Hindinger v. J&M Temp, LLC ( 2023 )

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE
ANDREW HINDINGER, :
Plaintiff, :
:
v. :
:
J&M TEMP, LLC, f/k/a REXCON, :
LLC, and COMMAND ALKON, INC., :
Defendants, :
and :
: Civ. Act. No. N20C-01-272 DJB
J&M TEMP, LLC, f/k/a/ REXCON, LLC, :
Defendant/Third-Party Plaintiff, :
:
v. :
:
HMA CONCRETE, LLC, d/b/a :
HERITAGE CONCRETE, :
Third-Party Defendant. :
MEMORANDUM OPINION
Submitted: November 23, 2022
Decided: February 28, 2023
On Third-Party Defendant’s Motion to Dismiss – GRANTED
Lawrance Kimmel, Esquire, and Linda Malkin, Esquire, KIMMEL CARTER
ROMAN PELTZ & O’NEILL PA, Christiana, Delaware; for Plaintiffs.
Amy Taylor, Esquire, HECKLER & FRABIZZIO, Wilmington, Delaware; for
Defendants and Third-Party Plaintiff Command Alkon.
1
Kevin Connors, Esquire, MARSHALL DENNEHY WARNER COLEMAN &
GOGGIN, Wilmington, Delaware; Annice Mae Mattus, Esquire, Castell Abner III,
Esquire, and J. Scott Shannon, Esquire, LEE SHOEMAKER, Washington, DC;
Jeffrey G. Granillo, Esquire, CHAMBLISS, BAHNER, & STOPHEL, P.C.,
Chattanooga, TN; for Defendants and Third-Party Plaintiff J&M Temp f/k/a/
Rexcon.
Timothy Houseal, Esquire, and Jennifer Kinkus, Esquire, YOUNG CONAWAY
STARGATT & TAYLOR LLP, Wilmington, Delaware; Nancy Chrissinger Cobb,
Esquire, COBB & LOGULLO LAW OFFICES, Wilmington, Delaware; M.
Abbegael Giunta, Esquire, and Ursula Silvering, Esquire, MCNEES WALLACE &
NURICK LLC, Harrisburg, PA; for Third Party Defendants HMA Concrete.
BRENNAN, J.
2
I. BACKGROUND
HMA Concrete, LLC d/b/a Heritage Concrete (hereinafter “Heritage”) is a
Delaware limited liability company involved in the ready-mix concrete business.1
Heritage produces concrete through its operation of concrete batch plants. On May
22, 2019, Plaintiff Andrew S. Hidinger (“Hidinger”), an employee of Heritage, was
performing maintenance at one of Heritage’s concrete batch plants (the “Plant”).
While in the course of his employment, a cement mixer activated without warning,
causing Hidinger to fall inside and sustain injuries. Thereafter, Hidinger filed suit
against J&M Temp, LLC f/k/a/ REXCON, LLC (“Rexcon”) and Command Alkon,
Inc. (“Alkon”).2
Rexcon is a manufacturer and seller of industrial equipment who sold the
component parts of the Plant to Heritage on November 11, 2016.3 Rexcon and
Heritage memorialized the sale through the execution of a sales order agreement (the
“Rexcon Contract”).4 The Rexcon Contract provided that Heritage was responsible
for (1) installation and assembly of the plant; (2) furnishing alternative safety
devices; and (3) any additional disconnect switches or electrical wiring devices.5
With respect to installation and assembly of the plant, the Rexcon Contract provided
that “[Heritage] must install and use the products in a safe and lawful manner in
1
Rexcon Third-Party Compl. ¶ 2, Sept. 24, 2021 (D.I. 74).
2
Hidinger filed his initial Complaint on January 31, 2020, naming Rexcon
as the lone defendant in the case. D.I. 1. Hidinger filed a Second
Amended Complaint on March 11, 2021, adding Alkon as a party. D.I.
46.
3
Rexcon Third-Party Compl. ¶ 6.
4
Heritage’s Mot. to Dismiss, Ex. 1 (hereinafter “Rexcon Contract”), Dec.
20, 2021 (D.I. 83). Though not paginated, the Rexcon Contract appears
on page 4 and 5 of Heritage’s attached exhibit.
5
Id.
