Interest of J.N.
2012 ND 256
| N.D. | 2012Background
- KLJ contracted with the City of Valley City to provide engineering services for a paving and sewer project.
- Haggart acted as general contractor; SCI subcontracted with Haggart, leading SCI to sue St. Paul on the payment bond.
- St. Paul asserted a third-party indemnity claim against the City, and the City joined Haggart and KLJ seeking defense/indemnity.
- A jury found SCI did not prove entitlement to additional compensation; SCI’s and St. Paul’s claims were dismissed, but the City’s defense/indemnity claims against KLJ remained.
- The district court held KLJ had a duty to defend the City under N.D.C.C. § 22-02-07(4) and ordered KLJ to pay the City costs.
- KLJ appeals, arguing it had no duty to defend under the indemnity contract, and the court’s award of costs should be reconsidered; the Supreme Court reverses and remands.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether KLJ had a duty to defend the City | KLJ contends there is no duty to defend; indemnity only covers liability after negligence and proportionate culpability. | City argued the indemnity and NDCC § 22-02-07(4) impose a duty to defend when requested. | KLJ did not have a duty to defend under the indemnity as written; statutory duty to defend does not apply due to contrary contract intent. |
| Whether the district court's costs award was proper or subject to remand for prevailing-party determination | KLJ argues the costs award should be reversed or reconsidered; issues of prevailing-party status were not properly resolved. | City contends the district court properly awarded costs incurred in defense and indemnity efforts. | Remanded to determine KLJ's entitlement to recover costs as a prevailing party. |
Key Cases Cited
- Schulte v. Continental Ins. Co., 2000 ND 209 (ND 2000) (duty to defend under insurance-like indemnity when allegations potentially trigger coverage)
- Bridston v. Dover Corp., 352 N.W.2d 194 (N.D. 1984) (save-harmless language can signal broad defense obligations)
- Crawford v. Weather Shield Mfg. Inc., 187 P.3d 424 (Cal. 2008) (statutory duty to defend broader than reimbursement and controls indemnity disputes)
- Regan Roofing Co. v. Superior Court, 29 Cal. Rptr. 2d 413 (Cal. Ct. App. 1994) (duty to defend limited to matters embraced by indemnity; later cases refined this view)
- Mills v. City of Grand Forks, 2012 ND 56 (ND 2012) (explanation of res judicata in ND)
- Olander Contracting Co. v. Gail Wachter Inv., 2002 ND 65 (ND 2002) (indemnity concept and equitable considerations in ND indemnity law)