Mobile Infirmary Association d/b/a Mobile Infirmary Medical Center v. Quest Diagnostics Clinical Laboratories, Inc. ( 2023 )

Rel: February 24, 2023
Notice: This opinion is subject to formal revision before publication in the advance sheets of Southern
Reporter. Readers are requested to notify the Reporter of Decisions, Alabama Appellate Courts,
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SUPREME COURT OF ALABAMA
OCTOBER TERM, 2022-2023
_________________________
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_________________________
Mobile Infirmary Association d/b/a Mobile Infirmary Medical
Center
v.
Quest Diagnostics Clinical Laboratories, Inc.
Appeal from Mobile Circuit Court
(CV-17-900403)
SHAW, Justice.
Mobile Infirmary Association d/b/a Mobile Infirmary Medical
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Center ("Mobile Infirmary"), the plaintiff seeking contractual indemnity
in the action below, appeals the Mobile Circuit Court's summary
judgment in favor of the defendant below, Quest Diagnostics Clinical
Laboratories, Inc. ("Quest"). We affirm.
Facts and Procedural History
On March 17, 2014, Quest and Mobile Infirmary entered into a
Laboratory Management Agreement ("the LMA"), in which Quest agreed
to manage Mobile Infirmary's onsite clinical laboratory facilities and to
provide clinical testing services used by Mobile Infirmary's medical staff
to diagnose and treat patients. The LMA also contained indemnity
provisions. Specifically, Section 8.1 of the LMA stated, in pertinent part:
"Quest Diagnostics hereby agrees to indemnify, defend and
hold [Mobile Infirmary], and [Mobile Infirmary's] officers,
directors, employees and agents (collectively, the 'Lab
Indemnitees'), harmless from and against any and all
liability, losses, damages, claims or causes of action ('Claims'),
and expenses connected therewith, including reasonable
attorneys' fees, that are caused by or a result of (i) any
negligent or intentional act, error or omission by Quest
Diagnostics, its employees, agents, servants or
representatives with respect to its responsibilities and/or the
performance of Services hereunder, to the extent such Claim
does not arise from an act or omission or cause for which
[Mobile Infirmary] is required to provide indemnity pursuant
to Section 8.2 below … [or] (v) any personal injury (including
death) or property damage caused by or arising from the
negligence, acts or omissions of Quest Diagnostics or any
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employee or agent of Quest Diagnostics …."
Section 8.2 of the LMA addressed Mobile Infirmary's indemnity
obligations:
"[Mobile Infirmary] hereby agrees to indemnify, defend and
hold Quest Diagnostics and Quest Diagnostics Affiliates,
officers, directors, employees and agents (collectively, the
'Quest Indemnitees') harmless from and against any and all
Claims, and expenses connected therewith, including
reasonable attorneys' fees, (i) directly caused by or as a result
of any negligent or intentional act, error or omission by
[Mobile Infirmary], its employees, agents, servants,
contractors or representatives with respect to its
responsibilities hereunder, to the extent such Claim does not
arise from an act or omission or cause for which Quest
Diagnostics is required to provide indemnity pursuant to
Section 8.1 above … [or] (v) any personal injury (including
death) or property damage caused by or arising from the
negligence, acts or omissions of [Mobile Infirmary] or any
employee or agent of [Mobile Infirmary] …."
On March 13, 2015, James A. Ward went to Mobile Infirmary's
emergency room after suffering weakness, dizziness, loss of fluids, a mild
cough, and severe body aches. While there, he was diagnosed with the
flu, and he was later discharged with a prescription for medication. Two
days later, Ward's symptoms worsened, and he returned to the
emergency room. Ward was eventually diagnosed with diabetic
ketoacidosis.
When his condition did not improve, Ward was moved into the
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intensive-care unit, at which point his doctor ordered him to undergo
glucose finger-sticks and a basic metabolic panel every four hours to help
monitor his serum glucose, kidney function, acid/base status, and
electrolytes. According to Mobile Infirmary, those basic metabolic panels
were supposed to be performed by Quest, but they were allegedly
canceled by one of Quest's employees.
Over the next several hours, Ward developed cardiac dysfunction
and lost consciousness. At some point, he suffered an "anoxic brain
injury" and later died "as a result of multisystem organ failure secondary
to severe sepsis and septic shock."
In 2017, Ingrid Mia Ward ("Mia"), Ward's wife and the personal
representative of his estate, commenced a wrongful-death action against
Mobile Infirmary and other defendants, including Mobile Infirmary's
doctors and nurses who were responsible for Ward's treatment and care.
Mia alleged that the defendant medical-care providers had breached the
standard of care in several ways, including by "failing to obtain serial
basic metabolic panels every four hours" and by "failing to properly
monitor and report Mr. Ward's blood glucose levels on an hourly basis."
She also alleged that Mobile Infirmary was vicariously liable for those
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who "undertook to and did provide medical, diagnostic, nursing,
technical, and/or other health care services and treatment to [Ward]."
According to Mia, her husband died as a proximate result of the acts or
omissions of Mobile Infirmary and its staff in failing to properly diagnose
and treat his condition.
Quest was not named as a party to Mia's action. Mobile Infirmary
informed Quest of the action and, as the case progressed, apprised Quest
of the status of the proceedings, including its negotiations with Mia for
potential settlement of the lawsuit. Mia and Mobile Infirmary ultimately
settled the wrongful-death action. Before Mia's claims against Mobile
Infirmary were dismissed pursuant to a joint motion of those parties,
Mobile Infirmary filed a third-party complaint against Quest in which it
sought contractual and equitable indemnity related to its defense and
settlement of Mia's action. Quest filed a motion to dismiss, which the
trial court granted in part by dismissing Mobile Infirmary's equitable-
indemnity claim.
