Williams v. White Mountain Const. Co., Inc.

• Decision Date: 01 February 1988
• Docket Number: No. 86SA100,86SA100
• Parties: Zeke WILLIAMS, Plaintiff, v. WHITE MOUNTAIN CONSTRUCTION COMPANY, INC., a Colorado corporation, and Lloyd Rogers, Defendants, Third-Party Plaintiffs-Appellants, v. PERMANENT BUILDERS, INC., a Colorado corporation, Third-Party Defendant- Appellee.
• Court: Colorado Supreme Court

Page 423

749 P.2d 423

Zeke WILLIAMS, Plaintiff, v. WHITE MOUNTAIN CONSTRUCTION COMPANY, INC., a Colorado

corporation, and Lloyd Rogers, Defendants, Third-Party Plaintiffs-Appellants, v. PERMANENT BUILDERS, INC., a Colorado corporation,

Third-Party Defendant- Appellee.

No. 86SA100.

Supreme Court of Colorado En Banc.

Feb. 1, 1988.

Elder, Phillips, Daniel, Phillips & Boughton, W. Bruce Phillips, Keith Boughton, Grand Junction, for defendants, third-party plaintiffs-appellants.

Hugh D. Wise, Grand Junction, for third-party defendant-appellee.

VOLLACK, Justice.

Defendants, third-party plaintiffs-appellants White Mountain Construction Co. and Lloyd Rogers (collectively White Mountain), appeal directly from the Pitkin County District Court order granting summary judgment in favor of Permanent Builders, Inc. (Permanent Builders). ¹ We affirm.

I.

In the fall of 1981, Permanent Builders subcontracted with White Mountain to dig a trench and install water pipes on Aspen Mountain. White Mountain dug the trench according to the express instructions of Frank Wright, a construction superintendent for Permanent Builders. When advised by White Mountain of the potential hazards of digging the trench in accordance with his instructions, Frank Wright said, "Don't worry about it--we will take care of it if anything happens." On October 7, 1981, Zeke Williams, an employee of Permanent Builders, was seriously injured when the trench collapsed. After the accident, White Mountain again contacted Frank Wright, who made reassurances that Permanent Builders would take care of any problems concerning Williams.

Williams received workmen's compensation benefits which precluded a tort action against Permanent Builders. ² He also filed suit in Pitkin County District Court against White Mountain, alleging that his injuries were caused by White Mountain's negligence.

White Mountain then filed a third-party complaint against Permanent Builders. It claimed that an oral contract of indemnity arose by virtue of Frank Wright's statements. Alternatively, White Mountain claimed that it was entitled to contribution from Permanent Builders. Permanent Builders filed a motion for summary judgment and entered into a stipulation of facts with White Mountain for that purpose. ³

Based on these stipulated facts, the trial court found that no contract of indemnity was created and that, as a matter of law, White Mountain's claim of contribution was barred by section 8-42-102, 3B C.R.S. (1986), of the Colorado Workmen's Compensation Act (the Compensation Act). Williams later recovered a jury verdict of $574,586.

White Mountain contends here that (1) the trial court erred in refusing to find that an oral contract of indemnity was created; (2) the Compensation Act does not prohibit White Mountain from claiming contribution from Permanent Builders under the Uniform Contribution Among Tortfeasors Act (the Contribution Act), §§ 13-50.5-101 to -106, 6A C.R.S. (1987); and (3) to the extent that the Compensation Act prohibits third-party claims for indemnity or contribution against a negligent employer, it violates the Colorado and United States Constitutions' guarantees of due process and equal protection of the law.

II.

White Mountain first contends that Frank Wright's statement before the accident, "Don't worry about it--we will take care of it if anything happens," when understood in context, together with his reassurance after the accident that Permanent Builders would take care of any problems, was sufficient to create an oral contract indemnifying White Mountain from its own negligence. We do not agree.

Like other contracts, indemnity contracts can arise orally. See Chicago, M., St. P. & Pac. R.R. Co. v. Famous Brands, Inc., 324 F.2d 137 (8th Cir.1963). The word "indemnity" is not required, Westinghouse Elec. Corp. v. Turnberry Corp., 423 So.2d 407 (Fla.Dist.Ct.App.1982), pet. for review denied, 434 So.2d 889 (Fla.1983), and its presence does not guarantee that an indemnity contract was created. Batson-Cook Co. v. Industrial Steel Erectors, 257 F.2d 410, 412 (5th Cir.1958). While such contracts are generally construed to effectuate rather than defeat the parties' intentions, Gardner Bros. & Glenn Constr. Co. v. American Surety Co., 95 Colo. 456, 460, 37 P.2d 384, 386 (1934), indemnity contracts holding indemnitees harmless for their own negligent acts must contain clear and unequivocal language to that effect. Zimmerman v. Baca, 346 F.Supp. 172, 178 (D.Colo.1972). Ambiguities will be resolved against the party seeking indemnity. Lackie v. Niagara Mach. & Tool Works, 559 F.Supp. 377, 380 (E.D.Penn.1983).

