Safeway, Inc. v. Rooter 2000 Plumbing & Drain SSS , 2013 NMCA 21 ( 2012 )

I attest to the accuracy and
integrity of this document
New Mexico Compilation
Commission, Santa Fe, NM
'00'05- 15:36:46 2013.02.06
Certiorari Granted, January 28, 2013, No. 33,969
IN THE COURT OF APPEALS OF THE STATE OF NEW MEXICO
Opinion Number: 2013-NMCA-021Filing Date: October 19, 2012
Docket No. 30,196
SAFEWAY, INC.,
Defendant/Cross-Claimant-Appellant,
v.
ROOTER 2000 PLUMBING AND DRAIN SSS,
Defendant/Cross-Defendant-Appellee.
APPEAL FROM THE DISTRICT COURT OF McKINLEY COUNTY
Louis E. DePauli, Jr., District Judge
Madison, Harbour & Mroz, P.A.
Gregory D. Steinman
Robert J. Sanchez
Albuquerque, NM
for Appellant
Butt, Thornton & Baehr, P.C.
Emily A. Franke
Jane A. Laflin
Albuquerque, NM
for Appellee
OPINION
VIGIL, Judge.
{1} This case requires us to examine which version of New Mexico’s anti-indemnity
statute applies to an agreement between a contractor and a landowner: the version of the
statute that was in force when the parties signed the agreement, or the amended version that
1
was in force when the contractor performed the work and the accident occurred. We
conclude that the version of the statute that was in effect when the contract was signed
applies and that the statute voided the contractor’s agreement to indemnify but not its
agreement to defend and insure. We also conclude that notwithstanding the unenforceability
of the parties’ indemnification agreement, material issues of fact precluded entry of summary
judgment on the landowner’s claim of common law indemnification. Accordingly, we
reverse in part and affirm in part.
I. BACKGROUND
{2} Safeway, Inc. (Safeway) owns a grocery store in Gallup, New Mexico. On March
10, 2005, Rooter 2000 Plumbing and Drain SSS (Rooter) installed a diaper changing table
in the Safeway store. On April 8, 2006, Brianna DeWeese and her child (Plaintiffs) were
injured when the baby changing table became dislodged and fell from the wall. In an
amended complaint, Plaintiffs sued Safeway and Rooter alleging general negligence,
negligence per se, breach of implied warranty, strict liability, and a claim under the doctrine
of respondeat superior against Safeway. Safeway demanded a defense from Rooter’s
insurance company, but Safeway was not named by Rooter as an additional insured on its
policy, and the insurance company denied Safeway’s request. Rooter also declined to
otherwise provide Safeway a defense.
{3} Safeway then filed a cross-claim against Rooter, alleging that Rooter was in breach
of the Standard Service Provider Terms and Conditions Agreement (Agreement) between
them that was in effect when Rooter installed the diaper changing table. Safeway sought
indemnification and damages pursuant to the contract, common law indemnification, and
contribution from Rooter. The relevant provision of the Agreement states:
[Rooter] shall indemnify, defend and hold [Safeway] harmless from and
against: any and all claims, losses, damages, liabilities, and expenses
(including the costs of investigation and attorney’s fees) in connection with
any claim or cause of action arising from any act or omission of [Rooter,] its
employees, agents, and representatives, in the performance of its obligations
under this Agreement, except where the claim, loss or damage is caused by
the sole negligence of [Safeway].
The Agreement also requires Rooter to maintain liability insurance and to name Safeway as
an additional insured on that policy.
{4} Rooter and Plaintiffs settled before trial. Rooter filed a motion for summary
judgment in the district court requesting that summary judgment be granted on all of
Safeway’s cross-claims, asserting that the agreement was void under NMSA 1978, Section
56-7-1 (1971, as amended through 2005). At the hearing on Rooter’s motion for summary
judgment, Plaintiffs abandoned their strict and vicarious liability claims against Safeway but
retained their claim that Safeway had a non-delegable duty to maintain safe premises.
