Scudder v. Kennecott Copper Corp.

• Decision Date: 12 February 1993
• Docket Number: WEYHER-LIVSEY,No. 910480-CA,910480-CA
• Citation: 858 P.2d 1005
• Parties: Richard E. SCUDDER, Plaintiff, v. KENNECOTT COPPER CORPORATION, Defendant and Appellee. STEARNS CATALYTIC CORPORATION, Third-Party Plaintiff and Appellant, v.CONSTRUCTORS, INC., Third-Party Defendant and Appellee.
• Court: Utah Court of Appeals

Page 1005

858 P.2d 1005

Richard E. SCUDDER, Plaintiff, v. KENNECOTT COPPER CORPORATION, Defendant and Appellee.

STEARNS CATALYTIC CORPORATION, Third-Party Plaintiff and Appellant, v. WEYHER-LIVSEY CONSTRUCTORS, INC., Third-Party Defendant and Appellee.

No. 910480-CA.

Court of Appeals of Utah.

Feb. 12, 1993.

Rehearing Denied April 21, 1993.

Robert A. Peterson and Robert W. Payne, Salt Lake City, for appellant Stearns Catalytic Corp.

Stephen B. Nebeker, Salt Lake City, for appellee Kennecott Copper Corp.

Terry M. Plant, and Daniel D. Anderson, Salt Lake City, for appellee Weyher-Livsey Constructors, Inc.

J. David Nelson and Robert D. Dahle, Salt Lake City, for appellee Richard E. Scudder.

Before BENCH, GARFF and NEWEY ¹, JJ.

BENCH, Judge:

Stearns Catalytic Corporation (Stearns) appeals from several orders of the trial court. We reverse the trial court's grant of summary judgment in favor of Weyher-Livsey Constructors, vacate that portion of the jury verdict that found Kennecott and Stearns negligent and apportioned liability only to those parties, and remand for further proceedings consistent with this opinion.

FACTS

In 1986, Kennecott initiated a construction project known as the Utah Copper Division Modernization Project (Project). Kennecott entered into a contract with Stearns, whereby Stearns agreed to serve as Project Manager. Kennecott also entered into an agreement with Weyher-Livsey, whereby Weyher-Livsey agreed to serve as Contractor for the Project. Both contracts contained detailed indemnification agreements. The indemnification agreement in the contract between Kennecott and Weyher-Livsey required Weyher-Livsey to indemnify Kennecott or Stearns for any losses and expenses incurred by reason "of negligence or any other ground of legal liability...." The agreement also required Weyher-Livsey to indemnify Kennecott or Stearns for losses incurred as a result of Kennecott's or Stearns's own negligence unless the loss was caused by the sole negligence or willful misconduct of Kennecott or Stearns. The contract between Kennecott and Stearns contained a similar indemnification agreement that required Stearns to indemnify Kennecott.

Richard E. Scudder, an employee of Weyher-Livsey, was injured while descending a ladder designed and built by Weyher-Livsey. After receiving workers' compensation benefits, Scudder filed suit for personal injuries against Kennecott, and later amended his complaint to add Stearns as a defendant. Stearns filed a Third-Party Complaint against Weyher-Livsey, pursuant to the terms of the indemnification agreement between Kennecott and Weyher-Livsey. Weyher-Livsey filed a motion for summary judgment based upon its interpretation of the indemnification agreement The case proceeded to a jury trial without any participation by Weyher-Livsey. The jury returned a special verdict, finding Kennecott negligent and 20% liable for Scudder's injuries and Stearns negligent and 80% liable for Scudder's injuries. The jury found Weyher-Livsey and Scudder not negligent. Judge Leslie Lewis entered a final amended judgment based on the jury's apportionment of liability, whereupon Stearns filed a notice of appeal.

and the exclusive remedy provision of the Workers' Compensation Act. Judge Raymond S. Uno (now retired) granted Weyher-Livsey's motion for summary judgment and dismissed the claim against Weyher-Livsey. ²

Several post judgment motions were filed. Stearns filed a motion for judgment notwithstanding the verdict (j.n.o.v.) and that motion was denied. Kennecott filed a motion for summary judgment against Stearns based on the indemnification agreement between Kennecott and Stearns, which required Stearns to indemnify Kennecott, and on the theory that Kennecott was an additional insured under Stearns's liability insurance policy. Judge Lewis granted Kennecott's motion for indemnification from Stearns, and Stearns filed a separate notice of appeal from that order.

Before this appeal was heard, Stearns and Scudder settled and released all claims between them and filed a stipulated motion for dismissal of appeals pending between them in this case. Based on the stipulation, this court dismissed Scudder's appeal from the jury verdict, judgment, and amended judgment, and Stearns's appeal from the jury verdict, judgment, and amended judgment as it pertains to Scudder.

