Waterwiese v. KBA Const. Managers, Inc.

• Court: Missouri Court of Appeals
• Writing for the Court: CRANDALL; GRIMM, P.J., and SATZ
• Citation: Waterwiese v. KBA Const. Managers, Inc., 820 S.W.2d 579 (Mo. App. 1991)
• Decision Date: 29 October 1991
• Docket Number: No. 59550,59550
• Parties: Wolfgang WATERWIESE and Erica Waterwiese, Plaintiffs, v. KBA CONSTRUCTION MANAGERS, INC., and The St. Paul Companies, Inc., Defendants/Third-Party Plaintiffs/Respondents, v. JOHN J. SMITH MASONRY COMPANY, Third-Party Defendant/Fourth-Party Plaintiff/Appellant/Cross-Respondent, v. C & G MIDWEST INSURORS AGENCY, INC., and Robert L. Gibbs, Fourth-Party Defendants/Cross-Appellants.

Page 579

820 S.W.2d 579

Wolfgang WATERWIESE and Erica Waterwiese, Plaintiffs, v. KBA CONSTRUCTION MANAGERS, INC., and The St. Paul Companies, Inc., Defendants/Third-Party Plaintiffs/Respondents, v. JOHN J. SMITH MASONRY COMPANY, Third-Party Defendant/Fourth-Party Plaintiff/Appellant/Cross-Respondent, v. C & G MIDWEST INSURORS AGENCY, INC., and Robert L. Gibbs, Fourth-Party Defendants/Cross-Appellants.

No. 59550.

Missouri Court of Appeals,

Eastern District,

Division Two.

Oct. 29, 1991.

Motion for Rehearing and/or Transfer to Supreme Court

Denied Dec. 4, 1991.

Application to Transfer Denied Jan. 28, 1992.

James E. Whaley, Robert W. Cockerham, Brown & James, P.C., St. Louis, for C & G Midwest Insurors Agency, Inc., et al.

Denis C. Burns, and John B. Singleton, Godfrey, Vandover & Burns, Inc., St. Louis, for John J. Smith Masonry Co.

James Parker Lemonds and Erich Vieth, Holtkamp, Liese, Beckemeier and Childress, St. Louis, for KBA Const. Managers, Inc. and The St. Paul Companies, Inc.

CRANDALL, Judge.

Plaintiffs, Wolfgang Waterwiese and Erica Waterwiese, brought an action against KBA Construction Managers (KBA) for damages for injuries sustained by Wolfgang Waterwiese while performing work for his employer, John J. Smith Masonry Co. (Smith Masonry). Plaintiffs settled their claim with KBA; and St. Paul Companies (St. Paul), KBA's liability insurance carrier, paid the full amount of the settlement. KBA, joined by St. Paul, brought a third party action against Smith Masonry, alleging a contractual right to be indemnified for all sums paid to plaintiffs. Smith Masonry brought a fourth party action against C & G Midwest Insurors Agency (C & G) and its agent, Robert Gibbs (Gibbs), for their failure to secure liability insurance to cover Smith Masonry during the course of the construction project. Smith Masonry appeals from the judgment, in a court-tried case, in favor of KBA on KBA's third party action for indemnity for the full amount of the settlement. C & G and Gibbs appeal from the trial court's judgment in favor of Smith Masonry in the fourth party action, which held C & G and Gibbs liable for one-half of the settlement. We affirm both judgments.

Our review of a court-tried case is guided by Murphy v. Carron, 536 S.W.2d 30, 32 (Mo. banc 1976). The record reveals that KBA contracted with the State of Missouri (State) to provide construction management services for a State office building. Smith Masonry contracted with the State to do the masonry work on the building. The contract between Smith Masonry and the State required Smith Masonry to secure the following insurance coverage:

ARTICLE 21--INSURANCE:

* * * * * *

B. Contractor shall provide and maintain during the life of the contract ...

d. Owner's Protective Liability Insurance: ... for protection of the Owner, the Construction Manager and the Consultant protecting them against the standard hazards, except liability from operation of trucks and automobiles, and with the amount of coverage provided in the Public Liability and Property Damage Insurance of Contractor....

The standard language of an "Owner's Protective Liability" (OPL) insurance policy reads in pertinent part:

I. COVERAGE A-BODILY INJURY LIABILITY

COVERAGE B-PROPERTY DAMAGE LIABILITY

The company will pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of

Coverage A bodily injury or

Coverage B property damage

to which this policy applies caused by an occurrence and arising out of (1) operations performed for the name insured by the contractor designated therein or (2) acts or omissions of the name insured in connection with his general supervision of such operations and the company shall have the right and duty to defend any suit against the insured seeking damages on account of such injury or bodily damage....

