Berger v. Teton Shadows Inc. ( 1991 )

THOMAS, Justice,

dissenting, with whom GOLDEN, Justice, joins.

I dissent from the disposition of this case according to the majority opinion. I agree with the views expressed in the dissenting opinion of Justice Golden, in which I join. I am further persuaded that Carris v. Housing Investment Corporation, 389 So.2d 689 (Fla.App.1980), the cases upon which it relies, and other cases of similar tenor suffer from a fundamental fault in analysis that, for me, dictates a different result.

The articulated rationale found in such cases is that since an owner always has a right to insure his property, a provision in a construction contract assigning the responsibility for obtaining coverage to the owner would have no efficacy other than to include the contractor as an insured. It follows according to the reasoning of those courts that no action will lie against the contractor, even for a loss caused by his own negligence, because an insurance carrier cannot seek recoupment from its insured. The cases do not seem to consider the proposition that the contractor might have no insurable interest in the property other than the work that the contractor had performed. If the cases were limited to including the contractor as an insured to the extent of the contractor’s insurable interest, they would be far more sound.

The majority asserts that a provision of a construction contract that provides, “Owner to carry fire, tornado and other necessary insurance,” is a clear expression of the intent of the parties that the risk is to be shifted to the insurance carrier selected by the owner, including the risk of the contractor’s negligence. I can find a clear expression of an intent that as between the owner and contractor, the owner is going to accept the expense and the necessary investment of time and effort to obtain the insurance alluded to in their agreement. Anything beyond that is conjecture that leads to a legal fiction.

The fallacy of the approach adopted by the majority, as I see the situation, is that an insurance policy obtained by the owner of property, covering certain limited risks to his property, becomes in an almost mystical way a liability policy for the contractor, covering the risk of the contractor’s negligence. I submit that is an entirely different risk from the risks for which the insurance carrier received its premium, and that the insurance carrier clearly would be entitled to an additional premium for covering the negligence of the contractor. In fact the policy provisions would be markedly different. In a larger context of public policy, this rule provides very little incentive to the contractor to use due care.

The possibility that the contractor did, in fact, have liability insurance for which an appropriate premium had been paid is ignored. I have some tolerance for legal fictions but, in the field of insurance, I have accepted the proposition‘that risk coverage should be tied to the insurance contract and the risks for which a premium is paid. If the contractor had liability insurance, then that insurance company should pay for this loss and, if the contractor for some reason had no coverage, the rule should be the same. The negligent party, whether protected by insurance for negligence or not, should be responsible for the consequences of his negligence.

I note the application of a similar rule in several jurisdictions in the context of landlord and tenant. Indeed, some cases lead to the conclusion that the rule for owners and contractors was adapted from the rule for landlords and tenants. In the rental context, the Illinois courts have properly assigned the risk of the tenant’s negligence and retreated from the rule that the tenant will be considered a coinsured against whom the insurer for the landlord cannot seek subrogation for the consequences of the tenant’s negligence. Fire Ins. Exchange v. Geekie, 179 Ill.App.3d 679, 128 Ill.Dec. 616, 534 N.E.2d 1061 (1989).

This analysis demonstrates the wisdom of the long-standing rule in Wyoming that an agreement to indemnify a party from the consequences of his own negligence must articulate that provision in clear and unequivocal language. Northwinds of Wyo., Inc. v. Phillips Petroleum Co., 779 P.2d 753 (Wyo.1989); Wyoming Johnson, Inc. v. Stag Industries, Inc., 662 P.2d 96 (Wyo.1983). I would adopt the result in a contrary line of cases to the effect that when the landlord insures, whether by contract requirement or not, that does not absolve the tenant of the consequences of his negligence. E.g., Sears, Roebuck & Co. v. Poling, 248 Iowa 582, 81 N.W.2d 462 (1957); Winkler v. Appalachian Amusement Co., 238 N.C. 589, 79 S.E.2d 185 (1953); Wichita City Lines, Inc. v. Puckett, 156 Tex. 456, 295 S.W.2d 894 (1956). This line of authority is in harmony with our general rule. In U.S. Fidelity & Guaranty Co. v. Farrar’s Plumbing & Heating Co., 158 Ariz. 354, 762 P.2d 641 (App.1988), and Steamboat Development Corp. v. Bacjac Industries, Inc., 701 P.2d 127 (Colo.App.1985), are found examples of contractual language that probably would satisfy our general rule in Wyoming. That language should not be implied as a matter of law.

I would affirm all aspects of the judgment of the trial court in this case.