied its proportionate share of liability with the Plaintiffs; and (2) whether the Court of Appeals erred in holding that Rooter owes Safeway its defense fees and costs even though the contractual indemnification provision between Safeway and Rooter is void and unenforceable as a matter of law. We granted certiorari. Safeway, Inc. v. Rooter 2000 Plumbing & Drain SSS, 2013–NMCERT–001, 299 P.3d 864 (No. 33,969, Jan. 28, 2013).

II. STANDARD OF REVIEW

{8} This appeal requires this Court to review a lower court's grant of summary judgment. "Summary judgment is appropriate where there are no genuine issues of material fact and the movant is entitled to judgment as a matter of law." Self v. United Parcel Serv., Inc., 1998–NMSC–046, ¶ 6, 126 N.M. 396, 970 P.2d 582 (citation omitted). A lower court's grant or denial of summary judgment is reviewed de novo. See id. "The validity of an indemnification agreement and interpretation of statutes raises issues of law, which we review de novo." J.R. Hale Contracting Co., Inc. v. Union Pac. R.R., 2008–NMCA–037, ¶ 62, 143 N.M. 574, 179 P.3d 579 (citation omitted). All issues raised in this appeal are legal issues, which we review de novo.

III. DISCUSSION

{9} Rooter argues that because it satisfied its proportionate share of negligence with the Plaintiffs, and because Safeway was never held liable for Rooter's negligence, Safeway does not have a right to...