North American Roofing Services, Inc. v. Menard, Inc. , 997 N.E.2d 1087 ( 2013 )

FOR PUBLICATION
ATTORNEYS FOR APPELLANT: ATTORNEYS FOR APPELLEE:
ROBERT S. GRIMM DANNY E. GLASS
ALVIN J. KATZMAN JOHN J. KREIGHBAUM
Katzman & Katzman, P.C. Fine & Hatfield, P.C.
Indianapolis, Indiana Evansville, Indiana
Oct 17 2013, 10:09 am
IN THE
COURT OF APPEALS OF INDIANA
NORTH AMERICAN ROOFING SERVICES, )
INC., )
)
Appellant-Plaintiff, )
)
vs. ) No. 26A01-1303-PL-125
)
MENARD, INC., )
)
Appellee-Defendant. )
APPEAL FROM THE GIBSON SUPERIOR COURT
The Honorable Earl G. Penrod, Judge
Cause No. 26D01-0906-PL-11
October 17, 2013
OPINION - FOR PUBLICATION
SHARPNACK, Senior Judge
STATEMENT OF THE CASE
Menard, Inc., hired North American Roofing Services, Inc. (“NARSI”), to install a
roof on a new store that was being built. During construction, a portion of the structure
collapsed and fell on two workers, injuring them and resulting in lawsuits. After the roof
was completed, Menard refused to pay NARSI, and NARSI filed suit. NARSI now
appeals the trial court’s denial of its motion for partial summary judgment and the grant
of summary judgment to Menard. We reverse and remand.
ISSUE
NARSI raises one issue, which we restate as: whether the court erred in denying
partial summary judgment to NARSI and granting summary judgment to Menard.
FACTS AND PROCEDURAL HISTORY
Menard decided to build a store in Princeton, Indiana. In 2007, Menard and
NARSI executed a contract, pursuant to which NARSI agreed to install a membrane roof
on the store. Menard ultimately agreed to pay NARSI $209,529 for the job. The contract
contains an indemnity clause, which provides as follows:
[NARSI] shall indemnify and hold harmless [Menard], its agents and
employees from any and all liability, damages, expenses, claims, demands,
actions or causes of action, including attorney fees, arising out of the
performance of the work hereunder, whether such liability, damages,
expenses, claims, demands, actions or causes of actions are caused by
[NARSI], its subcontractors, or their agents or employees, or any persons
acting on their behalf.
Appellant’s App. p. 28. The contract also contains a provision entitled Article 9, Section
E (“Section E”), which sets forth circumstances under which Menard may decline to pay
NARSI for its work. Appellant’s App. p. 29. That clause provides:
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[Menard] may withhold payment from [NARSI] because of:
(1) defective work not remedied;
(2) third party claims filed or reasonable evidence indicating
probable filing of such claims;
(3) failure of [NARSI] to make payments properly to
subcontractors or for labor, materials, or equipment;
(4) reasonable doubt that the uncompleted Contract Work can be
completed for the unpaid balance of the Contract Sum;
(5) damage to another Contractor;
(6) reasonable indication that the Contract Work will not be
completed within the Contract Time; or
(7) unsatisfactory prosecution of the Contract Work by the
Contractor.
Id. at 29-30.
In September 2007, during construction, a portion of the building collapsed after
heavy rains. Debris fell on construction workers Michael Folsom and Derek Hazelip,
causing them serious injuries.
Folsom sued Menard, NARSI, and other contractors in federal court, and Hazelip
sued Menard, NARSI, and other contractors in state court. Their complaints are similar
in many respects. Folsom and Hazelip both alleged that Menard:
provided architectural drawings, specifications, blue prints, and material
lists for the construction at the [building site]; further, its representatives
attended and participated in safety meetings, and provided supervision and
inspection services of work done and materials provided by those with
whom it contracted directly as well as those that contracted with the general
contractor, CDI, Inc.
Id. at 105, 114-15. The complaints further alleged that NARSI “was under contract with
[Menard] to install a membrane roofing system according to specifications provided by
[Menard] and began the installation of that membrane prior to September 26, 2007.” Id.
at 106, 115. In addition, Folsom and Hazelip each claimed, “[NARSI] failed to provide
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adequate runoff or drainage for the membrane on the structure at the [building site].” Id.
at 106, 115. They also alleged that water accumulated on the membrane roof and, “as the
result of the actions of [NARSI], [Menard], [CDI], and [another contractor] the water was
unable to drain or run off,” which led to the collapse. Id. at 106, 116. Both Folsom and
Hazelip asserted that Menard, NARSI, and other contractors owed them a duty of care
and, “by their acts and omissions, individually and jointly,” breached the duty. Id. at 107,
116.
