Burkes Mechanical, Inc. ("Burkes"), appeals from a judgment entered against it indemnifying Ft. James-Pennington, Inc. ("Ft. James"), in the amount of $989,963.19, which represented Ft. James's payment to settle an action against it, plus attorney fees and litigation expenses. We affirm.
This dispute arises out of events that occurred in 1997 at a pulp and paper mill owned and operated by Ft. James in Choctaw County ("the mill"). On April 12, 1997, Burkes agreed in an "on-site addendum to Fort James Corporation purchase order" ("the contract") to construct or "install hardwood screening" at the mill. The contract contained the following pertinent provisions:
At that time, Burkes had in force a "Commercial General Liability Coverage" policy issued by Fidelity & Guaranty Insurance Company ("Fidelity"). The policy declarations listed Burkes as the "Named Insured." A "certificate of liability insurance" was provided to Ft. James listing Ft. James as the "Additional Insured," with bodily-injury coverage of $1,000,000, as required by the contract. The policy stated, in pertinent part:
The policy included an endorsement for "Additional Insureds" ("the endorsement"), which provided, in part:
On July 8, 1997, while performing his duties as an employee of Burkes, Jimmy James slipped and fell on the mill premises. He brought a worker's-compensation action against Burkes, and, on May 24, 2000, was awarded benefits on the basis of permanent and total disability. Burkes appealed from the judgment in the worker's-compensation action. On March 30, 2001, the Court of Civil Appeals affirmed that judgment without opinion. Burkes Mech., Inc. v. James (No. 2991084), 823 So.2d 62 (Ala.Civ.App.2001)(table).
Meanwhile, on April 28, 1999, Jimmy James sued Ft. James, averring that Ft. James negligently or wantonly "allowed the floor of the premises to become wet and covered with ... chemicals which made the surface slippery and unsafe." On August 5, 1999, the trial court granted a "petition for intervention." The petition, which purported to be filed by Burkes, stated:
The petition was signed by "Attorney for Burkes Mechanical, Inc."
Burkes did not respond to the letter. Consequently, on February 23, 2001, Ft. James addressed a follow-up letter to Burkes; again Burkes did not respond. However, on March 7, 2001, Fidelity responded to the demand in a letter to counsel for Ft. James. In that letter, Fidelity denied coverage, citing Paragraph 2.c. of the endorsement (the bodily-injury exclusion) and Section IV.2. of the policy (the duty-to-notify provision).
On July 11, 2002, Ft. James filed a "third-party complaint" against Burkes and Fidelity. Count one of the complaint, as last amended, averred that Burkes had breached its contract with Ft. James to defend and indemnify Ft. James in the action. It sought a judgment against Burkes "for any and all costs and expenses incurred in defending the claims of [James], including reasonable attorney fees, as well as any liability [Ft. James might] incur, either by judgment, settlement, or otherwise." Count two averred that Fidelity had breached its contract with Ft. James "by failing to acknowledge coverage for indemnity of Ft. James as an additional insured and ... [by failing] to tender a defense to Ft. James under [the] policy." Count three alleged that Fidelity had refused in "bad faith" to investigate its allegations that Burkes's "negligence proximately caused or contributed to [Jimmy James's] accident." The trial court severed Ft. James's claims against Fidelity, and that case was removed to the United States District Court for the Southern District of Alabama.
On August 18, 2003, Jimmy James settled his action against Ft. James for $875,000. On January 20, 2004, Ft. James's claims against Burkes were tried without a jury. At the close of all the evidence, Burkes filed a motion, styled "Motion for Judgment as a Matter of Law At the Close of the Third Party Plaintiff's Evidence." The trial court denied the motion and entered a judgment for Ft. James for "$989,963.19, representing the amount of the settlement, plus Ft. James' fees and expenses incurred in defending James' action." The judgment was based on explicit findings that, among other things, "Burkes received notice of the lawsuit by Jimmy
Burkes raises two issues on appeal. First, it argues that Ft. James's claims that Burkes breached the provision of its contract requiring it to defend and indemnify Ft. James are barred by the statute of limitations. Second, it contends that Ft. James is "barred from bringing this action," because of "its unreasonable delay in submitting its claim." Burkes's brief, at 13-14. Burkes asks this Court to "reverse the trial court's order ... and render a verdict in favor of [Burkes]."
