Rush, Chief Justice.
Indiana courts strictly construe contracts to indemnify a party against its own negligence— recognizing that a party would not lightly accept liability for someone else’s negligence. … And the need for explicit language is especially important when an agreement involves retroactive indemnity— since even in insurance contracts, where indemnity is the central purpose, we presume that insurers would not accept liability for a known, existing loss.
Here, Mid-America Sound argues that the Indiana State Fair Commission accepted liability for an existing, catastrophic loss—not through explicit contract language calling for retroactive indemnification, but through a years-long course of conduct in paying invoices that had standard indemnity language on the back. But as a matter of law, a form of liability so disfavored (especially when retroactive) cannot be implied from a course of dealing when it is not expressed by clear and unequivocal contract language. We therefore grant transfer and affirm the trial court’s grant of summary judgment for the Commission.
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The Indiana State Fair Commission (the “Commission”) manages the Fair, and by extension, the concerts and other major events that take place at the Fair. Since the 1990s, the Commission utilized Mid-America Sound (“Mid-America”) to provide equipment and services for those concerts and events. That equipment often included a temporary roof for the grandstand stage, speakers, and lights.
During the last ten years of their relationship, the Commission and Mid-America followed a standard routine. Before each Fair, they agreed on the equipment to be delivered and the corresponding prices. Then after the Fair, Mid-America would collect the equipment and submit a blank claim voucher form, with invoices for the rentals attached. [Footnote omitted.] The Commission would then verify whether all the invoiced items had actually been provided and, if so, sign the claim voucher to authorize payment. All told, the parties followed this course of dealing more than a hundred times over those ten years.
Tragedy struck on the night of August 13, 2011. Just prior to the Sugarland concert at the grandstand stage, strong winds approached the Fairgrounds. While Mid-America’s on-site technicians worked to remove equipment hanging from Mid-America’s roof, the roof collapsed, killing seven people and injuring many more. Shortly thereafter, the victims and families filed lawsuits naming several defendants, including Mid-America and the Commission. Then, on December 7, 2011, while those lawsuits were still pending, Mid-America sent the Commission a two-sided invoice for the lease of the collapsed roof and services provided, along with the single-sided claim voucher form. Above the Commission’s signature, the voucher contained certifications “that the attached invoice is true and correct” and “in accordance with contract.” The Commission signed the voucher and authorized payment, which it remitted via check.
In March 2012, Mid-America filed a third-party lawsuit against the Commission, claiming that two sentences located on the back of the December 2011 invoice entitled it to indemnification for its own negligence in relation to the August 2011 roof collapse. * * *
Mid-America and the Commission proceeded to file cross-motions for summary judgment, taking opposite positions about whether the December 2011 invoice’s indemnity language applied retroactively to the August 2011 roof collapse. The trial court granted the Commission’s motion, and Mid-America appealed. A divided Court of Appeals reversed and remanded, finding that genuine issues of material fact existed regarding whether the Commission knowingly and willingly agreed to indemnify Mid-America for the roof collapse. In re Ind. State Fair Litigation, 28 N.E.3d 333, 343 (Ind. Ct. App. 2015).
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Discussion
I. Indiana Enforces Indemnity Provisions With Skepticism, Recognizing That Parties Would Not Lightly Accept Liability for Someone Else’s Negligence—Especially for Existing Losses.
A. Indiana requires “clear and unequivocal” language to indemnify for another’s own negligence—tacitly recognizing that retroactive indemnity for existing losses is a burden few would willingly accept.
Our analysis begins with a dim view of indemnity clauses like the one at issue here. … [I]ndemnity provisions are strictly construed—we treat them as “disfavor[ed] . . . because we are mindful that to obligate one party to pay for the negligence of another is a harsh burden that no party would lightly accept.” [Citation omitted.] Accordingly, indemnity is permissible only if the contract language shows in “clear and unequivocal terms” that the obligated party “knowingly and willingly agrees to such indemnification.” [Citation omitted.]