2
Plaintiffs also represented that they would be willing to include other Defendants on the
special verdict form for comparative fault purposes and would not require Safeway to pay
any percentage of fault assigned by the jury to Rooter at trial. The district court granted
Rooter’s motion and dismissed all of Safeway’s cross-claims. Safeway’s claim for common
law indemnification was dismissed because “[t]he Plaintiff is not seeking liability or
damages from Safeway for Rooter’s acts or omissions.” The court orally ruled in the hearing
that the agreement to indemnify, defend, and insure was void as against public policy under
Section 56-7-1. The district court did not address which version of the statute it was
applying, nor did it include this in the written order.
{5} Safeway and Plaintiffs proceeded to trial on the remaining claims. The jury found
that Safeway was negligent, awarded damages, and apportioned fault on a special verdict
form assigning forty percent fault to Safeway and sixty percent fault to Rooter. Safeway
appeals from the district court order granting summary judgment to Rooter on Safeway’s
cross-claims for indemnification and its defense costs.
II. ANALYSIS
{6} Safeway asserts that summary judgment was improper for four reasons: (A) the 2003
amended version of Section 56-7-1 applies to the Agreement because the events invoking
the provisions of the Agreement occurred after 2003; (B) Rooter’s agreement to indemnify
is not barred by Section 56-7-1; (C) the doctrine of common law indemnification requires
Rooter to indemnify Safeway independent of any effect of Section 56-7-1; and (D) the
defense and insurance provisions in the Agreement are not barred by Section 56-7-1.
“Summary judgment is appropriate where there are no genuine issues of material fact and
the movant is entitled to judgment as a matter of law.” Self v. United Parcel Serv., Inc.,
1998-NMSC-046, ¶ 6, 126 N.M. 396, 970 P.2d 582. All issues raised in this appeal are legal
issues, which we review de novo. Id.A. Application of Amended Version of Section 56-7-1
{7} In 2003, between the signing of the agreement between Rooter and Safeway and the
relevant events giving rise to Plaintiffs’ lawsuit, Section 56-7-1 was amended. 2003 N.M.
Laws, ch. 309, § 1. Section 56-7-1 had not been amended since its enactment in 1971. The
original version stated in pertinent part:
Any provision, contained in any agreement relating to the
construction, installation, alteration, modification, repair, maintenance,
servicing, demolition . . . of any real property, or any improvement of any
kind . . . by which any party to the agreement agrees to indemnify the
indemnitee, or the agents and employees of the indemnitee, against liability,
claims, damages, losses or expenses, including attorney fees, arising out of
bodily injury to persons or damage to property caused by, or resulting from,
in whole or in part, the negligence, act or omission of the indemnitee, or the
3
agents or employees of the indemnitee, or any legal entity for whose
negligence, acts or omissions any of them may be liable, is against public
policy and is void and unenforceable[.]
Section 56-7-1 (1971) (emphasis added). The statute defined “indemnify” as:
without limitation, an agreement to remedy damage or loss caused in whole
or in part by the negligence, act or omission of the indemnitee, the agents or
employees of the indemnitee, or any legal entity for whose negligence, acts
or omissions any of the foregoing may be liable.
Id.
{8} The 2003 version of the statute was amended to state in pertinent part:
A. A provision in a construction contract that requires one
party to the contract to indemnify, hold harmless, insure or defend the
other party to the contract, including the other party’s employees or
agents, against liability, claims, damages, losses or expenses, including
attorney fees, arising out of bodily injury to persons or damage to
property caused by or resulting from, in whole or in part, the negligence,
act or omission of the indemnitee, its officers, employees or agents, is
void, unenforceable and against the public policy of the state.
B. A construction contract may contain a provision that, or
shall be enforced only to the extent that, it:
(1) requires one party to the contract to indemnify,
hold harmless or insure the other party to the contract, including its
officers, employees or agents, against liability, claims, damages, losses
or expenses, including attorney fees, only to the extent that the liability,
damages, losses or costs are caused by, or arise out of, the acts or
omissions of the indemnitor or its officers, employees or agents; or
(2) requires a party to the contract to purchase a
project-specific insurance policy, including an owner’s or contractor’s
protective insurance, project management protective liability insurance
or builder’s risk insurance.
