Goodyear Tire v. J.M. Tull Metals
Goodyear Tire v. J.M. Tull Metals
Opinion of the Court
The Goodyear Tire and Rubber Company ("Goodyear") appeals from a dismissal of an action of indemnity; the trial court held the action was barred by the exclusive remedy provision of the Alabama Workers' Compensation Act, §
In reviewing a Rule 12(b)(6) dismissal, this Court must examine the allegations in the pleadings and construe them so as to resolve all doubts concerning the sufficiency of the complaint in favor of the plaintiff, to determine whether the plaintiff can prove "any set of facts in support of his claim which would entitle him to relief." Jones v. Lee CountyCommission,
Goodyear sued Tull Metals ("Tull"), seeking indemnity for the amounts paid to David Cook, an employee of Tull, for injuries suffered during the course of his employment with Tull, due to the negligence of Goodyear; Goodyear also claimed that Tull had breached an agreement to procure public liability insurance naming Goodyear as an additional insured.1 Goodyear amended its complaint to add a claim that §
The complaint recites the following facts: For consideration, Tull agreed to deliver to Goodyear different types of metals to Goodyear's plant in Gadsden. On October 22, 1990, David Cook, an employee of Tull, was injured on the Gadsden premises while delivering materials pursuant to the agreement between Goodyear and Tull. Cook sued Goodyear, and Goodyear brought this action seeking a judgment declaring that Tull was required to indemnify Goodyear and seeking damages for breach of contract resulting from Tull's failure to provide public liability insurance.
The written purchase order contained the following provision requiring Tull ("Seller") to indemnify Goodyear ("Purchaser"):
"(13) To the extent that this Purchase Order calls for work to be performed upon property owned or controlled by Purchaser, it is agreed that:
". . . .
"(d) Seller will indemnify, save harmless and defend Purchaser from all liability for loss, damage or injury to person or property in any manner arising out of or incident to the performance of this Purchase Order.
". . . .
"(f) To the extent that this Purchase Order provides that Seller will indemnify, save harmless and defend Purchaser from liability, claims, demands or suits, *Page 635 it is the intention of Seller that such indemnity shall apply, to the extent permitted by law, whether or not the liability, claims, demands or suits arise out of the negligence of Purchaser. . . ."
The purchase order also required Tull to provide public liability insurance to cover any indemnity obligation. The purchase order stated:
"Seller shall carry public liability insurance with limits that are at least the equivalent of a combined bodily injury and property damage single limit of $1,500,000 per occurrence, including contractual coverage with respect to the indemnity provisions of the terms and conditions of this Purchase Order, and shall have purchaser named as an additional insured thereon. Such insurance shall be deemed to be the primary liability coverage for all purposes hereof and Seller shall furnish Purchaser acceptable evidence of such insurance before commencing work hereunder."
"It is clear in Alabama that this provision [§
25-5-53 ] not only bars suits by injured employees against their employers, but also bars suits by third parties seeking to enforce indemnity agreements that purport to insulate the third party from liability for the employee's injury. Paul Krebs Associates v. Matthews Fritts Construction Co.,356 So.2d 638 (Ala. 1978); Union Camp Corp. v. McAbee Construction Co.,465 So.2d 390 ,391 (Ala. 1985)."
This Court, in Paul Krebs Associates v. Matthews FrittsConstruction Co.,
"The [exclusive remedy provision, §
25-5-53 , Ala. Code 1975,] says that no employer shall be held civilly liable for injuries to workmen injured in the course of [their] employment. To allow a third-party tortfeasor to recover over against an employer for injury to an employee would be to allow indirectly what is prohibited directly."
Also, this Court held that to allow a third party to bring an action seeking indemnity from an employer for damages paid to its employee would "write into the legislation an exception which is not there." Id. at 640. Since Krebs, this Court has consistently interpreted §
Goodyear, asking this Court to overrule Krebs and to reverse that line of cases following Krebs, correctly notes that Alabama is the only state that has judicially interpreted its exclusive remedy provision to bar enforcement of express indemnity contracts against an employer. See 2B Arthur Larson,The Law of Workmen's Compensation § 76.43 (1989). Every other jurisdiction that has considered this issue has judicially interpreted its workers' compensation statute to permit enforcement of express indemnity contracts against employers by third parties. See Porello v. United States,
The rationale for the majority rule has been stated as follows:
City of Artesia v. Carter,"Enforcing express contracts of indemnity is no more than enforcing the loss distribution agreed to by the contracting parties. Contribution and Indemnity: The Effect of Workmen's Compensation Acts, 42 Va.L.Rev. 959 at 976 (1956). This arrangement to distribute the loss does not offend any policy concerned with securing the payment of workmen's compensation; the compensation payable is not affected by the indemnity agreement. This arrangement does not depart from the policy of limiting the employer's liability; that policy remains intact. All that is involved is the employer's departure from the policy. If the employer desires to voluntarily relinquish his statutory protection, he may do so. Such a relinquishment is not prohibited by [the exclusive provision of New *Page 637 Mexico's Workmen's Compensation Act]; such a relinquishment is consistent with the policy favoring the right to contract."
