Hart v. Amour

Hart v. Amour (2000-279); 172 Vt. 588; 776 A.2d 420

[Filed 20-Apr-2001]

[Motion for Reargument Denied 15-May-2001]


                                 ENTRY ORDER

                      SUPREME COURT DOCKET NO. 2000-279

                              MARCH TERM, 2001


Mark and Kalliope Hart	               }	APPEALED FROM:
                                       }
     v.	                               }
                                       }	Chittenden Superior Court
Peter Amour	                       }	
                                       }
     v.	                               }	DOCKET NO. 1529-98 CnC
                                       }	
Fusion Semiconductor Systems Corp.     }	Trial Judge:  Matthew I. Katz


             In the above-entitled cause, the Clerk will enter:


       Third-party defendant and lessee Fusion Semiconductor Systems Corp.
  (Fusion) appeals the  grant of defendant/third-party plaintiff and lessor
  Peter Amour's motion for summary judgment  against Fusion in this
  negligence action.  Fusion claims that the court's grant of summary
  judgment,  enforcing an indemnification agreement between Fusion and Amour,
  was improper because the  indemnification agreement violates public
  policy. (FN1)  Because the indemnification agreement  properly assigns
  Fusion responsibility to indemnify Amour, we affirm.

       The following facts are not in dispute.  Fusion, as tenant, and Amour,
  as landlord, entered into  a commercial real estate lease, effective June
  1, 1996, which included the following provision:

    INDEMNITY REGARDING USE OF PREMISES.  Tenant agrees to  indemnify,
    hold harmless, and defend Landlord from and against any and  all
    losses, claims, liabilities, and expenses, including reasonable
    attorneys  fees, if any, which Landlord may suffer or incur in
    connection with  Tenant's use or misuse of the Premises. 

  The agreement also provides that Fusion maintain liability insurance of at
  least $100,000.  On  December 7, 1998, Hart filed a negligence complaint
  against Amour, alleging that on May 2, 1997,  Hart suffered severe injuries
  in his workplace (the premises leased from Amour by Fusion) as a  result of
  falling from a loft storage area, through a suspended ceiling, and landing
  on the floor below.  The Harts claimed that Amour breached the duty of care
  he owed to Hart and others working within  the building to provide a
  building reasonably safe and free from hazards.

 

       Amour subsequently filed a third-party complaint against Fusion,
  alleging that the lease  agreement between Fusion and Amour obligated
  Fusion to defend and indemnify Amour against  Hart's claims.  Fusion
  counterclaimed against Amour, alleging that Amour had been negligent in 
  delivering unsafe property to Fusion, and that Amour had breached the lease
  agreement by failing to  maintain the premises in good repair at all times
  and by violating other common law duties regarding  the maintenance of the
  premises. 

       Fusion and Amour subsequently filed motions for summary judgment in
  their respective  claims against each other, focusing on the indemnity
  provision of the lease.  The court granted  summary judgment to Amour,
  noting that the indemnity provision at issue was a conventional  component
  of commercial leases, and relied upon our decision in Hamelin v. Simpson
  Paper Co.,  167 Vt. 17, 702 A.2d 86 (1997), in holding that the indemnity
  provision's allocation of risk,  negotiated by these commercial equals, was
  consistent with Vermont law.  Thereafter, Fusion filed a  motion to
  reconsider, and Amour filed a reply as well as a motion to dismiss the
  counterclaim,  arguing that Fusion could not avoid its obligation under the
  indemnity provision by claiming breach  of contract.  The court agreed with
  Amour, denying the motion to reconsider and granting the motion  to
  dismiss.  After the court's approval and entry of the parties' stipulation
  to the entry of final  judgment on the issues (pursuant to V.R.C.P. 54(b)),
  Fusion brought this appeal.  

