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PIRELLI v. MIDWEST9/20/1995
In the district court, the plaintiff, Pirelli-Armstrong Tire Corporation (Pirelli), recovered indemnity from defendant, Midwest-Werner & Pfleiderer, Inc. (Midwest), for seventy percent of the workers' compensation benefits paid to the surviving beneficiaries of a Pirelli employee who was injured and later died from acts of Midwest in performing a contract on Pirelli's premises. The district court's award was based on its interpretation of a contract between the parties. Although that court found Pirelli was entitled to indemnification, it reduced the amount claimed by the percentage of causal fault attributed to Pirelli (as contrasted with Midwest) in regard to the events that caused the employee's injury.
The issues on Midwest's appeal are: (1) whether an indemnity clause in the agreement [540 NW2d Page 648]
under which it undertook to work on Pirelli's premises required it to indemnify Pirelli for workers' compensation liability to employees injured by Midwest's work; and (2) whether, if Pirelli was entitled to such indemnity, it forfeited that right by not pursuing and ultimately releasing its lien and indemnification rights against the injured employee's tort recovery from Midwest. Pirelli has cross-appealed, asserting that it is entitled to one hundred percent indemnity rather than seventy percent. Because we agree with Midwest as to its second contention, we reverse on its appeal and dismiss Pirelli's appeal on the basis that the decision on the primary appeal renders those issues moot.
The parties entered into an agreement whereby Midwest would repair machinery on Pirelli's business premises. In performing this work, it became necessary for Midwest to de-energize an electric motor and turn it manually. To assist in this process, Midwest attached a large chain wrench to the motor's shaft. Midwest's employees failed to remove this wrench prior to re-energizing the machine. When the motor started, the wrench whirled about like an airplane propeller. When Terry Avitt, an employee of Pirelli, walked into the area, he was struck by the flailing wrench. He was seriously injured and had a portion of his arm amputated. He eventually died from a blood clot.
Immediately after Avitt's injury, Pirelli began paying him workers' compensation benefits. Four months after the injury Avitt also filed a tort action against Midwest to recover for his personal injuries. Eleven months after the injury it was necessary to surgically amputate Avitt's left hand. Six months after that surgery he died from bilateral pulmonary emboli caused by a deep venous thrombosis related to the initial injury. His personal representative then continued the tort action as a wrongful-death claim.
The tort case against Midwest and Pirelli's remaining workers' compensation liability to Avitt's surviving beneficiaries were resolved about seven months after Avitt's death. The workers' compensation claim was the subject of a special case settlement between Pirelli and Avitt's surviving beneficiaries. Part of the recited consideration was Pirelli's withdrawal of its statutory lien and indemnity rights against any damages recovered by the Avitt estate in the tort case. The total amount of workers' compensation benefits paid to Avitt and his surviving beneficiaries was $330,406. Six days after the workers' compensation claim was compromised, Midwest agreed to a consent judgment against it in the tort action for the sum of $798,000.
The work undertaken on Pirelli's premises by Midwest was in response to three separate purchase orders. These documents described Pirelli as "Buyer," and Midwest as "Seller." Each of these documents contained the following language:
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