3
compliance with applicable health and safety regulations and laws and general
standards of reasonable care.”6
The Rexcon Contract also contained a “Remedy” provision, which states all
claims under the agreement must be made within six months of product delivery.7
The provision details that the full extent of Rexcon’s liability under the agreement
is limited to a refund, repair, or replacement of component parts.8 The provision
bars any other remedy, “whether in contract or tort (including strict liability and
negligence).”9 The Rexcon Contract, however, did not include a command
automation control (hereinafter the “Control Panel”), which is necessary to operate
the Plant.10 Instead, Heritage purchased the Control Panel from Command Alkon,
Inc. (“Alkon”).11
Heritage’s parent company, Oldcastle Materials, Inc. (“Oldcastle”), entered
into a Master Software License, Hardware Sales and Services Agreement (“Master
Agreement”) with Alkon on April 27, 2012.12 Under the Master Agreement, Alkon
would “license, sell and/or service certain hardware, software and/or equipment” to
Oldcastle or any affiliated entity of Oldcastle, including Heritage.13 Purchases of
equipment under the Master Agreement were executed through a “Form Order
6
Id.
7
Id.
8
Id.
9
Id.
10
Rexcon Third-Party Compl. ¶ 14-15.
11
Alkon Third-Party Compl. ¶ 8, 10, 19-20, July 18, 2022 (D.I. 121).
12
Id. ¶ 8.
13
Id. ¶ 8. Heritage does not dispute that it is bound by the terms of the
Master Agreement. See Heritage’s Opening Br. (Alkon) at 2, Aug. 19,
2022 (D.I. 126) (noting that Heritage entered Master Agreement through
Oldcastle).
4
Document” attached as an exhibit to the Master Agreement.14 On February 15, 2017,
Alkon and Heritage (through Oldcastle) executed a contract, substantially in the
form of the “Form Order Document,” whereby Heritage purchased a Control Panel
from Alkon (the “Purchase Order”).15
The Purchase Order expressly incorporated the terms and conditions of the
Master Agreement (collectively, the “Alkon Contract”).16 Relevant to the dispute
are three terms of the Alkon Contract. First, Section 13.3 of the Master Agreement
provides that Heritage, to the extent allowed by law, will indemnify Alkon “against
any and all third [parties] (including employees of [Heritage].”17 The
indemnification provision applies to any claims arising out of “[Heritage’s] breach
of any representation, warranty, or other obligation under this Agreement.”18
Section 3.9.2 of the Master Agreement provides that “[i]nstallation of Equipment is
the sole responsibility of [Heritage] unless Equipment installation services are
separately purchased pursuant to an Order Document.”19 Further, the Master
Agreement provides a limitation on liability clause under Section 14.1. The relevant
clause precludes Alkon’s liability for claims arising from “any modification or
attempted modification, or use of the results of such modification or attempted
modification, of any software, equipment or other materials, which modification is
not performed by [Alkon] or at its express direction.”20
14
Alkon Third-Party Compl., Ex. A (hereinafter “Master Agreement”) §
1.1, 3.9, Sept. 7, 2022 (D.I. 128).
15
Alkon Third-Party Compl. ¶ 10; see also Alkon Third-Party Compl., Ex.
B (hereinafter “Purchase Order”), Sept. 7, 2022 (D.I. 129).
16
Purchase Order at 3-4.
17
Master Agreement § 13.3.
18
Id. § 13.3.1.
19
Id. § 3.9.2.
20
Id. § 14.1.
5
In the underlying action, Hidinger asserts multiple theories of liability,
including claims of negligence and breach of express and implied warranties against
Rexcon and Alkon.21 Both Rexcon and Alkon filed answers to Hidinger’s latest
Complaint denying liability on all alleged theories.22
Each Defendant filed a third-party complaint against Heritage based on
theories of contractual indemnification.23 Heritage has moved for the dismissal of
each third-party complaint.24 For the reasons set forth below, the motions to dismiss
the third-party complaints are GRANTED.
II. STANDARD OF REVIEW
“Under Superior Court Civil Rule 12(b)(6), the legal issue to be decided is,
whether a plaintiff may recover under any reasonably conceivable set of
circumstances susceptible of proof under the complaint.”25 Under that Rule, the
Court will:
(1) accept all well pleaded factual allegations as true, (2)
accept even vague allegations as “well pleaded” if they
give the opposing party notice of the claim, (3) draw all
reasonable inferences in favor of the non-moving party,
and (4) not dismiss the claims unless the plaintiff would
not be entitled to recover under any reasonably
conceivable set of circumstances.26
21
Third Am. Compl. ¶¶ 2-6, Jan. 17, 2022 (D.I. 88).
