OPINION
RABINOWITZ, Justice.
I.
INTRODUCTION
The principal issue in this appeal is whether a manufacturer which settles a products liability lawsuit is entitled to implied indemnity (i.e., common law indemnity) from one of its raw materials suppliers. This appeal also raises the question of whether, and under what circumstances, an express indemnification provision can serve to shield a raw material supplier from a manufacturer’s claim for implied indemnity.
II.
FACTS AND PROCEEDINGS
In 1987 the Wainwright/Alak School complex was destroyed when children lit a fire under the raised building, igniting exposed polystyrene insulation which had been installed on the underside of the school structure. Eventually, the insurers for the North Slope Borough and North Slope Borough School District [the borough and the district are hereinafter referred to as “NSB”] paid approximately $14 million for the loss, and NSB filed a subrogation action against Western Insulfoam Manufacturing Company (“Western”), the manufacturer of the insulation,
and Palmer G. Lewis Company (“Lewis”), the retailer, as well as eleven other parties involved in the construction of the school. NSB asserted claims against Western for the fire loss based on strict liability, negligence, and breach of warranty for selling an allegedly defective and unreasonably dangerous product which was not fit for its intended use. As to Lewis, NSB’s sole claim was that it was strictly liable for selling a defective and unreasonably dangerous product.
In tracing the chain of distribution, the record shows that Western formed the insulation, trade named “Insulfoam,” by expanding and molding polystyrene beads which were supplied to it by ARCO.
Western then sold the insulation, in final product form, to Lewis, which in turn resold it to contractors, who used it to insulate the underside of the school.
After ARCO rejected their tender of defense, Western and Lewis filed a third-party complaint against ARCO based on implied indemnity.
In its answer, ARCO denied any
duty to indemnify Western and Lewis, and alleged numerous affirmative defenses.
In June 1992, Western and Lewis settled the underlying subrogation action with NSB for $3.2 million. The comprehensive agreement released Western from “any and all” claims — warranty, negligence, and strict liability — and likewise, Lewis from any derivative strict liability claims. Shortly thereafter, Western, Lewis and ARCO filed cross-motions for summary judgment in the indemnity action.
The superior court denied Western and Lewis’ motion for summary judgment, holding that as third-party plaintiffs, Western and Lewis must prove that ARCO’s beads were defective. The superior court simultaneously granted ARCO’s motion for summary judgment, holding that an express indemnification provision between ARCO and Western was applicable, thus shielding ARCO from any implied indemnity claims that Western or Lewis could otherwise assert. against it. The superior court also awarded full attorney’s fees to ARCO against Western. Western and Lewis now appeal the superior court’s summary judgment orders, and ARCO cross-appeals claiming that its summary judgment motion, though properly granted, should have been granted on additional grounds as well.
III.
DISCUSSION
A.
The Superior Court Did Not Err in Denying Western’s Motion for Summary Judgment Against ARCO.
1.
The Superior Court held that Western failed to prove that ARCO’s beads were defective.
Western argues that ARCO is automatically liable as an indemnitor since Western settled the underlying subrogation claim in good faith and since it had previously tendered timely defense of this claim to ARCO.
In essence, Western asserts that based on our holding in
Heritage v. Pioneer Brokerage and Sales, Inc.,
604 P.2d 1059 (Alaska 1984), its settlement conclusively establishes ARCO’s status as an implied indem-nitor under the doctrine of strict liability. ARCO counters that Western must prove, among other things, that ARCO’s beads were defective before it is deemed an indemnitor under products liability law. Western responds that requiring it to prove that the beads were defective creates a perverse incentive for it, and other manufacturers like it, to forego settlement of the underlying claim, lose the ease at trial, and then bind ARCO as an indemnitor. Finally, Western contends that this court’s decisions in this area are “inconsistent” and “conflicting” and “have led to much confusion.”
Western’s apparent confusion probably stems from a failure to appreciate the distinction between a manufacturer and a retailer. In considering the parties’ motions, the superior court accurately summarized Alaska law:
The general rule of implied indemnity in Alaska is that an innocent supplier of a defective product who is liable on a theory of strict liability is entitled to indemnity from the manufacturer of the defective product.
