Court of Appeals of Texas, Dallas.

J.C. PENNEY CO., INC., David Dawley, and Alan Rose, Appellants

v.

MEL CLARK ELECTRIC, INC. d/b/a Clark Electric Service and/or Clark Electric Service, Inc., Appellee

No. 05-95-00207-CV.

|

Aug. 9, 1996.

Before DEVANY,¹WRIGHT and HANKINSON, JJ.

OPINION

HANKINSON, Justice.

*1 This appeal involves the enforceability of an indemnity agreement. J.C. Penney (“Penney”) filed suit against Mel Clark Electric (“Clark”) after Clark failed to indemnify Penney in a wrongful death suit involving a Clark employee. In seven points of error, Penney challenges the grant by two different trial courts of two summary judgments in favor of Clark, the first court’s grant of attorney’s fees to Clark and its denial of attorney’s fees to Penney, and a third trial court’s denial of Penney’s motion for reconsideration. We overrule each of the points and affirm the trial court’s judgment.

BACKGROUND

In 1991, Richard Hickey was a Clark employee doing electrical work at a Penney store. He was installing new lighting fixtures pursuant to a contract between Clark and Penney. While performing the work, he was electrocuted and died. Hickey, the decedent’s mother, brought suit against Penney and two of its employees, claiming that the negligence of Penney and its employees resulted in Richard Hickey’s death. Penney demanded that Clark indemnify Penney for its costs in defending the suit.

When Clark refused to indemnify Penney, Penney brought suit against Clark in the 193rd District Court. Penney sought declaratory relief and damages for breach of contract based on allegations that its contract with Clark required that Clark indemnify Penney for Penney’s own negligence. Clark counterclaimed for declaratory relief that Clark had no duty to indemnify Penney in the Hickey suit. Penney moved for summary judgment and later filed a second motion for summary judgment that addressed only the parties’ declaratory judgment claims. Clark filed an amended motion for summary judgment and later a second motion for summary judgment on the grounds that the indemnity provision in the parties’ contract was unenforceable because it failed the express negligence test. In a partial summary judgment order, the 193rd District Court granted both Clark’s amended and second motions, denied Penney’s second motion, and awarded attorney’s fees to Clark.

Penney also filed a third-party petition against Clark in the wrongful death suit, which was pending between Penney and Hickey in the 116th District Court. There, Penney realleged in its third-party action that Clark’s failure to indemnify Penney constituted a breach of contract. Penney also raised new breach of contract claims based on Clark’s alleged failure to obtain indemnity insurance and failure to provide proof of insurance coverage.

The 193rd District Court ordered the declaratory judgment action against Clark transferred to the 116th District Court where it was consolidated with the wrongful death suit. Clark filed an amended motion for summary judgment in the 116th District Court on the grounds that the action was barred by the express negligence test, the Workers’ Compensation Act, the express language of the contract, the doctrines of res judicata and collateral estoppel, and the summary judgments entered by the 193rd District Court. The 116th District Court granted Clark’s amended motion. The trial judge in the 116th District Court later recused himself from the case, and the matter was transferred to the 298th District Court where Penney filed a motion for reconsideration, which that court denied.

*2 Hickey’s wrongful death suit against Penney and two Penney employees was tried to a jury in the 298th District Court. The jury returned a verdict of no liability for Penney and its two employees. In rendering judgment on the verdict, the 298th District Court incorporated the two summary judgments that had been granted in favor of Clark. Penney now appeals from the judgment entered in favor of Clark. On appeal, this Court severed Hickey’s appeal of her wrongful death claim from this appeal.

STANDARD OF REVIEW

This Court reviews a summary judgment de novo to determine whether a party’s right to prevail is established as a matter of law. See Capitan Enters., Inc. v. Jackson, 903 S.W.2d 772, 775 (Tex.App.-El Paso 1994, writ denied). An appellate court follows well-established procedures when reviewing a summary judgment. See Nixon v. Mr. Property Management Co., 690 S.W.2d 546, 548-49 (Tex.1985). When both parties move for summary judgment, each party bears the burden of establishing that it is entitled to judgment as a matter of law. Guynes v. Galveston County, 861 S.W.2d 861, 862 (Tex.1993).

