OPINION
CHEZEM, Judge.
Case Summary
Appellants-Plaintiffs, Mary A. Morris ("Morris") and Delbert M. Morris (collectively, the "Morrises") appeal the granting of summary judgment to Defendant, McDonald's Corporation ("McDonalds"). We reverse.
Issues
The Morrises present one issue for our review which we restate as follows: Whether indemnity and exculpatory clauses contained in a franchise agreement/lease shield a franchisor from suit by a third party.
McDonalds raises two additional issues. The first issue alleged that the court of appeals does not have jurisdiction because the summary judgment was partial. However, the trial court has since granted an order to certify and to direct entry of final judgment on the trial court's ruling on Me-Donalds' motion for summary judgment. Therefore, an appealable final order has been rendered. See Ind.Trial Rules 56(C) and 54(B).
The second issue of whether McDonalds had a legal duty to the Morrises, is waived because it was not properly presented to the trial court. The question of duty was mentioned in only one unsupported sentence of McDonalds' motion for summary judgment. "A party cannot change its theory and on appeal argue an issue which was not properly presented to the trial court." Franklin Bank & Trust Co. v. Mithoefer (1990), Ind., 563 N.E.2d 551, 553.
Facts and Procedural History
On February 13, 1998, Morris entered a McDonalds restaurant in Bloomington, Indiana, and purchased food and drink. While carrying her tray toward a seat, Morris tripped upon a six inch step up to a raised platform dining area, fell upon the tile floor, and suffered personal injuries.
On June 16, 1998, the Morrises filed a complaint alleging claims of negligence, nuisance, and loss of services against franchisor
McDonalds and franchisee GBS Restaurants, Inc. ("GBS"). On August 6, 1993, Mc-Donalds and GBS filed an answer denying liability and asserting that the Morrises were barred from recovery because the contributory fault of Morris was greater than the fault of the Defendants.
On November 3, 1998, McDonalds filed a motion for partial summary judgment. In that motion, McDonalds argued that it should be dismissed as a party-defendant because the indemnity and exculpation clauses contained in McDonalds' lease with GBS shielded McDonalds from liability to a third party. McDonalds' summary judgment motion was granted on June 28, 1994.
Discussion and Decision
Summary judgment was improper, argue the Morrises, because the provisions of a contract to which they were not parties, do not bind them or determine their right to sue. We agree.
When reviewing the grant or denial of summary judgment, we stand in the trial court's shoes and consider the same matters it considered. Economy Fire & Casualty Co. v. Collins (1994), Ind.App., 643 N.E.2d 382, 384, reh. denied. We look to see whether there is a genuine issue of material fact and whether the moving party is entitled to judgment as a matter of law. Id. We base our decision upon the Rule 56(C) materials properly designated to the trial court. Id.
In the present case, the facts are essentially undisputed. The question which divides the parties is whether the following clauses shield McDonalds from the Morrises' suit:
7.02 Indemnity for Litigation: If [Me-Donalds] shall be subject to any claim, demand or penalty or become a party to any suit or other judicial or administrative proceeding by reason of ... any act occurring on the Premises, or by reason of an omission with respect to the business or operation of the Restaurant, [GBS] shall indemnify and hold [MeDonalds] harmless against all judgments, settlements, penalties, and expenses, including reasonable attorney's fees, court costs and other expenses of litigation or administrative pro
ceedings, incurred by or imposed on [Mc-Donalds] in connection with the investigation or defense relating to such claim or litigation or administrative proceeding, and, at the election of [McDonalds], [GBS] shall also defend [MeDonalds].
# # * #k *
7.03 Waiver of Claims: [McDonalds] and [MeceDonalds'] agents and employees shall not be liable for, and [GBS] waives all claims for, damage to person or property sustained by [GBS] or any person claiming through [GBS] resulting from any accident or occurrence in or upon the premises or the building of which they shall be a part, or any other part of the entire premise, including but not limited to, claims for damage resulting from: ... (d) any defect in or failure of ... stairs, porches, railings or walks;
(R. 55).
McDonalds argues that when GBS signed the franchise operator's lease and accepted the premises, GBS assumed all liability and agreed to hold McDonalds harmless for any accidents or occurrences upon the premises. It follows then, MeDonalds asserts, that GBS's assumption of Hability and agreement to hold harmless shields Mc-Donalds from suit by a business invitee injured on the premises.
