Walbridge Aldinger Co. v. Walcon Corp., Docket No. 158500

• Decision Date: 21 November 1994
• Docket Number: Docket No. 158500
• Parties: WALBRIDGE ALDINGER COMPANY, Defendant/Third-Party Plaintiff-Appellant, v. WALCON CORPORATION, Third-Party Defendant-Appellee.
• Court: Court of Appeal of Michigan — District of US

Page 489

525 N.W.2d 489

207 Mich.App. 566

WALBRIDGE ALDINGER COMPANY, Defendant/Third-Party Plaintiff-Appellant, v. WALCON CORPORATION, Third-Party Defendant-Appellee.

Docket No. 158500.

Court of Appeals of Michigan.

Submitted Oct. 5, 1994, at Detroit.

Decided Nov. 21, 1994, at 9:40 a.m.

Released for Publication Jan. 24, 1995.

Kohl, Secrest, Wardle, Lynch, Clark & Hampton by Janet Callahan Barnes, Farmington Hills, for Walbridge Aldinger Co.

Blake, Kirchner, Symonds, MacFarlane, Larson & Smith by Daniel C. Symonds and Christopher G. Manolis, Detroit, for Walcon Corp.

Before MICHAEL J. KELLY, P.J., and CYNAR, ^* and SCHAEFER, ^** JJ.

CYNAR, Judge.

Third-party plaintiff Walbridge Aldinger Company appeals from an October 23, 1992, Wayne Circuit Court order granting third-party defendant Walcon Corporation's motion for summary disposition and a November 9, 1992, order denying Walbridge's motion for voluntary dismissal. The trial court's orders resulted in the dismissal of Walbridge's claim against Walcon for indemnity pursuant to an express contract relative to plaintiffs' negligence claim against Walbridge. Having determined that the trial court's denial of Walbridge's motion for voluntary dismissal was based on a mistake of law and having further determined that there is a genuine issue of material fact regarding whether Walcon is obligated to indemnify Walbridge, we reverse the trial court's orders and remand for further proceedings.

On February 10, 1989, plaintiff Robert Reagan was injured while working at a construction project on the premises of Ford Motor Company's assembly plant in Wayne, Michigan. Reagan was employed by Walcon as a sheet-metal worker. Walcon was a subcontractor on the construction project and Walbridge was the general contractor.

Plaintiffs filed the instant action against Walbridge, alleging that Walbridge was liable under negligence principles and under the "inherently dangerous activities" doctrine. Walbridge filed a third-party complaint against Walcon, claiming that an August 28, 1989, subcontract between Walbridge and Walcon required Walcon to indemnify and defend Walbridge against plaintiffs' claims.

On May 29, 1991, Walbridge moved for summary disposition on the basis that a June 10, 1988, subcontract (not the August 28, 1989, subcontract relied on by Walbridge in its third-party complaint), specifically provision X, entitled it to indemnity from Walcon. No decision was ever entered on the motion. While Walbridge's motion was pending, Walcon assumed the defense of Walbridge.

During this time period, the parties discovered that the subcontract relied on by Walbridge in its third-party complaint, the August 28, 1989, subcontract, was the wrong contract. The contract that governs is the June 10, 1988, contract executed before plaintiff's accident and relied on by Walbridge in its motion for summary disposition.

On November 18, 1991, Walcon filed its own motion for summary disposition on the basis that the indemnity provision in "Attachment G" to the June 10, 1988, subcontract specifically prohibited Walbridge from receiving indemnity from Walcon for Walbridge's own breach of duty. On November 20, 1991, Walcon filed a motion for leave to file an amended answer to Walbridge's third-party complaint on the ground that its original answer was based on the wrong subcontract. The trial court allowed Walcon to orally amend its answer and deferred action on the indemnity dispute until after the trial on the primary complaint.

A settlement in the primary action was reached in November of 1991. The agreement provided that Walcon's insurer, Liberty Mutual, would pay $450,000 to plaintiffs and $150,000 to the worker's compensation lien holder.

On June 18, 1992, Walbridge filed a motion for voluntary dismissal of its third-party complaint on the ground that Walcon had agreed to defend and indemnify Walbridge in July of 1991, that Walcon had fulfilled this duty via the payment of $600,000 made by its liability insurer, and that the third-party claim was thereby settled.

The trial court held hearings on Walbridge's motion for voluntary dismissal and on Walcon's November 18, 1991, motion for summary disposition. The trial court denied Walbridge's motion for dismissal on the basis that no resolution of the indemnity issue was signed and filed with the trial court in July of 1991. The trial court also granted Walcon's motion for summary disposition on the basis that Walcon owed no duty to indemnify Walbridge under the June 10, 1988, subcontract. The trial court ordered Walbridge to reimburse $600,000 to Walcon's carrier.

I

On appeal, Walbridge argues that the trial court erred in denying its motion for voluntary dismissal. Walbridge states that Walcon's agreement in July of 1991 to defend and indemnify Walbridge effectively settled the third-party claim and is binding against Walcon.

Walcon concedes that its attorney agreed to assume Walbridge's defense and to indemnify Walbridge but argues that this agreement was not formally accomplished, that is, it did not settle the third-party complaint.

The trial court's decision to deny Walbridge's motion for voluntary dismissal should be vacated because it was based on an error of law, namely a determination that any agreement between the parties or their attorneys that Walcon would defend and indemnify Walbridge had to be filed with the court in order for it to be binding on the parties.

Under MCR 2.504(A)(2), an action may not be dismissed at the plaintiff's request except by order of the court on terms and conditions the court deems proper. We review the trial court's decision to deny Walbridge's motion for voluntary dismissal to see whether the decision was without justification. Rosselott v. Muskegon Co., 123 Mich.App. 361, 373, 333 N.W.2d 282 (1983).

An agreement to settle a pending lawsuit is a contract and is to be governed by the legal principles applicable to the construction and interpretation of contracts. Eaton Co. Bd. of Rd. Comm'rs v. Schultz, 205 Mich.App. 371, 379, 521 N.W.2d 847 (1994). An agreement or consent between the parties is required to be in writing and subscribed by the party, or by the party's attorney, against whom the agreement is offered when the agreement or consent is subsequently denied by a party. MCR 2.507(H); Cf. Metropolitan Life Ins. Co. v. Goolsby, 165 Mich.App. 126, 129, n. 1, 418 N.W.2d 700 (1987). The writing does not have to be filed with the court. MCR 2.507(H).

The parties do not dispute that there was an agreement that Walcon would defend and indemnify Walbridge. The point disputed by Walcon is that this agreement resolved Walbridge's third-party complaint against it. However, a letter dated July 18, 1991, and signed by the attorney for Walcon could reasonably be interpreted...