Section 56-7-1(A), (B) (2003) (emphasis added).
{9} The 2003 amendment also added that to “indemnify or hold harmless” included “any
requirement to name the indemnified party as an additional insured in the indemnitor’s
insurance coverage for the purpose of providing indemnification for any liability not
4
otherwise allowed in this section.” Section 56-7-1(E) (2003). The statute was again
amended in 2005 by adding a new subsection dealing with state contracts, but not changing
any other provision. Safeway asserts, and we agree, that those amendments do not affect the
disposition of this case.
{10} In Windham v. L.C.I.2, Inc., 2012-NMCA-001, ¶ 8, 268 P.3d 528, we applied the
version of Section 56-7-1 that was in effect when the parties signed the contract, although
the statute had been subsequently amended because the parties did not dispute that the
version of the statute that was in effect at the time of the formation of the contract controlled.
Here, however, Safeway argues that although the original version of Section 56-7-1 was in
effect at the time the parties signed the contract, the version as amended in 2003 applies
because that was the version which was in effect at the time Rooter performed its work and
the accident occurred. We disagree. Rather, we conclude that the version of the statute in
effect at the time the contract is signed governs and explain in greater detail our reasons.
{11} Provided that a contract is enforceable, we generally construe it in light of the law
that was in existence at the time the contract was signed, in line with our policy of enforcing
the parties’ intent and justified expectations at the time they made their agreement. See State
Farm Mut. Auto Ins. Co. v. Valencia, 120 N.M. 662, 663-64, 905 P.2d 202, 203-04 (Ct. App.
1995) (stating that contracts incorporate the relevant law in force at the time of their
creation); see also Ponder v. State Farm Mut. Auto. Ins. Co., 2000-NMSC-033, ¶ 11, 129
N.M. 698, 12 P.3d 960 (stating that contract interpretation has the goal of “ascertaining the
intentions of the contracting parties with respect to the challenged terms at the time they
executed the contract” (alteration, internal quotation marks, and citation omitted).
{12} Furthermore, generally statutes are to be applied prospectively, absent a clear
legislative intent to the contrary. See Quintana v. Los Alamos Med. Ctr., 119 N.M. 312, 314,
889 P.2d 1234, 1236 (Ct. App. 1994); see also Wegner v. Hair Prods. of Tex., 2005-NMCA-
043, ¶ 14, 137 N.M. 328, 110 P.3d 544 (“If retroactive application of a newly enacted law
attaches new legal consequences to events completed before its enactment, substantial rights
are affected, and prospective application is generally required.”). We acknowledge
Safeway’s assertion that an exception to the prospective application of statutes exists where
the statute deals with a “remedial procedure,” but Safeway makes no argument and cites no
authority connecting Section 56-7-1 to a remedial procedure. We therefore decline to
entertain its undeveloped argument for retroactive application of the statute. See Headley
v. Morgan Mgmt. Corp., 2005-NMCA-045, ¶ 15, 137 N.M. 339, 110 P.3d 1076 (stating that
we will not review unclear arguments or guess at what the arguments might be). Rather, we
conclude that it is most appropriate under these circumstances to apply the version of the
statute in effect at the time the parties formed the Agreement.
{13} The original version of Section 56-7-1 contained a wholesale prohibition against
indemnity agreements, while the amended version allows parties to contract for
indemnification to compensate an indemnitee for the negligence of the indemnitor. See
Holguin v. Fulco Oil Servs. L.L.C., 2010-NMCA-091, ¶¶ 37-44, 149 N.M. 98, 245 P.3d 425
(concluding that the amended version of Section 56-7-1 allows enforcement to the extent that
the agreement allows indemnification to an indemnitee for an indemnitor’s negligence,
reflecting a change in the law from the prior version of the statute), cert. granted, 2010-
NMCERT-010, 149 N.M. 65, 243 P.3d 1147; see also Sierra v. Garcia, 106 N.M. 573, 575-
76, 746 P.2d 1105, 1107-08 (1987) (applying the prior version of the statute and refusing to
reform an agreement to be enforced only to the extent of allowing indemnification for the
indemnitor’s negligence). Further, while the original version of Section 56-7-1 was silent
as to agreements requiring one party to defend or insure another against claims from a third
party, the 2003 amendments provide that agreements to defend and insure for the acts of the
indemnitee are void and unenforceable in the same manner as agreements to indemnify for
the same acts. Section 56-7-1(A) (2003).
