Caterpillar Inc. v. Trinity Industries, 100,258.

134 P.3d 881

2006 OK CIV APP 48

CATERPILLAR INC., and Caterpillar Paving Products Inc., Plaintiffs/Appellees/Counter-Appellants, v. TRINITY INDUSTRIES, INC., Defendant/Appellant/Counter-Appellee.

No. 100,258.

Court of Civil Appeals of Oklahoma, Division No. 2.

December 13, 2005.

Rehearing Denied January 24, 2006.

Certiorari Denied April 10, 2006.

This Opinion has been Released for Publication by Order of the Court of Civil Appeals of Oklahoma, Division No. 2.

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Appeal from the District Court of Oklahoma County, Oklahoma; Honorable Daniel L. Owens, Trial Judge.

AFFIRMED.

James A. Jennings, III, Carrie P. Hoisington, Linda G. Kaufmann, Jennings, Cook & Hoisington, PLLC, Oklahoma City, OK and W.T. Womble, Womble Cotellesse & Howell, Houston, TX, for Plaintiffs/Appellees/Counter-Appellants.

Clyde A. Muchmore, Mary H. Tolbert, Crowe & Dunlevy, Oklahoma City, OK, for Defendant/Appellant/Counter-Appellee.

Opinion by JANE P. WISEMAN, Judge.

¶ 1 In this action for indemnification, defendant Trinity Industries, Inc., appeals the trial court's judgment on a jury verdict in favor of plaintiffs Caterpillar Inc. and Caterpillar Paving Products Inc. (collectively, Caterpillar). For the following reasons, we affirm.

BACKGROUND

¶ 2 The genesis of this appeal is a 1994 highway construction accident that injured two workers. The workers were operating a Caterpillar PR-1000C cold planer, a large machine that breaks up and removes asphalt and other surfaces from roads. The machine's "teeth" were located inside a large cutter housing assembly unit which one could access by hydraulically raising a twelve-by-four-foot, 1,500-pound door. While the workers were under the machine changing equipment and making repairs, the large door fell on them, causing injuries.

¶ 3 The workers sued Caterpillar for negligence, manufacturer's product liability, and implied warranty. Initially, the trial court granted summary judgment to Caterpillar in one of the lawsuits, because the worker had failed to use a safety bar intended to secure the door. In 1997, in appeal number 88,841, this Court reversed and remanded, holding that facts were in dispute regarding whether proper use of the safety bar would have prevented the door from falling.

¶ 4 We noted in that opinion that there was evidence of a defect in the manufacture of the machinery. The heavy door was held open only by a hydraulic cylinder, whose hydraulic "ram" had separated, allowing the door to fall. We stated: "The failure of the hydraulic ram was likely due to stress fracture caused by bending forces resulting from an improper assembly of a hinge bracket during manufacture." According to the workers' expert, the machine's center hinge bracket on the cutter housing door was larger than the size specified by Caterpillar, eliminating the necessary clearance between the bracket and another part of the machine. This resulted in fatigue cracks and the stress fracture.

¶ 5 Caterpillar identified Trinity as the manufacturer and supplier of the bracket. In 1998, Caterpillar notified Trinity of the accident and lawsuits, and requested it participate in settlement negotiations. Trinity refused. Caterpillar then notified Trinity that it planned to proceed with negotiations and to sue Trinity for contribution or indemnification.

¶ 6 In January 1999, Caterpillar settled for $1,800,000 the lawsuit that was the subject of the appeal. In February 2000, it settled the other lawsuit for $250,000.

¶ 7 Later in 2000, Caterpillar filed its petition against Trinity for indemnification for the settlements plus attorney's fees and costs. Caterpillar asserted that the hinge bracket was manufactured by Trinity and did not conform to Caterpillar's specifications, and that this was the primary basis for Caterpillar's liability to the workers.

¶ 8 As a general rule, a party is entitled to indemnity where it settles a claim rather than taking it to judgment when it shows the indemnitor was legally liable and the settlement was reasonable and in good faith. 41 Am.Jur.2d Indemnity § 46 (1995). Additionally, where the indemnitor has notice of the claim and refuses to defend, the indemnitee (the party settling the claim) must show it was potentially liable, as opposed to showing actual liability. Id.

¶ 9 In 2002, the trial court applied these principles in refusing to dismiss Caterpillar's indemnity theory. The trial court found Caterpillar gave Trinity adequate notice of settlement negotiations and an opportunity to participate; Caterpillar's decision to settle and the settlement amounts were reasonable; and Caterpillar had proved it was potentially liable to the workers. The trial court concluded Caterpillar could prevail on its indemnity claim if it proved by the greater weight of the evidence that its potential liability resulted from a part supplied by Trinity.

