Precision Air, Inc. v. Standard Chlorine of Delaware, Inc.

Decision Date17 January 1995
Docket Number1994,No. 335,335
PartiesPRECISION AIR, INC., a Delaware Corporation, Third Party Defendant Below, Appellant, v. STANDARD CHLORINE OF DELAWARE, INC., a Delaware Corporation, Defendant and Third Party Plaintiff Below, Appellee, and Lisle E. Shaffer and Patricia A. Shaffer, Individually and as Husband and Wife, Plaintiffs Below. . Submitted:
CourtUnited States State Supreme Court of Delaware

Interlocutory appeal from the Superior Court. AFFIRMED AND REMANDED.

William J. Cattie, III (argued), Heckler & Cattie, Wilmington, for Precision Air, Inc., appellant.

William F. Taylor, Natalie S. Wolf (argued), Young, Conaway, Stargatt & Taylor, Wilmington, for Standard Chlorine of Delaware, Inc., appellee.

Before VEASEY, C.J., WALSH and HARTNETT, JJ.

VEASEY, Chief Justice:

In this interlocutory appeal we consider the contention of third-party defendant below-appellant Precision Air, Inc. ("Precision") that the Superior Court erred in denying its motion to dismiss a third-party complaint filed by defendant/third-party plaintiff below-appellee Standard Chlorine of Delaware, Inc. ("Standard"). This case requires us to decide whether the workers' compensation statute, 19 Del.C. § 2304 ("Section 2304"), 1 bars Standard from impleading Precision, an employer that has paid workmen's compensation benefits, into a negligence suit brought by an injured employee and his wife against Standard notwithstanding an indemnity contract between Precision and Standard. For the reasons set forth below, we hold that Standard is not precluded from impleading Precision under the circumstances of this case, which turn on the contractual claim arising out of the indemnity contract. We therefore affirm the ruling of the Superior Court denying Precision's motion to dismiss the third-party complaint.

I. FACTS 2

In August 1993, Standard accepted a bid from Precision to perform a service known as "stack-testing" on boilers used in Standard's chemical production plant in Delaware City, Delaware. Standard and Precision executed a contract on August 20, 1993, which states in relevant part:

6. [Precision] shall employ a competent foreman and any necessary employees during the progress of the Work, so that the Work shall be done in a safe, good, substantial and workmanlike manner....

* * * * * *

11. [Precision] covenants and agrees that it will forever indemnify and save harmless Standard ... from and against any and all claims, causes of action, liability, damage, costs and expenses (including reasonable counsel fees); which Standard may incur or which may be asserted against Standard, arising from bodily injury or death and/or property loss or damage occasioned by, growing out of, or incidental to acts or omissions whether negligent or otherwise by [Precision], including but not limited to any failure to comply with any governmental law, ordinance, rule or regulation....

(Paragraph 11 hereinafter referred to as the "Indemnification Clause").

On August 24, 1993, plaintiff below Lisle E. Shaffer ("Mr. Shaffer") incurred substantial injuries when he fell through the roof of a structure in the Delaware City plant while "stack-testing" a boiler. On January 11, 1994, Mr. Shaffer and his wife, co-plaintiff below Patricia A. Shaffer (collectively, "Plaintiffs"), brought a personal injury action against Standard, claiming that Standard's negligence caused Mr. Shaffer's injuries. More specifically, Plaintiffs alleged in pertinent part:

4. Precision Air, Inc., had been subcontracted by [Standard] for the purposes of air quality testing.

* * * * * *

7. Defendant Standard Chlorine of Delaware, Inc., was negligent in that it:

* * * * * *

(e) failed to require and/or permit its ... contractors and/or subcontractors to comply with appropriate safety regulations and procedures when [Standard] had the right to control the actions of its ... contractors and/or subcontractors;

(f) required and/or permitted its ... contractors and/or subcontractors to use improper, unsafe and dangerous materials, machinery, equipment and techniques, when [Standard] knew, or should have known, that the use of such machinery, equipment and techniques was improper, unsafe and dangerous and when [Standard] had a right to control the actions of its ... contractors and/or subcontractors[.]

On April 11, 1994, Standard filed the third-party action against Precision, alleging that Precision was contractually liable to indemnify Standard in an amount equal to any percentage of liability that a fact-finder may attribute to Precision. Standard, in relevant part, averred:

8. Defendant [Standard], while expressly denying each and every of the allegations contained in Plaintiffs' Complaint, hereby incorporates by reference Plaintiffs' Complaint in this matter and avers that if any or all of the averments contained thereto are proven true, that Plaintiffs have suffered any injuries as alleged, then by virtue of [the contract] Precision Air, Inc. is required to indemnify [Standard] for any percent of liability for which Precision Air, Inc. may be found responsible in this action, and is further required to hold harmless [Standard] from and against all claims, damages, losses and expenses on the course of action declared upon by Plaintiffs including but not limited to attorneys' fees, in a percent equal to Precision Air, Inc.'s liability.

