Opinion
E040570
5-25-2007
CITY OF CHINO, Plaintiff and Appellant, v. SAN BERNARDINO ASSSOCIATED GOVERNMENTS, Defendant and Respondent.
Jimmy L. Gutierrez and Angelica A. Arias, for Plaintiff and Appellant. The Law Offices of Adrienne D. Cohen, Adrienne D. Cohen and Sean R. Ferron, for Defendant and Respondent.
NOT TO BE PUBLISHED
I. INTRODUCTION
Plaintiff City of Chino (City) appeals from judgment in favor of defendant San Bernardino Associated Government (SANBAG) in the Citys action for express contractual indemnity to recover attorney fees, costs, and settlement payments the City incurred to defend itself in three separate lawsuits arising from an automobile accident. The City contends the trial court erred in interpreting the indemnity agreement entered into between the parties as requiring a finding of fault on the part of SANBAG before the City was entitled to indemnity from SANBAG.
II. FACTS AND PROCEDURAL BACKGROUND
In 1993, SANBAG proposed a freeway detour to reroute traffic from State Route 71 (SR-71) through the cities of Chino and Chino Hills while SANBAG reconstructed SR-71 into a state freeway. In June 1993, the City and SANBAG entered into a Cooperative Agreement (the Agreement). Under the Agreement, SANBAG undertook to provide the plans, specifications, and estimates of all improvements required for the detour, to file the necessary permits, to administer construction of the detour (with oversight by the City), and to fund most of the detour project. The City undertook to provide timely review of the plans and specifications submitted by SANBAG.
The Agreement included reciprocal indemnity provisions. Paragraph 18 provided as follows: "Neither City of Chino nor any officer or employee thereof is responsible for any damage or liability occurring by reasons of anything done or omitted to be done by SANBAG under or in connection with any work, authority or jurisdiction delegated to SANBAG under this Agreement. It is understood and agreed that, pursuant to Government Code Section 895.4, SANBAG shall fully defend, indemnify and save harmless City of Chino, all officers and employees from all claims, suits or actions of every name, kind and description brought for or on account of injury (as defined in Government Code Section 810.8) occurring by reasons of anything done or omitted to be done by SANBAG under or in connection with any work, authority of [sic] jurisdiction delegated to SANBAG under this Agreement."
Paragraph 17 of the Agreement similarly provided as follows: "Neither SANBAG nor any officer or employee thereof is responsible for any damage or liability occurring by reasons of anything done or omitted to be done by the City of Chino under or in connection with any work, authority or jurisdiction delegated to City of Chino under this Agreement. It is understood and agreed that, pursuant to Government Code Section 895.4, City of Chino shall fully defend, indemnify and save harmless SANBAG, all officers and employees from all claims, suits or actions of every name, kind and description brought for or on account of injury (as defined in Government Code Section 810.8) occurring by reasons of anything done or omitted to be done by City of Chino under or in connection with any work, authority or jurisdiction delegated to City of Chino under this Agreement."
On April 9, 1996, William Ephraim Brown was driving his motor home in the northbound lanes of SR-71. Because of the freeway construction, he exited SR-71 at Ramona Avenue onto the designated detour. He passed through the first intersection on a green light without incident. However, when he approached the second intersection at Ramona Avenue and Chino Hills Parkway, the light turned red. He entered the intersection against the red light, and his motor home collided with another vehicle in the center of the intersection. Three occupants of the other vehicle were killed in the collision, and the fourth occupant was injured.
In three underlying wrongful death and personal injury actions against the City and other defendants, the plaintiffs alleged that the collision had been caused by a dangerous condition of public property due to the design of the detour, including the temporary intersection of Ramona Avenue and Chino Hills Parkway. Specifically, the plaintiffs in the underlying actions alleged that (1) the design of the temporary intersection was improper and inadequate; (2) the signage of the roadway, temporary concrete barriers, and phasing of traffic control signals within close proximity to a curve for traffic on Ramona Avenue created a trap for the unwary; and (3) the distance between the two signals was so short that vehicles could not stop for the northern traffic signal, leading to improper sight distance.
After being served with the three underlying lawsuits, the City made a written request that SANBAG defend and indemnify the City in the wrongful death and personal injury actions. SANBAG failed to provide a defense or pay any of the claims made against the City. The City defended itself in those actions and incurred litigation costs and attorney fees. The City also contributed monetarily to the settlement of the underlying actions.
