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In re Indiana State Fair Litigation

Court of Appeals of Indiana

March 30, 2015

In re: Indiana State Fair Litigation.
Mid-America Sound, et al., 49D02-1111-CT-44823, Polet, et al. VanDam Estate
Mid-American Sound, et al., 49D02-1111-CT-044823-001, Urschel
Mid-American Sound, et al., 49D02-1111-CT-044823-002, Brennon
Mid-American Sound, et al., 49D02-1111-CT-044823-003, Porter
Mid-American Sound, et al., 49D02-1111-CT-044823-004, Santiago Estate
Mid-American Sound, et al., 49D02-1111-CT-044823-005, BigJohny Estate
Mid-American Sound, et al., 49D02-1111-CT-044823-006, Vinnegar
Mid-American Sound, et al., 49D02-1111-CT-044823-007, Indiana Farmers
Dave Lucas Ent., et al., 49D02-1111-CT-044823-008, Hujdich
Live Nation Worldwide Ind., et al., 49D02-1111-CT-044823-009, Fireman's Fund Ins. Co.
State of Indiana, et al., 49D02-1111-CT-044823-010

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Appeal from the Marion Superior Court; The Honorable Theodore M. Sosin, Judge; 49D02-1111-CT-44823.

ATTORNEYS FOR APPELLANT: Robert D. MacGill, Michael D. Moon, Jr., Kara M. Kapke, Matthew B. Barr, Indianapolis, Indiana.

ATTORNEYS FOR APPELLEE: Gregory F. Zoeller, Attorney General of Indiana; Thomas M. Fisher, Solicitor General; John C. Trimble, Indianapolis, Indiana.

May, Judge. Friedlander, J., concurs. Vaidik, C.J., dissents with separate opinion.


Page 335

May, Judge.

[¶ 1] For many years, the Indiana State Fair Commission (" the Commission" ) used equipment leased from Mid-America Sound (" Mid-America" ) to produce outdoor concerts, including one on August 31, 2011, where a number of people were killed or injured when a stage at the Indiana State Fair collapsed. Lawsuits followed, and Mid-America asserted cross-claims or third-party claims seeking indemnification from the Commission. The Commission moved for summary judgment on the question whether it must indemnify Mid-America, arguing the indemnity provisions in their agreements were unconscionable; violated the Indiana Tort Claims Act, Ind. Code ch. 34-13-3; could not be applied retroactively; and were outside the Commission's authority. The trial court granted the Commission's motion but did not articulate the basis for its decision. As the Tort Claims Act does not apply and there are genuine issues of fact regarding the validity and enforceability of the indemnification agreement, we reverse and remand for trial.

Facts and Procedural History[1]

[¶ 2] Mid-America provides temporary roof structures and other equipment used to produce concerts and entertainment events. The Commission operates the Indiana State Fair, and its executive director is Cindy Hoye. Since the mid-1990s, the Commission has leased equipment from Mid-America to produce concerts at the Grandstand Stage and other locations at the fairgrounds.

[¶ 3] During the last ten years of their business relationship, the Commission and Mid-America followed a standard procedure. Mid-America delivered the leased equipment to the Commission before the Fair. After the Fair, Mid-America picked up the equipment, signed about forty contracts for the rented items, and submitted

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the contracts to the Commission. The Commission audited each contract to ensure it reflected the parties' agreement, then paid Mid-America.

[¶ 4] Before 2003, the invoices Mid-America submitted did not include an indemnification provision, but that year the parties began using a form lease contract, which they continued to use for the next nine years. It did include indemnification provisions. During that period the parties executed over one hundred leases.

[¶ 5] Each lease consisted of a double-sided invoice and a single-sided claim voucher. The front side of the invoices identified the leased goods and the payment due. It included the delivery and return dates for the goods and the " class" of rental -- in this case, " show." (App. at 541.) On the back, the invoices included " Conditions of Contract" in two sections of the document. In the " Rentals" section, the Commission agreed " to assume the entire responsibility for the defense of, and to pay, indemnify, and hold [Mid-America] harmless from and hereby releases [Mid-America] from any and all claims for damage to property or bodily injury (including loss of life) resulting from" the use of Mid-America's equipment. ( Id. at 542.) In the " Shows" section of the same " Conditions of Contract," the Commission again agreed to " pay, indemnify, and hold harmless [Mid-America] from and hereby releases [Mid-America] from any and all claims for damage to property or bodily injury" resulting from the use of the equipment. ( Id. ) The Commission reviewed and paid each invoice.

[¶ 6] The claim vouchers that accompanied the invoices were drafted by the Commission and the Commission directed Mid-America to use them. Over the signature line for " State Fair Official" the claim voucher included the language: " I certify that the attached invoice is true and correct . . . and was in accordance with the contract." ( Id. at 544.) The " standard protocol," ( id. at 492), was that the claim voucher had to be executed by two officials -- it was certified by a State Fair official as true and correct and in accordance with the contract, then it was approved by the executive director of the Commission.

