Berger v. Teton Shadows Inc.
Annotate this Case
Berger v. Teton Shadows Inc.
1991 WY 136
820 P.2d 176
Case Number: 90-31
Decided: 11/05/1991
Supreme Court of Wyoming
STATT BERGER, D/B/A STATT'S PLUMBING,
APPELLANT
(DEFENDANT/CROSS-CLAIMANT),
v.
TETON
SHADOWS INCORPORATED, A WYOMING CORPORATION,
APPELLEE
(DEFENDANT/CROSS-CLAIMANT).
Appeal from the District Court,
TetonCounty, D. Terry Rogers,
J.
Steven R.
Helling of Murane & Bostwick, Casper, for appellant.
R. Michael
Mullikin of Mullikin, Larson & Swift, Jackson, for appellee.
Before
URBIGKIT, C.J., and THOMAS, CARDINE, MACY and GOLDEN,
JJ.
OPINION
MACY, Justice.
[¶1.] Appellant Statt Berger
appeals from the district court's judgment awarding damages to Appellee Teton
Shadows Incorporated resulting from a fire at a condominium project in
TetonCounty. Berger and Teton
Shadows stipulated that Teton Shadows' damages totaled $120,000. At the
conclusion of a two-day bench trial, the district court found, inter alia, that
Berger's negligence caused the fire, and it granted judgment in favor of Teton
Shadows for the full $120,000.1 Berger does not appeal from the
district court's finding of negligence. Berger's appeal, instead, focuses upon
the district court's interpretation of the parties' written
agreement.
[¶2.] We reverse in part and
affirm in part.
[¶3.] Berger raises the
following issues:
1. Did
the trial court err in awarding Appellee judgment against Appellant for damages
caused by fire, in light of Appellee's contractual agreement to provide fire
insurance?
2. Did
the trial court err in allowing a subrogated claim by Appellee's insurer in
light of Appellee's contractual agreement to provide fire insurance and further
in light of Appellant's claim of being a co-insured under Appellee's insurance
policy, since the policy provided coverage for the personal property of others,
including Appellant?
3. Did
the trial court err in not entering judgment in favor of Appellant and against
Appellee for the damages sustained by Appellant as a result of the fire, in
light of Appellee's contractual agreement to provide fire
insurance?
[¶4.] Teton Shadows responds
with the following issues:
1.
Whether Teton Shadows contractually waived the right to pursue a claim for
ordinary negligence against Berger (or agreed to indemnify Berger for his own
negligence) as to any loss due to Berger's negligence for either the insured
portion of the claim, the uninsured portion of the claim or
both.
2.
Whether Berger was a "co-insured" under or a party to the policy of Farm Bureau
so as to preclude recovery by Farm Bureau of its subrogated interest in the
claim of Teton Shadows for the negligence of Berger.
3.
Whether Berger is the real party in interest with regard to any claim seeking to
recover amounts paid to Mateosky in settlement of Mateosky's claim against
Berger for negligence.
4.
Whether Berger stated a claim under any judicially recognizable theory upon
which relief could be granted for the recovery of amounts paid by CIGNA (his
insurance company) to Mateosky based on a claim that Berger was
negligent.
[¶5.] Teton Shadows,
owner/general contractor, hired Berger as a subcontractor to do the plumbing on
the project. The terms of their agreement were set out in a written contract.2 The dispute centered on the
contract provision, "Owner to carry fire, tornado and other necessary
insurance." Berger argued that this provision required the owner (Teton Shadows)
to insure the project against fire and, thereby, shifted the risk of loss to
Teton Shadows' insurance carrier. Teton Shadows claimed that, notwithstanding
this provision, Berger was still responsible for the damages which resulted from
his negligence.
[¶6.] In True Oil Company v. Sinclair Oil
Corporation, 771 P.2d 781, 790 (Wyo. 1989) (citations omitted), we reviewed
this Court's role in contract interpretation:
The
determination of the parties' intent is our prime focus in construing or
interpreting a contract. "If an agreement is in writing and the language is
clear and unambiguous, the intention is to be secured from the words of the
agreement." Nelson v. Nelson, 740 P.2d 939, 940 (Wyo. 1987). When the language is clear and
unambiguous, the writing as a whole should be considered, taking into account
relationships between various parts. Contract construction and interpretation
are done by the court as a matter of law.
It is
also true in contract interpretation that, "`Ambiguity . . . is not generated by
subsequent disagreement of the parties concerning [the contract's] meaning.'" Ricci v. New Hampshire Insurance Company,
721 P.2d 1081, 1085 (Wyo. 1986).
[¶7.] In a Florida case with facts
nearly identical to those in this case, the plumber's alleged negligence caused
a fire which damaged the owner's insured property. Housing Investment Corporation v.