       We review a grant of summary judgment de novo, RLI Ins. Co. v. Agency
  of Transp., __ Vt.  __, __, 762 A.2d 475, 477 (2000) (mem.), using the same
  standard as the trial court, Gus' Catering,  Inc. v. Menusoft Sys., __ Vt.
  __, __, 762 A.2d 804, 806 (2000).  A trial court's grant of summary 
  judgment is appropriate only where, "taking the allegations of the
  nonmoving party as true, it is  evident that there are no genuine issues of
  material fact and the movant is entitled to judgment as a  matter of law." 
  Galfetti v. Berg, Carmolli & Kent Real Estate Corp., __ Vt. __, __, 756 A.2d 1229,  1231 (2000) (mem.); see also V.R.C.P. 56(c)(3). 
 
       Fusion does not contest the clarity or sufficiency of the language
  used in the indemnity  provision as it pertains to requiring
  indemnification for causes of action arising out of Amour's own  alleged
  negligence.  Rather, Fusion relies primarily upon Dalury v. S-K-I, Ltd.,
  164 Vt. 329, 670 A.2d 795 (1995), in arguing that the indemnity provision
  is unenforcable as a matter of law as  violative of public policy.  Fusion
  claims this is because allocating liability for injuries suffered by 
  Amour's tenants, as a result of his own failure to comply with building
  codes, undermines Amour's  incentive, as well as his common law duty and
  statutory obligation, to keep his premises safe and  free from dangerous
  conditions. 

       In Dalury, a negligence action brought by an injured skier against the
  operator of a ski area, we  held that a ski area operator may not, through
  an exculpatory agreement printed on a season pass and  photo identification
  card, be held harmless for injuries to its patrons resulting from its own 
  negligence.  164 Vt. at 330, 670 A.2d  at 796.  We identified that
  circumstance as requiring a public  policy based exception to upholding the
  validity of exculpatory agreements, with the principal public  policy
  implications being those "underlying the law of premises liability."  Id.
  at 334, 670 A.2d  at  799. 

       However, the present case has far more in common with Hamelin than
  with Dalury.  Hamelin,  which came before us in a similar procedural
  posture to the case at bar, involved an employee of

 

  Vescom, a security company, who had been injured while working on the
  premises of Simpson Paper  Co. while providing contracted-for security
  services.  The employee sued Vescom in negligence, and  Vescom filed a
  third-party claim against Simpson based on an indemnification clause in
  their  contract.  Our holding focused on the language of the
  indemnification provision, which required  Vescom to indemnify Simpson for
  losses incurred by injuries which arise from activity "in any  manner
  connected with" the services Vescom provided to Simpson.  Hamelin, 167 Vt.
  at 19, 702 A.2d  at 88.  We stated that the "injury suffered by a security
  guard while the guard is on duty and on  Simpson's premises is without
  question 'connected with' Vescom's security operation."  Id. at 20, 702 A.2d  at 88.  We held that the provision required Vescom to indemnify
  Simpson for the claims by the  employee, even if the injuries were caused
  by Simpson's own negligence.  Id. at 20-21, 702 A.2d  at  89. 

       In Hamelin, Vescom argued that allowing the indemnity provision to
  extend to the negligent  acts of the lessor "offends the public policy
  underlying the law of premises liability."  Id. at 20, 702 A.2d  at 89. 
  Fusion makes the same claim, and the grounds upon which we rejected that
  argument in  Hamelin are present in this case as well.  In Hamelin, we
  distinguished the public policy reasoning  applied in Dalury by recognizing
  that the agreement at issue "reflects an arms-length business deal,  in
  which corporate parties divided certain risks and responsibilities.  The
  indemnification clause at  issue did nothing more than allocate to Vescom
  the cost of purchasing insurance to cover the risk."   Id. at 21, 702 A.2d 
  at 89.  "The considerations of public policy that motivated us in Dalury,
  such as  unequal bargaining power, fairness, and the benefits of
  risk-spreading, are not present here."  Id.; see  also Furlon v. Haystack
  Mountain Ski Area, Inc., 136 Vt. 266, 269-70, 388 A.2d 403, 405 (1978) 
  (rejecting public policy argument to not enforce indemnification agreement
  when situation lacks  disparity in bargaining power between parties, and
  not unfair to hold parties to the agreement). 

