White v. Quechee Lakes Landowners' Assn.

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White v. Quechee Lakes Landowners' Assn. (98-243); 170 Vt. 25; 742 A.2d 734

[Filed 24-Sept-1999]

       NOTICE:  This opinion is subject to motions for reargument under
  V.R.A.P. 40 as well as formal  revision before publication in the Vermont
  Reports.  Readers are requested to notify the Reporter  of Decisions,
  Vermont Supreme Court, 109 State Street, Montpelier, Vermont 05609-0801 of
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  to press.

                                 No. 98-243

Anthony G. White, Individually and	         Supreme Court
as Administrator of the Estate of
Elizabeth L. White
                                                 On Appeal from
     v.		                                 Windsor Superior Court

Quechee Lakes Landowners' Association, Inc.	


Helo Factories, Ltd.                      	 April Term 1999

Alan W. Cheever, J.

       Kaveh S. Shahi of Cleary Shahi Associates, P.C., Rutland, for
  Third-Party Plaintiff-Appellant.

       Robert D. Rachlin, Walter E. Judge, Jr. and Eric A. Poehlmann of Downs
  Rachlin & Martin   PLLC, Burlington, for Third-Party Defendant-Appellee.

PRESENT: Amestoy, C.J., Morse, Johnson and Skoglund, JJ., and Gibson, J. (Ret.), 	
	 Specially Assigned

       AMESTOY, J.   This is an indemnity case concerning the tragic death of
  a woman who  lost consciousness in a sauna owned and operated by
  third-party plaintiff Quechee Lakes  Landowners' Association.  The
  plaintiff in the underlying action, Anthony White, obtained a  $450,000
  settlement from Quechee Lakes following the close of evidence in a wrongful
  death suit  in which he claimed that Quechee Lakes's negligence caused his
  wife's death.  Following the  settlement, Quechee Lakes filed suit seeking
  indemnity from the manufacturer and distributor of  the sauna heating unit
  and control panel, third-party defendant Helo Factories, Ltd.  The superior 
  court granted summary judgment in favor of Helo, and Quechee Lakes now
  appeals that 


  judgment.  We agree with the superior court that, as a matter of law,
  Quechee Lakes is not  entitled to indemnification; accordingly, we affirm
  the court's judgment.

                       I. Facts and Procedural History

       Quechee Lakes owns and operates a health club for the recreational use
  of its members.  The club maintains saunas within its men's and women's
  locker room facilities.  Helo  manufactured the heating unit and control
  panel used in the women's sauna, but was not involved  in designing or
  constructing the sauna itself.  In 1973, before ownership of the resort was 
  transferred to the Quechee Lakes Landowners' Association, the developer
  hired an independent  contractor to construct the sauna.  Quechee Lakes
  operated and maintained the sauna without  incident until February 1, 1994,
  when Elizabeth White was found lying unconscious on the floor  of the
  sauna.  She died several days later as the result of irreversible
  hyperthermia, leaving behind  her husband and three young children.

       Anthony White filed two wrongful death actions, one against Quechee
  Lakes in the  superior court in January 1995, and the other against Helo in
  federal court approximately one year  later.  The federal case eventually
  settled.  In the state court action, Mr. White alleged that  Quechee Lakes
  failed to implement necessary safeguards concerning use of the women's
  sauna,  including screening users, monitoring use, posting an adequate
  warning sign, and adding an  automatic shutoff device, a timer, a clock, a
  thermometer, and a window in the sauna door.  He  also alleged that a
  Quechee Lakes employee negligently turned up the heat while his wife was in 
  the sauna, without first checking to see if anyone was inside.
       In turn, Quechee Lakes filed a third-party complaint against Helo, but
  the parties agreed  to sever that complaint and postpone its resolution
  pending the outcome of the underlying action,  which was contested in an
  eight-day trial in October 1997.  Following the close of evidence in that 
  trial, but before the case was submitted to the jury, the parties reached a
  $450,000 settlement  agreement.  The agreement explicitly reserved Quechee
  Lakes's right to seek indemnification from  Helo, stating that the
  settlement was not for any active or independent 


  negligence on Quechee Lakes's part.