In both lawsuits, Menard filed cross-claims against NARSI and other contractors.
Furthermore, Menard separately sued various insurers, including NARSI’s liability
insurance carrier, in federal court, claiming failure to defend and seeking
indemnification.1
Meanwhile, it is undisputed that NARSI completed the roofing job, and the store
opened for business. It is also undisputed that Menard refused to pay NARSI, claiming
that NARSI was contractually obligated to indemnify it against liabilities resulting from
the roof collapse. NARSI filed a mechanic’s lien against the store and later filed suit to
foreclose upon the lien, thereby beginning this case.
Eventually, Folsom and Hazelip executed settlement agreements with Menard,
NARSI, and the other defendants, and they dismissed their lawsuits. Menard dismissed
its cross-claims against NARSI in those lawsuits. The settlement agreements have not
been included in the record, but the parties agree that Menard, NARSI, and other
1
Other provisions in the contract between Menard and NARSI required NARSI to obtain Workers
Compensation Insurance, Comprehensive General Liability Insurance, and Builders Risk “All Risk”
Insurance, in which policies Menard was to be designated as an “additionally insured.” Appellant’s App.
pp. 30-31.
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contractors each contributed to the settlements. Menard subsequently dismissed its
federal lawsuit against the insurers.
NARSI’s case against Menard remained active, and NARSI amended its
complaint to add a claim of breach of contract.2 In its answer to NARSI’s amended
complaint, Menard raised affirmative defenses based on the contract’s indemnification
clause and Section E. Next, NARSI filed a motion for partial summary judgment, limited
to its claim for breach of contract. Menard filed a motion for summary judgment as to
both of NARSI’s claims.
After a hearing, the court denied NARSI’s motion for partial summary judgment.
The court granted Menard’s motion, determining that Menard was “entitled to judgment
as a matter of law on [NARSI’s] claim for Breach of Contract.” Id. at 13. The court
further determined that NARSI’s claim to foreclose upon the mechanic’s lien must also
fail and, having disposed of both of NARSI’s claims, entered judgment in favor of
Menard. This appeal followed.
DISCUSSION AND DECISION
This Court applies the same standard as the trial court when reviewing a grant or
denial of summary judgment. Herron v. Anigbo, 897 N.E.2d 444, 448 (Ind. 2008).
Therefore, summary judgment is to be affirmed only if there is no genuine issue as to any
material fact and the moving party is entitled to a judgment as a matter of law. Id. All
facts established by the designated evidence, and all reasonable inferences from them, are
to be construed in favor of the nonmoving party. Id.2
NARSI also added a claim of unjust enrichment but later moved to dismiss that claim.
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The party moving for summary judgment bears the burden of making a prima
facie showing that there is no genuine issue of material fact and that he or she is entitled
to a judgment as a matter of law. Dreaded, Inc. v. St. Paul Guardian Ins. Co., 904
N.E.2d 1267, 1270 (Ind. 2009). Once the moving party meets these two requirements,
the burden shifts to the nonmoving party to show the existence of a genuine issue of
material fact by setting forth specifically designated facts. Id. The fact that the parties
have both filed motions for summary judgment does not alter our standard of review, as
we consider each motion separately to determine whether the moving party is entitled to
judgment as a matter of law. Reed v. Reid, 980 N.E.2d 277, 285 (Ind. 2012).
NARSI argues that it is entitled to summary judgment on its claim for breach of
contract because it fulfilled its obligations to Menard. Menard does not dispute that it
and NARSI had a valid contract, that NARSI performed the work it was contractually
obligated to perform, and that Menard has withheld payment. Thus, NARSI has set forth
a prima facie claim of breach of contract, and Menard is obligated to show the existence
of a genuine dispute of material fact. Menard responds that the indemnification clause
and Section E authorized it to withhold NARSI’s payment.
Before examining those clauses, we review our rules of contract interpretation.
The ultimate goal of any contract interpretation is to determine the intent of the parties at
the time that they made the agreement. Citimortgage, Inc. v. Barabas, 975 N.E.2d 805,
813 (Ind. 2012). We look at the contract as a whole. Dunn v. Meridian Mut. Ins. Co.,
836 N.E.2d 249, 252 (Ind. 2005). If a contract’s provisions are clear and unambiguous,
courts must give the provisions their plain and ordinary meaning. Id. at 251.
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An indemnity clause involves a promise by one party (the indemnitor) to
reimburse another party (the indemnitee) for the indemnitee’s loss, damage, or liability.
