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06/28/76 Barbara H. Hooks, v. Southeast Construction

June 28, 1976

THE ESTATE OF CHARLES E. HOOKS, DECEASED

v.

SOUTHEAST CONSTRUCTION CORPORATION, A CORPORATION, APPELLANT AND ANTHONY IZZO COMPANY INC., THIRD PARTY DEFT. 1976.CDC.153



UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT

BARBARA H. HOOKS, INDIVIDUALLY AND AS THE ADMINISTRATRIX OF

As Amended on Denial of Rehearing August 25, 1976.

Appeal from the United States District Court for the District of Columbia (D.C. Civil Action 3293-70).

APPELLATE PANEL:

MacKinnon and Robb, Circuit Judges, and Weigel,* United States District Judge for the Northern District of California. Opinion for the court filed by Circuit Judge MacKinnon.

DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE MACKINNON

Southeast Construction Corp. (Southeast) is a general contractor which entered into a contract with Anthony Izzo Co. (hereafter Izzo and Subcontractor), a masonry subcontractor, to perform certain masonry work as part of a construction project. Izzo in turn subcontracted with the Nathaniel Ford Brick Cleaning Company for the pointing and cleaning of the masonry. In performing the work of the subcontractor, the plaintiff's decedent Hooks lost his life through the alleged negligence of Southeast. Southeast settled plaintiff's suit for $57,000 and here under the terms of the contract seeks to recover from Izzo on the subcontractor's contractual obligation to carry public liability insurance protecting Southeast.

The only issue in this appeal is whether the district court correctly interpreted section 7 of the contract between appellant Southeast and appellee Izzo. Section 7 of the contract reads:

Sub-contractor [Izzo] agrees to carry Public Liability Insurance protecting Sub-contractor and Contractor [Southeast] and Workmen's Compensation Insurance in connection with employees engaged in the performance of this agreement with company and in an amount satisfactory to Contractor. Sub-contractor agrees to indemnify Contractor from claims growing out of injury received or damage done by reason of any act, omission, or negligence of Sub-contractor. Sub-contractor shall supply Contractor with certificates for Workmen's Compensation Insurance and Public Liability Insurance before commencing work under this agreement.

(J. App. 53). Izzo argues that the first two sentences must be read together as though the second qualified the first. Under such interpretation subcontractor Izzo concludes he only agreed to provide public liability insurance for injuries received or damage done "by reason of any act, omission, or negligence of Subcontractor [ Izzo ]" (emphasis added), and thus was not required to provide insurance against the injuries in this case which were allegedly caused by the negligence of Southeast. This argument was accepted by the district court, which dismissed the third party complaint of Southeast against Izzo. We disagree.

On this appeal, Southeast argues that the correct reading of section 7 indicates that Izzo agreed to two separate obligations. By the first sentence Izzo was required "to carry public liability insurance protecting Sub-Contractor [Izzo] and Contractor [Southeast]." By the second sentence Izzo undertook to indemnify Southeast against liability growing out of Izzo's "act, omission, or negligence." After careful study of the relevant contract and insurance law, we agree with the interpretation of section 7 advanced by Southeast.

In order to accept Izzo's argument, one would first be required to find, inter alia, that the two concepts of liability insurance and indemnity are one and the same. However, they are not. A leading treatise points out a significant distinction between liability policies and policies (contracts) of indemnification:

Indemnity and liability insurance distinguished.

Under a liability policy the insurer is required to make payment although the insured has not yet suffered any loss, for by definition the purpose of the liability policy is to shield the insured from being required ...


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