{14} Because the statute added that agreements to insure and defend are unenforceable to
the same extent as agreements to indemnify at least to the extent the agreement purports to
indemnify for the acts of the indemnitee, it would undermine the parties’ justified
expectations at the time of the signing of the contract to apply the amended version of the
statute to this case. Thus, we conclude that the statute in effect at the time of the signing of
the contract controls, irrespective of the statute’s subsequent amendment. See, e.g.,
Windham, 2012-NMCA-001, ¶ 8 (agreeing with the parties’ stipulation, without deciding,
that the version of the anti-indemnification statute that was in effect at the time of the signing
of the contract controlled); Holguin, 2010-NMCA-091, ¶ 40 (applying the version of anti-
indemnification statute that was in effect at the time the contract was signed); K.R.
Swerdfeger Constr., Inc. v. Bd. of Regents, Univ. of N.M., 2006-NMCA-117, ¶ 9, 140 N.M.
374, 142 P.3d 962 (concluding that the version of the Uniform Arbitration Act that was in
effect at the time the contract was signed governed, although the Act had been subsequently
amended); Bogle Farms, Inc. v. Baca, 1996-NMSC-051, ¶¶ 33-36, 122 N.M. 422, 925 P.2d
1184 (discussing the parties’ reliance on precedent in effect at the time the contract was
signed). We therefore proceed in applying the 1971 version of Section 56-7-1 to the terms
of the Agreement between Safeway and Rooter.
B. Contractual Indemnification
{15} The 1971 version of Section 56-7-1 invalidates all indemnity agreements relating to
construction contracts, whether they indemnify against the indemnitee’s or the indemnitor’s
negligence. See Sierra, 106 N.M. at 575-76, 746 P.2d at 1107-08 (concluding that the
original version of Section 56-7-1 applied to render agreements unenforceable whether they
were for indemnity for the indemnitee’s or the indemnitor’s negligence). Safeway
acknowledges that if the original version of the statute applies, the indemnification provision
in the Agreement is unenforceable. We agree. We therefore conclude that Rooter had no
contractual duty to indemnify under the Agreement.
C. Common Law Indemnification
{16} Safeway next argues that even if the agreement to indemnify is unenforceable under
6
Section 56-7-1, a common law right to “traditional indemnification” exists and entitles
Safeway to indemnification from Rooter. Although the cases refer to the common law right
as “traditional indemnification,” we refer to the right as “common law indemnification” for
clarity. See Otero v. Jordan Rest. Enters., 1996-NMSC-047, ¶ 12, 122 N.M. 187, 922 P.2d
569; In re Consol. Vista Hills Retaining Wall Litig., 119 N.M. 542, 545, 893 P.2d 438, 441
(1995). “[Common law] indemnification grants the person who has been held liable for
another’s wrongdoing an all-or-nothing right of recovery from a third party, such as the
primary wrongdoer.” Christus St. Vincent Reg’l Med. Ctr. v. Duarte-Afara, 2011-NMCA-
112, ¶ 14, 267 P.3d 70 (internal quotation marks and citation omitted). “The purpose of
[common law] indemnification is to allow a party who has been held liable without active
fault to seek recovery from one who was actively at fault.” In re Vista Hills Retaining Wall
Litig., 119 N.M. at 546, 893 P.2d at 442. “Thus the right to indemnification involves
whether the conduct of the party seeking indemnification was passive and not active or in
pari delicto with the indemnitor.” Id. Acting in pari delicto refers to the parties being
“negligent in an equal degree.” Trujillo v. Berry, 106 N.M. 86, 87, 738 P.2d 1331, 1333 (Ct.
