Petition for Writ of Certiorari — Thompson v. Budd Co.

—D Supreme Court, U.8,

FILED

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FFICE OF 4s

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IN THE

SUPREME COURT OF THE UNITED STATES

ANTHONY THOMPSON,

Petitioner,

¥;

THE BUDD COMPANY,

Respondent.

On PETITION For Writ OF CERTIORARI

To Tue UNITED STATES CourT OF APPEALS

For THE Sixtu Circuit

PETITION FOR WRIT OF CERTIORARI

MICHAEL R. HANCE *

FRANKLIN & HANCcE, P.S.C.

505 West OrmMsBY AVENUE

LoulsvILLE, KY 40203

(502) 637-6000

Counsel for Petitioner

* Counsel of Record

BECKER GALLAGHER LEGAL PUBLISHING, INC.,

CINCINNATI, OHIO 800-890-5001

S170

QUESTION PRESENTED

May the Commonwealth of Kentucky deprive its citizens of

their constitutional right to redress for injuries they sustain

due to the negligence of another.

PARTIES TO THE PROCEEDING

Petitioner

Anthony Thompson, Petitioner is an individual and has

no corporate affiliations.

Respondent

The Budd Company, Respondent

In addition to the parties named in the caption, Liberty

Mutual Insurance Company, Barton-Malow Company, Inc.,

Albert Kahn Associates, Inc., and Merrick Mechanical, Inc.,

were parties before the court of appeals.

il

TABLE OF CONTENTS

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PARTIES TO THE PROCEEDING ....... eee ii

pe ek Bee ey» Sarre ill

pp Pee iy ly | | iv

sg od aad -idha wee ck ees l

I Sa care 4 ae oD ai wd WR awe aes 1

CONSTITUTIONAL AND STATUTORY

PROVISIONS INVOLVED .............. ]

pameemeeees CP EREECASE 2 ow ceeds 2

ARGUMENT FOR GRANTING THE WRIT ....... 4

THE PETITION SHOULD BE GRANTED

BECAUSE THE COURT’S' OPINION

BELOW IGNORED THE

CONSTITUTIONAL IMPLICATIONS

INVOLVED IN THIS MATTER .......... 4

EG gn os oe ae a ee 8

APPENDIX

Appendix A

Opinion of the United States Court of Appeals

for the Sixth Circuit, dated December9, 1999 .. la

ill

Appendix B

Memorandum Opinion and Order of the

United States District Court for the Eastern

District of Kentucky at Frankfort, dated July

PME S05: u ada eee eee 26a

Appendix C

Judgment; Memorandum Opinion and Order

of the United States District Court for the

Eastern District of Kentucky at Frankfort,

ee aa ss es oe eas 28a

Appendix D

Order of the United States Court of Appeals

for the Sixth Circuit Denying the Petition for

Rehearing, dated January 11,2000 ........ 37a

Appendix E

§§ 342.610 and 342.690 Exclusiveness of

SO ey Berar eee ee ret. 39a

1V

Re WICC AR RES fs ARE RV SE RATA Ae

TABLE OF AUTHORITIES

Cases:

Happy v. Erwin,

Ky, 330 S.W.2d 412 (1959) .....--

Ludwig v. Johnson,

243 Ky. 5434, 49 S.W.2d 347 (1932)

Statutes:

U.S. Const., Amendment XIV, section! ...

Kentucky Const. §14........----555-

Kentucky Const. §54........---+++5::

MUSE. CTR) «os cose hee ees

Kentucky Revised Statutes § 342.610......

Kentucky Revised Statutes § 342.690 ......

OPINIONS BELOW

The Opinion of the United States Court of Appeals for

the Sixth Circuit is reported at 199 F.3d 799 (6™ Cir.Ky.

1999). A copy of the Opinion is included in the Appendix at

Appendix A at la. The Opinion of the District Court for the

Eastern District of Kentucky is not published and is included

in Appendix B at 26a. The Order of the District Court

became final and appealable on April 6, 1998, which is

printed in Appendix C at 28a.

JURISDICTION

The United States Court of Appeals for the Sixth

Circuit issued its Opinion on December 9, 1999. On

December 23, 1999, Petitioner filed a Petition for Rehearing

which the United States Court of Appeals denied on January

11, 2000 (App. D at 37a). This Petition for Writ of

Certiorari is filed within 90 days of the denial of the Petition

for Rehearing. The Court’s jurisdiction is invoked pursuant

to 28 U.S.C. § 1254 (1).

CONSTITUTIONAL AND STATUTORY

PROVISIONS INVOLVED

U.S. Const., Amendment XIV, section 1

. . . No state shall make or enforce any law which

shall abridge the privileges or immunities of citizens of the

United States; nor shall any State deprive any person of life,

liberty or proper, without due process of law; nor deny to any

person within its jurisdiction the equal protection of the laws.

sie nin ANON AH Neato hg 3 195 Cee oo

Kentucky Const. §14

All courts shall be open and every person, for an

injury done him in his lands, goods, person or reputation,

shall have remedy by due course of law, and right and justice

administered without sale, denial or delay.

Kentucky Const. §54

The General Assembly shall have no power to limit

the amount to be recovered for injuries resulting in death, or

for injuries to person or property.

Pertinent sections of the Kentucky Revised Statutes,

KRS §§342.610 and 342.690 (Baldwin 1997) (in relevant

party) are provided in Appendix E at 39a.

STATEMENT OF THE CASE

Petitioner commenced a negiigent action for the

injuries he sustained while performing work for his employer,

Merrick Mechanical, Inc., on the premises of the Respondent,

The Budd Company. Petitioner was injured when he fell

sixteen feet from a set of unguarded and unmarked equipment

access doors at the Budd Company plant.

The Respondent is an automotive parts stamping

company. Sometime after Respondent began its operations at

the plant, it contracted with Merrick Mechanical to take care

of its HVAC equipment. As part of this contract, Merrick

Mechanical would change the filters on the heating and air

conditioning units on the roof. The Respondent permitted

Merrick Mechanical employees to store filters and filter

frames for the heating and air conditioning units on the

mezzanine area level.

Petitioner was hired by Merrick Mechanical to work

on a new construction project at the Respondent plant. On

one particular day however, a Merrick Mechanical employee

who was regularly assigned to perform the Merrick

Mechanical maintenance contract with Respondent, enlisted

Petitioner’s aid to help him change filters and filter frames.

In the process of obtaining the replacement filters and

filter frames from the mezzanine area level, Petitioner

unexpectedly and unnecessarily encountered a sixteen foot

drop. Petitioner fell and was rendered a quadriplegic.

Petitioner’s initial cause of action against Respondent was

based upon Respondent’s failure to provide Petitioner with an

adequate and safe work environment. Respondent argued that

it was immune from common law tort liability pursuant to an

application of §§ KRS 342.610 and 342.690.

Taken together, the two statutes provide that a

contractor who sub-contracts any part of a contract and his

carrier shall be liable for payment of compensation to the sub-

contractor unless the sub-contractor who is primarily liable

for the payment of such compensation has secured the

payment of compensation. A contractor is deemed to be one

who contracts with another to perform work of a kind that is

a regular or recurrent part of the work or the business. Ifa

business is deemed to be a contractor pursuant to the

definition contained in KRS 342.610, then they are afforded

immunity from common law liability as provided in KRS

342.690. Respondent argued and the: United States District

Court agreed that the Respondent is a contractor as it is

defined in KRS 3242.610 and is therefore entitled to

immunity from common law tort liability pursuant to KRS

3

342.690 (App. E at 40a). The District Court made this

decision despite the fact that Respondent did not make any

workers compensation payments to Petitioner nor would it

have ever been required to make those payments.

Petitioner filed a timely appeal with the Court of

Appeals for the Sixth Circuit. On December 9, 1999, the

Court of Appeals affirmed the District Court’s judgment.

Petitioner’s request for an en banc review was denied on

January 11, 2000.

