









2015 VT 3










Heco v.
Foster Motors, Midstate Dodge, LLC and Johnson
Controls, Inc., et al. (2013-323)
 
2015 VT 3
 
[Filed 09-Jan-2015]
 
NOTICE:  This opinion is
subject to motions for reargument under V.R.A.P. 40 as well as formal revision before
publication in the Vermont Reports.  Readers are requested to notify the
Reporter of Decisions by email at: JUD.Reporter@state.vt.us or by mail at:
Vermont Supreme Court, 109 State Street, Montpelier, Vermont 05609-0801, of any
errors in order that corrections may be made before this opinion goes to press.
 
 



2015 VT 3



 



No. 2013-323



 



Dzemila
Heco, Kenan Heco and Emir
  Heco


Supreme Court




 


 




 


On Appeal from




     v.


Superior Court, Chittenden
  Unit,




 


Civil Division




 


 




Foster Motors, Midstate Dodge, LLC and 
Johnson Controls, Inc., et al.


May Term, 2014




 


 




 


 




Geoffrey
  W. Crawford, J.




 



Thomas M. Higgins of Pierson Wadhams
Quinn Yates & Coffrin, LLP, Burlington, and 
  Peter M. Durney and James
P. Kerr of Cornell & Gollub, Boston,
Massachusetts, for
  Cross-Claim Plaintiff/Appellant Midstate Dodge, LLC.
 
John T. Sartore and Stephen J.
Soule of Paul Frank + Collins P.C., Thomas McCormick of
  McCormick, Fitzpatrick, Kasper
& Burchard, PC, Burlington, Richard K. Wray and
Tracy G.
  Ferak of Reed Smith
LLP, Chicago, Illinois, and James M. Beck of Reed Smith LLP,
  Philadelphia, Pennsylvania,
for Cross-Claim Defendant/Appellee Johnson Controls, Inc. 
 
 
PRESENT:    Reiber,
C.J., Dooley, Skoglund and Robinson, JJ., and Zonay, Supr. J.,
                    
Specially Assigned
 
 
¶ 1.            
SKOGLUND, J.   Midstate
Dodge, LLC appeals from a superior court judgment in favor of Johnson Controls,
Inc. (JCI) on Midstate’s cross-claim for indemnification
of compensation paid to plaintiff Dzemila Heco in settlement of a personal-injury action.  We
affirm, albeit on a different basis from the trial court.  
¶ 2.            
The undisputed facts may be summarized as follows.  In August 2007,
plaintiff was severely injured when a 2000 Dodge Neon that she was driving was
struck from behind by another vehicle.  In July 2010, she filed a
personal-injury action against Midstate, the
automobile dealer that sold her the vehicle; Chrysler Group LLC, successor-in-interest
to Chrysler Corporation, which manufactured the vehicle but later declared
bankruptcy; JCI, which manufactured the vehicle’s driver’s seat; and Autoliv ASP, Inc., which manufactured the vehicle’s
seatbelts.[1] 
  
¶ 3.            
In her original and second amended complaints, plaintiff alleged that
she suffered spinal cord injuries when her seatback collapsed rearward upon
impact and the seat, seatbelt system, and other vehicle components failed to
adequately restrain her.  She asserted claims of strict products
liability, negligence, and breach of warranty against Autoliv
for designing, manufacturing, and selling an allegedly defective seatbelt
system; against JCI for designing, manufacturing, and selling an allegedly
defective seating system; and against Midstate for
selling a vehicle that contained the allegedly defective seatbelt and seating
systems, that “failed to incorporate other designs and technologies which could
protect occupants from foreseeable crash forces in rear impact accidents,” and
that “lacked adequate and sufficient warnings and instructions about the risks
. . . presented by the Neon and reasonable means to reduce such risks.”[2] 
       
¶ 4.            
In February 2012, plaintiff settled with Autoliv
and stipulated to its dismissal with prejudice.  Shortly thereafter,
plaintiff filed a third amended complaint solely against Midstate
and JCI.[3] 
The complaint again alleged strict liability, negligence, and breach of
warranty against JCI for designing, manufacturing, and supplying a defective
seating system, and against Midstate for selling a
vehicle that was not “crashworthy” because of a defective and inadequate seat system,
a design that “failed to incorporate other designs and technologies which could
protect occupants from foreseeable crash forces in rear impact accidents,” and
a “lack[] [of] adequate and sufficient warnings about the risks.”  In its
answer to the third amended complaint, Midstate
included a cross-claim for indemnification against co-defendant JCI, alleging
that, if plaintiff sustained any damages, it was caused solely by the acts or
omissions of JCI.     
¶ 5.            
Shortly thereafter, in September 2012, plaintiff entered into a
settlement agreement with Midstate and Chrysler
Group.  The agreement provided that, for an undisclosed monetary
consideration, plaintiff released Midstate and
Chrysler Group from “any and all claims, demands, damages and causes of action
under any state or federal law whatever the nature, which are known or unknown,
foreseeable or unforeseeable, past, present or future, arising directly or
indirectly out of the Vehicle, the Incident or the Lawsuit.”  Based on the
settlement agreement, the trial court issued an order of dismissal with
prejudice in favor of Midstate and Chrysler Group.
  