App. 1987) (internal quotation marks and citation omitted). We have defined active and
passive conduct as follows:
Active conduct occurs when the indemnitee personally participated in an
affirmative act of negligence, was connected with negligent acts or omissions
by knowledge or acquiescence, or has failed to perform a precise duty, which
the indemnitee had agreed to perform. Passive conduct occurs when the
party seeking indemnification fails to discover and remedy a dangerous
situation created by the negligence or wrongdoing of another.
Budget Rent-A-Car Sys., Inc. v. Bridgestone, 2009-NMCA-013, ¶ 12, 145 N.M. 623, 203
P.3d 154 (internal quotation marks and citation omitted).
{17} Our Supreme Court discussed the passive/active distinction in a different, but
analogous, circumstance in Otero. In Otero, a restaurant owner had been sued by a patron
who was injured when bleachers in its restaurant collapsed. See 1996-NMSC-047, ¶¶ 1, 4.
The bleachers had been negligently installed by a contractor who was granted a commercial
construction permit by the city, although the contractor was only licensed for residential
construction. See id. ¶ 5. The restaurant owner requested an instruction allowing the jury
to consider the comparative fault both of an architect, who failed to provide specifications
for the bleachers, and of the city, which had issued the permit to the contractor. See id. The
district court denied the instruction. See id. The Supreme Court first held that the restaurant
owner stood in the shoes of the contractor under the non-delegable duty doctrine. See id. ¶¶
2, 14. For support, the Supreme Court cited Restatement (Second) of Torts § 422(b) (1965),
which states:
A possessor of land who entrusts to an independent contractor
construction, repair, or other work on the land, or on a building or other
structure upon it, is subject to the same liability as though he had retained the
7
work in his own hands to others on or outside of the land for physical harm
caused to them by the unsafe condition of the structure . . . [if he has
possession of the land while the work is being completed, or] after he has
resumed possession of the land upon its completion.
Nevertheless, the Supreme Court concluded that the negligent contractor had no right to
assign fault to the city because it had misrepresented its licensing qualification to the city in
the permitting process and, therefore, the restaurant owner likewise had no right to apportion
fault to the city because it stood in the shoes of the contractor. Otero, 1996-NMSC-047, ¶
18.
{18} The Supreme Court also concluded that the restaurant owner was not liable to
indemnify concurrent tortfeasors for any damages assessed against it because the restaurant
owner was not an active tortfeasor. See id. ¶ 14. The Supreme Court cited to the
Restatement to support its reasoning, which states: “‘Where a person has become liable with
another for harm caused to a third person because of his negligent failure to make safe a
dangerous condition of land[,] . . . which was created by the misconduct of the other[,] . . .
he is entitled to restitution from the other . . . unless after discovery of the danger, he
acquiesced in the continuation of the condition.’” Id. ¶ 13 (quoting Restatement (First) of
Restitution § 95 (1937)). The Court concluded that the restaurant owner was not an active
tortfeasor based upon the undisputed evidence that the bleachers were negligently installed
by the contractor and that the restaurant owner did not discover the unsafe condition. Otero,
1996-NMSC-047, ¶ 14.
{19} The Supreme Court thus affirmed the district court’s finding that the restaurant owner
was entitled to indemnification from both the contractor and architect for whose negligence
it was held liable under the non-delegable duty doctrine. See id. ¶ 3 n.2. Other New Mexico
cases have also stated that the determination of the circumstances under which such
indemnification is warranted lies in the distinction “between one who was negligent ‘. . . in
failing to discover and remedy a dangerous condition . . .’ and one who ‘created’ the
dangerous condition.” Harmon v. Farmer’s Mkt. Food Store, 84 N.M. 80, 82, 499 P.2d
1002, 1004 (Ct. App. 1972) (quoting Rio Grande Gas Co. v. Stahmann Farms, Inc., 80 N.M.
