ATTORNEYS FOR APPELLANT: ATTORNEY FOR APPELLEE:
RONALD J. WAICUKAUSKI SHANNON L. ROBINSON
JANA K. STRAIN Kelley, Belcher & Brown
Price, Jackson, Waicukauski & Mellowitz, P.C. Bloomington, Indiana
COURT OF APPEALS OF INDIANA
GKN CO., formerly known as )
GUST K. NEWBERG CONSTRUCTION )
) No. 49A02-0304-CV-282
STARNES TRUCKING, INC. )
APPEAL FROM THE MARION SUPERIOR COURT
The Honorable Steven H. Frank, Judge
Cause No. 49D01-9405-CT-0434
November 14, 2003
OPINION - FOR PUBLICATION
Larry Magness sought recovery from Gust K. Newberg Construction Company (GKN) for injuries
resulting from a fall while working on a construction project in Indianapolis for
which GKN was the general contractor. GKN, after settling with Magness pursuant
to an Agreed Judgment, brought an indemnity complaint against Magnesss employer and GKNs
subcontractor, Starnes Trucking, Inc. (Starnes). GKN filed a Motion for Partial Summary
Judgment and the trial court denied GKNs motion. Starnes filed a Motion
for Summary Judgment on the indemnity claim and the trial court granted Starness
motion. GKN now appeals. We reverse and remand with instructions.
GKN raises one issue for our review which we restate as whether the
trial court properly granted Starness Motion for Summary Judgment and denied GKNs Motion
for Partial Summary Judgment on the indemnity claim.
Facts and Procedural History
GKN was the general contractor for a highway construction project contracted through the
Indiana Department of Transportation for repair work on I-65 and I-465 on the
south side of Indianapolis. GKN subcontracted with Starnes to perform certain hauling
services on the project. Magness was a truck driver employed by Starnes
to work on the project.
During the project, GKN built a concrete batch plant with an area for
fueling the trucks that hauled the concrete. This fueling area included a
containment wall, or moat, consisting of a concrete berm surrounding the perimeter of
the fueling area with the purpose of controlling fuel spills. On July
14, 1992, while working on the project, Magness stopped in the fueling area
to refuel his truck. During the refueling, he stepped on the concrete
berm and fell.
Magness initiated this action by seeking recovery from GKN for the injuries which
resulted from his fall.See footnote Based upon an indemnity provision in its subcontract
for the project, GKN filed a Third Party Complaint for Indemnity against Magnesss
employer, Starnes. The indemnity provision, located in paragraph seventeen of the subcontract,
[Starnes] shall indemnify and hold harmless the Owner, the Architect Engineer, and [GKN]
and their agents and employees from and against all claims, damages, causes of
action, losses and expenses, including attorneys fees, arising out of or resulting from
the performance of the work, provided that such claim, damage, loss or expense
(1) is attributable to bodily injury, sickness, disease or death, or to injury
to or destruction of tangible property (other than the work itself) including the
loss of use resulting therefrom; and (2) is caused in whole or in
part by any negligent act or omission of [Starnes] or any of his
subcontractors [sic], anyone directly or indirectly employed by any of them or for
anyone for whose acts any of them may be liable, regardless of whether
it is caused in part by a party indemnified hereunder.
Appellants Appendix at 46.
GKN moved for partial summary judgment on its third party claim for indemnity
against Starnes. Starnes filed a cross-motion for summary judgment, arguing that the
indemnity provision was unenforceable for failing to state with clarity that Starnes agreed
to indemnify GKN for GKNs own negligence. The trial court denied GKNs
motion and granted Starness cross-motion.
On March 3, 2003, the trial court approved an Agreed Judgment between Magness
and GKN. In the Agreed Judgment, Magness accepted responsibility for twenty per
cent of the negligence and GKN accepted responsibility for eighty per cent of
the negligence. The trial court found that Magnesss total damages were $250,000.00
and entered judgment against GKN for $200,000.00, representing eighty per cent of Magnesss
total damages.See footnote It was specifically noted that the Agreed Judgment did not
purport to settle GKNs third party claim against Starnes and that GKN reserved
the right to appeal the summary judgment entered in favor of Starnes.
This appeal ensued.