I. Standard of Review
By the two issues it raises in this appeal, Burkes essentially challenges the trial court's denial of the motion it filed at the close of all the evidence. That motion purported to be a "motion for a judgment as a matter of law," filed pursuant to Ala. R. Civ. P. 50(a) ("a JML motion"). However, the motion was not, in fact, a JML motion, because this action was tried without a jury. "In actuality, [Burkes's] motion was a motion for a judgment on partial findings by the trial court, pursuant to Rule 52(c), Ala. R. Civ. P.," as amended October 1, 1995. Loggins v. Robinson, 738 So.2d 1268, 1270 (Ala.Civ.App.1999). The 1995 amendment to Rule 52(c) "incorporated a recent amendment and a proposed amendment to [Fed.R.Civ.P. 52(c) (`Federal Rule 52')];" Rule 52, Committee Comments to October 1, 1995, Amendment. "This rule `supplanted, in nonjury trials, the "involuntary dismissal" procedure set forth in [former] Rule 41(b), Ala. R. Civ. P.'" Loggins, 738 So.2d at 1271 (quoting Hinson v. Holt, 776 So.2d 804, 808 n. 2 (Ala.Civ.App.1998)). In other words, Rule 52(c) "effects a transfer from former Ala. R. Civ. P. 41(b) of the vehicle for obtaining a judgment for failure of proof in a nonjury case." Rule 52, Committee Comments to October 1, 1995, Amendment.
The standard of review applicable to rulings on motions for involuntary dismissal is "equally applicable" to rulings on motions for a judgment on partial findings by the trial court. Loggins, 738 So.2d at 1271. See also Grant v. Bullock County Bd. of Educ., 895 F.Supp. 1506, 1508-09 (M.D.Ala.1995) (review under Federal Rule 52). Ordinarily, that standard is the ore tenus standard. Loggins, 738 So.2d at 1271. However, the ore tenus standard is inapplicable "where the evidence is undisputed, or where the material facts are established by the undisputed evidence." Salter v. Hamiter, 887 So.2d 230, 234 (Ala. 2004). Although evidence was presented ore tenus in this case, the trial court's findings as to the issues on appeal are based on facts that are not in dispute. Thus, the ore tenus standard of review is inapplicable, and our review is de novo. With these principles in view, we first address Burkes's statute-of-limitations argument.
II. Statute of Limitations
Burkes first argues that this case is controlled by Ala.Code 1975, §§ 6-5-220 to -228, applicable to civil actions against, among others, "builders who constructed, or performed or managed the construction of, an improvement on or to real property designed by and constructed under the supervision, administration, or observation of an architect or engineer." § 6-5-221(a) (emphasis added). Section 6-5-221(a) provides that all such actions must be commenced within two years of the accrual of the cause of action. A cause of action accrues "at the time the damage or injury is or in the exercise of reasonable diligence should have been first discovered," and so accrues "whether or not the full amount of
Burkes contends that Ft. James incurred its "first injury or damage," namely, legal expenses, in May 1999, when it hired its own counsel to respond to Jimmy James's complaint. Thus, Burkes argues, Ft. James's complaint, which was filed on July 11, 2002, was filed outside the two-year limitations period. It is undisputed that if § 6-5-221(a) does not apply, then the claims are not barred by any limitations period.
Ft. James contends that Burkes has presented no proof that Burkes satisfies the statutory definition of a "builder," and, consequently, Burkes cannot rely on the limitations period of § 6-5-221(a). We agree with Ft. James.
Section 6-5-220(a) defines a builder as "[a]ny individual, partnership, firm, or corporation that constructed, or performed or managed the construction of, an improvement, or any portion thereof, on or to real estate, and [which] at the time of the construction was licensed as a general contractor in the State of Alabama." (Emphasis added.) "A party claiming the benefits of a statute has the burden of establishing a sufficient factual basis to support invocation of the statute." Wood v. Krenz, 392 N.W.2d 395, 397 (N.D.1986); see also Geiger & Co. v. Hussey, 63 Ala. 338, 342 (1879) ("whoever claims the benefits of [a] statute must bring himself within its provisions—must show affirmatively that he is of the class of persons, and has a [right] of the kind the statute intends to secure").
In reply to Ft. James's contention that Burkes has presented no proof that it satisfies the definition of a "builder" at § 6-5-220(a), Burkes states: "Of course, Burkes Mechanical is a licensed Alabama general contractor, so this argument is incorrect." Reply brief, at 10 (emphasis added). However, the "briefs of counsel, with the statements of their contentions, [are] not evidence in the case." Fleming v. Copeland, 210 Ala. 389, 391, 98 So. 128, 129 (1923). "This Court is limited to a review of the record, and the record cannot be changed, altered or varied on appeal by statements in briefs of counsel." Wal-Mart Stores, Inc. v. Goodman, 789 So.2d 166, 176 (Ala.2000). The record contains no evidence of Burkes's status. Because Burkes has failed to satisfy its burden of showing it is entitled to the benefit of § 6-5-221(a), we hold that the claims of Ft. James are not barred by that statute of limitations.
III. Timely Notice
Burkes next contends that "Ft. James's twenty-month delay in seeking defense and indemnity and three-year delay in filing its third-party complaint against Burkes precludes recovery." Burkes's brief, at 23. Again, we disagree.
