WW CONSULTANTS, INC., Plаintiff/Counterclaim Defendant/Third-Party Plaintiff Below, Petitioner, v. POCAHONTAS COUNTY PUBLIC SERVICE DISTRICT, Defendant/Counterclaim Plaintiff Below, Respondent, and A-3 USA, INC., ORDERS CONSTRUCTION COMPANY, INC., AND PIPE PLUS, INC., Counterclaim Defendants/Third-Party Defendants Below, Respondents.
No. 21-0485
Supreme Court of Appeals of West Virginia
June 12, 2023
January 2023 Term
Appeal
Business Court Division
The Honorable Christopher C. Wilkes, Judge
Civil Action No. 18-C-115
AFFIRMED IN PART, REVERSED IN PART, AND REMANDED
Lee Murray Hall, Esq.
Sarah A. Walling, Esq.
Jenkins Fenstermaker, PLLC
Huntington, West Virginia
Attorneys for the Petitioner
Submitted: January 11, 2023
Filed: June 12, 2023
John D. Hoblitzell, III, Esq.
Camille E. Wartts, Esq.
Kay Casto & Chaney, PLLC
Charleston, West Virginia
Attorneys for Respondent
Norman T. Daniels, Jr., Esq.
Thomas E. G. Spears, Esq.
Daniels Law Firm, PLLC
Charleston, West Virginia
Attorneys for Respondent Pipe Plus, Inc.
Christopher D. Negley, Esq.
Michael D. Dunham, Esq.
Shuman McCuskey Slicer PLLC
Charleston, West Virginia
Attorneys for Respondent Pocahontas County Public Service District
Orders Construction Company, Inc.
John W. Burns, Esq.
Gordon Rees Scully Mansukhani, LLP
Pittsburgh, Pennsylvania
Attorney for Respondent A-3 USA, Inc.
JUSTICE BUNN delivered the Opinion of the Court.
JUSTICE ARMSTEAD concurs in part, dissents in part, and may write separately.
SYLLABUS BY THE COURT
- ““The key to determining if an order is final is not whether the language from Rule 54(b) of the West Virginia Rules of Civil Procedure is included in the order, but is whether the order approximates a final order in its nature and effect. We extend application of this rule to a motion to dismiss under Rule 12(b)(6) of the West Virginia Rules of Civil Procedure.” Syl. Pt. 1, State ex rel. McGraw v. Scott Runyan Pontiac-Buick, Inc., 194 W. Va. 770, 461 S.E.2d 516 (1995).” Syllabus point 7, Erie Insurance Co. v. Dolly, 240 W. Va. 345, 811 S.E.2d 875 (2018).
- “Where an order granting summary judgment to a party completely disposes of any issues of liability as to that party, the absence of language prescribed by Rule 54(b) of the West Virginia Rules of Civil Procedure indicating that ‘no just reason for delay’ exists and ‘directi[ng] . . . entry of judgment’ will not render the order interlocutory and bar appeal provided that this Court can determine from the order that the trial court‘s ruling approximates a final order in its nature and effect.” Syllabus point 2, Durm v. Heck‘s, Inc., 184 W. Va. 562, 401 S.E.2d 908 (1991).
- Even though a claim for indemnity does not technically arise until the primary obligation to pay has been established, such claims may be brought by way of third-party prаctice before they are technically ripe to serve the interests of fairness and judicial economy.
- “The requisite elements of an implied indemnity claim in West Virginia are a showing that: (1) an injury was sustained by a third party; (2) for which a putative indemnitee has become subject to liability because of a positive duty created by statute or common law, but whose independent actions did not contribute to the injury; and (3) for which a putative indemnitor should bear fault for causing because of the relationship the indemnitor and indemnitee share.” Syllabus point 4, Harvest Capital v. West Virginia Department of Energy, 211 W. Va. 34, 560 S.E.2d 509 (2002).
- “The general principle of implied indemnity arises from equitable considerations. At the heart of the doctrine is the premise that the person seeking to assert implied indemnity—the indemnitee—has been required to pay damages caused by a third party—the indemnitor. In the typical case, the indemnitee is made liable to the injured party because of some positive duty created by statute or the common law, but the actual
cause of the injury was the act of the indemnitor.” Syllabus point 2, Hill v. Joseph T. Ryerson & Son, Inc., 165 W. Va. 22, 268 S.E.2d 296 (1980). - The statutory scheme and exceptions set forth in
West Virginia Code §§ 55-7-13a to -13d govern contribution claims. The unambiguous language of those statutes abolished any contribution claim that falls outside of them.
BUNN, Justice:
In this appeal from pending litigation involving the construсtion of a wastewater treatment facility in Pocahontas County, WW Consultants, Inc. (“WWC“), the design engineer for the project, challenges various rulings by the business court that either dismissed or granted summary judgment to three third-party defendant contractors who worked on or supplied materials for the project. WWC contends that the business court erred by disposing of its claims for contractual indemnity, implied indemnity, and contribution in favor of the third-party defendants. Because we have determined that the business court erred by disposing of WWC‘s contractual indemnity claims, we reverse, in part, on that issue and remand for additional proceedings consistent with this opinion. However, we further conclude that WWC failed to plead or present facts alleging the requisite special relationships to support its implied indemnity claims, and that WWC failed to plead contribution claims that are recognized under the modified comparative fault statutory scheme codified at
I. FACTUAL AND PROCEDURAL HISTORY2
Respondent Pocahontas County Public Service District (“Pocahontas PSD“), defendant and counterclaim plaintiff below, provides water service and wastewater processing to certain customers throughout Pocahontas County, West Virginia. Petitioner WWC, plaintiff, counterclaim defendant, and third-party plaintiff below,3 is a professional
A. The Project
WWC was to serve as the lead engineer and provide certain design and consulting services to Pocahontas PSD related to the construction of a new wastewater plant to serve the Snowshoe Resort and Linwood Valley areas of Pocahontas County. Complete copies of the contracts between Pocahontas PSD and WWC are not in the appellate record, only the “Standard General Conditions” portion was provided. WWC represents that the project was divided into two phases but fails to describe them.