Ross Laboratories v. Thies,
725 P.2d 1076, 1081 (Alaska 1986);
D.G. Shelter Products Co. v. Moduline Industries, Inc.,
684 P.2d 839, 841 (Alaska 1984). Even if no liability is found, the innocent supplier may nonetheless be entitled to indemnity from the manufacturer for the attorney’s fees and costs in defending the action.
Heritage v. Pioneer Brokerage
and Sales, Inc.,
604 P.2d 1059 (Alaska 1979). A supplier entitled to indemnity may be a retailer, a lessor, or even a manufacturer who incorporates an already defective component part into its product.
See Ross Laboratories, 725
P.2d at 1081 (retailer);
Koehring Mfg. Co. v. Earthmovers of Fairbanks, Inc.,
763 P.2d 499 (Alaska 1988) (lessor);
D.G. Shelter Products,
684 P.2d at 840 (manufacturer). A party who is independently negligent is completely barred from recovery under the theory of implied indemnity.
Koehring Mfg.,
763 P.2d at 504;
Ross Laboratories,.
725 P.2d at 1081;
Verteos Corp. v. Reichhold Chems., Inc.,
661 P.2d 619, 626 (Alaska 1983).
Heritage
stands for the following proposition: A party is entitled to indemnity for its attorney’s fees and costs when it successfully defends an action if it would have been entitled to indemnity had it lost the case after trial.
See Heritage,
604 P.2d at 1067. In footnote 27 of
Heritage
we acknowledge another application of this same principle: A party is entitled to indemnity when it settles a case if it would have been entitled to indemnity had it tried the case and lost.
See id.
While focusing on footnote 27, Western apparently neglected footnote 25 of
Heritage
which states that only the issue of attorney’s fees was before us on appeal.
Id.
That is, for purposes of appeal, the underlying issue of the manufacturer’s indemnity liability had already been established, a situation quite distinct from the case at bar.
In this instance, if, instead of settling, Western had tried the case and lost, it would not have automatically been entitled to indemnity from ARCO. Instead, it would have had to prove that the beads ARCO supplied were defective, and also would have had to prove causation, before it was entitled to indemnity.
In applying
Heritage,
Western argues that its good faith settlement with NSB should not preclude it from seeking indemnity. Western is correct: its settlement does not preclude it from seeking indemnity. However, its settlement alone does not guarantee that it is entitled to indemnification.
Western additionally argues that ARCO’s beads were defective and that it merely expanded and shaped the beads into insulation. In essence, Western’s argument is predicated on its assertion that ARCO was the manufacturer of a defective product and Western merely resold ARCO’s product — polystyrene beads — much like an intermediary does through the ordinary chain of distribution. Though in some instances the demarcation between a “manufacturer” and a “retailer” will undoubtedly be difficult to discern, this case does not present such an instance. Western, through a relatively complex procedure, processed, steamed, and molded the beads supplied by ARCO into ready-cut pieces of insulation.
Consequently, Western is not automatically entitled to indemnity from ARCO. However, it is not automatically precluded either. In short, it must prove that ARCO’s beads were defective.
See D.G. Shelter Prods.,
684 P.2d at 841.
2.
ARCO Raised the Issue of Western’s Independent Negligence.
The superior court alternatively held that even if Western had proved that ARCO’s beads were defective, summary judgment in favor of Western was still inappropriate since “ARCO ha[d] sufficiently raised the issue of Western’s] ... [independent] negligence.” It is well established that negligence is a complete bar to indemnification.
Koehring,
763 P.2d at 503-04;
see also Ross Labs.,
725 P.2d at 1081. Pursuant to Alaska Rule of Civil Procedure 8(c), ARCO affirmatively pled the issue of Western’s negligence and presented evidence in support of its defense.
As the superior court correctly concluded, ARCO “has produced evidence of negligence sufficient to overcome Western[’s] ... motion.” At trial, ARCO bears the burden of proving Western’s negligence.
B.
The Superior Court Erred in Granting ARCO’s Motion for Summary Judgment Against Western.
1.
Background.