To be sure, in order to preserve an indemnity claim, the indemnitee must timely notify the indemnitor of the action against the indemnitee. However, "timely notice" is a relative term, that is, it depends on the facts and circumstances of each case. Cochrane Roofing & Metal Co. v. Callahan, 472 So.2d 1005, 1008 (Ala. 1985). "`The notice must be timely in that it must not come so late that the indemnitor is prejudiced in preparing the defense ....'" Stone Building Co. v. Star Elec. Contractors, Inc., 796 So.2d 1076, 1091 (Ala.2000) (quoting Restatement (Second) of Judgments § 57, cmt. e). "Conversely, tardiness without prejudice provides no defense." 796 So.2d at 1091 (emphasis added). Ft. James correctly contends that Burkes has failed to show how it was prejudiced, and, consequently,
Burkes contends that it was prejudiced, but does so solely on the basis of Fidelity's denial of coverage. Specifically, Burkes states:
Burkes's brief, at 26-27 (emphasis added). For a number of reasons, this argument is without merit.
First, it must be noted that Burkes does not contend that it lacked timely notice of the underlying action, that is, the claims of Jimmy James against Ft. James. Burkes states only that it lacked a timely notice of the "demand for defense and indemnity." In that connection, Ft. James states that "[o]n August 5, 1999, approximately three months after the filing of the complaint in the underlying action, Burkes intervened in the lawsuit and has been a party to the underlying action ever since. Burkes received, or could have received, a copy of the complaint at the time of the intervention." Ft. James's brief, at 30.
In response, Burkes contends that "[t]his intervention was only in the name of [Burkes], and was actually done by [Burkes's] worker's compensation carrier, not Burkes itself, which had no stake in the intervention." Reply brief, at 2 (emphasis added). Even assuming that this assertion is true, it appears to be a distinction without a difference, especially in view of the fact that Burkes does not deny timely notice of the underlying action. Burkes offers no explanation.
The second weakness in Burkes's argument is found in the policy itself. Although Burkes's policy with Fidelity listed Ft. James as an "additional insured," the "named insured" was Burkes. The policy defined the duties owed to Fidelity "in the event of an occurrence, offense, claim, or suit." "Occurrence" was defined in Section V of the policy as "an accident, including continuous or repeated exposure to substantially the same general harmful conditions."
Under the policy, Burkes—as well as Ft. James—was to "see to it that [Fidelity
There is no evidence or contention that anyone notified Fidelity of the "occurrence" on July 8, 1997, in which Jimmy James slipped and fell at the mill. In a summary-judgment motion it filed on January 13, 2003, Fidelity stated: "The first notification received by Fidelity of this `occurrence' occurred on January 22, 2001, when it received the correspondence from [Ft. James's counsel] dated January 17, 2001. This was a delay in notification of the `occurrence' of three years and six months." (Emphasis added.) If, as Burkes alleges, Ft. James breached its duties as an additional insured to notify Fidelity of Jimmy James's action against Ft. James, Burkes, as the named insured, breached the policy in failing to notify Fidelity of the underlying accident.
It appears that had either Burkes or Ft. James timely notified Fidelity of Jimmy James's accident, Fidelity would have had no ground for the defense on which Burkes's prejudice argument is based. Moreover, as Ft. James correctly contends, Burkes's duty to indemnify Ft. James does not turn on the validity of Fidelity's lack-of-notice defense. Paragraph 11 of the contract states that Burkes's "obligations to defend, indemnify and hold [Ft. James] harmless . . . shall not be limited or otherwise affected by any insurance which [Burkes] may carry under Paragraph 10 above or otherwise or by any insurance which [Ft. James] may carry." Unlike the policy, the contract contains no timely-notice requirement. Burkes may not assert the consequences of its own default under the policy as the basis for the prejudice it now alleges as grounds for avoiding the contract's indemnity provisions.
Because Burkes knew of Jimmy James's injury and his consequent action against Ft. James, this case differs from Cochrane Roofing & Metal Co. v. Callahan, supra, cited by Burkes.
Stone Building Co., 796 So.2d at 1091 (discussing and distinguishing Cochrane).
In this case, Burkes was fully and timely apprised of the basis of the underlying claim, namely, the injury to Jimmy James. James slipped and fell while performing his duties as Burkes's employee and immediately filed a written report of the accident. The facts and circumstances of the fall were necessarily involved in James's worker's-compensation action against Burkes, which was fully and finally litigated. Those facts formed the basis of Jimmy James's claim against Ft. James and of the indemnity claim against Burkes. Consequently, Burkes cannot show that its ability to investigate and determine the basis of the underlying claim was impaired.
In short, we find no merit in Burke's contention that Ft. James failed to preserve
HOUSTON, LYONS, BROWN, JOHNSTONE, HARWOOD, and STUART, JJ., concur.
NABERS, C.J., and SEE, J., concur in the result.
NABERS, Chief Justice (concurring in the result).
I concur in the judgment of the main opinion based solely on the fact that Burkes's contract with Ft. James obligated Burkes to defend, to indemnify, and otherwise to hold Ft. James harmless in regard to any claim filed against Ft. James by an employee of Burkes, regardless of any insurance held by the parties. There was no provision in that contract mandating that Ft. James give timely notice to either Burkes or Fidelity Insurance that it intended to hold Burkes to this obligation.
SEE, J., concurs.