In this interlocutory appeal we consider the contention of third-party defendant below-appellant Precision Air, Inc. ("Precision") that the Superior Court erred in denying its motion to dismiss a third-party complaint filed by defendant/third-party plaintiff below-appellee Standard Chlorine of Delaware, Inc. ("Standard"). This case requires us to decide whether the workers' compensation statute, 19 Del.C. § 2304 ("Section 2304"),
In August 1993, Standard accepted a bid from Precision to perform a service known as "stack-testing" on boilers used in Standard's chemical production plant in Delaware City, Delaware. Standard and Precision executed a contract on August 20, 1993, which states in relevant part:
(Paragraph 11 hereinafter referred to as the "Indemnification Clause").
On August 24, 1993, plaintiff below Lisle E. Shaffer ("Mr. Shaffer") incurred substantial injuries when he fell through the roof of a structure in the Delaware City plant while "stack-testing" a boiler. On January 11, 1994, Mr. Shaffer and his wife, co-plaintiff below Patricia A. Shaffer (collectively, "Plaintiffs"), brought a personal injury action against Standard, claiming that Standard's negligence caused Mr. Shaffer's injuries. More specifically, Plaintiffs alleged in pertinent part:
On April 11, 1994, Standard filed the third-party action against Precision, alleging that Precision was contractually liable to indemnify Standard in an amount equal to any percentage of liability that a fact-finder may attribute to Precision. Standard, in relevant part, averred:
Precision filed a motion to dismiss the third-party complaint, arguing that Section 2304 prohibited direct or indirect suits against it for its negligence and that the Indemnification Clause thus was not valid. On July 12, 1994, the Superior Court, after hearing oral argument, denied Precision's motion. That ruling is the subject of this interlocutory appeal.
II. STANDARD OF REVIEW
We review de novo a ruling by the Superior Court denying a motion to dismiss. See State v. Cephas, Del.Supr., 637 A.2d 20, 23 (1994). Accepting as true all well-pleaded allegations in a complaint, the trial court's denial of the motion is erroneous only if a "plaintiff would not be entitled to recover under any reasonably conceivable set of circumstances susceptible of proof." Kofron v. Amoco Chems. Corp., Del.Supr., 441 A.2d 226, 227 (1982); accord Spence v. Funk, Del. Supr., 396 A.2d 967, 968 (1978); Diamond State Tel. Co. v. University of Del., Del. Supr., 269 A.2d 52, 58 (1970). An allegation, though vague or lacking in detail, is nevertheless "well-pleaded" if it puts the opposing party on notice of the claim being brought against it. 269 A.2d at 58; see Super.Civ.R. 8(e)(1) & (f). Here, because Standard's third-party complaint incorporates by reference the allegations in Plaintiffs' complaint, we accept as true for purposes of this appeal the well-pleaded allegations in both the underlying complaint and the third-party complaint.
III. APPLICABILITY OF THE INDEMNIFICATION CLAUSE AND ITS EFFECT THEREOF
Precision argues that, because it has paid worker's compensation benefits to Mr. Shaffer, Section 2304 prohibits Standard's suit, notwithstanding the Indemnification Clause.
