City of Kan. City v. Occupational Health Ctrs. of the Sw., P.C.

676 S.W.3d 426

CITY OF KANSAS CITY, Missouri, Appellant,

v.OCCUPATIONAL HEALTH CENTERS OF THE SOUTHWEST, P.C., d/b/a Concentra Medical Centers, Respondent.

WD 85602

Missouri Court of Appeals, Western District.

Filed: September 12, 2023 Motion for Rehearing and/or Transfer to Supreme Court Denied October 24, 2023

Bret R. Kassen, Kansas City, for Appellant.

Scott K. Logan, Merritt B. Watson, David M. Tyrrell, Prairie Village, KS for Respondent.

Before Division Three: Alok Ahuja, P.J., and Karen King Mitchell and Edward R. Ardini, Jr., JJ.

Alok Ahuja, Judge

The City of Kansas City asserted a claim for contractual indemnity against Occupational Health Centers of the Southwest, P.C. (doing business as Concentra Medical Centers) in the Circuit Court of Jackson County. The City's indemnity claim sought to shift to Concentra the costs associated with an employment discrimination claim which had been asserted against the City. The circuit court granted summary judgment to Concentra, and the City appeals. We affirm.

Factual Background

In 2012, the City and Concentra executed Contract No. EV1227, for the performance of drug and alcohol testing on City employees. The Contract was renewed annually through January 31, 2017.

On May 5, 2014, the City sent Shahidah Hazziez, a City employee, to a Concentra facility for a purportedly random drug screening. Hazziez later contended that she and other Muslim City employees had been disproportionately selected for such drug testing.

Hazziez was unable to provide a urine sample of sufficient volume through two attempts, which she claimed was due to a bladder infection. Hazziez was told that she would have to stay at the testing site until she provided a sufficient sample, or for at least three hours following her first attempt. Because Hazziez had observed blood in her urine and believed she required medical attention, she left the testing facility to go see her physician before three hours had elapsed. Hazziez submitted to a urine test at her doctor's office later that day, which was drug-free.

Concentra notified the City that Hazziez had refused to provide a compliant urine sample, and had claimed that it was due to a bladder infection. The City requested further information from Concentra and from eScreen, Inc., which developed the testing protocol and testing selection process for the City. After reviewing the information supplied by Concentra and eScreen, the City terminated Hazziez's employment for violation of its Drug and Alcohol Misuse Testing Policy.

Hazziez sued the City, as well as a number of Concentra-affiliated entities and employees. Hazziez also sued eScreen, Inc., as well as eScreen's parent company Alere, Inc. In her Second Amended Petition, Hazziez alleged claims under the Missouri Human Rights Act, ch. 213, RSMo, for retaliation and for employment discrimination based on her sex, religion, race, and based on her perceived and actual status as disabled. Hazziez also alleged claims for negligence and strict products liability against the eScreen defendants for their development of the City's testing methods and procedures, and the system for processing test results.

Hazziez settled her claims against the Concentra defendants on May 6, 2016.

A jury trial began against the City and the eScreen defendants on October 2, 2017. The eScreen defendants settled while trial was underway. After an eight-day trial, Hazziez submitted four claims to the jury. Those claims alleged that the City had discriminated against her because it regarded her as disabled; because she was in fact disabled; because of her sex; and because of her religion. In the verdict directors for each claim, the only adverse employment action Hazziez identified was the termination of her employment with the City. The jury found in Hazziez's favor and against the City on Hazziez's claims for discrimination based on sex and a perceived disability. The jury awarded her compensatory damages of $172,000.00, but found that the City was not liable for punitive damages. The court subsequently awarded Hazziez attorney's fees in the amount of $303,660.00, and costs of $10,130.85.

This court affirmed the judgment on appeal; we also awarded Hazziez her attorney's fees on appeal. Hazziez v. City of Kansas City , 606 S.W.3d 149 (Mo. App. W.D. 2020) (mem. ). We remanded to the circuit court for determination of the additional fee award; the circuit court later determined that Hazziez's reasonable appeal-related fees and expenses were $88,896.00. The City satisfied the judgment in November 2020.

Prior to the trial of Hazziez's underlying discrimination claims, the City filed a third-party petition against Concentra for indemnification under Concentra's contract for drug and alcohol testing services. We quote extensively from the relevant contractual provisions in the legal discussion which follows.