22
D.I. 98, 102.
23
D.I. 74, 121.
24
D.I. 83, 126.
25
Vinton v. Grayson, 189 A.3d 695, 700 (Del. Super. 2018) (quoting
Superior Court Civil Rule 12(b)(6)).
26
Id. (quoting Cent. Mortg. Co. v. Morgan Stanley Mortg. Capital Holdings
LLC, 27 A.3d 531, 535 (Del. 2011)).
6
“The Court, however, need not accept conclusory allegations unsupported by
specific facts or … draw unreasonable inferences in favor of the non-moving
party.”27 “If any reasonable conception can be formulated to allow Plaintiffs’
recovery, the motion must be denied.”28
III. DISCUSSION
Section 2304 of Delaware’s Workers’ Compensation Act29 provides that
payment of workers’ compensation benefits is the exclusive remedy for work-related
injuries suffered by an employee from his or her employer.30 The exclusivity
provision provides, in pertinent part:
Every employer and employee, adult and minor, shall be bound
by this chapter respectively to pay and to accept compensation
for personal injury or death by accident arising out of and in the
course of employment, regardless of the question of negligence
and to the exclusion of all other rights and remedies.31
Delaware courts have applied the exclusivity provision to bar “the imposition
of joint tort liability upon an employer in a suit brought by an injured employee
against a third party.”32 “Thus, an employer cannot be held jointly liable to an
27
Intermec IP Corp. v. TransCore, LP, 2021 WL 3620435, at *7 (Del.
Super. Ct. Aug. 16, 2021) (citing Prince v. E.I. DuPont de Nemours &
Co., 26 A.3d 162, 166 (Del. 2011), overruled on other grounds by
Ramsey v. Ga. S. Univ. Advanced Dev. Ctr., 189 A.3d 1255, 1277 (Del.
2018)).
28
Vinton, 189 A.3d at 700 (citing Cent. Mortg. Co., 27 A.3d at 535).
29
19 Del. C. §§ 2301-2397.
30
Id. § 2304.
31
Id.
32
O’Neal v. Mercantile Press, 2009 WL 3327228, at *1 (Del. Super. Ct.
Oct. 8, 2009) (citing Precision Air, Inc. v. Standard Chlorine of
Delaware, Inc., 654 A.2d 403, 406 (Del. 1995)).
7
employee for injuries sustained in the course of employment, even if the employer’s
negligence contributed to the employee’s injuries.”33
Rexcon and Alkon do not dispute that Heritage paid Hidinger workers’
compensation benefits. Instead, Rexcon and Alkon both maintain that they can
recover against Heritage under a theory of contractual indemnification. Under
Delaware law, “a third party has a right to maintain an action against a negligent
employer who may be held liable for indemnity if the employer… has breached an
independent duty owed a third party, or if in the circumstances there is a basis for
finding an implied promise of indemnity.”34 Therefore, the Court must determine
whether Rexcon and Alkon have properly pled a claim for contractual
indemnification, and as a result, have sufficiently stated a claim upon which relief
can be granted.
A. Heritage’s Motion to Dismiss Rexcon’s Third-Party Complaint
In Precision Air Inc. v. Standard Chlorine of Del., Inc., the Delaware Supreme
Court held that “[a]n employer, even though it has paid workmen’s compensation
benefits to an injured employee, can be held contractually liable to a third party
where a contract between the employer and third party contains provisions requiring
the employer to: (i) perform work in a workmanlike manner; and (ii) indemnify the
third-party-indemnitee for any claims arising from the employer-indemnitor’s own
negligence.”35 This contractual indemnification exception to Delaware’s workers’
33
Menkes v. Saint Joseph Church, 2011 WL 1235225, at *4 (Del. Super. Ct.
Mar. 18, 2011).
34
Precision Air, 654 A.2d at 407 (quoting SW (Del.), Inc. v. Am.
Consumers Indus., 450 A.2d 887, 889-90 (Del. 1982)).
35
Id. (citing SW (Del.), 450 A.2d at 889-90).
