Construction of Reciprocal Indemnity Provision

Mobile Infirmary Association v. Quest Diagnostics, [Ms. SC-2022-0641, Feb. 24, 2023] __ So. 3d __ (Ala. 2023). The Court (Shaw, J.; Wise, Bryan, Sellers, Mendheim, and Stewart, JJ., concur; Cook, J., concurs specially, which Mitchell, J., joins; Parker, C.J., dissents) affirms the Mobile Circuit Court’s summary judgment dismissing a claim for contractual indemnity asserted by Mobile Infirmary Association d/b/a Mobile Infirmary Medical Center (“Mobile Infirmary”), against Diagnostics Clinical Laboratories, Inc. (“Quest”).

The subject Laboratory Management Agreement between Quest and Mobile Infirmary contained reciprocal indemnity provisions. Ms. *9. Mobile Infirmary admitted that it settled the underlying wrongful death suit based in part on allegations of its “own negligent conduct in the care of James A. Ward.” Ms. *8.

The Court first explains that “ ‘[t]he general rule in Alabama, ..., prohibits one of several joint tortfeasors from enforcing contribution from the others who participated in the wrong. This is because of the maxim that no man can make his own misconduct the ground for an action in his own favor.’ ” Ms. *15, quoting Sherman Concrete Pipe Mach., Inc. v. Gadsden Concrete & Metal Pipe Co., 335 So. 2d 125, 127 (Ala. 1976). In light of this rule, an agreement to indemnify a party for its own negligence must be clear and unequivocal. Ms. *15.

The Court reiterates “ ‘if two parties knowingly, clearly, and unequivocally enter into an agreement whereby they agree that the respective liability of the parties will be determined by some type of agreed-upon formula, then Alabama law will permit the enforcement of that agreement as written.’ ” Ms. *14, quoting Holcim (US), Inc. v. Ohio Casualty Insurance Co., 38 So. 3d 722 (Ala. 2009).

Mobile Infirmary argued the reciprocal indemnity provisions should be construed as requiring Quest to indemnify it for Quest’s proportionate fault in causing the death of Mr. Ward. The Court rejects this argument and holds

[The provisions] do not clearly and unequivocally address what happens when a claim arises out of acts of both parties. The provisions require indemnification for all liability; but, if both are at fault, it is unclear how both can be liable in full. Nowhere in these provisions do the parties expressly agree or clearly provide a formula that, in the event there is a claim that arises out of partial liability or concurrent acts by both parties, indemnification will be required for a proportionate share. Without a “clear” and “unequivocal” agreement addressing indemnification in such a concurrent-fault situation, Mobile Infirmary’s proposed reading of these sections does not comply with Holcim. Ms. *21.

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