W. Bend Mut. Ins. Co. v. Macdougall Pierce Constr., Inc., 06A01-1304-CT-162
| Decision Date | 10 June 2014 |
| Docket Number | No. 06A01-1304-CT-162,06A01-1304-CT-162 |
| Parties | WEST BEND MUTUAL INSURANCE COMPANY and K.B. ELECTRIC, LLC, Appellants, v. MACDOUGALL PIERCE CONSTRUCTION, INC., AMERISURE INSURANCE COMPANY, et al., Appellees. |
| Court | Indiana Appellate Court |
WEST BEND MUTUAL INSURANCE COMPANY
and K.B. ELECTRIC, LLC, Appellants,
v.
MACDOUGALL PIERCE CONSTRUCTION, INC.,
AMERISURE INSURANCE COMPANY, et al., Appellees.1
No. 06A01-1304-CT-162
COURT OF APPEALS OF INDIANA
June 10, 2014
FOR PUBLICATION
ATTORNEYS FOR APPELLANTS:
MARK R. SMITH
Smith Fisher Maas & Howard, P.C.
Indianapolis, Indiana
Attorney for West Bend Mutual
Insurance Company
ANDREW B. JANUTOLO
JON C. ABERNATHY
Goodin Abernathy, LLP
Indianapolis, Indiana
Attorneys for K.B. Electric, LLC
ATTORNEYS FOR APPELLEES:
JOSEPH M. DIETZ
ANDREW M. SUMERFORD
RICK D. MEILS
WILLIAM M. BERISH
Meils Thompson Dietz & Berish
Indianapolis, Indiana
Attorneys for MacDougall Pierce
Construction, Inc.
STEPHEN J. PETERS
DAVID I. RUBIN
Harrison & Moberly, LLP
Indianapolis, Indiana
Attorneys for Amerisure Insurance
Company
KIRSCH, Judge
Page 2
After he sustained serious injuries through electrocution at the site of a construction project, James Wethington, an employee of K.B. Electric, LLC, filed a lawsuit against various defendants seeking compensation for his injuries. West Bend Mutual Insurance Company and K.B. Electric appeal from the trial court's order, which disposed of motions for summary judgment, and in which the trial court entered a declaratory judgment in favor of Amerisure Insurance Company and against West Bend regarding indemnification clauses and coverage under the available insurance policies. The following restated issues are presented for our review:
I. Whether the trial court erred by granting summary judgment in favor of Amerisure and MacDougall Pierce Construction Inc., its insured, based upon the following determinations:A. West Bend had the sole primary duty under its Commercial General Liability ("CGL") policy to defend or indemnify Wal-Mart against Wethington's claims;
B. West Bend had the sole primary duty under its CGL policy to defend or indemnify MacDougall against Wethington's claims;
C. West Bend's umbrella coverage provided coverage to Wal-Mart and MacDougall with respect to Wethington's claims;
D. West Bend's Umbrella Policy was primary to Amerisure's CGL policy for purposes of Wethington's claims against Wal-Mart and MacDougall;
E. K.B. Electric had a duty under a Subcontract's indemnification provision to defend or indemnify MacDougall against Wethington's claims; and
F. West Bend had a duty under its CGL and umbrella policies to defend or indemnify K.B. Electric against MacDougall's third-party complaint for indemnification.
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II. Whether the trial court's determination on the duty to indemnify was premature;
III. Whether the Subcontract is an insured contract under the Contractors Businessowners Policy issued by West Bend to provide CGL coverage to K.B. Electric and the Commercial Umbrella Policy issued by West Bend to K.B. Electric; and
IV. Whether the trial court correctly determined that the anti-subrogation rule applies to West Bend's claims.
We affirm.
On June 26, 2008, Wal-Mart hired MacDougall as the general contractor for the construction of a Wal-Mart SuperCenter in Lebanon, Indiana ("the Project"). K.B. Electric was a subcontractor selected by MacDougall to perform electrical work at the Project. Wethington was employed by K.B. Electric on June 10, 2009, when he was injured at the Project site while working in the scope of his employment. Wethington filed a complaint against various defendants seeking compensation for his injuries, which were catastrophic.
The Prime Contract between Wal-Mart, the owner of the property, and MacDougall consisted of an AIA Document A201-1997 general conditions document, and included supplementary conditions requiring MacDougall to purchase and maintain, until full performance of the contract, "[CGL] insurance . . . with minimum limits of $2,000,000 per occurrence, $3,000,000 general aggregate," "Umbrella/Excess Liability Insurance with minimum limits of $5,000,000," and to name Wal-Mart as an "additional insured," on both policies on a "primary" and "noncontributing" basis. The Supplementary Conditions provided that MacDougall's insurance policies could not
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exclude coverage for Wal-Mart's independent negligence.