Mobile Infirmary later amended its complaint to more specifically
state its remaining claim of contractual indemnity against Quest. Mobile
Infirmary alleged:
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"4. The claims of [Mia] against Mobile Infirmary in this
action were caused by and/or resulted from negligent acts,
errors or omissions of Quest in its responsibilities under the
[LMA] and/or the performance of services under [the LMA],
and said claims did not arise from an act or omission or cause
for which Mobile Infirmary is required to provide indemnity
to Quest pursuant to Section 8.2 of the [LMA]. Such negligent
acts, errors or omissions included the following:
"a. Quest's failure to timely collect, test,
diagnose and/or report the results of blood work
ordered by doctors and other healthcare providers
in connection with the care and treatment of the
… Decedent, James Ward, on a timely basis, in
breach of its duties under the [LMA] ….
"b. Quest's unwarranted delay in collecting,
testing, diagnosing and/or reporting the results of
blood work ordered by physicians and other
healthcare providers in connection with the care
and treatment of … James Ward, in breach of its
duties under the [LMA] ….
"c. Quest's cancellation of physicians' and
other healthcare providers' orders for blood work
needed in the care and treatment of [Mia's]
Decedent, James Ward, in breach of its duties
under the [LMA] ….
"5. As a proximate result of the aforesaid negligence, the
physicians and other healthcare providers attending Mr.
Ward lacked the information necessary to appropriately
monitor and assess his condition on a timely basis and to
administer the appropriate amounts of insulin and IV fluids,
and take other action, in accordance with his on-going
condition and, as a proximate result thereof, Mr. Ward died."
Quest later served Mobile Infirmary with a set of requests for
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admissions, to which Mobile Infirmary provided the following responses:
"1. Admit that there were allegations of negligence in
the Third Amended Complaint filed by Mia Ward, as personal
representative of the Estate of James Ward, against Mobile
Infirmary Medical Center that did not relate to the laboratory
services provided by Quest Diagnostics pursuant to the [LMA]
(hereinafter the 'non-lab allegations.').
"RESPONSE: Admitted.
"2. Admit that the death of James A. Ward was caused,
in part, by the negligence of Mobile Infirmary Medical Center.
"RESPONSE: Admitted.
"3. Admit that the death of James A. Ward was caused,
in part, by the negligence of Mobile Infirmary Medical for non-
lab allegations.
"RESPONSE: Denied.
"4. Admit that the death of James A. Ward was caused,
in part, by the negligence of Mobile Infirmary Medical Center
within the meaning of Section 8.2 of the [LMA] between Quest
Diagnostics and Mobile Infirmary Medical Center dated
March 17, 2014.
"RESPONSE: Admitted.
"5. Admit that Mobile Infirmary Medical Center is solely
seeking indemnification in this matter from Quest for monies
it spent in defending itself and for the confidential settlement
with the Estate of James A. Ward.
"RESPONSE: Admitted.
"6. Admit that Mobile Infirmary Medical Center
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incurred legal defenses expenses in defending its conduct for
those non-lab allegations referenced in Requests for
Admission Nos. 1 and 3.
"RESPONSE: Admitted.
"7. Admit that Mobile Infirmary Medical Center settled
the lawsuit filed by Mia Ward, as personal representative of
the Estate of James A. Ward, based in part on allegations of
Mobile Infirmary Medical Center's own negligent conduct in
the care of James A. Ward.
"RESPONSE: Admitted.
"8. Admit that Mobile Infirmary Medical Center settled
the lawsuit filed by Mia Ward, as personal representative of
the Estate of James Ward, while claims based on allegations
of Mobile Infirmary Medical Center's own negligent conduct
were still pending.
"RESPONSE: Admitted."
Quest filed a motion for a summary judgment in which it argued in
its supporting brief that Mobile Infirmary's contractual-indemnity claim
failed as a matter of law. Relying on Mobile Infirmary's responses to its
requests for admissions, Quest argued that because Mobile Infirmary's
own negligence was at least a partial cause of Ward's death and because
the parties had not agreed under either Sections 8.1 or 8.2 in the LMA to
indemnify each other against losses caused by the indemnitee's own
negligence, it was not required to indemnify Mobile Infirmary for the
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settlement of Mia's action. Quest further argued that, absent clear and
unequivocal language to the contrary, any argument by Mobile Infirmary
that the reciprocal indemnity provisions found in Sections 8.1 and 8.2 of
the LMA allowing each party to recover indemnification for the other's
negligence also permitted partial indemnification based on the
proportionate fault of the indemnitor was meritless.
In response to Quest's motion, Mobile Infirmary filed a cross-motion
for a summary judgment in which it argued that, under the LMA and
upon proof that Quest's negligent acts or omissions in the performance of
its duties under the LMA caused Ward's death, it was entitled to full
indemnification from Quest. In the alternative, Mobile Infirmary argued
that it was entitled to indemnification for the portion of its losses that
were attributable to Quest's negligence under a comparative-fault
analysis.
After a hearing, the trial court entered a summary judgment in
favor of Quest and denied Mobile Infirmary's cross-motion for a summary
judgment. In its judgment, the trial court explained:
"At this stage, the Parties have not conducted discovery
on [Mobile Infirmary's] allegations of negligence against
Quest. However, this Court does not need such evidence or
lack thereof to rule on the pending motions. Rather, given the
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foregoing indemnity provisions and [Mobile Infirmary's]
admission of negligence, there are two threshold legal
questions for this Court to decide at this juncture:
"(1) Is [Mobile Infirmary] precluded from
seeking contractual indemnity from Quest when
its own independent negligence contributed to the
death of Mr. Ward?; and
"(2) Whether the indemnity provisions in
Sections 8.1 and 8.2 are ambiguous, and if so,
whether an agreement was reached as to
comparative fault analysis despite the ambiguity?