According to WWC, the project experienced delays from the outset, including proceedings before the West Virginia Public Service Commission (“PSC“), which resulted in a PSC order directing that Pocahontas PSD resolve to build a centralized treatment plant rather than a decentralized system utilizing multiple sewage plants as proposed in WWC‘s design. WWC represents that some delays required additional work not contemplated in the design agreement. For example, following a PSC mandated consultation with the West Virginia Department of Environmental Protection, WWC had to рrepare unanticipated engineering design alternatives. WWC completed Phase I of the project in 2012.
In April 2013, the PSC granted Pocahontas PSD approval for a Phase II engineering contract. WWC completed its engineering work in 2013; however, the construction process for Phase II did not begin until 2015 because Pocahontas PSD had to obtain necessary easements.
WWC oversaw the bidding process and explains that the project was bid as three separate construction contracts; one for the collection system, one for the pump stations, and one for the wastewater treatment plant. Respondent Pipe Plus, Inc., counterclaim defendant and third-party defendant below, successfully bid both the collection system and pump stations and executed two contracts with Pocahontas PSD accordingly. Respondent Orders Construction Company, Inc., also a counterclaim defendant and third-party defendant below, successfully bid the wastewater treatment plant, which included the headworks portion of the facility,5 and entered a contract with Pocahontas PSD for its construction. Respondent A-3 USA, Inc., an additional counterclaim defendant and third-party defendant below, supplied certain component parts used in the wastewater treatment plant.6
The project‘s target completion date was October 1, 2016; however, WWC claims the project was not completed until at least May 31, 2017. WWC accepts no responsibility for the numerous delays incurred throughout the design and construction of the project. WWC contends that it was required to provide additional engineering services not contracted for, and was engaged in the project for a longer period than anticipated, through no fault of its own.
B. The Litigation
Seeking compensation for the alleged additional work for which it had not been paid, WWC filed a complaint in the Circuit Court of Kanawha County against Pocahontas PSD and certain others on February 6, 2018, asserting, in relevant part, various breach of contract claims.7 On March 28, 2018, Pocahontas PSD served its answer and a two-count counterclaim on WWC. Count I of Pocahontas PSD‘s counterclaim asserted professional negligence based on twenty-eight
In July 2018, the case was transferred to the Business Court Division of the West Virginia Judiciary, and the parties engaged in discovery. In August 2019, WWC filed a motion for partial summary judgment as to Pocahontas PSD‘s professional negligence counterclaim. By order entered on November 27, 2019, the business court granted WWC‘s motion and dismissed twenty of Pocahontas PSD‘s twenty-eight allegations of professional negligence because they were not adequately supported by expert testimony.
Meanwhile, discovery closed on September 15, 2019. WWC asserts that it tried to obtain information about the nature of Pocahontas PSD‘s counterclaims and associated damages during discovery, yet Pocahontas PSD gave no indication that it anticipated extensive repairs of the headworks area. After the close of discovery, Pocahontas PSD filed its third supplemental response to WWC‘s requests for production. This supplemental response included a headworks repair plan and three options for headworks improvements that ranged in cost from $274,000 to $1,573,500. WWC characterizes this discovery response as a “new headworks improvement claim,” and filed a motion to strike the response on November 4, 2019. By order entered on March 16, 2020, the business court granted, in part, WWC‘s motion to strike. The court declined to strike certain documents contained in Pocahontas PSD‘s third supplemental response to WWC‘s requests for production, but it reopened discovery to allow for development of the newly produced evidence and stated that it would implement a new scheduling order to allow for possible amendment of pleadings, joinder of parties, and supplementation of expert witness reports.
After WWC filed its motion to strike, it sent a tender letter to Orders Construction. The tender letter, dated November 5, 2019, advised Orders Construction that claims asserted in Pocahontas PSD‘s counterclaim implicated Orders Construction‘s work and that WWC sought to be defended and indemnified under Orders Construction‘s contract with Pocahontas PSD.
WWC then filed a motion to join new parties and a proposed third-party complaint against Orders Construction, Pipe Plus, and A-3 USA. Pocahontas PSD also moved for leave to file an amended counterclaim to add claims against Pipe Plus and A-3 USA. The business court granted both motions. Pocahontas PSD filed its first amended counterclaim on May 12, 2020,8 and WWC filed its third-party complaint on May 18, 2020.9 In its third-party complaint, WWC alleged, in relevant part, that Orders and Pipe Plus were obligated by contract to provide it with a defense and indemnity pursuant to their contracts with Pocahontas PSD and asserted claims of implied indemnity and contribution against Orders, Pipe Plus, and A-3 USA.