In Batson-Cook, the fifth circuit held that a contract purporting to indemnify a general contractor against all losses "sustained in connection with or to have arisen out of or resulting from the performance of the work by subcontractor" was not sufficiently specific and unambiguous to impose liability. There the court noted:

The phrase stressed heavily is indeed broad. But the broad, all-inclusiveness of language used is itself one of the indicia which the law regards as insufficient. The purpose to impose this extraordinary liability on the Indemnitor must be spelled out in unmistakable terms. It cannot come from reading into the general words used the fullest meaning which lexicography would permit....

257 F.2d at 413. This reasoning applies with greater force when the statement is not only broad but ambiguous.

Applying these rules, the stipulated facts establish that Frank Wright's statement was ambiguous. The statement arose while he and a White Mountain employee were discussing the hazards of digging the trench in the manner proposed by Frank Wright. Such a discussion might prompt a subcontractor to be concerned not only with the possibility of tort liability as a result of following an unorthodox excavation procedure but also with vicarious liability, see Jacobson v. Doan, 136 Colo. 496, 319 P.2d 975 (1957) (loaned servant doctrine makes subcontractor liable for torts of employee), and the concomitant responsibility under the Compensation Act to make workmen's compensation payments as an employer. While it is perhaps more plausible that "it" in the statement "Don't worry about it--we'll take care of it if anything happens" refers to the first possible concern, it is also plausible that "it" refers to the second set of concerns, or to some other concern known only to the parties. We are mindful that it is inappropriate to construe statements so narrowly as to deprive them of any meaning, yet the burden of indemnity is so onerous that we hesitate to impose it unless the language used clearly requires such a result. For the same reasons, the reassurance given by Frank Wright after the injury fails to buttress White Mountain's argument. Resolving these ambiguities against a finding of indemnity, we conclude that the district court correctly found that no express contract of indemnity arose between White Mountain and Permanent Builders. ⁴ See Greer v. Services Equip. & Eng'g, Inc., 593 F.Supp. 1075 (E.D.Tex.1984); Price v. Amoco Oil Co., 524 F.Supp. 364, 369 (S.D.Ind.1981); Crum v. Colman-Cocker Textile Machinery, 467 F.Supp. 6, 7 (E.D.Tenn.1978).

III.

White Mountain advances three arguments supporting its claim that the district court erred in failing to recognize a right to contribution from Permanent Builders for its proportionate liability in the injury to Williams. It maintains first that the primary purpose of the Compensation Act would not be defeated by a judicial interpretation permitting third parties to recover contribution from a negligent employer. White Mountain further claims that such a decision would avoid the unjust result of requiring one tortfeasor to shoulder disproportionate liability because of the fortuity that the other tortfeasor is statutorily immune. White Mountain finally argues that third parties received no benefit under the Compensation Act and should therefore not be burdened by it. Permanent Builders argues that the Contribution Act cannot apply to negligent employers because the exclusive remedy provision of the Compensation Act prohibits employers from being tortiously liable for injuries to their employees. We are persuaded that the rule that best incorporates the design of the legislature and fairness to the parties is one denying all claims of contribution from employers who comply with the Compensation Act.

A.

Whether a third-party tortfeasor sued by an injured employee can recover contribution from a negligent employer who has complied with state workmen's compensation procedures has aptly been called perhaps the most evenly balanced controversy in all of compensation law. 2 A. Larson, The Law of Workmen's Compensation § 76.11, at 14-561 (1987). As we noted in another context:

[T]here are conflicting policy considerations involved. It is undoubtedly true that the legislature has altered traditional theories of loss allocation in tort with the passage of the Uniform Contribution Among Tortfeasors Act, 13-50.5-101 to -106, C.R.S. 1973 (1980 Supp.) and with the introduction of a comparative negligence scheme into Colorado law. Section 13-21-111, C.R.S. 1973. The ability of a jury to apportion fault on a percentage basis among plaintiffs and joint tortfeasors alike is now accepted. We also recognize that among joint tortfeasors there is a right of contribution, again according to the relative degree of fault of each. Section 13-50.5-103, C.R.S. 1973 (1980 Supp.).

Public Serv. Co. v. District Court, 638 P.2d 772, 777 (Colo.1981) (denial of motion to file third-party complaint alleging indemnity or contribution was not an abuse of discretion).

The statutory scheme in Colorado closely resembles those in other states. Section 8-42-102, 3B C.R.S. (1986), the exclusive remedy provision of Colorado's Compensation Act, provides:

An employer who has complied with the provisions of articles 40 to 54 of this...