Contractor liable for gross-negligence damage

In March 1998, Chrysler Corp. hired Graves Sheet Metal Co. Inc. to upgrade the ventilation system in its Kokomo, Ind., casting plant.

In March 1998, Chrysler Corp. hired Graves Sheet Metal Co. Inc. to upgrade the ventilation system in its Kokomo, Ind., casting plant. As part of the work, Graves leased a 250-ton crane with a 300-ft boom from R.H. Marlin Inc., a heavy-equipment lessor. On June 2, 1998, a crane operator from Marlin was relocating the crane when it toppled over, and its boom, jib and ball crashed through the roof of Chrysler's transmission plant, which was next to the casting plant, causing injuries and extensive damages.

Chrysler sued Graves and Marlin, asserting negligence, breach of contract and gross negligence. Graves and Marlin asked the Indiana trial court to grant judgment for them relying on Paragraph 30 of the construction contract, which stated that Chrysler assumed the risk of loss and damage to the work performed and that Chrysler "waives any right of recovery against the contractors and subcontractors for damage to or destruction of the above property and of other property of [Chrysler] located at the construction locations, due to all-risk perils." This provision reflects the parties' intent that Chrysler's insurer would cover any damage that might occur in the area where construction was being performed.

The trial court granted summary judgment for Graves and Marlin based on this contract provision. Although Chrysler argued that the transmission plant where the damages occurred was not a "construction location" because Graves was hired to do work at the casting plant, the court concluded that the "location of the mobile crane and the surrounding area defined by a 300-ft radius were the construction location."

Chrysler appealed to the Indiana Court of Appeals and won the right to a new trial. The appellate court agreed with the trial court that the transmission plant was a "construction location," because the crane was in a location where construction was taking place when it toppled.

Nevertheless, the court reinstated Chrysler's lawsuit, ruling that it could pursue its claim that Graves and Marlin had been grossly negligent and that negligence was the cause of the accident. Under Michigan law, which the construction contract made applicable, a party may not contract against liability for his own gross negligence. Thus, the court stated Chrysler might have a case, despite the language of Paragraph 30.

Daimler Chrysler Corp. v. Graves Sheet Metal Co., 827 N.E.2d 607 (Ind.App. 2005), Court of Appeals of Indiana, May 19, 2005.
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