In July 2020, Orders Construction and A-3 USA each filed a Rule 12(b)(6)10 motion to dismiss WWC‘s third-party complaint, raising several grounds for dismissal. Prior to the business court ruling on these motions, WWC filed, on November 4, 2020, a “Notice of Intent to Attribute Fault,” under
to Orders Construction and A-3 USA.11 Orders Construction and A-3 USA filed a joint motion
By order entered on January 14, 2021, the business court granted Orders Construction‘s Rule 12(b)(6) motion and dismissed it from the action with prejudice. The business court denied WWC‘s subsequent Rule 59(e)12 motion to alter this judgment by order entered on April 12, 2021. Similarly, by order entered on March 30, 2021, the business court granted A-3 USA‘s Rule 12(b)(6) motion and dismissed it, with prejudice, from the action. In an order dated May 18, 2021, the business court denied WWC‘s Rule 59(e) motion to alter the order dismissing A-3 USA. The business court certified this order as final pursuant to Rule 54(b).13
In February 2021, Pipe Plus filed a motion for partial summary judgment, which the business court granted by order entered on April 16, 2021, completely resolving WWC‘s claims against Pipe Plus and dismissing it, with prejudice, as a third-party defendant.14
In this appeal, WWC seeks review of the business court‘s orders granting dismissаl of its third-party complaint against Orders Construction and A-3 USA, along with the orders denying WWC‘s motions to alter or amend those dismissals. WWC also seeks review of the business court‘s order granting summary judgment to Pipe Plus and dismissing Pipe Plus as a third-party defendant. Finally, WWC seeks review of the business court‘s order granting the joint motion by Orders Construction and A-3 USA to strike WWC‘s contingent notice of nonparty fault.
II. STANDARD OF REVIEW
Our review of the orders dismissing Orders Construction and A-3 USA, as well as the summary judgment order dismissing Pipe Plus, is de novo. See Syl. pt. 2, State ex rel. McGraw v. Scott Runyan Pontiac-Buick, Inc., 194 W. Va. 770, 461 S.E.2d 516 (1995) (“Appellate review of a circuit court‘s order granting a motion to dismiss a complaint is de novo.“); Syl. pt. 1, Painter v. Peavy, 192 W. Va. 189, 451 S.E.2d 755 (1994) (“A circuit court‘s entry of summary judgment is reviewed de novo.“). Applying these standards, we give plenary review to the issues properly before us.
III. DISCUSSION
After a brief discussion of the appealability of the orders WWC seeks review of, we will address, in turn, four issues raised by WWC: express indemnity, implied indemnity, contribution, and timeliness.
A. Appealability
Although this case remains pending below, WWC seeks review of orders issued by the business court that resolved WWC‘s claims against Orders Construction, A-3 USA, and Pipe Plus, and an order that struck its notice of nonparty fault. Only one of these orders, the May 18, 2021 order denying WWC‘s motion to alter or amend the dismissal order as to A-3 USA, is designated as final pursuant to Rule 54(b). This order, which resolves WWC‘s claims against A-3 USA, is appealable pursuant to well-established caselaw. See Syl. pt. 1, Riffe v. Armstrong, 197 W. Va. 626, 477 S.E.2d 535 (1996) (“In an оrder dismissing fewer than all of the parties or fewer than all the claims in a civil action, the inclusion of the language required by Rule 54(b) of the West Virginia Rules of
However, the absence of Rule 54(b) language from the orders granting dismissal to Orders Construction and summary judgment to Pipe Plus is not dispositive as to those orders’ finality. We have held that
“[t]he key to determining if an order is final is not whether the language from Rule 54(b) of the West Virginia Rules of Civil Procedure is included in the order, but is whether the order approximates a final order in its nature and effect. We extend application of this rule to a motion to dismiss under Rule 12(b)(6) of the West Virginia Rules of Civil Procedure.” Syl. Pt. 1, State ex rel. McGraw v. Scott Runyan Pontiac-Buick, Inc., 194 W. Va. 770, 461 S.E.2d 516 (1995).
Syl. pt. 7, Erie Ins. Co. v. Dolly, 240 W. Va. 345, 811 S.E.2d 875 (2018). Likewise,
[w]here an order granting summary judgment to a party completely disposes of any issues of liability as to that party, the absence of language prescribed by Rule 54(b) of the West Virginia Rules of Civil Procedure indicating that “no just reason for delay” exists and “directi[ng] . . . entry of judgment” will not render the order interlocutory and bar appeal provided that this Court can determine from the order that the trial court‘s ruling approximates a final order in its nature and effect.
Syl. pt. 2, Durm v. Heck‘s, Inc., 184 W. Va. 562, 401 S.E.2d 908 (1991). Both the order dismissing A3-USA and the ordеr granting summary judgment to Pipe Plus as to WWC‘s claims disposed of all WWC‘s claims against those third-party defendants and dismissed both parties with prejudice. Accordingly, these orders approximate a final order in their nature and effect and are appealable.
WWC also seeks review of the business court‘s order granting a motion to strike its contingent notice of nonparty fault as untimely. WWC argues that this interlocutory order is reviewable under the following standard:
“‘Where an appeal is properly obtained from an appealable decree either final or interlocutory, such appeal will bring with it for review all preceding non-appealable decrees or orders, from which have arisen any of the errors complained of in the decree appealed from, no matter how long they may have been rendered before the appeal was taken.’ Point 2, syllabus, Lloyd v. Kyle, 26 W. Va. 534 [1885].” Syllabus point 5, State ex rel. Davis v. Iman Mining Co., 144 W. Va. 46, 106 S.E.2d 97 (1958).
