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State Fair invoices do not retroactively indemnify company in stage collapse

January 28, 2016

The terms on invoices from the company contracted to provide equipment for concerts at the State Fair do not imply retroactive indemnification for the company after the 2011 stage collapse, the Indiana Supreme Court held Thursday in a matter of first impression.

The justices granted transfer to In Re: Indiana State Fair Litigation, Mid-America Sound Corporation v. Indiana State Fair Commission, et al., Jill Polet, et al., 49S02-1601-CT-51, to determine whether the trial court properly granted summary judgment to the Indiana State Fair Commission on the issue of whether the commission accepted liability for the stage fair collapse through a years-long course of conduct in paying invoices that had standard indemnity language on the back.

For 10 years before the August 2011 accident during a Sugarland concert in which high winds toppled stage equipment, killing seven and injuring dozens, the State Fair Commission and Mid-America Sound followed the same procedure. Before the fair, the parties agreed on the equipment and prices; after the fair, Mid-America would submit a blank claim voucher form with invoices for the rentals attached. The commission would then sign the claim voucher to authorize payment if it was correct.

In December 2011, while lawsuits were pending from victims of the stage collapse against the parties at issue in the instant case, Mid-America followed this procedure and sent an invoice to the commission. The commission signed the voucher.

Mid-America claimed that two sentences on the December 2011 invoice entitled it to indemnification for its own negligence in relation to the stage collapse. The trial court granted the commission’s motion for summary judgment; a divided Court of Appeals reversed and remanded because of genuine issues of material fact.

Indiana requires “clear and unequivocal” language to indemnify for another’s own negligence – tacitly recognizing that retroactive indemnity for existing losses is a burden few would willingly accept, Chief Justice Loretta Rush wrote for the unanimous court. And because indemnity provisions must be expressed unambiguously – especially when retroactive – they may not be inferred in a course of dealing, she noted, citing cases from jurisdictions that have squarely addressed this retroactivity question.

The trial court therefore correctly granted summary judgment for the commission and against Mid-America, the justices held.

“In view of that conclusion, we express no opinion on whether the Commission is a governmental entity with immunity under the Indiana Tort Claims Act (ITCA), Ind. Code ch. 34-13-3; whether indemnity for another party’s negligence is a tort- or contract-based liability for ITCA purposes; or whether the invoices’ indemnity language is void against public policy. But those arguments do illustrate why Mid-America’s failure to make a ‘clear and unequivocal’ demand for retroactive indemnification is particularly significant in these circumstances,” Rush wrote.

“Regardless of their merits, those claims are not implausible — and therefore it seems that a party seeking to impose such a disfavored liability under these circumstances would have particular incentive to draft its contract in the clearest and most unequivocal terms possible. Mid-America’s failure to do so here further underscores why we should not infer an extraordinary liability when a contract fails to provide for it expressly.”
 

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