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Unique Equipment Co.8/31/1999
n Indus., Inc. v. Schwartz, 108 Ariz. 464, 467-68, 501 P.2d 936, 939-40 (1972)). This policy does not apply to TRW, which did not provide design specifications for inflator test cells to be placed into the "stream of commerce" or the "chain of distribution," but rather for inflator test cells to be used uniquely by its own employees.
As for the employees, this court has already determined that product liability does not arise when an employer furnishes a product to an employee for in-house use, for the employee receives the product "as an employee and not as a member of the consuming public." Allen v. Southwest Salt Co., 149 Ariz. 368, 373, 718 P.2d 1021, 1026 (App. 1986); see also Hills v. Salt River Project Ass'n, 144 Ariz. 421, 425-26, 698 P.2d 216, 220-21 (App. 1985). To the extent that an employer may be faulted for an unreasonable danger to its employees that lurks within its own design or specifications for a product that is intended exclusively for in-house use, that fault arises within the context of the employment relationship, not within a relationship of commercial distribution. It is fault, in other words, within the scope of the exclusivity provisions of the Worker's Compensation Act and not within the scope of A.R.S. § 12-684. See Stoecker, 209 Ariz. Adv. Rep. at 26; see also Hills, 144 Ariz. at 426, 698 P.2d at 221.
For the foregoing reasons, we conclude that to construe § 12-684 as creating a statutory exception to the exclusivity provisions of the Workers' Compensation Act would serve the policy of neither statute. When an employer has provided design specifications for the manufacture of equipment to be used exclusively by its employees, and an employee covered by workers' compensation brings a products liability suit against the manufacturer for damages attributed to a design defect in the equipment, the manufacturer is not entitled to statutory indemnification from the employer pursuant to A.R.S. § 12-684. Conclusion
Because the Workers' Compensation Act precludes Unique's third-party claims against TRW, we affirm summary judgment in favor of TRW. Both parties request attorneys' fees on appeal, pursuant to A.R.S. § 12-341.01, asserting that this indemnity action arises out of contract. To TRW, the prevailing party, we award reasonable attorneys' fees and costs in an amount to be determined upon TRW's compliance with Rule 21 of the Arizona Rules of Civil Appellate Procedure.
NOEL FIDEL, Presiding Judge
CONCURRING:
SHELDON H. WEISBERG, Judge
E. G. NOYES, JR., Judge
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