8
compensation scheme may arise through an express contractual obligation or an
implied promise to indemnify.36
Rexcon contends that it has pled the existence of an express contractual
indemnification claim consistent with the exception in Precision Air. In the
alternative, Rexcon maintains that the circumstances of this case give rise to an
implied obligation of indemnity.
1. Express Contractual Indemnification
Heritage asserts that the Rexcon Contract is a sales contract and consequently,
contained no express language obligating Heritage to perform work in a
workmanlike manner. Heritage claims its sole contractual obligation was to remit
timely payment to Rexcon in exchange for the Plant’s component parts. As a result,
Heritage contends that the Rexcon Contract fails to meet the first of the two-part
exception in Precision Air. Rexcon, however, avers that the “Product Safety” and
“Remedy” provisions of the Rexcon Contract provide express contractual language
well within the Precision Air exception.
The parties’ arguments turn on the meaning of certain provisions within the
Rexcon Contract. In Delaware, a contract’s proper construction is a question of law
that can be resolved upon a motion to dismiss.37 “The Court will interpret contract
terms according to their common or ordinary meaning and contract provisions as a
whole, giving effect to each and every term… in a manner that does not render any
36
SW (Del.), 450 A.2d at 888 (“a third-party tortfeasor may assert a claim
for indemnification against the injured party’s employer for the latter’s
breach of contract—express or implied—with the third party to perform
in a careful and prudent manner, assuming the employer’s breach of such
duty was the actual cause of its employee’s injury.”) (emphasis added).
37
Markow v. Synageva Biopharma Corp., 2016 WL 1613419, at *4 (Del.
Super. Ct. Mar. 3, 2016) (quoting L & L Broad. LLC v. Triad Broad. Co.,
LLC, 2014 WL 1724769, at *3 (Del. Super. Ct. Apr. 8, 2014)).
9
provision illusory or meaningless.”38 Delaware law “adhere[s] to the objective
theory of contracts,” which requires Courts “to interpret a particular contractual term
to mean what a reasonable person in the position of the parties would have thought
it meant.”39 “When a contract only is susceptible of one interpretation, and that
interpretation effectively negates the claim as a matter of law, a motion to dismiss
should be granted.”40
The Rexcon Contract memorialized a one-time sale of industrial construction
equipment from Rexcon to Heritage. The Rexcon Contract additionally sets forth
various “Conditions of Sale.”41 Rexcon relies upon the “Product Safety” condition,
which states in full:
Products designed and manufactured by [Rexcon] are capable of
being used in a safe manner, but [Rexcon] cannot warrant their
safety under all circumstances. [Heritage] must install and use
the products in a safe and lawful manner in compliance with
applicable health and safety regulations and laws and general
standards of reasonable care.42
Rexcon maintains that this language, along with other provisions of the
Rexcon Contract,43 demonstrate an ongoing contractual duty whereby Heritage
agreed to install and operate the plant in a safe and workmanlike manner.
38
Id. at *5 (quoting Narrowstep, Inc. v. Onstream Media Corp., 2010 WL
5422405, at *6-7 (Del. Ch. Dec. 22, 2010)) (internal quotation marks
omitted).
39
Vinton, 189 A.3d at 704 (internal quotation marks and citations omitted).
40
APX Operating Co., LLC v. HDI Glob. Ins. Co., 2021 WL 5370062, at *5
(Del. Super. Ct. Nov. 18, 2021) (citing VLIW Tech., LLC v. Hewlett-
Packard Co., 840 A.2d 606, 614-15 (Del. 2003)).
41
See Rexcon Contract.
42
Id. (emphasis in original).
43
Rexcon claims that three other provisions demonstrate Heritage’s
ongoing contractual duties. Rexcon avers that the Safety Devices
provision establishes that Heritage accepted “the responsibility…to
10
However, in reviewing the Rexcon Contract as a whole, it is apparent that the
main object of the agreement was a one-time purchase of component parts to
construct the Plant. Rexcon argues the “must install and use” language in the
Product Safety provision creates an ongoing contractual duty owed by Heritage.
Under this reading, Heritage is obligated to install and use the products in safe a
manner for an indefinite period. This interpretation does not comport with the full
context of the Product Safety provision and the Rexcon Contract as a whole.
