Thursday, January 28, 2016
Ind. Decisions - Supreme Court decides one today - re 2011 State Fair stage collapse
In In Re: Indiana State Fair Litigation, Mid-America Sound Corporation v. Indiana State Fair Commission, et al., Jill Polet, et al., an 11-page, 5-0 opinion, Chief Justice Rush writes:
Indiana courts strictly construe contracts to indemnify a party against its own negligence—recognizing that a party would not lightly accept liability for someone else’s negligence. Thus, indemnity clauses must state the parties’ intent to indemnify in clear and unequivocal language. Otherwise, we will not find a knowing and willing agreement to indemnify. And the need for explicit language is especially important when an agreement involves retroactive indemnity—since even in insurance contracts, where indemnity is the central purpose, we presume that insurers would not accept liability for a known, existing loss.ILB: The ILB has a list of posts related to the State Fair stage collapse.
Here, Mid-America Sound argues that the Indiana State Fair Commission accepted liability for an existing, catastrophic loss—not through explicit contract language calling for retroactive indemnification, but through a years-long course of conduct in paying invoices that had standard indemnity language on the back. But as a matter of law, a form of liability so disfavored (especially when retroactive) cannot be implied from a course of dealing when it is not expressed by clear and unequivocal contract language. We therefore grant transfer and affirm the trial court’s grant of summary judgment for the Commission. * * *
Mid-America and the Commission proceeded to file cross-motions for summary judgment, taking opposite positions about whether the December 2011 invoice’s indemnity language applied retroactively to the August 2011 roof collapse. The trial court granted the Commission’s motion, and Mid-America appealed. A divided Court of Appeals reversed and remanded, finding that genuine issues of material fact existed regarding whether the Commission knowingly and willingly agreed to indemnify Mid-America for the roof collapse. In re Ind. State Fair Litigation, 28 N.E.3d 333, 343 (Ind. Ct. App. 2015). * * *
In summary, then, the principle we deduce from Indiana contract law (and confirmed by the States that follow similar principles) is this: Indemnification for another party’s negligence—especially retroactively—is an “extraordinary obligation” that is generally “not favored.” Emmet Fertilizer, 852 F.2d at 360. Accordingly, as a matter of law, we will not infer that obligation from a course of dealing when, as here, the parties’ contract does not expressly call for it in “clear and unequivocal terms.” GKN Co., 798 N.E.2d at 552. The trial court therefore correctly granted summary judgment for the Commission and against Mid-America.
In view of that conclusion, we express no opinion on whether the Commission is a govern-mental entity with immunity under the Indiana Tort Claims Act (ITCA), Ind. Code ch. 34-13-3; whether indemnity for another party’s negligence is a tort- or contract-based liability for ITCA purposes; or whether the invoices’ indemnity language is void against public policy. But those arguments do illustrate why Mid-America’s failure to make a “clear and unequivocal” demand for retroactive indemnification is particularly significant in these circumstances. Regardless of their merits, those claims are not implausible—and therefore it seems that a party seeking to impose such a disfavored liability under these circumstances would have particular incentive to draft its contract in the clearest and most unequivocal terms possible. Mid-America’s failure to do so here further underscores why we should not infer an extraordinary liability when a contract fails to provide for it expressly.
Conclusion. The terms of Mid-America’s invoices to the Commission did not clearly and unequivocally provide for retroactive application, and as a matter of law, we will not infer such an onerous provision from the parties’ course of dealing. We therefore affirm the trial court’s grant of summary judgment to the Commission.