Walbridge Aldinger Co. v. Walcon Corp.
525 N.W.2d 489 · Michigan Court of Appeals · 1994
Facts
Robert Reagan, a sheet-metal worker employed by Walcon Corporation, was injured on February 10, 1989, while working at a construction project at Ford Motor Company’s assembly plant in Wayne, Michigan. Walcon was a subcontractor and Walbridge Aldinger Company (Walbridge) was the general contractor on this project. Plaintiffs, including Reagan, filed a lawsuit against Walbridge, alleging negligence and liability under the "inherently dangerous activities" doctrine. Walbridge then filed a third-party complaint against Walcon, asserting that a subcontract between them required Walcon to indemnify and defend Walbridge against the plaintiffs’ claims. Although Walbridge initially cited an August 28, 1989, subcontract, it was later determined that the governing agreement was a June 10, 1988, subcontract, which contained both a broad indemnity clause (Article X) and a provision (Attachment G) stating Walcon would not indemnify Walbridge for Walbridge's own breach of duty. Walcon's attorney agreed to assume Walbridge's defense and indemnify Walbridge, and Walcon's insurer subsequently paid $600,000 to settle the primary action.
Procedural history
Plaintiffs filed an action against Walbridge. Walbridge filed a third-party complaint against Walcon. Walbridge moved for summary disposition, but no decision was entered. Walcon later filed its own motion for summary disposition and a motion to amend its answer, which was granted. After a settlement in the primary action, Walbridge moved for voluntary dismissal of its third-party complaint. The trial court denied Walbridge’s motion for voluntary dismissal and granted Walcon’s motion for summary disposition, ordering Walbridge to reimburse Walcon’s carrier $600,000. Walbridge appealed these orders, and this court reversed and remanded for further proceedings.
Issue
Did the trial court err in denying Walbridge's motion for voluntary dismissal, given an alleged settlement agreement between the parties that Walcon would defend and indemnify Walbridge? Did the trial court err in granting Walcon's motion for summary disposition and ordering Walbridge to reimburse Walcon, considering the indemnity provisions of the June 10, 1988, subcontract?
Holding
The court held that the trial court erred in denying Walbridge’s motion for voluntary dismissal because its decision was based on a mistake of law regarding the necessity of filing a settlement agreement. The court also held that the trial court erred in granting Walcon’s motion for summary disposition and ordering Walbridge to reimburse Walcon, as no breach of duty by Walbridge was established to negate the broad indemnity provision.
Rule
An agreement to settle a pending lawsuit is a contract governed by general contract principles. Under MCR 2.507(H), an agreement or consent between parties, if subsequently denied, must be in writing and subscribed by the party or attorney against whom it is offered, but this writing does not need to be filed with the court to be binding. When an indemnity contract is clear and unambiguous, its interpretation is a question of law for the court. A settlement of a primary action, without more, merely admits the existence of a dispute and payment to resolve controversy, not necessarily an admission of a breach of duty by the indemnitee. If no breach of duty by the indemnitee is established, a broad indemnity provision requiring indemnification for claims arising from the indemnitor's employees' actions applies.
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