Welker By and Through Bradbury v. Teacher Standards and Practices Com'n

• Decision Date: 21 January 1998
• Docket Number: C-12525
• Citation: 152 Or.App. 190,953 P.2d 403
• Parties: , 124 Ed. Law Rep. 1108 Steven R. WELKER, By and Through Leslie R. BRADBURY, assignee, Appellant, v. TEACHER STANDARDS AND PRACTICES COMMISSION, Respondent. 95; CA A93668.
• Court: Oregon Court of Appeals

Page 403

953 P.2d 403

152 Or.App. 190, 124 Ed. Law Rep. 1108

Steven R. WELKER, By and Through Leslie R. BRADBURY assignee, Appellant, v. TEACHER STANDARDS AND PRACTICES COMMISSION, Respondent.

95C-12525; CA A93668.

Court of Appeals of Oregon.

Argued and Submitted Sept. 2, 1997.

Decided Jan. 21, 1998.

James M. Brown, Salem, argued the cause for appellant. With him on the briefs were Nicole M. Hendricks and Enfield Brown Collins & Knivila.

Michael C. Livingston, Assistant Attorney General, argued the cause for respondent. With him on the brief were Hardy Myers, Attorney General, and Virginia L. Linder, Solicitor General.

Before De MUNIZ, P.J., and DEITS, C.J., and HASELTON, J.

HASELTON, Judge.

Plaintiff appeals, assigning error to the trial court's entry of summary judgment against his claim for indemnity. Plaintiff contends that the trial court erred in holding that plaintiff's statutory indemnity action was barred by disclaimer and "hold harmless" provisions in the contract between Welker, plaintiff's assignor, and defendant. We conclude that there are disputed issues of material fact bearing on whether enforcement of those provisions would impermissibly conflict with fundamental public policies embodied in the Oregon Tort Claims Act (OTCA). Accordingly, we reverse and remand.

The material undisputed facts are as follows: The Teacher Standards and Practices Commission (TSPC) has licensing and disciplinary authority over Oregon school administrators. See ORS 342.121; ORS 342.175. In August 1991, TSPC's Executive Secretary David Myton received a complaint alleging sexual misconduct against the superintendent of The Dalles public schools, Leslie Bradbury. Pursuant to ORS 342.176, ¹ TSPC appointed a private citizen, Steven Welker, to investigate the complaint.

Before Welker began his investigation, he and TSPC executed a "Personal Service Contract." The contract specified, in pertinent part:

"11. Access to Records

The Commission, the Secretary of State's Office of the State of Oregon, the Federal Government and their duly authorized representatives shall have access to the books, documents, papers, and records of the Contractor which are directly pertinent to the specific Contract for the purpose of making audit, examination, excerpts, and transcripts. The Contractor shall not disclose all or any part of such records to any other person, firm, corporation, association, or any other entity.

" * * * * *

"13. State Tort Claims Act

Contractor is not an officer, employe, or agent of the State as those terms are used in ORS 30.265.

" * * * * *

"16. Indemnity

The Contractor shall def[end], save, and hold harmless the State of Oregon and the Commission, its officers, agents, employes, and members from all claims, suits, or actions of whatsoever nature resulting from or arising out of the activities of the Contractor or its subcontractors, agents, or employes under this agreement.

" * * * * *

"24. Severability

The parties agree that if any term or provision of this contract is declared by a court of competent jurisdiction to be illegal or in conflict with any law, the validity of the remaining terms and provisions shall not be affected, and the rights an[d] obligations of the parties shall be construed and enforced as if the Contract did not contain the particular term or provision held to be invalid.

Welker conducted an investigation of the allegations against Bradbury and ultimately prepared a report of that investigation, which he delivered to the TSPC. Subsequently, and in executive session, the TSPC decided not to pursue the charges against Bradbury and closed the file. Thereafter, and in contravention of both ORS 342.176(4) AND PARAGRAPH 11² of his personal services contract with TSPC, see 152 Or.App. at 192-93, 953 P.2d at 405, Welker released a copy of the report to the complainant. The complainant circulated the report to The Dalles school board.

Bradbury filed suit against Welker for wrongful release of the report, and Welker confessed judgment in the amount of $200,000. ³ Welker assigned his rights, including any right to indemnity by the TSPC, to Bradbury, in exchange for a covenant not to execute. Bradbury, as Welker's assignee, thereafter sent a written request for counsel and indemnification to the Attorney General's office pursuant to ORS 30.287(1). ⁴ Bradbury received no response to that letter.