The superior court granted ARCO’s motion for summary judgment against Western on one basis: it held that an express indemnity provision between the parties barred Western’s claim for implied indemnity. The indemnity provision was contained on the reverse side of purchase order confirmations routinely sent by ARCO to Western after Western had placed an order, but before the beads were sent. The indemnity provision states:
18. INDEMNIFICATION — Buyer
[Western] agrees to defend, indemnify and save harmless Seller [ARCO] from any and all claims of whatsoever nature including but not limited to injuries to Buyer’s or Seller’s employees or to third parties (including death), or for damages to the property of Seller, or to the property of Buyer, or of third parties, caused by, arising directly or indirectly from, or occurring in a) any handling of said materials, including but not limited to, unloading railroad ears, tank cars, trucks, tank trucks, barges, or in handling containers of materials sold, and b) any use of said materials.
Also of significance is the front side of each purchase order confirmation form. In addition to containing price and quantity information, it contains a proviso in small print at the bottom of the page which reads:
ATTENTION: “This order is accepted by us subject to the Terms and Conditions printed on the REVERSE SIDE OF THIS SHEET and your acceptance of delivery of the material set forth above constitutes acceptance of these Terms and Conditions. THE WARRANTY SET FORTH ON THE REVERSE HEREOF IS EXPRESSLY IN LIEU OF ANY OTHER EXPRESS OR IMPLIED WARRANTIES INCLUDING ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR ANY PURPOSE AND ANY OTHER OBLIGATION ON THE PART OF SELLER.”
After determining that Washington law governed interpretation of the transaction, the superior court concluded that the express indemnity provision shielded ARCO from Western’s implied indemnity claim. Western claims on appeal that the hold harmless indemnification provision was a material alteration of the parties’ agreement and thus is not a term of the contract under the UCC. Though Western did not raise this issue below, we nonetheless consider it since, for reasons discussed below, it “involves a question of law that is critical to a proper and just decision.”
Vest v. First Nat'l Bank of Fairbanks,
659 P.2d 1233, 1234 n. 2 (Alaska),
aff'd on reh’g,
670 P.2d 707 (Alaska 1983). Addi
tionally, there is a strong argument that the superior court’s failure to consider the UCC issue constitutes plain error.
See Sea Lion Corp. v. Air Logistics of Alaska, Inc., 787
P.2d 109, 115 (Alaska 1990).
2.
Choice of Law: Washington or Alaska?
Before determining the legal effect of the express indemnity provision at issue here, it is necessary to resolve a choice of law question. In summarizing the arguments below, the superior court stated:
The parties dispute whether Washington law or Alaska law governs the validity of the express indemnity clause. Western ... argues that Washington law applies because that is the place of negotiating, contracting, and performance of the sales contract containing the disputed clause. ARCO argues that the issue is whether Western ... is entitled to implied indemnity under Alaska’s common law, which would be analyzed under Alaska law.
When choice of law issues arise, we commonly refer to the
Restatement (Second) of Conflicts
for guidance.
In this instance, application of
Restatement
principles leads to the conclusion that Washington law controls.
As the
Restatement
directs, since ARCO’s purchase order confirmation form does not contain a choice of law provision, section 188 of the
Restatement
governs. It instructs that we look to the place of contracting, negotiation, and performance of the contract, all of which took place in Washington. Consequently, Washington law governs disposition of this issue.
3.
UCC Analysis: Was the Indemnification Clause Contained in ARCO’s Purchase Order Confirmation Form Incorporated into the Parties’ Agreement Under UCC Section 2-207?
Western claims, pursuant to section 2-207 of the Uniform Commercial Code (UCC), that the indemnity provision constituted a “material alteration” of the parties’ agreement and as such did not become a term of the parties’ contract. Section 2-207 of the UCC, as codified in Alaska at AS 45.02.207 and Washington at Wash.Rev.Code § 62A.2-207 (1994), states:
(1) A definite and seasonable expression of acceptance or a written confirmation which is sent within a reasonable time operates as an acceptance even though it states terms additional to or different from those offered or agreed upon, unless acceptance is expressly made conditional on assent to the additional or different terms.