ARGUMENT FOR GRANTING THE WRIT

THE PETITION SHOULD BE GRANTED

BECAUSE THE COURT’S OPINION

BELOW IGNORED THE

CONSTITUTIONAL IMPLICATIONS

INVOLVED IN THIS MATTER.

The Court should grant this Petition because the

combined effect of KRS §§ 342.610 and 342.690 limit

common law tort liability in violation of sections 14 and 54 of

the Kentucky Constitution and the due process clause of the

U.S. Constitution.

KRS §342.610 provides, in pertinent part,

(2) A Contractor who subcontracts all or any

part of a contract and his carrier shall be liable

for the payment of compensation to the

employees of the subcontractor unless the

subcontractor primarily liable for the payment

of such compensation has secured the payment

of compensation as provided for in this

4

chapter. . . . A person who contracts with

another . . . (b) to have work performed of a

kind which is a regular or recurrent part of the

work of the trade, business, occupation or

profession of such person, shall for the

purposes of this section be deemed a

contractor, and such other person a

subcontractor.

While the determination as to whether or not

Respondent is a contractor as defined in KRS § 342.610 and

thus entitled to immunity from common Jaw tort liability

provided contractors in KRS § 342.690 is a question of fact,

the District Court made the factual determination that

Respondent was a contractor against the clear weight of the

evidence. The Court of Appeals subsequently agreed with

this factual determination.

Respondent operates the Budd Plant in Shelbyville,

Kentucky. The Budd Company is an automotive parts

stamping company. In 1986, Respondent contracted with

Barton-Malow, Inc., to design and build the Budd Plant.

Subsequently Barton-Malow contracted with Albert Kahn &

Associates to provide the design and specifications for the

plant.

As part of the design of the plant, the electrical

substation components were to be placed on the mezzanine

level. The mezzanine level was to be accessed by a set of

stairways. The mezzanine was to have been a limited access

area only. To limit the access, the Respondent placed signs

stating “Authorized Personnel Only” and had a metal mesh

fence with a door which divided the electrical area from the

Stairway area. Sometime after Respondent began its

operations at the plant, it contracted with Merrick Mechanical

5

ete 8

to take care of its HVAC equipment. As part of this contract,

Merrick Mechanical would change the filters on the heating

and air conditioning units on the roof. The Budd Company

allowed Merrick Mechanical employees to store filters and

filter frames for the heating and air conditioning units on the

mezzanine area level.

On the morning of November 29, 1995, Petitioner, an

employee of Merrick Mechanical, reported to work and rather

than work at the construction site where he was employed to

work, he was enlisted by another Merrick Mechanical

employee to assist in changing air filters. Petitioner went

immediately to the roof, began changing the filters and

sometime midmorning, ran out of the filters.

Either the filters or the filter frames were stored

through a door on the mezzanine level. Petitioner observed

a set of double doors and assumed that they led him to the

mezzanine level. He opened the doors and fell sixteen feet to

the ground. The equipment access doors, as designed and

constructed, were accessible from the mezzanine level and

rather than opening to another room, opened out to a sixteen

foot drop to the plant below. The doors contained no

markings, no warning signs of any type and only locked from

the outside. Regardless of whether the lock on the outside

was actually used, the way the doors were designed and

constructed, they could always be opened from the inside.

Merrick Mechanical carried workers compensation

coverage and made workers compensation payments to and on

behalf of the Petitioner. Respondent did not make any

workers compensation payments to Petitioner or on his

behalf. In fact, there is no evidence that Respondent carried

worker’s compensation insurance for the benefit of Petitioner.

What is clear in this matter is that Respondent

permitted an extraordinarily dangerous condition to exist on

its premises and subjected its employees, as well as any other

individuals who were on the premises of the plant, to an

extreme risk of danger. Despite its wholly negligent acts,

Respondent has no common law tort liability. Petitioner was

left with no redress for the injuries he sustained. This is in

violation of the Kentucky Constitution §§14 and 54 and the

due process clause of the United States Constitution.

The Kentucky Constitution §14 provides that all

Courts shall be open and every person shall have remedy by

due course of law for the injuries done to him in lands, goods,

person or reputation. Further § 54 of the Kentucky

Constitution provides that the general assembly cannot limit

the amount to be recovered for injuries to person.

Petitioner’s right to receive redress for the injuries he

sustained due to the negligent acts of Respondent has been

wholly circumvented as a result of KRS §§342.610 and

342.690.

When statues have been passed by our legislature that

limit or eliminate an individuals right to redress for the

damages he has suffered, our courts have summarily held

them unconstitutional. Ludwig v. Johnson, 243 Ky. 5434, 49

S.W.2d 347 (1932); Happy v. Erwin, Ky, 330 S.W.2d 412

(1959). Despite these constitutional provisions and applicable

case law, the Court of Appeals affirmed the District Court’s

opinion.

The statutes in issue deprive an individual of a right or

remedy without a corresponding benefit. Respondent is not

required to make any payments to Petitioner however

Petitioner is prohibited from bringing a cause of action against

Respondent for the injuries he sustained due to Respondent's

negligence.

A vested right was taken away from Petitioner without

any corresponding benefit bestowed. Such a result is contrary

to the provisions of the Kentucky Constitution and the due

process clause of the U.S. Constitution.

CONCLUSION

For the aforementioned reasons, Petitioner respectfully

requests that the Court grant his Petition for Writ of

Certiorari.

Respectfuliy submitted,

/s/

MICHAEL R. HANCE

FRANKLIN & HANCE, P.S.C.

505 West Ormsby Avenue

Louisville, Kentucky 40203

(502) 637-6000

Attorney for Petitioner

APPENDIX A

RECOMMENDED FOR FULL- TEXT PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

[Filed December 9, 1999]

No. 98-5518, 5585, 5613

ANTHONY THOMPSON;

LIBERTY MUTUAL

INSURANCE COMPANY

Plaintiffs - Appellants/

Cross-Appellees

v.

THE BUDD COMPANY

Defendant Appellee/

Cross-Appellant

BARTON-MARLOW

COMPANY, INC.; ALBERT

KAHN ASSOCIATES, INC.

Defendants - Appellees

MERRICK MECHANICAL, INC.

Third Party

Defendant-Appellee.

Ne meee ee ee ee ee ee”

la

ee A Te

Court of Appeals Opinion - 12/9/99

Appeal from the United States District Court

for the Eastern District of Kentucky at Frankfort.

No. 96-00036 - Joseph M. Hood, District Judge.

Before: MERRITT arid CLAY, Circuit Judges; WISEMAN’,

District Judge.

OPINION

THOMAS A. WISEMAN, District Judge. Anthony

Thompson (“Thompson”), a Merrick Mechanical, Inc.

(“Merrick”) employee, sustained serious injuries while

working at The Budd Company’s (“Budd”) Shelbyville,

Kentucky manufacturing plant. Thompson sued Budd alleging

common law tort claims. The district court entered summary

judgment for Budd, finding that Budd qualified as a

“contractor” under Kentucky Workers’ Compensation law

and that Budd was immune from liability. Thompson appeals

the district court’s decision that Budd is a “contractor.”

Stemming from the same set of events, Budd brought

common law indemnification claims against Barton-Marlow

Company, Inc. (“Barton”) and Albert Kahn Associates, Inc.

(“Kahn”) and brought contractual indemnity claims against

Barton and Merrick. The district court noted that without

legal liability there can be no indemnification. Because Budd

was not liable to Thompson, the district court dismissed the

The Honorable Thomas A. Wiseman, United States

District Judge for the Middle District of Tennessee, sitting by

designation.

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Court of Appeals Opinion - 12/9/99

common law and contractual indemnification claims. Budd

appeals.

We find that Budd is a contractor under Kentucky’s

Workers’ Compensation system and AFFIRM the district

court’s summary judgment against Thompson. Because we

find that contractual indemnification, unlike common law

indemnification, does not require legal liability to a third

party, we REVERSE in part the district court’s entry of

summary judgment against Budd.