Discussion and Decision
I. Standard of Review
Summary judgment is appropriate only if there is no genuine issue as to
any material fact and the moving party is entitled to judgment as a
matter of law. Ind. Trial Rule 56(C);
Hagerman Constr. Co. v. Long
Elec. Co., 741 N.E.2d 390, 391 (Ind. Ct. App. 2000), trans. denied.
Relying upon specifically designated evidence, the moving party bears the burden of showing
that there are no genuine issues of material fact and that it is
entitled to judgment as a matter of law. Hagerman, 741 N.E.2d at
391. If the moving party meets these two requirements, the burden then
shifts to the non-movant to set forth specifically designated facts showing that there
is a genuine issue for trial. Id. A genuine issue of
material fact exists where facts concerning an issue which would dispose of the
litigation are in dispute or where the undisputed material facts are capable of
supporting conflicting inferences on such an issue. Id. Even if the
facts are undisputed, summary judgment is inappropriate where the record reveals an incorrect
application of the law to the facts. Id. On appeal, this
court is bound by the same standard as the trial court, and we
consider only those matters which were designated to the trial court. Id.
at 392. We liberally construe all designated evidentiary material in the light
most favorable to the non-moving party to determine whether there is a genuine
issue of material fact. Id. The party that lost in the
trial court has the burden of persuading the appellate court that the trial
court erred. Id.
II. Motions for Summary Judgment
The fact that the parties filed cross-motions for summary judgment does not alter
our standard of review. Lake States Ins. Co. v. Tech Tools, Inc.,
743 N.E.2d 314, 318 (Ind. Ct. App. 2001). Instead, we must consider
each motion separately to determine whether the moving party is entitled to judgment
as a matter of law. Id. If our review of the
record discloses an incorrect application of the law to the undisputed facts, then
we must reverse the grant of summary judgment. Id. at 317.
A. Starness Motion for Summary Judgment
On September 11, 2002, Starnes filed its Motion for Summary Judgment, arguing that
the indemnification clause in the Subcontractor agreement was unenforceable for failing to state
with clarity that Starnes agreed to indemnify GKN for GKNs own negligence.
The trial court granted Starness motion.
Initially, we review the relevant rules of contract interpretation. When reviewing the
trial courts interpretation of a contract, we view the contract in the same
manner as the trial court. Exide Corp. v. Millwright Riggers, Inc., 727
N.E.2d 473, 478 (Ind. Ct. App. 2000), trans. denied. The court should
attempt to determine the intent of the parties at the time the contract
was made by examining the language used to express their rights and duties.
Id. Words used in a contract are to be given their
usual and common meaning unless, from the contract and the subject matter thereof,
it is clear that some other meaning was intended. Id. Words,
phrases, sentences, paragraphs, and sections of a contract cannot be read alone.
Id. The entire contract must be read together and given meaning, if
Absent prohibitive legislation, no public policy prevents parties from contracting as they desire.
Hagerman, 741 N.E.2d at 392. For instance, in Indiana, a party
may contract to indemnify another for the others own negligence. Id.
However, this may only be done if the party knowingly and willingly agrees
to such indemnification. Id. Such provisions are strictly construed and will
not be held to provide indemnification unless it is so stated in clear
and unequivocal terms. Id. We disfavor indemnification clauses because we are
mindful that to obligate one party for the negligence of another is a
harsh burden that a party would not lightly accept. Id.
This court has followed a two-step analysis to determine whether a party has
knowingly and willingly accepted this burden. Id. See also Exide, 727
N.E.2d at 480; Moore Heating & Plumbing, Inc. v. Huber, Hunt & Nichols,
583 N.E.2d 142, 146 (Ind. Ct. App. 1991). First, the indemnification clause
must expressly state in clear and unequivocal terms that negligence is an area
of application where the indemnitor (in this case, Starnes) has agreed to indemnify
the indemnitee (in this case, GKN). See Hagerman, 741 N.E.2d at 392.
The second step determines to whom the indemnification clause applies. Id.
Again, in clear and unequivocal terms, the clause must state that it
applies to indemnification of the indemnitee by the indemnitor for the indemnitees own
1. Negligence as an Area of Application
The first step of the analysis is to determine if the indemnification clause
clearly and unequivocally states that negligence is an area of application. The
Moore court noted that the indemnification clause considered therein contemplated liability, damages, actions,
omissions, duties, and causations which the court stated are the language of negligence.