SUMMARY JUDGMENT-193RD DISTRICT COURT

In its first five points of error, Penney asserts that the 193rd District Court erred in granting Clark’s amended and second motions for summary judgment, denying Penney’s second motion for summary judgment, and awarding attorney’s fees. In a single broad-form order, the trial court denied Penney’s motion, granted both of Clark’s motions, and awarded attorney’s fees to Clark. Because all three motions addressed the enforceability of the contract’s indemnity provision, we will consider the points of error challenging the trial court’s disposition of the motions together.

Lack of Specificity

Initially, we note that Penney argues in its brief that the trial court erred in granting Clark’s second motion for summary judgment because Clark failed to state the specific grounds on which summary judgment was sought. A motion for summary judgment must state specifically the grounds on which judgment is sought. Tex.R. Civ. P. 166a(c); McConnell v. Southside Indep. School Dist., 858 S.W.2d 337, 339 (Tex.1993). In its second motion for summary judgment, Clark sought summary judgment, because “The agreement between J.C. Penney and Clark Electric does not entitle J.C. Penney to recover contribution or indemnity from Clark Electric for any damages it must pay as a result of the death of Clark Electric’s employee.” We conclude that Clark stated its grounds with sufficient specificity.

Express Negligence Test

In considering Penney’s first five points of error, we must determine whether the indemnification provision of the contract between Penney and Clark requires Clark to indemnify Penney for Penney’s own negligence. The express negligence test sets out the standard that a contract’s indemnity provision must meet if one party seeks to require another to indemnify it for its own negligence. Ethyl Corp. v. Daniel Constr. Co., 725 S.W.2d 705, 708 (Tex.1987). To meet the express negligence test, the contract must express this intent in specific terms “within the four corners of the contract.” Id. However, the indemnity provision need not be expressed in one sentence. Enserch Corp. v. Parker, 794 S.W.2d 2, 9 (Tex.1990).

*3 The Supreme Court adopted the express negligence test in an attempt to stem the tide of litigation resulting from ambiguous indemnity agreements. Ethyl, 725 S.W.2d at 708. The Court sought to thwart the efforts of drafters to “indemnify the indemnitee for its negligence, yet be just ambiguous enough to conceal that intent from the indemnitor.” Id. at 708. The courts have recognized that indemnifying a party for its own negligence involves a dramatic shifting of risks. Dresser Indus., Inc. v. Page Petroleum, Inc., 853 S.W.2d 505, 508 (Tex.1993). The express negligence test was designed to guard against the unfairness that results when one party is unaware that it has assumed responsibility for another’s negligence. Requiring such an indemnity provision to be clearly and unambiguously drafted ensures that the indemnitor is well aware that he is assuming this extra burden. Houston Lighting & Power Co. v. Atchison, Topeka & Santa Fe Ry. Co., 890 S.W.2d 455, 458 (Tex.1994). These policy considerations require that we strictly construe indemnity contracts like the one before us today. See id.

The pertinent provisions in the Penney-Clark contract state:

6.4 CONTRACTOR’S INDEMNIFICATION

Contractor shall defend, indemnify and hold harmless Owner (and J.C. Penney Company, Inc. if it is not the Owner) and its (their) employees and agents, from and against any and all costs, losses and expenses, liability, damages, settlements, and claims for damages (including attorney’s fees and costs for defending any action) suffered, incurred, relating to or arising from the performance of the Work including, but not limited to:

6.4.2 The failure of Contractor, any Subcontractor or other Person performing any portion of the Work to comply with any Legal Requirement;

6.4.4 Injury to or death of persons, or damage to or destruction of property, including property of Owner, arising or resulting from the work or from any actual or alleged acts, omissions, or negligence of Contractor, any Subcontractor or other Person performing any portion of the Work; or

6.4.5 The failure of Contractor to comply with any obligation, term, covenant or provision of any of this Contract.

6.5 The foregoing provisions shall in no way be deemed released, waived, modified or limited in any respect by reason of: (a) any insurance or surety bond provided by Contractor, (b) any allegation or judicial determination that the claim in question arose as a result of or was based upon, the acts, omissions or negligence of Owner, or (c) any limitation on the amount or type of damages, compensation or benefits payable by or for Contractor or any Subcontractor under any Worker’s Compensation disability benefits or other employee benefits acts.

