Clement v. Consolidated Rail Corp.
| Decision Date | 04 September 1990 |
| Docket Number | Civ. No. 88-3793 (CSF). |
| Citation | 745 F. Supp. 266 |
| Parties | Susan E. CLEMENT, Plaintiff, v. CONSOLIDATED RAIL CORPORATION, et al., Defendants. |
| Court | U.S. District Court — District of New Jersey |
Connell, Foley & Geiser by Samuel D. Lord, Roseland, N.J., for defendant Consol. Rail Corp.
Smith, Stratton, Wise, Heher & Brennan by Peter R. Freed, Trenton, N.J., for defendant Pennsylvania Truck Lines, Inc.
This litigation stems from an accident which took the life of Thomas Allen Clement, an employee of defendant Pennsylvania Truck Lines, Inc. ("PTL"), who drove a pick-up truck into a chassis which was situated alongside Track D in defendant Consolidated Rail Corporation's Trailvan Terminal in South Kearny, New Jersey. The defendants are presently before the court moving for summary judgment on Conrail's crossclaim against PTL for indemnity. For the reasons set forth below, PTL will not be required to indemnify Conrail for Conrail's own negligence.
Conrail is engaged in the business of transporting highway trailers and containers upon railroad flatcars. In order to coordinate the handling of such trailers and to arrange for their loading and unloading, Conrail entered into a "Services Agreement" with PTL, a wholly-owned subsidiary of Conrail at the time of the accident. The parties entered into that agreement on June 15, 1985, recognizing that PTL had the expertise, experience and special equipment necessary to assume many of the day-to-day operations at, among other places, Conrail's South Kearny Trailvan Terminal.
The agreement divides the functions delegated to PTL into three categories: management services, terminal and clerical services and miscellaneous services. Specific duties are detailed in a series of documents appended to the back of the agreement. In essence, the agreement transfers responsibility for virtually all terminal operations to PTL.
Paul Neff, a member of PTL's Board of Directors and its Vice President of Finance and Administration, was intimately involved in drafting the agreement. Neff Deposition at 64. He explained that a prior agreement between the parties delegated fewer responsibilities to PTL; however, that agreement proved unsuitable following a change in the "organizational structure of PTL." Neff stated that:
the major difference was that prior to 1980 PTL was simply nothing but a subcontract lift operator at the terminals. And after 1980, not only was PTL a lift operator but it was responsible for management of the terminal, responsible for all trailer repairs, ... and responsible for management and control of the trail van fleet....
Id. at 67. Thus, the Services Agreement reflected the "major change in the way that Conrail and PTL related to one another," id. at 65, insofar as it detailed the additional responsibilities for which PTL was to be accountable.
Section 4.5 of the Services Agreement contains a detailed indemnification provision. It requires PTL to:
protect, indemnify and hold harmless Conrail against and from any and all claims, losses, liability, suits, actions, judgments, costs and expenses ... including those resulting ... from the injury or death of any person ... to the extent such event shall have arisen from any act of commission or omission, negligent or otherwise, of PTL, or of any of PTL's agents, servants, or employees....
See Services Agreement, Section 4.5 (emphasis added). A similar provision was contained in the former agreement; however, it had sharply limited Conrail's right to indemnification to those instances where the event triggering liability arose solely from PTL's conduct.1
As set forth earlier, this litigation stems from the accidental death of Thomas Clement. Susan Clement, as administratrix of his estate, individually, and as legal guardian of their children, filed this action alleging, among other things, that negligence on the part of Conrail and PTL caused her husband's death. In its crossclaim against PTL, Conrail argues that it is entitled to complete indemnification from PTL under the aforesaid Services Agreement, even if its negligence contributed to the accident. PTL contends otherwise. Both parties are presently before the court moving for summary judgment.
Under Pennsylvania law,2 it is well settled that a contract will not be construed to indemnify a party for its own negligence unless such a provision is expressed in unequivocal terms. Pittsburgh Steel Co. v. Patterson-Emerson-Comstock, Inc., 404 Pa. 53, 171 A.2d 185 (1961); Perry v. Payne, 217 Pa. 252, 66 A. 553 (1907); Bush v. Chicago & Northwestern Transp. Corp., 522 F.Supp. 585 (E.D.Pa.1981). In explaining the rationale behind this rule, the Pennsylvania Supreme Court noted that it would be "contrary to experience and reason" for a contractor to subject itself to "uncertain and indefinite" liability by agreeing to indemnify an entity for its own negligence. Perry, 66 A. at 555. Thus, there can be no presumption that the indemnitor intended to assume such responsibility "unless the contract puts it beyond doubt." Pittsburgh Steel, 171 A.2d at 188.