"As discussed below, the Court concludes the answer to
the first question to be 'Yes', and thus [Mobile Infirmary]
cannot recover here. The Court further concludes that the
provisions are by [Mobile Infirmary's] own admission
ambiguous and as such, the parties did not 'knowingly,
clearly, and unequivocally' enter into a comparative fault
indemnification contract. For either of these reasons,
summary judgment on behalf of Quest is due to be granted."
In support of its conclusions, the trial court explained:
"Section 8.2 of the LMA provides the various scenarios
in which [Mobile Infirmary] must indemnify, defend, and hold
Quest harmless from and against any and all liability, losses,
damages, claims or causes of action. Specifically, Section
8.2(v) requires [Mobile Infirmary] to defend, indemnify, and
hold Quest harmless against a death 'caused by or arising
from the negligence, acts or omissions of [Mobile Infirmary]
or any employee or agent of [Mobile Infirmary].' Based on
[Mobile Infirmary's] admission that the death of Mr. Ward
was indeed caused, in part, by the negligence of Mobile
Infirmary, the Court concludes that Section 8.2(v) is
triggered.
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"The triggering of [Section] 8.2(v) is sufficient to end the
Court's inquiry and dictates that Quest is entitled to
summary judgment on [Mobile Infirmary's] third-party claim.
Because Section 8.2(v) requires [Mobile Infirmary] to hold
Quest harmless when [Mobile Infirmary] is negligent, [Mobile
Infirmary] cannot advance a third-party claim against Quest
while simultaneously conceding it [(Mobile Infirmary)] was
negligent. Put another way, Section 8.2(v) imposes a duty on
[Mobile Infirmary] to hold Quest harmless when [Mobile
Infirmary] or its employees are negligent -- and there is no
question they were negligent in this case. [Mobile Infirmary's]
attempt here to recover damages from Quest while also
admitting negligence defies the hold harmless nature of
Section 8.2(v). [Mobile-Infirmary's] Third-Party Complaint is
doing the opposite of holding Quest harmless. Accordingly,
the Court need not look any further to determine that Quest
does not owe [Mobile Infirmary] contractual indemnity in this
case, and the Court's inquiry can end here.
"[Mobile Infirmary] is essentially seeking indemnity
from Quest for [Mobile Infirmary's] own negligence -- or at
least in part for [Mobile Infirmary's] own negligence. See
[Mobile Infirmary's] responses to Quest's Requests for
Admission …. The Alabama Supreme Court has addressed
the standard of review of agreements by one party to
indemnify for another's wrongful conduct, stating:
'Agreements by which one party agrees to indemnify [the
other] for the consequences of the other's acts or omissions are
carefully scrutinized .… An agreement by one person to
indemnify the [other] for the other's negligence is enforceable
only if the indemnity provisions are unambiguous and
unequivocal.' Royal Ins. Co. v. Whitaker Contr. Corp., 824 So.
2d 747, 752 (Ala. 2002), quoting Industrial Tile, Inc. v.
Stewart, 388 So. 2d 171 (Ala. 1980).
"Quest further contends that the competing indemnity
provisions of [Sections] 8.1(i) and 8.2(i) cancel each other out
when there is mutual negligence. Quest argues that [Section]
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8.1(i) cannot be analyzed in a vacuum: if [Mobile Infirmary] is
negligent -- as conceded in this case -- [Section] 8.2(i) must be
read in conjunction with [Section] 8.1(i). The Court finds that
when read together, [Sections] 8.1(i) and 8.2(i) establish that
Quest and [Mobile Infirmary] agreed to indemnify the other
for their own sole fault when the other is not also at fault.
Under these circumstances, [Section] 8.2(i) is triggered
because [Mobile Infirmary] has already admitted its own
independent negligence. Thus, Quest cannot owe indemnity
to [Mobile Infirmary] under [Section] 8.1(i), and the Court's
inquiry could also end here.
"In contrast, [Mobile Infirmary] wants the Court to
interpret [Section] 8.1(i) independent of [Sections] 8.2(i) and
8.2(v), and find that three (3) words, 'to the extent,' provides
the framework for a comparative fault trial where [Mobile
Infirmary] can ultimately recover partial indemnity from
Quest in proportion to the Parties' respective comparative
fault to the Estate of Mr. Ward. The Supreme Court of
Alabama requires this Trial Court to find that any such
purported agreement between [Mobile Infirmary] and Quest
is clear and unequivocal with an agreed-upon formula for it to
order a comparative fault trial. Holcim (US), Inc. v. Ohio Cas.
Inc. Co., 38 So. 3d 722, 728 (Ala. 2009) (determining that 'if
two parties knowingly, clearly, and unequivocally enter into
an agreement whereby they agree that the respective liability
of the parties will be determined by some type of agreed-upon
formula, then Alabama law will permit the enforcement of
that agreement as written'). Here, [Mobile Infirmary] and
Quest did not 'knowingly, clearly, and unequivocally' craft
Section 8.1(i) to create a comparative fault indemnification
contract. This is further supported by the fact that Section
8.1(i) lacks 'an agreed-upon formula' for a comparative fault
trial.
"Finally, the Court notes that under no circumstances
should it grant [Mobile Infirmary's] Cross-Motion for Partial
Summary Judgment against Quest because neither Party
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suggest the record establishes negligence by Quest or
proximate cause against Quest. The plain language of the
agreement does not allow for [Mobile Infirmary] to recover
against Quest for [Mobile Infirmary's] own negligence. Thus,
the Cross-Motion for Partial Summary Judgment is due to be
denied. As discussed above, the Court concludes [Section]
8.1(i) is insufficient to compel a comparative fault trial."