McDonalds' argument demonstrates some confusion between the definition of an exeulpatory clause and the definition of an indemnity clause. An exculpatory clause covers the risk of harm sustained by the exeulpator (here, GBS) that might be caused by the exculpatee (here, McDonalds). See eg., Weaver v. American Oil Co. (1970), Ind.App., 261 N.E.2d 99, 102, superceded on other grounds by Weaver v. American Oil Co. (1971), 257 Ind. 458, 276 N.E.2d 144. By releasing the exculpatee from liability for such harm, an exculpatory clause deprives the exculpator of its right to recover damages for the exculpatee's negligence. Hence, by signing the "Waiver of Claims" provision, GBS relinquishes its right to hold McDonalds liable for McDonalds' acts of negligence toward GBS.
On the other hand, an indemnity clause covers the risk of harm sustained by third persons that might be caused by either the indemnitor or the indemnitee. It shifts the financial burden for the ultimate payment of damages from the indemnitee to the indemnitor. 261 N.E.2d 99, 102. Thus, the "Indemnity for Litigation" provision in the franchise operator's lease covers the risk of harm sustained by third persons that might be caused by either GBS or McDonalds. GBS's agreement to the indemnity clause insures that if a third party sues McDonalds to recover for an injury sustained on the leased premises, GBS will ultimately carry the financial burden for McDonalds. Hence, in the present case, if the Morrises eventually prevail against McDonalds, GBS will pay any judgment, costs, fees, etc., levied against McDonalds. If the Morrises are unsuceessful, GBS will still pay McDonalds' costs to defend the matter.
What neither an exculpatory nor an indemnity clause does is shield McDonalds from suit by a third party injured as a result of McDonalds and/or GBS's negligence.
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OPINION
CHEZEM, Judge.
Case Summary
Appellants-Plaintiffs, Mary A. Morris ("Morris") and Delbert M. Morris (collectively, the "Morrises") appeal the granting of summary judgment to Defendant, McDonald's Corporation ("McDonalds"). We reverse.
Issues
The Morrises present one issue for our review which we restate as follows: Whether indemnity and exculpatory clauses contained in a franchise agreement/lease shield a franchisor from suit by a third party.
McDonalds raises two additional issues. The first issue alleged that the court of appeals does not have jurisdiction because the summary judgment was partial. However, the trial court has since granted an order to certify and to direct entry of final judgment on the trial court's ruling on Me-Donalds' motion for summary judgment. Therefore, an appealable final order has been rendered. See Ind.Trial Rules 56(C) and 54(B).
The second issue of whether McDonalds had a legal duty to the Morrises, is waived because it was not properly presented to the trial court. The question of duty was mentioned in only one unsupported sentence of McDonalds' motion for summary judgment. "A party cannot change its theory and on appeal argue an issue which was not properly presented to the trial court." Franklin Bank & Trust Co. v. Mithoefer (1990), Ind., 563 N.E.2d 551, 553.
Facts and Procedural History
On February 13, 1998, Morris entered a McDonalds restaurant in Bloomington, Indiana, and purchased food and drink. While carrying her tray toward a seat, Morris tripped upon a six inch step up to a raised platform dining area, fell upon the tile floor, and suffered personal injuries.
On June 16, 1998, the Morrises filed a complaint alleging claims of negligence, nuisance, and loss of services against franchisor
McDonalds and franchisee GBS Restaurants, Inc. ("GBS"). On August 6, 1993, Mc-Donalds and GBS filed an answer denying liability and asserting that the Morrises were barred from recovery because the contributory fault of Morris was greater than the fault of the Defendants.
On November 3, 1998, McDonalds filed a motion for partial summary judgment. In that motion, McDonalds argued that it should be dismissed as a party-defendant because the indemnity and exculpation clauses contained in McDonalds' lease with GBS shielded McDonalds from liability to a third party. McDonalds' summary judgment motion was granted on June 28, 1994.
Discussion and Decision
Summary judgment was improper, argue the Morrises, because the provisions of a contract to which they were not parties, do not bind them or determine their right to sue. We agree.
When reviewing the grant or denial of summary judgment, we stand in the trial court's shoes and consider the same matters it considered. Economy Fire & Casualty Co. v. Collins (1994), Ind.App., 643 N.E.2d 382, 384, reh. denied. We look to see whether there is a genuine issue of material fact and whether the moving party is entitled to judgment as a matter of law. Id. We base our decision upon the Rule 56(C) materials properly designated to the trial court. Id.