The Product Safety provision initially provides that Rexcon’s products “are
capable of being used in a safe manner, but [Rexcon] cannot warrant their safety
under all circumstances.”44 The provision speaks in terms of limiting Rexcon’s
liability against potential third party suits sounding in products liability. Consistent
with this understanding, the “must install and use” language serves to disclaim
Rexcon’s responsibility as to the use of its products after a sale. As a result, rejecting
Rexcon’s interpretation of the Rexcon Contract would not render the disputed
provisions as mere surplusage.
Even if the Court were to accept Rexcon’s contention that Heritage owed
Rexcon contractual obligations to operate the Plant safely, the agreement would still
fail to meet the Precision Air contractual indemnification exception. In Precision
Air, the underlying contract provided in pertinent part, “[Precision] shall employ a
competent foreman and any necessary employees during the progress of the Work,
furnish other appropriate safety devices which are desired by [Heritage]
and/or required by OSHA Standards and other laws.” Id. Rexcon further
contends that the Electrical Equipment and Wiring provision provides
that Heritage “is responsible for any disconnect switches or other devices
required in addition to the main disconnect switch in the power panel.”
Id. Finally, Rexcon maintains that the Installation Supervision provision
demonstrates that Heritage agreed to assemble and install all products
purchased through the Rexcon Contract. Id.44
Id.11
so that the Work shall be done in a safe, good, substantial and workmanlike
manner…”45 Based on the explicit contract language, the Delaware Supreme Court
determined that the employer agreed to perform services in a workmanlike manner.46
Here, the Rexcon Contract does not expressly obligate Heritage to work in a
workmanlike manner. Further, Rexcon offers no authority to support the contention
that the “Product Safety” provision or any other provision, as written, amounts to a
contractual obligation to work in a workmanlike manner. Nevertheless, the Rexcon
Contract fails to meet the Precision Air exception for one additional reason—it lacks
an express indemnification clause.
Rexcon argues that the parties agreed to an indemnification clause under the
Remedy provision. Essentially, the provision limits Rexcon’s liability solely to
repairing or replacing component parts or refunding Heritage on claims brought
within six months of product delivery.47 Specifically, the Remedy provision
provides, in relevant part:
[Rexcon] will not be liable for any other [Heritage] costs, damages, or
expenses that may result from a breach of this contract. The foregoing
remedy is sole and exclusive and states the full extent of [Rexcon’s]
liability. No other remedy will be allowed, whether in contract or tort
(including strict liability and negligence).48
In order to invoke the exception to the exclusivity provision, “[t]he intention
to indemnify must … clearly appear in the terms of the [governing] agreement.”49
Nothing in this provision requires Heritage to indemnify Rexcon. The plain
language reads as a limitation of Rexcon’s liability. Contractual obligations limiting
45
Precision Air, 654 A.2d at 405.
46
Id. at 408.
47
See Rexcon Contract, Ex. 1 to Heritage’s Motion to Dismiss
48
Id. (emphasis in original).
49
Precision Air, 654 A.2d at 407. (quoting Howard, Needles, Tammen &
Bergendoff v. Steers, Perini & Pomeroy, 312 A.2d 621, 624 (Del. 1973)).
12
Rexcon’s liability to the provided remedies do not and cannot obligate Heritage to
indemnify and hold Rexcon harmless against claims from third parties. Because the
Rexcon Contract does not establish a clear intent to indemnify, Rexcon cannot
establish an express contractual indemnification claim as set forth in Precision Air.
Rexcon argued this “Remedy” provision does constitute an express
indemnification clause because it is actually Heritage, not Hidinger, bringing the
underlying negligence claim in this case. In support of this argument, Rexcon
reasoned that Heritage, as a corporate entity, can only act through its employees and
agents and Hidinger, as a Heritage employee who was injured within the scope of
his employment, is an authorized agent of Heritage. Consequently, Rexcon asserts
that Heritage, through its authorized agent (Hidinger), is asserting a negligence claim
against Rexcon in violation of the “Remedy” provision. As a result, Rexcon claims
that its limitation of liability provision “carries with it an obligation of Heritage to
indemnify Rexcon.” Rexcon’s lone citation to authority to support its argument is
to Slover v. Fabtek, Inc.,50 which does not support this contention. However, even
if true, the Rexcon Contract would still does not establish that Heritage is
contractually obligated to indemnify Rexcon.