(Emphasis in original.) Mobile Infirmary appeals.
Standard of Review
The material issue at this stage of the case does not involve a
question of fact. "We review a summary judgment and all questions of
law de novo." Pinkerton Sec. & Investigation Servs., Inc. v. Chamblee,
961 So. 2d 97, 101 (Ala. 2006).
Discussion
On appeal, Mobile Infirmary maintains that Quest was required to
indemnify it for the settlement of Mia's wrongful-death action.
Specifically, Mobile Infirmary argues that Quest's failure to perform the
basic metabolic panels ordered by Ward's doctor caused or contributed to
his death and, thus, triggered the indemnity provision found in Section
8.1 of the LMA, thereby entitling it to full indemnification from Quest
under that provision. To the extent, however, that its own admitted
negligence contributed, at least in part, to Ward's death, Mobile
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Infirmary argues in the alternative that, under Section 8.1(v) of the LMA,
Quest was still required to indemnify it for Quest's proportionate share
of the fault in causing or contributing to Ward's death. For these reasons,
Mobile Infirmary argues that the trial court erred in entering a summary
judgment in Quest's favor.
We address the alternative argument first. The decision in Holcim
(US), Inc. v. Ohio Casualty Insurance Co., 38 So. 3d 722, 727 (Ala. 2009),
considered the following certified question, as rephrased by the Court:
"Whether, under Alabama law, an indemnitee may enforce an
indemnification provision calling for the allocation of an obligation or
damages based on the respective fault of the indemnitee and
indemnitor?" The answer was "in the affirmative": "[I]f two parties
knowingly, clearly, and unequivocally enter into an agreement whereby
they agree that the respective liability of the parties will be determined
by some type of agreed-upon formula, then Alabama law will permit the
enforcement of that agreement as written." Holcim, 38 So. 3d at 729.
In arriving at this answer, the Court first noted that, generally,
"joint tortfeasors are not entitled to common-law indemnity or
contribution." Id. at 727.
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"In Vandiver v. Pollak, 107 Ala. 547, 553, 19 So. 180, 182
(1895), this Court explained that the basis of this prohibition
is found in the maxim ex turpi causa non oritur actio:
" 'As a general principle of the common law it
is often stated that indemnity or contribution will
not be enforced as between joint wrong-doers. The
reason underlying the principle is, that courts will
not lend assistance to him who founds his cause of
action on an immoral or illegal act -- "Ex turpi
causa, oritur non actio." A trespasser confessing
that he has injured or taken the property of
another, is not entitled to the assistance of courts,
instituted as well for the protection of property as
for the protection of persons, to recover indemnity
or contribution from his associates in the
trespass.' "
38 So. 3d at 727. See also Sherman Concrete Pipe Mach., Inc. v. Gadsden
Concrete & Metal Pipe Co., 335 So. 2d 125, 127 (Ala. 1976) ("The general
rule in Alabama, subject to exceptions, prohibits one of several joint
tortfeasors from enforcing contribution from the others who participated
in the wrong. This is because of the maxim that no man can make his
own misconduct the ground for an action in his own favor.").
Despite the maxim ex turpi causa non oritur actio, indemnity
agreements in which the indemnitor agrees to indemnify the indemnitee
for the indemnitee's own negligence can be enforced:
" 'The Court has, for many years, held that as
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between private parties, indemnity contracts are
enforceable if the contract clearly indicates an
intention to indemnify against the consequences of
the indemnitee's negligence, and such provision
was clearly understood by the indemnitor, and
there is not shown to be evidence of a
disproportionate bargaining position in favor of
the indemnitee.'
"Industrial Tile, Inc. v. Stewart, 388 So. 2d 171, 175 (Ala.
1980). This rule includes the enforcement of a valid indemnity
agreement that requires an indemnitor to indemnify an
indemnitee for the indemnitee's own wrongdoing: '[I]f the
parties knowingly, evenhandedly, and for valid consideration,
intelligently enter into an agreement whereby one party
agrees to indemnify the other, including indemnity against
the indemnitee's own wrongs, if expressed in clear and
unequivocal language, then such agreements will be upheld.'
388 So. 2d at 176. See also Apel Mach. & Supply Co. v. J.E.
O'Toole Eng'g Co., 548 So. 2d 445, 448 (Ala. 1989) ('Although
the general rule in Alabama is that joint tort-feasors are not
entitled to indemnity, when one joint tort-feasor agrees in
writing to indemnify the other, even for claims based on the
other's own negligence, the agreement, if it is a valid
indemnity agreement, can be upheld, and the joint tort-feasor
can receive indemnification.')."
38 So. 3d at 727-28. That said, those agreements must be clear:
"However, 'the intention to indemnify the negligence of the indemnitee
must clearly appear from the wording of the instrument, but when that
intention is clear, the indemnity provisions will be read and construed so
as to give them the meaning the parties have expressed.' " Holcim, 38 So.
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3d at 728 (quoting Eley v. Brunner-Lay S. Corp., 289 Ala. 120, 124, 266
So. 2d 276, 280 (1972), overruled on other grounds by Goodyear Tire &
Rubber Co. v. J.M. Tull Metals Co., 629 So. 2d 633 (Ala. 1993)).