A. Contribution Theory
Standard may not maintain an action against Precision based on a contribution theory. "Under the [Workmen's Compensation] Act[, 19 Del.C. §§ 2301-2397,] every employee is bound to accept compensation for personal injury caused by accident arising out of and in the course of employment, regardless of the question of negligence and to the exclusion of all other rights and remedies." Histed v. E.I. duPont de Nemours & Co., Del.Supr., 621 A.2d 340, 342 (1993) (citing Section 2304); accord SW (Del.), Inc. v. American Consumers Indus., Del.Supr., 450 A.2d 887, 888 n. 1 (1982) (hereinafter American Consumers); Kofron v. Amoco Chems. Corp., Del.Supr., 441 A.2d 226, 231 (1982). As a corollary, Section 2304 precludes the imposition of joint tort liability upon an employer
In the instant case, Standard's third-party complaint alleges: "[P]recision Air, Inc. is solely liable to Plaintiffs, jointly and severally with and/or liable to [Standard] for
B. Indemnification Theory
Standard's indemnification action against Precision can, however, survive Precision's motion to dismiss. An employer, even though it has paid workmen's compensation benefits to an injured employee, can be held contractually liable to a third party where a contract between the employer and third party contains provisions requiring the employer to: (i) perform work in a workman-like manner;
The American Consumers court elaborated:
450 A.2d at 888 (internal citations omitted). Where both of the above-mentioned provisions are provided for by an express or implied contract:
American Consumers, 450 A.2d at 888-89 (insert in original) (quoting Diamond, 269 A.2d at 56-57) (citing 2A Arthur Larson, Workmen's Compensation Law § 76.00 (1970)). "[T]he intention to indemnify must[, however,] clearly appear in the terms of the [governing] agreement," Howard, 312 A.2d at 624, and generally does not extend to indemnification for an indemnitee's own negligence,
Further, such indemnity contracts are not against the public policy of Delaware. Bar Steel Constr. Co. v. Read, Del.Supr., 277 A.2d 678, 680 (1971). In that case, we rejected the contention of an indemnitor that an agreement to indemnify the indemnitee for the indemnitee's own negligence should not be enforced because of the exclusivity provision of the workers' compensation statute. Read, 277 A.2d at 679. In doing so, we reasoned:
Id. at 680.
In the instant case, Standard seeks recovery from Precision for only the latter's alleged negligence, not its own. Standard's contract with Precision contains the following provisions: (i) that Precision perform its obligations in a "safe, good, substantial and workmanlike manner"; and (ii) that Precision indemnify Standard for "any and all claims... arising from bodily injury or death and/or property loss or damage occasioned by, growing out of, or incidental to acts or omissions whether negligent or otherwise by [Precision.]" These two provisions create an "independent duty" based on the contract law principle of indemnification. See American Consumers, 450 A.2d at 888-89; Diamond, 269 A.2d at 56-57. Unlike American Consumers, 450 A.2d at 888, and Howard, 312 A.2d at 624, where there was no clear intent to create such an obligation to indemnify, and Diamond, 269 A.2d at 58-59, where the Court was forced to remand the case to determine whether the facts supported such an implied obligation, Precision's duty to indemnify Standard for any claims based on Precision's own negligence is clear from the language of the Indemnification Clause.
An employer cannot be held liable for indemnification, however, where there is no allegation that the employer acted improperly, for in such a scenario an indemnification obligation predicated on such improper conduct never becomes applicable. See Office Structures, Inc. v. Home Ins. Co., Del.Supr., 503 A.2d 193, 197-98 (1985); American Consumers, 450 A.2d at 888-89; Hollingsworth, 208 A.2d at 66. Where the third-party-indemnitee employs a tort theory for recovery, the injured employee's original complaint against the third-party-indemnitee must also include a claim alleging that the employer-indemnitor acted negligently. See Office Structures, 503 A.2d at 198 (indemnitee relying on tort principle of vicarious liability); Hollingsworth, 208 A.2d at 66 (indemnitee using tort law's fellow servant rule). Where the indemnification action is based on a breach of an implied or express indemnity contract, however, the issue of the employer-indemnitor's negligence can be injected into the case via either the third-party or original complaint. See American Consumers, 450 A.2d at 888 (employer-indemnitor's alleged negligence averred to only in third-party complaint, not original complaint by injured employee). That is, in the latter situation, for the indemnification obligation to arise, the underlying complaint need not state a claim against the employer-indemnitor. See id. Such a distinction, based on the legal mechanism the third party employs in seeking to recover from the employer, is consistent with the purposes of Section 2304, which include eliminating the employer's risk of being held liable for a tort-based judgment after having paid compensation benefits. See Kofron, 441 A.2d at 230-31 (relying on Section 2304's legislative history, as found in 29 Del.Laws, c. 233 (1917)).
