United Rentals Highway Techs., Inc. v. Wells Cargo, Inc.

• Decision Date: 06 December 2012
• Docket Number: Nos. 55331, 56701, 56923.,s. 55331, 56701, 56923.
• Citation: 289 P.3d 221,128 Nev. Adv. Op. 59
• Parties: UNITED RENTALS HIGHWAY TECHNOLOGIES, INC., A Delaware Corporation, Appellant, v. WELLS CARGO, INC., A Nevada Corporation, Respondent. United Rentals Highway Technologies, A Delaware Corporation, Appellant, v. Wells Cargo, Inc., A Nevada Corporation, Respondent. United Rentals Highway Technologies, A Delaware Corporation, Appellant, v. Wells Cargo, Inc., A Nevada Corporation, Respondent.
• Court: Nevada Supreme Court

289 P.3d 221

128 Nev. Adv. Op. 59

UNITED RENTALS HIGHWAY TECHNOLOGIES, INC., A Delaware Corporation, Appellant,

v.WELLS CARGO, INC., A Nevada Corporation, Respondent.

United Rentals Highway Technologies, A Delaware Corporation, Appellant,

v.Wells Cargo, Inc., A Nevada Corporation, Respondent.

United Rentals Highway Technologies, A Delaware Corporation, Appellant,

v.Wells Cargo, Inc., A Nevada Corporation, Respondent.

Nos. 55331, 56701, 56923.

Supreme Court of Nevada.

Dec. 6, 2012.

Alverson, Taylor, Mortensen & Sanders and Nathan R. Reinmiller and Sabrina G. Mansanas, Las Vegas, for Appellant.

Hall, Jaffe & Clayton, LLP, and Steven T. Jaffe, Ashlie L. Surur, and Phil W. Su, Las Vegas, for Respondent.

OPINION

By the Court, HARDESTY

, J.:

In these appeals, we consider what effect specific contract language has on an indemnitor's duty to indemnify and defend an indemnitee in a personal injury action, where that language provides that indemnification will occur “to the extent” that any injury or damage is “caused” by the indemnitor.

Appellant United Rentals Highway Technologies, Inc., contracted to provide traffic control on a road improvement project coordinated and facilitated by respondent Wells Cargo, Inc. The parties' contract required United Rentals to indemnify, defend, and hold harmless Wells Cargo to the extent that United Rentals caused any injury or damage. A woman was injured in connection with the road improvement project and sued United Rentals, Wells Cargo, and other defendants for negligence. Wells Cargo sought indemnification and defense from United Rentals, but United Rentals consistently denied that it was obligated to provide indemnification and defense.

We conclude that a plain reading of the contractual indemnity language imposes a causal limitation on United Rentals' duty to indemnify and defend Wells Cargo. Because the jury found that United Rentals did not proximately cause the underlying accident, we conclude that United Rentals did not have a duty to indemnify or defend Wells Cargo, and we reverse the judgment of the district court.^FN1

FACTS AND PROCEDURAL HISTORY

In 2004, Wells Cargo entered into a contract with project owner Howard Hughes Corporation to perform work as a general contractor on a road improvement project. Shortly after, Wells Cargo and United Rentals executed a contract whereby United Rentals would act as a subcontractor on the project to assist with traffic control. The contract, which was drafted by Wells Cargo, contained the following indemnification provision relevant to this appeal:

The Subcontractor ... shall indemnify, defend and hold the General Contractor [and] Owner ... harmless from and against all claims, losses, costs and damages, including but not limited to attorneys' fees, pertaining or allegedly pertaining to the performance of the Subcontract and involving personal injury ... or damage to tangible property ..., including loss of use of property resulting therefrom, economic loss, or other claims or damages, to the extent caused in whole or in part by the negligent acts or omissions or other fault of the Subcontractor.... This indemnification agreement is binding on the Subcontractor ... to the fullest extent permitted by law, regardless of whether any or all of the persons and entities indemnified hereunder are responsible in part for the claims, damages, losses or expenses for which the Subcontractor ... is obligated to provide indemnification.

(Emphasis added.) Further, the contract required that Wells Cargo be named as an additional insured on certain liability insurance policies procured by United Rentals.

During construction of the road project, Antonette Kodera was driving her motorcycle when she allegedly hit an unmarked bump in the road, lost control of the motorcycle, and sustained serious injuries. Kodera filed a complaint against multiple defendants, including Wells Cargo and Howard Hughes Corporation, alleging negligence. Wells Cargo and Howard Hughes Corporation each filed an answer denying liability. Kodera later amended her complaint to name additional defendants, including United Rentals. She alleged that Howard Hughes Corporation, Wells Cargo, United Rentals, and other defendants were negligent because the unmarked bump was dangerous, the defendants failed to provide appropriate warning of the bump's presence, and/or the defendants failed to remove the dangerous or hazardous condition that caused her injuries.