MacDougall entered into a construction subcontract with K.B. Electric for electrical work at the Project. Several of the provisions of the Subcontract are relevant to the issues on appeal and are reproduced here. The Subcontract explicitly refers to the Prime Contract in paragraph 23, a "flow-down" provision, as follows:
23. GENERAL CONTRACT:
To the extent of the work to be performed by [K.B. Electric], [K.B. Electric] is bound to [MacDougall] by terms of the contract documents between [MacDougall] and [Wal-Mart] and assumes toward [MacDougall] all the obligations and responsibilities which [MacDougall], by those documents, assumes toward [Wal-Mart] and Architect. All rights of [Wal-Mart] and Architect under the contract documents are preserved with respect to the work to be performed by [K.B. Electric]. The Subcontract consists of (i) this Subcontract Agreement; (ii) the Prime Contract, including the Agreement between [Wal-Mart] and [MacDougall] and all other Contract documents identified therein, including all Conditions of the contract (general, supplementary and special conditions), Drawings, Specifications, Addenda issued prior to execution of the Prime Contract between [Wal-Mart] and [MacDougall], and other Contract Documents listed in the Prime Contract; (iii) other documents identified in this Subcontract Agreement; and (iv) changes or modifications to the Subcontract issued after execution of this Agreement.
Appellants' App. at 306. Paragraph 29 of the Subcontract contains the following provision:
29. SUBCONTRACT CONTROLS:
Where any provision of the contract documents between [Wal-Mart] and [MacDougall] are found to be inconsistent with any provision of this Subcontract, then this Subcontract shall govern.
Id. at 307.
K.B. Electric was required under the terms of the Subcontract to obtain, at its sole expense, and furnish to Wal-Mart and MacDougall, certificates of insurance for CGL "with a combined Bodily Injury and Property Damage limit of not less than ONE Million
Page 5
($1,000,000.00) dollars per occurrence and in the aggregate," and to name Wal-Mart and MacDougall as additional insureds ("AIs") on a primary non-contributory basis. Id. at 301. Unlike the Prime Contract, the Subcontract did not include a provision explicitly requiring the purchase of umbrella/excess insurance coverage, and did not include a prohibition against K.B. Electric's insurer from excluding coverage for the independent negligence of Wal-Mart and MacDougall.
The Subcontract contains two indemnification provisions, which are referred to by the parties as Paragraph 4 and Paragraph 21. Those indemnification provisions read as follows:
4. INSURANCE:
INSURANCE/HOLD HARMLESS RIDER
. . . .
HOLD HARMLESS:
To the fullest extent permitted by law, [K.B. Electric] expressly agrees to defend (at [K.B. Electric's] expense and with counsel acceptable to [MacDougall]), Indemnify, and hold harmless [Wal-Mart], [MacDougall], Architect, Architect's Consultants, Engineer, Construction Manager, Lender and any other parties which [MacDougall] has agreed to indemnify as named or referenced in the project contract documents as attached to and made a part of this Subcontract, their respective Officers, Directors, Shareholders, Employees, Agents, Successors, Affiliates and Assigns from and against any and all claims, suits, losses, cause of action, damages, liabilities, fines, penalties and expenses of any kind whatsoever, including without limitation arbitration or court costs and attorney's fees, arising on account of or in connection with injuries to or the death of any person, or any and all damages to property including loss of use, from or in any manner connected with the work performed by or for [K.B. Electric] under this Subcontract, caused in whole or in part by the presence of the person or property or the negligent acts or omissions of [K.B. Electric] or any of its Employees, Agents, Representatives, Sub-Subcontractors, or suppliers or anyone for whose acts they may be liable, including without limitation such claims, damage, loss or expense caused in part by the negligent acts or omissions of a party indemnified hereunder. Such obligation shall not be construed to negate, abridge or reduce the rights or obligations of indemnity
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which would otherwise exist as to a party or person described in the Paragraph. The defense and indemnification obligations under this Subcontract agreement shall not be restricted in any way by any limitation on the amount or type of damages, compensation, or benefits payable by or for [K.B. Electric] under workers' compensation acts, disability benefits acts, or other employees of [K.B. Electric] or of any third party to whom [K.B. Electric] may subcontract a part or all of the work....
. . . .
21. INDEMNITY:
A. [K.B. Electric] shall unconditionally indemnify, hold harmless, protect and defend [MacDougall], [Wal-Mart], Architect, and all of their agents, and employees from and against all claims, damages, losses, liabilities, and expenses, including attorneys' fees, arising out of or resulting from the performance of [K.B. Electric's] work or of other activities or services of any kind undertaken by [K.B. Electric], or any other actions taken on or off the premises, provided that any such claim, damages, loss liability, or expense, (i) is attributable to bodily injury, sickness, disease, or death of any person (including employees of [K.B. Electric], indemnities, and the third parties), or patent infringement or to injury to or destruction of tangible property and (ii) is caused in whole or in part by any negligent or wrongful act or omission of [K.B. Electric] or anyone directly or indirectly employed by it or anyone for whose acts it may
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