The City and Concentra filed cross-motions for summary judgment on the City's third-party claim. The circuit court entered its judgment on July 29, 2022, granting Concentra's motion for summary judgment and denying the City's cross-motion. In its judgment, the circuit court concluded that, despite a broader indemnification clause contained in the City's form contract, the parties had agreed to modifications to the indemnity language which Concentra had proposed in its response to the City's Request for Proposals. The circuit court also found that the scope of Concentra's indemnity obligations was reflected in the language of the insurance certificate and policy language which Concentra had submitted to the City as part of its contract proposal.

Ultimately, the circuit court concluded that Hazziez's claims against the City were not based in whole or in part on Concentra's actions, but that the City's liability to Hazziez was based on its own actions, for which Concentra had no indemnification obligation:

Concentra was not a party to the jury trial, and the jury instructions contained no mention of Concentra. The verdict was against the City exclusively and resulted solely from the City's statutory violations of the Missouri Human Rights Act. This Court finds that Concentra is not liable for the City's statutory violations of the Missouri Human Rights Act and the harm caused to Plaintiff as a result.

The City appeals.

Standard of Review

We review the grant of a motion for summary judgment de novo. Day Advertising, Inc. v. Hasty , 606 S.W.3d 122, 129 (Mo. App. W.D. 2020).

The criteria on appeal for testing the propriety of summary judgment are no different from those which should be employed by the trial court to determine the propriety of sustaining the motion initially. This Court reviews the record in the light most favorable to the party against whom judgment was entered. Summary judgment is appropriate when the moving party has [established], on the basis of facts as to which there is no genuine dispute, a right to judgment as a matter of law. We may affirm if the record shows that summary judgment was appropriate either on the basis it was granted by the trial court or on an entirely different basis, if supported by the record.

Randolph v. City of Kansas City , 620 S.W.3d 636, 639 (Mo. App. W.D. 2021) (quoting in part Newton v. Mercy Clinic E. Cmtys. , 596 S.W.3d 625, 628 (Mo. 2020) ; other citation omitted).

Discussion

On appeal, the City asserts eight Points Relied On. Despite the number of separate Points raised by the City, this appeal boils down to two fundamental issues: (1) determining the operative contract language which defines Concentra's indemnity obligations; and (2) determining the basis for Hazziez's discrimination claims against the City, for which the City seeks indemnity. We address those issues in turn.

I.

Generally, "rules applicable to the construction of contracts apply generally to indemnity agreements." Chehval v. St. John's Mercy Medical Ctr. , 958 S.W.2d 36, 38 (Mo. App. E.D. 1997). "The cardinal principle for contract interpretation is to ascertain the intention of the parties and to give effect to that intent." Lacey v. State Bd. of Registration for the Healing Arts , 131 S.W.3d 831, 838 (Mo. App. W.D. 2004) (quoting Butler v. Mitchell-Hugeback, Inc. , 895 S.W.2d 15, 21 (Mo. 1995) ). In doing so, we review the contract holistically rather than looking at provisions in isolation. Lacey , 131 S.W.3d at 838. We construe individual terms of a contract to avoid rendering other terms meaningless; "[a] construction that attributes a reasonable meaning to all the provisions of the agreement is preferred to one that leaves some of the provisions without function or sense." Kohner Properties, Inc. v. SPCP Group VI, LLC , 408 S.W.3d 336, 342-343 (Mo. App. E.D. 2013). "Where the contract consists of multiple documents, as is the case here, all of the documents must be read together in an effort to capture what was intended." Lin v. Clark, 666 S.W.3d 270, 278 (Mo. App. W.D. 2023) (quoting Metrc, LLC v. Steelman , 617 S.W.3d 472, 481 (Mo. App. W.D. 2021) ).

We focus on the plain and ordinary meaning of the contract itself, and do not look to extrinsic evidence unless the terms of the contract are ambiguous. Lacey , 131 S.W.3d at 839. "A contract is not made ambiguous by the mere fact that the parties to it disagree on its proper construction"; rather, it is ambiguous if the words used are reasonably susceptible to more than one plain meaning. Id.

"Where parties stand on substantially equal footing, one may legally agree to indemnify the other against the results of the indemnitee's own negligence." Economy Forms Corp. v. J.S. Alberici Const. Co., Inc. , 53 S.W.3d 552, 554 (Mo. App. E.D. 2000). However, such a provision "must be stated clearly, unequivocally, and conspicuously." Utility Serv. and Maint., Inc. v. Noranda Aluminum, Inc. , 163 S.W.3d 910, 913 (Mo. 2005). Nonetheless, when the two parties are sophisticated entities negotiating at arm's length, a broad, all-inclusive indemnification provision may be sufficient to...