¶ 6.            
Plaintiff’s settlement agreement with Midstate
and Chrysler Group preserved her remaining claims against JCI, expressly
recognizing her “inten[t] to continue” the lawsuit
against JCI to recover the “full value” of her injuries.  While those
claims remained pending, however, JCI moved for summary judgment on Midstate’s cross-claim for indemnification.  Following
further briefing and argument, the trial court issued a written decision
granting the motion.    Relying on the Restatement (Third) of
Torts: Apportionment of Liability § 22(a) (2000), the court concluded that an
essential precondition to Midstate’s indemnification
claim was a complete settlement and discharge of JCI’s liability to plaintiff,
and that absent such a discharge the claim failed as a matter of law. [4]   
¶ 7.            
A jury trial in June 2013 on plaintiff’s remaining action against JCI
resulted in a verdict in favor of plaintiff on the products-liability claim.[5]  The trial court thereafter entered
a final judgment for plaintiff and against JCI in the amount of $36,948,123, which
was the subject of a separate appeal.[6] 
In August 2013, the trial court also entered a final judgment in favor of JCI
and against Midstate on the cross-claim for
indemnity.  This appeal by Midstate is of that
judgment.
               
¶ 8.            
Because it forms the basis of the trial court’s ruling, the issue
primarily briefed by the parties on appeal is whether an indemnitee invoking
common law equitable indemnity must extinguish the liability of the indemnitor to collect indemnity.  In its pleadings
below, however, JCI advanced an alternative, more fundamental argument in
support of the motion for summary judgment; it asserted that the settlement
agreement with plaintiff discharged Midstate from
potential vicarious liability quite separate and independent from JCI’s
potential liability, and that Midstate could not
therefore compel JCI to compensate it for the Midstate’s
“own vicarious liability for the conduct of Chrysler Group and Chrysler” in no
way attributable to JCI.     
¶ 9.            
Although the trial court did not resolve this alternative argument, it
was—as noted—expressly raised below, and both parties have addressed it on
appeal.  Furthermore, if JCI is correct, it represents a clearly
preferable basis of decision, resting on well-settled and universally
recognized common-law principles as opposed to a question which our prior
decisions have not yet addressed and a Restatement section that we have not yet
adopted.  See, e.g., Greater New Orleans Broad.
Ass’n v. United States, 527 U.S. 173, 184 (1999)
(observing that courts will not ordinarily reach out to decide “novel” issues
where case can be resolved on narrower grounds); Robey v. Superior Court,
302 P.3d 574, 590 (Cal. 2013) (noting that “judicial restraint” counsels in
favor of “deciding novel issues only when the circumstances require”); accord State
v. Bauder, 2007 VT 16, ¶ 27, 181 Vt. 392, 924
A.2d 38 (recognizing in context of constitutional law the “fundamental tenet of
judicial restraint” that courts will not address “novel” claims where adequate
alternative grounds are available).      
¶ 10.         It is
axiomatic that a party seeking implied equitable indemnity may recover only
where its potential liability is vicariously derivative of the acts of the indemnitor and it is not independently culpable.  See Windsor
Sch. Dist. v. State, 2008 VT 27, ¶ 18, 183 Vt. 452, 956 A.2d 528 (“[E]ven where the liability of a manufacturer of a product is
based on strict liability in tort, it is required to indemnify the seller of
the product to the consumer if the seller is found liable to the consumer but
is not independently culpable.”); White v. Quechee
Lakes Landowners’ Ass’n, 170 Vt. 25, 29, 742 A.2d
734, 737 (1999) (observing that implied equitable indemnity is generally
“appropriate only when the indemnitee is vicariously or secondarily liable” for
condition “caused by the act of the indemnitor, who
is primarily responsible for the condition”); Gen. Motors Corp. v. Hudiburg Chevrolet, Inc., 199 S.W.3d 249, 255 (Tex.
2006) (“Under the common law, a person is entitled to indemnity for products
liability only if his liability is entirely vicarious and he is not himself
independently culpable.”).  As we recognized in Windsor, 2008 VT 27
¶ 18, this principle is carried forward in the current Restatement, which
allows for noncontractual indemnity only where the
indemnitee is “not liable except vicariously for the tort of the indemnitor,” or where the indemnitee sells a product
supplied by the indemnitor and the indemnitee is “not
independently culpable.”  Restatement (Third) of Torts: Apportionment
of Liability § 22(a)(2)(i)
& (ii) (emphases added).  Such independent culpability need not arise
exclusively from the primary negligence of the indemnitee.  See, e.g., Hudiburg, 199 S.W.3d at 260 (holding that, where
acts or omissions of assembler of truck chassis and service bed were
“attributable” to truck dealer, dealer was “independently” culpable and barred
from asserting indemnity action against chassis and service bed
manufacturers).        
¶ 11.         Here,
as noted, plaintiff’s third amended complaint alleged not only that Midstate was vicariously liable for the allegedly defective
seating system supplied by JCI, but was also vicariously liable for Chrysler’s
role in selling a vehicle that “failed to incorporate other designs and
technologies which could protect occupants from foreseeable crash forces in
rear impact accidents,” and “lacked adequate and sufficient warning and
instructions about the risks . . . presented
by the Neon.”  Under the settlement agreement with Midstate,
plaintiff broadly discharged Midstate and Chrysler
Group from “all claims . . . known or unknown, foreseeable or unforeseeable,
past, present or future, arising directly or indirectly out of the Vehicle, the
Incident or the Lawsuit.”  It is clear, therefore, that plaintiff
discharged Midstate’s potential vicarious liability not
only for the acts of JCI, but also Chrysler, and as such Midstate may not assert equitable indemnity to compel JCI
to reimburse it for the undisclosed monetary compensation it paid in
settlement. 
¶ 12.         Midstate’s arguments to the contrary are not
persuasive.  It claims that it could not be independently liable because
Chrysler Corporation, the entity that manufactured the vehicle, declared
bankruptcy and was not a named defendant.  The argument ignores the plain
fact that Midstate was sued based on its vicarious
liability for the acts of both JCI and Chrysler Corporation, and chose to
settle and compensate plaintiff in exchange for the discharge of any potential
vicarious liability “arising directly or indirectly out of the Vehicle.”  Midstate also claims that an indemnitee’s independent
culpability must be predicated on active negligence.  It advances no
persuasive argument or authority, however, to support the claim, which we find
unavailing.  See Hudiberg, 199 S.W.3d at 260.  
¶ 13.         Accordingly,
while we rely on an alternative rationale, we find no basis to disturb the
judgment in favor JCI.  See Samplid
Enters., Inc. v. First Vt. Bank, 165 Vt. 22, 28, 676 A.2d 774, 778 (1996)
(observing that we may affirm on different “rationale” from trial court where
the judgment was otherwise “proper”). 
Affirmed.       