Syl. pt. 6, Riffe, 197 W. Va. 626, 477 S.E.2d 535 (emphasis added). We disagree. In the context of an appeal under Rule 54(b) of an order that does not fully resolve the litigation below, the foregoing authority permits consideration of preceding non-appealable orders only when the errors in the Rule 54(b) order arise from the earlier non-appeаlable orders. See, e.g., Jane Doe-1 v. Corp. of President of The Church of Jesus Christ of Latter-day Saints, 239 W. Va. 428, 445, 801 S.E.2d 443, 460 (2017) (considering in limine rulings along with an appeal from a Rule 54(b) order granting summary judgment where “the in limine rulings and the summary judgment rulings are inextricably entwined“). In this case, WWC‘s contingent notice of nonparty fault was stricken by the business court as untimely. The business court‘s ruling on the timeliness of that notice—a procedural issue governed by
B. Contractual Indemnity Claims Against Orders Construction and Pipe Plus
In its third-party complaint, WWC demanded indemnification from Orders and Pipe Plus pursuant to their contracts with Pocahontas PSD, WWC asserts that the
WWC based its contractual indemnity demands on the following clause, which appears in the relevant contracts:15
7.18 Indemnification
A. To the fullest extent permitted by laws and Regulations, and in addition to any other obligations of Contrаctor under the Contract or otherwise, Contractor shall
indemnify and hold harmless Owner and Engineer, and the officers, directors, members, partners, employees, agents, consultants and subcontractors of each and any of them from and against all claims, costs, losses, and damages (including but not limited to all fees and charges of engineers, architects, attorneys, and other professionals and all court or arbitration or other dispute resolution costs) arising out of or relating to the performance of the Work, provided that any such claim, cost, loss, or damage is attributable to bodily injury, sickness, disease, or death, or to injury to or destruction of tangible property (other than the Work itself), including the loss of use resulting therefrom but only to the extent caused by any negligent act or omission of Contractor, any Subcontractor, any Supplier, or any individual or entity directly or indirectly employed by any of them to perform any of the Work or anyone for whose acts any of them may be liable.
. . . .
C. The indemnification obligations of Contractor under Paragraph 7.18.A shall not extend to the liability of Engineer and Engineer‘s officers, directors, members, partners, employees, agents, consultants and subcontractors arising out of:
1. the preparation or approval of, or the failure to prepare or approve maps, Drawings, opinions, reports, surveys, Change Orders, designs, or Specifications; or
2. giving directions or instructions, or failing to give them, if that is the primary cause of the injury or damage.
WWC argues that the foregoing language encompasses all claims Pocahontas PSD has raised in its counterclaims, and as such, requires Orders and Pipe Plus to indemnify WWC for any damages it may owe Pocahontas PSD.
The business court rejected WWC‘s contractual indemnity claims and provided only a vague and convoluted discussion of the indemnity clause when granting both Orders Construction‘s motion to dismiss and Pipe Plus‘s motion for summary judgment. The court first found the claims in this case are related to the exceptions to indemnity set out in paragraph “C” quoted above. Nevertheless, the court then discussed the requirements for the indemnity provision and observed that it is narrow and applies only to certain types of damages and losses caused by Orders Construction or Pipe Plus. Then, turning back to the exceptions, the business court commented that they exclude liability arising from WWC‘s design work. Finally, the business court identified the various claims asserted against WWC by Pocahontas PSD, whiсh are based on WWC‘s design of the wastewater treatment facility and its failure to supervise the contractors.16 Absent from the business court‘s orders is any discussion or application of the standards for dismissing a complaint or granting summary judgment.
We have explained that ”
complaint.” Cantley v. Lincoln Cnty. Comm’n, 221 W. Va. 468, 470, 655 S.E.2d 490, 492 (2007) (per
On the other hand, “[a] motion for summary judgment should be granted only when it is clear that there is no genuine issue of fact to be tried and inquiry concerning the facts is not desirable to clarify the application of the law.” Syl. pt. 3, Aetna Cas. & Sur. Co. v. Fed. Ins. Co. of N.Y., 148 W. Va. 160, 133 S.E.2d 770 (1963). At this stage, the court is “bound to draw any permissible inference from the pleadings, depositions, and the facts, in a light most favorable to the non-moving party,” however, “the non-moving party still must produce evidence sufficient for a reasonable jury to find in its favor.” City of Morgantown v. W. Va. Univ. Med. Corp., 193 W. Va. 614, 620, 457 S.E.2d 637, 643 (1995). Accordingly, summary judgment is proper [only] “if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.”
Bowden v. Monroe Cnty. Comm’n, 239 W. Va. 214, 219, 800 S.E.2d 252, 257 (2017).
In connection with its contractual indemnity claim, WWC quoted the pertinent indemnity clause language in its third-party complaint and maintained that “the allegations in [Pocahontas PSD‘s] Counterclaim clearly allege damages that arise out of the construction and construction management undertaken by Orders Construction and/or its subcontractors, for which it is responsible pursuant to Orders Construction‘s contract with [Pocahontas PSD].” In addition, WWC alleged that “to the extent WWC has been sued as a result of Orders Construction‘s defective work and/or inadequate construction management and supervision of the Project, Orders Construction is contractually obligated to . . . indemnify WWC, as the Project Engineer, for [Pocahontas PSD‘s] claims in this lawsuit.” WWC asserted identical claims against Pipe Plus. Viеwed in the light most favorable to WWC, it has, in effect, alleged that the damages, if any, suffered by Pocahontas PSD in connection with the construction of the wastewater treatment plant project were caused by Orders Construction and Pipe Plus rather than by any design defect. We find these allegations sufficient to survive a 12(b)(6) motion to dismiss on the issue of contractual indemnity.
