Petition for Rehearing En Banc Denied En Banc July 9, 1963.
Petition for Rehearing by the Division Denied July 9, 1963.
BAZELON, Chief Judge.
These consolidated appeals involve third-party complaints of Roscoe-Ajax Corporation, the general contractor for certain construction in the District of Columbia, against Moses-Ecco Company, Inc., its subcontractor for concrete work, and the subcontractor's superintendent, Charles Detwiler.
The main action was brought against Roscoe-Ajax in March 1959 by George W. Williamson, an employee of Moses-Ecco, and his wife. They alleged that, as a result of the negligence of Roscoe-Ajax in failing properly to install and maintain certain guard rails, Williamson fell five and one-half stories and sustained serious injuries. Roscoe-Ajax promptly filed the present third-party complaint under Rule 14 of the Federal Rules of Civil Procedure against Moses-Ecco and Detwiler for all sums which might be adjudged against Roscoe-Ajax in the main action.
The claim against Moses-Ecco was based upon an indemnification provision in the subcontract which we describe later. The claim against Detwiler for indemnification or contribution was based on an allegation that Williamson's injuries were caused solely by the negligence of Detwiler or jointly by Detwiler and Roscoe-Ajax.
Two jury trials of the main action were commenced. In the first, after the jury had returned a verdict of $120,000 against Roscoe-Ajax, the trial judge declared a mistrial because of prejudicial remarks in plaintiffs' closing argument to the jury. Hence, the third-party complaint was not reached. At the second trial, and near its completion, plaintiffs and defendant agreed to a settlement of the main action under which a consent judgment of $45,000 was entered in favor of plaintiffs.
Thereafter, in a trial of the third-party action, without a jury, the court entered judgment in favor of Roscoe-Ajax against Moses-Ecco for $45,000 plus costs and expenses and attorneys' fees incurred in defending against plaintiffs' claim; and it dismissed the third-party complaint against Detwiler. These consolidated appeals followed.
Moses-Ecco's main contention is that the indemnification provision of the subcontract lacks the positiveness which the law requires to indemnify Roscoe-Ajax for its own affirmative negligence. That provision reads:
Losses incurred by Roscoe-Ajax through its own negligence are not specifically included. And Moses-Ecco urges here, as it did below, that no intention to include such losses "is otherwise clearly and unequivocally revealed."
We accept the principle that where, as here, the agreement does not specifically refer to losses incurred by the indemnitee's own negligence, the intent to cover such losses must otherwise plainly appear from the agreement. Maiatico v. Hot Shoppes, Inc., 109 U.S.App.D.C. 310,
The District Court concluded that the language of the indemnification agreement in the present case was so broad and sweeping as to plainly reveal an intent to encompass losses incurred in whole or in part by the negligence of the indemnitee. In reaching this conclusion, the court relied upon Chesapeake Beach R. Co. v. Hupp Automatic Mail Exchange Co., 48 App.D.C. 123 (1918); Princemont Construction Corp. v. Baltimore & O. R. Co., 131 A.2d 877 (D.C. Mun.Ct.App.1947); and Atlantic Coast Line R. Co. v. Robertson, 214 F.2d 746 (4th Cir. 1954) (citing cases). We think the view of the District Court is correct.
It is difficult to conceive of any phraseology broader than Moses-Ecco's agreement to indemnify Roscoe-Ajax against "any and all loss, cost, damage, or expense * * * on account of any claim, demand or suit * * * by or on behalf of any employee of [Moses-Ecco] * *." Since the parties specified that "all" losses on "any" claims included those of Moses-Ecco's employees, we think further specification would be superfluous and ritualistic. Moreover, it would appear that no valid claim by an employee of Moses-Ecco could arise against Roscoe-Ajax except through Roscoe-Ajax's own negligence. Consequently to exclude losses caused by Roscoe-Ajax's negligence would deprive that part of the clause which refers to the claims by employees of Moses-Ecco against Roscoe-Ajax of virtually the only meaning it can possibly have. See Rice v. Pennsylvania R. Co., 202 F.2d 861 (2d Cir. 1953); cf. Farrell v. Eastern Bridge & Structural Co., 291 Mass. 323, 197 N.E. 68 (1935).