I. FACTUAL AND PROCEDURAL BACKGROUND

Anthony Thompson, was an employee of Merrick

Mechanical, Inc. Merrick had contracted with The Budd

Company to maintain Budd’s heating, ventilation, and air

conditioning (“HVAC”) system. In November 1995,

Thompson was working at Budd’s automobile part stamping

plant. The plant contained a mezzanine level electrical

substation. This substation was a restricted area; it remained

locked to ensure limited access. Within this area was a set of

double doors which opened to the plant floor - sixteen feet

below the mezzanine level.

Chuck Cummings (“Cummings”), another Merrick

employee, was generally responsible for maintaining Budd’s

HVAC system. The day prior to Thompson’s injury,

Cummings had requested and received Thompson’s aid in

changing filters and filter frames. Thompson also helped

Cummings the next morning. When they ran out of filters,

Cummings and Thompson went to obtain more. The filters

were stored in the mezzanine level electrical substation.

Cummings unlocked the substation entrance giving Thompson

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access to the substation. Thompson was unfamiliar with the

area and the, plant design. While searching for the stored

filters, Thompson opened the double doors and fell sixteen

feet to the plant floor. Injuries resulting from the fall left him

a paraplegic. Since then Thompson has received workers

compensation payments through Merrick.

Anthony Thompson originally filed a negligence claim

in the Shelby Circuit Court of Kentucky on 19 March 1996.

Thompson sued Budd for failing to provide a safe working

environment. On the basis of diversity jurisdiction, Budd

removed the case to the United States District Court for the

Eastern District of Kentucky, Frankfort Division, on 16 April

1996. Thereafter, Thompson amended the complaint to

include as defendants Barton, who constructed the facility,

and Kahn, who provided engineering and consulting services

to Barton. Thompson alleged that Barton and Kahn failed to

design and construct a safe working environment that

complied with all applicable laws and regulations. Budd filed

cross claims against Barton, Kahn, and Merrick.

In March of 1997, Budd filed a Motion for Summary

Judgment against Thompson. After oral argument on this

motion in July, 1997, the district court granted Budd’s motion

for summary judgment. Thompson filed a notice of appeal to

this court on 18 August 1997. Finding that the order entering

judgment against Thompson was not final because of Budd’s

pending indemnity claims, this Court dismissed the appeal for

lack of jurisdiction.

On remand the district court entered a final order

dismissing Budd’s claims for indemnity against Barton, Kahn,

and Merrick. Thereafter, Thompson, Budd, and intervening

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plaintiff Liberty Mutual Insurance Company filed notices of

appeal to this Court.

On 18 July 1997, Thompson entered into a settlement

agreement with Barton and Kahn which resolved Thompson’s

claims against these two defendants. In accordance with the

settlement agreement, Thompson agreed to defend Barton and

Kahn against Budd’s remaining claims.

II. DISCUSSION

We review de novo the district court’s grant or denial

of summary judgment. See DePiero v. City of Macedonia,

180 F.3d 770, 776 (6th Cir. 1999). We, thus, consider

whether there are any issues of material fact and, if not,

whether Budd is entitled to judgment as a matter of law. See

Fed. R. Civ. P. 56(c); DePiero, 180 F.3d at 776.

Additionally, in reviewing summary judgment decisions we

view the factual evidence and draw all reasonable inferences

in favor of the nonmoving party. /d. (citing Matsushita Elec.

Indus. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S. Ct.

1348, 89 L. Ed. 2d 538 (1986)). The district court ultimately

dismissed Budd’s indemnity claims for failure to state a claim.

Since the court considered affidavits and matters outside the

pleadings, the dismissal is treated as a summary judgment.

See Fed. R. Civ. P. 12(c).

The lynchpin of the district court’s resolution of this

case is the holding that Kentucky Workers’ Compensation law

immunizes Budd from liability for Thompson’s injuries. We,

therefore, first address Budd’s argument that Kentucky’s

Workers’ Compensation system shields it from Thompson’s

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Court of Appeals Opinion - 12/9/99

common law tort claims. Only after addressing this issue can

we address Budd’s various claims for summary judgment.

A. Kentucky Workers’ Compensation

and Immunity from Common Law

Tort

Analysis of Budd’s motion for summary judgment

depends on the meaning of two provisions of the Kentucky

Workers’ Compensation law. See Ky. Rev. Stat. Ann.

§§ 342.610(2)(b) and 342.690(1) (Banks-Baldwin 1997).

Section 342.610(2)(b) defines “contractor” as a” person who

contracts with another . . . [tlo have work performed of a

kind which is a regular or recurrent part of the work of the

trade, business, occupation, or profession of such person.”

Section 342.690(1) provides in relevant part:

If an employer secures payment of

compensation as required by this chapter, the

liability of such employer under this chapter

shall be exclusive and in place of all other

liability of such employer to the employee. . .

and anyone otherwise entitled to recover

damages from such employer at law or in

admiralty on account of such injury or death.

For purposes of this section, the term

“employer” shall include a “contractor”

covered by subsection (2) of KRS 342.610,

whether or not the subcontractor has in fact,

secured the payment of compensation.

Kentucky law, thus, makes clear that if Budd is a contractor

then it has no liability in tort to Thompson, an employee who

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Court of Appeals Opinion - 12/9/99

has received compensation through Budd’s subcontractor. See

United States Fidelity & Guar. Co. v. Technical Minerals,

Inc., 934 S.W.2d 266, 267 (Ky. 1996); Daniels v. Louisville

Gas and Elec. Co., 933 S.W.2d 821,823 (Ky. Ct. App.

1996). Under this regime, Budd’s claim raises one basic

issue: whether Budd is a contractor.’ Budd qualifies as a

contractor if it contracted to have Merrick “perform[] work of

a kind that is a regular or recurrent part of the work of the

trade, business, occupation or profession of such person.”

See Ky. Rev. Stat. Ann. § 342.610(2)(b). No one disputes

that HVAC maintenance was regular or recurring; the

disagreement centers around whether such maintenance

qualifies as “part” of Budd’s “work of the trade, business,

occupation or profession.” See id.

Although Kentucky cases have not mapped precisely

the contours of section 342.610, they do provide useful

guidance to the meaning of “regular or recurrent part of the

work of the trade, business, occupation or profession.”

Kentucky case law is clear that activities beyond one’s

primary business objective may qualify under section

342.610. For example, “rough carpentry” is a regular or

recurrent part of the work of the building construction

business, even if the contractor never performed rough

Carpentry with its own employees. See Fireman’s Fund Ins.

Co. v. Sherman & Fletcher, 705 S.W.2d 459,462 (Ky. 1986).

' Thompson attempts to raise a second issue: whether

Budd has secured payment of compensation as the workers’

compensation system requires. Budd has clearly met this

requirement; the Department of Workers’ Claims of Kentucky has

certified that Budd has complied with the Workers’ Compensation

Act as a self-insurer.

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Court of Appeals Opinion - 12/9/99

Additionally, emissions testing required by the EPA

constitutes a regular or recurring part of a coal fired electric

plant’s business. See Daniels v. Louisville Gas and Elec.

Co., 933 S.W.2d 821, 824 (Ky. Ct. App. 1996). The Daniels

court implied that the mandatory nature of the testing sufficed

to establish the necessary connection to the company’s

business. Jd.

The Sixth Circuit also has had several opportunities to

consider the relationship between the alleged contractor’s

business and the employee’s actions. See, e.g., Granus v.

North Am. Philips Lighting Corp., 821 F.2d 1253 (6th Cir.

1987). The plaintiff in Granus was injured after falling at the

defendant’s manufacturing plant. See id. at 1254. Plaintiff

was engaged in a project “to refurbish and upgrade a glass-

melting installation, or ‘tank’ at the plant.” /d. at 1254-55.

Specifically, the plaintiff operated the saw which cut the

firebricks that were used to line the furnace. See id. at 1255.

