Jones v. Fisher

Jones v. Fisher
1998 OK CIV APP 120
69 OBJ 3270
Case Number: 91222
Decided: 07/10/1998
Mandate Issued: 08/14/1998

RELEASE FOR PUBLICATION BY ORDER OF THE COURT OF CIVIL APPEALS,
IN THE COURT OF CIVIL APPEALS OF THE STATE OF OKLAHOMA;
DIVISION I.

Bruce Jones, Plaintiff,
vs.
Larry Fisher, individually, Defendant, and AMERICAN AIRLINES, INC., a Delaware corporation doing business in Oklahoma, Defendant/Third-Party Plaintiff/Appellee,
vs.
FLINTCO, INC., an Oklahoma corporation, and SUN DIAL PAINTING, INC., an Oklahoma corporation, Third-Party Defendants/Appellants.

APPEAL FROM THE DISTRICT COURT OF TULSA COUNTY, OKLAHOMA;
HONORABLE JANE P. WISEMAN, DISTRICT JUDGE.

REVERSED

Melissa M. Minton, Neil D. Van Dalsem, Tulsa, Oklahoma, For Third-Party Defendants/Appellants,
James Weger, Tulsa, Oklahoma, For Third-Party Plaintiff/Appellee.

OPINION

CARL B. JONES, Vice-Chief Judge

¶1 The issue presented in this case is whether the trial court correctly entered summary judgment in favor of Appellee American Airlines, Inc. against contractor Flintco, Inc. and subcontractor Sun Dial Painting, Inc. [collectively, Appellants]. After review of the record and the legal authorities, we conclude it did not, and so reverse.

¶2 American hired Flintco in 1989 to build a hanger. Flintco subcontracted part of the work to Sun Dial Painting. In May, 1994, an employee of Sun Dial was injured through the negligence of an airline employee. In June, 1995, American made demand on Flintco and Sun Dial to defend the injured party's claim. The injured party brought suit against the tortfeasor and American in 1996. With its answer, the airline filed a third-party action against Flintco for contribution and indemnity, and against Sun Dial for indemnity. By separate correspondence, American again made written demand for indemnity upon Flintco and Sun Dial.

¶3 The indemnity demands were made based on the following provisions in the contract between American and Flintco, and in the subcontract between Flintco and Sun Dial. The former provided that Flintco would indemnify the airline "[t]o the fullest extent permitted by law ... from and against all claims, damages, losses and expenses, including but not limited to attorneys' fees, arising out of or resulting from performance of the Work, ..." The latter incorporated the terms of the general contract and included a separate indemnity clause in favor of Flintco.

¶4 Flintco and Sun Dial refused both of American's demands to assume its defense. Only after the injured party had been deposed and his testimony may have shown that either Flintco or Sun Dial was partly to blame for his injuries did Appellants agree to assume American's defense. Their agreement was limited, however, to assuming costs of defense from that point forward and paying the amount of any settlement or adverse verdict. Appellants reserved the right to question whether, and to what extent, American was entitled to recover for attorney fees and costs incurred earlier.

¶5 The injured party's claim was eventually settled. After that, Appellants moved for partial summary adjudication of their liability for all of the sums American had demanded. Appellants argued that American incurred some of the claimed fees and costs in pursuit of its quest for indemnity which could not be recovered afterCockings v. Austin, 1995 OK 46, 898 P.2d 136, andUnited General Ins. Co. v. Crane Carrier Co., 1984 OK 47, 695 P.2d 1334.

¶6 InUnited, the court was tendered a certified question from federal court: Whether a prevailing third-party plaintiff, after suffering an adverse judgment in the plaintiffs' products liability action, could recover attorney fees expended in litigating a third-party action and/or attorney fees recovered from it by the plaintiff. The court answered the first part of the question in the negative, and the second in the affirmative. Only the first part concerns us here. On that point, the court said:

As a general rule, an indemnitee is entitled to recover as part of his damages, reasonable attorney's fees. The allowance of attorney's fees is limited to the defense of the claim indemnified against and does not extend to services rendered in establishing the right of indemnity. [citation omitted]

United General

¶7 InCockings, the trial court entered judgment in favor of minority shareholders against a majority shareholder on their claim for indemnity, but denied their request for attorney fees. As inUnited, the trial court began its analysis of the indemnity issue by distinguishing between recovery of attorney fees incurred in defense of the underlying claim and fees incurred to press a claim for indemnity. SeeCockings, 1995 OK 46 at ¶ 27, 898 P.2d at 141;United, 1984 OK 47 at ¶ 21, 685 P.2d at 1339. But, there is no indication inCockings whether a written indemnity clause existed in the shareholders' agreement to do business or whether the indemnity claim by the minority shareholders was based merely on their legal relation.

¶8 American filed a cross-motion for summary judgment. It admitted that a part of the fees and expenses requested were related to obtaining indemnity from Appellants. It argued, however, that Appellants' reliance onCockings andUnited was misplaced because both of those cases involved indemnity implied by law. American argued that the language of the indemnity provision in the contract between it and Flintco was broad enough to encompass recovery for all of the attorney fees and expenses it had incurred since it was first sued by the injured party, even though some of those fees and costs related to demands for indemnity and the feasibility, preparation, filing, and proceedings in aid of its third-party indemnity claim.

¶9 The well-established rule is that attorney fees are not recoverable unless specifically allowed by statute or by an enforceable contract.Rout v. Crescent Pub. Works Auth., 1994 OK 85, ¶ 9, 878 P.2d 1045, 1049. Given the existence of a contractual indemnity clause, the court's task reduces to interpretation and construction of the contract language.

¶10 The narrower construction of the indemnity clauses proffered by Appellants is based onUnited's citation ofJones v. Strom Const. Co., 84 Wash. 2d 518, 527 P.2d 1115 (1974). The Supreme Court of Washington in that case rejected a broad interpretation of a similar indemnity clause in a subcontract for masonry work and materials. As the court there noted, an indemnity clause which purports to absolve an indemnitee from liability for its own acts or omissions is not favored, and must be strictly construed against the indemnitee. Id., 527 P.2d at 1118. Also, "such clauses are to be viewed realistically, recognizing the intent of the parties to allocate between them the cost or expense of the risk of losses or damages arising out of performance of the contract." Id.

¶11 In our view, the interpretation of the indemnity provisions urged by American - that except for execution of the contract with Flintco and construction of the hanger it would not have been required to defend the injury claim by Sun Dial's employee - is overbroad. We hold that "arising out of or resulting from performance of the Work" as used in the American/Flintco contract does not include the attorney fees and expenses incurred by American to establish and pursue its indemnity claim against Flintco and Sun Dial. In order to recover those fees and costs, the indemnity clause in question must specifically allow such recovery.

¶12 The parties stipulated to the amounts of fees American incurred defending the injured party's claim and asserting its claim for indemnity from Flintco and Sun Dial. Only the latter amount is at issue here. Because the trial court erroneously construed the contractual provisions to permit recovery of attorney fees and costs in pursuit of the indemnity claim, the judgment in favor of American must be, and to that extent hereby is, reversed.

¶13 REVERSED.

JOPLIN, P.J. and GARRETT, J., concur.

FOOTNOTES

The phrase "claims, damages, losses and expenses" included the injured party's claim. "The work" was defined as the required construction, all necessary labor, and all materials and equipment (to be) incorporated in such construction.