Jacobs Constructors Inc. v. NPS Energy Serv.
| Decision Date | 04 September 2001 |
| Docket Number | Nos. 00-3239,No. 00-3238,Nos. 97-,Nos. 00-3238 and 00-3239,Nos. 98-,s. 97-,s. 00-3239,s. 98-,00-3238,s. 00-3238 and 00-3239 |
| Citation | 264 F.3d 365 |
| Parties | (3rd Cir. 2001) JACOBS CONSTRUCTORS, INC. v. NPS ENERGY SERVICES, INC. (D.C. Civilcv-00131) NPS ENERGY SERVICES, INC. Appellant JACOBS CONSTRUCTORS, INC. v. NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA JACOBS CONSTRUCTORS, INC. (D.C. Civilcv-00205), JACOBS CONSTRUCTORS, INC. Appellant |
| Court | U.S. Court of Appeals — Third Circuit |
APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF PENNSYLVANIA District Judge: The Honorable Sean J. McLaughlin
Counsel for Jacobs Constructors, Appellant/Cross Appellee: Dennis A. Watson, Esq. (Argued) Andrew F. Adomitis, Esq. Grogan, Graffam & McGinley Three Gateway Center, 22nd Floor Pittsburgh, PA 15222
Counsel for Nps Energy, Appellees/Cross Appellants: Elizabeth C. Bailey, Esq. Thomas McKay, III, Esq. (Argued) Cozen & O'Connor 1900 Market Street, The Atrium Philadelphia, PA 19103
Counsel for National Union Fire Ins. Co., Appellees/Cross Appellants: R. Bruce Morrison, Esq. (Argued) Conrad J.J. Radcliffe, Esq. Marshall, Dennehey, Warner, Coleman & Goggin 1845 Walnut Street 16th Floor Philadelphia, PA 19103
Before: Sloviter, Nygaard, and Roth, Circuit Judges.
In these consolidated declaratory judgment actions, we are presented with disputes concerning two contracts: an indemnification agreement between a contractor and a subcontractor, and a subsequent insurance contract between the contractor and an insurance company. On appeal, there are three primary issues: (1) whether NPS Energy Services is obligated to defend Jacobs Constructors, Inc., pursuant to their subcontract, in a declaratory judgment action in which a third party, Pennzoil Products Company, is seeking contractual indemnification from Jacobs for work-related injuries and deaths; (2) whether NPS Energy fulfilled its contractual obligation to name Jacobs as an additional insured on the National Union Fire Insurance Company of Pittsburgh insurance agreement; and (3) whether the insurance agreement between National Union and Jacobs, which covers Jacobs as an "additional insured," requires National Union to indemnify and defend Jacobs in the declaratory judgment action between Pennzoil and Jacobs.
The District Court partially granted cross-motions for summary judgment, holding that NPS Energy is obligated to provide an interim defense on behalf of Jacobs. The District Court also held that NPS Energy fulfilled its obligation to name Jacobs as an additional insured on the National Union Policy. Finally, the court held that National Union's insurance policy does not provide coverage for liability that an additional insured assumes pursuant to an indemnity agreement. For the reasons discussed below, we will affirm in part and reverse in part.
This case arises out of a fire and explosion that occurred on October 16, 1995, at Pennzoil's oil refinery in Rouseville, Pennsylvania. Before the explosion, Pennzoil hired Jacobs to construct an addition to the refinery known as the Specialty Wax Project. Under the terms of their contract, Jacobs agreed to indemnify Pennzoil for liability and defense costs for all claims arising from the personal injury or death of subcontractor employees, regardless of the cause. Jacobs' indemnity obligations, however, did not extend to damage or loss resulting from Pennzoil's willful misconduct or gross negligence.
Jacobs, in turn, hired NPS Energy to perform the mechanical services work at the Specialty Wax Project. Like the general contract between Jacobs and Pennzoil, the subcontract contained an indemnity clause, requiring NPS Energy to indemnify Jacobs. It also required NPS Energy to procure commercial general liability coverage of at least five million dollars for each occurrence and five million dollars in the aggregate. As a result, NPS Energy obtained a general liability policy ("primary policy") and an umbrella policy with National Union. Under both policies, NPS Energy was covered as a "named insured" and Pennzoil and Jacobs were covered as "additional insureds." The terms of both the indemnification agreement and the umbrella insurance policy are contested.