The court held that “[t]he evidence established that furnaces

at glass factories are rebricked periodically as a matter of

maintenance routine.” /d. The Court concluded, “The

relining of furnaces, required periodically as a matter of

regular maintenance, is . . . a ‘recurrent’ part of the

manufacturing business in which defendant . . . is engaged.”

Id. at 1258.

Given this case law, “part of . . . the business of such

person” incorporates more than the primary task of Budd’s

company. Its business of “stamping automotive parts,”

therefore, may include more than the actual assembly line

-- production of auto parts. As Granus and Daniels indicate,

respectively, section 342.610 encompasses _ regular

maintenance of manufacturer’s physical plant as well as

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Court of Appeals Opinion - 12/9/99

activities required to conform with applicable governmental

regulations. It is undisputed that changing the air

conditioning filters was a regular element of Budd’s plant

maintenance. Although, perhaps, more remotely related to

the stamping of auto parts than the lining of furnaces is to

glass production, Budd’s HVAC system plays an important

role in its manufacturing process. Budd points to the winter

1995 temporary shutdown of one of its production lines due

to an improperly functioning HVAC system. Thompson

neither disputes nor offers an alternative explanation for this

shutdown; the general proffer of statements that the HVAC

system primarily serves climate control for the comfort of

Budd employees simply fails to raise a triable issue of fact.

Budd’s claim that the Kentucky Building Code required a

properly functioning HVAC system also supports the

conclusion that Thompson’s activities for Budd on the day of

his injuries fall within section 342.610. See Daniels, 933

S.W.2d 821. Thus, the district court properly concluded that,

for purposes of Kentucky Workers’ Compensation, Budd is a

contractor and cannot be held liable in tort for Thompson’s

injuries.

B. Workers’ Compensation and the

Kentucky Constitution

Thompson next argues that sections 342.610 and

342.690 combine to limit common law tort liability in

violation of sections 14 and 54 of the Kentucky Constitution.

Section 14 of the Kentucky Constitution provides, “All courts

shall be open, and every person for an injury done him in his

lands, goods, person or reputation, shall have remedy by due

course of law, and right and justice administered without sale,

denial or delay.” Section 54 provides, “The General

9a

Court of Appeals Opinion - 12/9/99

Assembly shall have no power to limit the amount to be

recovered for injuries resulting in death, or for injuries to

person or property.”

In prior cases, Kentucky courts have addressed the

constitutionality of its workers’ compensation system and

found that it meets constitutional muster. In so holding,

Kentucky courts have concluded that the General Assembly

did not limit the available recovery due an injury; rather, it

provided a system by which persons could consent to limit the

amount of recovery in exchange for greater certainty of

recovery. Any limitations were agreed to and not imposed.

See Edwards v. Louisville Ladder, 957 §.W.2d 290, 295 (Ky.

Ct. App. 1997) (citing Greene v. Caldwell, 186 S.W. 648,

652 (Ky. 1916)). By initially proceeding through the

workers’ compensation system, Thompson waived his

constitutional rights protected under sections 14 and 54 of the

Kentucky Constitution. See Edwards, 957 S.W.2d at 295

(citing M.J. Daly Co. v. Varney, Ky., 695 S.W.2d 400, 403

(Ky. 1985), overruled on other grounds by Technical

Minerals, Inc., 934 S.W.2d at 269)). Thompson’s

constitutional claims are without merit.

c. Indemnity

In addition to moving for summary judgment against

Thompson, Budd also moved for summary judgment as to its

indemnity claims against Merrick, Barton, and Kahn. The

district court denied Budd’s motion for summary judgment on

the basis that the claims were due to be dismissed. The court

reasoned that without liability there can be no indemnity --

whether based in the common law or in contract. Thus, the

district court dismissed all claims. In the alternative, the

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Court of Appeals Opinion - 12/9/99

court denied the summary judgment motion because of

unresolved issues of material fact. Budd asserts claims for

contractual indemnity against Merrick and Barton and claims

for common law indemnity against Barton and Kahn.

Although the district court treated the common law and

contractual indemnity claims alike, Kentucky distinguishes

them. Following Kentucky law, we treat these claims

separately. We will first address Budd’s common law claims

for indemnity and then Budd’s contractual claims for

indemnity.

1. The Common Law Indemnity Claims

Against Barton and Kahn

In 1987 the Supreme Court of Kentucky addressed the

~ common law right to indemnity in Crime Fighters Patrol v.

Hiles, 740 S.W.2d 936 (Ky. 1987). In Crime Fighters, the

underlying claim involved an assault on a customer, Hiles, at

a White Castle restaurant. Hiles claimed that White Castle

knew of the assailant’s violent propensities, yet failed to

protect him. The restaurant filed a third party suit against its

security firm, Crime Fighters Patrol, alleging that they

breached their contract by failing to keep order. The court

noted that the common law provided White Castle and Crime

Fighters Patrol complete indemnity from the assailant if they

could prove that he was more to blame (at greater fault) than

they for Hiles’ injuries. See Crime Fighters, 740 S.W.2d at

939. The Crime Fighters court brought the common law right

of indemnity into fuller relief by looking to the equitable

principle of restitution:

Where a person has become liable with another

for harm caused to a third person because of

lla

Court of Appeals Opinion - 12/9/99

his negligent failure to make safe a dangerous

condition of land or chattels, which was

created by the misconduct of the other, . . . he

is entitled to restitution from the other for

expenditures properly made in the discharge of

such liability.

Crime Fighters, 740 S.W.2d at 940 (quoting Restatement of

Restitution § 95 (1937)).

In essence, we have a very similar situation before us.

Budd alleges that Barton and Kahn bear greater responsibility

for the dangerous condition - if any - at Budd’s Shelbyville

plant. The Crime Fighters rule seems to apply to the case at

hand, except for the first clause - “Where a person has

become liable.” In addressing Kentucky’s common law

indemnity claim, courts have repeatedly recognized liability

as a prerequisite. See, e.g., Clark v. Hauck Mfg. Co., 910

S.W.2d 247, 253 (Ky. 1995) (“Indemnity is not an issue until

fault has been determined. . .. There can be no indemnity

without liability.”); Poole Truck Line, Inc. v. Commonwealth,

892 S.W.2d 611,614 (Ky. Ct. App. 1995) (“Both indemnity

and contribution depend upon liability by one or both parties

to the original claimant who suffered the original loss.

Without such liability, there is no independent right to

indemnity or contribution.”). In general, then, a party cannot

recover under a common law indemnity claim if it has not

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Court of Appeals Opinion - 12/9/99

been held liable to a third party.” Budd is not liable to

Thompson; thus, Budd’s common law indemnity claims fail.

To the extent that Budd’s common law indemnity

claims also involve claims for attorney fees, they fail as well.

Generally, each party is responsible for its own attorney fees

and expenses. See Nucor Corp. v. General Elec. Co., 812

S.W.2d 136, 147 (Ky. 1991). The Nucor court noted,

however, that exceptions to this general role apply where

equity indicates that attorney fees should be indemnified. /d. ;

see also, Chittum v. Abell, 485 S.W.2d 231, 237 (Ky. Ct.

2 Some courts have interpreted Kentucky common law to

allow indemnity claims despite the failure to show legal liability.

In Long v. Illinois Cent. Gulf R. R. Co., 660 F. Sup. 469 (W.D.

Ky. 1986), the district court concluded that Kentucky law does not

require an actual judgment to be rendered before a claim of

indemnity can succeed. /d. at 472. Long addressed a claim of

indemnity by a party who had settled with the injured worker.

Although an actual judgment may not be required, the court did

require “one seeking indemnity to show that his liability was

certain, and that there was no impediment or defense to the claim

against him.” /d. at 472. Budd is certainly not asserting that its

liability to Thompson is certain; thus, even this possible exception

to the rule requiring liability to have attached does not apply. We

will not extend this exception beyond the context in which it was

announced: a case where a party has settled a claim and seeks

indemnification for the cost of settlement. The Long court did note

that if a claim for liability is brought against a party --e.g., Budd

- such defendant may maintain an indemnity action in conjunction

with the principal suit at least until the resolution of the underlying

liability claim. If the defendant is found not liable, then the

common law indemnity claims must be dismissed as well. See

Long, 660 F. Supp. at 473-74.