Our judicial interpretation of §
"In seeking a declaration that [the third party] is entitled to indemnity from [the employer], [the third party] is not seeking to recover the damages sustained by [the employee], but it is asserting its contractual right . . . to be protected by [the employer] from any loss which [the third party] may suffer as a result of [the employee's] injury and his suit against it for damages."
In Gunter v. United States Fidelity Guaranty Co.,
Later, this Court explicitly overruled Eley and broadly interpreted the exclusivity provision of the Workers' Compensation Act to bar claims by third parties against employers for indemnity. Krebs, supra. As authority for its holding, the Court in Krebs relied on a lower appellate court case from New Mexico. Id., 356 So.2d at 640 (citing Gulf OilCorp. v. Rota-Cone Field Operating Co.,
We also consider the argument that the legislative intent is to effectuate the holding in Krebs because the Workers' Compensation Act was reenacted in 1984 and 1985 without reference to Krebs. However, we do not find that this legislative intent must, or even may, be presumed under the circumstances of this case. The general rule of construction that a legislative reenactment includes a contemporaneous and practical interpretation does not apply where there is no indication that the legislature had its attention directed to the judicial interpretation of a statute. 2B Norman J. Singer,Sutherland Statutory Construction, § 49.05 (5th ed. 1992). *Page 638
Nothing in the briefs or in the record in this case indicates that in either reenactment the legislature considered this Court's construction of the exclusivity provisions. A review of the legislative commentary on both reenactments shows no acknowledgement of the rule in Krebs. We recognize that this Court is bound by the ordinary rules of construction and that the "courts may not extend the construction of the [Workers' Compensation Act] beyond its legitimate scope, nor may the courts extend the Act's construction to cover persons or occupations not within the scope of the Act." Jack B. Hood, et al., Alabama Workmen's Compensation § 1-3, at 7, nn. 4 5 (2d ed. 1990) (citations omitted). We further recognize that the "courts are not bound by stare decisis to follow a previous interpretation [that is] later found to be erroneous." 2B Norman J. Singer, Sutherland Statutory Construction, § 49.05, at p. 16 (5th ed. 1992).
Construing the exclusivity provision in light of these rules, we hold that the Act means what it says: an employer is immune from a civil action brought by an employee or an employee's representative on account of the employee's injury that occurred in the course of employment. Krebs and its progeny, including Redwing Carriers, Inc.; Hertz Equipment Rental Corp.;Stauffer Chemical Co.; Union Camp Corp.; Aetna Casualty Surety Co., supra, and any other cases following the rule inKrebs, are overruled to the extent that they hold that an express contract of indemnity may not be enforced by a third party against an employer. We reinstate the rule in Eley, supra, and we hold that enforcement of an express indemnity agreement against an employer by a third party does not violate the exclusive remedy provision of Alabama's Workers' Compensation Act. This holding shall apply prospectively only, but shall be applicable to all actions pending at the time of issuance of this opinion.
In making this holding we are mindful of the strong public policy interest favoring enforcement of contractual agreements entered into voluntarily by competent parties, unless they clearly contravene some positive law or rule of public morals.Puckett, Taul Underwood, Inc. v. Schreiber Corp.,
"Great damage is done where businesses cannot count on certainty in their legal relationships and strong reasons must support a court when it interferes in a legal relationship voluntarily assumed by the parties."
We emphasize that our holding reinstating the rule inEley and joining the great majority of American jurisdictions is limited to the enforcement of express contracts of indemnification. The consideration of this rule in the context of implied contracts of indemnification is not raised in this appeal. See, e.g., Florida Power Light Co. v. Elmore,
The record before us indicates that Goodyear did not bring this indemnity action in a representative capacity that would trigger immunity. In addition, it appears that Goodyear's action is not an action for damages on account of the employee's injury, but rather an action for indemnity, or reimbursement, on account of an independent contractual duty owed by Tull to Goodyear. In light of our holding that the rule in Krebs is no longer the law and that the exclusivity provision of the Workers' Compensation Act does not bar enforcement of express indemnity agreements, the trial court's dismissal of Goodyear's contractual indemnity claim is due to be reversed.