Moore, 583 N.E.2d at 144. Therefore, the Moore court held that
the challenged indemnification clause clearly and unequivocally stated that negligence was an area
of application. Id. See also Hagerman, 741 N.E.2d at 393 (holding
that an indemnification clause clearly and unequivocally applied to negligence because the clause
spoke of claims, damages, losses and expenses attributable to bodily injury, sickness, disease
or death and injury to or destruction of property); Exide, 727 N.E.2d at
480 (holding that an indemnification clause applied to the acts of negligence because
it discussed liability, claims and suits and contemplated losses, fines, and expenses).
In the present case, the indemnification clause includes: claims, damages, causes of action,
losses and expenses, including attorneys fees, arising out of or resulting form the
performance of the work . . . provided that such claim, damage, loss
or expense (1) is attributable to bodily injury, sickness, disease or death or
to injury or destruction of tangible property . . . . Appellants
Appendix at 46. Therefore, the indemnification clause expressly states in clear and
unequivocal terms that negligence is an area of application where Starnes has agreed
to indemnify GKN. This satisfies the first step of the analysis.
2. GKNs Own Negligence
When applying the second step, we must determine whether the indemnification clause clearly
and unequivocally applies to indemnification of GKN by Starnes for GKNs own negligence.
GKN directs our attention to Moore, in which this court held that
an indemnification clause clearly and unequivocally identified the subject of the indemnitors indemnification
for the indemnitees own negligence. Moore, 583 N.E.2d at 144. The
facts in Moore are identical to the facts in the present case in
that an employee sued a general contractor for injuries suffered while working at
a job site and the general contractor sued the sub-contractor for indemnification.
The indemnification clause in Moore stated:
[Moore] agrees to indemnify [Huber] against and hold [Huber] harmless from any and
all liability . . . from any claim or cause of action of
any nature arising while on or near the Job Site . . .
including claims relating to its . . . employees, or by reason of
any claim or dispute of any person or entity for damages from any
cause directly or indirectly relating to any action or failure to act by
[Moore], its representatives, employees, subcontrators or suppliers, and whether or not it is
alleged that [Huber] in any way contributed to the alleged wrongdoing or is
liable due to a nondelegable duty. It is the intent of the
parties that [Moore] shall indemnify [Huber] under [this indemnification clause and the insurance
clause] to the fullest extent permitted by law, however, [Moore] may not be
obligated to indemnify [Huber] for the sole negligence or willful misconduct where such
indemnification is contrary to law, but otherwise it is the intent of the
parties that [Moore] shall indemnify [Huber] to the fullest extent permitted by law
for such liability.
Id. at 144. The trial court entered summary judgment in favor of
the general contractor on the indemnification claim and the subcontractor appealed.
Upon appeal, the court focused on the statement however, [Moore] may not be
obligated to indemnify [Huber] for the sole negligence or willful misconduct where such
indemnification is contrary to law and determined that such a statement unquestionably, expressly,
clearly, and unequivocally identified the subject of Moores indemnification of Huber for Hubers
own negligence. Id. Therefore, the court held that the indemnification clause
Relying on Moore, GKN contends that the indemnification clause at hand clearly and
unequivocally identifies the subject of Starness indemnification of GKN for GKNs own negligence.
We agree. The indemnification clause in the immediate case states clearly
that Starnes will indemnify GKN for damages resulting from bodily injury where the
. . . is caused in whole or in part by any negligent
act or omission of [Starnes] or any of his subcontractors [sic], anyone directly
or indirectly employed by any of them or for anyone for whose acts
any of them may be liable, regardless of whether it is caused in
part by a party indemnified hereunder.