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App. 1972). The Chittum court specifically stated that

attorney fees may “be allowed in the judgment of indemnity

for the damages.” /d., 485 S.W.2d at 237. Chittum indicates

that liability for the underlying claim is also a prerequisite for

a common law indemnity claim for attorney fees. Thus, the

district court properly denied Budd’s motion for summary

judgment and dismissed Budd’s common law indemnity

claims (including attorney fees) for failure to state a claim.

2. The Contractual Indemnity Claims

Budd’s motion for summary judgment also alleged

contractual bases for its indemnity claims. Kentucky law

provides that “[t]he nature of an indemnitor’s liability under

an indemnity contract shall be determined by the provisions

of the indemnity agreement itself.” United States Fidelity, &

Guar. Co. v. Napier Elec. & Constr. Co., Inc., 571 S.W.2d

644, 646 (Ky. Ct. App. 1978). Under Napier, parties may

contractually provide for indemnification for - among other

things - the costs incident to a potential legal liability as well

as for the legal liability itself.’ We now decide whether Budd

The cases which the district court cited as requiring

liability for both contractual and common law indemnity relate only

to common law indemnification claims. See Long, 660 F. Supp. at

471 (stating that Kentucky recognizes common law indemnity);

Harris Corp. v. Comair, Inc., 510 F. Supp. 1168, 1174 (E.D. Ky.

1981) (stating that plaintiff has no right to indemnity under

common law principles); see also Crime Fighters Patrol, 740

S.W.2d at 938 (noting that both contractual and common law

indemnity arise in this case, but that appellants did not contest the

contractual indemnity in this case). The court also mentions Clark

v. Hauck Mfg. Co., 910 S.W.2d 247, 253 (Ky. 1995). The opinion

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Court of Appeals Opinion - 12/9/99

contracted with Merrick and Barton for indemnification for its

legal expenses in defending the suit brought by Thompson

irrespective of whether liability has been imposed on Budd.

a. Budd’s claims against Merrick

Budd and Merrick argue that three different documents

represent their contractual agreement: (1) Purchase Order 94-

06004 (“First Purchase Order”); (2) Purchase Order 94-06539

(“Second Purchase Order”); and (3) Budd’s Quotation

Request Form (“Bid Request”). In terms of their actual

indemnity language, which contract controls is immaterial

because each indemnity provision has the same legal effect as

to the events in question. Paragraph fourteen on the reverse

side of both the First Purchase Order and the Second Purchase

Order contains the following language:

Seller [Merrick] agrees to indemnify, defend

and hold harmless the Buyer [Budd] . . . and

[defend]* from and against any and all

demands, actions, causes of actions, suits,

costs, fees, penalties, damages (consequential

and otherwise), attorneys’ fees and all other

in Clark is unclear whether contractual or common law indemnity

claims are involved.

* Budd’s brief quotes the contract as stating “and demand

from and against.” Although the copies of the agreement are not

very clear, the agreement actually seems to provide “and demend

[sic] from and against.” It appears that an “m” was mistakenly

used in the place of an “f.” Additionally, “defend” simply makes

more sense in this context than does “demand.”

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Court of Appeals Opinion - 12/9/99

liabilities and obligations whatsoever

(“Losses”) arising out of or relating to:

(a) personal injuries, damages or death to any

natural person . . . which relates to, in whole

or part, (i) any manufacturing, design, or other

defect, failure to warn, improper handling, and

improper operating installation or other act or

omission of Seller with respect to any of the

Products or (ii) the performance by Seller of

any services... .

The language in this contract is very broad; it requires

indemnification not only for penalties and damages but also

for suits, costs, attorney fees, and all other liabilities and

obligations. As the contract provides, only where the costs or

attorney fees are “clearly shown to have resulted solely and

directly from [Budd’s] gross negligence or willful

misconduct” can Merrick avoid liability under either one of

these contractual provisions.

The Bid Requést also contains indemnity language; its

language, however, differs from the indemnity provision just

quoted. Specifically, paragraph seventeen on the reverse side

of the Bid Request provides as follows:

Seller agrees to indemnify and protect Buyer

against all liabilities, claims or demands for

injuries or damages to any person or property

arising out of any labor performed on Buyer’s

premises by Seller under this contract or out of

any use by Seller or Buyer’s tools or

equipment, including any legal fees or cost

incurred by Buyer in connection therewith.

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Court of Appeals Opinion - 12/9/99

This provision, like the purchase order indemnity provisions,

is very broad; it provides for indemnity not only for legal

liabilities but also for costs associated with mere claims or

demands as well as legal fees. Although not as clear as the

language in the purchase orders, the Bid Request indemnity

provision would also require Merrick to indemnify Budd for

Budd’s negligence. See Fosson v. Ashland Oil & Ref Co.,

309 S.W.2d 176 (Ky. 1958). In Fosson, the court considered

a contract with indemnity language similar to the Bid Request:

The Contractor shall indemnify the Owner

against all claims, demands, liens, taxes, loss

or damages of any character suffered by the

Owner and shall save the Owner harmless

from all liability growing out of or incurred in

the prosecution of said work or arising from

any operations, acts, or omissions of

Contractor.

Id. at 177. The court construed such language to include

indemnity for the owner’s negligence. See /d. at 178. The

court expressly refused to require a specific statement to the

effect that indemnity “include[s}] the owner’s own

negligence.” /d. The court noted, “we can hardly envision

a more inclusive indemnity provision.” /d. The Fosson court

also relied on the fact that the contractor was required to carry

insurance satisfactory to the owner. /d. The Bid Request,

immediately after the indemnity provision, allows Budd to

require Merrick to prove the level of its insurance coverage --

indicating that Budd had a vested interest in Merrick’s

insurance. Fosson compels us to find that the Bid Request

contract includes indemnification for Budd’s own negligence.

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Court of Appeals Opinion - 12/9/99

Thus, as to their meaning, which indemnity provision controls

is immaterial.

Merrick next seeks to raise a genuine issue of material

fact by challenging the legal validity of the indemnity

provisions in particular contracts. First, Merrick argues that

the Second Purchase Order is unsigned, thus making its

indemnity provision unenforceable if the Second Purchase

Order controls.’ For support in this claim, Merrick looks to

> A review of the two purchase orders reveals very few

differences. There are, however, some differences - even between

the two copies of the second purchase order contained in the joint

appendix. The parties, however, point to no substantive

differences. Nonetheless, without further fact finding it is unclear

whether the contracts are identical. If there are no substantive

differences, then there is only one contract memorialized on two

purchase orders. Merrick signed one recording of the contract and

should not be able to point to a second unsigned copy lo negate its

prior acceptance. ,

Court of Appeals Opinion - 12/9/99

Kentucky Revised Statutes 371.010(4)° and 342.690(1).’

Under these provisions, an inderanity provision generally

must be in writing and signed by the indemnitor. The Court

of Appeals of Kentucky, however, has noted that “if one

promises to pay the debt of another in order to further some

purpose of his own, . . . such promise is not within” section

371.010(4). Barnett v. Stewart Lumber Co., 547 S.W.2d

788, 790 (Ky. Ct. App. 1977). In this case, Merrick agreed

° Section 371.010(4) provides “No action shall be brought

to charge any person . . . [u]pon any promise to answer for the

debt, default, or misdoing of another . . . unless the promise,

contract, agreement, representation, assurance, or ratification, or

some memorandum or note thereof, be in writing and signed by the

party to be charged therewith, or by his authorized agent. It shall

not be necessary to express the consideration in the writing, but it

may be proved when necessary or disproved by parol or other

evidence.” Ky. Rev. Stat. Ann. § 371.010(4) (Banks-Baldwin

1997).