ISSUES

Because of the dismissal of Scudder's appeal and Stearns's appeal as it pertains to Scudder, the amount of the jury award is not at issue before this court. The portion of the jury verdict that found Kennecott and Stearns negligent and apportioned liability is, however, before this court. Stearns claims, inter alia, that the trial court erred (1) in granting Weyher-Livsey's motion for summary judgment and dismissing it from this action; (2) in refusing to grant Stearns's motion for j.n.o.v.; and (3) in granting Kennecott's summary judgment motion for indemnification from Stearns.

STANDARD OF REVIEW

Summary judgment is appropriate only when there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. Ron Case Roofing & Asphalt Paving, Inc. v. Blomquist, 773 P.2d 1382, 1385 (Utah 1989). Because summary judgment resolves only issues of law, we give no deference to the trial court's legal determinations. Id. We affirm only if the decision of the trial court was correct. Id.

ANALYSIS

Weyher-Livsey's Indemnification Agreement

Stearns argues that Judge Uno erroneously interpreted the indemnification agreement in the contract between Kennecott and Weyher-Livsey. ³ Stearns claims that as a result of this erroneous interpretation, Judge Uno improperly granted Weyher-Livsey's motion for summary judgment. We agree.

We are called upon to interpret the indemnification agreement in the contract between Weyher-Livsey and Kennecott. If a contractual dispute may be resolved by examining only the words of the contract, without the use of extrinsic evidence, such interpretation is a question of law which we review for correctness. Zions First Nat'l Bank v. National Am. Title Ins. Co., 749 P.2d 651, 653 (Utah 1988); accord West Valley City v. Majestic Inv. Co., 818 P.2d 1311, 1313 (Utah App.1991).

The law is clear that indemnification agreements should be strictly construed against the drafter. Freund v. Utah Power & Light Co., 793 P.2d 362, 370 (Utah 1990). The reason an indemnification agreement is strictly construed "seems to have arisen primarily to appease the concern that one who is not financially responsible for the consequences of his or her own negligence will be less careful in his or her behavior toward others." Pickhover v. Smith's Management Corp., 771 P.2d 664, 666-67 (Utah App.1989). "A party is contractually obligated to assume ultimate financial responsibility for the negligence of another only when that intention is 'clearly and unequivocally expressed.' " Freund, 793 P.2d at 370 (quoting Shell Oil v. Brinkerhoff-Signal Drilling Co., 658 P.2d 1187, 1189 (Utah 1983)). The presumption is against assuming financial responsibility for the negligence of another and "it is not achieved by inference or implication from general language." Pickhover, 771 P.2d at 667 (quoting Union Pacific R.R. v. El Paso Natural Gas Co., 17 Utah 2d 255, 408 P.2d 910, 913 (1965)).

In Freund, the Utah Supreme Court interpreted an indemnification agreement that was substantively similar to the agreement in the present case. Plaintiff Freund, an employee of Jones Intercable (Jones) was injured when he came in contact with an electrical power line while working on a television cable hung on power poles owned by Utah Power & Light (UP & L). Freund received workers' compensation benefits from Jones. Freund then brought suit against UP & L, who, in turn, asserted a claim for indemnity against Jones based on a written indemnification agreement between the parties. The federal district court determined that the indemnification agreement was not sufficiently clear and unequivocal to require Jones to indemnify UP & L for claims arising in whole or in part by UP & L's own negligence. Id. at 364-65.

On appeal, the United States Tenth Circuit Court of Appeals certified the case to the Utah Supreme Court to interpret the indemnification agreement under Utah law. The indemnification agreement in Freund stated in pertinent part:

Licensee [Jones] shall indemnify, protect, and save harmless Licensor [UP & L] from and against any and all claims, demands, causes of action, costs or other liabilities for damages to property and injury or death to persons.... Except for intentional wrongdoing or willful negligence on the part of [UP & L], or any of its agents or employees, [Jones] shall also indemnify[,] protect[,] and save harmless [UP & L] from and against any and all claims, demands, causes of action, costs, or other liabilities arising from any interruption, discontinuance or interference with [Jones's] service which may be occasioned or which may be claimed to have been occasioned by any action of [UP & L] pursuant to or consistent with this agreement.

Id. at 371. The supreme court examined the indemnification provision sentence by sentence and concluded that the provision "as a whole expresses a clear and unequivocal intent by the parties that [Jones] will indemnify [UP & L] from any and all liabilities, including the liability that arises because of [UP & L's] negligence, except when liability arises because of [UP & L's] intentional wrongdoing or willful negligence...." Id.

The agreement between Kennecott and Weyher-Livsey, under which Stearns is claiming indemnification, states in pertinent part:

Contractor [Weyher-Livsey] agrees to indemnify and save Owner [Kennecott], its subsidiaries, parent corporation, affiliated entities, employees, Manager This indemnification agreement, while somewhat convoluted, is less equivocal than the indemnification agreement in Freund because it specifically requires...