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Heritage at Deer Creek Associates8/8/2005
Heritage at Deer Creek Associates (Heritage) and Kirtley-Cole Associates (Kirtley-Cole) are parties to a construction contract that includes an indemnity agreement. The parties dispute whether the indemnity agreement requires Kirtley-Cole to indemnify Heritage for Heritage's Condominium Act violations. We conclude that the agreement does not cover claims involving harm caused by construction defects, which do not result in injury or destruction of tangible property, and affirm the superior court's order granting summary judgment in favor of Kirtley-Cole.
I.
Kirtley-Cole, a general contractor, entered into a contract with Heritage to develop phase II of the Heritage at Deer Creek Condominiums. The parties entered into an indemnification agreement, which they attached as exhibit 'A' to the general conditions contract.
A couple of years after construction on phase II was completed, Heritage at Deer Creek Owners Association filed suit against Heritage for damages stemming from construction defects in both phases I and II. The complaint alleged numerous claims, including Condominium Act violations, Consumer Protection Act violations, breach of warranty, breach of contract, and negligence. Heritage filed a third party complaint against Kirtley-Cole, as well as the general contractor for phase I and a number of subcontractors, for negligence, breach of contract, breach of express and implied warranties, and indemnification.
Subsequently, Heritage settled with the condominium owners association, but it continued to seek reimbursement from the third party defendants. Heritage and Kirtley-Cole filed cross motions for summary judgment on Heritage's claim for indemnity. The superior court granted Kirtley-Cole's motion for summary judgment, as well as a motion to strike certain evidence. We granted discretionary review of the superior court's orders. Heritage's contract and warranty claims are still pending below.
II.
We review an order on motions for summary judgment de novo. Summary judgment is appropriate only when there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law.
Heritage seeks indemnity from Kirtley-Cole for damages it paid pursuant to its settlement. It argues that the indemnity agreement reflects the parties' intent that Kirtley-Cole indemnify Heritage for all claims stemming from performance of the work. Heritage argues that its settlement agreement with the owners association only reflects the Washington Condominium Act claims, and therefore it is only seeking indemnity under those claims. Kirtley-Cole responds that the indemnity agreement only applies to tort claims, so it has no duty to indemnify Heritage for Condominium Act violations.
The intention of the parties must be the starting point for interpreting the indemnity agreement. We view ''the contract as a whole, the subject matter and objective of the contract, all the circumstances surrounding the making of the contract, the subsequent acts and conduct of the parties to the contract, and the reasonableness of respective interpretations advocated by the parties'' in order to ascertain the parties' intent. Because contract interpretation is generally a question of fact, we can interpret an agreement as a matter of law only when the interpretation does not depend on the use of extrinsic evidence, or when the extrinsic evidence leads to only one reasonable conclusion. Therefore, summary judgment is appropriate only if the indemnity agreement, viewed in Heritage's favor, has only one reasonable meaning.
The indemnity clause reads:
The CONTRACTOR shall indemnify and
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