Section 342.690(1) provides in relevant part, “If an

employer secures payment of compensation as required by this

chapter, the liability of such employer under this chapter shall be

exclusive and in place of all other liability of such employer to the

employee The liability of an employer to another person who may

be liable for or who has paid damages on account of injury or death

of an employee of such employer arising out of and in the course

of employment and caused by a breach of any duty or obligation

owed by such employer to such other shall be limited to the amount

of compensation and other benefits for which such employer is

liable under this chapter on account of such injury or death, unless

such other and the employer by written contract have agreed to

share liability in a different manner.” Ky. Rev. Stat. Ann.

§ 342.690(1) (Banks-Baldwin 1997).

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Court of Appeals Opinion - 12/9/99

to indemnify Budd as part of its consideration for being

awarded the maintenance service contract. Because Merrick

agreed to indemnify Budd in order to advance its own

purpose, Merrick cannot seek cover under Kentucky’s statute

of frauds. Similarly, section 342.690(1) provides no relief for

Merrick. This statute merely requires that the contract be

written. In this case, the Second Purchase Order is written

and specifically provides for acceptance by performance or

signature. Moreover, Merrick admits that it has a history of

including indemnity provisions in its contracts with Budd.

Both the explicit language of the statute and the equities of the

Situation prevent the conclusion that section 342.690(1) would

invalidate the Second Purchase Order’s indemnity provision.

Finally, Merrick seeks to raise a genuine issue of

material fact as to which contract controls by arguing that the

First Purchase* Order improperly incorporates its indemnity

provision. Merrick’s argument does not raise a genuine issue

of material fact. Merrick claims that Kentucky law requires

language incorporating provisions from the back of a contract

“be conspicuous by being in larger or other contrasting type

or color.” Hertz Commercial Leasing Corp. v. Joseph, 641

S.W.2d 753, 756 (Ky. Ct. App. 1982). Merrick, however,

gives too much weight to Hertz; subsequent cases apply a

lower standard. In Bartlett Aviation, Inc. v. Dry Lake Coal

Co., Inc., 682 S.W.2d 796 (Ky. Ct. App. 1985), the court of

appeals noted that Hertz relied on case law addressing a

Merrick makes no claims as to the incorporating

language of the Bid Request or the Second Purchase Order. The

equities of the situation, however, would demand the same result

as to each alleged contract.

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Court of Appeals Opinion - 12/9/99

provision seeking to limit implied warranties - a provision

which the law requires to be “conspicuous,” that is, to be in

larger or contrasting type. See Bartlett, 682 S.W.2d at 798.

The Bartlett court addressed an arbitration provision and

concluded that when the incorporating language is above a

contractor’s signature, “we know of no case law or statutes

which require that the incorporation language for the

arbitration provision be stated in bold type or in any unusual

form.” /d. In another arbitration clause case, Kentucky

likewise required that the incorporating language merely be

plain and clear. See Home Lumber Co. v. Appalachian Reg 'l

Hosps., Inc., 722 S.W.2d 912, 914 (Ky. Ct. App. 1987).

Although the issue in this case is an indemnity

provision as opposed to an arbitration provision, the

distinction is immaterial. The first purchase order contains

the following incorporating provision:

THE SELLER IN ACCEPTING THIS

ORDER AGREES TO ALL TERMS AND

CONDITIONS SET FORTH ON THE FACE

AND REVERSE HEREOF ALL OF WHICH

ARE MADE PART OF THIS ORDER{[.]

This language is undoubtably clear. The fact that the this

language is in a smaller font - albeit in all capitals - than

much of the rest of the contract is immaterial. In every

alleged contract between Merrick and Budd - including the

bid request - the indemnity provision is on the reverse side of

the purchase order. Merrick has acknowledged that

indemnity provisions of some sort were included in past

contracts. Thus, Merrick cannot now claim that it was

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Court of Appeals Opinion - 12/9/99

unaware that the provisions on the reverse side of the

purchase order were part of the contract.

Despite the fact that Merrick has failed to establish a

material issue of fact as to which contract covers Thompson’s

injuries, summary judgment must be denied. As the district

court noted, genuine issues of material fact remain as to

whether Budd was grossly negligent or engaged in willful

misconduct which led to Thompson’s injuries. This issue

must be remanded for further. factual determinations.

b. Contractual Indemnity Claims against

Barton

Article 25 of the contract between Budd and Barton

- contains the following indemnification clause:

With regard to the work to be performed

hereunder by the contractor on the owner’s

premises, contractor agrees to and will

indemnify and hold harmless owner from and

against any claims, losses, or damages due to

the death of or injury to the person or the

property of any person, or persons arising out

of, or in connection- with, contractor’s

performance hereunder, except as to any such

loss or damage which is caused by the sole

negligence, or wanton and willful misconduct

of owner or owner’s agents, servants or

employees.

The first issue is whether such a clause includes attorney fees.

In United States v. Hardy, 916 F. Supp. 1385 (W.D. Ky.

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1996), the United States District Court for the Western

District of Kentucky addressed a contract that provided

indemnity for “any and all loss, damage, injury, liability, and

any Claim or claims therefor, including claims for injury or

death to any and ali persons or property.” /d. at 1390. The

court awarded attorney fees based on this contract, but two

qualifications must be noted. First, liability had already

attached. See Hardy, 916 F. Supp. at 1388 (noting that

indemnitee had already paid the United States for CERCLA

liability). Second, the court noted that award of attorney fees

was not automatic but based on equitable distinctions. See id.

at 1391 n.5.

Applying Hardy, the language “against any claims,

losses, or damages” encompasses more than legal liability

(i.e., damages). It is not dispositive that Budd, unlike the

indemnitee in Hardy, has not been held liable in the

underlying claim. See Napier, 571 S.W.2d 644. In Napier,

the court of appeals found indemnity proper although there

had been no judicial determination of liability where the

contract provided indemnification for “all ‘liabilities, losses

and expenses’ incurred by the appellant, including all amounts

paid by appellant ‘in good faith under the belief that: (1)

Surety was or might be liable therefore; (2) Such payments

were necessary or advisable to protect any of Surety’s right or

to avoid or lessen Surety’s liability or alleged liability .[‘]”

Napier, 571 S.W.2d at 645. Considering Napier In

conjunction with Hardy leads to the conclusion that the

contract between Barton and Budd allows - but does not

require — a court to award attorney fees despite the absence of

liability unless Budd was defending claims that arise out of its

“sole negligence, or wanton and willful misconduct.”

23a

atin

aie Sa ie SEE tek alte ett ioc AIS Re tre aT

Court of Appeals Opinion - 12/9/99

Because Kentucky applies comparative negligence

principles, Barton argues that by definition Thompson’s claim

was for Budd’s sole negligence. Kentucky case law has not

specifically interpreted the meaning of “loss or damage caused

by the sole negligence, or wanton and willful misconduct” .as

an exception to an indemnification contract. Michigan courts,

however, have construed a statute which bars indemnification

for “damages arising out of bodily injury to persons . . .

caused by or resulting from the sole negligence of the

promisee or indemnitee.” Burdo v. Ford Motor Co., 828

F.2d 380, 382 (6th Cir. 1987). In construing that statute,

Michigan courts found that such language bars indemnity only

where “‘the “bodily injury” as a whole, results from the sole

negligence of the indemnitee.’” /d at 384 (citing Fischbach-

Natkin v. Power Process Piping, 403 N.W.2d 569, 574

(Mich. Ct. App. 1987)).. Thus, even where comparative

negligence regimes exist, an indemnitee may recover under

the indemnity agreement as long as it was not 100%

responsible for the plaintiff's injuries. See generally Burdo,

828 F.2d 380; Paquin v. Harnischfeger Corp., 317 N.W.2d

279 (Mich. Ct. App. 1982). Although not binding, this

interpretation is persuasive and imminently reasonable under

Kentucky law.

