Jacobsen Construction Co. v. Industrial Indemnity Co.

657 P.2d 1325, 1983 Utah LEXIS 936
CourtUtah Supreme Court
DecidedJanuary 5, 1983
Docket17219
StatusPublished
Cited by4 cases

This text of 657 P.2d 1325 (Jacobsen Construction Co. v. Industrial Indemnity Co.) is published on Counsel Stack Legal Research, covering Utah Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Jacobsen Construction Co. v. Industrial Indemnity Co., 657 P.2d 1325, 1983 Utah LEXIS 936 (Utah 1983).

Opinions

HOWE, Justice:

This is an appeal of a subrogation case between the Insurance Company of North America (INA) and Structo-Lite Engineering, Inc. (Structo) and presents the issue of whether Structo was a subcontractor of plaintiffs, Jacobsen Construction Company, Inc. and Jelco Incorporated.

On February 21, 1972 plaintiffs entered into a written contract with the Central Utah Water Conservancy District for construction of the Jordan Water Purification Plant in southwestern Salt Lake County, Utah. Effective the same date, plaintiffs obtained from INA a transportation floater policy naming plaintiffs as insured. By endorsement to the policy, all “subcontractors” on the job were named as additional insureds. The policy was an inland marine, a physical damage type of policy, which insured the work of construction rather than the completed structure. It was not a liability policy. Plaintiffs obtained public liability insurance from Industrial Indemnity Company.

A part of the water purification plant consisted of six large fiberglass tanks to hold liquid alum. Structo entered into a contract with plaintiffs to furnish the tanks. The contract was denominated a Purchase Order. Under its terms, Structo was obligated only to furnish the six tanks and accessory materials F.O.B. job site. It had no obligation to install them or to perform any work on the construction site. It could either fabricate the tanks or obtain them from any source. Plaintiffs were not concerned how Structo obtained them so long as they met the contract specifications.

Structo fabricated the tanks and delivered them to the job site where it attached angle irons to the bottom of the tanks as a means of attaching them to the floor and also drilled holes in the tanks to accommodate necessary plumbing. They were then installed by plaintiffs.

On July 22,1974 while the District was in the process of starting up the plant, one of the alum tanks exploded causing substantial damage to the plant. The cause of that explosion was examined in a separate but related case where the jury in a special verdict found the District 10 percent negligent, plaintiffs 20 percent negligent, and Structo 70 percent negligent in causing the loss. Judgment was entered in favor of plaintiffs against Structo for the full amount of their damages, less the percentage (20%) attributable to their own negli[1327]*1327gence. That judgment was affirmed by this Court, Jacobsen Construction, Inc., et al, v. Structo-Lite Engineering, Inc., Utah, 619 P.2d 306 (1980).

INA and Industrial Indemnity Company both denied coverage for the mishap and the instant action was brought against them by plaintiffs. INA filed a third-party complaint against Structo for indemnity based on its subrogation rights. Structo counterclaimed against INA claiming that it was a “subcontractor” of plaintiffs and, as such, was an additional insured under the terms of INA’s policy. Therefore, Structo asserted it was not only immune from suit by INA on the policy, but was entitled to recover from INA any loss which it sustained as a result of an insured peril.

At the trial below judgment was entered in favor of plaintiffs against INA. INA promptly satisfied that judgment and the issues between plaintiffs and INA are not involved in this appeal. INA was awarded a judgment on its third-party complaint against Structo for 80 percent of the amount of plaintiffs’ judgment against INA (100% less 20% found by the jury to be attributable to plaintiffs’ negligence). Structo was found by a special jury verdict not to be a “subcontractor” of plaintiffs and consequently its counterclaim against INA was dismissed. Structo appeals and this appeal deals only with issues between INA and Structo.

At the close of the presentation of evidence, Structo moved for a directed verdict in its favor on INA’s third-party complaint arguing that as a matter of law Structo was a subcontractor. The trial court denied the motion. Structo renewed its motion by way of its motions for judgment notwithstanding the verdict and for a new trial. Both of these motions were also denied.

Structo assigns as error the refusal of the trial court to give to the jury the following proposed instruction:

Whoever shall do work or furnish materials by contract, express or implied, with the owner, shall be deemed an original contractor, and all other persons doing work or furnishing materials shall be deemed subcontractors.

This definition was taken from U.C.A., 1953, § 38-1-2. We find no error in the refusal to give this instruction. The statute cited is a part of our Mechanics’ Lien Law. In order to give a widespread application of the beneficence of that law, the legislature adopted a broad definition of subcontractor and included therein materialmen. It would be unwarranted to extend that broad definition to other contexts such as in the present case where an insurance contract is being examined which apparently intended to differentiate between subcontractors and materialmen. We find no support in the law for extending the application of a specially tailored statutory definition to other unrelated situations.

Instead, the trial court gave its Jury Instruction No. 16 defining a subcontractor as follows:

A subcontractor means one who has contracted with the original contractor for the performance of all or a part of the work or services which such contractor has himself contracted to perform.

We conclude that under this definition, which INA approves and asserts is founded on well established case law, Structo was a subcontractor as a matter of law and therefore was an insured under the policy. We reject INA’s contention that the jury could have reasonably found Structo to be a ma-terialman and not an insured under this definition. In support of this conclusion, we find helpful an opinion of the Supreme Court of California in the case of Theisen v. County of Los Angeles, 54 Cal.2d 170, 5 Cal.Rptr. 161, 352 P.2d 529 (1960). There the defendant county contracted with Theisen for the construction of a fire combat training center. Theisen contracted with Petterson Corporation to supply 64 custom made doors to conform to the architect’s specifications. Petterson then contracted with Durrand to supply 20 of such [1328]*1328doors. Durrand fabricated and shipped the doors to Petterson, who in turn delivered them together with the other 44 doors to Theisen. Theisen installed the doors. Neither Durrand nor Petterson entered upon the job site. In defining who was a subcontractor, the court stated, not dissimilar to the instruction given the jury in the instant case, that “the essential feature which constitutes one a subcontractor rather than a materialman is that in the course of performance of the prime contract he constructs a definite, substantial part of the work of improvement in accord with the plans and specifications of such contract.” 5 Cal.Rptr. at 161, 352 P.2d at 537. The court held it immaterial that he did not enter upon the job site and do his part of the construction there. Further, said the court:

We are not here concerned with the mere furnishing of materials from which doors were to be constructed by the general contractor, nor are we interested in the sale of standard stock-in-trade doors.

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Jacobsen Construction Co. v. Industrial Indemnity Co.
657 P.2d 1325 (Utah Supreme Court, 1983)

Cite This Page — Counsel Stack

Bluebook (online)
657 P.2d 1325, 1983 Utah LEXIS 936, Counsel Stack Legal Research, https://law.counselstack.com/opinion/jacobsen-construction-co-v-industrial-indemnity-co-utah-1983.