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04/14/95 KIMBERLY-CLARK CORPORATION v. FLUOR-DANIEL

April 14, 1995

KIMBERLY-CLARK CORPORATION
v.
FLUOR-DANIEL, INC.



Appeal from Jefferson Circuit Court. (CV-94-1458). Jack D. Carl, TRIAL JUDGE.

As Corrected. Released for Publication August 25, 1995.

Maddox, Hornsby, C.j., and Almon, Shores, Houston, Cook and Butts, JJ., concur.

The opinion of the court was delivered by: Maddox

MADDOX, JUSTICE.

This appeal involves the prospective application of this Court's decision in Goodyear Tire & Rubber Co. v. J. M. Tull Metals Co., 629 So. 2d 633 (Ala. 1993) (rehearing denied, November 5, 1993). In Goodyear, this Court allowed the enforcement of indemnity agreements involving work site injuries; it stated that the decision "shall apply prospectively only, but shall be applicable to all actions pending at the time of issuance of this opinion." 629 So. 2d at 638.

The essential facts in the present case were stipulated to by counsel:

"It is stipulated by counsel for the purposes of the motions to dismiss that the accident involving Larry Brown occurred on November 29, 1988; that the lawsuit in Federal Court was filed on November 28, 1990; that a judgment was rendered on June 4, 1992, and affirmed on appeal on May 14, 1993; . . . This [present] action was filed on February 24, 1994."

The trial court dismissed Kimberly-Clark's complaint, as amended, stating, "Based on [the] stipulated facts and the language in the Goodyear case which states that its holding '... shall apply prospectively only, but shall be applicable to all actions pending at the time of issuance of [the] opinion,' it is the opinion of the Court that the [motions to dismiss filed by Fluor-Daniel, Inc., are to be granted]."

Although the stipulated facts are sufficient for the purpose of deciding the legal question presented, we set forth some of the basic underlying facts for a better understanding of our reasons for affirming the judgment of the trial court.

Fluor-Daniel, Inc., a contractor, entered into a written agreement with Kimberly-Clark to rebuild a paper machine at Kimberly-Clark's Coosa Pines facility. The contract contained an indemnity clause that required Fluor-Daniel to defend, indemnify, and hold harmless Kimberly-Clark from and against any claims, including claims for attorney fees, arising out of or resulting from Fluor-Daniel's negligent acts during the performance of the work described in the contract.

Larry Brown, a Fluor-Daniel millwright, was assigned to begin work on Kimberly-Clark's paper machine. On November 29, 1988, Brown was injured while performing work pursuant to the contract between Fluor-Daniel and Kimberly-Clark. On November 28, 1990, Brown filed an action in a United States district court against Kimberly-Clark, alleging that negligence and wantonness on the part of Kimberly-Clark had caused his injuries. *fn1 A jury returned a verdict in favor of Brown for $1,500,000 on June 4, 1992, and the Eleventh Circuit Court of Appeals, on May 14, 1993, affirmed the judgment of the trial court entered pursuant to the jury verdict.

As stated earlier, the sole issue for our review is whether Kimberly-Clark can obtain the beneficial effect of the Goodyear decision and enforce the indemnity provisions of its contract with Fluor-Daniel. Kimberly-Clark summarizes its argument in its brief, as follows:

"The applicable law of Alabama, as clearly set forth by this Court in Goodyear, permits a third party to enforce an employer's express agreement to indemnify the third party for damages incurred by the third party arising out of an on-the-job injury to the employer's employee. Moreover, the parties' expectations, as embodied in their written contract, reflect Fluor-Daniel's intent to assume liability under the terms of the contract, regardless of the provisions of Alabama's Workmen's Compensation Act. Finally, consideration of principles of equity and an analysis of the effect of applying the new rule to these parties confirm that application of the Goodyear rule to Kimberly-Clark's cause of action is appropriate. For all these reasons, this Court should reverse the order dismissing this case and should remand the case for further proceedings consistent with the Goodyear opinion."

In Goodyear, this Court expressly overruled Paul Krebs & Assoc. v. Matthews & Fritts Construction Co., 356 So. 2d 638 (Ala. 1978), which had held that an employer subject to Alabama's Workers' Compensation Statute could not be sued for indemnity by a third party for reimbursement of damages that the third party had paid to one of the employer's employees. The Krebs holding was based on ยง 25-5-53, Ala. Code 1975, the "exclusive remedy" provision that makes employers immune from civil liability for on-the-job injuries suffered by employees. Goodyear, in reversing Krebs, reinstated the rule in Eley v. Brunner-Lay Southern Corp., 289 Ala. 120, 266 So. 2d 276 (1972); Goodyear held "that enforcement of an express indemnity agreement against an employer by a third party does not violate the exclusive remedy provision of Alabama's Workers' Compensation Act." 629 So. 2d at 638. This Court further stated, "We are mindful of the strong public policy interest favoring enforcement of contractual agreements entered into voluntarily by competent parties, unless they clearly contravene some positive law or rule of public morals." 629 So. 2d at 638. ...


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