(2) The additional terms are to be construed as proposals for addition to the
contract. Between merchants such terms become part of the contract unless:
(a) the offer expressly limits acceptance to the terms of the offer;
(b) they materially alter it; or
(c) notification of objection to them has already been given or is given within a reasonable time after notice of them is received.
(3) Conduct by both parties which recognizes the existence of a contract is sufficient to establish a contract for sale although the writings of the parties do not otherwise establish a contract. In such case the terms of the particular contract consist of those terms on which the writings of the parties agree, together with any supplementary terms incorporated under any other provisions of this Act.
We must first determine whether the small proviso contained on the front side of ARCO’s confirmation form converts an otherwise valid acceptance into a
de facto
rejection and counteroffer.
That is, if ARCO’s purchase order confirmation form operates as an acceptance, then the indemnification clause becomes incorporated only if it is not a “material alteration” of the parties’ contract under section 2-207(2)(b); if it operates as a counteroffer, however, the relevant question becomes whether Western accepted ARCO’s counteroffer, and thus the accompanying indemnification clause, when it accepted delivery of the beads.
As previously observed, this issue must be analyzed under Washington law. In
Hartwig Farms, Inc. v. Pacific Gamble Robinson Co.,
28 Wash.App. 539, 625 P.2d 171 (1981), the court, without specifying what type of language constitutes a counteroffer, addressed a situation similar to the one now posed. In
Hartwig Farms,
the seller argued that the buyer was bound by a warranty disclaimer clause contained on an invoice delivered with the goods. The court held that because the warranty disclaimer clause was a “material alteration,” a buyer does not assent to it by merely accepting delivery of the goods. The court stated:
In
Roto-Lith, Ltd. v. F.P. Bartlett & Co.,
297 F.2d 497 (1st Cir.1962), the court held the disclaimer on a sales acknowledgement to be a material alteration and an acceptance conditional on the offeror’s assent to the additional term. The
Roto-Lith
court also held a buyer, when he accepted goods, became bound by the additional terms set by the seller. This result has not been followed by all courts and we decline to follow it here.
Id.
at 174.
Thus, the court rendered moot any distinction between a counteroffer and an acceptance. That is, the court effectively held that when a buyer accepts delivery of goods, it does not assent to a warranty disclaimer clause, or any other clause which materially alters the contract, even if the invoice containing the clause is characterized as a counteroffer. In such cases, the only relevant question is whether the contested clause materially alters the contract under section 2-207(2)(b).
Yet ARCO argues that
Hartwig Farms
is distinguishable since it involved a warranty disclaimer clause contained on an invoice sent with the shipment of goods, whereas the instant case concerns an indemnification clause contained on a confirmation sent some time before the shipment of goods. However, we note that in
Rottinghaus v. Howell,
35 Wash.App. 99, 666 P.2d 899,
review denied,
100 Wash.2d 1016 (Wash.1983), the same court subsequently held that any distinction between an invoice and a confirmation is irrelevant. The court stated, “[T]he fact that the limitations appeared on written confirmations signed by the parties rather than an invoice as in
Hartwig
or a label attached to the container as in
Dobias [v. Western Farmer’s Ass’n,
491 P.2d 1346 (Wash.App.1971) ] is irrelevant!)]”
Rottinghaus,
666 P.2d at 905. Consequently, under Washington law, the express indemnity clause contained on ARCO’s purchase order confirmation form is enforceable only if it does not constitute a material alteration of the parties’ contract.
Generally, materiality is a question of fact.
Comments four and five to section 2-207 provide that the test for materiality is whether the newly introduced clause would result in surprise or hardship to the non-assenting party.
In Washington, the burden of showing surprise is placed on the party against whom the term would operate.
However, courts have held that certain clauses are material as a matter of law.
For instance, in Washington and elsewhere, clauses such as those listed in Code comment four, like warranty disclaimers, are routinely deemed material as a matter of law.
Similarly, though Washington
courts have not had occasion to address the issue, other courts commonly hold that indemnification clauses like ARCO’s are “material” as a matter of law.