This indemnity provision does not affirmatively state that Clark has agreed to indemnify Penney for the consequences of its own negligence, and Penney does not contend otherwise. Rather, Penney contends that the express negligence test is satisfied by (1) Clark’s agreement in paragraph 6.4 to indemnify Penney for “all losses … (including attorney’s fees and costs for defending any action) … arising out of the performance of the Work” and (2) the language in paragraph 6.5 that this broad indemnification obligation cannot be limited by allegations that a claim arose from Penney’s negligence. We disagree.

*4 Paragraph 6.5 does not contain language that can be construed as an agreement to indemnify. Instead, it essentially provides that whatever indemnification obligation Clark has undertaken cannot be changed by allegations that a claim arose from Penney’s negligence. Paragraph 6.4 does not obligate Clark to indemnify Penney for the consequences of Penney’s own negligence, however. See Ethyl, 725 S.W.2d at 708 (use of “any loss” and “as a result of operations” language in indemnification provision does not satisfy express negligence test). Nor does Clark undertake this obligation in any other provision of the contract. Therefore, the contract does not sufficiently express the parties’ intent that Clark indemnify for Penney’s own negligence. We conclude that the indemnity provision of the contract does not meet the requirements of the express negligence test.²

Declaratory Judgment and Breach of Contract Claims

Penney’s claim for declaratory relief, Clark’s counterclaim for declaratory relief, and Penney’s breach of contract claim all hinge on the resolution of the express negligence issue. We have resolved that issue by concluding that the parties’ contract failed to satisfy the express negligence test. Clark, therefore, had no duty to indemnify Penney for the consequences of Penney’s alleged negligence. For this reason, we further conclude that the summary judgment granted on the parties’ declaratory judgment claims against Penney and in favor of Clark was proper. For the same reason, we also conclude, as a matter of law, that Clark did not breach its contract with Penney when it refused to indemnify Penney for the consequences of Penney’s alleged negligence. The trial court properly granted Clark’s amended motion for summary judgment and second motion for summary judgment and properly denied Penney’s second motion for summary judgment. We overrule points of error one, two, and three.

Attorney’s Fees

In its fourth and fifth points of error, Penney complains that the 193rd District Court erred in granting Clark’s request for attorney’s fees and denying Penney’s request for attorney’s fees. Penney does not challenge the amount of the award made to Clark. Instead, Penney argues that because it should have prevailed on its declaratory judgment action, the trial court should have awarded it attorney’s fees and denied Clark’s request. Either party in a declaratory judgment proceeding may plead for and obtain attorney’s fees. Hartford Cas. Ins. v. Budget Rent-a-Car, 796 S.W.2d 763, 771 (Tex.App.-Dallas 1990, no writ). A court of appeals does not reverse an award of attorney’s fees in a declaratory judgment action unless the complaining party demonstrates a clear abuse of discretion by the trial court. McLendon v. McLendon, 862 S.W.2d 662, 672 (Tex.App.-Dallas 1993, writ denied). Because we have concluded that the trial court did not err in granting Clark’s various motions for summary judgment against Penney in the declaratory judgment action, we further conclude that the trial court did not abuse its discretion in awarding attorney’s fees to Clark and denying them to Penney. We overrule points of error four and five.

SUMMARY JUDGMENT-116TH DISTRICT COURT

*5 In its sixth point of error, Penney contends that the 116th District Court erred in granting the motion for summary judgment that Clark filed in that court. In its first amended third-party petition in the 116th District Court, Penney reasserted the claims it brought in the 193rd District Court and added new grounds for its breach of contract claims-specifically, that Clark breached the contract by failing to obtain insurance coverage for Clark’s indemnity obligation and by failing to provide Penney with certificates of insurance before beginning work. Penney alleged that these breaches of the contract entitled it to recover as damages the costs it incurred in defending against Hickey’s claims. Clark filed an amended motion for summary judgment, which the 116th District Court granted. Because we have already determined that summary judgment was proper on the claims that Penney also raised in the 193rd District Court, we will not discuss point of error six as it pertains to those claims.

Penney first argues that Clark’s amended motion for summary judgment in the 116th District Court failed to state the specific grounds supporting the motion. See Tex.R. Civ. P. 166a(c); McConnell, 858 S.W.2d at 339. In its amended motion, Clark urged that Penney was precluded from recovering breach of contract damages from Clark, citing as reasons the Texas Workers’ Compensation Act, the doctrines of res judicata and collateral estoppel, the express language of the parties’ contract, and the summary judgments entered by the 193rd District Court. We conclude that Clark stated its grounds for summary judgment with sufficient specificity.