 


 


FOR THE COURT:




 


 


 




 


 


 




 


 


 




 


 


Associate
  Justice



 









[1]
 The complaint also named as plaintiffs Heco’s
two sons, and included a claim for loss of consortium on their behalf. 
For convenience, we refer in this opinion solely to plaintiff.  The
original complaint also mistakenly listed Foster Motors, Inc. as the vehicle’s
retailer, but this was corrected in the second amended complaint to Midstate.    
 


[2]
 The second amended complaint also included claims against Autoliv and JCI for violation of the Consumer Fraud Act,
and against Chrysler Group on a third-party beneficiary theory pursuant to an
indemnification agreement between Chrysler Group and  Midstate, entered into in August 2010, in which
Chrysler Group agreed to assume the defense of and indemnify Midstate against plaintiff’s claims.   


[3] 
By stipulation, Chrysler Group had been earlier dismissed without
prejudice.  
  


[4] 
The Restatement section in question provides, in part, as follows:
 
  When two or
more persons are or may be liable for the same harm and one of them discharges the
liability of another in whole or in part by settlement or discharge of
judgment, the person discharging the liability is entitled to recover indemnity
in the amount paid to the plaintiff, plus reasonable legal expenses, if:
 
  (1) The indemnitor has agreed by contract to indemnify the
indemnitee, or
 
  (2) The
indemnitee
 
  (i) was not liable except
vicariously for the tort of the indemnitor, or
 
  (ii) was not liable except as a seller of a product supplied
to the indemnitee by the indemnitor and the
indemnitee was not independently culpable.
 
Restatement (Third) of Torts:
Apportionment of Liability § 22(a).  
 


[5] 
During trial, plaintiff dismissed all but the strict products-liability claim,
and her sons dismissed their claims for loss of consortium. 
    
 


[6] 
In September 2014, the parties stipulated to a dismissal of that
appeal.   



