In this case we consider whether the application of the common law borrowed servant doctrine conflicts with a statute that declares void as against public policy contracts by which one party purports to indemnify the other for the latter's own negligence. We affirm the judgment of the Superior Court holding that the common law borrowed servant doctrine governs and is not barred by the statute declaring invalid as against public policy contracts indemnifying tortfeasors in connection with construction projects. Because the common law borrowed servant doctrine was the operative principle applied in this case, the statute was not implicated, and the common law doctrine was not invalidated.
In June 1999 Pettinaro Construction Company became the general contractor for a project at a facility owned by Household International in New Castle. On June 9 Pettinaro entered into a sub-contractor agreement with appellant, Volair Contractors, Inc. Volair was to perform heating and air conditioning installation services for Pettinaro. Volair further entered into a rental contract with appellee, AmQuip Corporation. The contract stated that AmQuip was to provide Volair with a crane and operator to assist in installing the air conditioning units. Thereafter, AmQuip engaged an operator, Edward Gutierrez, through a local union hall.
On July 26, 1999, Gutierrez and the crane arrived at the construction site. Gutierrez met with two representatives of Volair who were in charge on the site, superintendent, Joseph Tigue, and foreman, Jack Lester. Tigue and Lester gave Gutierrez specific instructions, directions and procedures for performing the job. The two men told Gutierrez that Tigue was in charge on the ground and that Lester was in charge on the roof. Gutierrez would not be able to see onto the roof from his position in the crane, thus Lester was to be his "eyes, ears and controller of the lift once the unit was over the roof." Volair also had other crew members on the roof in charge of placing and installing the units. One of these members was Richard Breece.
During the course of the work, the crane received a flat tire. In order to change the tire, one-third of the counterweights on the crane were removed. One hour later the tire was replaced and installation of the units continued. It was then decided that the removed counterweights would not be added back on. There is some dispute about who made this decision.
Lester directed Gutierrez to continue with the third round of lifts. During the course of this lift, the crane experienced difficulties, and Gutierrez was required quickly to lower the unit to the roof. The problems with the crane were either caused by the ground below the crane supports giving way, lack of sufficient counterweights, or a combination of both.
At this point Lester decided it would be best to raise the air conditioning unit a few feet above the roof and slowly "walk" the unit toward the edge of the roof. Lester instructed the Volair crew to help walk the unit to the edge by guiding it. The walking of the unit in this manner was a normal procedure followed by Volair's employees to control such lifts.
While walking the lift Lester noticed Breece backing away from the area. Breece was not assisting in the walking of the unit but was on the roof. As Breece was backing away from the unit Lester yelled to him to watch where he was going.
Breece filed suit against AmQuip, Gutierrez and Pettinaro. AmQuip demanded that Volair defend, indemnify, and hold AmQuip harmless in connection with the litigation. Volair did not respond. As a result, in December 2000 AmQuip filed a third party complaint against Volair seeking contractual indemnification based on the rental contract. The rental contract stated, in pertinent part, that Volair:
Pettinaro and AmQuip eventually settled with Breece, with AmQuip contributing $400,000. Volair refused to indemnify AmQuip for the amount. After various court proceedings between AmQuip and Volair, AmQuip filed a summary judgment motion.
At the hearing on the motion AmQuip contended that the contract alone was dispositive. In the alternative, AmQuip conceded that if the contract was not dispositive, the borrowed servant question would be one of fact. Volair contended that the contract ran afoul of the public policy set forth in Section 2704(a) of the Delaware Code.
The Superior Court applied the common law borrowed servant provision. The court then decided that the jury must apply the doctrine to the facts because the issue of whether Gutierrez was a borrowed servant of Volair was an issue of material fact. The court denied the summary judgment motion and the issue went to trial. The jury found that Gutierrez was an employee of Volair at the time of the incident. Volair now appeals.
Issues on Appeal
Volair contends that the trial court erred in two respects. First it argues that the court erred by applying the common law borrowed servant doctrine. Second, Volair asserts that the court erred by holding it liable for Gutierrez' negligence because the contractual indemnification was rendered void by Section 2704(a) as against public policy.
The Statutory Public Policy
Volair contends the trial court erred by applying the common law borrowed servant doctrine. It asserts that the contract regarding indemnification was the operative principle and it was void and unenforceable pursuant to Section 2704(a). Thus, Volair argues, it could not be held liable by applying the common law doctrine. AmQuip argues that the trial court properly applied the common law doctrine. This Court reviews de novo the trial court's interpretation and application of legal precepts.
The purpose of Section 2704(a) is to make clear that, "a contractual provision requiring one party to indemnify another party for the second party's own negligence, whether sole or partial, `is against public policy and is void and unenforceable.'"
Common Law borrowed Servant Doctrine
The common law borrowed servant doctrine focuses on the relationship between an employer and an employee.
Therefore, under the common law, an employee (in this case Gutierrez) of one party (in this case AmQuip) can temporarily become the employee of another (in this case Volair) in the performance of certain services. So, if Gutierrez is found by the jury
Volair contends that its contract with AmQuip is invalid because it violated Section 2704(a). AmQuip asserts that Section 2704(a) is irrelevant to the case, in light of the court's instruction to the jury on the common law borrowed servant doctrine and the jury's ruling. It contends that the court properly applied the common law borrowed servant doctrine.
The Superior Court, in ruling on AmQuip's motion for summary judgment, found that the central issue required a determination of the identity of Gutierrez' employer at the time of the incident. The Court found that the contract was not dispositive of this issue. Specifically the Court stated:
The Court's analysis is correct. We assume, without the need to decide the issue, that the contract would be void and unenforceable if it were applicable to indemnify AmQuip for the negligence of AmQuip's own employee. In that case, if AmQuip were the employer, it would arguably be passing on to Volair liability for AmQuip's negligence in violation of Section 2704(a). A jury determination, under the common law, however, that Volair was Gutierrez' employer at the time of the incident would not invalidate the contractual indemnification provision because the contract does not indemnify AmQuip for its own negligence. Rather, a common law borrowed servant determination would render Volair liable for the negligence of its borrowed servant, Gutierrez, for the specific acts for which he was borrowed.
To determine Gutierrez' employer at the time of the incident the Superior Court applied the borrowed servant doctrine.
Volair contends that the borrowed servant doctrine cannot coexist with Section 2704(a). We disagree. Section 2704(a) is intended to prevent one party from contracting away its own negligence to another party. The borrowed servant doctrine is not contrary to this principle. Rather, the borrowed servant doctrine is not an indemnification principle, but is used solely to determine the identity of the employer who was in control of the employee at the time of the negligent act. The identified employer would then be held liable for the negligence of its employee — in this case, Volair's borrowed employee, Gutierrez.
In this case Gutierrez was taking direction from Volair's crew. He was under their control and was told by them what to do and how to do it. Given these circumstances it was reasonable for a jury to conclude that Volair was Gutierrez' employer at the time of the accident.
Volair does not appear to dispute the jury's determination that it was Gutierrez' employer at the time of the accident, apparently resting its case on the application of the public policy statute. AmQuip argues that the jury's finding was proper and that the statute is not involved.
Because the jury could reasonably find Volair was Gutierrez' employer, under the borrowed servant doctrine, Section 2704(a) was not violated and Volair must indemnify AmQuip.
The judgment of the Superior Court is affirmed.