Uniwest Constr. Inc v. Amtech Elevator Serv. Inc

• Decision Date: 16 September 2010
• Docket Number: 091496,091521.,Record No. 091495
• Citation: 280 Va. 428,699 S.E.2d 223
• Court: Virginia Supreme Court
• Parties: UNIWEST CONSTRUCTION, INC., et al.v.AMTECH ELEVATOR SERVICES, INC., n/k/a ABM Amtech, Inc., et al.Amtech Elevator Services, Inc., n/k/a ABM Amtech, Inc., et al.v.Uniwest Construction, Inc., et al.Federal Insurance Companyv.Amtech Elevator Services, Inc., n/k/a ABM Amtech, Inc., et al.

280 Va. 428

699 S.E.2d 223

UNIWEST CONSTRUCTION, INC., et al.

v.AMTECH ELEVATOR SERVICES, INC., n/k/a ABM Amtech, Inc., et al.

Amtech Elevator Services, Inc., n/k/a ABM Amtech, Inc., et al.

v.Uniwest Construction, Inc., et al.

Federal Insurance Company

v.Amtech Elevator Services, Inc., n/k/a ABM Amtech, Inc., et al.

Record Nos. 091495, 091496, 091521.

Supreme Court of Virginia.

Sept. 16, 2010.

Edward W. Cameron, Fairfax (Christopher R. Carroll; Matthew J. Lodge; Geoffrey S. Gavett; Cameron/McEvoy; Carroll, McNulty & Kull; Gavett & Datt, on briefs), for Uniwest Construction, Inc., United States Fire Insurance Company, and Pennsylvania Manufacturers' Association Insurance Company.

Barbara I. Michaelides (Agelo L. Reppas; John D. McGavin, Fairfax; John C. Bonnie; Howard J. Russell; Bates & Carey; Trichilo Bancroft McGavin, Horvath & Judkins; Weinberg, Wheeler, Hudgins, Gunn & Dial, on briefs), for Amtech Elevator Services, Inc., n/k/a ABM Amtech, Inc., ABM Industries Incorporated, and AIU Insurance Company.

Jeffrey R. Schmieler (Alan B. Neurick; Lisa N. Walters; Saunders & Schmieler, on briefs), for Federal Insurance Company.

Present: HASSELL, C.J., KOONTZ, KINSER, GOODWYN, MILLETTE, and MIMS, JJ., and LACY, S.J.

Opinion by Justice WILLIAM C. MIMS.

In these companion appeals we consider whether Amtech Elevator Services, Inc., now known as ABM Amtech, Inc., (“Amtech”) had a contractual duty to defend and indemnify Uniwest Construction, Inc. (“Uniwest”) in an action brought against Uniwest by an injured Amtech employee and the estate of a deceased Amtech employee. We also consider whether Uniwest was insured under Amtech's insurance policies.

I. BACKGROUND AND MATERIAL PROCEEDINGS BELOW

A. THE CONTRACT DOCUMENTS

The Fountains at Logan Square, L.L.C. (“Fountains”) executed a written agreement (the “Prime Contract”) with Uniwest in August 1999 to renovate a building Fountains owned in Philadelphia, Pennsylvania. The Prime Contract was drafted using a form American Institute of Architects (“AIA”) document that included AIA's General Conditions of the Contract for Construction (the “General Conditions”). Paragraph 3.18.1 of the General Conditions obligated Uniwest to defend and indemnify Fountains

[t]o the fullest extent permitted by law ... from and against claims, damages, losses and expenses, including but not limited to attorneys' fees, arising out of or resulting from performance of the Work, provided that such claim, damage, loss or expense is attributable to bodily injury, sickness, disease or death, or injury to or destruction of tangible property, (other than the Work itself) including loss of use resulting therefrom, but only to the extent caused in whole or in part by negligent acts or omissions of [Uniwest], a Subcontractor, anyone directly or indirectly employed by them or anyone for whose acts they may be liable, regardless of whether or not such claim, damage, loss or expense is caused in part by a party indemnified hereunder.

The General Conditions also obligated Uniwest to “require each Subcontractor ... to be bound to [Uniwest] by [the] terms of the Contract Documents, and to assume toward [Uniwest] all the obligations and responsibilities which [Uniwest], by these Documents, assumes toward [Fountains].”

The renovations set forth in the Prime Contract included modernization of three existing passenger elevators and installation of a new service elevator. Uniwest subcontracted this elevator work to Amtech in March 2000 by a written agreement (the “Subcontract”) governed by Virginia law. The Subcontract expressly incorporated the Prime Contract “to the extent not otherwise excluded or modified by the terms of th[e] Subcontract.” Paragraph 3 of the Subcontract amplified this obligation:

[Amtech] agrees to be bound to Uniwest by all the terms of the [Prime Contract] and to assume towards Uniwest all of the obligations and responsibilities that Uniwest has by the [Prime Contract] assumed toward [Fountains]. All terms and conditions contained in the [Prime Contract] which, by the [Prime Contract] or by operation of law, are required to be placed in [the] Subcontract[ ] are hereby incorporated herein as if they were specifically written herein.

