Lackie v. Niagara Mach. and Tool Works

• Decision Date: 08 March 1983
• Docket Number: Civ. A. No. 81-0052.
• Citation: 559 F. Supp. 377
• Parties: David C. LACKIE and Marion Lackie v. NIAGARA MACHINE AND TOOL WORKS and Port Realty and Warehousing Corp. and National Machinery Exchange, Inc.
• Court: U.S. District Court — Eastern District of Pennsylvania

559 F. Supp. 377

David C. LACKIE and Marion Lackie v. NIAGARA MACHINE AND TOOL WORKS and Port Realty and Warehousing Corp. and National Machinery Exchange, Inc.

Civ. A. No. 81-0052.

United States District Court, E.D. Pennsylvania.

March 8, 1983.

Edward F. Silva, Philadelphia, Pa., for plaintiff.

Christopher C. Fallon, Jr., Philadelphia, Pa., for Port Realty Nat. Mach Francis J. Deasey, Philadelphia, Pa., for Niagara.

John T. Quinn, Philadelphia, Pa., for Cardinal Systems.

MEMORANDUM AND ORDER

TROUTMAN, Senior District Judge.

In August, 1980, while at work and operating a shear press, plaintiff, David C. Lackie,¹ sustained injuries when his right hand became stuck in the machine. Suit was instituted approximately five months later; plaintiff alleges that defendant, National Machinery Exchange, Inc. (National) breached various obligations imposed by § 402A of the Restatement of Torts (Second). National then commenced a third-party action against plaintiff's employer, Cardinal Systems, Inc. (Cardinal), alleging generally that Cardinal had agreed to indemnify it, National, for any claim arising out of the machine's operation. Cardinal, now moving for summary judgment on the third-party complaint, argues that Pennsylvania's Workmen's Compensation Act, 77 P.S. § 1 et seq., (Act) prohibits the third-party action. We agree and grant the motion.

The relevant provision of Pennsylvania's Workmen's Compensation Act, 77 P.S. § 481(a), provides in pertinent part that the

liability of an employer under this act shall be exclusive² and in place of any and all other liability to such employes...

Moreover,

In the event injury or death to an employe is caused by a third party, then such employe ... may bring their action at law against such third party but the employer ... shall not be liable to a third party for damages, contribution or indemnity in any action at law ... unless liability for such damages, contributions or indemnity shall be expressly provided for in a written contract ....

77 P.S. § 481(b) (emphasis added).

In the case at bar, National asserts that its sale to Cardinal of the injury-causing shear press was accompanied by an appropriately worded indemnification agreement and that Cardinal has, therefore, waived the immunity from joinder which an employer generally enjoys by virtue of the Act.

Countering, Cardinal argues that the indemnification provisions of the agreement are ambiguous and subject to more than one rational interpretation. Since National drafted the language at issue, Cardinal asseverates that the clause must be strictly construed against its author. Moreover, given this construction, Cardinal urges that it has not expressly waived its protection under the Act and that it is, therefore, entitled to judgment.

Resolution of the issue at bar requires reference to Pennsylvania law regarding the effect and construction of indemnification agreements generally as well as those under § 481(b) of the Act. In undertaking this analysis we begin with the observation that indemnification clauses are generally "not favored by the law" and are subject to a strict construction compelling an interpretation "against the party seeking their protection". Dilks v. Flohr Chevrolet, 411 Pa. 425, 435, 192 A.2d 682 (1963).

The specific clause at issue provides as follows:

Please note the important paragraph below: The above used equipment may or may not conform to OSHA Standards. It is the buyers Cardinal Systems, Inc. and their operators responsibility to operate the equipment properly and to put proper and protective guarding on the equipment in order to avoid possible injuries through its operation. It is agreed that buyers shall at their own cost and expense defend any claim or action which may have been brought by any person or firm claiming damages for personal injuries resulting from the operation of the above equipment and shall indemnify and hold the seller harmless from any such claim or resulting judgment.

The above quoted language, by its very terms, broadly purports to require Cardinal to indemnify National and hold it harmless for all claims arising out of the operation of the shear press.

In Pittsburgh Steel Co. v. Patterson-Emerson-Comstock, Inc., 404 Pa. 53, 171 A.2d 185 (1961), the Pennsylvania Supreme Court barred an action for indemnification where the clause at issue failed to expressly contemplate the type of injury ultimately sustained by the injured worker. In reaching its conclusion, the court relied in part upon Perry v. Payne, 217 Pa. 252, 66 A. 553, which had previously construed language which purported to require indemnification from "all loss, cost or expense ... arising from accidents to ... laborers" as insufficient to require indemnification since no permissible "inference from words of general import can establish" the express assumption of potential liability. Pittsburgh Steel Co. v. Patterson-Emerson-Comstock, Inc., 404 Pa. 53, 57, 59, 171 A.2d 185 (quotations omitted; emphasis in original).