       After the underlying action settled, Helo and Quechee Lakes filed
  opposing motions for  summary judgment regarding the third-party complaint. 
  Relying on the Restatement of Restitution  § 95 (1937), which this Court
  adopted in Bardwell Motor Inn, Inc. v. Accavallo, 135 Vt. 571,  573, 381 A.2d 1061, 1062 (1977), the superior court ruled that Helo was entitled to
  judgment as  a matter of law on the implied indemnification claim because
  for twenty years preceding the  accident Quechee Lakes had acquiesced in
  the continuation of any dangerous condition in the  sauna attributable to
  Helo.  After its motion for reconsideration was rejected, Quechee Lakes
  filed  this appeal, arguing that the superior court erred by (1) basing its
  decision on grounds not raised  in Helo's motion for summary judgment; (2)
  placing the burden on Quechee Lakes to prove that  it had not acquiesced in
  any dangerous condition concerning the sauna; (3) relying on evidence  not
  submitted by the parties with their summary judgment motions; (4)
  incorrectly applying § 95  of the Restatement of Restitution to the facts
  of this case; and (5) concluding that there were no  material issues of
  disputed fact precluding summary judgment in Helo's favor.

                         II.  The Standard of Review

       In reviewing a decision to grant summary judgment, we apply the same
  standard as the  trial court, requiring the moving party to prove both that
  there is no genuine issue of material fact  and that it is entitled to
  judgment as a matter of law.  See V.C.R.P. 56(c); Chapman v. Sparta,  167
  Vt. 157, 159, 702 A.2d 132, 134 (1997); Peters v. Mindell, 159 Vt. 424,
  426, 620 A.2d 1268, 1269 (1992).  In determining whether a dispute over
  material facts exists, we accept as true  allegations made in opposition to
  the motion for summary judgment, so long as they are supported  by
  affidavits or other evidentiary material.  See Chapman, 167 Vt. at 159, 702 A.2d  at 134.   Nevertheless, the party opposing summary judgment may not
  rest upon the mere allegations or  denials in its pleadings, "but must set
  forth specific facts showing that there is a genuine issue for  trial." 
  V.R.C.P. 56(e).  Thus, mere conclusory allegations without facts to 


  support them are "insufficient to sustain a complaint for indemnity." 
  Central Hudson G. & E.  Corp. v. Hatzel & Beuhler, Inc., 202 N.Y.S.2d 818,
  822 (Sup. Ct. 1956), aff'd, 205 N.Y.S.2d 864 (N.Y. App. Div. 1960).

                          III. The Law of Indemnity

       The right to indemnity, which is an exception to our longstanding rule
  barring contribution  among joint tortfeasors, see Chapman, 167 Vt. at 159,
  702 A.2d  at 134, exists only when one  party has expressly agreed to
  indemnify another, or when the circumstances are such that the law  will
  imply such an undertaking.  See id.; Bardwell, 135 Vt. at 572, 381 A.2d  at
  1062.  Because  of the rule against contribution among joint tortfeasors
  and the fact that indemnification shifts the  entire loss from one party to
  another, see Peters, 159 Vt. at 428, 620 A.2d  at 1270, one who has  taken
  an active part in negligently injuring another is not entitled to
  indemnification from a second  tortfeasor who also negligently caused the
  injury.  See Fireside Motors, Inc. v. Nissan Motor  Corp., 479 N.E.2d 1386,
  1389 (Mass. 1985).  Rather, indemnification accrues "to a party who, 
  without active fault, has been compelled by some legal obligation, such as
  a finding of vicarious  liability, to pay damages occasioned by the
  negligence of another."  Morris v. American Motors  Corp., 142 Vt. 566,
  576, 459 A.2d 968, 974 (1982).  Generally, indemnity will be imputed only 
  when equitable considerations concerning the nature of the parties'
  obligations to one another or  the significant difference in the kind or
  quality of their conduct demonstrate that it is fair to shift  the entire
  loss occasioned by the injury from one party to another.  See W. Keeton,
  Prosser and  Keeton on the Law of Torts § 51, at 344 (5th ed. 1984).