In the present case, the facts are essentially undisputed. The question which divides the parties is whether the following clauses shield McDonalds from the Morrises' suit:
7.02 Indemnity for Litigation: If [Me-Donalds] shall be subject to any claim, demand or penalty or become a party to any suit or other judicial or administrative proceeding by reason of ... any act occurring on the Premises, or by reason of an omission with respect to the business or operation of the Restaurant, [GBS] shall indemnify and hold [MeDonalds] harmless against all judgments, settlements, penalties, and expenses, including reasonable attorney's fees, court costs and other expenses of litigation or administrative pro
ceedings, incurred by or imposed on [Mc-Donalds] in connection with the investigation or defense relating to such claim or litigation or administrative proceeding, and, at the election of [McDonalds], [GBS] shall also defend [MeDonalds].
# # * #k *
7.03 Waiver of Claims: [McDonalds] and [MeceDonalds'] agents and employees shall not be liable for, and [GBS] waives all claims for, damage to person or property sustained by [GBS] or any person claiming through [GBS] resulting from any accident or occurrence in or upon the premises or the building of which they shall be a part, or any other part of the entire premise, including but not limited to, claims for damage resulting from: ... (d) any defect in or failure of ... stairs, porches, railings or walks;
(R. 55).
McDonalds argues that when GBS signed the franchise operator's lease and accepted the premises, GBS assumed all liability and agreed to hold McDonalds harmless for any accidents or occurrences upon the premises. It follows then, MeDonalds asserts, that GBS's assumption of Hability and agreement to hold harmless shields Mc-Donalds from suit by a business invitee injured on the premises.
McDonalds' argument demonstrates some confusion between the definition of an exeulpatory clause and the definition of an indemnity clause. An exculpatory clause covers the risk of harm sustained by the exeulpator (here, GBS) that might be caused by the exculpatee (here, McDonalds). See eg., Weaver v. American Oil Co. (1970), Ind.App., 261 N.E.2d 99, 102, superceded on other grounds by Weaver v. American Oil Co. (1971), 257 Ind. 458, 276 N.E.2d 144. By releasing the exculpatee from liability for such harm, an exculpatory clause deprives the exculpator of its right to recover damages for the exculpatee's negligence. Hence, by signing the "Waiver of Claims" provision, GBS relinquishes its right to hold McDonalds liable for McDonalds' acts of negligence toward GBS.
On the other hand, an indemnity clause covers the risk of harm sustained by third persons that might be caused by either the indemnitor or the indemnitee. It shifts the financial burden for the ultimate payment of damages from the indemnitee to the indemnitor. 261 N.E.2d 99, 102. Thus, the "Indemnity for Litigation" provision in the franchise operator's lease covers the risk of harm sustained by third persons that might be caused by either GBS or McDonalds. GBS's agreement to the indemnity clause insures that if a third party sues McDonalds to recover for an injury sustained on the leased premises, GBS will ultimately carry the financial burden for McDonalds. Hence, in the present case, if the Morrises eventually prevail against McDonalds, GBS will pay any judgment, costs, fees, etc., levied against McDonalds. If the Morrises are unsuceessful, GBS will still pay McDonalds' costs to defend the matter.
What neither an exculpatory nor an indemnity clause does is shield McDonalds from suit by a third party injured as a result of McDonalds and/or GBS's negligence. While a party can ordinarily contract out his duty to exercise reasonable care with respect to another contracting party via a simple exculpatory provision, a party cannot contract out his duty to exercise reasonable care
with respect to third parties See Vernon Fire & Casualty Insur. Co. v. Graham (1975), 166 Ind.App. 509, 336 N.E.2d 829, 832.
In Vernon, we addressed the issue of whether a lease required a lessee to indemnify a lessor against the lessor's own negligence. Id., 336 N.E.2d 829 at 830. We arrived at the following conclusions regarding how indemnification and exeulpation clauses affect the rights of a lessor, a lessee, and a third person injured on the leased premises:
[A] third party injured upon the premises might properly recover against lessor for lessor's negligence. The lessor's possible rights as against the lessee in such cireum-stance must then be fixed not in terms of the purported exculpation but rather in view of any provision for indemnity by the lessee in favor of the lessor. (citations omitted).
Id., 336 N.E.2d 829 at 832.
Accordingly, the indemnity clause and the exeulpation clause in the franchise operator's lease govern the relationship between Mc-Donalds and GBS, as parties to the contract. Indisputably, the Morrises were not parties to the franchise operator's lease. Therefore, the exculpatory and indemnity clauses in the operator's lease do not bind or determine the rights of the Morrises. The pertinent clauses merely transfer liability to GBS, if liability is established by the Morrises against McDonalds.
The clauses cannot insulate Mc-Donalds from suit by a third party.
Reversed.
RILEY and RUCKER, JJ., concur.