Potts v. Dow Chemical Co., 272 Pa.Super. 323, 415 A.2d 1220, 1221 (1979), applied Pittsburgh Steel specifically to an action where the defendant supplier sought to join plaintiff's employer as a third-party defendant. The third-party action there, as in the case at bar, was predicated upon an indemnification agreement which assertedly waived, pursuant to 77 P.S. § 481(b), the Act's protection against such a joinder. Specifically, the Potts indemnification clause purported to require indemnification from all liability except that "directly resulting ... solely" from its own negligence. Id. The contract in Potts assertedly shielded the defendant/supplier from allegations of "negligence or any other cause of action". Potts v. Dow Chemical Corp., 415 A.2d 1221.

Construing the indemnification language in light of the applicable provisions of the Act, 77 P.S. § 481(b), the Potts court emphasized that contracts for indemnification must expressly provide for "such damage" as suffered by the plaintiff. 415 A.2d at 1222. Since the language in Potts failed to meet this test, the court declined to give it any effect. See also, Tookmanian v. Safe Harbor Water Corp., 505 F.Supp. 920 (E.D. Pa.1981).

National argues that Pittsburgh Steel and Potts should be strictly confined to their facts and that the proper method of determining the validity of indemnification clauses is made by reference to Leidy v. Deseret Enterprises, Inc., 252 Pa.Super. 162, 381 A.2d 164 (1977). Leidy, a decision of the Pennsylvania Superior Court, did not, and indeed could not, alter the rule articulated in Pittsburgh Steel by the Pennsylvania Supreme Court.

Leidy considered an indemnity clause which favored a health spa, i.e., an entity "clearly concerned" with health and safety. Leidy v. Deseret Enterprises, Inc., 381 A.2d at 164 (1977). See also, Physical Therapy Practice Act, 63 P.S. § 1301 et seq. In concluding that the spa's motion for judgment on the pleadings was erroneously granted by the trial court, Leidy observed that four criteria generally determine whether or not an indemnification clause will be enforced. 381 A.2d at 167. Because the contract there at issue related to health and public safety, the clause was viewed as infringing upon the public interest, therefore, enforcement thereof was improper. Leidy's general language addressed factors for consideration when determining the validity of an indemnity clause. It did not purport to inquire into the area explored by Pittsburgh Steel, i.e., the legal construction of such a clause. Simply stated, Leidy's broad language is useful in determining the general validity of an indemnity clause, that is, whether it violates notions of public policy, etc. Pittsburgh Steel's primary application is the effect and construction given the clause. Accordingly, although the contract at bar arguably satisfies Leidy's requirements that the clause regulates only private conduct between parties with some degree of parity in bargaining power, that the party against whom enforcement is sought knew of the clause's existence and that enforcement would not contravene public policy, movants have nevertheless failed to satisfy the requirements of Pittsburgh Steel in that the clause's general language cannot support a "permissible inference" of an express assumption of liability. Pittsburgh Steel Co. v. Patterson-Emerson-Comstock, Inc., 404 Pa. 53, 59, 171 A.2d 185.

Phillippe v. Rhoads, 233 Pa.Super. 503, 336 A.2d 374, 376 (1975), upon which National also relies, provides little real support for its position. It articulated the familiar rule announced in Dilks, supra, that an indemnity clause should be strictly construed and that any ambiguity contained therein be read against the party seeking its protection. Phillippe relied, in part, upon Galligan v. Arovitch, 421 Pa. 301, 219 A.2d 463 (1966). It, too, authorizes strict construction of indemnification clauses and requires the parties to articulate with the "utmost particularity" their intentions with regard thereto. Id. at 465. The indemnity clause at issue in Phillippe was narrowly read and its scope was limited to coverage of "only ... certain enumerated duties" to be performed in a "specified manner". Phillippe v. Rhoads, 336 A.2d at 376.

The indemnity clause at bar purportedly requires Cardinal to hold National harmless for damages "resulting from the operation of the machine". (emphasis added.) Applicable rules of construction require that this phrase be narrowly read and that any ambiguities contained therein be construed against the phrase's author, National. The clause addresses the type of claim made by third parties against National—the obligation to indemnify is triggered by third-party claims against Cardinal which result from the machine's operation.

Plaintiff's claim against National factually arises out of his "operation" of the machine; his legal claim, however, is premised upon National's purported...