Mead Johnson & Co. v. Kenco Group, Inc., 899 N.E.2d 1, 3 (Ind. Ct. App. 2009). The
basic purpose of an indemnity clause is to shift the financial responsibility to pay
damages from the indemnitee to the indemnitor. Id. We construe an indemnity
agreement to cover all losses and damages to which it reasonably appears the parties
intended it to apply. Id.The terms of the indemnification clause are set forth above. NARSI argues,
correctly, that this clause does not require NARSI to indemnify Menard for negligent acts
that are solely attributable to Menard. An indemnification clause that seeks to require
indemnification for the indemnitee’s own negligence must “expressly state, in clear and
unequivocal terms,” that the parties have agreed to such terms. Moore Heating &
Plumbing, Inc. v. Huber, Hunt & Nichols, 583 N.E.2d 142, 146 (Ind. Ct. App. 1991); see
also Ind. Code § 26-2-5-1 (1975) (an indemnity clause in a “construction or design
contract” that indemnifies the indemnitee against liability from the sole negligence of the
indemnitee or its agents is “against public policy and . . . void and unenforceable”). The
clause in this case does not clearly and unequivocally require NARSI to indemnify
Menard for Menard’s own negligence.
Based on the foregoing, NARSI would be obligated under the clause at issue to
indemnify Menard for liability, damages, etc., arising out of NARSI’s negligence. To
prevail on its motion for summary judgment on its defense to NARSI’s claim, Menard
would have to demonstrate that it had incurred liability due to negligence of NARSI. The
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only evidence on this point is that Menard, along with NARSI and other contractors,
contributed to settlements of the Folsom and Hazelip claims, and that Menard paid more
toward the settlements than the $209,529 due to NARSI. This falls short.
The claims of Folsom and Hazelip were subject to the Indiana Comparative Fault
Act, which requires that liability be apportioned among multiple defendants according to
the degree of each defendant’s responsibility for an injury, rather than jointly and
severally. See Ind. Code § 34-51-2-3 (1998) (“legal requirements of causal relation apply
to . . . fault as the basis for liability.”). In addition, the Act eliminated the right of
contribution among tortfeasors where applicable but preserved rights of indemnity. Ind.
Code § 34-51-2-12 (1998).
No court or agreement has allocated liability for Folsom and Hazelip’s injuries
among Menard, NARSI, other contractors, and the workers. Menard, NARSI and other
contractors each contributed funds to settle those lawsuits, but Menard offers nothing to
show NARSI’s degree of responsibility for Folsom and Hazelip’s injuries or that the
contributors paid for anything but their own shares of fault. In the absence of evidence
on these points, we conclude that Menard and NARSI paid for their shares of the fault for
the accident, and Menard has failed to set forth any facts that establish a genuine dispute
as to whether Menard is excused from paying NARSI under the contract due to the
indemnification clause.
Next, Menard contends that it is excused from paying NARSI under Section E of
their contract, specifically the portion authorizing Menard to withhold payment if
necessary to satisfy “third party claims filed or reasonable evidence indicating probable
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filing of such claims.” Appellant’s App. p. 29. Menard concedes that this provision
would only allow it to withhold payment to NARSI due to “third-party claims [arising]
from NARSI’s work.” Appellee’s Br. p. 9. However, Folsom and Hazelip’s third party
claims have been settled and dismissed. Menard and NARSI both paid money to Folsom
and Hazelip pursuant to the settlement, and Menard points to no evidence that Folsom
and Hazelip’s claims otherwise remain active. In addition, Menard does not identify any
other third party claims arising from the September 2007 structural collapse that remain
pending. Giving Section E’s unambiguous language a plain and ordinary reading, it does
not justify withholding payment from NARSI once third party claims have been resolved,
absent the application of some other contractual provision such as the indemnification
clause. We have already determined that Menard has failed to establish a dispute of
material fact as to whether the indemnification clause applies.
In order to defeat NARSI’s motion for partial summary judgment, Menard was
obligated to rebut NARSI’s prima facie case for breach of contract by establishing a
dispute of material fact as to its right to withhold payment. We have determined that
Menard did not establish such a dispute. Consequently, Menard also failed to establish as
a matter of law that it was entitled to prevail upon its own motion for summary judgment.
The trial court erred by denying NARSI’s motion for partial summary judgment and by
granting Menard’s motion for summary judgment.
CONCLUSION
For the reasons stated above, we reverse the judgment of the trial court and
remand with instructions to: (1) deny Menard’s motion for summary judgment on
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NARSI’s claims for breach of contract and foreclosure of mechanic’s lien; (2) grant
NARSI’s motion for partial summary judgment on its claim for breach of contract; and
(3) move forward to resolve NARSI’s claim to foreclose upon mechanic’s lien.
Reversed and remanded.
KIRSCH, J., and BRADFORD, J., concur.
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