Because parties may enter into agreements that allow an
indemnitee to recover from the indemnitor even for claims resulting
solely from the negligence of the indemnitee, this Court saw no legal
obstacle to an indemnification agreement calling for the allocation of an
obligation or damages based on the respective fault of the indemnitee and
the indemnitor, that is, a contractual agreement providing a form of
otherwise barred joint-tortfeasor contribution:
"If, under Alabama law, the maxim ex turpi causa non
oritur actio provides no barrier to a contractual agreement in
which an indemnitor may obligate himself or herself to pay an
indemnitee's obligation resulting from the indemnitee's own
wrongs, then, a fortiori, we see no barrier to an agreement
between parties for an indemnitor to provide indemnity where
the indemnitor's own wrongs also contribute to the creation of
the obligation. Similarly, we see no barrier to the freedom of
parties to negotiate an agreement providing for the allocation
of a proportionate part of the obligation or damages based on
the parties' respective fault. As we have previously stated,
when ' "dealing with an Alabama contract entered into by two
competent contracting parties in this State, ... we are mindful
of our duty to avoid, if at all possible, infringing upon the
rights of either or both." ' Shoney's [LLC v. MAC East, LLC],
27 So. 3d [1216,] 1223 [(Ala. 2009)] (quoting Summers v.
Adams Motor Co., 34 Ala. App. 319, 324, 39 So. 2d 300, 304
(1949))."
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38 So. 3d at 728-29 (footnote omitted).
This Court held that such agreements, 1 which, again, are contrary
to the general prohibition on indemnity or contribution between joint
wrongdoers, must themselves be clear: "[I]f two parties knowingly,
clearly, and unequivocally enter into an agreement whereby they agree
that the respective liability of the parties will be determined by some type
of agreed-upon formula, then Alabama law will permit the enforcement
of that agreement as written." Id. at 729 (emphasis added). 2
As noted previously, in Section 8.1 of the LMA, Quest agreed to
indemnify and hold Mobile Infirmary harmless against
"any and all liability, losses, damages, claims or causes of
action … that are caused by or a result of (i) any negligent or
intentional act, error or omission by Quest Diagnostics, its
employees, agents, servants or representatives with respect
to its responsibilities and/or the performance of Services
hereunder, to the extent such Claim does not arise from an
1In Holcim, this Court specifically disclaimed "expressing an
opinion as to the proper interpretation" of the agreement in that case. 38
So. 3d at 727.
2Given the above, we reject the conclusion of the Eleventh Circuit
Court of Appeals in Ohio Casualty Insurance Co. v. Holcim (US), Inc.,
589 F.3d 1361, 1363 n.1 (11th Cir. 2009), in which that court interpreted
our decision in Holcim as not requiring such agreements to have "clear
and unequivocal language."
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act or omission or cause for which [Mobile Infirmary] is
required to provide indemnity pursuant to Section 8.2 below
… [or] (v) any personal injury (including death) or property
damage caused by or arising from the negligence, acts or
omissions of Quest Diagnostics or any employee or agent of
Quest Diagnostics .…"
(Emphasis added.) Under Section 8.2, Mobile Infirmary in turn agreed
to indemnify Quest from and against
"any and all Claims … (i) directly caused by or as a result of
any negligent or intentional act, error or omission by [Mobile
Infirmary] … with respect to its responsibilities [under the
LMA], to the extent such Claim does not arise from an act or
omission or cause for which Quest Diagnostics is required to
provide indemnity pursuant to Section 8.1 above … [or] (v)
any personal injury (including death) … caused by or arising
from the negligence, acts or omissions of [Mobile Infirmary]
or any employee or agent of [Mobile Infirmary] …."
(Emphasis added.)
Under Section 8.1(v), Quest has agreed to indemnify and hold
Mobile Infirmary harmless for "any and all liability" caused by or that
was the result of "any personal injury (including death)" that arose out of
Quest's negligence, acts, or omissions. Likewise, under Section 8.2(v),
Mobile Infirmary has agreed to indemnify and hold Quest harmless for
"any and all" claims related to "any personal injury (including death)"
that arose from Mobile Infirmary's negligence, acts, or omissions.
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Together, these provisions may be read to mean that the parties have
agreed to indemnify each other for all liability that may arise from their
respective negligence, acts, or omissions.
Mobile Infirmary admitted that Ward's death was caused in part
by its negligence within the meaning of Section 8.2; its acts formed a
basis for Mia's action (that is, Mia's action arose from Mobile Infirmary's
acts). Under Section 8.2(v), it would be required to hold Quest harmless
for all claims arising from such acts. If Quest's acts also contributed to
Ward's death (that is, if Mia's action also arose from Quest's acts), then,
under Section 8.1(v), Quest would hold Mobile Infirmary harmless from
all claims arising from such acts. If both of these provisions apply, they
could be read to require each party to hold the other harmless from all
claims asserted in Mia's wrongful-death action.
Mobile Infirmary argues, however, that Sections 8.1(v) and 8.2(v)
instead require each party to indemnify the other for its own
proportionate share of fault. As stated previously, Holcim makes clear
that parties must "knowingly, clearly, and unequivocally enter into an
[indemnity] agreement whereby they agree that the respective liability
of the parties will be determined by some type of agreed-upon formula."
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38 So. 3d at 729. In the present case, although Sections 8.1(v) and 8.2(v)
can be read to address when a claim arises from either party's acts, they
do not clearly and unequivocally address what happens when a claim
arises out of acts of both parties. The provisions require indemnification
for all liability; but, if both are at fault, it is unclear how both can be liable
in full. Nowhere in these provisions do the parties expressly agree or
clearly provide a formula that, in the event there is a claim that arises
out of partial liability or concurrent acts by both parties, indemnification
will be required for a proportionate share. Without a "clear" and
"unequivocal" agreement addressing indemnification in such a
concurrent-fault situation, Mobile Infirmary's proposed reading of these
sections does not comply with Holcim.