An additional argument advanced by Moses-Ecco is that in the claim over for indemnification, Roscoe-Ajax had the burden of proving that it had suffered an "actual liability," and that since the issue of Roscoe-Ajax's liability to plaintiffs was not adjudicated in either the main action or the third-party action, indemnification will not lie for the payment in settlement of plaintiffs' claim. This position is apparently taken on the view that a settlement may not be deemed to reflect an "actual liability" and that they are somehow mutually exclusive. Support for this view is rested on the following
We think, however, that this must be read to mean only that, if an indemnitor challenges a settlement as imprudent, the indemnitee must justify it as prudent. This meaning is supported by a very recent decision of the Second Circuit recognizing that recovery by an indemnitee is not precluded simply because he settled the main claim rather than litigate it to final judgment:
And this accords with Justice Holmes' statement that "a sum paid in the prudent settlement of a suit is paid under the compulsion of the suit as truly as if it were paid upon execution." St. Louis Dressed Beef & Provision Co. v. Maryland Casualty Co., 201 U.S. 173, 182, 26 S.Ct. 400, 50 L.Ed. 712 (1906). Moreover, the parties did not contract to exclude indemnification for settlement. On the contrary they included indemnification for loss "on account of any claim demand or suit * * *." (Emphasis supplied.) This clearly encompasses settlements and is not limited to litigated judgments.
It follows that Roscoe-Ajax did not lose its contract right to indemnification simply because it settled plaintiffs' claim. And in the trial of the claim over for indemnification, there was no need for an adjudication of Roscoe-Ajax's liability to plaintiffs because the issue before the trial judge was whether Roscoe-Ajax was reasonable and prudent in settling, not whether it had been negligent and was therefore legally liable to plaintiffs.
Although Moses-Ecco says in one breath that "the reasonableness of the settlement is not in dispute * * *" it says in the next breath that indemnification will not lie because Roscoe-Ajax abandoned certain defenses to plaintiffs' claim. We lay aside this apparent inconsistency and discuss the merits of the later statement. The main defense to which Moses-Ecco refers is that plaintiffs' exclusive remedy was to seek benefits under the District of Columbia Workmen's Compensation Act, D.C.Code § 36-501 et seq. (1961),
Thus, it may be said that plaintiffs' claim rested on a question of law open and debatable in this jurisdiction. Ordinarily a settlement between the parties in such cases is motivated by a mutual desire to avoid the expense and risks of litigation. There is no allegation that a different motive prevailed here. In these circumstances a settlement payment, made when the law was uncertain, cannot be successfully attacked on the basis of any subsequent resolution of the uncertainty. Otherwise the public policy of encouraging settlements
Finally, Moses-Ecco asserts that the court below erred in allowing attorneys' fees as part of Roscoe-Ajax's recovery. It is of course true that attorneys' fees may not be taxed to either party unless provided for either by law or by agreement between the parties. D.C.Code § 11-1501 (1961); Rosden v. Leuthold, 107 U.S.App.D.C. 89, 274 F.2d 747 (1960). We think that the agreement of Moses-Ecco to indemnify Roscoe-Ajax for "any and all loss, cost, damage or expense" clearly includes attorneys' fees. Cf. General Acc. Fire & Life Assur. Corp., Ltd. v. Smith & Oby Co., supra; B & G Electric Company v. G. E. Bass & Company, 252 F.2d 698 (5th Cir. 1958).
WILBUR K. MILLER, Circuit Judge (dissenting).
The Williamsons' suit, which Roscoe-Ajax settled during the progress of the second trial, was based on the alleged sole, independent negligence of the latter. The majority hold — erroneously, I think — that Moses-Ecco had indemnified Roscoe-Ajax against loss caused by its own negligence. But that mistaken conclusion does not require or justify the award of indemnity against Moses-Ecco, as Roscoe-Ajax did not claim or prove that its negligence produced Williamson's injuries, but steadfastly denied guilt of negligence. Nor was its negligence judicially found, either in the main or the indemnity action. In those circumstances, it must be concluded, I think, that Roscoe-Ajax settled voluntarily, without any legal compulsion whatever and that it is not entitled to indemnity.
I shall therefore first discuss Roscoe-Ajax's plain failure to show entitlement to indemnity even under the erroneous holding that it was protected from liability arising from its own negligence. Later in this dissent, I shall demonstrate, at least to my own satisfaction, that the contract did not indemnify Roscoe-Ajax against loss occasioned by its own negligence and that therefore it could not recover under the indemnity agreement, even if Roscoe-Ajax's negligence had been shown or judicially found.
On November 24, 1958, Roscoe-Ajax Corporation, the general contractor for the construction of an addition to the Shoreham Hotel, engaged Moses-Ecco
On June 22, 1959, Williamson and his wife sued Roscoe-Ajax, charging it with negligent installation and maintenance of the railing on the landing above the fifth floor from which Williamson fell. Roscoe-Ajax filed a third-party complaint against Moses-Ecco seeking indemnification for all sums which might be adjudged against it, based on the following provision of the subcontract:
Roscoe-Ajax also made one Detwiler, Moses-Ecco's superintendent, a third-party defendant, alleging his negligence caused the accident. Thereafter, Roscoe-Ajax filed an answer to the complaint in which it denied negligence.