To the extent that the business court relied on exceptions to the indemnity clause in dismissing Orders Construction, the application of those exceptions is dependent upon resolving whether or not the alleged harm to Pocahontas PSD was caused by WWC‘s “preparation or approval of, or the failure to prepare or approve maps, Drawings, opinions, reports, surveys, Change Orders, designs, or Specifications,” or “giving directions or instructions, or failing to give them, if that is the primary cause of the injury or damage.” The presence of these factual questions preclude dismissal pursuant to
We also reject Orders Construction‘s claim that, under the modified comparative fault standard set out in
For the same reasons, we find there are material questions of fact with respect to the source of the alleged damages suffered by Pocahontas PSD that preclude summary judgment in favor of Pipe Plus as to WWC‘s contractual indemnity claim. Pipe Plus has not directed us to any evidence in the record that resolves these liability questions as a matter of law.
Pipe Plus also asserts that WWC‘s contractual indemnity claim is not ripe; therefore, the business court lacks subject matter jurisdiction. See Syl. pt. 3, State ex rel. Universal Underwriters Ins. Co. v. Wilson, 239 W. Va. 338, 801 S.E.2d 216 (2017) (“Subject matter jurisdiction does not exist over claims that are not ripe for adjudication.“). However, under the circumstances presented in this case, there is an exception to the general ripeness doctrine. This Court has explained that
[l]he ripeness doctrine “seeks to prevent the courts, through avoidance of premature adjudication, from entangling themselves in abstract disagreements.” Paraquad v. St. Louis Housing Auth., 259 F.3d 956, 958 (8th Cir. 2001) (internal quotations and citation omitted). “Questions that may never arise or are purely advisory or hypothetical do not establish a justiciable controversy. Because an unripe claim is not justiciable, the circuit court has no subject matter jurisdiction over it.” Doe v. Golden & Walters, PLLC, 173 S.W.3d 260, 270 (Ky. Ct. App. 2005) (footnotes omitted)[.]
Universal Underwriters Ins. Co. at 345, 801 S.E.2d at 223 (footnote omitted). Nevertheless, “[a] claim for . . . indemnity may be asserted long before the cause of action actually accrues.” 3 Bruner & O‘Connor on Constr. Law, § 10:6, at 1048 (2022 ed). As one court explained,
[t]echnically a claim for indemnity does not arise until the prime obligation to pay has been established . . . . Nevertheless, for the sake of fairness and judicial economy, . . . third-party actions [may] be commenced in certain circumstances before they are technically ripe, so that all parties may establish their rights and liabilities in one action.
Mars Assocs., Inc. v. New York City Educ. Const. Fund, 126 A.D.2d 178, 191-92 (N.Y. App. Div. 1987) (emphasis added; quotations and citations omitted). Thus, we now hold that even though a claim for indemnity does not technically arise until the primary obligation to pay has been established, such claims may be brought by way of third-party practice before they are technically ripe to serve the interests of fairness and judicial economy.17 For this reason, the fact that WWC‘s contractuаl indemnity claims are not technically ripe did not require disposition of those claims by summary judgment in Pipe Plus‘s favor. See
the plaintiff‘s claim against the third-party plaintiff” (emphasis added)). Therefore, we conclude that the circuit court erred by granting summary judgment to Pipe Plus as to WWC‘s contractual indemnity claims.
C. Contractual Duty to Provide a Defense Claim Against Orders Construction and Pipe Plus.
WWC also demanded that Orders Construction and Pipe Plus assume its legal defense of Pocahontas PSD‘s claims and
[a]n insurance company‘s duty to defend an insured is broader than the duty to indemnify under a liability insurance policy. An insurance company has a duty to defend an action against its insured if the claim stated in the underlying complaint could, without amendment, impose liability for risks the policy covers. If, however, the causes of action alleged in the plaintiff‘s complaint are entirely foreign to the risks covered by the insurance policy, then the insurance company is relieved of its duties under the policy.
Bowyer v. Hi-Lad, Inc., 216 W. Va. 634, 651, 609 S.E.2d 895, 912 (2004) (per curiam). While this Court has “recognized that an indemnitor may assume control of the indemnitee‘s defense, at least where no conflict of interest exists,” State ex rel. Vapor Corp. v. Narick, 173 W. Va. 770, 774, 320 S.E.2d 345, 349 (1984) (emphasis added), WWC cites no case imposing on a purported indemnitor a broad duty to defend like that imposed on insurance companies.
To the contrary, a Michigan appellate court has explained that “[t]he duty to defend is not the same as the duty to indemnify.” Downer v. GDC-Cranbrook Ltd. Dividend Hous. Ass‘n, LLC, No. 359580, 2023 WL 2144553, at *8 (Mich. Ct. App. Feb. 21, 2023) (per curiam). Contrasting the duty to defend as it relates to insurance with a commercial law duty to defend, the Downer court clarified that in “commercial transactions not involving insurance law, whether a duty to defend exists is determined by the language of the parties’ сontract.” Id. Further,
the duty to defend and the duty to indemnify are two concepts that are not interdependent and “relate to distinctly different matters.” . . . The duty to defend contemplates a duty to deny, contest, or oppose an allegation or claim while the duty to indemnify “contemplates reimbursement for injuries/losses that have already been incurred.”
