The question before this court is whether and to what extent appellant is entitled to be indemnified pursuant to the indemnity provision of its agreement with Refiners. The controverted contractual language states as follows:
“Carrier [Refiners] agrees to indemnify, save harmless, and defend Sohio from and against all and any liabilities, losses, obligations, claims, damages, penalties, suits, aсtions, judgments, costs and expenses of whatsoever nature which are incurred or brought against Sohio as the result of injury to or death of persons or damages to or loss of propеrty caused by acts or omission to act by Carrier, its agents, servants and employees in the performance of work under this Agreement, except where the separate intervening negligence of Sohio or third persons is the proximate cause of the accident.”
By its terms, this provision requires Refiners to indemnify appellant “except where the * * * negligence of Sohio or third persons is the proximate cause of the accident.” The court below held this exceptions clause to be applicable and relieved Refiners of its obligаtion to defend. We disagree.
The contractual provision established two exceptions whereby Refiners could have justifiably refused to indemnify Sohio: (1) if the separate intervening negligence of Sohio was the proximate cause of the accident or (2) if the separate intervening negligence of third persons was the proximate cause of the acсident. Our review of the indemnity provision and the record indicates that neither exception applies.
Refiners clearly may not invoke the first exception because the jury specifically found that Allen’s own negligence was “the sole proximate cause of his injuries.” Nor may Refiners rely on the second exception because no “third persons” were involvеd. The claims arising from the injuries sustained by Allen in the course of performing his duties as a Refiners’ employee appear to be precisely the type of claims Sohio sought to be indemnified against. The indemnity provision expressly covers “* * * claims, damages, penalties, suits, actions, judgments, costs and expenses * * * caused by acts * * * by Carrier [Refiners], its agents, servants and emplоyees * * *.” For this reason the case at bar is distinguishable from the case of Drewery v. Daspit Bros. Marine Divers, Inc. (C.A. 5, 1963),
“Charleston Drydock undertook to indemnify the United States for any damages arising from injury to anyone other than the Government or its employees caused ‘in the whole or in part’ by Charleston Drydock or its employees. Therefore, if the accident resulted from Hollis’ [Charlestоn Drydock’s employee’s] negligence in any degree, the United States is entitled to indemnification from his employer.”
To paraphrase Hollis in terms of the disputed contractual language in the case at bar, Refiners undertook to indemnify Sohio from any damages and expenses arising from injury to anyone, expressly including injury caused by Refiners’ “agents, servants and employees,” unless the “intervening negligencе of Sohio or third persons * * * [was] the proximate cause of the accident.” Applying this rationale, Refiners is clearly liable under the indemnity provisions of the agreement.
Appellee nevertheless contends that the contractual language of indemnity is ambiguous and must be strictly construed against the drafter, in this instance, appellant. McKay Machine Co. v. Rodman (1967),
We also reject appellee’s attempt to invoke the pleading rule. The pleading rule posits that “* * * [i]f the allegations of the injured party’s complaint fall within the coverage of the policy, the insurer must defend * * *.” 1 Long, Law of Liability Insurance 5-9, Section 5.03. This court has generally followed the pleading rule. Socony-Vacuum Oil Co. v. Continental Cas. Co. (1945),
For purposes of the pleading rule the question is whether the allegations contained in thе complaint fall within the coverage of the policy. The nature of the allegations determines whether an insurer is bound to defend. Under
To state the rule generally, when an indemnitor expressly аgrees to indemnify an indemnitee except in certain specified instances and it is determined that the exceptions do not pertain, then the indemnitor is obligated to indemnify the indemniteе under the terms of the agreement.
We now must consider the extent of Refiners’ liability. Refiners contends that even if, as we have found, it is liable under the agreement, then its liability would only extend to aрpellant’s expenses in defending the suit brought by the Allens and not to appellant’s subsequent efforts to enforce the contractual language. Appellant disagrees and seeks to recover all its expenses “to date,” notwithstanding the general rule that attorney fees are not recoverable in a contract action. Gates v. Toledo (1897),
Motorists involved a declaratory judgment action brought by the insurer against its insured. This court, per Celebrezze, J., stated, at page 47, that the action arose “out of Motorists’ basic unwillingness to defend a suit in which it had a clear legal duty to defend, which even Motorists ultimately acknowledged. The rationale behind allowing attorney fеes to date in defending the negligence action is that the insured must be put in a position as good as that which he would have occupied if the insurer had performed its duty. The fact that the insurеr brings a declaratory judgment action after it has failed in its duty to defend should not require the insured to incur expenses which he cannot recover.”
The instant case is factually distinguishable from Motorists insofar as Refiners never acknowledgеd liability, as Motorists ultimately did, and the additional expenses sought were incurred in Sohio’s third-party action rather than in an action for declaratory judgment. Nevertheless, these factual distinсtions do not affect the applicable legal principle, which is that Refiners failed in its duty to defend and this failure should not require appellant to incur expenses that it cannot recover.
Contrary to appellee’s contentions, we need not find or impute bad faith
Appellee further asserts that it is not amenable to the Motorists exception because it is not an “insurer.” As a practical matter, however, appellee’s acceptance оf the indemnity provision placed it in the position of an insurer to the extent provided for in the agreement. An indemnitee, no less than an insured, is entitled to recover attorney fees and еxpenses when an indemnitor wrongfully refuses to defend an action against the indemnitee. Accordingly, we hold that when an indemnitor wrongfully refuses to defend an action against an indemnitee, the indemnitor is liable for the costs, including attorney fees and expenses, incurred by the indemnitee in defending the initial action and in vindicating its right to indemnity in a third-party action brought against the indemnitor.
The judgment of the court of appeals is reversed and the cause remanded for a determination of appellant’s costs to date.
Judgment reversed and cause remanded.