Appellants Appendix at 46 (emphasis added). Therefore, it is clear that the
indemnification clause states that Starness liability for indemnification to GKN will not be
negated merely because GKN is partly at fault. It is equally clear,
and both parties agree, that Starnes was not to indemnify GKN for any
injury which was the result of GKNs negligence alone. However, through the
indemnification clause, Starnes has agreed to indemnify GKN for GKNs own negligence where
the injury is caused partly by the negligence of Starnes or any of
its employees. B. GKNs Motion for Partial Summary Judgment
For its position, Starnes directs our attention to Exide and Hagerman. In
Exide, a construction worker brought action against the operator of the factory in
which he was working and the operator brought a third-party indemnification claim against
the workers employer. The indemnification provision provided:
Without limiting the foregoing, Contractor, for itself, its successors and assigns releases Exide
and agrees to indemnify, defend with counsel satisfactory to Exide and hold harmless
Exide and its officers and employees from any [sic] against any and all
liability, claims, actions, suits, losses, costs and expenses (including without limitation attorneys fees),
fines or penalties which may arise in any way, directly or indirectly, from
Contractor, its employees, subcontractors and their employees, third persons or the government, and
from entry onto the Site or any other Exide property or from use,
the possession, handling, storage, transportation, and treatment or disposal, of any materials or
exposure thereto or contract therewith. This indemnity shall survive the termination or
expiration of any contract between the contractor and Exide or receipt and removal
of the materials. If any portion of this indemnity shall in the
future be deemed or held to be invalid or unenforceable, the indemnity shall
apply and be enforceable to the maximum extent allowed by law.
Exide, 727 N.E.2d at 479. This court held that the clause did
not explicitly state that the contractors were required to indemnify Exide for its
own negligent acts and therefore, the contract was unenforceable. Id.
In Hagerman, an injured employee of a subcontractor brought action against the general
contractor and the general contractor brought a third-party indemnification claim against the subcontractor.
The indemnification clause in Hagerman provided:
To the fullest extent permitted by law, the Subcontractor shall indemnify and hold
harmless the Owner, Contractor, Architect, Architects consultants, and agents and employees of any
of them from and against claims, damages, losses and expenses, including but not
limited to attorneys fees, arising out of or resulting from performance of the
Subcontractors Work under this Subcontract, provided that such claim, damage, loss or expense
is attributable to bodily injury, sickness, disease or death, or to injury to
or destruction of tangible property (other than the Work itself) including loss of
use resulting therefrom, but only to the extent caused in whole or in
part by negligent acts or omissions of the Subcontractor, the Subcontractors Sub-subcontractors, anyone
directly or indirectly employed by them or anyone for whose acts they may
be liable, regardless of whether or not such claim, damage, loss or expense
is caused in part by a party indemnified hereunder. Such obligation shall
not be construed to negate, abridge, or otherwise reduce other rights or obligations
of indemnity which would otherwise exist as to a party or person described
in [this paragraph].
Hagerman, 741 N.E.2d at 392-93. Upon appeal, this court held that the
indemnification clause did not clearly and unequivocally state that Long was to indemnify
Hagerman for its own negligent acts. Id. at 393. Specifically, the
court noted that the phrase but only to the extent clearly limited Longs
obligation to indemnify Hagerman only to the extent that Long, its sub-subcontractors, employees,
and anyone for whom it may be liable were negligent. Id. at
393-94. Otherwise, the court continued, the clause contained no clear statement that
would give the contractors notice of the harsh burden that complete indemnification would
impose. Id. at 394.
Contrary to Exide and Hagerman, the indemnification clause in the current case clearly
and unequivocally operated to alert Starnes to the burden it undertook. The
clause clearly states that Starnes will indemnify GKN even when GKN is partly
at fault. We note that Starnes has experience in contracts and should
have recognized the burden to which it agreed in the Subcontractor Agreement.
Exide and Hagerman are distinguishable and are not instructive.
Therefore, we reverse the trial courts granting of Starness Motion for
Summary Judgment and hold that the indemnification clause clearly and unequivocally states that
Starnes was to indemnify GKN for GKNs own negligence provided that GKN was
not completely at fault.
On July 26, 2002, GKN filed its Motion for Partial Summary Judgment with
the trial court. In that motion, GKN requested summary adjudication that Starnes
was required to indemnify GKN for any judgment, loss, expense, or attorneys fee
incurred by GKN if Magness was found to have any contributory fault.
