Appellant, Diplomat Properties, L.P. (“Diplomat”), appeals an order which dismissed all of its claims against the defendants, Tecnoglass USA, Inc., and Tecno-
Diplomat is the owner of the Westin Diplomat Resort and Spa (the “hotel”) in Hollywood, Florida. During the construction of the hotel, Diplomat contracted with Shower Concepts, Inc. (“Shower Concepts”) to furnish and install glass shower doors in the guest rooms. Shower Concepts, in turn, entered into a contract with Tecnoglass, who fabricated the glass doors. After the hotel opened for business in 2002, at least thirty-nine of the installed glass doors spontaneously fractured into small pieces. According to Diplomat’s complaint, nickel sulfide inclusions in the glass doors caused them to break spontaneously.
In 2006, Diplomat brought an arbitration proceeding against Shower Concepts tо recover damages for breach of contract. Specifically, Diplomat sought to recover the costs associated with replacing all the defective glass shower doors in the hotel. Shower Concepts failed to defend and did not appear at the arbitration hearing. In 2007, the arbitrator rendered an award in favor of Diplomat and against Shower Concepts. In 2008, the circuit court confirmed the arbitrator’s award and entered a final judgment awarding Diplomat over $2.5 million against Shower Concepts. In exchange for Diplomat’s agreement not to execute on the judgment, Shower Concepts assigned to Diplomat any claims it had against third parties arising from the defects in the glass doors.
In 2011, Diplomat, standing in the shoes of Shower Concepts, filed a multi-count complaint against Tecnoglass, Tecnoglass LLC,
Tecnoglass moved to dismiss all of Diplomat’s claims. The motion to dismiss sought dismissal of the common law indemnity claim on two grounds: 1) Diplomat did not allege facts supporting the existence of a special relationship between Shower Concepts and Tecnoglass; and 2) the arbitrator’s award held Shower Conсepts liable for breach of contract and included “no finding that such liability is vicarious, constructive, or derivative to the Defendants.”
Following a hearing on the motion to dismiss, the trial court dismissed all of Diplomat’s claims against Tecnoglass with prejudice. This appeal ensued.
We apply a de novo standard of review tо a final order of dismissal for failure to state a cause of action. Kreizinger v. Schlesinger,
The seminal Florida case on common law indemnity is Houdaille Industries, Inc. v. Edwards,
Common law indemnity is a claim that “shifts the entire loss from one who, although without active negligence or fault, has been obligated to pay, because of some vicarious, constructive, derivative, or
The Florida Supreme Court noted that although the courts “have consistently premised the allowance of indemnity upon a special relationship between the primary defendant and the third-party defendant,” confusion had arisen over the use of the labels that courts employed to designate the types оf conduct that would permit the party seeking common law indemnity to recover. Id. The Houdaille court stated that “[rjegardless of what specific terms are employed whether the courts say active-passive or primary-secondary what they are really speaking of is fault or no fault.” Id.
The Florida Supreme Court explained that in determining whether a party is entitled to indemnity, the courts will not weigh the relative fault of the parties. Id. Rather, the courts must look to the party seeking indemnity to determine whether he is without fault. Id. If both parties are at fault, no matter how slight the fault of the party seeking indemnity, recovery for common law indemnity is precluded. Id. at 494.
Applying these principles, the Florida Supreme Court held that “absent a special relationship between the manufacturer and the employer which would make the manufacturer only vicariously, constructively, derivatively, or technically liable for the wrongful acts of the employer, there is no right of indemnification on the part of the mаnufacturer against the employer.” Id. at 492. The court noted that the manufacturer’s claim that the worker’s death resulted solely from the negligence of the employer would have stated a complete defense to the original action, and did not establish that the manufacturer was vicariously, constructively, derivatively, оr technically liable for the employer’s negligence. Id. at 494. However, the court noted that a “different situation may exist where the manufacturer’s liability arises because of a defective component supplied by another and incorporated into the product which is subsequently sold to one injured by the defect.” Id. at 493 n. 3. “In that case, a manufacturer who is held liable for a breach of an implied warranty of fitness could be without fault insofar as its relationship with the supplier of the component part is concerned and may be permitted to seek indemnification from the supplier.” Id.