Carris, 389 So. 2d 689 (Fla.App. 1980). The owner's insurance carrier paid
the loss and sought subrogation. The Florida court denied subrogation because the
parties' contract provided, "`Owner to carry fire, tornado, and other necessary
insurance.'"3 Id. at 689. The court
reasoned:
[T]he
parties foresaw the possibility of loss by fire arising from construction work
and . . . the contract provision was for the purpose of providing protection
from that risk by use of insurance.
Id. at 689-90. The
Florida court
discussed the rationale for parties shifting the risk of loss to the insurance
carrier:
The
owner had, as all owners always have, the right to insure his own property for
his own exclusive benefit without the consent or agreement of the contractor or
anyone else. Therefore, the only reasonably conceivable purpose of a
construction contract provision placing an obligation on the owner to carry
insurance is to benefit the contractor by providing him protection and
exculpation from risk of liability for the insured loss. Although the contractor
was not named as an insured, nor does the contract require this to be done, the
contract insurance provision is valuable to the contractor for the very purpose
this case exemplifies and serves to limit the owner to insurance proceeds even
though the loss was caused by the negligence of the
contractor.
Id. at 690.
[¶8.] In this case, the
parties' contract was unambiguous. The contract provision, owner to carry fire
insurance, clearly expressed the parties' intent to shift the risk to Teton
Shadows' insurance carrier. We agree with the Florida court's reasoning and hold that Teton
Shadows is limited to the proceeds of its insurance policy for its recovery. The
district court's $120,000 judgment for Teton Shadows is
reversed.
[¶9.] Because the parties'
contract was unambiguous, we do not need to decide whether Berger was a
co-insured under Teton Shadows' builder's risk policy. As to Berger's third
issue, the district court did not err in denying Berger's cross-claim against
Teton Shadows for damages. Berger does not cite any authority or present a
cogent argument to support his claim that Teton Shadows agreed to insure against
the losses which Berger suffered due to the fire. Bland v. State, 803 P.2d 856 (Wyo.
1990).
[¶10.] Reversed in part and affirmed in
part.
THOMAS,
J., dissenting, with GOLDEN, J., joining.
GOLDEN,
J., dissenting.
THOMAS,
Justice, dissenting, with whom GOLDEN, Justice, joins.
[¶11.] I dissent from the disposition of this
case according to the majority opinion. I agree with the views expressed in the
dissenting opinion of Justice Golden, in which I join. I am further persuaded
that Carris v. Housing Investment
Corporation, 389 So. 2d 689 (Fla.App. 1980), the cases upon which it relies,
and other cases of similar tenor suffer from a fundamental fault in analysis
that, for me, dictates a different result.
[¶12.] The articulated rationale found in such
cases is that since an owner always has a right to insure his property, a
provision in a construction contract assigning the responsibility for obtaining
coverage to the owner would have no efficacy other than to include the
contractor as an insured. It follows according to the reasoning of those courts
that no action will lie against the contractor, even for a loss caused by his
own negligence, because an insurance carrier cannot seek recoupment from its
insured. The cases do not seem to consider the proposition that the contractor
might have no insurable interest in the property other than the work that the
contractor had performed. If the cases were limited to including the contractor
as an insured to the extent of the contractor's insurable interest, they would
be far more sound.
[¶13.] The majority asserts that a provision of
a construction contract that provides, "Owner to carry fire, tornado and other
necessary insurance," is a clear expression of the intent of the parties that
the risk is to be shifted to the insurance carrier selected by the owner,
including the risk of the contractor's negligence. I can find a clear expression
of an intent that as between the owner and contractor, the owner is going to
accept the expense and the necessary investment of time and effort to obtain the
insurance alluded to in their agreement. Anything beyond that is conjecture that
leads to a legal fiction.
[¶14.] The fallacy of the approach adopted by
the majority, as I see the situation, is that an insurance policy obtained by
the owner of property, covering certain limited risks to his property, becomes
in an almost mystical way a liability policy for the contractor, covering the
risk of the contractor's negligence. I submit that is an entirely different risk
from the risks for which the insurance carrier received its premium, and that
the insurance carrier clearly would be entitled to an additional premium for
covering the negligence of the contractor. In fact the policy provisions would
be markedly different. In a larger context of public policy, this rule provides
very little incentive to the contractor to use due care.
[¶15.] The possibility that the contractor did,
in fact, have liability insurance for which an appropriate premium had been paid
is ignored. I have some tolerance for legal fictions but, in the field of
insurance, I have accepted the proposition that risk coverage should be tied to
the insurance contract and the risks for which a premium is paid. If the
contractor had liability insurance, then that insurance company should pay for
this loss and, if the contractor for some reason had no coverage, the rule
should be the same. The negligent party, whether protected by insurance for
negligence or not, should be responsible for the consequences of his
negligence.