Furthermore, we have found no ease where an indemnity clause was held to be “immaterial” under section 2-207. These factors lead us to predict that Washington courts would hold that ARCO’s indemnity clause was a material alteration of the parties’ contract under section 2-207(2)(b) of the UCC.
Therefore, we hold that the clause is unenforceable as a matter of law.
4.
Alternative Basis for Incorporation of the Indemnity Clause: Express Agreement.
Notwithstanding the above analysis, ARCO’s indemnity clause may be part of the parties’ contract provided they expressly agreed to it. That is, if the indemnity provision was expressly agreed to by Western, and thus the confirmation was merely a codification of the parties’ earlier agreement, the clause is binding and section 2-207 analysis is unnecessary.
Whether ARCO and Western expressly agreed to the indemnity clause is a factual question.
The entirety of the evidence presented by ARCO concerning the formation of its contract with Western consisted of an affidavit by a former order clerk stating that documents “acknowledging or confirming a customer’s order” were sent to Western. Even ARCO acknowledged the absence of evidence concerning contract formation in its briefing of the issue of waiver:
Had Western ... raised the issue about its negotiations with ARCO ... or otherwise called attention to this issue, ARCO ... would have had the opportunity to conduct discovery regarding the course of dealing and/or actual negotiations between the parties. Since Western ... conceded that the indemnity provision was a part of the contract, however, there was no need to try to develop such additional evidence.
Since there is an absence of evidence of an oral agreement, it can not be determined whether the parties expressly negotiated for and agreed to the indemnity clause. Thus, we conclude that summary judgment on this alternative theory is not appropriate.
C.
The Superior Court Properly Denied ARCO’s Alternative Bases for Summary Judgment.
On cross-appeal, ARCO contends that it is entitled to summary judgment for several additional reasons not relied upon by the superior court. We now address these arguments
1.
Western Substantially “Altered” the Beads.
In its brief, ARCO argues that the superior court failed to consider an alternate basis for granting summary judgment:
The trial court addressed the question of Westem[’s] ... negligence and held that ARCO ... had raised evidence of West
ern[’s] ... negligence sufficient to defeat Westem[’s] ... motion for summary judgment. However, the trial court did not explicitly address
the significance of non-negligent “active participation” or “contribution.”
[[Image here]]
The “active participation” or “contribution” by Western ... in this case, even if such conduct does not constitute negligence, should also bar any recovery by West-ern_ Because Western ... manufactured ánd marketed its insulation board, Western ... had to have “contributed to” and “actively participated” in any alleged defect in the “Insulfoam” that it sold.
(Emphasis added.) By stating as such, ARCO is asking us to consider the significance of Western’s material alteration of the beads.
ARCO’s assertion that Western actively participated in or contributed to any alleged defect in the Insulfoam by altering the beads is an affirmative defense. As ARCO correctly notes, we have held that “[ajctive participation by the indemnitee in the indemnitor’s wrong may preclude recovery on an implied contract theory.”
Kandik I,
795 P.2d at 804;
see also D.G. Shelter Prods.,
684 P.2d at 842. However, based on this premise, ARCO mistakenly concludes that Western is precluded from seeking implied indemnity.
As for whether Western’s “material alteration” of the beads precludes its claim for implied indemnity, the
Restatement (Second) of Torts
is instructive. It states:
Further Processing or Substantial Change.... It seems reasonably clear that the mere fact that the product is to undergo processing, or other substantial change, will not in all cases relieve the seller of liability under the rule stated in this Section. If, for example, raw coffee beans are sold to a buyer who roasts and packs them for sale to the ultimate consumer, it cannot be supposed that the seller will be relieved of all liability when the raw beans are contaminated with arsenic, or some other poison.... On the other hand, the manufacturer of pigiron, which is capable of a wide variety of uses, is not so likely to be held to strict liability when it turns out to be unsuitable for the child’s tricycle into which it is finally made by a remote buyer. The question is essentially one of whether the responsibility for discovery and prevention of the dangerous defect is shifted to the intermediate party who is to make the changes. No doubt there will be some situations, and some defects, as to which the responsibility will be shifted, and others in which it will not.
Restatement (Second) of Torts
§ 402A, cmt. p (1977).