2. Implied Contractual Indemnification
In the alternative to its express contractual indemnification argument, Rexcon
claims that the facts as set forth in its third-party complaint give rise to an implied
indemnification claim. In doing so, it raises two theories of implied indemnification.
First, it asserts that the “special relationship” test outlined in Roy v. Star Chopper
Co., Inc.51 operates as a basis for finding an implied indemnification obligation.
50
1985 WL 552281 (Del. Super. Ct. Mar. 4, 1985).
51
442 F.Supp. 1010 (D.R.I. 1997), aff’d, Roy v. Star Chopper Co., 584 F.2d
1124 (1st Cir. 1978).
13
Second, Rexcon argues that one of the factual scenarios discussed in Diamond State
Telephone v. University of Delaware52 applies and gives rise to a claim for implied
contractual indemnification.53 In response, Heritage argues no such implied
obligation can arise from a sales contract and contends the facts, as alleged, do not
meet the “special relationship” test outlined in Star Chopper.
Delaware law recognizes that an implied contractual obligation to indemnify
a third party may operate as an exception to Delaware’s workers’ compensation
exclusivity scheme.54 In Diamond State, the Delaware Supreme Court identified
three factual scenarios which may give rise to a claim of implied contractual
indemnification.55 All scenarios contemplated by Diamond State, however, are
conditioned on the existence of a contract whereby the employer performs services
for the third party on the third party’s premises.56 Here, Rexcon fails to allege that
Heritage performed services for Rexcon on Rexcon’s premises.57 As a result,
52
269 A.2d 252 (Del. 1970).
53
Rexcon raised this argument for the first time at oral argument. The
Court permitted Heritage to supplement its response to address this claim,
which they did on November 23, 2022. (D.I. 138).
54
Karcher v. Restoration Guys, LLC, 2022 WL 2720887, at *2 (Del. Super.
Ct. July 14, 2022).
55
Diamond State Tel. Co. v. Univ. of Del., 269 A.2d 52, 57-58 (Del. 1970).
56
Id. at 57 (“[a] possible liability in indemnification may come into
existence if there is a contract between the third-party defendant and the
third-party plaintiff for the performance of services by the third-party
defendant on the premises of the third-party plaintiff.”); see also SW
(Del.), 450 A.2d at 890 (“the simple contract of sale between [employer]
and [third party] does not give rise to an implied duty owed to [third
party] by [employer] to install and use the machine in a workmanlike
manner[.]”).
57
See generally Rexcon Third-Party Compl.
14
Rexcon’s third-party complaint does not trigger any of the factual circumstances
contemplated by Diamond State.58
Rexcon further claims that it is entitled to implied indemnification under the
special relationship test as set forth in Star Chopper. This Court has recently held
that Delaware law does not recognize the special relationship test as an exception to
workers’ compensation exclusivity.59 Even assuming Delaware does recognize the
exception, this claim cannot survive. In Star Chopper, the United States District
Court of the District of Rhode Island held that an implied indemnity obligation may
arise if the relationship between the manufacturer and purchaser of a product is
“more in the nature of co-manufacturers.”60 The Star Chopper court strictly
confined its holding to the “unusual allegations and evidence before [it].”61
The Star Chopper court focused on three allegations that give rise to this
special relationship. The Delaware Supreme Court summarized the findings as
follows:
The evidence of a special relationship included: (1) that the
purchaser/employer imposed certain design specifications on the
manufacturer which required the omission of certain safety
devices normally placed on the machine; (2) that the
purchaser/employer assumed full responsibility for the actual
assembly of the unit of which the purchased machine was a part;
and (3) that the purchaser/employer also assumed responsibility
for the addition of any necessary safety devices upon the
machine’s final assembly at the plant.62
58
See Farrow v. Teal Construction, Inc., 2020 WL 3422401, at *3 (Del.
Super. Ct. June 22, 2020).
59
Karcher, 2022 WL 2720887, at *4 (finding “the Delaware Supreme Court
did not adopt the [Star Chopper] exception.”).
60
Roy v. Star Chopper Co., Inc., 442 F.Supp. 1010, 1020 (D.R.I. 1977).
61
Id.62
SW (Del.), 450 A.2d at 890.
15
Here, Rexcon fails to meet the first prong of the special relationship test.
