Bridgestone/Firestone, Inc. v. Ogden Plant Maintenance Co. of North Carolina , 144 N.C. App. 503 ( 2001 )

CAMPBELL, Judge,

concurring in part and dissenting in part.

I concur with the majority opinion to the extent that it allows plaintiff to proceed on its claim against defendants for the property damage plaintiff allegedly incurred as a result of the 9 September 1994 accident. I respectfully dissent from the majority opinion’s conclusion that plaintiff should be allowed to proceed on its claim seeking indemnity from defendants for the costs incurred by plaintiff in defending and settling the underlying wrongful death action. Therefore, the trial court’s order should be affirmed in part and reversed in part.

“The right to indemnity between defendants arises when liability is imposed upon one defendant for the other’s tortious conduct through operation of law, as for example, through the doctrine of respondeat superior.” Kim v. Professional Business Brokers, 74 N.C. App. 48, 51, 328 S.E.2d 296, 299 (1985). “Indemnity is not permitted when the defendants are in pari delicto, that is, when both defendants breach substantially equal duties owed to the plaintiff.” Id. In the instant case, plaintiff seeks indemnification from defendants for the expenses it incurred in defending and settling the underlying wrongful death action brought against the parties. Upon examination of the complaint in the underlying wrongful death action, which defendants attached as an exhibit to their respective answers¹,1 find that the only allegations asserted against plaintiff are allegations of direct and active negligence. Although plaintiffs complaint in the instant case alleged that plaintiffs liability in the underlying action could only be based on passive or derivative negligence, there are no allegations of passive or derivative negligence on the part of plaintiff in the underlying wrongful death suit. Having settled an action based on a complaint alleging direct and active negligence on its part, plaintiff would be prohibited from seeking indemnification from defendants for the costs incurred in such settlement. I believe a contrary ruling would violate this State’s public policy against allowing an entity to be indemnified for loss arising from its own negligence, as codified in N.C. Gen. Stat. § 22B-1.

Further, as to defendant-Ogden, plaintiffs contractual indemnification claim is itself violative of N.C.G.S. § 22B-1. Pursuant to N.C.G.S. § 22B-1, a construction indemnity provision which purports to indemnify a promisee against liability for damages arising from the negligence, in whole or in part, of the promisee “is against public policy and is void and unenforceable.” N.C. Gen. Stat. § 22B-1 (1999). In the instant case, the indemnity provision in the contract between plaintiff and defendant-Ogden clearly purports to indemnify plaintiff against damages arising from its own negligence. By its terms, the indemnity provision provides that defendant-Ogden shall indemnify plaintiff “from damage to or theft of [plaintiffs] property and from all claims and judgments . . . based on injuries to person or property . . . regardless of whether such claims are alleged to be caused by negligence, or otherwise, on the part of [plaintiff] or its employees . . . .” This provision clearly attempts to hold defendant-Ogden responsible for the negligence of plaintiff. It is therefore against public policy and is void and unenforceable.

However, this does not end the inquiry as to the indemnity provision between plaintiff and defendant-Ogden. “When a contract contains a provision which is severable from an illegal provision and is in no way dependent upon the enforcement of the illegal provision for its validity, such a provision may be enforced.” International Paper Co. v. Corporex Instructors, Inc., 96 N.C. App. 312, 315, 385 S.E.2d 553, 555 (1989). The majority opinion does not specifically address the issue of severability, but having carefully reviewed the indemnity provision at issue and applicable case law, I do not believe that the indemnity provision between plaintiff and defendant-Ogden can be severed so as to make it valid under N.C.G.S. § 22B-1.

Even if the offending phrase, “regardless of whether such claims are alleged to be caused by negligence, or otherwise, on the part of [plaintiff] or its employees,” were to be stricken, the remaining indemnity provision would still allow plaintiff to seek indemnity from defendant “from all claims and judgments ... based on injuries to person or property ... in any manner caused by, incident to, connected with, resulting or arising from the performance of this contract,.. ..” The remaining indemnity provision would not by its terms prevent plaintiff from seeking indemnification from loss arising from the performance of the contract and caused, in whole or in part, by plaintiffs own negligence. Therefore, it would still violate public policy and be void and unenforceable.

In Miller Brewing Co. v. Morgan Mechanical Contractors, Inc., 90 N.C. App. 310, 368 S.E.2d 438, disc. review denied, 323 N.C. 174, 373 S.E.2d 110 (1988), this Court considered an appeal from a trial court order holding that the indemnity provision printed on the back of a purchase order was against public policy, void and unenforceable under N.C.G.S. 22B-1. The indemnity provision at issue in Miller, read:

9. Seller is to save harmless and indemnify Buyer from any and all judgments, costs, expenses, attorneys’ fees, and claims . . . arising out of or in any way connected with the work done or goods furnished under this [purchase order]. . . .

As in the instant case, the indemnity provision in Miller did not in any way prohibit the party seeking indemnity from recovering for loss caused by its own negligence. In Miller, this Court held that the indemnity provision at issue was invalid under N.C.G.S. 22B-1. I believe that the indemnity provision at issue in the instant case is sufficiently similar to the one in Miller to make this Court’s holding in Miller controlling.

Further, the majority’s reliance on International Paper Co. does not change my opinion. In International Paper Co., this Court severed from an indemnity provision a phrase similar to the offending phrase in the instant case. Having done so, the remainder of the indemnity provision was found not to be violative of N.C.G.S. § 22B-1. However, unlike the remaining indemnity provision here, the remaining indemnity provision in International Paper Co. only allowed for indemnification for loss “caused in whole or in part by any negligent act or omission of the Builder, any Subcontractor, anyone directly or indirectly employed by any of them or anyone for whose acts any of them may be liable.” This provision would not allow plaintiff to seek indemnification for loss caused by its own negligence.

Having found this Court’s conclusion in Miller to be controlling, I believe the indemnity provision between plaintiff and defendant-Ogden is void and unenforceable under N.C.G.S. § 22B-1, and cannot be used as the basis for recovery in an indemnity action. Consequently, plaintiffs contractual indemnification claim against defendant-Ogden has no legal basis, and the trial court did not err in entering judgment on the pleadings in favor of defendant-Ogden as to that portion of plaintiffs claim.

I do not find that the indemnification provision between plaintiff and defendant-Budd violates N.C.G.S. § 22B-1. It does not purport to indemnify plaintiff against liability arising from its own negligence. Nevertheless, for the reasons previously stated, I believe the trial court’s judgment on the pleadings in favor of defendant-Budd as to plaintiffs contractual indemnification claim was correct.

As to plaintiff’s property damage claim, I concur in reversing the trial court’s order, and remanding for further proceedings to determine if defendants are liable to plaintiff for the property damage incurred on 9 September 1994. On remand, one of the factual issues to be resolved would be whether the damage to plaintiff’s property and equipment was covered by the “Fire and Extended Coverage and Boiler and Machinery Insurance Policies filed and approved in New York State” at the time of the accident, thereby leading to plaintiff’s waiver of its right to recover from defendant-Ogden pursuant to Article XIII of their contract.

1 . When ruling on a motion for judgment on the pleadings the trial judge is allowed to consider any exhibits which have been attached to the pleadings. See Minor v. Minor, 70 N.C. App. 76, 318 S.E.2d 865, cert. denied, 312 N.C. 495, 322 S.E.2d 558 (1984).