Roadsafe Holdings, Inc. v. Walsh Const. Co., 2021 WL 325677 (Ind. Ct. App. 2021)
This case has a long appellate history involving a number of legal issues. After a driver was injured while operating his vehicle through a construction zone, he filed a lawsuit against Walsh Construction Company (“Walsh”) for allegedly creating an unsafe traffic pattern. Walsh filed a third-party complaint against a subcontractor, Roadsafe, claiming that Roadsafe breached its subcontract with Walsh in failing to indemnify or provide insurance coverage to Walsh for the accident.
After Walsh tendered the matter to Roadsafe, Walsh also notified Roadsafe’s insurer, Zurich, and requested that Zurich defend Walsh in the lawsuit. Walsh filed a separate declaratory judgment action against Zurich contending that it owed a duty to indemnify Walsh. The trial court eventually entered summary judgment for Zurich, finding that Zurich had no contractual obligation to cover Walsh as an additional insured primarily because there was a large self-insured retention (“SIR”) endorsement that obligated Roadside to pay before Zurich’s policy was triggered. Walsh Const. Co. v. Zurich Am. Ins. Co., 72 N.E.2d 957 (Ind. Ct. App. 2017), trans. denied.
Walsh proceeded to defend and eventually settled the driver’s lawsuit against it for $60,000. Walsh then moved for summary judgment in its lawsuit against Roadsafe by contending that Roadsafe was liable for the settlement with the driver as well as Walsh’s attorney fees in litigating both the driver’s lawsuit as well as its pursuit of the declaratory judgment action against Zurich. The trial court granted summary judgment to Walsh and after a damages hearing ordered Roadsafe to pay the following:
- the $60,000 settlement;
- Walsh’s defense costs for the driver’s lawsuit in the amount of $201,603.80;
- Walsh’s fees and costs for pursuit of the declaratory judgment action in the amount of $28,240.96; and
- Pre-judgment interest in the amount of $134,169.43.
Roadsafe appealed the grant of summary judgment by raising a number of issues. With respect to the Court’s determination that Walsh was entitled to indemnity, Roadsafe contended that it lacked a duty to indemnify Walsh until and unless there had been an adjudication that Roadsafe was negligent in causing the driver’s injuries. Roadsafe further contended that the language did not obligate it to indemnify Walsh for Walsh’s own negligence. The Court of Appeals rejected this argument based upon Roadsafe’s concession that it had a duty to defend Walsh in the driver’s lawsuit. Because Roadsafe denied the indemnity request, Walsh was free to settle the lawsuit without any Roadsafe objection to it.
The Court also suggested that once Roadsafe knew of the indemnity demand, Roadsafe had an obligation to avoid being collaterally estopped to question the settlement by either providing a defense under a reservation of rights or filing a separate declaratory judgment action to ask a court for a judicial declaration of its rights under the SIR to its policy. However, Walsh filed a third-party complaint against Roadsafe, so presumably the issues about Roadsafe’s responsibility were already part of a legal proceeding and the Court does not address this issue. It does not make sense for the Court to suggest that Roadsafe had to file a separate declaratory judgment action to avoid the effect of collateral estoppel, when it was already involved in litigation relating to that issue with Walsh.
The Court also concluded that Roadsafe was responsible for Walsh’s entire defense costs in defending against the driver’s suit, even for those defense costs incurred before it filed its third-party complaint against Roadsafe. Likewise, the Court found that Walsh was also entitled to its attorney fees for prosecuting the claim for indemnification. Finally, the Court also found that Roadsafe was responsible for Walsh’s attorney fees incurred in pursuing the declaratory judgment action against Zurich, as such costs were also part of the “prosecution of the indemnity claim.”
This case, while not technically an insurance matter, addresses issues that frequently arise in indemnity/insurance matters. Thus, the authors felt that it is a significant case that practitioners may wish to review when confronted with those types of claims.