The City brought an action against SANBAG for express contractual indemnity. A court trial was held in 2002, at which Judge King interpreted the indemnity provisions of the Agreement to mean that the City had to prove liability on the part of SANBAG before a duty on the part of SANBAG to indemnify the City arose. Judge King issued a ruling as follows: "Under the contract the City of Chino must . . . prove liability (negligence or wrongful conduct and causation) on the part of SANBAG before it can receive any indemnity or contribution."
Thereafter, the City filed a Second Amended Complaint for express contractual indemnity, which added allegations that incorporated and recognized Judge Kings ruling. A second trial was held on the issue of SANBAGs liability, and the jury found on a special verdict that "the detour, as designed and constructed by SANBAG" was "safe for the motoring public" on the date of the collision. The trial court thereafter entered judgment in favor of SANBAG.
III. DISCUSSION
A. Standard of Review
The interpretation of a contract, without the use of any parol evidence, is a matter of law for this court to determine, and we are not bound by the interpretation of the trial court. Therefore, our review is de novo. (Amwest Surety Ins. Co. v. Patriot Homes, Inc. (2005) 135 Cal.App.4th 82, 87; Heppler v. J.M. Peters Co. (1999) 73 Cal.App.4th 1265, 1275 (Heppler).)
B. Rules of Interpretation of Indemnity Clause
Whether an indemnity agreement applies in a given case depends primarily on contractual interpretation and the intent of the parties as expressed in the agreement. (Rossmoor Sanitation, Inc. v. Pylon, Inc. (1975) 13 Cal.3d 622, 633.) The contract must be interpreted to give effect to the mutual intentions of the parties, which are ascertained from the "`clear and explicit" language the parties have used. (Continental Heller Corp. v. Amtech Mechanical Services, Inc. (1997) 53 Cal.App.4th 500, 504 (Continental Heller); see also Civ. Code, §§ 1636, 1638, 1639.)
If indemnification is to be imposed regardless of negligence, the language of the contract to that effect must be specific and unequivocal and must evidence the clear intent of the parties. (See Heppler, supra, 73 Cal.App.4th at p. 1278.)
C. Analysis
The trial court held, based on Government Code section 895.4 and the language of the Agreement, that the City had to prove liability on the part of SANBAG before a duty arose for SANBAG to indemnify the City. In our independent review of the issue, we conclude that section 895.4 and the decision in Heppler, supra, 73 Cal.App.4th 1265, support that holding.
Sections 895 through 895.6 address the allocation of responsibility for tort-based damages between contracting governmental entities. Section 895 defines an agreement between public entities as one in which a public entity undertakes to perform any function, purpose, or act with or for any other public entity. Section 895.2 provides that the contracting public entities are jointly and severally liable to a plaintiff or claimant whose injury is caused by negligence or a wrongful act occurring in the performance of the agreement. However, section 895.4 provides: "As part of any agreement, the public entities may provide for contribution or indemnification by any or all of the public entities that are parties to the agreement upon any liability arising out of the performance of the agreement." And section 895.6 provides that if the parties choose not to provide for indemnity in their agreement, they will be liable for a pro rata contribution to satisfy any judgment against one of them for liability arising from the agreement.
In their Agreement, SANBAG and the City specifically included reciprocal provisions regarding indemnity under section 895.4. Thus, the parties chose to have their indemnity obligations governed by the provisions of the Agreement rather than by a pro rata share under section 895.6.
In Heppler, supra, 73 Cal.App.4th 1265, homeowners brought a residential construction defect action against a general contractor. The general contractor settled the claims, and, as part of the settlement, assigned to the homeowners the general contractors indemnity rights from nonsettling subcontractors. The trial court entered a judgment upon special verdicts that the homeowners take nothing from the subcontractors whose contracts contained express indemnity clauses. On appeal, the court held that fault on the part of the subcontractors was a prerequisite to indemnity based on the language of the contracts. (Id. at p. 1278.)