Id. (quoting Ajax Paving Indus., Inc. v Vanopdenbosch Constr. Co., 797 N.W. 2d 704 (Mich. Ct. App. 2010)).18
The relevant language of the indemnity clause requires Orders Construction and Pipe Plus to
indemnify and hold harmless [WWC] . . . from and against all claims, costs, losses, and damages (including but not limited to all fees and charges of engineers, architects, attorneys, and other professionals and all court or arbitration or other dispute resolution costs) . . . .
Plainly, the obligation described is to indemnify, not to assume WWC‘s defense. See Indemnify, Black‘s Law Dictionary (11th ed. 2019) (defining “indemnify” in relevant part as meaning “1. To reimburse (another) for a loss suffered because of a third party‘s or one‘s own act or default; . . . 2. To promise to reimburse (another) for such a loss.” (emphasis added)); see also Supervalu Operations, Inc. v. Ctr. Design, Inc., 206 W. Va. 311, 315, 524 S.E.2d 666, 670 (1999) (per curiam) (“If the contract language is found to be unambiguous then ‘[i]t is the safest and best mode of construction to give words, free from ambiguity, their plain and ordinary meaning.‘” (quoting Syl. pt. 3, Bennett v. Dove, 166 W. Va. 772, 277 S.E.2d 617 (1981))). Because the indemnification clause at issue does not encompass a duty to defend, the business court did not err by concluding that Orders Construction and Pipe Plus had no obligation to
D. Implied Indemnity Claim Against A-3 USA and Pipe Plus
In its third-party complaint, WWC claimed entitlement to common-law indemnity, also referred to as implied indemnity or equitable indemnity,19 from A-3 USA and Pipe Plus. We first address this issue with respect to A-3 USA, we then consider it as to Pipe Plus.
Because the business court disposed of WWC‘s implied indemnity claim against A-3 USA by granting A-3 USA‘s
We have previously explained that,
[t]he requisite elements of an implied indemnity claim in West Virginia are a showing that: (1) an injury was sustained by a third party; (2) for which a putative indemnitee has become subject to liability because of a positive duty created by statute or common law, but whose independent actions did not contribute to the injury; and (3) for which a putative indemnitor should bear fault for causing because of the relationship the indemnitor and indemnitee share.
Syl. pt. 4, Harvest Cap. v. W. Va. Dep‘t of Energy, 211 W. Va. 34, 560 S.E.2d 509 (2002) (emphasis added). These three elements are joined by the conjunction “and” meaning they all must be present.20 And we have clarified that “the concept of implied indemnity is based on equitable principles arising from the special nature of the relationship between the parties.”21 Sydenstricker v. Unipunch Prods., Inc., 169 W. Va. 440, 445, 288 S.E.2d 511, 515 (1982) (emphasis added).
The business court granted A-3 USA‘s motion to dismiss, in part, on WWC‘s failure to proffer a special relationship with A-3 USA upon which to base a claim for implied indemnity. On appeal, WWC seizes on a sentence in Pocahontas PSD‘s amended counterclaim alleging that WWC “was to act as [Pocahontas PSD‘s] representative in connection with the construction of the Project.” Based on this allegation, WWC argues that “in any supervisory capacity it may have had, [it] would not have actually created the defects” alleged by Pocahontas PSD. (Emphasis added). However, WWC‘s role as a representative for Pocahontas PSD with respect to construction of the wastewater treatment plant does not suggest the type of relationship between A-3 USA and WWC
The general principle of implied indemnity arises from equitable considerations. At the heart of the doctrine is the premise that the person seeking to assert implied indemnity—the indemnitee—has been required to pay damages caused by a third party—the indemnitor. In the typical case, the indemnitee is made liable to the injured party because of some positive duty created by statute or the common law, but the actual cause of the injury was the act of the indemnitor.
Syl. pt. 2, Hill v. Joseph T. Ryerson & Son, Inc., 165 W. Va. 22, 268 S.E.2d 296 (1980) (emphasis added). The Hill Court, addressing a product liability claim, also stated generally that
[i]t is this relationship [between indemnitee and indemnitor] . . . as well as to the injured party, which must ultimately determine the right to implied indemnity and the defenses available to the indemnitor. . . . [T]he fundamental premise for the cause of action is that the indemnitee has been subjected to a judgment which arose from injuries brought about by the action of the indemnitor.
Id. at 27-28, 268 S.E.2d at 301.
While we have repeatedly acknowledged the need for a special relationship by which a faultless indemnitee is made liable for the acts of the indemnitor because of some positive duty created by statute or common law, we have not provided guidance as to the types of relationships that might fall intо that category.22 Other courts, though, have examined scenarios where a special relationship supporting a claim for implied indemnity is present. These cases clarify that the requisite relationship is one by which liability is imputed from the indemnitor to the indemnitee:
“Importantly, the right to indemnification at common law derives from a special relationship between the parties which has obligated one party to pay because of its vicarious, constructive, derivative or technical liability for the wrongful acts of the other.” Dominion of Canada v. State Farm Fire and Cas. Co., 754 So. 2d 852, 855 (Fla. 2nd DCA 2000).
