28 N.E.3d 333
Ind. Ct. App.2015Background
- Mid-America provided leased production equipment to the Indiana State Fair Commission (the Commission) for outdoor concerts, including the 2011 State Fair where a stage roof collapsed, causing fatalities and injuries.
- Leases since the mid-1990s included indemnification provisions; beginning in 2003 over one hundred leases were executed using a form contract containing those terms.
- Invoices and claim vouchers were prepared and approved by the Commission, certifying that the invoices were true, correct, and in accordance with the contract, with multiple levels of internal review and payment by the Commission.
- In 2011, after requests and long-standing practice, the Commission accepted equipment under a “sole source” arrangement, continuing a course of dealing that included indemnity terms.
- Mid-America later sought defense and indemnification from the Commission in tort lawsuits arising from the stage collapse; the Commission refused, leading to cross-claims and a summary-judgment motion.
- The trial court granted summary judgment for the Commission, but the Indiana Supreme Court concluded genuine issues of fact existed concerning the validity, enforceability, and retroactivity of the indemnity provisions and reversed/remanded for trial.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether indemnity provisions apply retroactively | Mid-America argues course of dealing made retroactive terms enforceable. | Commission asserts retroactivity not supported by course of dealing and ITCA concerns. | Genuine factual issues preclude summary judgment on retroactivity. |
| Whether the indemnity provisions are unconscionable or improperly placed | Indemnity terms reflected standard invoicing and were part of long-standing contracts. | Indemnity terms were hidden or tucked into boilerplate boilerplate language on the invoice back. | Not conclusively unconscionable as a matter of law; material placement and context raise factual questions. |
| Whether the Commission knowingly and willingly agreed to indemnification | The Commission reviewed, audited, approved, and paid hundreds of invoices with indemnity language. | Signature on internal vouchers alone may not signify assent to indemnity terms. | There is a factual dispute about assent; summary judgment improper on this basis. |
| Whether the ITCA immunities apply to bar indemnification claims | ITCA does not apply because this is a contract claim, not a tort claim. | ITCA immunizes governmental entities from tort claims; indemnity seeks to shift tort responsibility. | Issue of ITCA applicability presents genuine fact questions; summary judgment on ITCA grounds was error. |
| Whether the Commission has authority to indemnify under its statutorily defined powers | Legislature authorized broad contracts; Commission could indemnify as part of contracts. | ITCA and constitutional appropriation principles limit exposure and authority. | There are factual and statutory questions about authority; summary judgment reversed. |
Key Cases Cited
- GKN Co. v. Starnes Trucking, Inc., 798 N.E.2d 548 (Ind. Ct. App. 2003) (indemnity provisions strictly construed; not implied absent clear terms)
- Maxon Corp. v. Tyler Pipe Indus., Inc., 497 N.E.2d 570 (Ind. Ct. App. 1986) (inadvertent or hidden indemnity clauses may be unconscionable)
- Weaver v. Am. Oil Co., 257 Ind. 458, 276 N.E.2d 144 (Ind. 1971) (burden to show terms were explained and agreed to; mutual assent)
- State v. Feigel, 178 N.E.435 (Ind. 1931) (state contracts and public affairs governed by same principles as private contracts)
- S. Ry. Co. v. Arlen Realty & Dev. Corp., 257 S.E.2d 841 (Va. 1979) (course of dealing can establish terms; enforceability depends on prior conduct)