432, 436, 457 P.2d 364, 368 (1969)).
{20} We therefore conclude that a common law right to indemnification exists in
circumstances in which a landowner is held liable for damages as a passive tortfeasor for
failing to discover a dangerous condition on its land created by another tortfeasor. See In
re Vista Hills Retaining Wall Litig., 119 N.M. at 547, 893 P.2d at 443 (stating that where a
party fails to discover and remedy a dangerous situation created by another, “the conduct of
the party not discovering the dangerous condition is passive”); Spectron Dev. Lab. v. Am.
Hollow Boring Co., 1997-NMCA-025, ¶ 19, 123 N.M. 170, 936 P.2d 852 (stating that
irrespective of a non-delegable duty to an injured third party, an employer can generally
recover indemnification from a contractor and that the non-delegable duty is to prevent an
employer from escaping liability by hiring an independent contractor, and stating “[t]hat
8
rationale, however, hardly justifies permitting the actual tortfeasor—the contractor—to
escape responsibility by denying the employer the right to indemnification from the
contractor”).
{21} Here, Plaintiffs represented to the district court that they were seeking damages under
the non-delegable duty doctrine, based on Safeway’s alleged failure to maintain safe
premises. Rooter does not dispute that the theory presented to the jury for Safeway’s
negligence was based on the non-delegable duty doctrine, and states that “[t]he claim against
Safeway arose out of Safeway’s duty to keep the premises safe.” Thus, the parties agree that
the jury was presented with a theory against Safeway under the non-delegable duty doctrine,
under which our case law allows for common law indemnification to passive tortfeasors.
{22} Rooter argues that because the jury apportioned fault between Safeway and Rooter
no common law right to indemnification can remain for Safeway to invoke because it was
held liable only for its own negligence. We disagree. The non-delegable duty doctrine, like
vicarious liability and strict liability, allows the plaintiff to recover from a party who was not
actively at fault. See Otero v. Jordon Rest. Enters., 119 N.M. 721, 723-24, 895 P.2d 243,
245-46 (Ct. App. 1995) (stating that a landowner has a non-delegable duty irrespective of
whether the landowner is at fault), aff’d by 1996-NMSC-047; Broome v. Byrd, 113 N.M. 38,
40-41, 822 P.2d 677, 679-80 (Ct. App. 1991) (same); Restatement (Second) of Torts § 422.
However, under Section 95 of the Restatement (First) of Restitution, the passive tortfeasor
retains a right of recovery from the active tortfeasor for the damages assessed against it,
regardless of his failure to discover the condition. See Restatement (First) of Restitution §
95 cmt. a (“[T]he [indemnitee] is not barred by the fact that he was negligent in failing to
discover or to remedy the defect as a result of which the harm was occasioned; in most of
the cases it is because of this failure that he is liable.”). Our Supreme Court has explicitly
reserved the right of common law indemnification in spite of rights of “proportional
indemnification” and contribution that divide the fault between co-defendants, because
common law indemnification allows a passive wrongdoer who is not at fault to recover in
full from an active tortfeasor who is at fault. See In re Vista Hills Retaining Wall Litig., 119
N.M. at 545, 553, 893 P.2d at 441, 449 (stating that the doctrine of common law
indemnification allows the passive tortfeasor an “all-or-nothing” right of recovery from the
party actively at fault).
{23} The fact that the jury apportioned fault between the parties at trial does not strip away
Safeway’s common law right of indemnification to obtain full recovery for damages assessed
against it from Rooter, assuming that Safeway is found by the jury to be a passive tortfeasor.
See NMSA 1978, § 41-3A-1(F) (1987) (stating in statute abolishing joint and several liability
and adopting comparative fault that “[n]othing in this section shall be construed to affect or
impair any right of indemnity or contribution arising out of any contract of agreement or any
right of indemnity otherwise provided by law”); Trujillo, 106 N.M. at 87, 738 P.2d at 1332
(stating that notwithstanding New Mexico’s adoption of comparative fault, traditional
indemnification is still available in cases involving vicarious liability or strict liability, where
the liability of the indemnitee arises not from its own fault, but from its relationship with the
9
party at fault). Contrary to Rooter’s argument, the fact that the jury apportioned fault to
Safeway at trial did not establish whether Safeway was a passive tortfeasor and entitled to
indemnification, because summary judgment was granted before trial and the jury was not
instructed on those theories.