CC-Aventura, Inc. v. Weitz Co., LLC, No. 06-21598-CIV, 2009 WL 2136527, at *1 (S.D. Fla. July 13, 2009) (emphasis added). Another court has explained that
“[t]he key element of a common-law cause of action for indemnification is not a duty running from the indemnitor to the injured party, but rather is a separate duty owed the indemnitee by the indemnitor” (Dreyfus v. MPCC Corp., 124 A.D.3d 830, 830, 3 N.Y.S.3d 365 [2015] [internal quotation marks, brackets and citations omitted]). . . . “[T]he predicate of common-law indemnity is vicarious liability without actual fault on the part of the proposed indemnitee” . . . (id. [internal quotation marks and citations omitted]). As the Court of Appeals has held, “[c]ommon-law indemnification is generally available in favor of one who is held responsible solely by operation of law because of his [or her] relation to the actual wrongdoer” (McCarthy v. Turner Constr., Inc., 17 N.Y.3d 369, 375, 929 N.Y.S.2d 556, 953 N.E.2d 794 [2011], quoting Mas v. Two Bridges Assoc., 75 N.Y.2d 680, 690, 555 N.Y.S.2d 669, 554 N.E.2d 1257 [1990]).
O‘Toole as Tr. for Charafeddine v. Marist Coll., 170 N.Y.S.3d 264, 268-69 (N.Y. App. Div. 2022).23 An implied indemnity claim has
Absent a liability-imputing relationship, the claim that another is responsible for an alleged harm is a defense rather than a basis for implied indemnification. See Woodrum v. Johnson, 210 W. Va. 762, 768, 559 S.E.2d 908, 914 (2001) (“[T]he Court has clearly acknowledged the fact that there is a technical difference between joint tortfeasors and those whose liability is derivative or vicarious[.]“). See, e.g., Houdaille Indus., Inc. v. Edwards, 374 So. 2d 490, 494 (Fla. 1979) (“[Manufacturer‘s] claim that [employee‘s] death resulted solely from the negligence of [employer] states a complete defense to the original action. It does not establish that [manufacturer] is vicariously, constructively, derivatively, or technically liable for [employer‘s] negligence.“).
In this case, to support its claim for implied indemnity against A-3 USA, WWC had to plead all the essential elements of its claim, including facts supporting a special relationship with A-3 USA that would result in liability for A-3 USA‘s wrongful acts being imputed on WWC by operation of law. See Price v. Halstead, 177 W. Va. 592, 594, 355 S.E.2d 380, 383 (1987) (stating that a plaintiff must, “at a minimum . . . set forth sufficient information to outline the elements of [the] claim” in its complaint, and if it “fails to do so, dismissal is proper“); Fass v. Nowsco Well Serv., Ltd., 177 W. Va. 50, 52, 350 S.E.2d 562, 563 (1986) (per curiam) (“The complaint must set forth enough information to outline the elements of a claim or permit inferences to be drawn that these elements exist.“).
WWC, in its third-party complaint, expresses its belief that “A3-USA was retained by Orders Construction and supplied the membrane bioreactor (‘MBR‘) system and related components of that system installed in the WWTP [wastewater treatment plant] and provided direction as to what components of the system, including the screens, pumps[,] and solution tank, should be installed.” Then, under the heading “Negligence,” WWC alleges:
- [A-3 USA] had a duty to supply a membrane bioreactor (“MBR“) system and related components that functioned properly and met the requirements of the Contract Documents and complied with applicable industry standards.
- [A-3 USA] had a duty to exercise [a] reasonable degree of care, skill, and knowledge in supplying the MBR system and related components.
Finally, WWC avers that, to the extent Pocahontas PSD proves its allegations and suffered damages in connection with the membrane bioreactor systems and related components supplied by A-3 USA, WWC is entitled to implied indemnificatiоn from A-3 USA.
WWC‘s third-party complaint contains no facts about its relationship with A-3 USA, much less one that gives rise to imputed or vicarious liability. In fact, the only relationship involving A-3 USA mentioned in WWC‘s third-party complaint is one between A-3 USA and Orders Construction.24 Furthermore,
In contrast to the procedural posture of A-3 USA‘s dismissal, the business court disposed of WWC‘s implied indemnity claim against Pipe Plus by granting Pipe Plus‘s motion for summary judgment.26 “A motion for summary judgment should be granted only when it is clear that there is no genuine issue of fact to be tried and inquiry concerning the facts is not desirable to clarify the application of the law.” Syl. pt. 3, Aetna Cas. & Sur. Co, 148 W. Va. 160, 133 S.E.2d 770. Further,
[s]ummary judgment is appropriate if, from the totality of the evidence presented, the record could not lead a rational trier of fact to find for the nonmoving party, such as where the nonmoving party has failed to make a sufficient showing on an essential element of the case that it has the burden to prove.
Syl. pt. 2, Williams v. Precision Coil, Inc., 194 W. Va. 52, 459 S.E.2d 329 (1995). We have stated that “[s]ummary judgment . . . is a device designed to effect a prompt disposition of controversies on their merits without resort to a lengthy trial, if in essence there is no real dispute as to salient facts or if only a question of law is involved.” Hanks v. Beckley Newspapers Corp., 153 W. Va. 834, 836-37, 172 S.E.2d 816, 817 (1970).