       While it is difficult to state a general rule that will cover all
  cases, see id. at 343, implied  indemnification is usually appropriate only
  when the indemnitee is vicariously or secondarily  liable to a third person
  because of some legal relationship with that person or because of the 
  indemnitee's failure to discover a dangerous condition caused by the act of
  the indemnitor, who  is primarily responsible for the condition.  See id.
  at 341-43; Viens v. Anthony Co., 282 F. Supp. 983, 986 (D. Vt. 1968).  This latter principle is set forth in
  Restatement of Restitution §  95 (1937), which provides:

       Where a person has become liable with another for harm caused 
     to a third person because of his negligent failure to make safe a 
     dangerous condition of land or chattels, which was created by the 
     misconduct of the other or which, as between the two, it was the 
     other's duty to make safe, he is entitled to restitution from the other 
     for expenditures properly made in the discharge of such liability, 
     unless after discovery of the danger, he acquiesced in the 
     continuation of the condition.

       Applying this and the other principles stated above, this Court has
  held that (1) an  engineering company that contracted with the sellers of a
  home to design and build a septic system  would have to indemnify the
  sellers should they be found liable to the buyers for a defective 
  condition in the system, so long as the sellers did not acquiesce in that
  condition, see Peters, 159  Vt. at 429, 620 A.2d  at 1272; (2) the
  manufacturer of a defective automobile part was required  to indemnify the
  automobile manufacturer for injuries sustained as a result of the defect,
  see  Morris, 142 Vt. at 577, 459 A.2d  at 974; (3) an independent contractor
  was required to indemnify  a hotel operator for injuries sustained when a
  patron was struck by an automatic door that the  operator had hired the
  contractor to repair, see Bardwell, 135 Vt. at 574, 381 A.2d  at 1063; and 
  (4) a wholesaler whose employee had inserted a glass thermometer into a
  banana was required to  indemnify the owners of a market after a customer
  was injured biting into the banana, see  Digregorio v. Champlain Valley
  Fruit Co., 127 Vt. 562, 566, 255 A.2d 183, 186 (1969).

       On the other hand, this Court has held that (1) the employer of an
  employee injured  delivering a refrigerator to a private home was not
  required to indemnify the homeowners for the  employee's injuries, which
  were allegedly caused by the defective condition of the homeowners' 
  basement steps, see Hopper v. Kelz, 166 Vt. 616, 617, 694 A.2d 415, 416
  (1997) (mem.); (2)  the architect of an apartment complex containing a pond
  in which two children drowned was not  required to indemnify the owner of
  the complex, who acquiesced in the 


  obvious risk presented by the absence of a fence around the pond, Goulette
  v. Appleton, 153 Vt.  650, 651, 571 A.2d 74, 75 (1990) (mem.); and (3) the
  employer of an employee injured while  operating a defective side-boom
  counterweight used on a tractor was not required to indemnify  the
  manufacturer of the defective equipment, notwithstanding the manufacturer's
  claim that the  employer was aware of the defect, see Hiltz v. John Deere
  Indus. Equip. Co., 146 Vt. 12, 15,  497 A.2d 748, 752 (1985).

       In our most recent indemnity case, the owner of a building who had
  laid floor tiles in the  entranceway of the building settled a
  slip-and-fall lawsuit and then sought indemnification from  the tile
  distributor.  We reversed the trial court's summary judgment ruling in
  favor of the  distributor because there remained a material factual dispute
  over whether the owner had selected  the floor tiles or rather merely
  stated his needs and then relied on the distributor's  recommendation as to
  what type of tile was appropriate for the entranceway.  See Chapman, 167 
  Vt. at 161, 702 A.2d  at 135.

                    III.  Quechee Lakes' Claims of Error

                            A. Procedural Issues

       Before reviewing the merits of the trial court's decision, we address
  the issues Quechee  Lakes raises concerning the scope of the superior
  court's ruling and of the record both in the trial  court and here on
  appeal.  Quechee Lakes first complains that because the superior court's 
  summary judgment ruling relied on a position not argued by Helo in its
  summary judgment motion  -- that Quechee Lakes had acquiesced in any
  dangerous condition attributable to Helo -- it was  deprived of a fair
  opportunity to contest that issue.  We find no merit to this argument.