Rexcon claims that Heritage’s decision to use a Control Panel supplied by Alkon,
instead of one available through Rexcon, imposed design changes to Rexcon’s
product.63 The facts underlying Star Chopper, however, differ significantly. In Star
Chopper, the manufacturer claimed that the employer-purchaser “was exclusively
responsible for the design of the [allegedly defective product].”64 Further, the
manufacturer claimed, “it simply followed the detailed, complete designs imposed
by its customer, [the employer-purchaser].”65 The employer-purchaser’s
specifications omitted all safety mechanisms normally available on the product at
issue.66
Here, Heritage’s use of a separate Control Panel is distinguishable from the
design specifications alleged in Star Chopper. A purchaser’s mere input or
modification alone cannot give rise to a co-manufacturer relationship significant
enough to warrant the imposition of an implied indemnity obligation. 67 The Star
Chopper court specifically noted its ruling was “narrowly confined” to the facts
before it.68
The allegations in dispute more closely align with the facts in Karcher v.
Restoration Guys, LLC. In Karcher, the employer-purchaser entered an agreement
63
See Rexcon’s Opp’n. Br. at 17-18, Feb. 11, 2022 (D.I. 94).
64
Star Chopper, 442 F.Supp. at 1020.
65
Id.66
Id.67
See Fehl v. J.W. Greer, Inc., 1981 WL 383065, at *2 (Del. Super. Ct.
Aug. 6, 1981) (distinguishing Star Chopper and holding “a sales contract
is not sufficient to establish that type of relationship from which an
implied obligation to indemnify the third-party may arise.”) (citation
omitted); see also 11 Larson’s Workers’ Compensation Law § 121.08(4)
(discussing lack of authority supporting implied indemnity obligations
arising from sales contracts).
68
Id.
16
with a contractor to replace the entryway of employer-purchaser’s storage facility.69
The employer-purchaser specified the type of door it wanted and requested that the
contractor build a three-to-four-inch curb to prevent water encroachment.70 The
Karcher court held that purchaser-employer’s specifications “did not create the type
of special relationship that generated an implied duty of indemnification.”71
Establishing an implied indemnification duty on similar facts would “recognize an
exception that would bypass exclusivity in nearly any circumstance where an
employer gives a contractor specifications as to how it wants something built.”72
Similarly, the Court finds that Heritage’s request to use a different Control
Panel to operate its Plant does not establish that it co-designed the component parts
of the Plant. These facts are far removed from a reasonable inference that Heritage
was “exclusively responsible for the design” as was alleged in Star Chopper.73
Accordingly, to the extent Delaware law recognizes the special relationship test at
all, the Court declines to extend its application to the facts as alleged by Rexcon.
For the foregoing reasons, the Court GRANTS Heritage’s Motion to Dismiss
Rexcon’s Third Party Complaint for failure to state a claim.
B. Heritage’s Motion to Dismiss Alkon’s Third-Party Complaint.
The issues and arguments before the Court in Heritage’s Motion to Dismiss
Alkon’s Third-Party Complaint are substantially similar to the issues addressed
above.
As previously mentioned, the Delaware Supreme Court in Precision Air, held
that “[a]n employer, even though it has paid workmen’s compensation benefits to an
69
Karcher, 2022 WL 2720887, at *1.
70
Id.71
Id. at *4.
72
Id. at *5.
73
Star Chopper, 442 F.Supp. at 1020.
17
injured employee, can be held contractually liable to a third party where a contract
between the employer and third party contains provisions requiring the employer to:
(i) perform work in a workmanlike manner; and (ii) indemnify the third-party-
indemnitee for any claims arising from the employer-indemnitor’s own
negligence.”74 This contractual indemnification exception may arise either through
an express contractual obligation or an implied promise to indemnify.75 Like
Rexcon, Alkon argues that the Alkon Contract contains an express indemnification
obligation, or in the alternative, the Court should recognize an implied promise to
indemnify.
1. Express Contractual Indemnification
Alkon argues that the express terms found in the Alkon Contract establish that
Heritage agreed to perform work in a workmanlike manner and that Heritage agreed
to indemnify Alkon for Heritage’s negligence. Heritage claims that the Alkon
Contract offers no express language that requires Heritage to perform work in a
workmanlike manner. As a result, Heritage contends that Alkon’s express
contractual indemnification claim fails as a matter of law.