       The agreement between Fusion and Amour represents an arms-length
  commercial transaction  between a business and a commercial lessor which
  divides risks and responsibilities.  Fusion does  not contend that there
  was any disparity in bargaining power between these commercial parties.  It
  is  similarly uncontested that the language of the indemnity provision
  requires Fusion to indemnify  Amour in claims which arise out of Fusion's
  use or misuse of the leased premises.  See Hamelin, 167  Vt. at 19, 702 A.2d  at 88 ("When the contract language is clear, the intent of the parties
  is taken to be  what the agreement declares.").  The injury suffered by
  Hart, which occurred while performing his  work duties at his place of
  employment, clearly falls within the scope of his employer's use of the 
  premises, and the agreement requires that Fusion indemnify Amour in the
  ensuing negligence action. 

       We also address the court's dismissal of Fusion's counterclaim.  A
  dismissal made pursuant to  Rule 12(b)(6) is improper "unless it appears
  beyond doubt that there exist no circumstances or facts  which the
  plaintiff could prove about the claim made in his complaint which would
  entitle him to  relief."  Levinsky v. Diamond, 140 Vt. 595, 600-01, 442 A.2d 1277, 1280-81 (1982) (overruled on  other grounds by Muzzy v. State,
  155 Vt. 279, 583 A.2d 82 (1990)).

       The court based its decision to dismiss the counterclaim on the notion
  that Fusion was merely  attempting to circumvent its indemnification
  obligation by claiming that the lease had been breached  as a result of the
  same underlying facts which require the indemnification.  The court
  reasoned that  allowing Fusion's counterclaim would permit an "end run" of
  the indemnification obligation and 

 

  would be "at odds with the risk allocation purposes behind indemnification
  agreements and the case  law interpreting them."  We agree with the Arizona
  Supreme Court that "[i]f the language of an  indemnity agreement 'clearly
  and unequivocally indicates that one party is to be indemnified, 
  regardless of whether or not that injury was caused in part by that party,
  indemnification is required  notwithstanding the indemnitee's active
  negligence.'"  Cunningham v. Goettl Air Conditioning, Inc.,  980 P.2d 489,
  493 (Ariz. 1999); see also MacGlashing v. Dunlop Equip. Co., 89 F.3d 932,
  938 (1st  Cir. 1996) (in negligence action, indemnity provision in lease
  agreement unaffected by breach of  underlying agreement).  To allow
  otherwise would defeat the legitimate purposes for which  commercial
  parties negotiate and enter into risk allocation agreements.  See Hamelin,
  167 Vt. at 21,  702 A.2d  at 89 (recognizing ability of commercial parties
  to allocate risk by agreement).  In light of  the indemnification
  provision, Fusion's counterclaim is without merit, and dismissal was
  therefore  appropriate in this case.    


       Affirmed.



                                       BY THE COURT:


                                       _______________________________________
                                       Jeffrey L. Amestoy, Chief Justice

                                       _______________________________________
                                       John A. Dooley, Associate Justice

                                       _______________________________________
                                       James L. Morse, Associate Justice

                                       _______________________________________
                                       Denise R. Johnson, Associate Justice

                                       _______________________________________
                                       Marilyn S. Skoglund, Associate Justice



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                                  Footnotes


FN1.  Fusion also states that the record failed to sufficiently
  demonstrate undisputed material  facts to support summary judgment, but
  does not otherwise argue or brief this claim of error.   Accordingly, we
  need not address this claim.  See Granger v. Town of Woodford, 167 Vt. 610, 
  613 n.2, 708 A.2d 1345, 1348 n.2 (1998) (mem.) (declining to address claim
  inadequately  briefed).