City of Wilmington v. NC Natural Gas Corp.

450 S.E.2d 573 (1994)

The CITY OF WILMINGTON, Plaintiff, v. NORTH CAROLINA NATURAL GAS CORPORATION, Defendant.

No. 935SC1301.

Court of Appeals of North Carolina.

December 6, 1994.

*575 Johnson & Lambeth by Maynard M. Brown, for plaintiff-appellant City of Wilmington.

McCoy, Weaver, Wiggins, Cleveland & Raper by Jeffrey N. Surles, and Ragsdale, Liggett & Foley, Fayetteville by Peter M. Foley and Stephanie H. Autry, Raleigh, for defendant-appellee N.C. Natural Gas Corp.

EAGLES, Judge.

Plaintiff asserts that the trial court erred by granting defendant's motion for summary judgment based on defendant's third, fourth, fifth, and eighth defenses in its answer. After careful review of the record, we affirm. We will separately address each defense on which the trial court granted summary judgment.

First, we review the standard for granting a summary judgment motion. A court grants a motion for summary judgment when "the evidence before the court demonstrates that there is no genuine issue as to any material fact and that a party is entitled to a judgment as a matter of law." Kirkpatrick & Associates v. Wickes Corp., 53 N.C.App. 306, 307, 280 S.E.2d 632, 634 (1981), citing G.S. 1A-1, Rule 56(c).

Defendant's third defense in its answer stated that plaintiff's negligence proximately caused the explosion and resulting damage and that defendant never agreed to indemnify plaintiff from plaintiff's own negligence. In contrast, plaintiff claims that defendant signed an indemnity provision that indemnified plaintiff from all liability for any damages that its actions might cause. We do not agree with plaintiff's contention.

Courts do not favor indemnity contracts that relieve the indemnitee from liability for its own negligence. New River Crushed Stone v. Austin Powder Co., 24 N.C.App. 285, 287, 210 S.E.2d 285, 287 (1974) (citations omitted). Accordingly, courts strictly construe indemnity clauses against *576 the party asserting it. Hill v. Carolina Freight Carriers Corp., 235 N.C. 705, 710, 71 S.E.2d 133, 137 (1952). Courts will not read into an indemnity agreement provisions "which are neither expressly nor reasonably inferable from the terms." Kirkpatrick & Associates v. Wickes Corp., 53 N.C.App. 306, 308, 280 S.E.2d 632, 634 (1981) (citations omitted).

Here, there is no language in the indemnity agreement that explicitly provides that plaintiff will be insulated from its own negligence. In contrast, the agreement clearly provides only that defendant will hold plaintiff harmless for all damages resulting from defendant's operation of a gas system. Plaintiff points to the language at the end of the first paragraph of the indemnity clause to argue that the intention of the parties was for defendant to hold plaintiff harmless for all actions. However, this language, stating that the parties will construe the provision broadly in favor of the plaintiff, is not clear and unequivocal. "Mere general, broad, and seemingly all-inclusive language in the indemnifying agreement has been said not to be sufficient to impose liability for the indemnitee's own negligence." 41 Am.Jur.2d, Indemnity, § 15. Accordingly, the trial court did not err in granting summary judgment for defendant on defendant's third defense.

Defendant's fourth defense provided that the franchise agreement was void under G.S. 22B-1 insofar as it might require defendant to indemnify plaintiff from plaintiff's own negligence. G.S. 22B-1 provides that construction indemnity agreements are invalid insofar as they insulate the promisee from liability for its own negligence. Plaintiff argues that the franchise agreement is not a construction contract and therefore G.S. 22B-1 does not apply to void the indemnity provision of the franchise agreement. Plaintiff's argument fails for several reasons.

First, the franchise agreement explicitly provides that the indemnity provision is subject to the limitations of G.S. 22B-1. If G.S. 22B-1 did not apply, there would have been no reason for plaintiff, who drafted the agreement, to include it in the franchise agreement. Secondly, G.S. 22B-1 applies to the franchise agreement because the franchise agreement includes much of the same language which appears in G.S. 22B-1. G.S. 22B-1 provides that it applies to any indemnity agreement that relates "to the design, planning, construction, alteration, repair or maintenance of a building, structure, highway, road, appurtenance or appliance, including moving, demolition and excavating connected therewith." The indemnity provision in the franchise agreement provides that defendant will indemnify plaintiff for damages related to "the design, construction, installation, maintenance, or operation of a gas system by [defendant]." Plaintiff cannot persuasively argue that G.S. 22B-1 does not apply to the franchise agreement when the franchise agreement, which plaintiff drafted, describes the scope of defendant's activities by using many of the same terms that G.S. 22B-1 uses.

Finally, plaintiff cannot legitimately assert that G.S. 22B-1 does not apply to the franchise agreement because plaintiff admitted during discovery that "the ordinance granting a natural gas franchise to [defendant] as agreed to between [plaintiff] and [defendant] gives [defendant] the right to construct, repair, and maintain natural gas structures in the public streets, rights-of-way, and other public places." A contract for constructing, repairing, and maintaining structures is exactly what G.S. 22B-1 contemplates. Plaintiff's argument that the statute does not apply to the indemnity provision is without merit. This assignment of error fails.

In its fifth defense, defendant claimed that plaintiff was not entitled to indemnification because of its own negligence. Plaintiff again contends that the indemnity clause provides that defendant will hold plaintiff harmless for plaintiff's own negligence. As we stated in discussing defendant's fourth defense supra, we do not accept plaintiff's interpretation of the indemnity clause. Accordingly, we conclude that the trial court did not err in granting summary judgment for defendant on its fifth defense.

In its eighth defense, defendant asserted that because plaintiff voluntarily paid the injured workers sums of money above the required worker's compensation payments, defendant was not required to reimburse plaintiff for these voluntary settlement payments. Plaintiff claims that it made these payments pursuant to a City ordinance which provided that plaintiff could provide injured workers with up to twenty-one days of injury leave in addition to the required worker's compensation payments. However, the ordinance does not mandate additional leave, but merely gives plaintiff the discretionary authority to award the additional days of leave.

Indemnity does not cover payments to a third person for which the indemnitee is not liable and which the indemnitee voluntarily or improperly pays. 41 Am.Jur.2d, Indemnity, § 35. Here, plaintiff was not legally obligated to pay the amount in excess of the required worker's compensation payments; plaintiff's actions were voluntary. Accordingly, we hold that defendant was not required to reimburse plaintiff for these payments. Here too, the trial court did not err in granting summary judgment for defendant.

Affirmed.

ORR and JOHN, JJ., concur.