A motorist suffered injuries when her car went out of control after encountering a drop-off when she left the paved roadway in a construction zone. The motorist sued the highway construction contractor and the South Carolina Department of Transportation (DOT). The jury found the DOT solely at fault. The DOT appealed, citing trial court errors. The appeals court agreed with the trial court, ruling that the construction company's contract was ambiguous and the contractor's indemnity bond did not exempt the DOT from liability.

CRASH

On July 15, 1990, Tracy Lynn Penton (Penton) drove south on two-lane Highway 17-A in Colleton County, South Carolina. Penton was in the left lane passing a car when she felt a sudden jerk on her vehicle's left side. The vehicle went off the paved roadway. When Penton pulled back onto the pavement, the car fishtailed and she lost control. Her car went off the left side of the road and flipped down an embankment. The crash threw her from the car and broke her back.

The DOT had hired a resurfacing contractor, J. F. Cleckley & Co. (Cleckley), who had recently repaved the section of highway where Penton's crash occurred.

TRIAL COURT DECISION

Penton sued Cleckley and the DOT in Colleton County Circuit Court. She argued that Cleckley (1) failed to perform the provisions of its resurfacing contract, (2) created a dangerous three-inch to four-inch drop-off on the highway shoulder, (3) failed to build up the shoulder to correct the drop-off, and (4) failed to warn drivers with signs or barriers. Penton alleged the DOT (1) failed to warn drivers with signs or barriers and (2) failed to build up the road shoulder.

Cleckley and the DOT counterclaimed, alleging contributory negligence. The DOT cross-claimed against Cleckley, asserting that Cleckley's required indemnity bond insulated the DOT from liability; therefore, Cleckley was solely at fault. Cleckley and the DOT agreed the trial judge could rule on the bond issue after the jury's verdict. The jury found the DOT solely at fault, and the trial judge ruled Cleckley's indemnity bond did not protect the DOT. The DOT appealed.

APPEALS COURT DECISION

The appeals court considered two issues:

I. Admission of Testimony

The DOT argued that the trial judge improperly allowed its employees to testify regarding their understanding of the parties' responsibilities under Cleckley's resurfacing contract. The DOT maintained it was Cleckley's responsibility to place warning signs.

Testimony showed the contractor had to remove the dirt against the road edge in order to clean the area to be resurfaced. After repaving, the contractor had to move that dirt back to the roadway edge. The DOT was responsible for adding the necessary dirt to match the shoulder height to the pavement height.

Testimony also showed the DOT had responsibility for low-shoulder signs. Additional material was needed to build up the shoulders; however, the DOT had to wait for the new asphalt to cure. During this waiting period, the shoulders were lower than the pavement, and the DOT was to put up low-shoulder signs. The DOT argued testimony regarding these responsibilities was inadmissible, because it differed from the terms of Cleckley's written contract.

The appeals court disagreed, citing the parol evidence rule: "[E]xtrinsic evidence is inadmissible to vary or contradict the terms of an integrated agreement." (Levy v. Outdoor Resorts, 304 S.C. 427, 405 S.E.2d 387 (1991)). However, the court noted, "[W]here a contract is ambiguous, parol evidence is admissible to ascertain the true meaning and intent of the parties. . . . An ambiguous contract is one capable of being understood in more ways than just one or one unclear in meaning because it expresses its purpose in an indefinite manner." (Klutts Resort Realty, Inc. v. Down'Round Devp. Corp., 268 S.C.80, 232 S.E.2d 20 (1977) and others.)

Cleckley's contract with the DOT stated, in part:

The appeals court found part of the contract ambiguous; it was unclear what type of signs the contract required Cleckley to install. The contract also lacked a definition of "traffic control device" and did not address whether a low-shoulder warning sign is a traffic control sign.

The appeals court determined from the contract that Cleckley was not required to provide every sign used during construction. Since Cleckley had finished repaving by the time Penton's crash happened, the DOT controlled the site and had responsibility for building up the road shoulders. Finding no guidelines for what constitutes a low shoulder, the court pointed out:

II. Indemnity Agreement

Cleckley's resurfacing contract required that the contractor indemnify the DOT "from all suits or claims of any character brought because of any injuries or damage received or sustained by any person, persons, or property on account of . . . any act or omission, neglect, or misconduct of said contractor." Cleckley provided a performance and indemnity bond. The parties agreed to wait for the jury's liability decision and treat the indemnification issue as part of post-trial motions. When the jury found the DOT liable for Penton's injuries, the trial judge ruled that Cleckley had no duty to indemnify.

Arguing this ruling was in error, the DOT contended the South Carolina Tort Claims Act limited the DOT's liability. Moreover, they said Cleckley's contract assigned to the contractor the duties the DOT contended Cleckley had breached.

The appeals court disagreed, citing S.C. Code Ann. Section 15-78-60 (15)(Supp. 1995), which provides ". . . the governmental entity is not liable for loss when it is protected by an indemnity bond." The court countered, "This is certainly not dispositive since the entire issue here is whether [DOT] is protected by this bond." In addition, under this contract the DOT could seek indemnification only "'on account of . . . any act of omission, neglect, or misconduct' of Cleckley." Given Penton sued both the DOT and Cleckley and the jury failed to find Cleckley at fault, the appeals court found the jury's verdict "dispositive of the indemnification issue" and concluded that "the judge's ruling was proper."

On November 19, 1996, the Supreme Court of the State of South Carolina affirmed the trial court's decision and assigned sole liability to the DOT.