Thomson Consumer Electronics, Inc. v. Wabash Valley Refuse Removal, Inc.

Citations: 658 N.E.2d 92; 1995 WL 688663Docket: No. 27A02-9505-CV-245

Court: Indiana Court of Appeals; November 21, 1995; Indiana; State Appellate Court

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Thomson Consumer Electronics, Inc. (Thomson) appeals the trial court's dismissal of its third-party complaint against Wabash Valley Refuse Removal, Inc. (Wabash Valley), raising the issue of entitlement to indemnity under the Indiana Comparative Fault Act. The trial court's dismissal was based on a contractual indemnity provision in which Wabash Valley agreed to indemnify Thomson for injuries occurring on Thomson's premises, except where such injuries were solely due to Thomson's negligence. 

Luther D. Steele, Jr., an employee of Wabash Valley, was injured while removing refuse at Thomson's facility and subsequently filed a complaint against Thomson. Thomson sought indemnification from Wabash Valley, alleging vicarious liability for Steele's actions under the doctrine of respondeat superior. Wabash Valley successfully moved to dismiss Thomson's complaint under Ind.Trial Rule 12(B)(6).

In the review of the dismissal, the court assessed the legal sufficiency of Thomson's complaint, accepting its allegations as true and determining whether any claims for relief were stated. Wabash Valley did not submit a brief in response, leading the court to grant Thomson's motion to strike Wabash Valley's brief. Consequently, Thomson needed only to demonstrate prima facie error for a reversal. However, the court opted to decide the case on its merits rather than solely on procedural grounds. The appellate court ultimately affirmed the trial court's dismissal.

Thomson claims that any contributory fault of Steele should be attributed to Wabash Valley under the doctrine of respondeat superior and seeks indemnification from Wabash Valley in two scenarios: (1) when both parties are concurrently negligent, and (2) when Wabash Valley is solely at fault for Steele's injury. The first scenario is informed by the Indiana case Indianapolis Power & Light Co. v. Brad Snodgrass, where the court ruled that the Indiana Comparative Fault Act does not create vicarious liability or indemnification rights. Therefore, if Thomson and Wabash Valley are both negligent, any fault attributed to either would reduce the damage award to Steele, limiting Thomson's liability to only its share of fault. The indemnity clause in their contract does not allow for indemnification when both parties are at fault. In the second scenario, where Thomson is not negligent, it may recover its legal costs and attorney fees for defending against Steele's claims based on the indemnification clause, which requires Wabash Valley to indemnify Thomson for losses arising from Wabash Valley’s actions. Thus, Thomson may validly claim costs and attorney's fees from Wabash Valley if it is found not to be negligent.

Thomson's indemnity claim for costs and attorney fees is distinct from Steele's suit and cannot be pursued through a third-party complaint. Under Ind.Trial Rule 14(A), a third-party plaintiff can only implead someone who may be liable for part or all of the plaintiff's claim against them. Thomson's recovery on the indemnity claim hinges on its lack of fault, allowing for reimbursement solely for attorney fees and costs incurred in defending against Steele's action. These fees and costs are not included in Steele's claim. If Thomson is found not at fault, it bears no liability to Steele. The precedent set in Pivarnik v. Northern Indiana Pub. Serv. Co. clarifies that a third-party defendant's liability must be contingent on the original defendant being held liable to the plaintiff, which is not the case here; Thomson’s liability to Wabash Valley depends on its non-liability to Steele. Consequently, Thomson must initiate a separate lawsuit against Wabash Valley to seek recovery of its costs and attorney fees. The ruling is affirmed by Judges Friedlander and Rucker.