In its motion seeking summary judgment, Pipe Plus argued, and the business court subsequently agreed, that WWC had no viable claim for implied indemnity because no special relationship had been alleged. On appeal, WWC asserts the same argument it provided with respect to A-3 USA, that WWC “was to act as [Pocahontas PSD‘s] representative in connection with the construction of the Project” and that “in any supervisory capacity it may have had, [i]t would not have actually created the defects” alleged by Pocahontas PSD. Missing from WWC‘s argument is any discussion of evidence showing a special relationship between it and Pipe Plus by which WWC is liable for the wrongful conduct of Pipe Plus. Likewise, WWC has directed us to no record evidence creating a “genuine issue of fact to be tried” as to the existence of such a relationship. Syl. pt. 3, in part, Aetna Cas. & Sur. Co., 148 W. Va. 160, 133 S.E.2d 770. Therefore, the business
E. Viability of Contribution Claim Against A-3 USA
In granting A-3 USA‘s
WWC argues that the business court erred by ruling that West Virginia‘s modified several liability standard prevents its contribution claim against A-3 USA because the Legislature did not expressly abolish claims of contribution. WWC also relies on a 2019 order of the business court in a separate matter opining that legislative adoption of the modified comparative fault standard did not extinguish the inchoate right to contribution. We are unpersuaded by this authority.
We begin our analysis by reviewing the principles of contribution. This Court explained, prior to the enactment of the modified comparative fault standard, that
[t]he right of contribution arises from liability for a joint wrong committed by two or more parties against the plaintiff. We explained the doctrine of contribution in Syllabus Point 4, in part, of Sydenstricker v. Unipunch Prods., Inc., 169 W. Va. 440, 288 S.E.2d 511 (1982), as follows:
“The doctrine of contribution has its roots in equitable principles. The right to contribution arises when persons having a common obligation, either in contract or tort, are sued on that obligation and one party is forced to pay more than his pro tanto share of the obligation.”
Bd. of Educ. of McDowell Cnty. v. Zando, Martin & Milstead, Inc., 182 W. Va. 597, 602, 390 S.E.2d 796, 801 (1990). The Zando Court further described the applicable nomenclature, stating that an “inchoate right to contribution,” refers to the right of a defendant in a negligence action to join those who share the fault by asserting clаims for contribution. Id.29 The Court clarified that the “fundamental purpose of inchoate contribution,” is to allow all those who contributed to an injury to be brought into one suit, which promotes judicial economy, avoids piecemeal litigation, and ensures that damages are shared among those who contributed to them. Id. at 603, 390 S.E.2d at 802.
The question we must address is whether, or to what extent, the inchoate right to contribution exists under the modified comparative fault standard established by statute. Resolving this issue requires us to determine the Legislature‘s intent in adopting the modified comparative fault standard. See Syl. pt. 1, Smith v. State Workmen‘s Comp. Comm‘r, 159 W. Va. 108, 219 S.E.2d 361 (1975) (“The primary object in construing a statute is to ascertain and give effect to the intent of the Legislature.“). In engaging in this query, “[w]e look first to the statute‘s language. If
In adopting modified comparative fault, the Legislature specifically provided that
(a) For purposes of this article, “comparative fault” means the degree to which the fault оf a person was a proximate cause of an alleged personal injury or death or damage to property, expressed as a percentage. Fault shall be determined according to section thirteen-c [§ 55-7-13c] of this article.
(b) In any action based on tort or any other legal theory seeking damages for personal injury, property damage, or wrongful death, recovery shall be predicated upon principles of comparative fault and the liability of each person, including plaintiffs, defendants and nonparties who proximately caused the damages, shall be allocated to each applicable person in direct proportion to that person‘s percentage of fault.
(c) The total of the percentages of comparative fault allocated by the trier of fact with respect to a particular incident or injury must equal either zero percent or one hundred percent.
(a) In any action for damages, the liability of each defendant for compensatory damages shall be several only and may not be joint. Each defendant shall be liable only for the amount of compensatory damages allocated to that defendant in direct proportion to that defendant‘s percentage of fault, and a separate judgment shall be rendered against each defendant for his or her share of that amount. However, joint liability may be imposed on two or more defendants who consciously conspire and deliberately pursue a common plan or design to commit a tortious act or omission. Any person held jointly liable under this section shall have a right of contribution from other defendants that acted in concert.
By employing mandatory language in the modified comparative fault standard, specifying that fault shall be allocated among those who proximately caused the damages suffered, providing a method for a factfinder
Based on the foregoing discussion, we now hold that the statutory scheme and exceptions set forth in
As explained above, we reverse the order of the Circuit Court of Kanawha County, Business Court Division, dated January 14, 2021, granting Orders Construction‘s
Affirmed in part, Reversed in part, and Remanded.
Notes
(a) In any action for damages, the liability of each defendant for compensatory damages shall be several only and may not be joint. Each defendant shall be liable only for the amount of compensatory damages allocated to that defendant in direct proportion to that defendant‘s percentage of fault, and a separate judgment shall be rendered against each defendant for his or her share of that amount. . . .
For the same reasons applied to Orders Construction, the business court concluded that the indemnity clause in the Pipe Plus contract prohibited WWC‘s contribution claim against Pipe Plus. WWC has not challenged this ruling. Therefore, the business court‘s summary judgment ruling on that ground is final. Additionally, we have already determined that the business court did not err in granting summary judgment as to WWC‘s implied indemnity claim because WWC failed to make a sufficient showing of a special relationship to overcome summary judgment. Thus, we need not address the question of whether the business court was correct as to the alternate ground of the statute of limitations.