Though the coffee bean example posed above does not involve a design defect, whereas Western’s allegation does, the necessary analysis remains unchanged. “Material alteration,” per se, does not preclude indemnity. Instead, the necessary focus is on the alleged defect and whether the alteration actively contributed to it. Applied to this ease, if, as a result of Western’s processing, the beads became more flammable, and this increased flammability played a role in causing the fire, then Western “actively contributed” to the defect.
Though normally a question of fact, in this instance ARCO has effectively conceded that Western did not actively contribute to the alleged defect, the flammability of the beads themselves. Rather, ARCO argues as follows:
ARCO[’s] ... defense is based upon the proposition that Western ... manufactured an insulation product, not that it altered the beads so as to increase their flammability characteristics. The flammability characteristics of the beads have virtually no bearing upon the flammability characteristics of any insulation board as installed or maintained by the [underlying] plaintiffs. The flammability characteristics of the insulation board depends upon the application of the insulation board and the measures employed by users such as the plaintiffs to protect the insulation board from fire.
In essence, ARCO is arguing that Western, either through nonfeasance or malfeasance, caused the ultimate harm. In so doing, ARCO is making two, somewhat implicit, arguments. First, it is arguing that its
beads were not defective. That is, in the words of the
Restatement,
“The seller is not liable when he delivers the product in a safe condition, and subsequent mishandling or other causes make it harmful by the time it is consumed.”
Restatement (Second) of Torts
§ 402A, cmt. g (1977). However, whether or not ARCO’s beads were defective when delivered is a threshold inquiry, not an affirmative defense, which we discuss in further detail
infra,
§§ 111(C)(2) & (C)(3).
Second, ARCO is arguing that, notwithstanding any flammability defect in its beads, Western’s subsequent processing of the beads into insulation either caused or contributed to the fire. That is, ARCO argues that Western’s marketing, labeling, and inadequate sheathing of its insulation end product, rather than any inherent flammability characteristic of the beads, caused or contributed to the fire. As we stated in
Kandik II,
“A traditional rule of indemnity, however, is that an indemnitee is not entitled to recover if the indemnitee has actively participated in the wrongful acts that caused the damage.” 823 P.2d 632, 638 (Alaska 1991).
Whether or not Western’s subsequent processing of the beads, rather than the beads themselves, caused or contributed to the damage — the fire — is a factual inquiry. Since the record does not dispositively demonstrate that it was Western’s subsequent manufacturing processes that caused or contributed to the fire, ARCO’s affirmative defense is not ripe for summary judgment.
2.
Who Has Burden of Proof ?
ARCO argues that the burden of proof test established by this court in
Caterpillar Tractor Co. v. Beck,
593 P.2d 871 (Alaska 1979), is inappropriate in this case.
Beck
states:
We hold that the plaintiff need only show that he was injured and that the injury was proximately caused by the product’s design. The defendant may then avoid liability for a defectively designed product by proving by a preponderance of the evidence that, “on balance, the benefits of the challenged design outweigh the risk of danger inherent in such design.”
Id.
at 885 (quoting
Barker v. Lull Eng’g Co., Inc.,
20 Cal.3d 413, 143 Cal.Rptr. 225, 573 P.2d 443, 458 (Cal.1978)).
ARCO contends that
Beck
establishes the “burdens of proof as between an ordinary consumer plaintiff and manufacturer.” Thus, the rationale of that decision does not apply to an implied indemnity claim by a manufacturer against one of its raw material suppliers. The rationale of
Beck
is clear. Besides lessening the burdens of plaintiffs prima fa-cie case, this allocation puts the burden of producing the relevant complex and technical evidence on the party who has the most access to and is the most familiar with such evidence.
Id.
at 886.
Contrary to ARCO’s assertion, the rationale of
Beck
does apply and the superior court correctly allocated the burden of proof upon ARCO as the bead manufacturer. The product in question in this case is ARCO’s beads, not Western’s Insulfoam. Western must prove that the beads are defective if it is to receive indemnity. Furthermore, in accordance with the rationale of
Beck,
ARCO is the “party who has the most access to and is the most familiar with” the relevant evidence of the quality of the beads since it manufactured them.