Agreements to procure insurance are generally enforceable under Alabama law, and a party who breaches such an agreement is liable for damages resulting from the failure to obtain the promised insurance. Turner v. Deutz-Allis Credit Corp.,
A contractual obligation to indemnify is distinct from a contractual obligation to procure insurance. Under an agreement to indemnify, the promisor assumes liability for all injuries and damages upon the occurrence of a contingency. In contrast, an agreement to obtain insurance involves the promisor's agreement to obtain or purchase insurance coverage, regardless of whether an contingency occurs. Zettel v. PaschenContractors, Inc.,
Because the contract to procure insurance is distinct from the contract to indemnify, the contract to procure insurance must be considered in light of Ala. Code 1975, §
This Court's holding in Reliance Ins. Co. v. Gary C. Wyatt,Inc.,
Accordingly, we hold that Goodyear could present facts that would entitle it to maintain an action for breach of contract to procure insurance against Tull that would not be barred by the exclusivity provision of the Workers' Compensation Act. Therefore, the dismissal of the claim alleging a breach of contract to procure insurance is reversed.
The cause is remanded for further proceedings in light of this opinion. In light of our holding with respect to Goodyear's claims concerning breach of contract to indemnify and breach of contract to procure insurance, we do not address Goodyear's arguments with respect to the constitutionality of Ala. Code 1975, §
REVERSED AND REMANDED.
ALMON, SHORES, ADAMS and HOUSTON, JJ., concur.
MADDOX, STEAGALL and INGRAM, JJ., dissent.
Dissenting Opinion
Notwithstanding the compelling arguments presented for adopting a construction of §
"Where reenactment of a statute includes a contemporaneous and practical interpretation, the practical interpretation is accorded greater weight than it ordinarily receives, as it is regarded as presumptively the correct interpretation of the law. The rule has special force where the construction was made by the judiciary. Thus where the legislature adopts an expression which has received judicial interpretation, [that] interpretation is prima facie evidence of legislative intent. . . .
"This rule is based upon the theory that the legislature is familiar with the contemporaneous interpretation of a statute. . . . Therefore, it impliedly adopts the interpretation upon reenactment. Legislative adoption is presumed conclusive when repeated reenactments follow a notorious practical interpretation. When Congress reenacts an earlier statute, the presumption is that it knows and approves prior judicial constructions of that act by state courts. . . ."
2B Norman J. Singer, Sutherland Statutory Construction § 49.09 (5th ed. 1992) (emphasis added) (citing, inter alia, Alabama cases — State Tenure Commission v. Madison County Board ofEducation,
Edgehill Corp. v. Hutchens,"The proper aim of judicial interpretation is to determine the intention of the legislature. . . . [T]here exists, and has long existed, in this state, a principle that when the legislature readopts a code section, or incorporates it into a subsequent Code, prior decisions of this court permeate the statute and it is presumed that the legislature deliberately adopted the statute with knowledge of this court's interpretation thereof."
In 1926, this Court stated:
Galloway Coal Co. v. Stanford,"There is another rule of construction which this court has uniformly recognized for nearly three-quarters of a century, and to which it has always accorded the obligation of a mandate:
" 'It is a settled rule, that, in the adoption of the Code, the Legislature is presumed to have known the fixed judicial construction pre-existing statutes had received, and the substantial re-enactment of such statutes is a legislative adoption of that construction.' Morrison v. Stevenson,
69 Ala. 448 , quoted with approval in Wood, etc., Co. v. Cocciola,153 Ala. 555 ,45 So. 192 ."So, in Barnewall v. Murrell,
108 Ala. 366 ,377 ,18 So. 831 ,836 [1895], it was declared . . .:" 'It is an elementary rule of statutory construction, that re-enacted statutes must receive the known, settled construction which they had received when previously of force, for it must be presumed the Legislature intended the adoption of that construction, or they would have varied the words, adapting them to a different intent. . . . The rule *Page 641 has been of frequent application to the Code; in its construction, uniformly, the Legislature has been presumed to have known the settled construction of statutes, of which there was a substantial reenactment, and to have intended the adoption of such construction.' "
I believe that our opinions regarding legislative adoption of prior judicial interpretations clearly require this Court topresume that the reenactment of §
For the foregoing reasons, I respectfully dissent.
MADDOX and STEAGALL, JJ., concur.
Reference
- Full Case Name
- The Goodyear Tire and Rubber Company v. J.M. Tull Metals Company.
- Cited By
- 21 cases
- Status
- Published