VanKirk v. Green Const. Co., 22791

• Decision Date: 08 December 1995
• Docket Number: No. 22791,22791
• Court: West Virginia Supreme Court
• Parties: Fred VANKIRK, West Virginia Commissioner of Highways, Plaintiff Below, Appellee, v. GREEN CONSTRUCTION COMPANY, an Iowa Corporation, and The American Insurance Company, a Nebraska Corporation, Defendants Below, Appellants.

Page 782

466 S.E.2d 782

195 W.Va. 714

Fred VANKIRK, West Virginia Commissioner of Highways Plaintiff Below, Appellee, v. GREEN CONSTRUCTION COMPANY, an Iowa Corporation, and The American Insurance Company, a Nebraska Corporation, Defendants Below, Appellants.

No. 22791.

Supreme Court of Appeals of West Virginia.

Submitted Sept. 20, 1995.

Decided Dec. 8, 1995.

Syllabus by the Court

1. " 'A circuit court's entry of summary judgment is reviewed de novo.' Syl. pt. 1, Painter v. Peavy, 192 W.Va. 189, 451 S.E.2d 755 (1994)." Syl. pt. 1, Jones v. Wesbanco Bank Parkersburg, 194 W.Va. 381, 460 S.E.2d 627 (1995).

2. " ' " 'A motion for summary judgment should be granted only when it is clear that there is no genuine issue of fact to be tried and inquiry concerning the facts is not desirable to clarify the application of the law.' Syllabus Point 3, Aetna Casualty & Surety Co. v. Federal Insurance Co. of New York, 148 W.Va. 160, 133 S.E.2d 770 (1963)." Syllabus Point 1, Andrick v. Town of Buckhannon, 187 W.Va. 706, 421 S.E.2d 247 (1992).' Syl. pt. 2, Painter v. Peavy, 192 W.Va. 189, 451 S.E.2d 755 (1994)." Syl. pt. 2, Jones v. Wesbanco Bank Parkersburg, 194 W.Va. 381, 460 S.E.2d 627 (1995).

3. A liquidated damage clause for delay in completing contract work does not preclude an injured party from recovering compensatory damages under the contract unless the liquidated damage clause expressly limits the right to such other damages.

4. In construing the language of an express indemnity contract, the ordinary rules of contract construction apply.

5. "A valid written instrument which expresses the intent of the parties in plain and unambiguous language is not subject to judicial construction or interpretation but will be applied and enforced according to such intent." Syl. pt. 1, Cotiga Development Co. v. United Fuel Gas Co., 147 W.Va. 484, 128 S.E.2d 626 (1962).

6. Where an indemnitor is given reasonable notice by the indemnitee of a claim that is covered by the indemnity agreement and is afforded an opportunity to defend the claim and fails to do so, the indemnitor is then bound by the judgment against the indemnitee if it was rendered without collusion on the part of the indemnitee.

7. When the State or one of its agencies is sued in the Court of Claims and the State has an indemnity agreement with a third party indemnitor, upon reasonable notice by the State or its agency to defend under the indemnity agreement, the indemnitor must either defend the suit or intervene under Rule 24(a)(2) of the West Virginia Rules of Civil Procedure and assert any defenses it claims would enable it to avoid the duty to defend the indemnitee under the indemnity agreement. The failure to take either step forecloses the indemnitor from contesting the validity of the judgment rendered against the indemnitee on any grounds except a claim that the indemnitee allowed the judgment to be obtained by collusion in the Court of Claims.

Appeal from the Circuit Court of Kanawha County, Honorable Irene C. Berger, Judge, Civil Action No. 92-C-1136. Affirmed.

Anthony G. Halkias, Jeff Miller, Legal Division, West Virginia Department of Transportation, Charleston, for Appellee.

Robert S. Brams, Gadsby & Hannah, Washington, DC, James K. Brown, Anthony J. Majestro, Jackson & Kelly, Charleston, for Appellants.

MILLER, Justice:

Green Construction Company (Green), an Iowa corporation, and The American Insurance Company (American), a Nebraska corporation, appeal from an order of the Circuit Court of Kanawha County, entered August 23, 1994, granting summary judgment to Fred VanKirk, West Virginia Commissioner of Highways (DOH). DOH filed a declaratory judgment action in the circuit court contending that Green, under its contract, and American, under its bond, were required to indemnify DOH for the amount awarded by the Court of Claims against DOH in favor of Elmo Greer and Sons, Inc. (Greer). The Court of Claims recommended and the West Virginia Legislature awarded compensation to Greer in the amount of $1,214,088.68. The circuit court found that Green and American had a duty to indemnify DOH for the amount awarded against it by the Court of Claims.