In August 1995, Bradbury, as Welker's assignee, filed suit against TSPC for indemnity pursuant to ORS 30.287(3). ⁵

Defendant moved for summary judgment on two alternative grounds. First, TSPC asserted that Bradbury, by accepting Welker's claimed "right" to indemnity by assignment, stepped into Welker's shoes and could assert no greater rights than Welker himself. TSPC further asserted that the terms of Welker's contract, and particularly paragraphs 13 and 16, explicitly precluded any indemnity and that, thus, just as Welker could not obtain indemnity from TSPC, neither could Bradbury, his assignee. Second, TSPC argued, Welker's disclosure of the report, in violation of statutory and contractual provisions requiring confidentiality, constituted "malfeasance in office or willful or wanton neglect of duty" that, under ORS 30.287(3), precluded any entitlement to indemnity.

Plaintiff responded, and, concurrently, filed a cross-motion for summary judgment. Plaintiff asserted that, notwithstanding paragraph 13 of Welker's contract with TSPC, Welker was, in fact, an "agent" of TSPC, for purposes of the OTCA, and not an independent contractor. Because Welker was actually TSPC's "agent," plaintiff argued, the contract's "hold harmless" provision offended public policy by limiting recovery and indemnity otherwise available under the OTCA.

The trial court, without elaboration, granted defendant's motion for summary judgment and denied plaintiff's cross-motion. On appeal, plaintiff assigns error to the allowance of defendant's motion but does not challenge the denial of his cross-motion.

A party moving for summary judgment must show that there are no genuine issues of material fact and that it is entitled to judgment as a matter of law. Jones v. General Motors Corp., 325 Or. 404, 419-20, 939 P.2d 608 (1997); Seeborg v. General Motors Corp., 284 Or. 695, 699, 588 P.2d 1100 (1978). We view the record in the light most favorable to the party opposing the motion--here, plaintiff. Seeborg, 284 Or. at 699, 588 P.2d 1100.

We begin by emphasizing the nature of plaintiff's claim. Plaintiff's claim is for indemnity. It is not a "first-party" tort claim against TSPC based on Welker's actions. By accepting Welker's alleged claim for indemnity by assignment, plaintiff "stands in the shoes of the assignor and acquires no greater interest than the assignor possessed." Commonwealth Electric Co. v. Fireman's Fund Ins., 93 Or.App. 435, 438, 762 P.2d 1041 (1988). Thus, to the extent the Welker/TSPC contract would bar an indemnity claim by Welker, it similarly precludes plaintiff.

Paragraph 16 of the contract expressly provides that Welker will hold TSPC harmless from claims resulting from the duties Welker performs. See 152 Or.App. at 193, 953 P.2d at 405. That provision is unambiguous. Consequently, unless there is some legally sufficient ground that precludes enforcement of that provision, paragraph 16 bars plaintiff's assigned claim for indemnity. See, e.g., Pacific First Bank v. New Morgan Park Corp., 319 Or. 342, 347, 876 P.2d 761 (1994) (court must enforce an unambiguous contract according to its terms); Housing Authority of Portland v. Martini, 141 Or.App. 1, 4, 917 P.2d 53 (1996) (rules of judicial construction do not apply where the contract is unambiguous).

Plaintiff attempts to avoid enforcement of paragraph 16 in either of two ways. First, he argues that the TSPC/Welker contract, including paragraph 16, is a contract of adhesion that "must be construed against the drafter." Second, he reiterates that paragraphs 13 and 16, singly and in combination, are unenforceable as offending public policies embodied in the OTCA.

Whatever the merits of plaintiff's assertion that the TSPC/Welker agreement is a "contract of adhesion," his argument misses a critical, indeed dispositive, point: The principle that an "adhesive" provision is to be construed against the drafter applies only if the provision is ambiguous. Where "adhesive" language is unambiguous, and, thus, does not permit resort to rules of construction, it must be enforced as written. See Jacob v. Blue Cross and Blue Shield of Oregon, 92 Or.App. 259, 263, 758 P.2d 382 (1988). Here, paragraph 16 is unambiguous.

Plaintiff's "void as against public policy" arguments are somewhat obscure. However, from the briefs and argument, we understand plaintiff to be advancing two distinct propositions. First, paragraphs 13 and 16 conflict with the remedial purposes of the OTCA, because they impermissibly restrict the ability of injured third parties to collect against the state or public body for its agents' wrongs. In particular, those provisions preclude an injured citizen who secures a judgment against a public agent from obtaining recovery from the employer public body via assignment and subrogation of the agent's rights of indemnity under ORS 30.285(1). Second, paragraphs 13 and 16 impermissibly conflict with the OTCA's policy of indemnifying agents or employees who have been held liable to third parties for torts committed while acting within the scope of their employment. See ORS 30.285(1); ORS 30.287(3).

We do not address the first public policy argument because we conclude that the second requires reversal and remand. In particular, we conclude that if Welker in fact satisfied the prerequisites of indemnity under ORS 30.287, enforcement of paragraphs 13 and 16 to preclude that statutory entitlement would offend fundamental policies embodied in the OTCA. Because there are disputed issues of fact as to whether Welker was, in fact, TSPC's "agent" within the...