COURT OF APPEALS OF OHIO, EIGHTH DISTRICT COUNTY OF CUYAHOGA NO. 59137 : KRASNY-KAPLAN CORPORATION : : JOURNAL ENTRY Plaintiff-Appellee : : and -vs- : : OPINION : FLO-TORK, INC. et al. : : Defendant-Appellant : : DATE OF ANNOUNCEMENT OCTOBER 3, 1991 OF DECISION: CHARACTER OF PROCEEDING: Civil appeal from Common Pleas Court Case No. 114,582 JUDGMENT: Reversed. DATE OF JOURNALIZATION: __________________________ APPEARANCES: FOR PLAINTIFF-APPELLEE: FOR DEFENDANT-APPELLANT: JEFFREY EMBLETON LINCOLN OVIATT 2150 Illuminating Building 255 North Market Street 55 Public Square P. O. Box 488 Cleveland, Ohio 44113 Wooster, Ohio 44691 -2- PATRICIA A. BLACKMON, J.: The appellant Flo-Tork timely appeals the trial court's award of attorney fees and expenses to the appellee Paul Spuhler on his motion for indemnification. The appellant challenges the trial court's authority to issue this order when both the appellant and the appellee were co-defendants in the underlying case, and they were exonerated from liability by a jury verdict. Moreover, the appellant declares that there was no express or implied agreement for indemnification. For the reasons set forth below, we reverse the trial court's decision. The underlying case was one of products liability wherein plaintiff, Krasny-Kaplan Corporation, sued both Flo-Tork and Peter A. Spuhler. Flo-Tork was the manufacturer of the product in question and Spuhler was the distributor who made the sale to the plaintiff. There were numerous claims pursued on behalf of the respective parties. The case proceeded to a jury trial on Krasny-Kaplan's claim for strict liability against Flo-Tork, Krasny-Kaplan's claims against Spuhler for breach of express warranties, breach of implied warranties of merchantability and fitness for a particular purpose, strict liability, and negligent misrepresentation, and the respective counterclaims and cross- claims that were filed on behalf of the defendants. During the trial the appellee decided to have the matter of indemnification for attorney fees and expenses determined by the trial court. The appellant stipulated to the reasonableness of -3- the attorney fees claimed by the appellee. Nevertheless, the appellant was also very clear that it had no obligation to indemnify the appellee for the attorney fees. The jury returned verdicts in favor of Flo-Tork and Spuhler on the claims of Krasny-Kaplan. A verdict was returned in favor of Krasny-Kaplan on the counterclaims of both defendants. Also, a verdict was returned in favor of Flo-Tork on Spuhler's cross- claim. These judgments were entered on or about November 2, 1989. Thereafter, the appellee filed a motion requesting a hearing on his claim for costs and attorney fees against the appellant. The hearing was conducted on or about December 20, 1989, and some time after the hearing, the trial court ordered that Flo-Tork pay attorney fees and costs to Spuhler in the amount of approximately Fifteen Thousand Four Hundred and Ninety-four Dollars ($15,494.00). In support of its claimed error, the appellant asserts the following assignment of error: THE COURT ERRED IN RULING THAT DEFENDANT-APPELLEE SPUHLER, AN INDEPENDENT SALES CONTRACTOR, WAS ENTITLED TO INDEMNIFICATION FOR ATTORNEY FEES AND EXPENSES FROM DEFENDANT-APPELLANT FLO-TORK, A MANUFACTURER OF GOODS PURCHASED AND SOLD BY SPUHLER, WHEN THE JURY VERDICT EXONERATED BOTH SPUHLER AND FLO-TORK OF ANY LIABILITY TO THE PLAINTIFF PURCHASER OF THE GOODS. The issue presented in this case is whether Spuhler has either a contractual right of indemnity or a common law indemnity action against Flo-Tork that would entitle him to indemnification for attorney fees and costs expended to defend himself, as an -4- independent manufacturer's representative, in a products liability lawsuit. Indemnity, then, is the right of a person who is only secondarily liable to recover from the person primarily liable for proper expenditures paid to a third party injured through the violation of their common duties. Lattea v. Akron (1982), 9 Ohio App. 3d 118, 122. Initially, based upon this definition, it would appear that Spuhler would not be entitled to indemnity purely as a defini- tional matter. In the instant case, it was determined that neither Flo-Tork or Spuhler were liable to the plaintiff. It must, therefore, follow that no primary or secondary liability was established and no expenditures, proper or improper, were paid to Krasny-Kaplan by Spuhler. However, this appeal poses a more narrow question of whether a co-defendant, who has neither been deemed either primarily or secondarily liable nor made any expenditures to an injured third- party, may be indemnified by another co-defendant for attorney's fees and costs of his own defense. Clearly, the answer is no. This court, in Doyle v. Fisher Foods, Inc. (March 18, 1982), Cuyahoga App. No. 43701, unreported, ruled that the payment of attorney fees by one defendant to another co-defendant, when the jury found in favor of the plaintiff against both of the co- defendants, would be improper absent an express contractual arrangement for such a payment. -5- This court was very quick, in Doyle, to draw a distinction between common law indemnity rights and contractual indemnity rights. "A contractual indemnity claim arises out of an agree- ment between the parties that one will be responsible for losses incurred by the other in specified circumstances." Id. at 12. "A common law