Penney next asserts that summary judgment on the breach of contract claim was improper because Clark did not obtain insurance coverage for Clark’s indemnity obligation and did not provide proof of coverage. It urges that because the contract obligated Clark to indemnify Penney for all Penney’s costs if Clark breached the contract, Clark’s breach of the contract triggered Clark’s duty to pay the defense costs in the Hickey suit.

The essential elements of a breach of contract cause of action are: (1) the existence of a valid contract; (2) performance or tendered performance by the plaintiff; (3) a breach of the contract by the defendant; (4) damage to the plaintiff as a result of the breach. Hussong v. Schwan’s Sales Enters., Inc., 896 S.W.2d 320, 326 (Tex.App.-Houston [1st Dist.] 1995, no writ). Here, the contract’s insurance provisions stated that Clark had a duty to maintain comprehensive general liability insurance that would cover “contractual liability coverage for the indemnity obligation assumed by Contractor.” We have already determined that Clark did not have a duty under the contract to indemnify Penney in the Hickey lawsuit. Penney claims its defense costs in the Hickey suit as its contract damages. Therefore, Clark’s alleged failure to obtain insurance to cover its indemnification duties could not have resulted in Penney’s damages because Clark had no indemnification duty to Penney in the Hickey suit. Because this alleged breach did not result in any damages, Penney cannot maintain a breach of contract action on this basis. See id. Similarly, even if Clark did not provide Penney with certificates of insurance, as required by the contract, its breach did not result in the claimed damages-its defense costs in the Hickey case. See id.

*6 Penney also argues on appeal that the contract required Clark to indemnify Penney for all Penney’s costs if Clark breached the contract. Clark’s failure to maintain insurance and to provide insurance certificates, the alleged breaches, did not result in any costs to Penney, so Clark has no such duty to indemnify Penney. See id. We conclude that the 116th District Court did not err in granting summary judgment on Penney’s breach of contract claims. We overrule Penney’s sixth point of error.

MOTION FOR RECONSIDERATION-298TH DISTRICT COURT

In its seventh point of error, Penney asserts that the 298th District Court erred in denying its motion for reconsideration. The judge in the 116th District Court recused himself from the case and transferred it to the 298th District Court. Penney asked the 298th District Court to reconsider the rulings made by the 193rd District Court and the 116th District Court on the parties’ summary judgment motions. The 298th District Court denied Penney’s motion for reconsideration. After a jury verdict in the wrongful death suit between Hickey and Penney, the judge entered a final judgment, which incorporated the summary judgments against Penney that had been granted by the two previous trial courts.

We review the denial of a motion for reconsideration according to the same standard used to review the denial of a motion for new trial. See Brazos Elec. Power Coop. Co. v. Callejo, 734 S.W.2d 126 (Tex.App.-Dallas 1987, no writ). A trial court has wide discretion in granting a motion for reconsideration. Champion Int’l Corp. v. Twelfth Court of Appeals, 762 S.W.2d 898, 899 (Tex.1988). The trial court’s discretion will not be disturbed on appeal absent a showing of an abuse of discretion. Id. In this case, we have determined that neither the 193rd District Court nor the 116th District Court erred in granting Clark’s various motions for summary judgment and in denying Penney’s second motion for summary judgment. Therefore, we conclude that the 298th District Court did not abuse its discretion in refusing to reconsider those trial courts’ rulings. We overrule Penney’s seventh point of error.

We affirm the judgment of the trial court.

	Footnotes
1		Although Justice Devany was a member of the original submissions panel, he did not participate in the decision.
2		In its second motion for summary judgment in the 193rd District Court, Clark asserted that the Workers’ Compensation Act barred Penney’s indemnity claim as an alternative to its argument that the parties’ contract failed to satisfy the express negligence test. The Workers’ Compensation Act also requires a written indemnity agreement between an employer and a third party. Tex.Rev.Civ. Stat. Ann. art. 8306, § 3(d)(currently codified at Tex. Lab.Code Ann. § 417.004 (Vernon Supp.1996)). Because we agree with Clark’s contention that the contract does not meet the express negligence test, we need not discuss the Workers’ Compensation Act argument.