Beloit Power Sys., Inc. v. Hess Oil Virgin Islands Corp.
| Decision Date | 30 March 1983 |
| Docket Number | Civil No. 80-94 |
| Parties | BELOIT POWER SYSTEMS, INC., and KEMPER INSURANCE COMPANIES, as Subrogee, Plaintiffs v. HESS OIL VIRGIN ISLANDS CORP., Defendant/Third-Party Plaintiff v. LITWIN CORPORATION, Third-Party Defendant |
| Court | U.S. District Court — Virgin Islands |
Motions for summary judgment by all parties in an action to determine who would be required to pay all or part of a judgment entered against plaintiff in an action for negligence which arose when an employee of third-party defendant sustained injuries while installing equipment manufactured by plaintiff and sold to defendant. The District Court, Christian, Chief Judge, held that although a provision of the purchase order lacked a clear and unambiguous intention that plaintiff be indemnified by defendant, a claim for contribution would be allowed, and if defendant were found liable for contribution, third-party defendant would be contractually liable to indemnify defendant.
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R. ERIC MOORE, ESQ. (Law Offices of R. ERIC MOORE), Christiansted, St. Croix, V.I., for plaintiffs
BRITAIN H. BRYANT, ESQ. (BRYANT, LENAHAN & ELTMAN), Chris-tiansted, St. Croix, V.I., for defendant/third-party plaintiff HOVIC
JAMES W. DIEHM, ESQ. (ISHERWOOD, HUNTER & DIEHM), Christiansted, St. Croix, V.I., for third-party defendant Litwin Corporation
MEMORANDUM AND ORDER
At issue in this lawsuit is the question of which party must either ultimately bear the entire burden of paying a sizeable civil judgment entered against the plaintiff in this cause in an action styledNorwilton Murray v. Beloit Power Systems, Inc., docketed in this division of our court at Civil No. 76-539 (affirmed 3rd Cir., 610 F.2d 149 (1979)), or, at least of sharing the load with plaintiff Beloit Power Systems, Inc. (Beloit). Presently, before the court are cross-motions by Beloit and defendant/third party plaintiff Hess Oil Virgin Islands Corporation (HOVIC) for summary judgment. In hot dispute are the issues of indemnity or contribution. Third-party plaintiff, HOVIC, hoping to leave the field completely unscathed, has hailed third-party defendant Litwin Corporation (Litwin) into the fray, moving for summary judgment against the latter, indemnity being its sole weapon. Litwin, not willing to be found at the bottom of the pile, has filed its cross-motion for summary judgment. Fed. R. Civ. P. 56.
On or about June 14, 1973, HOVIC entered into a contract with Beloit wherein Beloit would supply certain equipment for installation at the HOVIC refinery on St. Croix, Virgin Islands. On or about September 23, 1973, HOVIC contracted with Litwin for the installation of the equipment HOVIC had agreed to purchase from Beloit. On July 21, 1974, Norwilton Murray, a Litwin employee, was seriously injured while installing the Beloit equipment at the HOVIC refinery. Murray brought action against Beloit alleging alternative theories of strict liability under the Restatement (Second) of Torts § 402A, and common law negligence. The jury returned a verdict finding Beloit liable under both the strict products liability and the negligence counts. The jury found Murray's own negligence to account for five percent of his injuries. The jury's net award was $1,747,000. That verdict was affirmed on appeal. Murray v. Fairbanks Morse, 610 F.2d 149 (3d Cir. 1979). Beloit's insurer, the Kemper Group, made payment of $1,937,500 (this included post judgment interest) on January 29, 1980.
On May 23, 1980, Beloit and its insurer brought the present action against HOVIC for contractual indemnity based on the contract of sale (between Beloit and HOVIC) for the equipment or in the alternative, for common law contribution. Defendant HOVIC then impleaded Litwin, as a third-party defendant, arguing that if HOVIC owes anything to Beloit, then through the operation of an indemnity provision in HOVIC's contract with Litwin, Litwin is required to indemnify HOVIC. It is in this setting that the pending summary judgment motions were filed.