Soon after Kodera added United Rentals as a defendant, Wells Cargo tendered its defense to United Rentals and an insurance carrier for United Rentals. Both tenders allegedly went unanswered. As a result, Wells Cargo filed an answer to Kodera's first amended complaint and cross-claimed against United Rentals for contribution, equitable indemnity, express or contractual indemnity, and breach of contract. United Rentals, who had already answered Kodera's complaint, answered the cross-claim denying liability.

Wells Cargo moved for partial summary judgment on its cross-claim for contractual indemnification. It argued that because Kodera's claims were at least in part based on United Rentals' negligent acts, United Rentals had a contractual duty to defend, indemnify, and hold harmless Wells Cargo and Howard Hughes Corporation. Relying on the contract's indemnification provision and the provision adding Wells Cargo to United Rentals' insurance policies, Wells Cargo argued that United Rentals was required to indemnify Wells Cargo and Howard Hughes Corporation even if Wells Cargo itself was found partially liable. United Rentals opposed the motion, arguing that the bump signage was not contemplated in the original indemnification contract, that Wells Cargo failed to demonstrate that United Rentals' conduct caused Kodera's accident, that insurance principles of indemnification did not apply, and that the indemnification provision did not clearly permit Wells Cargo to be indemnified for its own negligence.^FN2

Wells Cargo replied, arguing that the contract applied to all traffic control, that there was sufficient evidence that United Rentals caused the accident, and that any alleged concurrent negligence by Wells Cargo and Howard Hughes Corporation was immaterial to United Rentals' duties.

The district court ordered United Rentals to indemnify Wells Cargo and Howard Hughes Corporation unless Wells Cargo or Howard Hughes Corporation was determined to be solely negligent. Further, it concluded that United Rentals was “obligated to defend Wells Cargo and Howard Hughes Corporation [from the date of the first tender] ... irrespective of any ultimate determination of liability, because the obligation to defend is not outcome driven.” Thus, it ordered United Rentals to defend Wells Cargo and Howard Hughes Corporation throughout the entire lawsuit. It also ordered United Rentals to hold harmless Wells Cargo and Howard Hughes Corporation.

On the same day the district court entered its order, Wells Cargo, Howard Hughes Corporation, and codefendant the Nevada Department of Transportation (NDOT) again tendered their defenses to United Rentals. These defendants asked United Rentals to indemnify them “for any damages owed [to Kodera], irrespective of allocations of fault and potential findings of sole negligence,” to assume all of the current and the previous defense costs, and to waive its appellate rights against the tendering defendants. After allegedly not receiving a response from United Rentals, these defendants sought district court approval of a $1,000,000 settlement with Kodera, which was the policy limit of Wells Cargo's primary insurer. United Rentals opposed this motion, arguing that the settlement amount was not made in good faith and that it was grossly disproportionate to the settling defendants' share of damages. After a hearing, the district court granted the motion and permitted Wells Cargo, Howard Hughes Corporation, and NDOT to settle for $1,000,000.^FN3

Kodera and United Rentals went to trial, and the jury returned a verdict in favor of United Rentals. Specifically, the jury found United Rentals was negligent, but that its negligence was not the proximate cause of the accident. The district court entered judgment on the jury verdict and awarded United Rentals its associated attorney fees and costs.

Notwithstanding the jury verdict, Wells Cargo filed a motion to enforce indemnification on behalf of the settling defendants, seeking reimbursement of the $1,000,000. It argued that the jury's finding of negligence on the part of United Rentals necessarily meant neither Wells Cargo nor Howard Hughes Corporation could be solely negligent, and thus, United Rentals was required to indemnify Wells Cargo and Howard Hughes Corporation. It also argued that United Rentals was bound by the settlement because it breached its duty to defend. United Rentals opposed the motion and filed another motion for summary judgment on Wells Cargo's cross-claim for indemnification, arguing again that its duties to indemnify and defend were contingent on a finding that the company itself caused Kodera's damages, which contingency was expressly negated by the jury when it found United Rentals' negligence was not the proximate cause of Kodera's injuries.

The district court concluded that because United Rentals knew about the $1,000,000 settlement and had an opportunity to defend against it, Wells Cargo only needed to show that United Rentals was potentially liable, and not actually liable, when Wells Cargo tendered its defense. Further, the district court reiterated its prior holding that because the settling defendants “demonstrated potential liability existed, their defense was seasonably tendered, and [United Rentals] was notified in reasonable fashion of the possibility of settlement and the negotiations,” United Rentals had a duty to indemnify regardless of the ultimate outcome of the case. The district court's analysis of Wells Cargo's sole liability was limited to an interpretation...