WHEREFORE, Defendant [Standard] alleges that Third-Party Defendant Precision Air, Inc. is solely liable to Plaintiffs, jointly and severally with and/or liable over to [Standard] for indemnification and/or contribution on the cause of action declared by Plaintiffs and thereby demands judgment accordingly.

Precision filed a motion to dismiss the third-party complaint, arguing that Section 2304 prohibited direct or indirect suits against it for its negligence and that the Indemnification Clause thus was not valid. On July 12, 1994, the Superior Court, after hearing oral argument, denied Precision's motion. That ruling is the subject of this interlocutory appeal.

II. STANDARD OF REVIEW

We review de novo a ruling by the Superior Court denying a motion to dismiss. See State v. Cephas, Del.Supr., 637 A.2d 20, 23 (1994). Accepting as true all well-pleaded allegations in a complaint, the trial court's denial of the motion is erroneous only if a "plaintiff would not be entitled to recover under any reasonably conceivable set of circumstances susceptible of proof." Kofron v. Amoco Chems. Corp., Del.Supr., 441 A.2d 226, 227 (1982); accord Spence v. Funk, Del.Supr., 396 A.2d 967, 968 (1978); Diamond State Tel. Co. v. University of Del., Del.Supr., 269 A.2d 52, 58 (1970). An allegation, though vague or lacking in detail, is nevertheless "well-pleaded" if it puts the opposing party on notice of the claim being brought against it. 269 A.2d at 58; see Super.Civ.R. 8(e)(1) & (f). Here, because Standard's third-party complaint incorporates by reference the allegations in Plaintiffs' complaint, we accept as true for purposes of this appeal the well-pleaded allegations in both the underlying complaint and the third-party complaint.

III. APPLICABILITY OF THE INDEMNIFICATION CLAUSE AND ITS EFFECT THEREOF

Precision argues that, because it has paid worker's compensation benefits to Mr. Shaffer, Section 2304 prohibits Standard's suit, notwithstanding the Indemnification Clause. 3 Standard responds that it has a valid contractual action against Precision based on the Indemnification Clause, regardless of Precision's payment of compensation benefits to Mr. Shaffer. In its third-party complaint, Standard alleged two theories for recovery--contribution and indemnification. The Superior Court denied Precision's motion to dismiss, ruling that the Indemnification Clause provided Standard with a basis for recovery. We hold that Standard may not maintain a contribution action against Precision, but that its contractual indemnity action is viable under the Indemnification Clause. 4

A. Contribution Theory

Standard may not maintain an action against Precision based on a contribution theory. "Under the [Workmen's Compensation] Act[, 19 Del.C. §§ 2301-2397,] every employee is bound to accept compensation for personal injury caused by accident arising out of and in the course of employment, regardless of the question of negligence and to the exclusion of all other rights and remedies." Histed v. E.I. duPont de Nemours & Co., Del.Supr., 621 A.2d 340, 342 (1993) (citing Section 2304); accord SW (Del.), Inc. v. American Consumers Indus., Del.Supr., 450 A.2d 887, 888 n. 1 (1982) (hereinafter American Consumers ); Kofron v. Amoco Chems. Corp., Del.Supr., 441 A.2d 226, 231 (1982). As a corollary, Section 2304 precludes the imposition of joint tort liability upon an employer in a suit brought by an injured employee against a third party where the employer has paid compensation benefits to the employee. Howard, Needles, Tammen & Bergendoff v. Steers, Perini & Pomeroy, Del.Supr., 312 A.2d 621, 623 (1973) (hereinafter Howard ); Diamond State Tel. Co. v. University of Del., Del.Supr., 269 A.2d 52, 55-56 (1970) (hereinafter Diamond ). Because the employer cannot be held liable as a joint tortfeasor, it is not obligated to provide contribution to the third party. 10 Del.C. § 6301; American Consumers, 450 A.2d at 888 n. 1; Diamond, 269 A.2d at 55. The particular legal theory that the third party employs in attempting to recover from the employer does not affect this result. Blackshear v. Clark, Del.Supr., 391 A.2d 747, 748 (1978).

In the instant case, Standard's third-party complaint alleges: "[P]recision Air, Inc. is solely liable to Plaintiffs, jointly and severally with and/or liable to [Standard] for indemnification and/or contribution on the cause of action declared by Plaintiffs[.]" (Emphasis added). This Court's prior precedent, however, precludes Standard from seeking contribution from Precision because the substantive basis...

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