Budd’s attorney fee indemnity claims are remanded to

the district court. The district court in its discretion may

award Budd attorney fees based on its contract with Barton,

unless the facts indicate that all of the injuries suffered by

Thompson arose because of Budd’s sole negligence, or

wanton and willful misconduct.

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Court of Appeals Opinion - 12/9/99

Ill. CONCLUSION

For the reasons discussed above, the district court’s

grant of summary judgment in favor of Budd against

Thompson is AFFIRMED; the award of summary judgment

in favor of Barton and Kahn regarding Budd’s common law

indemnity claims is AFFIRMED; and the award of summary

judgment in favor of Barton and Merrick regarding Budd’s

contractual indemnity claims is REVERSED as to Budd’s

claims for attorney fees. This case is remanded for

proceedings consistent herewith.

25a

ik Sait iat ania”

APPENDIX B

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF KENTUCKY

FRANKFORT

[Filed July 30, 1997]

No. 96-36

ANTHONY THOMPSON,

Plaintiff.

¥,

THE BUDD COMPANY, et al.,

Defendants.

Nee Ne Ne Ne ee es ee Se

MEMORANDUM OPINION & ORDER

Anthony Thompson was an employee of Merrick

Mechanical, Inc. ( “Merrick”) which had a contract with The

Budd Company (“Budd”) to maintain Budd’s heating,

ventilation and air conditioning system. While performing

such work for his employer, Thompson fell sixteen feet from

the mezzanine level of Budd’s plant, sustaining severe injuries

which have rendered him a paraplegic.

Thompson sued Budd alleging that it failed to provide

him a safe working environment. The matter is before the

26a

Court on Budd’s motion for summary judgment. After

considering the oral and written arguments of the parties, the

Court considers Budd’s motion to be well-made in light of

U.S. Fidelity & Guar. Co. v. Technical Minerals Inc., 934

S.W. 2d 266, 269 (Ky. 1996), Fireman’s Fund Ins. Co. v.

Sherman & Fletcher, 705 S.W. 2d 459, 461-462 (Ky. 1986);

Granus v. North American Phillips Lighting Corp., 821 F. 2d

1253, 1257-1258 (6 Cir. 1987); and Foothills Rural

Telephone Cooperative Corp., Inc. v. United, Inc., Pikeville

Civil Action No. 95-382 (E.D. Ky. March 13, 1997) (Hood,

J.).

Accordingly,

IT IS ORDERED that Budd’s motion for summary

judgment be and the hereby is, GRANTED.

IT IS FURTHER ORDERED that Thompson’s

complaint be, and the same hereby is, DISMISSED WITH

PREJUDICE.

This the 30" day of July, 1997.

Joseph M. Hood, Judge

27a

APPENDIX C

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF KENTUCKY

FRANKFORT

ee es Ee ee

[Filed April 6, 1998]

No. 96-36

ANTHONY THOMPSON,

Bi AL...

Plaintiffs,

Ve

THE BUDD COMPANY, Bi AL.

Defendants.

’

Nee Ne Na Ne Ne er a

JUDGMENT

In conformity with the Memorandum Opinion and

Order of even date,

IT IS ORDERED that this matter be, and the same

hereby is, DISMISSED and STRICKEN from the Court’s

active docket, as all issues have been resolved in this matter.

This is a final and appealable Order and there is no just cause

for delay.

ee ee eee

This the 6th day of April, 1998.

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District Court Judgment; Mem. Opinion & Order - 4/6/98

/s/

JOSEPH HOOD, JUDGE

Date of Entry and Service:

NOTICE IS HEREBY GIVEN OF THE

ENTRY OF THE ORDER OF JUDGMENT

ON 4-6-89, LESLIE G. WHITMER, CLERK

BY:/s/

C. Dearborn, D.C.

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District Court Judgment; Mem. Opinion & Order - 4/6/98

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF KENTUCKY

FRANKFORT

[Filed April 6, 1998]

No. 96-36

ANTHONY THOMPSON,

= Ai...

Plaintiffs,

Vi

THE BUDD COMPANY, ET AL.,

Defendants.

Nee? Se Se Ne Ne Ne Ne

MEMORANDUM OPINION AND ORDER

The defendant, The Budd Company (“Budd”), has

moved the Court for summary judgment regarding its claim

for contractual and common law indemnity against the

defendants, Barton-Malow, Inc. (“Barton-Malow”) and

Albert. Kahn Associates, Inc. (“AKA” ) and the third-party

defendant, Merrick Mechanical, Inc (“Merrick”). The

defendants, third-party defendant, and intervening plaintiff,

Liberty Mutual Insurance Company (“Liberty Mutual”) , have

responded. This matter is ripe for consideration.

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District Court Judgment; Mem. Opinion & Order - 4/6/98

FACTUAL BACKGROUND

The plaintiff, Anthony Thompson (“Thompson”), was

an employee of the third-party defendant, Merrick, who had

a maintenance contract with the defendant, Budd, to maintain

Budd’s heating, ventilation, and air conditioning (“HVAC”)

system. Thompson was injured when he fell sixteen (16) feet

from Budd’s mezzanine level substation, when attempting to

retrieve some air filters.

Generally, Chuck Cummings (“Cummings”), another

Merrick employee, was assigned the duty of maintaining

Budd’s HVAC system; however, just prior to the accident,

Cummings had requested that Merrick pravide him additional

help. Acknowledging Cummings’ request, Merrick assigned

Thompson to Budd's facility as well.

On the day of the accident, Thompson was helping

Cummings replace filters and filter frames as he had done the

day before. This was his second day working with Cummings

at Budd’s plant; he had only worked the previous day under

Cummings’ direct supervision, replacing filters and filter

frames.

On that day, Cummings and Thompson ran out of

filters. Thus, in order to continue with their job, they had to

obtain more filters. The filters were kept in the electrical

substation on the mezzanine floor.

This electrical substation was a restricted area. It was

kept locked so as to ensure limited access. Cummings, who

was familiar with the substation, unlocked the door and

allowed Thompson into the area. Within this area was a set

3la

Se

District Court Judgment; Mem. Opinion & Order - 4/6/98

of double doors, which opened to the plant floor sixteen (16)

feet below. Thompson, being unfamiliar with the area and the

plant design, opened those doors while searching for the

filters and fell to the floor below.

Thompson was severely injured by the fall; he is now

a paraplegic. This lawsuit, in which Thompson seeks

damages for his injuries, followed.

. Thompson sued Budd, alleging that Budd was

| negligent in failing to provide a safe working environment for

him. He also sued Barton-Malow, who constructed the Budd

facility, and AKA, who provided engineering and consulting

services to Barton-Malow, claiming that these defendants

failed to design and construct a safe working environment that

complied with all applicable laws and regulations.

] Budd initially moved the Court for summary

judgment, claiming that it could not be held liable for

Thompson’s injuries as it is excluded from liability under the

worker’s compensation “exClusivity” doctrine. KRS 342.690.

The Court agreed.

Construing Kentucky law, the Court held that Budd is

a contractor and Merrick is a subcontractor. The Court

determined that the HVAC system is an integral part of

Budd’s business and thus is considered to be a regular and

i recurrent part of Budd’s business pursuant to KRS 342.610.

See Silvers v. Martin County Coal Corp., 849 F.2d 1473 (6th

Cir. 1988)(unpublished opinion)(finding that Siding a coal

facility is necessary for the maintenance of the coal operations

and thus was a regular part of the business); U.S. Fidelity &

‘ Guar. Co. v. Technical Minerals, Inc., 934 S.W.2d 266, 269

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District Court Judgment; Mem. Opinion & Order - 4/6/98

(Ky. 1996); Daniels v. Louisville Gas & Elec. CO., 933

S.W.2d 821, 823-24 (Ky. Ct. App. 1996); see also Granus v.