The same analysis applies to Section 8.1(i). Mobile Infirmary
argues that this provision provides a proportionate-fault formula
pursuant to which Quest must indemnify it for the portion of the damages
resulting from its negligence that caused or contributed to Ward's death.
Under Section 8.1(i), Quest has agreed to indemnify Mobile Infirmary
against "any and all" claims that are caused by or are the result of "any
negligent or intentional act, error or omission by Quest … to the extent
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such Claim does not arise from an act or omission or cause for which
[Mobile Infirmary] is required to provide indemnity pursuant to Section
8.2." (Emphasis added.) As noted above, Section 8.2(v) can be read to
require Mobile Infirmary to hold Quest harmless for all claims asserted
in Mia's wrongful-death action. Further, the phrase "to the extent" can
be read to mean that indemnity is required "if" the claim does not "arise"
from Mobile Infirmary's own conduct, which would be consistent with a
reading of Sections 8.1(v) and 8.2(v) requiring indemnity for "sole" fault.
However, Mobile Infirmary suggests that the phrase can also be read as
providing a quantity or proportion, meaning, "to the degree." If this
alternate reading is also viable, it only amplifies the ambiguity of these
indemnity provisions, demonstrating that they are not "clear" and
"unequivocal" as required by Holcim.
In summary, the LMA could have specified that each party was
required to indemnify the other for any proportional share of fault in the
case of potential joint liability. The cited provisions do not clearly and
unequivocally do so. It might be implied, but so might other reasonable
and contrary implications. Thus, Mobile Infirmary's alternate argument
does not demonstrate reversible error.
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As to Mobile Infirmary's initial argument, it contends that, because
Sections 8.1(v) and 8.2(v) "cancel each other out," it would not be required
to provide any indemnity to Quest under Section 8.2. Thus, it asserts,
under Section 8.1(i), Quest would be required to indemnify it "in full" for
all damages in Mia's wrongful-death action because the limitation in that
part -- "to the extent such Claim does not arise from an act or omission
or cause for which [Mobile Infirmary] is required to provide indemnity
pursuant to Section 8.2" -- would not apply. (Emphasis added.) We
disagree. As the trial court held, "[b]ased on [Mobile Infirmary's]
admission that the death of Mr. Ward was indeed caused, in part, by the
negligence of [Mobile Infirmary], the Court concludes that Section 8.2(v)
is triggered." In such a circumstance, the terms of Section 8.1(i) do not
require indemnification by Quest. That Quest could be required to
indemnify Mobile Infirmary under Section 8.1(v) does not nullify the fact
that Section 8.2(v) was, as the trial court held, "triggered" under the facts
of this case.
Conclusion
For the reasons stated above, the trial court's judgment is affirmed.
AFFIRMED.
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Wise, Bryan, Sellers, Mendheim, and Stewart, JJ., concur.
Cook, J., concurs specially, with opinion, which Mitchell, J., joins.
Parker, C.J., dissents, with opinion.
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COOK, Justice (concurring specially).
I concur with the main opinion. I write specially to clarify my
understanding of our holding in this case.
In Holcim (US), Inc. v. Ohio Casualty Insurance Co., 38 So. 3d 722,
729 (Ala. 2009), this Court explained: "[I]f two parties knowingly, clearly,
and unequivocally enter into an agreement whereby they agree that the
respective liability of the parties will be determined by some type of
agreed-upon formula, then Alabama law will permit the enforcement of
that agreement as written." (Emphasis added.) Requiring that indemnity
agreements be "clear and unequivocal" is not confined solely to the fact
of indemnity but logically extends to the scope of that indemnity (that is,
it applies even if the parties are joint tortfeasors). After all, indemnity,
contribution among joint tortfeasors, and comparative negligence are all
departures from our normal liability rules.
In this case, Mobile Infirmary contends that simply by including
the language "to the extent" in the Laboratory Management Agreement's
indemnity provisions, the allocation of fault among the parties to those
provisions was "clear and unequivocal." It was not. Although the parties
string-cited cases from other jurisdictions interpreting similar "to the
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extent" language in contracts, both sides admit that courts have reached
conflicting results on whether this language is ambiguous. In fact, the
Eleventh Circuit Court of Appeals held that this language was
ambiguous. See Ohio Cas. Ins. Co. v. Holcim (US), Inc., 548 F.3d 1352,
1356-58 (11th Cir. 2008); Ohio Cas. Ins. Co. v. Holcim (US), Inc., 589 F.3d
1361, 1363 (11th Cir. 2009). If a number of courts have found this
language to be "ambiguous," such language generally fails the
heightened requirement of being "clear and unequivocal."
Although the main opinion alludes to the need for an "agreed-upon
formula" in such provisions, I do not understand our holding to require
specific, talismanic language or a mathematical formula expressed in
numbers or any heightened test of certainty in how a formula will work.
For instance, I do not understand our holding to decide whether the
words "to the degree" would have been sufficient. The problem here is
that the contract was not "clear and unequivocal" regarding whether
there would be any allocation if there was concurrent liability. What I
understand our holding to say is that such provisions should make clear
that some allocation of fault among the parties will occur. If necessary,
the court can then apply traditional contract-construction principles to
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provisions regarding how to actually make that allocation. Clarity is
almost always a good thing, and the parties almost always understand
-- far better than a court after the fact -- what they truly intend.
Mitchell, J., concurs.
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PARKER, Chief Justice (dissenting).
In my view, the issue presented in this case was not decided by
Holcim (US), Inc. v. Ohio Casualty Insurance Co., 38 So. 3d 722 (Ala.
2009). And I believe that Sections 8.1(v) and 8.2(v) of the Laboratory
Management Agreement are best understood as requiring fault-based
apportionment of indemnity between the parties.
