Kiewit Eastern Co., Inc. v. L & R Const. Co., Inc.

• Decision Date: 10 January 1995
• Docket Number: 94-1439,No. 94-1439,No. 94-1434,Nos. 94-1434,94-1434,s. 94-1434
• Parties: KIEWIT EASTERN CO., INC.; Kiewit/Perini, a Joint Venture, et al. v. L & R CONSTRUCTION CO., INC.; CNA Insurance Company Kiewit Eastern Company, Inc. and Kiewit/Perini, A Joint Venture, Appellants inCNA Insurance Company, Appellant in
• Court: U.S. Court of Appeals — Third Circuit

Page 1194

44 F.3d 1194

KIEWIT EASTERN CO., INC.; Kiewit/Perini, a Joint Venture, et al. v. L & R CONSTRUCTION CO., INC.; CNA Insurance Company Kiewit Eastern Company, Inc. and Kiewit/Perini, A Joint Venture, Appellants in No. 94-1434 CNA Insurance Company, Appellant in No. 94-1439

Nos. 94-1434, 94-1439.

United States Court of Appeals, Third Circuit.

Argued Sept. 26, 1994.

Decided Jan. 10, 1995.

Jerrold P. Anders (argued), White & Williams, Philadelphia, PA, for appellants/cross-appellees Kiewit Eastern Co., Inc. and Kiewit/Perini, A Joint Venture.

Alexis L. Barbieri (argued), Lewis & Wood, Philadelphia, PA, for appellee L & R Const. Co., Inc.

R. Bruce Morrison (argued), Marshall, Dennehey, Warner, Coleman & Goggin, Philadelphia, PA, for appellee/cross-appellant CNA Ins. Co.

Before: SCIRICA, NYGAARD and McKEE, Circuit Judges.

OPINION OF THE COURT

SCIRICA, Circuit Judge.

In this diversity case, we are presented with disputes over coverage under two contracts, an indemnification agreement between a contractor and subcontractor and a subsequent insurance contract between the subcontractor and an insurance company. The primary issue is whether the indemnification agreement sufficiently waived the immunity granted employers under the Pennsylvania Workers' Compensation Act. The district court partially granted cross-motions for summary judgment, holding the contractor was entitled to conditional indemnification but its general partner was not. The district court also dismissed the insurer from the case. We will affirm in part and reverse in part.

I.

Kiewit/Perini, a joint venture composed of Kiewit Eastern Company and Perini Corporation, served as general contractor for construction of a portion of Interstate 476, known as the Blue Route, near Philadelphia. In July 1988, Kiewit/Perini subcontracted certain work to L & R Construction which agreed to defend and indemnify Kiewit/Perini and obtain insurance in order to protect the general contractor from liability for personal injuries resulting in whole or in part from the subcontractor's negligence. As a result, L & R Construction purchased an insurance policy from CNA Insurance Company covering liability resulting from L & R Construction's incidental contracts, such as its contract with Kiewit/Perini.

During construction, a crane loaned to L & R Construction by Kiewit Eastern came too close to a power line, injuring Benedict Chen, an employee of L & R Construction. Chen brought two actions in the Philadelphia County Court of Common Pleas against Kiewit/Perini and Kiewit Eastern, ¹ but not against L & R Construction, which--as Chen's employer--was immune from suit under the Pennsylvania Workers' Compensation Act. ² After Kiewit/Perini and Kiewit Eastern tendered their defense to CNA Insurance, which refused to accept the tender, they filed a third-party complaint against L & R Construction, alleging it was obligated to defend and indemnify them.

Kiewit/Perini and Kiewit Eastern then filed this declaratory judgment action in federal court, seeking a defense and indemnification from L & R Construction or CNA Insurance, as well as reimbursement for attorneys' fees and costs. All parties filed motions for summary judgment. The district court granted Kiewit/Perini's motion in part, requiring L & R Construction to defend and conditionally indemnify it, but held as a matter of law that L & R Construction owed no duty to defend or indemnify Kiewit Eastern. After deciding those defense and indemnification issues, the court dismissed the claim against CNA Insurance as moot. Kiewit Eastern Co. v. L & R Constr. Co., Civ.A. No. 91-5563, 1993 WL 367051 (E.D.Pa. Sept. 3, 1993) ("Kiewit I "). The district court denied a subsequent motion to amend the judgment, Kiewit Eastern Co. v. L & R Constr. Co., Civ.A. No. 91-5563, 1994 WL 116108 (E.D.Pa. Mar. 15, 1994) ("Kiewit II "), and Kiewit/Perini, Kiewit Eastern, and CNA Insurance appealed.

The district court had jurisdiction of the case under 28 U.S.C. Sec. 1332 (1988). ³ We have jurisdiction under 28 U.S.C. Sec. 1291 (1988). Because this is an appeal from a grant of summary judgment, our review is plenary. Oritani Sav. & Loan Ass'n v. Fidelity & Deposit Co., 989 F.2d 635, 637 (3d Cir.1993). Summary judgment may be granted only when there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. Id. at 637-38; see also Fed.R.Civ.P. 56(c).