       As the superior court noted in denying Quechee Lakes' motion for
  reconsideration, the  thrust of Helo's summary judgment motion was that
  Quechee Lakes would not be able to prove  its claim of implied
  indemnification, which is governed by § 95 of the Restatement of
  Restitution.  Indeed, in their cross-motions for summary judgment, both
  parties cited Vermont case law that  refers to and relies upon § 95.  Thus,
  Quechee Lakes was plainly on notice that 


  any of the elements set forth in § 95 might prove determinative in the
  court's summary judgment  ruling.  In any event, in resolving the parties'
  motions, the superior court was not restricted to  the specific theories
  relied upon by the parties.  See Nagler v. Admiral Corp., 248 F.2d 319, 328 
  (2d Cir. 1957) (court has duty to grant relief required by facts; parties'
  legal theories might prove  helpful, but do not control court's decision). 
  Further, Quechee Lakes had a full opportunity to  address the issue of
  acquiescence in its motion for reconsideration and again on appeal here, 
  where, as noted, our standard of review is the same as the trial court.  In
  short, we are not  persuaded that Quechee Lakes was deprived of an
  opportunity to demonstrate that it had not  acquiesced in any dangerous
  condition present in the women's sauna.

       Nor are we persuaded that acquiescence is an affirmative defense that
  must be proved by  Helo.  Under § 95, a person who incurs liability as the
  result of a dangerous condition of land or  chattels attributable to the
  misconduct or negligence of another is entitled to restitution unless the 
  person acquiesced in the continuation of the condition with the knowledge
  that it posed a danger.  As the third-party plaintiff in this action,
  Quechee Lakes has the burden of establishing its right  to equitable
  indemnification under § 95.  Notwithstanding Quechee Lakes's arguments to
  the  contrary, we find no indication that § 95's drafters intended the
  alleged indemnitor to be required  to prove that the indemnitee acquiesced
  in the continuation of a dangerous condition allegedly  caused by the
  indemnitor.  Quechee Lakes has not cited any case law holding that
  acquiescence  is an affirmative defense under § 95, and we decline its
  invitation to adopt that position here.

       Quechee Lakes also faults the trial judge, who presided over both the
  underlying trial and  the summary judgment proceeding in the indemnity
  action, for relying on evidence from the  underlying trial that was not
  submitted as undisputed facts by the parties in their summary  judgment
  motions.  Based on the same argument, Quechee Lakes asks this Court to
  strike portions  of Helo's printed case and brief that refer to evidence
  from the underlying case not submitted to  the trial court along with the
  parties' summary judgment motions.


       Again, we find no merit to these arguments.  Our review of the record
  indicates that both  parties encouraged the superior court to review the
  entire body of evidence presented at the  underlying trial before ruling on
  their summary judgment motions in the indemnity action.  In a  supplemental
  memorandum supporting its motion for summary judgment, Quechee Lakes raised 
  the question of whether the evidence at trial proved its independent
  negligence, which had the  effect of attaching the entire transcript of the
  underlying hearing as an exhibit to its motion.  Time  and time again, in
  both their memoranda of law and at oral argument, both parties referred to 
  evidence presented at the underlying trial and urged the superior court to
  examine it as well.   Quechee Lakes cannot now claim that the superior
  court overstepped its authority in relying on  that evidence.  Nor can
  Quechee Lakes prevail on its motion to strike portions of Helo's 
  supplemental printed case and brief.

                            B. Substantive Issues

       Irrespective of the proper scope of the record below, Quechee Lakes
  contends that there  were disputed questions of material fact as to whether
  it had acquiesced in the continuation of a  known dangerous condition.  In
  support of this argument, Quechee Lakes challenges the superior  court's
  finding that in 1973 the Association selected a control panel without a
  timer for the  women's sauna.  Quechee Lakes raised this same objection in
  its motion for reconsideration, to  which the court acknowledged that in
  1973 Quechee Lakes's predecessor-in-interest selected the  control panel
  for the women's sauna, and that in 1990 Quechee Lakes purchased a control
  panel  with a timer for the men's sauna.