The fire and explosion occurred near the portion of the Pennzoil refinery where Jacobs and NPS Energy were working. The explosion seriously injured and killed several individuals, including employees of NPS Energy. Subsequently, the injured and representatives of deceased NPS Energy employees brought personal injury and wrongful death actions against Pennzoil. Neither NPS Energy nor Jacobs were joined in these actions. Pennzoil, however, sought to enforce its respective indemnification agreements with Jacobs and NPS Energy. Both denied liability and refused Pennzoil's tender. Pennzoil also brought claims against National Union. National Union declined coverage contending that the lawsuits arose out of Pennzoil's negligence.
Pennzoil filed a declaratory judgment action against Jacobs in the District Court of Harris County, Texas. It sought a declaration that Jacobs was obligated to defend against the NPS Energy employee suits. Pennzoil eventually added a breach of contract claim. Jacobs denied liability, arguing that Pennzoil caused the fire through its gross negligence and/or willful misconduct.
Thereafter, NPS Energy, National Union, and Pennzoil entered into a Settlement Agreement and Release. As part of the agreement, National Union agreed to tender the full value of its one million dollar primary policy, as well as four million dollars under the umbrella policy, so Pennzoil could settle the employee claims. The agreement also required Pennzoil to release NPS Energy and National Union from any further fire-related liability. Pennzoil, however, reserved the right to seek indemnity from Jacobs. As such, it continued to pursue its declaratory judgment action in Texas in order to recover the additional cost of resolving the employee suits not covered by the National Union settlement, approximately five million dollars.
In response to Pennzoil's action in Texas, Jacobs filed a declaratory judgment action in the Western District Court of Pennsylvania against NPS Energy. It requested the following declaration: (1) Jacobs is entitled to indemnification from NPS Energy for any payments it may be required to make to Pennzoil; (2) NPS Energy is obligated to defend Jacobs; (3) the subcontract between NPS Energy and Jacobs required NPS Energy to name Jacobs as an additional insured in the National Union Insurance Policy; and (4) NPS Energy is not entitled to indemnification from Jacobs for payments it made or may make to Pennzoil. NPS Energy filed a motion to dismiss, arguing that the case was not ripe for decision given the pendency of the Texas action. The District Court granted the motion in part. First, it held that Jacobs' requested indemnification from NPS Energy was not ripe because additional fact finding was necessary and could interfere with the Texas action. Second, the court held that the question of whether NPS Energy was obligated to defend Jacobs was ripe, but only to the extent that Jacobs sought an interim defense in the Texas action. Finally, the court denied NPS Energy's motion with respect to naming Jacobs as an additional insured and Jacobs' obligation to indemnify NPS Energy because the record was not sufficiently developed on either issue.
Jacobs also filed a declaratory judgment action against National Union. In it, Jacobs requested a declaration stating that: (1) National Union must indemnify Jacobs for payments that Jacobs is obligated to make to Pennzoil as a result of the Texas action; and (2) National Union must defend Jacobs in the Texas action. The District Court consolidated Jacobs' action against both NPS Energy and National Union. Thereafter, all three parties filed motions for summary judgment.
The District Court granted Jacobs' summary judgment motion concerning NPS Energy's interim duty of defense in the Texas action. It held that the subcontract with Jacobs does not contain any language that limits the scope of NPS Energy's duty to defend to tort claims or claims brought directly by plaintiffs who suffered personal injury or property damage. The District Court also granted NPS Energy's summary judgment motion. It held that NPS Energy was required to name Jacobs as an additional insured on the National Union insurance policies but nonetheless had satisfied that contractual requirement. In addition, the District Court declined to issue a declaration regarding whether NPS Energy was entitled to indemnification from Jacobs for any payments it made or may make to Pennzoil. It reasoned that Jacobs failed to produce any evidence that NPS Energy made payments to Pennzoil or that NPS Energy sought indemnification from Jacobs. Finally, the District Court granted National Union's summary judgment motion. The court held that National Union's indemnity obligations to Jacobs were not ripe,1 and that National Union's umbrella policy did not provide Jacobs a defense in the Texas action because it listed Jacobs only as an additional insured.
Jacobs appeals the court's judgment: (1) that NPS Energy fulfilled its obligation to name Jacobs as an additional insured on the National Union insurance agreement; and (2) that the National Union umbrella policy does not require National Union to provide Jacobs with indemnification or a defense in the Texas action. NPS Energy cross-appeals, arguing that, per the terms of its subcontract, it is not obligated to provide Jacobs with a defense in the Texas action.2
Because this is an appeal from a grant of summary judgment, our review is plenary. Witkowski v. Welch, 173 F.3d 192, 198 (3d Cir. 1999). Thus, we apply the same standard used by the District Court. See id. Summary judgment is appropriate if ...
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