Law Update

AREAS OF INTEREST:   Indemnification

LEGAL IMPACT: 

The manufacturer of a product does not have an implied duty to indemnify a
defendant against claims that the defendant negligently failed to discover a
defect in the product where the manufacturer did not provide the defendant
with a product or service.

CASE CAPTION:

French v. Time Warner Entertainment Co., L.P., et al, United States District Court,
District of New Hampshire, No. 10-cv-498-JL (October 5, 2012)

FACTUAL SUMMARY:

The decedent, James French, sustained fatal electrocution injuries while installing
cable on a utility pole when a forty-year old porcelain insulator holding the power
line to the pole broke.  His estate brought a wrongful death action against the
manufacturer of the insulator, Lapp Insulators LLC (“Lapp”), the owner of the
utility pole and insulator, Public Service of New Hampshire (“PSNH”), and Time
Warner, who had hired the decedent’s employer, NextGen, to install the cable. 

The plaintiff alleged that Time Warner negligently instructed NextGen to begin
hanging cable without first completing “make ready” work required under its
contract with PSNH.  Plaintiff also alleged that Time Warner breached its duty
to take reasonable steps, including an inspection of the pole, before allowing
work to begin. 

Lapp and PSNH entered into a settlement with the plaintiffs, leaving Time Warner
as the sole remaining defendant.  Time Warner had filed cross claims for contribution
and indemnification against Lapp.  Since the plaintiffs settled their claims against Lapp,
Time Warner stipulated to the dismissal of its contribution claim pursuant to
RSA 507:7-h.  Lapp filed a motion for summary judgment against Time Warner as
to the remaining claim for indemnification. 

HOLDING:  Summary judgment granted.

One joint tortfeasor can obtain indemnification, or a complete shifting of liability,
against another only where the indemnitee’s liability is derivative or imputed by
law, or where an express or implied duty to indemnify exists.

Time Warner acknowledged that it did not have an express indemnity agreement
with Lapp, but argued that it was entitled to indemnification because plaintiffs’
only claim against it was its failure to discover an alleged defect in the insulator
manufactured by Lapp. 

The Court ruled that the New Hampshire Supreme Court had specifically rejected
an effort to impose an indemnity obligation on a manufacturer under similar facts in
Consolidated Utility Equipment Servs., Inc. v. Emhart Mfg. Co., 123 N.H. 258
(1983), a case which was controlling and mandated entry of summary judgment in
favor of Lapp. In that case the decedent was killed when a bucket-lift device
collapsed.  The estate alleged that CUES, an inspection company hired by the
decedent’s employer, negligently failed to discover a defect in the equipment that
caused the accident.  CUES sought indemnification from the manufacturer, arguing
that the manufacturer’s role was “active” while CUES’ failure to discover the defect
was only “passive”.  The Supreme Court, however, declined to extend a general
right of indemnity to passively negligent tortfeasors. 

The Court noted that in a subsequent case, Jaswell Drill Corp. v. General Motors
Corp., 129 N.H. 341 (1987), the Supreme Court seemed to recognize a right of
indemnity running “downstream” from a manufacturer of a defective component
part to a manufacturer who incorporates the part in its product.  However, in this
case Lapp did not provide Time Warner with either a service or a product. 
Applying CUES, the Court concluded that a manufacturer is not required to indemnify
parties who neither bought nor used its product.