Green and American assert several errors. The first is the claim that the circuit court erred in granting res judicata or collateral estoppel to the Court of Claims' judgment. In addition, they assert such action violated their due process rights because they were not parties to the Court of Claims proceedings. Complaint also is made that the circuit court erred in finding that the indemnity contract with DOH required Green and American to indemnify DOH for the negligence. Upon review, we affirm the judgment of the circuit court.

I.

On May 14, 1984, DOH entered into a contract with Green for the construction of 27,551 linear feet of Interstate Route 64 in the area of the Bragg Interchange. On May 22, 1984, DOH entered into a contract with Greer for the construction of 12,899 linear feet of Interstate Route 64 from east of Glade Creek to the Bragg Interchange. Green's worksite overlapped with Greer's worksite for 1,050 linear feet. Green was to install a box culvert and perform special embankment work with a completion date of October 31, 1984. Afterwards, Greer was to complete the fill work. Greer could not complete its project until Green's work was complete.

As the result of delays, DOH asked Green several times to comply with its contractual obligations. DOH granted deadline extensions to Green that were not met. Greer then agreed to help Green complete Green's job. Green's delays caused Greer to incur additional construction costs which became the subject of the underlying Court of Claims case. Moreover, Greer discovered several construction errors made by Green when Greer began its project. As a result, Greer had to correct those errors before it could proceed. This caused additional construction costs to Greer.

On January 6, 1987, Greer submitted a claim to DOH alleging damages in the amount of $3,211,602.59. These damages were described by Greer as "monetary losses stemming from, and directly attributable to the delay in the completion of the box culvert and special embankment ... by Green[.]" On January 16, 1987, DOH forwarded Greer's claim letter to Green, stating the claim was due to Green's "failure to meet the contract completion date for specific work on your project."

On October 27, 1987, Greer filed a claim against DOH in the Court of Claims. DOH's contract with Green included several save harmless clauses. Furthermore, American issued a contract bond which Green signed as principal and American as surety. It also provided they would save and keep harmless DOH from all losses caused by Green in the construction of the highway project.

On October 30, 1987, by certified mail, DOH provided Green and American with a copy of the complaint Greer filed in the Court of Claims. DOH informed both Green and American it was holding them responsible for any damages awarded to Greer. DOH communicated its expectation to be indemnified pursuant to Green's contract and the contract bond. Green was given thirty days to advise DOH regarding Green's desire to cooperate. American responded by letter dated November 18, 1987, advising DOH it had investigated the claim with its principal (Green). American indicated it would "coordinate future involvement through them. Preliminarily, they have indicated an interest in assisting your department in the defense of this matter."

On July 5, 1988, Greer filed a complaint against Green in the United States District Court for the Southern District of West Virginia. In the federal complaint, Greer requested damages premised on three separate counts: (1) Greer claimed to be a third-party beneficiary of Green's contract; (2) Greer claimed Green breached an express agreement made with Greer; and (3) Greer claimed Green was liable to Greer based on promissory estoppel. Green filed a motion for summary judgment on each count, which the District Court granted by order dated May 9, 1990. The United States Court of Appeals for the Fourth Circuit affirmed the District Court's decision on September 10, 1991 in an unpublished opinion.

This federal court action appears to have delayed any substantial activity in the Court of Claims case filed by Greer in October, 1987. On April 15, 1991, Green's attorney sent a letter to DOH confirming a telephone conversation of that date. That letter acknowledged that Green did want to play a part in the conduct of DOH's defense in the Court of Claims. It concluded nothing would be done until the appeal in the Fourth Circuit Court of Appeals was decided. DOH's attorney wrote Green's attorney on April 24, 1991, reiterating that Green and American had contractual indemnity obligations with DOH on the Greer case in the Court of Claims and suggesting they assume DOH's defense. On July 22, 1991, Green's attorney responded, stating: "At this time, Green neither accepts the [DOH's] invitation to defend against the claim, nor admits any obligations to the Division of Highways."

Further contact ensued between DOH and Green about DOH's proposed filing of a declaratory judgment action against Green to determine Green's indemnity obligation to defend DOH. On October 25, 1991, Green's attorney wrote DOH in an attempt to dissuade it from filing suit. This action was followed by correspondence regarding a possible legal defense to be made by DOH in Greer's case in the Court of Claims. In September, 1992, the Court of Claims conducted a hearing in this matter with no participation by Green or American. The Court of Claims issued its opinion on December 11, 1992, and granted an award of $1,214,088.68 against DOH.

On March 16, 1992, DOH filed a complaint for declaratory judgment relief in the circuit court seeking to have the judgment of the Court of Claims imposed on Green and American. This action was based on the written indemnity...