The subcontract at issue provided that the subcontractor "`agree[s] to indemnify and save [the contractor] harmless against all claims for damages to persons or to property growing out of the execution of the work, and at his own expense to defend any suit or action brought against [the contractor] founded upon the claim of such damage . . . ." (Heppler, supra, 73 Cal.App.4th at p. 1278.) The court held, "The indemnity language contained in the preprinted subcontracts does not evidence a mutual understanding of the parties that the subcontractor would indemnify [the contractor] even if its work was not negligent. Indemnity provisions are to be strictly construed against the indemnitee, and had the parties intended to include an indemnity provision that would apply regardless of the subcontractors negligence, they would have had to use specific, unequivocal contractual language to that effect. [Citations.] As this court has pointed out . . . the specificity of the language used is a key factor in construction of an indemnity agreement. `To obtain greater indemnity, more specific language must be used. [Citation.]" (Ibid. )
The City, however, relies on two other cases (Centex Golden Construction Co. v. Dale Tile Co. (2000) 78 Cal.App.4th 992 (Centex); Continental Heller, supra, 53 Cal.App.4th 500), in which courts interpreted indemnity agreements between private entities as not requiring a finding of fault on the part of the indemnitor before indemnity was required. Those cases are distinguishable because the language of the contractual provisions at issue differed from and was more specific than that in the present case.
In Centex, supra, the indemnity clause between Centex, the general contractor, and Dale Tile, a subcontractor, provided: "`B. General Indemnity — All work covered by this Agreement done at the site of construction or in preparing or delivering materials or equipment, or any or all of them, to the site shall be at the risk of Subcontractor exclusively. Subcontractor shall, with respect to all work which is covered by or incidental to this contract, indemnify and hold Contractor harmless from and against all of the following: [¶] "1. Any claim, liability, loss, damage, cost, expenses, including reasonable attorneys fees, awards, fines or judgments arising by reason of the death or bodily injury to persons, injury to property, design defects (if design originated by Subcontractor), or other loss, damage or expense, including any if the same resulting from Contractors alleged or actual negligent act or omission, regardless of whether such act or omission is active or passive. . . . However, Subcontractor shall not be obligated under this Agreement to indemnify Contractor with respect to the sole negligence or willful misconduct of Contractor, his agents or servants or subcontractors who are directly responsible to Contractor, excluding Subcontractor herein." (Centex, supra, 78 Cal.App.4th at p. 995.)
After the work was completed, the owner of the building sued Centex, alleging, among other things, defective tile work. Centex settled the claims and then demanded indemnity from Dale Tile. At trial, the jury found that both Centex and Dale Tile were not negligent. The trial court nonetheless entered judgment requiring Dale Tile to indemnify Centex for its expenses in the underlying action. The appellate court affirmed, finding that "the language of the parties contract imposes no requirement that [Centex] prove that Dale was negligent." (Centex, supra, 78 Cal.App.4th at pp. 997-998.) The court further found that the subcontractors agreement to provide indemnity even if the absence of its fault was clear. (Id. at p. 998) The court based this finding on, among other things, the language of the indemnity clause stating that all work performed by the subcontractor "`shall be at the risk of Subcontractor exclusively," and "requir[ing] indemnity for all claims covered by or incidental to the subcontract, even those which involve the `alleged or actual negligent act or omission of the general contractor." (Ibid.) Thus, we find Centex distinguishable, in that the contractual language at issue in Centex was far more specific than that in the Agreement with respect to the scope of the duty to indemnify.
The indemnity provision at issue in Continental Heller, supra, required the subcontractor to indemnify the contractor "for a loss which `arises out of or is in any way connected with the performance of work under this Subcontract," and further provided that such indemnity "`shall apply to any acts or omissions, willful misconduct or negligent conduct, whether active or passive, on the part of Subcontractor." (Continental Heller, supra, 53 Cal.App.4th at p. 505.) The court held that under the indemnity agreement, the contractor was not required to prove fault or a causal connection between the work the subcontractor performed and the subsequent leak and explosion that led to the underlying action before it could establish a duty for the subcontractor to indemnify. (Id. at pp. 505-507.)
We find Continental Heller, supra, distinguishable in that the contractual language at issue was far more specific than that of the Agreement with respect to the scope of the duty to indemnify. In addition to requiring indemnity for willful misconduct or active or passive negligence, the contract in Continental Heller further required indemnity for "`any acts or omissions" of the indemnitor. (Continental Heller, supra, 53 Cal.App.4th at p. 505.)
We conclude that Heppler, supra, applies to the facts before us. Unlike the indemnity provisions in the cases on which the City relies, the Agreement did not contain any "specific, unequivocal contractual language" to the effect that the indemnity provision would apply regardless of negligence. (Heppler, supra, 73 Cal.App.4th at p. 1278.) We therefore affirm the ruling of the trial court.
IV. DISPOSITION
The judgment is affirmed.
We concur:
McKINSTER, J.
MILLER, J. --------------- Notes: All further statutory references are to the Government Code.