North American Philips Lighting Corp., 821 F.2d 1253,

1257-58 (6th Cir. 1987); cf. Morlan v. Green River Steel

Corp., 35 F.3d 566 (6th Cir. 1994)(unpublished disposition)

(holding that Green River was not a contractor under KRS

342.610 and that Morlan’s employer, PPM, was an

independent contractor). Accordingly, since Budd is a

contractor, it is excluded from liability pursuant to KRS

342.690, even if it did not itself pay the worker’s

compensation benefits. See Fireman’s Fund Ins. Co. v.

Sherman & Fletcher, 705 S.W.2d 459, 461 (Ky. 1986).

Budd now moves the Court for summary judgment on

its contractual and common law claims for indemnity. Budd

argues that Thompson’s injuries were a result of (1) Merrick’s

negligence in failing to supervise and train Thompson and (2)

Barton-Malow’s and AKA’s negligence in designing and

constructing the Budd plant. According to Budd, due to these

parties’ negligence, Budd has incurred costs and attorney’s

fees and possibly will be liable to Thompson if the Sixth

Circuit determines that Thompson’s liability claim against it

was not barred by the Kentucky worker’s compensation

“exclusivity” doctrine. Hence, Budd seeks judgment as a

matter of law, holding these parties responsible for

Thompson’s injuries and requiring them to indemnify Budd

for any damages and costs and expenses incurred as a result

of this litigation.

Barton-Malow, AKA, Merrick and Liberty Mutual

have all responded. In sum, these parties argue that Budd is

not entitled to summary judgment, first and foremost, because

Budd has not been determined liable. They also argue that

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District Court Judgment; Mem. Opinion & Order - 4/6/98

Budd is partly responsible for Thompson’s injuries regardless

of whether they were negligent. Thompson sued Budd for its

negligence in using the substation contrary to the use for

which the substation had been designed, i.e. the substation

was not suppose to be used for storage of air filters. Thus,

according to Barton-Malow, AKA, Merrick and Liberty

Mutual, Budd was negligent in its own right, regardless of its

derivative negligence due to the alleged improper design and

construction of its facility.

CONCLUSIONS OF LAW

- Looking at the arguments provided, the Court finds

that it cannot grant summary judgment to Budd. First, from

the record provided, the Court cannot determine as a matter

of law whether Barton-Malow, AKA and/or Merrick were

negligent and caused Thompson’s injuries; there appear to be

factual issues which need to be resolved by the jury on the

issues of negligence and apportionment of fault. Thus, the

Court cannot determine if Budd is entitled to indemnification

for the fault of these parties until such fault can be determined

at trial. Accordingly, Budd’s motion for summary judgment

on this basis is premature.

Moreover, a question remains as to whether Budd’s

own allegedly negligent acts caused Thompson’s injuries.

Assuming, then, that the contracts allowed for indemnification

for its own negligence, as Budd argues, the Court cannot

determine whether Budd would be entitled to indemnification

for its own allegedly negligent acts. Thus, again Budd’s

motion for summary judgment on this basis is premature.

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District Court Judgment; Mem. Opinion & Order - 4/6/98

Regardless, however, pursuant to the Court’s

Memorandum Opinion and Order of July 30, 1997 [Record

No. 196], granting Budd summary judgment pursuant to

Kentucky’s worker’s compensation “exclusivity” doctrine,

Budd cannot be held liable for Thompson's injuries under

Thompson’s tort claim.’ Since Budd can not been held liable,

then, Budd is not entitled to indemnification and the Court

Cannot grant it summary judgment. See Clark v. Hauck Mfg.

Co., 910 S.W.2d 247, 253 (Ky. 1995)(“There can be no

indemnity without liability.”); see also Long v. Illinois

Central Gulf R.R. Co., 660 F. Supp. 469, 472 (W.D. Ky.

1986) (citing Ashland Oil & Refining Co. v. General Tel.

Co., 462 S.W.2d 190 (Ky. 1970)) (stating that to recover on

a Claim of indemnity, the indemnitee must be “legally liable”

and “compelled at law to pay the claim”); Harris Corp., Data

Communications Div. v. Comair, Inc., 510 F. Supp. 1168,

1174 (1981) (stating that “indemnity arises ‘where one of two

persons who are liable for a tort discharges the liability of

both.’”), aff'd, 712 F.2d 1069 (6th Cir. 1983).

” Budd did not incur any costs of its own for Thompson’s

injuries, because Merrick paid the worker’s compensation benefits;

the only costs that Budd has had to incur has been the costs and

attorney's fees expended in this litigation. Attorney’s fees and cost

are generally not awarded by the court. See, e.g., Nucor Corp. v.

General Elec. Co., 812 S.W.2d 136, 137 (Ky. 1991). However,

if under the contractual provisions, the Court were to find that

Budd was entitled to indemnification for its attorney’s fees and

costs, the Court would certainly not award the full amount of

$187,424.41, when Budd could have minimized such expenses by

filing a motion to dismiss early on in the course of litigation.

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me uss inde

District Court Judgment; Mem. Opinion & Order - 4/6/98

Accordingly, with the Court being sufficiently

advised,

IT IS ORDERED herein as follows:

(1) Budd’s motion for summary judgment be, and

the same hereby is, DENIED.

(2) All issues having been resolved in this matter,

this matter be, and the same hereby is, DISMISSED and

STRICKEN from the Court’s active docket.

(3) A final judgment will be entered

contemporaneously herewith.

This the 6th day of April, 1998.

/s/

JOSEPH HOOD, JUDGE

Date of Entry and Service:

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APPENDIX D

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

[Filed January 11, 2000]

Nos. 98-5518, 5585, 5613

ANTHONY THOMPSON;

LIBERTY MUTUAL

INSURANCE COMPANY

Plaintiffs - Appellants

Cross-Appellees

Vi

THE BUDD COMPANY

Defendant Appellee

Cross-Appellant

BARTON-MAR LOW

COMPANY, INC.; ALBERT

KAHN ASSOCIATES, INC.

Defendants - Appellees

Defendants

MERRICK MECHANICAL, INC.

Third Party

Defendant-Appellee

a a a a Le Lae Le a, Le Le Le, Le, Lee Le, Le Lae Lae Lae Lae ae ae

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ORDFR

BEFORE: MERRITT, CLAY, Circuit Judges and

WISEHAN, District Judge'

Upon consideration of the petitions for rehearing filed

by the plaintiffs,

It is ORDERED that the petitions for rehearing be,

and they hereby are, DENIED.

ENTERED BY ORDER OF THE COURT

/s/

Leonard Green, Clerk

' The Honorable Thomas A. Wiseman, United States

District Judge for the Middle District of Tennessee, sitting by

designation.

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APPENDIX E

342.610 Liability for compensation; builder’s proof of

coverage required for issuance of building permit; notice

required to be posted by employers.

(2)

A contractor who subcontracts all of part of a contract

and his carrier shall be liable for the payment of

compensation to the employees of the subcontractor

unless the subcontractor primarily liable for the

payment of such compensation has secured the

payment of compensation as provided for in this

chapter. Any contractor or his carrier who shall

become liable for such compensation may recover the

amount of such compensation paid and necessary

expenses from the subcontractor primarily liable

therefor. A person who contracts with another:

(a) To have work performed consisting of the

removal, excavation, or drilling of soil, rock,

or mineral, or the cutting or removal of timber

from land; or ;

(b) To have work performed of a kind which is a

regular or recurrent part of the work of the

trade, business, occupation, or profession of

such person

shal! for the purpose of this section be deemed a

contractor, and such other person a subcontractor.

This subsection shall not apply to the owner or lessee

of land principally used for agriculture.

* * *

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342.690 Exclusiveness of liability.

(1)

If an employer secures payment of compensation as

required by this chapter, the liability of such employer

under this chapter shall be exclusive and in place of all

other liability of such employer to the employee, his

legal representative, husband or wire, parents,

dependents, next of kin, and anyone otherwise entitled

to recover damages from such employer at law or in

admiralty on account of such injury or death. For

purposes of this section, the term “employer” shall

include a “contractor” covered by subsection (2) of

KRS 342.610, whether or not the subcontractor has in

fact, secured the payment of compensation. . . .

* * *

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