The trial court denied GKNs Motion for Partial Summary Judgment. Based upon
the discussion above and our holding that the indemnification agreement clearly and unequivocally
notified Starnes of its indemnification of GKN for GKNs own negligence, we reverse
the trial court and order that GKNs Motion for Partial Summary Judgment be
granted. Thus, we hold that Starnes is required to indemnify GKN for
any judgment, loss, expense, or attorneys fee incurred by GKN if Starnes or
any of its employees including Magness are found to have any
Although we reverse and remand to the trial court for further proceedings, we
must address one additional issue. Specifically, we need to determine whether Starnes
can be held to the Agreed Judgment when Starnes was not a party
to that judgment. We hold that it cannot. Although Starnes was
not a necessary party to the Agreed Judgment, we believe that it would
be unfair to allow GKN and Magness to create a judgment which, in
essence, would force Starnes to pay for Magnesss injuries. GKN has argued,
and no doubt will argue again, that the Agreed Judgment makes Magnesss negligence
clear that Magness was twenty per cent at fault. However, we
are hesitant to agree with that conclusion. If we follow that reasoning,
a general contractor will be able to approach an injured worker and offer
that worker money for his injuries immediately and thereby allow the worker to
collect his money without presenting evidence at trial. However, by admitting to
a percentage of the negligence, the worker (perhaps unknowingly) binds the subcontractor to
a judgment in which the subcontractor is not a party.
We look to State Farm Fire & Cas. Co. v. T.B. ex rel.
Bruce, 762 N.E.2d 1227 (Ind. 2002) for guidance. In Bruce, State Farm
Fire and Casualty Company (State Farm) declined to represent an insured homeowner in
a suit brought by a child whom the insureds husband molested during daycare
in the insureds home. The insured agreed to a consent judgment of
$375,000.00 with the stipulation that none of it would be collected from the
insured who then assigned all policy rights to the child. The trial
court entered the judgment and later granted summary judgment in favor of the
child in proceedings supplemental against State Farm. State Farm appealed, claiming that
the trial court erred when it estopped State Farm from raising a childcare
exclusion in the homeowners policy as a defense.
The Bruce court stated that the agreed judgment addressed State Farms contractual obligations
under the homeowners policy even though the childs claim did not. Therefore,
the court held that such statements in the judgment were tantamount to dictum
and State Farm was not estopped from challenging those statements during proceedings supplemental.
Id. at 1232. Therefore, the court stated that there was a
genuine issue of material fact regarding the childcare exclusion and held that summary
judgment for either party was unsustainable. Id. at 1233. The court
reversed the trial court and remanded for a trial on the merits.
Here, GKN and Magness entered into an agreement in which GKN agreed to
pay eighty per cent of Magnesss damages.
See footnote However, any statements regarding Magnesss
admission of negligence are tantamount to dictum. Therefore, a genuine issue of
material fact remains regarding Magnesss negligence. We remand to the trial court
for a trial on the merits regarding Magnesss negligence.See footnote
The indemnification clause in the Subcontractor Agreement clearly and unequivocally identified the subject
of Starness indemnification of GKN for GKNs own negligence. Thus, the trial
court erred in granting Starness Motion for Summary Judgment and in denying GKNs
Motion for Partial Summary Judgment. However, the Agreed Judgment contained statements regarding
Magnesss negligence which are tantamount to dictum. Therefore, a genuine issue of
material fact remains as to whether GKN was wholly or only partly negligent
and we remand to the trial court for a trial on the merits.
Reversed and remanded with instructions.
NAJAM, J., and MATHIAS, J., concur.
GKN filed a Motion for Oral Argument with this court. GKNs
motion is hereby denied
This case was previously the subject of an interlocutory appeal on a
motion to dismiss filed by GKN on the grounds that Magnesss exclusive remedy
against GKN was under the Indiana Workers Compensation Act (the Act). Our
supreme court held that Magness was not an employee of GKN and therefore,
GKN failed to establish that Magnesss claim of injury fell within the scope
of the Act.
GKN Co. v. Magness, 744 N.E.2d 397, 407 (Ind.
GKN has satisfied the Agreed Judgment by paying $200,000.00 to Magness.
Footnote: We note that the Agreed Judgment specifically states that it does not
purport to settle GKNs third party claim against Starnes. Appellants Appendix at
Footnote: We recognize that, upon remand, GKN need only prove that Magness was
one per cent at fault and Starnes will be required to indemnify GKN
for Magnesss injuries. However, we believe it is important to allow Starnes
to have an opportunity to litigate the question of Magnesss negligence rather than
allowing GKN to circumvent this litigation by approaching Magness with an offer which
Magness could not refuse.