Carl T. Madsen, Inc. v. BABLER BROTHERS

Citations: 610 P.2d 958; 25 Wash. App. 880; 1980 Wash. App. LEXIS 2027Docket: 3444-II

Court: Court of Appeals of Washington; April 21, 1980; Washington; State Appellate Court

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In Carl T. Madsen, Inc. v. Babler Brothers, Inc., the Washington Court of Appeals upheld the trial court's summary judgment favoring Madsen and denying indemnity claims from Babler and Harbor Insurance. Madsen sought a declaratory judgment to clarify its lack of liability under an alleged indemnity agreement after Gaynor Lorentzen, a Madsen employee, was injured during work involving Babler’s contract with the State for a bypass highway. Although Lorentzen successfully sued Babler and other parties, Madsen was not included due to its immunity under the industrial insurance act.

Babler, having accepted a defense from the State, later sought indemnification from Madsen based on a claimed agreement. However, the court found no evidence of such an agreement and emphasized that while the industrial insurance act generally protects employers from third-party claims, exceptions exist if an employer voluntarily assumes an independent duty to indemnify. The court's ruling was consistent with precedent, indicating that Madsen was not liable to Babler for the settlement payment made to Lorentzen.

An action for indemnification is legally permissible if it arises from a distinct obligation the employer has to a third party, rather than solely from the employer's negligence causing an employee's injury. The existence of an independent duty between the employer and third party must be explicit rather than implied, although an implied right to indemnification may arise if such a duty is expressly stated in a contract. In the case at hand, the Babler-Madsen contract lacks explicit indemnification language found in the prime contract between the State and Babler. Babler contends that an implied indemnification agreement exists because Madsen had an independent duty to adhere to federal safety regulations, which Babler argues led to Lorentzen's injury and thus to its entitlement for reimbursement from Madsen.

However, even if an implied contract of indemnity could be established, Babler's claim fails because its payment to the State was based on a contractual obligation to hold the State harmless, not due to tort liability. Madsen would only be liable for Babler's obligations if it had explicitly agreed to assume Babler's potential liabilities to the State and its employees. The contract between Babler and Madsen specified that Madsen was to follow certain methods of work but did not obligate it to assume Babler's contractual liabilities to the State. Consequently, any implied contract would not extend to absolve Babler from its contractual responsibilities. Therefore, Babler has no right to indemnification from Madsen without a clear agreement indicating such a risk transfer. The court affirmed this conclusion, finding no need to address additional issues raised in the appeal.

The State, its Commission, Director, and employees are not liable for any loss or damage occurring during the performance of work, including injuries or fatalities to individuals or damage to property, which could have been prevented by the Contractor or their employees. The Contractor assumes full responsibility for any legal liabilities arising from injuries or property damage during the work, prior to final acceptance, and must indemnify the State and its representatives against any claims related to such incidents caused by the Contractor's actions or negligence.

Babler Brothers, Inc. and the State are named insureds under a liability policy with Harbor Insurance Company, Inc. The contract stipulates that neither the Contractor nor subcontractors may require laborers to work in unsafe or unsanitary conditions, as defined by federal safety standards. Furthermore, any subcontractor must execute work to the engineer's satisfaction and adhere to all contractual requirements related to employment, wage rates, and work methods.

Regulatory requirements include that employers must protect employees from electrical hazards during work. In interpreting the contract, even if any language is deemed ambiguous, rules of construction dictate that such ambiguity is resolved against the drafter, which in this case is Babler Brothers, Inc., who is also the indemnitee.