The contract between HOVIC and Beloit is embodied in a HOVIC purchase order form. On the reverse side of the purchase order were standard printed "Terms and Conditions". Paragraph 8 of this printed matter was an indemnity provision running in favor of HOVIC, under the terms of which Beloit would indemnify HOVIC for any claims arising from "any act or neglect on the part of the Seller [Beloit] . . . ." Paragraph 1 of the printed "Terms and Conditions" was a warranty provision.
After negotiation, HOVIC, at Beloit's request, typed on the front of the purchase order, a provision supplied to HOVIC by Beloit entitled "Warranty". This provision reads as follows:
Beloit now seeks indemnity from HOVIC for the sums it paid to Norwilton Murray, on the basis of the above language. It is Beloit's claim that this provision is a valid indemnity agreement which supercedes the indemnity clause printed on the reverse of the purchase order. HOVIC, on the other hand, argues that this is a warranty clause which Beloit now wishes to transform into an indemnity provision and that, as such, it is insufficient to transfer liability to HOVIC for Beloit's own negligence.
[1, 2] We begin our analysis of this question with the premise that in order for a party to be contractually indemnified for its own negligence, such an intention must be clearly and unambiguously expressed in the contract. United States v. Seckinger, 397 U.S. 203 (1970); Draper v. Airco, 580 F.2d 91 (3d Cir. 1978) ( Pennsylvania law); Gimbel Brothers v. Vanderherchen, 468 F.2d 597 (3d Cir. 1972) ( Pennsylvania law). As the Supreme Court stated:
[A] contractual provision should not be construed to permit an indemnitee to recover for his own negligence unless the court is firmly convinced that such an interpretation reflects the intention of the parties. This principle, though variously articulated, is accepted with virtual unanimity among American jurisdictions.
Seckinger, 397 U.S. at 211 (footnote omitted). Not only must the language be clear and unequivocal, but the burden of proof falls on the party seeking such indemnification. Gimbel Brothers, 468 F.2d at 599. This burden is even greater where the party seeking indemnification drafted the language. Seckinger, 397 U.S. at 210; Gimbel Brothers, 468 F.2d at 599.
In the instant case the quoted contractual language was proposed by Beloit and HOVIC inserted it on its purchase order. See plaintiff's answers to HOVIC's first set of interrogatories, number 29. Hence we may state at the outset that Beloit has the burden of showing that the language clearly and unequivocally intended that Beloit should be indemnified for its own negligence. Moreover, any ambiguity will be construed "most strongly" against Beloit as drafter of the provision. Seckinger, 397 U.S. at 210.
[3] Beloit argues that the heading of the provision as "warranty" is not controlling and that the clause specifically mentions "claims ofor negligent manufacture". We agree that the title of the provision is not controlling. However, the phrase "claims of or negligent manufacture" must be taken in the context of the sentence in which it is found. That sentence states, in essence, that Beloit shall not be liable for any of the eight types of contract damages listed, whether they result from ". . . claims of or negligent manufacture or otherwise." The next sentence provides, "The aggregate total liability of the seller under this contract, whether for breach of warranty or otherwise, shall in no event exceed the contract price." This sentence, particularly the "or otherwise" phrase, lacks the unambiguous and clear intention that Beloit be indemnified for its own negligence.
[4] Beloit also points to the final sentence of the clause as manifesting a clear intention that HOVIC should indemnify Beloit for Norwilton Murray's injuries. It reads: "Buyer [HOVIC] agrees to indemnify and hold harmless seller [Beloit] from all claims by third parties which extend beyond the foregoing limitations on seller's liability." In Gimbel Brothers, supra, the court stated:
The cases have distinguished situations where the indemnity clause explicitly referred to liability for a party's own negligence from situations where there was "an...
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