Moreover, our courts have generally taken for granted that the parties would be bargaining about prospective liability, by referring to “future acts of negligence” or making the agreement “in advance.” [Citation omitted.] That assumption—that parties would bargain over only prospective liability—is rooted in the very nature of allocating risk.
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… If a potential future liability “is a harsh burden that a party would not lightly accept,” [citation omitted] then actual retroactive liability for a known loss is harsher still—indeed, it would ordinarily be a fool’s bargain. “This is not to say, however, that parties may not explicitly agree to cover existing losses”—that is, “in clear and unequivocal terms,” to be strictly construed. [Citations omitted.] But Indiana law makes clear that we will not infer a party’s agreement to such an onerous liability unless that intent is expressed unmistakably.
B. Because indemnity provisions must be expressed unambiguously—especially when retroactive—they may not be inferred from a course of dealing.
Though Indiana contract law suggests a particularly strong disfavor for retroactive indemnity provisions as discussed above, we have never squarely addressed the retroactivity question. Nine other jurisdictions, however, have similarly concluded that such an extraordinary obligation as retroactive indemnity must be expressed unmistakably. …
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Bearing in mind the skepticism with which Indiana and other states view alleged agreements to indemnify retroactively for known losses, we now turn to Mid-America’s contention that it reached such an agreement with the Commission through a long-running course of dealing.
II. Because the Contract Language Fails to “Clearly and Unequivocally” Provide Retroactive Indemnification for a Known Loss, We Will Not Infer Such a Provision from a Course of Dealing.
Though none of the indemnity language in this invoice expressly extends to losses prior to the invoice date, Mid-America argues that its course of dealing with the Commission established such an agreement—or at least raises a question of fact of whether such an agreement existed. Again, the parties stopped exchanging contracts before the Fair in 2002 and began using claim vouchers and invoices after the Fair—and then, starting in 2003, the invoices included the same indemnity language at issue here. …
In essence, Mid-America argues that under this course of dealing, the invoices’ indemnity language is not being applied retroactively. Instead, it asserts that the invoices memorialized a standing recognition from each previous year’s dealings that the following year’s rental would be subject to the same indemnification requirements. But the Eighth Circuit, applying Nebraska law, rejected * * * an argument much like the course-of-dealing claim Mid-America makes here—that Emmet knew its installation would be subject to the indemnity provisions of [a] “standard license agreement,” which Emmet had signed twice before as part of similar installations * * * . Id. [T]he Court refused to rely on that course of dealing “to infer the existence of a type of obligation that is not favored in Nebraska courts” in the absence of “clear and unequivocal language”— specifically noting that “Nebraska law requires specific proof of the indemnitor’s intent to be bound by such an extraordinary obligation.” Id. (citation omitted).
We reach the same conclusion here, for the same reasons. As we have explained, Indiana law likewise requires a “clear and unequivocal” expression of a “knowing[] and willing[]” agreement to indemnify a party for its own negligence—and moreover, to say so “explicitly” if they further intend that liability “to cover existing losses.” [Citations omitted.] Even accepting all of Mid-America’s evidence as true for purposes of summary judgment, [citation omitted], the parties’ course of dealing cannot substitute for a “clear and unequivocal” indication in the contract itself that the Commission “knowingly and willingly” agreed to indemnify Mid-America for its own negligence in connection with a catastrophic loss that had already happened. [Citation omitted.]
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In summary, then, the principle we deduce from Indiana contract law (and confirmed by the States that follow similar principles) is this: Indemnification for another party’s negligence—especially retroactively—is an “extraordinary obligation” that is generally “not favored.” [Citation omitted.] Accordingly, as a matter of law, we will not infer that obligation from a course of dealing when, as here, the parties’ contract does not expressly call for it in “clear and unequivocal terms.” [Citation omitted.] The trial court therefore correctly granted summary judgment for the Commission and against Mid-America.
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Dickson, Rucker, David, and Massa, JJ., concur.