¶ 10 Trial took place in 2003. The jury found in favor of Caterpillar, awarding it $2,050,000 in damages for settlement of the workers' lawsuits and $1,021,103 for attorney's fees and expenses incurred in those cases. The trial court entered judgment on the verdict, adding $10,885 in costs and $871,237 in pre-judgment interest, for a total judgment of almost $4,000,000. Trinity appeals.

STANDARD OF REVIEW

¶ 11 Where any competent evidence reasonably tending to support a jury verdict exists, "and no prejudicial errors are shown in the trial court's instructions to the jury or rulings on legal questions presented during trial, the verdict will not be disturbed on appeal." Barnes v. Okla. Farm Bureau Mut. Ins. Co., 2000 OK 55, ¶ 3, 11 P.3d 162, 166.

ISSUES ON APPEAL

I. REAL PARTY IN INTEREST

¶ 12 Trinity first asserts the trial court erred in allowing Caterpillar's indemnification claim to go to the jury, because the settlement proceeds were paid by Caterpillar's insurance company, and not by either of the Caterpillar entities named as plaintiffs. Therefore, Trinity asserts, Caterpillar lacked "standing" to seek indemnification because it did not suffer a loss. The trial court resolved this matter against Trinity by treating the argument as a real party in interest defense that Trinity waived by failing to raise in a timely manner.

¶ 13 The trial court reached the correct result, regardless of whether the issue was waived. As Caterpillar points out, the applicable rule on this matter was expressed in Lapkin v. Garland Bloodworth, Inc., 2001 OK CIV APP 29, 23 P.3d 958, in which a doctor settled a malpractice claim against him. His insurer paid the proceeds, which were split between the patient and her lawyers. The settlement was voided by the Oklahoma Supreme Court. The patient's guardian returned her portion of the proceeds, but her lawyers refused to return their share. The doctor then sued the lawyers for unjust enrichment to recover the remaining proceeds.

¶ 14 The trial court granted summary judgment in the doctor's favor. The lawyers argued this was error because the settlement had been paid by the doctor's insurer, not the doctor. The Court of Civil Appeals rejected the argument, stating:

We note that the check issued by [the insurer] was issued on behalf of [Dr.] Lapkin its insured. Therefore, regardless of the actual source of the money, it came "from" Lapkin to compensate for his negligence. We agree with Lapkin that "a defendant's right is to have a cause of action prosecuted against him by the real party in interest, but his concern ends when a judgment for or against the nominal plaintiff would protect him from any action upon the same demand by another." Oklahoma Wildlife Federation, Inc. v. Nigh, 1972 OK 144, 513 P.2d 310, 314. Further, "... the insurer as subrogee, in contemplation of law, stands in the place of the insured and succeeds to whatever rights he may have in the matter." 44 Am.Jur.2d § 1795. This statement indicates that the insurer and insured stand in the same shoes and that the insured is the party who has rights against a claimant in the first place. We therefore conclude that Lapkin had standing to prosecute the claim for unjust enrichment, despite the fact that [the insurer] issued the check.

Id. at ¶ 8, 23 P.3d at 962.

¶ 15 The Oklahoma Wildlife case cited by Lapkin was later applied in Black Hawk Oil Co. v. Exxon Corp., 1998 OK 70, 969 P.2d 337. There the plaintiff alleged the defendants had failed to pay for slop oil that it and other gas plant operators had collected. The defendants asserted the plaintiff lacked standing because it had assigned its rights to a successor. The Oklahoma Supreme Court first rejected the idea that this was properly a standing issue, holding it actually involved the real party in interest doctrine. Then it rejected the argument on its merits, applying Oklahoma Wildlife, noting, "Neither [defendant] claims that any judgment against them here might not protect them from further liability to others arising out of the same acts." Id. at ¶ 24, 969 P.2d at 344.

¶ 16 Similarly, Trinity does not claim, or even express a concern, that the judgment Caterpillar received fails to protect Trinity from a further action by Caterpillar's insurance company or any other entity. Trinity was therefore not entitled to summary judgment. While we have chosen to analyze the matter slightly differently than the trial court did, we agree with the trial court's result, and find no error.

II. THE EVIDENCE — CATERPILLAR'S ALLEGED LIABILITY

¶ 17 Indemnity is available where "one party has a primary liability or duty that requires that party to bear the whole of the burden as between certain parties." Thomas v. E-Z Mart Stores, Inc., 2004 OK 82, ¶ 20, 102 P.3d 133, 139. No right of indemnity exists between joint tortfeasors against each other. Id. at ¶ 22, 102 P.3d at 140. The right exists when one who is only constructively liable to the injured party and is in no manner responsible for the harm is compelled to pay damages for the tortious act of...