Additionally, Paragraph 10 of the Subcontract required Amtech to defend and indemnify Uniwest:

[Amtech] hereby assumes entire responsibility for any and all damage or injury of any kind or nature whatever, including death resulting therefrom, to all persons, whether employees of [Amtech], its subcontractors or agents. If any claims for such damage or injury be made or asserted, whether or not such claim(s) are based upon the negligence of Uniwest or [Fountains], [Amtech] agrees to indemnify and save harmless Uniwest from any and all such claims, and further from any and all loss, costs, expense, liability, damage or injury, including legal fees and disbursements, that Uniwest may sustain, suffer or incur as a result thereof. Further [Amtech] agrees to and does hereby assume the defense of any action at law or in equity which may be brought against Uniwest or [Fountains] arising by reason of such claims.

Finally, Exhibit B of the Subcontract required Amtech to “[f]urnish and install elevator work in accordance with ‘Elevator Installation and Modernization Specifications for Logan Square East’ as prepared by Zipf Associates, Inc.” (the “Zipf Specifications”). The Zipf Specifications required Amtech to “name [Uniwest] as [an] Additional Insured” to its insurance policies or “submit a separate ... Liability Insurance policy” for Uniwest.

B. THE INSURANCE POLICIES

Amtech had a commercial general liability insurance policy (the “CNA Policy”) from Continental Casualty Company (“Continental”) with a $1,000,000 coverage limit.¹ The CNA Policy included an errors and omissions endorsement stating:

In the event, you are required to add a person or organization as an additional insured on this policy under a written agreement or contract but you inadvertently fail to issue such endorsement, that person or organization is included as an insured. Provided that, the additional insured is an insured only with respect to liability arising out of ... your ongoing operations performed for that additional insured if the additional insured is an owner, lessee or contractor for whom you are performing work.... Provided, further, that: [t]he additional insured is an insured only to the extent that it is required to be indemnified by your written agreement or contract with the additional insured; and [t]he insurance afforded to the additional insured shall not exceed the coverage and the limits of insurance required in the written agreement or contract, or the coverage and limits of insurance of this policy, whichever is less.

Amtech also had a commercial umbrella insurance policy (the “AIU Policy”) from AIU Insurance Company (“AIU”) with a $25,000,000 coverage limit. This policy insured any entities covered by the CNA Policy by including as an insured “[a]ny person ... included as an additional insured in the policies listed in the Schedule of Underlying Insurance.” ² The Schedule of Underlying Insurance included the CNA Policy.

The AIU Policy also included as an insured “[a]ny person ... to whom you are obligated by a written Insured Contract to provide insurance such as is afforded by this policy but only with respect to ... liability arising out of operations conducted by you or on your behalf....” ³ The AIU Policy defined “Insured Contract” to mean “any oral or written contract or agreement entered into by you and pertaining to your business under which you assume the tort liability of another party.”

Uniwest had a general liability insurance policy from Pennsylvania Manufacturers' Association Insurance Company (“PMA”) with a $1,000,000 coverage limit. Uniwest also had a commercial umbrella insurance policy from United States Fire Insurance Company (“U.S. Fire”) and a second tier excess policy from Federal Insurance Company (“Federal”), each with a $5,000,000 coverage limit.

C. THE ACCIDENT AND RESULTING LAWSUIT

Thomas Stinson and Robert Bruce were employees of Amtech assigned to the elevator project. Stinson and Bruce were working on a scaffold in an elevator shaft on January 15, 2001, when the scaffold collapsed and they plummeted to the bottom of the shaft. Stinson died and Bruce sustained serious injury. Stinson's estate and Bruce sued Uniwest and others in Pennsylvania. ⁴

PMA, Uniwest's principal insurer, notified Amtech that Uniwest and PMA expected it to defend and indemnify Uniwest against the Employees' lawsuit. ABM retained a Pennsylvania attorney, Richard Hohn, to determine whether the Subcontract required it to defend and indemnify Uniwest. Hohn determined that Paragraph 10 of the Subcontract was valid under Pennsylvania law but noted that the Subcontract was governed by Virginia law. He opined that the provision was valid under Virginia law as well.

Based on Hohn's opinion that Amtech had a duty to defend and indemnify Uniwest, ABM directed him to negotiate the terms of Uniwest's defense with PMA. PMA retained its own counsel, Joseph Gibley, for the negotiation. Thereafter ABM agreed to defend and indemnify Uniwest “pursuant to the terms and conditions” of the Subcontract. PMA accepted the offer and ABM retained James Lynn to be Uniwest's counsel with day-to-day control of Uniwest's defense.⁵

In July 2005, ABM notified Continental and AIU that Lynn and Hohn expected the Employees to demand damages exceeding $20,000,000. AIU subsequently informed Lynn that it had not joined in ABM's agreement to defend and indemnify Uniwest. ABM objected, contending that AIU had been informed of the accident as early as 2001 and was aware that ABM had agreed to defend and indemnify Uniwest for more than a year.

In November 2005, Continental informed AIU that litigation expenses already had exhausted Amtech's self-insured retention and were eroding coverage under the CNA Policy. Continental...