The first trial of the Williamsons' case against Roscoe-Ajax ended October 18, 1961, with a jury verdict in their favor in the total sum of $120,000. But, because of improper argument to the jury, the trial judge declared a mistrial, as a result of which the third-party action was not then tried.
The Williamsons' suit against Roscoe-Ajax came on for trial a second time on December 5, 1961. At the conclusion of the plaintiffs' evidence, Roscoe-Ajax moved for a directed verdict on the grounds (a) that the plaintiffs' exclusive remedy was under the Longshoremen's and Harbor Workers' Compensation Act of March 4, 1927,
The case was under advisement until February 12, 1962, when the District Court dismissed the third-party complaint as to Detwiler and awarded to Roscoe-Ajax judgment against Moses-Ecco for the sum of $46,033.67 plus attorney's fees and costs. Moses-Ecco appeals from this judgment and Roscoe-Ajax appeals from the dismissal of the third-party complaint against Detwiler.
I observe from the paragraph of the subcontract heretofore quoted that Moses-Ecco agreed to "at all times indemnify and save harmless the Owner [Shoreham Hotel] and the Contractor [Roscoe-Ajax] against any loss, because of injury or damage to persons or property arising or resulting from the performance of this contract * * *." The substance of this promise is to pay a loss which Shoreham or Roscoe-Ajax had been compelled to pay.
I agree with the Second Circuit's statement in The Toledo, 122 F.2d 255, 257, cert. denied Isbrandtsen-Moller Co. v. The Toledo, 314 U.S. 689, 62 S.Ct. 302, 86 L.Ed. 551 (1941):
Here, in settling with Williamson without its actionable negligence having been first judicially determined, Roscoe-Ajax took the risk of proving actual liability on its part as the basis of the right to indemnity.
There had been no judicial determination of liability in the main action, and
Moreover, at the conclusion of the Williamsons' evidence, Roscoe-Ajax had moved for a directed verdict, claiming its negligence had not been shown, and the trial court was in such doubt that it reserved its ruling on the motion. Then, during the presentation of its own evidence, while the trial judge still had under advisement its motion for a directed verdict for failure of proof of negligence, and when it was still denying negligence, Roscoe-Ajax settled for $45,000. And in its brief on this appeal, protesting its innocence and asserting the settlement "should not be construed as an admission of negligence by it," Roscoe-Ajax said:
Thus, although its negligence was not found as a fact in the principal action and was neither alleged nor proved in the third-party proceeding, and although it insisted it was not negligent, Roscoe-Ajax seeks indemnity for settling a suit based on its negligence, and at the same time contends the settlement should not be construed as an admission of negligence. This amounts to a claim of indemnity for a voluntary payment.
Curiously enough, Roscoe-Ajax complains in its brief that "Moses-Ecco did not introduce any evidence of the negligence of Roscoe-Ajax at the trial on the third-party complaint." It would have been passing strange if Moses-Ecco had done so even if it could have done it, for that would have amounted to supplying, to its own detriment, the insufficiency of the proof in Roscoe-Ajax's third-party action against it. It was incumbent upon Roscoe-Ajax to introduce or to point to evidence of its own negligence in order to show it acted under compulsion in settling with the Williamsons. Instead of introducing such evidence, or even trying to rely on the Williamsons' proof, Roscoe-Ajax argues to the contrary. I quote the following from its brief:
These statements seem to be a clear admission by the appellee that the trial court erred in holding Moses-Ecco liable
In attempting to avoid the effect of the Second Circuit's The Toledo case,
the majority say:
In support of this statement, the majority quote from the St. Louis Dressed Beef case
Hence, their failure to appreciate the full meaning of the term "prudent settlement" has led the majority into confused thinking. Their opinion indicates, I repeat, that the only consideration entitled to weight is whether the amount paid in settlement was reasonable in relation to the plaintiff's injuries and his demands. They fail to realize that no matter how reasonable a settlement may be in that respect, it is not a "prudent" settlement for which the indemnitee is entitled to recover from the indemnitor unless the indemnitee was obliged to pay it because of potential liability arising from its negligence. Thus, the majority are in effect saying the indemnity agreement does more than protect Roscoe-Ajax against its own negligence; they are saying it
As illustrative of the majority's misconception in this regard, I note that they accuse Moses-Ecco of being inconsistent in denying liability for indemnity and at the same time saying "the reasonableness of the settlement is not in dispute * * *." But Moses-Ecco was only saying that $45,000 was a reasonable amount to pay in settlement if — and only if — Roscoe-Ajax had been negligent and so was legally liable to pay damages.
Even under its theory that Roscoe-Ajax was indemnified against its own negligence, I think that, in the absence of evidence to the contrary, the court should accept Roscoe-Ajax's contention that it was in no way responsible for Williamson's injuries, and should hold that therefore the indemnity agreement could not be invoked; this would necessitate reversal and remand with directions to enter judgment in favor of Moses-Ecco.
