Pacific Gas & Electric Co. v. G.W. Thomas Drayage & Rigging Co.

In 1960, Defendant entered into a contract with Plaintiff to provide labor and equipment necessary to remove and replace the upper cover for Plaintiff’s steam turbine. Defendant agreed to perform the work at its own risk and expense and to indemnify Plaintiff for any “loss, damage, expense and liability resulting from injury to property” or any other act associated with performance of the contract. During performance, the cover fell and damaged part of the exposed rotor of Plaintiff’s turbine. Plaintiff brought suit to recover $25,144.51 in damages. The trial court awarded judgment for Plaintiff on the ground that Defendant’ indemnity clause protected Plaintiff from damage to its own property. The trial court concluded that the “plain meaning” of the indemnity clause in Defendant’ contract was to permit indemnification of damage to Plaintiff’s property in addition to the property of third parties. The trial court admitted no extrinsic evidence on this issue. Defendant appealed, arguing that the extrinsic evidence should be admissible to show that the “plain meaning” of the indemnity clause was that it should only apply to damage of the property of third parties, not Plaintiff.