{24} We conclude that the question of whether Safeway was an active or passive tortfeasor
should have been presented to the jury. See generally Dessauer v. Mem’l Gen. Hosp., 96
N.M. 92, 93-94, 628 P.2d 337, 338-39 (Ct. App. 1981) (discussing indemnification and
contribution claims as questions for the jury). Because genuine issues of material fact
existed as to whether Safeway was entitled to common law indemnification from Rooter for
the damages assessed to it by the jury, the district court improperly granted summary
judgment on this issue. See In re Vista Hills Retaining Wall Litig., 119 N.M. at 548-49, 893
P.2d at 444-45 (stating that the Supreme Court could not conclude whether a tortfeasor’s
conduct was passive or active on appeal because the facts were open to contradictory
interpretations, and therefore concluding that the district court improperly granted summary
judgment).
{25} We also note our conclusion that the right to common law indemnification in these
circumstances is not precluded by Section 56-7-1. In the statute, the Legislature only
addressed “agreements” to indemnify in the construction context, not common law right to
indemnification. Further, the common law right to indemnification is well-defined in our
case law and was not addressed by the original statute or any subsequent amendments. See
§ 56-7-1 (2005); Sims v. Sims, 1996-NMSC-078, ¶ 23, 122 N.M. 618, 930 P.2d 153 (“We
adopt a strict rule that the common law must be expressly abrogated by a statute because,
when determining the meaning of a statute, courts will often construe the language in light
of the preexisting common law. The common law fills in gaps not addressed by a statute.”
(citation omitted)); In re Vista Hills Retaining Wall Litig., 119 N.M. at 553, 893 P.2d at 449.
Because the statute only applies to agreements to indemnify, it is inapplicable to parties
raising the right of common law indemnification in the absence of an agreement to
indemnify. Likewise, we conclude that a party’s indemnification agreement’s
unenforceability under Section 56-7-1 has no effect upon a party’s common law right to
indemnification.
D. Duty to Insure and Defend
{26} The original version of Section 56-7-1 did not address agreements to defend or
insure. Rather, the statute specifically declared as unenforceable: “Any provision contained
in any [construction related activity] agreement . . . by which any party to the agreement
agrees to indemnify the indemnitee.” Section 56-7-1 (1971). In 2003, Section 56-7-1 was
amended to specifically include an agreement to insure or defend against the indemnitee’s
negligence stating: “A provision in a construction contract that requires one party to the
contract to indemnify, hold harmless, insure or defend the other party to the contract” against
liability for the negligence, acts or omissions of the indemnitee is unenforceable. Section
56-7-1(A) (2003).
10
{27} The Legislature was capable of including agreements to defend or insure in the
language of the indemnity statute, and did so in 2003. However, when the statute was
enacted in 1971, the Legislature did not include those provisions as being violative of the
public policy of New Mexico. Accordingly, we conclude that the Legislature did not intend
that the original version of the statute apply to agreements to defend or insure. See Key v.
Chrysler Motors Corp., 121 N.M. 764, 768-69, 918 P.2d 350, 354-55 (1996) (“In
interpreting statutes, we seek to give effect to the Legislature’s intent, and in determining
intent we look to the language used and consider the statute’s history and background.”); see
also Hart v. Warder, 57 N.M. 14, 15, 252 P.2d 515, 516 (1953) (applying the statutory canon
of “[e]xpressio unius est exclusio atlerius,” meaning the inclusion of one thing implies the
exclusion of another, in refusing to interpret the scope of a statute governing real property
to extend to personal property). Thus, because the original version of the statute applies to
the agreement, the defense and insurance provisions of the agreement are enforceable.1
{28} We note that our Supreme Court invalidated a contract which required one party to
“defend at its own cost and indemnify and hold harmless” the other party in Sierra under the
1971 version of Section 56-7-1. Sierra, 106 N.M. at 575-76, 746 P.2d at 1107-08.