First, Holcim did not hold that apportioned-indemnity provisions
must be unambiguous to be enforceable. In reading Holcim as so holding,
the main opinion overlooks the analytical frame within which that case
was decided.
Holcim came to us on a certified question from the United States
Court of Appeals for the Eleventh Circuit. The indemnity provision there
required indemnification of losses suffered by the indemnitee " ' " 'to the
extent such losses are attributable to the negligence or willful misconduct
of [the indemnitor]. ' " ' " Id. at 725 (emphasis added; citations omitted).
Before the Eleventh Circuit, the indemnitee argued that the phrase "to
the extent" required indemnification based on apportionment of fault
between the parties. Id. at 726. The indemnitor argued that the
indemnity provision's language was not specific enough to require
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apportionment, partly because it did not provide a method for
apportionment. Id. The Eleventh Circuit thought both arguments were
reasonable. Id. But that court recognized that, if the indemnitee's
argument were right and the provision required apportionment, a
question would arise whether such a provision is enforceable under
Alabama law. That question is the essence of what the Eleventh Circuit
certified to us. See id. We rephrased the certified question, distilling it to
that essence. Id. at 727.
Crucially for the present case, we then made clear that we would
answer the question "[w]ithout expressing an opinion as to the proper
interpretation of the actual agreement between [the indemnitee] and [the
indemnitor]." Id. In other words, we did not decide the issue disputed by
the parties in the Eleventh Circuit -- whether the indemnity provision's
language was specific enough to require apportionment. Rather, we did
the same thing the Eleventh Circuit had done in certifying the question:
We assumed for purposes of our analysis that the indemnitee's view was
correct -- that the provision's language was specific enough to require
apportionment. That assumption was necessary to the whole analysis
that followed, because if the provision did not require apportionment
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because it was not specific enough, then the certified question --
essentially, whether apportioned-indemnity provisions are
unenforceable based on Alabama public policy -- was moot.
In answering the (rephrased) certified question, we reviewed our
precedent on contractual indemnity for an indemnitee's own wrongdoing,
as discussed in today's main opinion. In summary, under common law,
joint tortfeasors were not entitled to indemnity because courts generally
will not assist a person whose claim is founded on his own wrongdoing.
Id. at 727. Despite that equity-based rationale, courts will enforce
contracts in which a party agrees to indemnify for the indemnitee's own
negligence. Id. However, to be enforceable, such provisions must be
written in clear and unequivocal language and must be entered into by
the indemnitor knowingly, evenhandedly, and without disproportionate
bargaining position of the indemnitee, id. at 727-28, presumably because
of those provisions' tension with equity. Next, we reviewed our precedent
on freedom of contract and its general applicability to indemnity. Id. at
728. Finally, we applied these principles by reasoning from the greater
to the lesser: If Alabama public policy did not prohibit an indemnitor from
contracting to indemnify an indemnitee for the indemnitee's own
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wrongdoing, then Alabama public policy also did not prohibit an
indemnitor from contracting to indemnify an indemnitee for the
indemnitor's apportioned wrongdoing as to a jointly caused harm. Id. at
728. We then concluded: "Accordingly, if two parties knowingly, clearly,
and unequivocally enter into an agreement whereby they agree that the
respective liability of the parties will be determined by some type of
agreed-upon formula, then Alabama law will permit the enforcement of
that agreement as written." Id. at 729.
Within that last sentence, the words "knowingly, clearly, and
unequivocally" and "by some type of agreed-upon formula" were
necessarily dicta. As explained above, the only question before this Court
was whether an indemnity provision whose language did require
apportionment would be unenforceable under Alabama public policy.
Clearly not before us was the question what language was necessary to
require apportionment. Both the Eleventh Circuit and this Court had
expressly declined to answer that question at that juncture, because both
courts were focused on the public-policy question that required assuming
that the subject provision required apportionment.
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Put another way, today's main opinion views Holcim as requiring
that apportioned-indemnity provisions be "clear and unequivocal" and
provide a "formula" for apportionment. If that view were correct, in
Holcim we would have held at the outset that the provision was
unenforceable (and declined to answer the certified question as moot)
because the Eleventh Circuit had already determined that the provision
was ambiguous. But we did not approach the provision that way, because
we were assuming that the provision was enforceable as a matter of
language and were examining only whether it was unenforceable as a
matter of policy.
There is another reason why that surplus language in Holcim's
conclusion sentence should be understood as dicta: It does not flow from
the equitable, public-policy concerns that underlie our cases' "clear and
unequivocal" requirement for provisions that agree to indemnification for
an indemnitee's own wrongdoing. Such a provision does more than depart
from the common-law rule against indemnity among joint tortfeasors. It
goes further, requiring an indemnitor to indemnify against the
indemnitee's own fault, separate from the indemnitor's fault, thus
essentially requiring the indemnitor to act as an insurer. Cf. Industrial
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Tile, Inc. v. Stewart, 388 So. 2d 171, 175-76 (Ala. 1980) (" '[S]uch
provisions must be construed in favor of the indemnitor in instances
where the indemnity is not contracted for from an insurance company
engaged in the business of writing, for consideration, such coverage ….' "
(citation omitted)). Such an arrangement cuts so deeply against the grain
of ordinary principles of equity that, to be enforceable, it must have been
entered into with the clearest of notice to the indemnitor. See id. at 176("The Court's insistence that such provisions be unambiguous and
unequivocal arises from its concern that, generally speaking, one should
not be able to contract against the consequences of his own wrong.").