       In any event, contrary to Quechee Lakes's assertions, the superior
  court did not focus  primarily on the absence of a timer in the women's
  sauna.  Rather, the court granted Helo  summary judgment because few of
  Anthony White's claims implicated Helo in any way, and to  the extent that
  the absence of safety features contributed to a dangerous condition in the
  sauna,  Quechee Lakes acquiesced in that danger, given that (1) there was
  no evidence suggesting that the  sauna's heating unit or control panel
  contained hidden dangerous defects unknown to 


  Quechee Lakes; (2) it was undisputed that Helo had taken no part in the
  design or construction  of the sauna itself; and (3) the sauna's features,
  dangerous or not, had existed unchanged and  obvious to Quechee Lakes for
  over twenty years.

       Seeking to avoid summary judgment on the acquiescence issue, Quechee
  Lakes submitted  along with its motion for reconsideration an affidavit of
  its building superintendent, Erik Roth,  containing the following
  statement: "At no time during my tenure at Quechee Lakes did I become 
  aware of any dangerous condition associated with the sauna."  Quechee Lakes
  now relies heavily  on this bare assertion to claim that a disputed issue
  of material fact exists, even though the  assertion is contrary to
  overwhelming evidence at the underlying trial indicating that Roth and 
  other Quechee Lakes employees were well aware, as well they should have
  been, of the potential  danger posed by saunas.  Indeed, evidence at the
  White trial indicated that Quechee Lakes's own  safety committee considered
  how to make the women's sauna safer, and that Roth and other  employees
  were aware of the committee's recommendations.  While we generally accept
  as true  allegations made in opposition to motions for summary judgment,
  Quechee Lakes cannot survive  Helo's summary judgment motion by raising an
  unsupported assertion that is contrary to the  affiant's prior undisputed
  testimony.  See Central Hudson, 202 N.Y.S.2d  at 822 (mere conclusory 
  allegations without facts to support them are insufficient to sustain
  indemnity complaint).

       Quechee Lakes contends, however, that the superior court erred in its
  acquiescence  analysis because although the conditions of the sauna were
  open for all to see, the dangerousness  of those conditions was not obvious
  to ordinary consumers with ordinary knowledge common to  the community. 
  This argument is not persuasive.  We agree with the trial court that the 
  obviousness of the potential danger created by a superheated room such as a
  sauna is comparable  to the obviousness of the danger posed by an openly
  accessible pond.  See Goulette, 153 Vt. at  651, 571 A.2d  at 75 (owner of
  apartment complex acquiesced to danger created by absence of  fence
  surrounding pond because danger was just as obvious to owner as to
  architect who 


  designed pond).  This is particularly true in this case because Quechee
  Lakes is not an ordinary  consumer but rather the owner of an enterprise
  operating a health club for the benefit of its  members.

       Finally, Quechee Lakes argues that Helo's motion for summary judgment
  should have  been denied under Chapman because the issue of whether it was
  independently negligent should  not be governed by the complaint in the
  underlying action.  Unlike in Chapman, however, the  superior court in this
  case relied on all of the evidence presented in the underlying case, not
  just  the complaint.  More importantly, the third-party plaintiff in
  Chapman demonstrated that there  was a disputed question of material fact
  concerning who was responsible for selecting the type of  floor tiles that
  resulted in the patron's injuries.  Here, as discussed above, there are no
  disputed  issues of material fact concerning who was at fault as between
  Helo and Quechee Lakes.

       In the underlying trial in this case, there was substantial evidence
  presented concerning  Quechee Lakes's independent negligence in causing the
  death of Elizabeth White.  Quechee Lakes  disputed that evidence, but the
  record supports the superior court's judgment that Quechee Lakes  would be
  unable to show that it was only vicariously liable for her death, and that
  her death was  primarily due to Helo's negligence.  See Chapman, 167 Vt. at
  160, 702 A.2d  at 134 (to prevail  on indemnity claim, third-party plaintiff
  must show that it was only vicariously liable for injuries  caused by
  third-party defendant).  Thus, the trial court properly concluded that, as
  a matter of  law, Quechee Lakes was not entitled to the equitable remedy of
  implied indemnification.  See id.  at 161, 702 A.2d  at 135 (decision in
  Chapman in no way eases requirements for establishing  indemnity).


                                       FOR THE COURT:

                                       Chief Justice

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