[¶16.] I note the application of a similar rule
in several jurisdictions in the context of landlord and tenant. Indeed, some
cases lead to the conclusion that the rule for owners and contractors was
adapted from the rule for landlords and tenants. In the rental context, the
Illinois
courts have properly assigned the risk of the tenant's negligence and retreated
from the rule that the tenant will be considered a coinsured against whom the
insurer for the landlord cannot seek subrogation for the consequences of the
tenant's negligence. Fire Ins. Exchange
v. Geekie, 179 Ill. App.3d 679, 128 Ill.Dec. 616, 534 N.E.2d 1061 (1989).
This
analysis demonstrates the wisdom of the long-standing rule in Wyoming that an agreement
to indemnify a party from the consequences of his own negligence must articulate
that provision in clear and unequivocal language. Northwinds of Wyo., Inc. v. Phillips Petroleum Co., 779 P.2d 753
(Wyo. 1989); Wyoming Johnson, Inc. v. Stag Industries,
Inc., 662 P.2d 96 (Wyo. 1983). I would adopt the result in a
contrary line of cases to the effect that when the landlord insures, whether by
contract requirement or not, that does not absolve the tenant of the
consequences of his negligence. E.g.,
Sears, Roebuck & Co. v. Poling, 248 Iowa 582, 81 N.W.2d 462 (1957); Winkler v. Appalachian Amusement Co.,
238 N.C. 589, 79 S.E.2d 185 (1953); Wichita City Lines, Inc. v. Puckett, 156
Tex. 456, 295 S.W.2d 894 (1956). This line of authority is in harmony with our general rule.
In U.S. Fidelity & Guaranty Co. v.
Farrar's Plumbing & Heating Co., 158 Ariz. 354, 762 P.2d 641 (App.
1988), and Steamboat Development Corp. v.
Bacjac Industries, Inc., 701 P.2d 127 (Colo. App. 1985), are found examples
of contractual language that probably would satisfy our general rule in Wyoming.
That language should not be implied as a matter of law.
[¶17.] I would affirm all aspects of the
judgment of the trial court in this case.
GOLDEN,
Justice, dissenting.
[¶18.] I respectfully dissent. Relying on a
Florida case,
the majority holds that the unambiguous contract provision, "Owner to carry
fire, tornado and other necessary insurance," clearly and unequivocally
expresses, beyond any peradventure of doubt, the intention of Teton Shadows, as
owner, and Berger, as its plumbing subcontractor, that Berger is absolved from
liability for Berger's own negligence. I disagree.
[¶19.] For me, the facts of significance which
frame this legal issue of the meaning of this unambiguous contract provision are
that Berger is deemed the drafter of the contract provision and Berger's
negligence caused the fire. In Wyoming
Johnson, Inc. v. Stag Industries, Inc., 662 P.2d 96, 99 (Wyo. 1983), this court
listed several principles of contract interpretation which I would apply here to
resolve the legal issue presented. Courts look with disfavor on contracts
exculpating a party from the consequences of his own acts. Id. Thus, we
look with disfavor on Berger's contract provision. We construe an agreement for
indemnity strictly against the indemnitee, particularly if the indemnitee
drafted the agreement. Id. Berger's
contract provision strikes me as being in the nature of an indemnity provision;
therefore, I construe it strictly against Berger. Since Berger intended to throw
the loss upon Teton Shadows for the consequences of Berger's own fault, it was
incumbent upon Berger to express that purpose beyond any peradventure of doubt.
Id. In my
judgment, Berger's contract provision fails to express that purpose since it is
silent about the matter. Berger's contract provision fails the test identified
in Wyoming Johnson: that provision does not
specifically focus attention on the fact that by the provision Teton Shadows was
assuming liability for Berger's own negligence. Id. See also, Northwinds of Wyoming, Inc. v.
Phillips Petroleum Company, 779 P.2d 753 (Wyo. 1989); and Cities Service Co. v. Northern Production
Co., Inc., 705 P.2d 321 (Wyo. 1985).
[¶20.] I would affirm the trial court's judgment
in favor of Teton Shadows.
1 Teton Shadows' insurance company,
Mountain West Farm Bureau Mutual Insurance Company, paid $103,000 of the loss
under its builder's risk policy, leaving $17,000 unpaid as an uninsured loss.
Teton Shadows' risk policy included fire insurance. This appeal involves both
Farm Bureau's subrogated claim of $103,000 and Teton Shadows' uninsured loss
(nonsubrogated claim) of $17,000.
2 The parties' contract consisted of
Berger's proposal to furnish materials and labor and Teton Shadows' acceptance
of the proposal.
3 This provision is identical to the
one at issue in this case.
Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You should read the full case before relying on it for legal research purposes.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.