The City of Fresno entered into a written contract with the 21st District Agricultural Association, Big Fresno Fair whereby the City agreed to provide onsite police protection and law enforcement services to the Big Fresno Fair that would be held in October of 2011, 2012 and 2013. The District agreed to pay the City approximately $700,000 over the three-year term.
The contract contained a broad indemnification provision requiring the District to indemnify the City from all claims, expenses or liability occasioned by the City’s performance of the contract.
However, the contract also required the City to maintain certain insurance coverages “protecting the legal liability” of the District, including workers’ compensation coverage. The City’s method of furnishing such insurance coverage during the term of the contract was self-insurance.
In October of 2012, while providing law enforcement services at the Big Fresno Fair pursuant to the contract, two of the City’s police officers were injured when attempting to restrain a belligerent patron. The injuries resulted in the City paying out workers’ compensation benefits for the two police officers.
Later, the City sought to recover these amounts from the District under the contract’s indemnification provision. When the District refused to indemnify the City, the present action for breach of contract was commenced by the City against the District.
The parties filed cross motions for summary judgment in the trial court, with the City and the District each arguing alternative interpretations of the contract. The trial court agreed with the District that the specific insurance requirement placed the risk of loss for workers’ compensation claims for police services performed under the contract squarely on the City. The court of appeal affirmed the summary judgment against the City in the unpublished case of City of Fresno v. 21st District Agricultural Assn.
Where possible, courts are to interpret contractual language in a manner that gives force and effect to every provision, and not in a way that would render a provision nugatory, inoperative or meaningless.
It appears that the most reasonable way to harmonize the two provisions is to recognize, as the trial court did, that the insurance requirements placed the risk of loss on the City for claims covered by the agreed-upon insurance coverage (such as payment of workers’ compensation benefits), while the indemnification provision required the District to indemnify the City for all other (e.g., uninsured or uncovered) losses that might arise out of the provision of services under the contract, excepting those relating to the City’s own negligence or willful misconduct.
This interpretation is a reasonable reconciliation of the two contrasting provisions in a manner that gives meaningful effect to both, while avoiding any absurd or unreasonable results.