II.

Section 11 of the subcontract between Kiewit/Perini and L & R Construction provided:

INDEMNIFICATION. The Subcontractor further specifically obligates itself to the Contractor, Owner and any other party required to be indemnified under the Prime Contract, jointly and separately, in the following respects, to-wit:

....

(b) to defend and indemnify them against and save them harmless from any and all claims, suits or liability for ... injuries to persons, including death, and from any other claims, suits or liability on account of acts or omissions of Subcontractor, or any of its subcontractors, suppliers, officers, agents, employees or servants, whether or not caused in part by the active or passive negligence or other fault of a party indemnified hereunder; provided, however, Subcontractor's duty hereunder shall not arise if such claims, suits or liability, injuries or death or other claims or suits are caused by the sole negligence of a party indemnified hereunder unless otherwise provided in the Prime Contract. Subcontractor's obligation hereunder shall not be limited by the provisions of any Workers' Compensation act or similar statute[.] ⁴

(emphasis added).

A.

The district court held the indemnification language required L & R Construction to defend and conditionally indemnify Kiewit/Perini. Kiewit I, supra, at * 8. L & R Construction does not dispute this holding, but its insurance company, CNA Insurance, does. ⁵

Pennsylvania law permits indemnification, even for the indemnitee's own negligence, as long as the agreement to indemnify is "clear and unequivocal." Ruzzi v. Butler Petroleum Co., 527 Pa. 1, 588 A.2d 1, 4 (1991); Willey v. Minnesota Mining & Mfg. Co., 755 F.2d 315, 323 (3d Cir.1985). In this case, CNA Insurance claims the language of the subcontract generally is ambiguous and should be interpreted against the indemnitee. ⁶ We cannot agree. Under Pennsylvania law, "[w]hen a written contract is clear and unequivocal, its meaning must be determined by its contents alone. It speaks for itself and a meaning cannot be given to it other than that expressed." Steuart v. McChesney, 498 Pa. 45, 444 A.2d 659, 661 (1982) (citation omitted). It is for the court, as a matter of law, to determine whether ambiguity exists in a contract. Hutchison v. Sunbeam Coal Corp., 513 Pa. 192, 519 A.2d 385, 390 (1986). ⁷ In this case, we agree with the district court that the indemnification provisions of the subcontract are unambiguous, requiring L & R Construction to indemnify Kiewit/Perini unless Kiewit/Perini was solely to blame for the injury. ⁸

CNA Insurance raises two other insubstantial arguments. As we have noted, section 11 of the subcontract provides "Subcontractor's duty hereunder shall not arise if such claims, suits or liability, injuries or death or other claims or suits are caused by the sole negligence of a party indemnified hereunder unless otherwise provided in the Prime Contract." Because the injured employee Chen sued Kiewit/Perini and Kiewit Eastern in negligence but not L & R Construction, CNA Insurance claims there is no duty to defend or indemnify because the "sole negligence" of Kiewit/Perini and Kiewit Eastern is at issue. Of course, L & R Construction was immune from suit because of the Pennsylvania Workers' Compensation Act. Pa.Stat.Ann. tit. 77, Sec. 481 (1992). Just because Chen could not sue L & R Construction does not mean the company was blameless in the accident. As the district court noted, legal immunity from suit between Chen and L & R Construction does not compel a conclusion that L & R Construction was not negligent, nor does it decide the contractual rights and obligations between L & R Construction and Kiewit/Perini. Kiewit I, supra, at * 6. The mere absence of allegations of negligence against L & R Construction in the underlying suit does not negate its obligation to defend and indemnify here. ⁹

Second, CNA Insurance maintains L & R Construction is immune from liability for injuries to its employees under the Workers' Compensation Act, which provides that the "liability of an employer under this act shall be exclusive and in place of any and all other liability to such employes...." Pa.Stat.Ann. tit. 77, Sec. 481 (1992) (footnote omitted). Although the statute immunizes employers from indemnification suits by third parties who have been sued by injured employees, it exempts from protection any employers that contractually agreed with third parties to waive their immunity under the statute. ¹⁰

Section 11(b) of the subcontract ends with the proviso that "Subcontractor's obligation [to defend and indemnify] hereunder shall not be limited by the provisions of any Workers' Compensation act or similar statute." Although the district court found this language amounted to an express waiver of immunity provided by the Workers' Compensation Act, Kiewit I, supra, at * 8, CNA Insurance argues on appeal that the subcontract does not "expressly provide" that L & R Construction would waive its immunity--as the statute requires.

In support of its position, CNA Insurance points to the decision in Bester v. Essex Crane Rental Corp., 422 Pa.Super. 178, 619 A.2d 304 (1993), in which the court denied an indemnity claim. The facts in Bester resemble those in the present case: a purported indemnitee claimed protection from liability for injuries to one of the indemnitor's employees that may have been caused by the indemnitee. Yet the comparison between the two cases ends there. Unlike the indemnification contract...