indemnity action arises from tort or quasi-contract responsibility." Id. The contractual agreement between Flo-Tork and Spuhler was a Distributor Licensing Agreement. Section 3.03 of this Distributor Licensing Agreement expressly states: Distributor shall pay all sales, personal property or other taxes as they shall become due and as they may relate to its Flo-Tork products. Distributor agrees to indemnity and hold harmless Flo-Tork from all taxes, claims, demands, or causes of action which arise out of or are incident to actions by Distributor, its agents or representatives relating to the sale, delivery or service of Flo-Tork products, which indemnity shall include attorney's fees and costs of the defense of any of such claims, demands, or causes or action. (Emphasis added.) In theory, an argument could have been made that Flo-Tork was entitled to indemnification from Spuhler based on a claim of contractual indemnification pursuant to Section 3.03. A substantial part of the plaintiff's cause of action was premised on causes of action arising out of or incident to actions by the distributor, Spuhler. Section 3.03 expressly provides for indemnification of attorney fees. Because there is no such contractual arrangement like the Distributor Licensing Agreement requiring Flo-Tork to indemnify Spuhler for attorney fees, the only theory available to the -6- appellee regarding indemnity for attorney fees would have to be an action for common law indemnity. Common law indemnity rights stem from different legal principals than contractual indemnity rights, so there is no reason why the measure of damages should be similar in such actions. Doyle at 11. Construing contractual indemnity language, a court might well find that the reasonable objective intention of the parties was reimbursement for all losses, including various forms of consequential damages. Attorney fees constitute one form of consequential damages. Id. at 12. With respect to consequential damages in the common law indemnity context, this court stated in Doyle at 12 that if one co-defendant is entitled to recover attorney fees as consequen- tial damages for the wrongful conduct of second co-defendant towards it, then any tort victim should be equally entitled to recover attorney fees from the tort feasor as part of his consequential damages. But Ohio law clearly rejects that analysis. Id. at 12. This court went on to state in Doyle at 13: For all these reasons, this court should not create a new rule of damages, particularly without any legisla- tive guidance, when the traditional rule has denied such damages in the absence of specific legislative provision for such recovery. Fisher should be granted judgment notwithstanding the verdict on its cross-claim against Coke but that judgment will not include attorney fees. The rule in Doyle was followed by the Ohio Court of Appeals -7- First District, in the case of Davis v. Glen Forest, Inc. (June 21, 1989), Hamilton App. No. C-88099, unreported. Davis is factually identical to the instant case to the extent that the plaintiff failed to establish liability against the defendants, one defendant had filed a cross-claim for indemnification and attorney-fees against the other defendants, and the trial court granting the co-defendant's claim for attorney fees. Citing Doyle, the First District Court of Appeals held that since the plaintiff failed to obtain a judgment against the defendants and there was no express or implied agreement for indemnification the trial court erred in awarding the attorney fees. "Absent a contractual provision for indemnification or for the payment of attorney fees in defending the lawsuit, neither Glen Forest, McDonald nor Rozic incurred an obligation to pay Blaker's legal fees." Id. at 2. With respect to this appeal, the only evidence of a contractual right of indemnification for attorney fees is contained in Section 3.03 of the Distributor Licensing Agreement. This section of the agreement supports a theory that Spuhler had a contractual indemnity obligation to reimburse Flo-Tork for its attorney fees, this language is evidenced on the face of the agreement. The plaintiff did not prevail against either Flo-Tork or Spuhler. Therefore, there can be no claim for reimbursement on the cross-claims, such reimbursement only going to the satisfaction of a judgment and not attorney fees. -8- Consequently, we hold that absent a contractual provision that provides for the indemnification of attorney fees in defense of a lawsuit, a co-defendant has no cause of action for indem- nity from another co-defendant for attorney fees and costs of his own defense. Judgment reversed. -9- This cause is reversed. It is, therefore, considered that said appellant recover of said appellee its costs herein taxed. It is ordered that a special mandate be sent to said court to carry this judgment into execution. A certified copy of this entry shall constitute the mandate pursuant to Rule 27 of the Rules of Appellate Procedure. Exceptions. NAHRA, P.J., and PATTON, J., CONCUR. PATRICIA A. BLACKMON JUDGE N.B. This entry is made pursuant to the third sentence of Rule 22(D), Ohio Rules of Appellate Procedure. This is an announcement of decision (see Rule 26). Ten (10) days from the date hereof this document will be stamped to indicate journaliza- tion, at which time it will become the judgment and order of the court and time period for review will begin to run. .