In contrast, a provision that calls for partial indemnity based on
apportionment of fault does not trigger that equitable concern. The
indemnitor is not indemnifying against the indemnitee's own fault, but
only against the indemnitor's fault. Even absent a contractual indemnity
provision, the common law itself would likely require that kind of
indemnification (via contribution), at least outside the context of joint
active tortfeasors. See American S. Ins. Co. v. Dime Taxi Serv., Inc., 275
Ala. 51, 55, 151 So. 2d 783, 785 (1963). An apportioned-indemnity
provision merely extends the common law's fault-based scheme of
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indemnity/contribution to the joint-tortfeasor scenario. Hence, the
equitable justification for a "clear and unequivocal" requirement, so
necessary as to an indemnitee's-own-wrongdoing provision, is simply not
present when dealing with an apportioned-indemnity provision.
In accord with this view was the Eleventh Circuit's follow-up
Holcim decision after we answered the certified question:
"The Supreme Court of Alabama explicitly declined to express
an opinion about the proper interpretation of the language at
issue here. Moreover, our conclusion that the contract
language is ambiguous does not require the ultimate finding
that no valid agreement on this issue existed between the
parties. Alabama's requirement for 'clear and unequivocal'
language seems to us to apply to those agreements in which
an indemnitor agrees to assume the burden of losses
attributable to the fault of the indemnitee. Here, however,
[the indemnitee] only seeks indemnification from [the
indemnitor] to the extent of [the indemnitee's] losses that
were caused by [the indemnitor], pursuant to an analysis of
comparative fault."
Ohio Cas. Ins. Co. v. Holcim (US), Inc., 589 F.3d 1361, 1363 n.1 (11th Cir.
2009) (citations omitted). In my view, that part of the Eleventh Circuit's
decision correctly interpreted our Holcim opinion. That opinion did not
hold that apportioned-indemnity provisions must be clear and
unequivocal or that they must provide a formula for apportionment.
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Second, the indemnity provisions here are best interpreted as
requiring fault-based apportionment of indemnity between the parties.
Outside the context of provisions requiring indemnification for an
indemnitee's own wrongdoing, "[w]hen construing an indemnity
agreement, this Court has applied the general rules of contract
interpretation," Once Upon a Time, LLC v. Chappelle Props., LLC, 209
So. 3d 1094, 1096 (Ala. 2016). Specifically, when confronted with
ambiguous indemnity provisions, we have looked to principles of contract
interpretation that might resolve the ambiguity. See, e.g., FabArc Steel
Supply, Inc. v. Composite Constr. Sys., Inc., 914 So. 2d 344, 357-61 (Ala.
2005); Alfa Mut. Ins. Co. v. Nationwide Mut. Ins. Co., 684 So. 2d 1295,
1298-1301 (Ala. 1996).
Thus, I would resolve the present provisions' ambiguity as we would
resolve any other, by applying principles of contract interpretation. There
are three possible interpretations of Sections 8.1(v) and 8.2(v) in a
situation when both parties are at fault: (1) The two parties can obtain
indemnification back and forth ad infinitum, (2) the provisions cancel
each other out and have no effect, or (3) the provisions require
apportionment of fault. " '[W]here there is a choice between a valid
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construction and an invalid construction [of an indemnity provision,] the
court has a duty to accept the construction that will uphold, rather than
destroy, the contract and that will give effect and meaning to all of its
terms.' " Once Upon a Time, 209 So. 3d at 1097 (citation omitted). Only
option (3), apportionment, avoids both the absurdity of option (1) and the
destruction that would result from option (2). Other courts have
interpreted similarly dueling indemnity provisions to require
apportionment. See Joseph Francese, Inc. v. DOS Concrete Servs., Inc.,
47 Mass. App. Ct. 367, 713 N.E.2d 984 (1999); Bank One, N.A. v. Echo
Acceptance Corp., 522 F. Supp. 2d 959, 971-73 (S.D. Ohio 2007); Gap, Inc.
v. Apex Xpress, Inc., No. A146176, June 14, 2017 (Cal. Ct. App. 2017)
(unpublished opinion).
In addition to allowing Sections 8.1(v) and 8.2(v) to be enforceable,
this interpretation allows them to be read harmoniously with Sections
8.1(i) and 8.2(i). The (i) subsections require indemnification for "any
negligent or intentional act, error or omission by [the indemnitor] ... with
respect to its responsibilities ... hereunder, to the extent such Claim does
not arise from an act or omission or cause for which [the indemnitee] is
required to provide indemnity pursuant to [the corresponding indemnity
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section] ...." (Emphasis added.) The (v) subsections are more specific,
requiring indemnification for "any personal injury (including death) or
property damage caused by or arising from the negligence, acts or
omissions of [the indemnitor]" (emphasis added) and do not contain the
"to the extent" caveat. Under the general/specific canon of construction,
specific provisions override general provisions in the specific situations
to which they apply. See ERA Commander Realty, Inc. v. Harrigan, 514
So. 2d 1329, 1335 (Ala. 1987); Antonin Scalia & Bryan A. Garner,
Reading Law 183-88 (Thomson/West 2012). Thus, under the (i)
subsections, generally indemnity is not provided when both parties cause
an indivisible harm ("to the extent such Claim does not arise from an act
or omission or cause for which [the indemnitee] is required to provide
indemnity" (emphasis added)). However, under the (v) subsections, when
the harm is specifically personal injury, death, or property damage, there
is no prohibition of reciprocal indemnity, and the parties are liable to
indemnify each other based on their respective apportioned fault.
Today's main opinion imposes new requirements that apportioned-
indemnity provisions be clear and unequivocal and provide a formula for
apportionment. Those requirements infringe on the parties' freedom of
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contract (which we emphasized in Holcim, see 38 So. 3d at 727-28)
without any justification in either Holcim's holding or the equitable
principles underlying its analysis. Without such a justification, I would
not impose those new requirements.
38