ARCO contends that this case represents an anomaly. It cites the fact that Western’s officers were active members of industry groups that conducted in-depth studies re
garding polystyrene beads.
However, the
Beck
standard for allocating burdens of proof nonetheless applies in this case because, although Western may be “fully knowledgeable about the combustion characteristics of expandable polystyrene beads,” ARCO is no less knowledgeable.
3.Western Offered No Proof as to Defect.
As discussed in detail in section 111(A),
supra,
Western must prove that ARCO’s beads were defective in order to obtain indemnity. It was for this reason that the superior court correctly denied Western’s own motion for summary judgment. In its cross-appeal, ARCO argues that Western failed to offer any proof as to whether ARCO’s beads were defective. In support of this contention, ARCO quotes the superior court’s finding that Western “offered no proof of defect in ARCO’s product.” The superior court, however, made this finding in the context of considering Western’s motion for summary judgment. When it considered ARCO’s cross-motion for summary judgment, the superior court stated:
Applying the above principles, Western ... need only show that its injury was proximately caused by the product’s design; in other words, that it paid the settlement due to the flammability characteristics of the polystyrene beads_ Proximate cause is a question of fact which must be established if Western ... is to be entitled to indemnity.
As there is a question of fact to [be] established, such must be determined by the trier of fact. Summary judgment based upon ARCO’s contention that Western ... has failed to prove the polystyrene foam was defective is thus inappropriate.
(Citations omitted.) Thus, though Western did not offer sufficient proof of defect to support its own motion for summary judgment, it did offer sufficient proof of defect to defeat ARCO’s cross-motion for summary judgment.
4.
Western as an “Innocent” Manufacturer.
In its cross-appeal, ARCO misconstrues the meaning and application of the word “innocent” as used in
Fairbanks North Star Borough v. Kandik Construction,
795 P.2d 793, 803 (Alaska 1990)
(Kandik I)
(“an innocent party who. merely passes on an already defective product in the stream of commerce is entitled to implied noncontrac-tual indemnity from the product producer”),
vacated in part on other grounds,
823 P.2d 632 (Alaska 1991). ARCO argues that since Western manufactured and marketed Insul-foam and altered the component beads, it is not “innocent” and thus is precluded from asserting its implied indemnity claim. However, “innocent,” as applied in these cases refers to the general proposition that a party’s own negligence bars a claim for implied indemnity. As such, it provides for an affirmative defense and does not preclude Western from asserting an indemnity claim.
5.
Western’s Settlement Included Negligence Claims.
ARCO argues that Western should not be entitled to recover implied indemnity since Western paid to settle a negligence claim. ARCO argues that the settlement establishes negligence on the part of West-
em, and thus bars Western from seeking indemnification from ARCO. However, ARCO’s argument, an estoppel claim, is misguided. Western’s settlement offer with the NSB explicitly denies any fault. It states, “Releasors understand that this settlement is in compromise of a disputed claim and that the payment
is not to be construed as an admission of liability on the part of the persons and entities hereby released....”
(Emphasis added.) In short, Western’s settlement agreement with the NSB in no way establishes Western’s liability.
D.
Attorney’s Fees.
The superior court held that ARCO’s express indemnity provision controlled, and thus awarded full attorney’s fees to ARCO.
Whether the award of attorney’s fees was proper is entirely dependent upon whether ARCO’s indemnity provision was part of the parties’ agreement. Since, for reasons discussed above, we have concluded that the indemnity provision is unenforceable, the superior court’s award of attorney’s fees must be set aside.
IV.
CONCLUSION
Western’s motion for summary judgment was properly denied because (1) It failed to prove that ARCO’s beads were defective; and (2) ARCO has sufficiently raised a genuine issue of material fact as to Western’s independent negligence. ARCO’s motion for summary judgment was improperly granted since the express indemnity provision relied upon is unenforceable. Furthermore, no alternative ground advanced by ARCO in its cross-appeal supports summary judgment. Accordingly, the judgment of the superior court is AFFIRMED in part, REVERSED in part, and REMANDED for further proceedings consistent with this opinion.
EASTAUGH, J., not participating.