[¶ 7] In 2009 the Commission hired a contracts officer, who worked to adopt a " sole source," ( id. at 473), agreement that would allow the Commission to accept equipment and services from Mid-America without requiring the Commission to engage in a bidding process. In 2011, the Commission asked Mid-America to send a letter explaining the services Mid-America would provide in 2011. The Commission asked that the letter refer to the long-term working relationship between the Commission and Mid-America, and to indicate Mid-America's " satisfaction with how business has been done with [the Commission] . . . regarding payments, invoices, etc." ( Id. at 475.) Mid-America did so, and the letter referred to the parties' prior course of dealing. The letter noted Mid-America had always provided the Commission with lower-than-normal pricing for production services, and it was able to do so because it worked so well with the Commission's Events Services Manager, who " understands our billing and the timing and manner in which invoices are paid." ( Id. at 481.) Because of that " long term relationship," ( id. ), Mid-America could maintain expenses at the same level or limit any increase.

[¶ 8] Also in 2011, the Commission sent Mid-America its " Standard Terms and Conditions that it provided in all contracts." (Br. of Appellee Indiana State Fair Commission (hereinafter Commission's Br.) at 5.) That document included language that Mid-America would agree to indemnify and hold harmless the Commission,

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but the Commission would not provide such indemnification to Mid-America. The Commission does not direct us to anything in the record indicating the parties ever entered into any agreement including those standard terms and conditions, and the record evidence is that Mid-America did not receive that document.

[¶ 9] The Commission hired Mid-America to provide equipment for the 2011 State Fair, where strong winds blew the temporary roof structure and audio equipment to the ground. After the 2011 Fair, Mid-America submitted to the Commission documents and invoices that included the same defense and indemnity provisions that had been in the lease agreements in prior years. The Fair's Director of Events signed the vouchers, certifying each was " true and correct" and " in accordance with the contract." ( E.g., App. at 525.) Then Hoye, the Commission's Executive Director, reviewed and executed the contracts, giving them " special scrutiny" because of the stage collapse. ( Id. at 503.)[2] The Commission's Chief Financial Officer audited Mid-America's invoice for the temporary roof structure, which included the defense and indemnity provisions, certifying it was true and correct and in accordance with the contract.

[¶ 10] When various plaintiffs commenced lawsuits against Mid-America and others, Mid-America asked the Commission to defend and indemnify it, but the Commission refused. Mid-America then filed third-party claims and cross-claims against the Commission. The Commission moved for and was granted summary judgment.

Discussion and Decision

[¶ 11] We review summary judgment de novo, applying the same standard as the trial court. Hughley v. State, 15 N.E.3d 1000, 1003 (Ind. 2014). Drawing all reasonable inferences in favor of the non-moving party, we will find summary judgment appropriate if the designated evidence shows there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Id. A fact is material if its resolution would affect the outcome of the case, and an issue is genuine if a trier of fact is required to resolve the parties' differing accounts of the truth, or if the undisputed material facts support conflicting reasonable inferences. Id.

[¶ 12] The initial burden is on the summary-judgment movant to demonstrate there is no genuine issue of fact as to a determinative issue, at which point the burden shifts to the non-movant to come forward with evidence showing there is an issue for the trier of fact. Id. While the non-moving party has the burden on appeal of persuading us a summary judgment was erroneous, we carefully assess the trial court's decision to ensure the non-movant was not improperly denied his day in court. Id.

[¶ 13] Our summary judgment policies aim to protect a party's day in court. Id. While federal practice permits the moving party to merely show that the party carrying the burden of proof lacks evidence on a necessary element, we impose a more onerous burden -- to affirmatively negate an opponent's claim. Id. That permits summary judgment to " be precluded by as little as a non-movant's 'mere designation

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of a self-serving affidavit.'" Id. (quoting Deuitch v. Fleming, 746 N.E.2d 993, 1000 (Ind.Ct.App. 2001), trans. denied ). Summary judgment is not a summary trial, and it is not appropriate just because the non-movant appears unlikely to prevail at trial. Id. at 1003-04. We " consciously err[] on the side of letting marginal cases proceed to trial on the merits, rather than risk short-circuiting meritorious claims." Id. at 1004.

[¶ 14] No public policy prevents parties from contracting as they desire, and in Indiana, a party may contract to indemnify another for the other's own negligence. GKN Co. v. Starnes Trucking, Inc., 798 N.E.2d 548, 552 (Ind.Ct.App. 2003). However, such provisions are strictly construed and will not be held to provide indemnification unless it is so stated in clear and unequivocal terms. Id. We disfavor indemnification clauses because to obligate one party for the negligence of another is a harsh burden that a party would not lightly accept. Id.

Unconscionability and Enforceability

a. Retroactive Application

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