Deskiewicz v. Zenith Radio Corp.

• Citation: 561 A.2d 33,385 Pa.Super. 374
• Court: Superior Court of Pennsylvania
• Decision Date: 26 June 1989
• Parties: Henry DESKIEWICZ & Patricia Ann Deskiewicz, Husband and Wife v. ZENITH RADIO CORPORATION, Zenith Electronics Corporation, International Piping Systems, and Robert Lempa, Estate of Steven Maruscak, Dec'd, Robert Franks, James Bakert, Apex Electrical Engineering Co., General Electric Co., & Joe Doe a/k/a Project Engineer For General Electric Co. Appeal of ZENITH RADIO CORPORATION and Zenith Electronics Corporation. 2890 PHILA. 1988

Page 33

561 A.2d 33

385 Pa.Super. 374

Henry DESKIEWICZ & Patricia Ann Deskiewicz, Husband and Wife v. ZENITH RADIO CORPORATION, Zenith Electronics Corporation,

International Piping Systems, and Robert Lempa, Estate of

Steven Maruscak, Dec'd, Robert Franks, James Bakert, Apex

Electrical Engineering Co., General Electric Co., & Joe Doe

a/k/a Project Engineer For General Electric Co.

Appeal of ZENITH RADIO CORPORATION and Zenith Electronics Corporation.

2890 PHILA. 1988

Superior Court of Pennsylvania.

Argued Jan. 24, 1989.

Filed June 26, 1989.

Joel D. Gusky, Philadelphia, for appellants.

Gerard Bruderle, Philadelphia, for Intern. Piping, appellees.

Before BROSKY, McEWEN and OLSZEWSKI, JJ.

BROSKY, Judge.

This is an appeal from an order finding that appellee, International Pipings Systems (IPS), was not obligated to indemnify appellant, Zenith Radio Corporation for a liability imposed upon Zenith for personal injury. IPS was contracted by Zenith to dismantle a large machine and move it to a plant located in Illinois. An employee engaged in this process was injured and a settlement was later reached with Zenith. Zenith sought indemnification from IPS under a contractual clause.

Zenith raises two issues for resolution: (1) was IPS contractually obligated to indemnity Zenith the sum paid the plaintiff? and (2) was IPS contractually obligated to pay Zenith's attorneys fees and costs in defending the underlying action? Upon consideration of the arguments advanced by all parties, we reverse.

The facts relevant to disposition of this appeal are, briefly stated: On or about October 9, 1981, Zenith and IPS entered

into a contract whereby IPS was required to disassemble, inter alia, a General Electric Oxidizer for reassembly at Zenith's manufacturing plant in Melrose Park, Illinois. Subsequently, IPS subcontracted the disassembly of the Oxidizer to plaintiff, Henry Deskiewicz. On the date of the accident, plaintiff sustained serious bodily injury when he jumped from an eight (8) foot-high platform after he placed a screwdriver into a 30-amp switch which he believed to be de-energized. He had placed the screwdriver into the switch for the purpose of confirming the fact that the machine had been de-energized.

Extensive discovery revealed that the only defendants against whom plaintiffs had a viable claim were Zenith and IPS.

On June 23, 1988, the case at bar was assigned for trial. Prior to impanelling a jury, the trial court conducted a thorough pre-trial conference and heard the parties' respective contentions regarding liability and damages.

As a result of the conference, plaintiffs agreed to accept, if offered, $165,000.00. Later that day, plaintiffs agreed to accept 75% of the settlement demand or $123,750.00 from Zenith. Subsequently, on June 27, 1988, plaintiffs accepted IPS's settlement offer of $40,000.00 and the case, as between plaintiffs and defendants, settled.

In Zenith's Answer to Plaintiffs' Complaint, it pleaded a crossclaim against IPS for contractual indemnity and for reimbursement of counsel fees and costs. This cross-claim was denied by IPS. Counsel for Zenith and IPS agreed that Judge Moss would retain jurisdiction over the case to resolve the contractual indemnity issue between them. With the trial court's permission, appellant and appellee submitted Stipulated Findings of Fact in lieu of live testimony.

On August 17, 1988, an Order was entered denying Zenith's contractual indemnity claims. This appeal followed.