However, the issue in Sierra dealt with the indemnitor’s argument that the contract should
be reformed to be consistent with Section 56-7-1 by enforcing it only to the extent of the
indemnitee’s negligence, an argument which the Court rejected under the language of the
1971 version of the statute. See Sierra, 106 N.M. at 575, 746 P.2d at 1107-08. Although the
Court found the entire contract unenforceable, no discussion in Sierra addressed the issue
of enforceability of agreements to defend, and we do not consider cases as authority for
propositions not raised. See Fernandez v. Farmers Ins. Co. of Ariz., 115 N.M. 622, 627, 857
P.2d 22, 27 (1993). Furthermore, since Sierra was decided, we have concluded that an
agreement to defend is distinct and separate from an agreement to indemnify. See BPLW
Architects, 2009-NMCA-081, ¶ 31. We therefore conclude that our interpretation of the
1971 version of the statute is consistent with Sierra and subsequent New Mexico case law.
{29} Furthermore, although Plaintiffs dismissed their strict and vicarious liability claims
1
We note that under the 2003 amendment to the statute, Rooter’s agreement to
provide a defense to Safeway “from and against: any and all claims . . . in connection with
any claim or cause of action arising from any act or omission of [Rooter] . . . in the
performance of its obligations under this Agreement,” is enforceable. See Windham, 2012-
NMCA-001, ¶¶ 15-18 (stating that the 2003 version of Section 56-7-1 did not void an
agreement to defend a subcontractor when the claims against the subcontractor arose out of
the negligence of the contractor); City of Albuquerque v. BPLW Architects & Eng’rs, Inc.,
2009-NMCA-081, ¶¶ 19-20, 146 N.M. 717, 213 P.3d 1146 (concluding that a contractual
provision that required a contractor to defend the city from any lawsuit alleging that the city
was negligent so long as the claim arose from the contractor’s alleged negligence was
enforceable under the amended version of Section 56-7-1).
11
against Safeway, Rooter nonetheless had a duty to defend under the contractual provision
for any claims “arising from” the work performed by Rooter, whether they were vicarious
liability claims or other causes of action. See BPLW Architects, 2009-NMCA-081, ¶¶ 6, 22-
24 (concluding that a contractual provision requiring a party to defend the other for any
claims “arising out of” the contractor’s negligence was triggered by the allegations in the
complaint against the city for its negligent failure to inspect, irrespective of the lack of
allegations of vicarious liability claims).
{30} With respect to the duty to insure, because the contractual provision was enforceable,
the dismissal of Plaintiffs’ vicarious liability claims also does not resolve the question of
whether that duty was breached and harm resulted to Safeway. Accordingly, genuine issues
of material fact existed as to Rooter’s duty to defend and insure, and summary judgment was
improperly granted as to those issues.
III. CONCLUSION
{31} We reverse the district court’s grant of summary judgment with respect to Safeway’s
right to common law indemnification and as to the enforceability of Rooter’s agreement to
defend and insure Safeway and remand for further proceedings consistent with this opinion.
We affirm as to all other issues.
{32} IT IS SO ORDERED.
____________________________________
MICHAEL E. VIGIL, Judge
WE CONCUR:
____________________________________
CELIA FOY CASTILLO, Chief Judge
____________________________________
CYNTHIA A. FRY, Judge
Topic Index for Safeway, Inc. v. Rooter 2000 Plumbing & Drain SSS, No. 30,196
APPEAL AND ERROR
Standard of Review
CIVIL PROCEDURE
Summary Judgment
CONTRACTS
Breach
12
Duty to Defend
Indemnification Agreement
Interpretation
INSURANCE
Indemnity
STATUTES
Applicability
Interpretation
Retroactivity
TORTS
Negligence
Premises Liability
13