Alternately, again assuming that Roscoe-Ajax was indemnified against its own negligence, I think the majority could logically reverse the judgment awarding indemnity, and remand the case for a new trial at which evidence would be heard and a finding made as to whether Roscoe-Ajax was negligent and so settled under legal compulsion. This course would give Roscoe-Ajax another opportunity to make out a case for indemnity, and would give Moses-Ecco a chance to cross-examine and to introduce countervailing evidence. Such procedure would avoid the present strained affirmance which requires Moses-Ecco to reimburse Roscoe-Ajax for what seems to me to have been a voluntary and gratuitous settlement.
The foregoing discussion is based on the assumption that the indemnity agreement was intended to and does protect Roscoe-Ajax from the consequences of its own negligence, and in my opinion the discussion is necessary only if the indemnifying language is so construed. As I have said, my brethren are of the view that Moses-Ecco agreed to indemnify Roscoe-Ajax for loss incurred through its own negligence. I disagree. In my opinion, the indemnifying language of the subcontract does not provide in express terms that indemnity must be paid for a loss sustained by Roscoe-Ajax through its own negligence, and that therefore the latter was not entitled to indemnity, even had its actionable negligence been established.
It is a general rule that an indemnity agreement does not protect the indemnitee from the consequences of his own negligence unless its language expressly provides for such indemnity. The intent to provide it must clearly and unequivocally appear, and it is held that words of general import are not enough. This general principle, which as far as I know is followed by practically all jurisdictions where the question has arisen, was stated in Southern Bell Tel. & Tel. Co. v. Mayor and Bd. of Aldermen
The Fifth Circuit also held, in Halliburton Oil Well Cementing Co. v. Paulk,
Among the many other cases to the same effect is City of Boston v. Boston Edison Company.
The City's cross-complaint, based on the indemnity provision of the ordinance, was dismissed because the District Court held that provision could not be construed as intended to save the City harmless from the consequences of its own subsequent independent negligence.
In upholding the dismissal, the First Circuit adopted as relevant (260 F.2d at 880) the following language in Laskowski v. Manning
After this quotation, the First Circuit added:
On the basis of these cases and many other authorities of identical import, I conclude the indemnity agreement here involved does not protect Roscoe-Ajax from the consequences of its own independent negligence, because it does not expressly, clearly and unequivocally provide for such protection; in fact, it does not so provide even in general terms which, as I have shown, would not be enough. An examination of the agreement for indemnity reveals not a word indicating an intention on the part of the parties to require the indemnitor to save the indemnitee harmless from loss due to its own negligence.
In reaching this conclusion I have not overlooked Chesapeake Beach R. Co. v. Hupp Automatic Mail Exchange Co., 48 App.D.C. 123, 128-129 (1918), which may be thought to depart from the general rule, but which I think is an exception due to the particular facts involved. In the Chesapeake case this court said:
Hupp was not engaged by the railroad company to aid in accomplishing its purpose, but was merely a tenant of railroad premises whose employees by their presence there increased the possibility of personal injury by the railroad's operation of its trains. It was against this added hazard, said the court, which the railroad company required indemnity.
This case is quite different. Moses-Ecco was not a tenant whose employees might by their presence add more hazard to Roscoe-Ajax's operations. It was engaged to do a part of the general work, and to some extent its employees were bound to use facilities furnished by Roscoe-Ajax. It was alleged that one of these facilities was defective, through the sole negligence of Roscoe-Ajax, and caused the injury. To apply the ruling of the Chesapeake case to this situation would be to extend its doctrine beyond the facts with which it dealt, and would be contrary to the general rule which is followed in an overwhelming majority of the cases.
I agree with the majority that under our workmen's compensation statute a general contractor is suable as a "third person" by an employee of a subcontractor. Continental Casualty Co. v. Thorden Line, 186 F.2d 992, 996 (4th Cir. 1951). Consequently, I too reject the argument that Williamson's remedy under that statute precluded him from suing Roscoe-Ajax. I also think the third-party complaint against Detwiler was properly dismissed.
In sum, the majority err in two respects: first, in construing the contract as indemnifying Roscoe-Ajax against its own negligence; and second, in affirming an award of indemnity under that construction when the indemnitee's negligence was not claimed, proved or judicially found. I must dissent from the majority's action in holding Moses-Ecco liable as indemnitor in such circumstances.
To the extent that the Batson-Cook case may appear to require the use of special legal terms such as "fault," "negligence" or "liability," we decline to follow it. Maiatico v. Hot Shoppes, Inc., supra; General Acc. Fire & Life Assur. Corp., Ltd. v. Smith & Oby Co.. supra.