Following the Houdaille decision, “[fjor a party to prevail on a clаim of common law indemnity, the party must satisfy a two-prong test.” Dade Cnty. Sch. Bd. v. Radio Station WQBA,
Undoubtedly, the most common factual scenario for an indemnity claim is where the party seeking indemnity was exposed to tort liability through no fault of its own. However, contrary to Tecno-glass’s argument, a party’s liability for breach of contract can fоrm the basis for an indemnification claim against a third party. See Auto-Owners Ins. Co. v. Ace Elec. Serv., Inc.,
Here, the fact that Shower Concepts was found liable for breach of contract does not preclude it (or its assignee) from bringing a common law indemnity сlaim against Tecnoglass. The federal court’s analysis in Auto-Owners is instructive:
In this case, the City’s potential contract liability to Ace [the electrical contractor] does not mean that its liability is “direct” such that an indemnification claim is impermissible. To the extent Dickens [the design professional ] is arguing that contract liability to one party can never form the basis of an indemnification claim against a third party, the argument is unpersuasive. Of the terms “vicarious,” “constructive,” “derivative” and “technical” liability, only “vicarious liability” is a recognized term of art, and it is typically used to describe liability imposed by agency law. The Florida Supreme Court’s analysis in Houdaille strongly suggests that the other three terms, “constructive,” “derivative,” and “technical,” are meant merely to capture the concept that the party seeking indemnity must be without fault ....
As these passages demonstrate, the common theme throughout the opinion is the need for the party seeking indemnity to be faultless, and the Florida Supreme Court has given no indication that a party’s liability for breach of contract precludes a finding of faultlessness. In fact, the common usage of indemnification against manufacturers in products liability cases where a customer sues a retailer for breach of implied warranty, a type of contract claim, suggests that a party may be indemnified for liability arising from a breach of contract.
In this case, Diplomat, which stepped into the shoes of Shower Concepts, alleged that 1) Shower Cоncepts was wholly without fault for the defective shower doors, 2) Tecnoglass was at fault for the defective shower doors, and 3) Shower Concepts was held vicariously, constructively, derivatively or technically liable for the wrongful acts of Tecnoglass. These allegations were sufficient to state a cause of аction for common law indemnity. See Fla. Farm Bureau Gen. Ins. Co., v. Ins. Co. of N. Am.,
Diplomat did not need to specifically plead the existence of a “special relationship” between Shower Concepts and Tecnoglass in order to properly state a cause of action for common law indemnity. The term “special relationship” merely describes a relationship which makes a faultless party “only vicariously, constructively, derivatively, or technically liable for the wrongful acts” of the party at fault. Houdaille,
The Fifth District’s decision in Paul N. Howard Co. v. Affholder, Inc.,
Tecnoglass also argues that the common law indemnity claim is barred because Shower Concepts failed to raise as a defense in the arbitration proceeding that its liability was vicarious, constructive, derivative or technical. This argument is simply a non-sequitur. A claim for common lаw indemnity is a basis for recovery against a third party, not a defense to a breach of contract action. In other words, a claim that the failure of the glass shower doors resulted solely from the negligence of Tecnoglass would not have stated a defense to Diplomat’s claim against Shower Concepts for breach of contract. Accordingly, Shower Concеpts did not need to claim in the original arbitration proceeding that its liability was vicarious, constructive, derivative or technical in order to preserve its indemnity claim against Tecnoglass.
Moreover, Shower Concepts did not need to bring a third party claim against Tecnoglass in the original arbitration proceeding, аs Tecnoglass now suggests. The Florida Rules of Civil Procedure do not provide for compulsory third party claims. The language of Florida Rule of Civil Procedure 1.180, which governs third party practice, is not mandato
Finally, Tecnoglass argues that Shower Concepts was “liable for failing to properly install” the glass doors under its contract with Diplomat, thereby precluding the indemnity claim. To be sure, a former adjudication against an indemni-tee, finding the indemnitee’s acts to be wrongful, is binding against the indemni-tee and precludes indemnification. Aerovias, SA. v. Air Haiti, S.A.,
In sum, because Diplomat stated a cause of action for common law indemnity, the trial court erred in dismissing this claim. We reverse the dismissal of the common law indemnity claim and remand for further proceedings.
Reversed and Remanded.
Notes
. Diplomat later voluntarily dismissed its claims against Tecnoglass LLC.
. Of course, if Tecnoglass can prove that Shower Concepts was even slightly at fault for the failure of the glass doоrs, then the indemnity claim will fail. However, the issue of whether Shower Concepts was in any way at fault in causing the failure of the glass doors is one that cannot be decided at the motion to dismiss stage. The only issue before the court at this stage is whether the allegations of the complaint were sufficient to state a claim for common law indemnity.