Although such clear expressions of intent have traditionally required specific mention of "the word negligence or any of its cognates," see Bush, 522 F.Supp. at 587; Westinghouse Electric Co. v. Murphy, Inc., 425 Pa. 166, 228 A.2d 656, 658 (1967), the court may look beyond the "four corners of an ambiguous agreement to determine whether it specifies losses caused by the indemnitee's negligence." Urban Redevelopment Auth. v. Noralco Corp., 281 Pa.Super. 466, 422 A.2d 563, 567 (1980). See also Brotherton Const. Co. v. Patterson-Emerson-Comstock, Inc., 406 Pa. 400, 178 A.2d 696, 697 (1962) (). In the instant matter, therefore, the court "may consider the circumstances surrounding the parties and their object in making the agreement." Brotherton Const., 178 A.2d at 697. Further, the nature of the indemnitor's duty and the active and/or passive negligence of the indemnitee may also be relevant in determining the scope of the indemnification clause. See Deskiewicz v. Zenith Radio Corp., 385 Pa.Super. 374, 561 A.2d 33 (1989).
In ascertaining the parties' intent, the court must first look to the specific language agreed upon. Id. 561 A.2d at 35. In so doing, the court notes that the indemnification provision in Services Agreement does not unequivocally provide that indemnification is due Conrail for damages resulting from its negligence. Rather, the agreement states that PTL will indemnify Conrail "to the extent" that the event triggering liability is attributable to PTL's conduct. The phrase "to the extent" does not expose PTL to unbridled liability; instead, it is a term of limitation. See e.g., Spencer v. Laconia School Dist., 107 N.H. 125, 218 A.2d 437, 440 (1966) (); Fed. Deposit Ins. Corp. v. Citizens State Bank of Niangua, 130 F.2d 102, 103 (8th Cir.1942) (); Webster's New Collegiate Dictionary at 402 (1979) (). Thus, when it agreed to indemnify Conrail "to the extent" that the liability-producing event (i.e., Clement's death) arose from its conduct, PTL did not assume absolute responsibility for Conrail's negligent acts; instead, it limited its exposure to liability.
This conclusion is buttressed by an examination of the prior contract between PTL and Conrail. The indemnification provision in that agreement required PTL to indemnify Conrail if the event triggering Conrail's liability arose "solely from any act ... negligent or otherwise, of PTL...." This provision limited Conrail's right to indemnity to the occasional instance where a liability-producing event arose solely from the action or inaction of PTL. In June, 1985, when the parties entered into the Services Agreement, the scope of the indemnification provision was broadened.
The lone variation between the indemnification provision in the present and former agreements is found in the phrase immediately following the events triggering liability. The former agreement read, in part, as follows:
PTL shall protect, indemnify and hold harmless Conrail against and from any and all claims, losses, liability, suits, actions, judgments, costs and expenses ... including those resulting ... from the injury or death of any person ... if such event shall have arisen solely from any act of commission or omission, negligent or otherwise, of PTL, or of any of PTL's agents, servants, or employees....
The Services Agreement modified that provision by substituting "to the extent that such event shall have arisen" in place of the underscored language. If, as Conrail argues, the parties intended to indemnify Conrail for its own negligent acts, simply removing the word "solely" from the former agreement would have shielded Conrail from such liability. If such were the case, the Services Agreement would have required PTL to indemnify Conrail if the event triggering Conrail's liability arose from any conduct, negligent or otherwise, attributable to PTL. See Deskiewicz v. Zenith Radio Corp., 385 Pa.Super. 374, 561 A.2d 33 (1989) (...
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Clement v. Consolidated Rail Corp.
...She then settled her claim against Conrail. The district court next granted PTL's motion for summary judgment on the crossclaim, 745 F.Supp. 266, holding that Conrail was not entitled to any indemnification. Conrail appeals this judgment. We conclude that the agreement affords Conrail some ......