In the instant case, Standard is seeking indemnification from Precision based solely on the latter's
Given the bar of Section 2304, Plaintiffs could not and did not state in their complaint a claim against Precision. Plaintiffs alleged, however, that Standard was negligent in: (i) "fail[ing] to require and/or permit its ... contractors and/or subcontractors to comply with appropriate safety regulations and procedures"; and (ii) "requir[ing] and/or permitt[ing] its ... contractors and/or subcontractors to use improper, unsafe and dangerous materials, machinery, equipment and techniques[.]" Plaintiffs also alleged that "Precision Air, Inc., had been subcontracted by [Standard] for the purposes of air quality testing." Thus, Precision's improper conduct — i.e., allegedly failing to comply with safety regulations and procedures, or using improper, unsafe, and dangerous instruments — as Standard's subcontractor was an issue in the underlying action by means of Plaintiffs' complaint.
Precision's alleged negligence also became an issue in this case via Standard's third-party complaint. In relevant part, paragraph 8 of the third-party complaint states: "[B]y virtue of [the contract between Precision and Standard,] Precision Air, Inc. is required to indemnify [Standard] for any percent of liability for which Precision Air, Inc.
Given the analysis above, Precision's reliance on Hollingsworth is misplaced. In that case, "neither [the contractor] nor [subcontractor-indemnitee] ha[d] ever faced a claim based on an allegation that [the subcontractor] was negligent as to [the underlying plaintiff.]" Hollingsworth, 208 A.2d at 66. Here, Plaintiffs' action against Standard is based, inter alia, on an allegation that Precision acted improperly. Because Standard's indemnification action is based only on the contract, Plaintiffs need not also have stated a claim against Precision in order for the Indemnification Clause to apply. See Office Structures, 503 A.2d at 198; American Consumers, 450 A.2d at 888; Hollingsworth, 208 A.2d at 66. Further, bringing Precision's conduct into this case in this indirect manner does not run afoul of the general rule that, unless expressly and clearly indicated in contractual language, an indemnitee cannot indemnify itself for its own negligence, see Interstate Amiesite, 297 A.2d at 44; Hollingsworth, 208 A.2d at 64, because Standard is not seeking indemnity for liability stemming from its own alleged negligence.
Precision's reliance on Office Structures is similarly unpersuasive. In that case, the indemnification clause read:
Office Structures, 503 A.2d at 195 (emphasis added). The third-party-indemnitee in that case, Office Structures, settled a personal injury claim brought by an injured employee,
On appeal, this Court summarized Office Structures' argument: "Because Pepper's claim against Office Structures in the underlying suit was based on Ci-De's violation of the OSHA regulations, ... Ci-De must indemnify Office Structures for its `liability imposed by law.'" Id. at 198. In affirming the trial court, the Court rejected Office Structures' contention:
Id. (emphasis added).
In this case, the "liability imposed by law" language in Office Structures is not present in the Indemnification Clause and Standard is not seeking recovery on that basis. That is, unlike the indemnitee in Office Structures that was seeking recovery based on the substantive tort principle of vicarious liability as applicable by the "liability imposed by law" contract language, see 503 A.2d at 198, Standard's action is based on Precision's
We hold that the Indemnification Clause controls this litigation. See Read, 277 A.2d at 680. Under that clause, Standard has a contractual basis for recovery based on Precision's agreement to indemnify Standard for any liability stemming from Precision's own negligence. Thus, the Superior Court did not err in denying Precision's motion to dismiss.
We hold that the Indemnification Clause is applicable in this case. We further hold that, under that provision, there is a contractual basis for Standard to seek indemnification from Precision as to any percent of liability attributed to Precision, due to Precision's own negligence, in the underlying action by Plaintiffs against Standard. Therefore, we
Id. § 2304.