A fundamental rule of construction in the law of contracts states that words, phrases and clauses will be given their plain and ordinary expressed meaning. If this is so, then this particular area of law, indemnification for damages or injuries arising from negligent acts, could be thought of as an exception to the general rule. If literal effect was given to these clauses then indemnification would be enforced. Yet due to policy and practical considerations decisions have been handed down indicating that such generally worded indemnification clauses will not be construed to mean that the indemnitor will indemnify the indemnitee for liability resulting from the indemnitee's own negligence. See Perry v. Payne, infra. Cases holding thusly are creating a rule of construction, not an absolute rule. Increasingly since the first pronouncement of this rule of construction the rule has been recognized to be only that, a rule of construction; and, cases have been reported finding an indemnification clause to cover injuries arising from the joint negligence of indemnitor and indemnitee. The rule has evolved up to and including the relatively recent case of Urban Redevelopment Authority v. Noralco Corp., 281 Pa.Super. 466, 422 A.2d 563 (1980), which further developed the rule to include concepts of active and passive negligence of the indemnitee. Of considerable importance also is the recognition in Noralco, that in addition to the four corners of the agreement, the surrounding circumstances must be considered in determining the scope of the clause. It is within this context that we examine the agreement in question here.

In this particular case, Zenith contracted IPS to perform the service of disassembling a large piece of machinery and transportation of it to a plant in Illinois. Zenith paid IPS approximately $29,000 for this service. The contract states:

The contractor is an independent contractor, shall be in charge of the work, and shall be solely responsible for the acts and omissions of all his employees and all subcontractors, their agents and employees, and other persons performing any of the work for or under a contract with the contractor.

It was further stipulated that IPS and plaintiff had control over the manner in which the disassembly was to be performed. Of equal importance to our analysis is the indemnification clause itself, it reads:

The contractor agrees to indemnify, hold harmless, and defend the owner, its subsidiaries, affiliated companies, and agents and employees ... from and against all claims or liabilities for damages (including costs of suit, attorney's fees of owner, and if awarded against owner by a court, attorney's fees of claimant) in any manner arising out of or resulting from:

(a) Performance of the work, provided that any such claim or liability (1) is attributed to bodily injury ... and (2) is caused in whole or in part by any negligent act or omission of the contractor, any subcontractor, anyone directly or indirectly employed by any of them ... (emphasis supplied).

Of particular importance, in our opinion, is the language "in whole or in part by any negligent act." This is explicit language which envisions the possibility that IPS will be obligated to indemnify Zenith even though someone other than IPS has contributed, through a negligent act or omission, to the liability imposed upon Zenith. Furthermore, to the extent the factor which triggers the indemnification obligation is the assumption of, or imposition upon, Zenith of a liability for personal injury, certainly a negligent act of Zenith must be considered one of the more likely and logical prefaces to imposition of such liability upon Zenith, and as such, arguably within contemplation of the subject indemnification clause. In light of the wording of the clause, we believe, to remain consistent with Noralco, it is essential that all of the circumstances be considered in deciding whether indemnification will follow the subject clause under the facts presented here.

Another important paragraph in the contract reads:

SAFETY: The contractor shall be responsible for initiating, maintaining, and supervising all safety precautions and programs in connection with the work.

The contractor shall comply with all applicable laws, ordinances, rules, regulations and orders of any public authority having jurisdiction for the safety of persons or property to protect them or it from damages, injury or loss.

Another factor important to the analysis here, which was implicitly given credence in Noralco, is the obligation, under the subject contract, of the contractor to purchase or provide insurance coverage. With these key facts delineated we turn to the law of indemnification.

The Noralco case represents one of the more recent and thoroughly analyzed cases in this area of law. It set forth a paraphrasement of the early cases establishing the principle that such generally worded clauses will not be construed to cover liability from the indemnitee's own negligence. These cases recognize that to hold otherwise would be tantamount to placing the indemnitor in the position of an insurer. However, it is worth noting that the earlier cases making such a holding involved situations where the indemnitee was solely or principally responsible for the injury. This was the case in Perry v. Payne, 217 Pa. 252, 66 A. 553 (1907); and Pittsburgh Steel Co. v. Patterson-Emerson-Comstock, Inc., 404 Pa. 53, 171 A.2d 185 (1961). Thus, allowing indemnification in those cases would have placed the indemnitor in, essentially, the position of an insurer.

Noralco also, at least implicitly, recognized that the circumstances surrounding usage of these clauses have changed since the time of the earlier decisions and that in reality...