Rodriguez v. McDonnell Douglas Corp.
151 Cal. Rptr. 399 (1978)
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Rule of Law:
Under a general indemnity agreement, a passively negligent indemnitee is entitled to full indemnification from an actively negligent indemnitor, even when both parties are concurrently negligent. This contractual right to full indemnity is not displaced by principles of comparative fault.
Facts:
- McDonnell Douglas Corporation (McDonnell) hired Norman Engineering Company (Norman) as the general contractor to modify a large hangar.
- Norman subcontracted structural steel work to Bethlehem Steel Corporation (Bethlehem) and fire sprinkler system modifications to Orvin Engineering Company (Orvin).
- Bethlehem's work required it to temporarily remove a horizontal steel girt, which was supported by various attachments.
- One attachment was an angle iron, which also served as a crucial earthquake sway brace for a 630-pound vertical pipe that was part of the fire sprinkler system.
- Bethlehem workers used torches to cut the angle iron free from the girt, but after inverting and reinstalling the girt, they failed to re-weld the angle iron, leaving the pipe without lateral support.
- The unsecured angle iron was hidden from view by black mastic, making the defect unapparent.
- Richard Rodriguez, an apprentice employed by Orvin, was working on the ground near the pipe.
- While a senior Orvin apprentice was at the top of the pipe preparing to lower it, he removed its upper coupling, causing the unsupported pipe to fall and strike Rodriguez, resulting in catastrophic injuries.
Procedural Posture:
- Richard Rodriguez and his wife sued McDonnell, Norman, Bethlehem, Cox, and Robertson in California superior court (trial court) for personal injuries and loss of consortium.
- The State Compensation Insurance Fund intervened to seek reimbursement for workers' compensation benefits paid to Richard Rodriguez.
- Norman filed a cross-complaint against Bethlehem and Orvin (Rodriguez's employer) seeking express contractual indemnity.
- Following a jury trial, a special verdict was returned finding Norman and Bethlehem negligent and liable to the plaintiffs. The jury found McDonnell and Cox were not negligent.
- The jury also found that Rodriguez's employer, Orvin, was 10% comparatively negligent.
- In a subsequent court proceeding on the cross-complaints, the trial judge found Norman's negligence was 'passive' and the negligence of Bethlehem and Orvin was 'active,' and awarded Norman full contractual indemnity against both.
- Bethlehem appealed from the judgment in favor of the plaintiffs and from the indemnity judgment in favor of Norman.
- Norman appealed from the judgment in favor of the plaintiffs.
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Issue:
Under a general indemnity clause where an indemnitor agrees to indemnify for its own negligent acts, is a passively negligent indemnitee entitled to full indemnification from an actively negligent indemnitor, even if both were concurrently negligent?
Opinions:
Majority - Jefferson, J.
Yes, a passively negligent indemnitee is entitled to full indemnification from an actively negligent indemnitor under a general indemnity clause. The court held that the indemnity agreements between Norman and the subcontractors (Bethlehem and Orvin) were general indemnity clauses. Such clauses permit indemnification for a loss resulting in part from an indemnitee’s passive negligence, but not active negligence. The court determined Norman's negligence was passive, as it consisted of a mere failure to inspect and discover the dangerous condition created by its subcontractors. In contrast, Bethlehem's negligence was active, as it directly participated in the affirmative act of failing to re-weld the angle iron brace. Similarly, Orvin's employee was actively negligent in proceeding with the pipe removal. The court rejected the argument that comparative indemnity principles from tort law should apply to contractual indemnity, holding that the express intent of the parties in the agreement controls.
Analysis:
This decision solidifies the distinction between contractual indemnity and equitable indemnity in California, affirming that principles of comparative fault established in Li v. Yellow Cab Co. do not override express contractual agreements. By upholding the active/passive negligence test from Rossmoor Sanitation, Inc. v. Pylon, Inc. for 'general' indemnity clauses, the case maintains an all-or-nothing framework for contractual indemnification. This reinforces the importance for contracting parties to explicitly address the issue of the indemnitee's own negligence if they wish to deviate from this common law standard. The case also provides a significant precedent on damages, confirming that juries may consider future inflation in calculating awards and that evidence of income tax consequences is inadmissible.
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