In addition, the agreement between Smith Masonry and the State contained the following provision:

ARTICLE 25--INDEMNIFICATION:

A. Contractor agrees to indemnify and save harmless Owner and Consultant and Construction Manager, their agents, servants and employees, from and against any and all liability for damage arising from injuries to persons or damage to property occasioned by any acts or omissions of Contractor, any subcontractors, agents, servants or employees, including any and all expense, legal or otherwise, which may be incurred by Owner or Consultant or Constructiion (sic) Manager, its agents, servants or employees, in defense of any claim, action or suit, irrespective of any claims that an act, omission or negligence of Owner or Consultant or Construction Manager, its agents, servants or employees contributed to such injury or damage.

St. Paul provided KBA with general liability insurance for the project. Smith Masonry contacted C & G through its agent, Gibbs, and requested that it provide OPL insurance during the construction project. The insurance Smith Masonry purchased from C & G, however, did not include OPL insurance, although the binder furnished by C & G to Smith Masonry and the State purported to provide such coverage.

Wolfgang Waterwiese, an employee of Smith Masonry, was injured when he fell from scaffolding while working on the construction of the State office building. Wolfgang Waterwiese received benefits from Smith Masonry under the Workers' Compensation Act. Wolfgang Waterwiese and his wife, Erica Waterwiese, (jointly referred to as Waterwiese) then brought an action against KBA for its failure to prohibit the use of scaffolding which was not in compliance with federal O.S.H.A. requirements. KBA filed a third party action against Smith Masonry, which was severed for a separate trial. After the jury returned a verdict in the amount of $157,000.00 in favor of Waterwiese, KBA settled with Waterwiese for $138,000.00. Pursuant to its policy with KBA, St. Paul paid the full amount of the settlement and all costs and attorney's fees incurred in the defense of the Waterwiese action.

After the settlement, KBA filed a second amended third party petition against Smith Masonry. KBA sought reimbursement from Smith Masonry for the settlement paid to Waterwiese, plus attorney's fees and costs. Count I of KBA's petition was based on Smith Masonry's failure to obtain OPL insurance in conformity with Article 21 of the contract. Count II was based on Article 25, the indemnification clause of the contract. St. Paul joined in the action as an additional third party plaintiff. Smith Masonry then filed a fourth party petition against C & G and Gibbs on the ground that they had neglected to provide the OPL insurance coverage requested by Smith Masonry.

The third and fourth party actions were bench-tried. The trial court entered judgment in favor of KBA and St. Paul in the third party action, finding that Smith Masonry must indemnify KBA and St. Paul in the full amount of the settlement ($138,000.00), with interest from the date of the settlement, plus costs and attorney's fees ($19,903.54) incurred in defending the Waterwiese action. The court also entered judgment in favor of Smith Masonry in the fourth party action in the amount of $88,253.54, plus interest from the date of settlement, and also assessed all costs of the third and fourth party actions against C & G and Gibbs. Smith Masonry appeals from the trial court's judgment in favor of KBA and St. Paul. C & G and Gibbs appeal from the trial court's judgment in favor of Smith Masonry. The appeals were consolidated for our review.

We first consider the appeal by Smith Masonry. In its first point, Smith Masonry alleges that the trial court erred in finding that its contract with the State required it to indemnify KBA.

Smith Masonry initially claims that the Missouri Workers' Compensation Act, specifically Section 287.120.1, RSMo (1986)), insulates it from liability. Section 287.120.1 provides:

Every employer subject to the provisions of this chapter shall be liable, irrespective of negligence, to furnish compensation under the provisions of this chapter for personal injuries arising out of and in the course of his employment, and shall be released from all other liability therefor whatsoever, whether to the employee or any other person....

In McDonnell Aircraft Corp. v. Hartman-Hanks-Walsh Painting Co., 323 S.W.2d 788, 796 (Mo.1959), the Missouri Supreme Court held that the language "therefor whatsoever " means:

[A]ll other liability 'for personal injuries or death of the employee'; and does not mean liability for breach of an independent duty or obligation owed to a third party.... Since such third parties receive no benefit from the compensation act ... in the absence of an express provision in the Act, it does not seem proper to hold that, by implication, the Act has taken from them rights which they had before.

Although an employer is generally immune from civil suits because of workers' compensation, the employer can contract to indemnify a third party for damages which the third party is liable to pay an employee. The Workers' Compensation Act allows the employer to be contractually responsible to a third party if the third party is found to be negligent. The employer is not held liable for the personal injury of his employee, but instead is held liable for the breach of an independent duty to a third party which he expressly agreed to perform. Id. KBA's action against Smith Masonry is based on contractual indemnity, with the result that the Workers' Compensation Act does not bar recovery from Smith Masonry.

The crucial issue then is whether Smith Masonry contractually agreed to provide indemnification where the basis of the liability asserted in the action against KBA was KBA's own negligence. Smith Masonry asserts that the contract does not require indemnification for injuries caused by KBA's own negligence.

Parks v. Union Carbide Corp., 602 S.W.2d 188 (Mo. banc 1980) recognizes that a non-employer can enter into an agreement with...