Like the Rexcon Contract, the Alkon Contract contains no express provision
for Heritage to perform work in a workmanlike manner. Nonetheless, Alkon
contends that express obligations in the document “demonstrate that Heritage had a
contractual duty to perform such work (i.e. the installation and operation of the Plant)
74
Precision Air, 654 A.2d at 407 (citing SW (Del), 450 A.2d at 889-90)).
75
SW (Del.), 450 A.2d at 888 (“a third-party tortfeasor may assert a claim
for indemnification against the injured party’s employer for the latter’s
breach of contract—express or implied—with the third party to perform
in a careful and prudent manner, assuming the employer’s breach of such
duty was the actual cause of its employee’s injury.”) (emphasis added).
18
in a workmanlike manner.”76 Alkon relies on Sections 3.9.2 and 14.1 of the Master
Agreement.
Section 3.9.2 notes that the installation of the Control Panel is Heritage’s sole
responsibility, while Section 14.1 disclaims Alkon’s liability from any claims arising
from Heritage’s modification or attempted modification of the Control Panel and
Heritage’s negligence, among other circumstances.77 Alkon claims that these
provisions obligate Heritage to perform the installation work in a workmanlike
manner. Once again, Precision Air is instructive. In that case, the court found that
an express contractual obligation to perform work in a workmanlike manner existed
because there was an explicit provision in the contract which said just that.78 There
is no such language here. Further, Alkon provides no legal authority to support its
position that these contractual terms, when read together, warrant an express
contractual obligation to perform work in a workmanlike manner.
While the parties agreed to certain indemnification provisions and limitations
on Alkon’s liability, the Alkon Contract does not obligate Heritage to perform work
in a workmanlike manner. In the context of sales contract, this Court has held that
the “duty to use the manufacturer’s product in a safe and proper manner is a duty
owed to the employee, not the manufacturer.”79 The same is true here; the Alkon
Contract is distinguishable from the underlying contract in Precision Air and does
not fall within the express contractual indemnification exception.
76
Alkon’s Opp’n Br. at 10, Sept. 15, 2022 (D.I. 132).
77
Master Agreement § 3.9.2, 14.1.
78
Precision Air, 654 A.2d at 408.
79
Fehl, 1981 WL 383065, at *2 (citation omitted).
19
2. Implied Contractual Indemnification
In the alternative to its express contractual indemnification claim, Alkon
contends that it is entitled to an implied contractual indemnification claim on two
bases. First, Alkon contends that two of the three factual scenarios giving rise to an
implied obligation to indemnify discussed in Diamond State are applicable to the
facts as alleged here. Second, Alkon asserts that the special relationship test
articulated in Star Chopper establishes the presence of an implied obligation to
indemnify.
The factual scenarios set forth in Diamond State require a contract whereby
the employer agrees to provide services to a third party on the third party’s premises
as a prerequisite to imposing an implied indemnification obligation.80 Because the
facts, as alleged by Alkon, fail to comport with the Diamond State factual scenarios,
Alkon has failed to establish “a condition precedent to invoking the narrow
exception.”81 Likewise, Alkon cannot meet the special relationship exception
outlined in Star Chopper, to the extent Delaware law recognizes the exception.82 As
previously mentioned, the Star Chopper court focused on three allegations that give
rise to this special relationship. The Delaware Supreme Court summarized the
findings as follows:
The evidence of a special relationship included: (1) that the
purchaser/employer imposed certain design specifications on the
manufacturer which required the omission of certain safety
devices normally placed on the machine; (2) that the
purchaser/employer assumed full responsibility for the actual
assembly of the unit of which the purchased machine was a part;
80
See Diamond State, 269 A.2d at 57.
81
Laugelle v. Bell Helicopter Textron, Inc., 88 A.3d 110, 120 (Del. Super.
2014).
82
See Karcher, 2022 WL 2720887, at *4 (“the Delaware Supreme Court
did not adopt the [Star Chopper] exception.”).
20
and (3) that the purchaser/employer also assumed responsibility
for the addition of any necessary safety devices upon the
machine’s final assembly at the plant.83
Here, Alkon argues that Heritage’s request that Alkon provide a Control Panel
based off a previous order does not establish that Heritage and Alkon were co-
manufactures of the Control Panel. Finding an implied indemnification obligation
based on these facts would “bypass exclusivity in nearly any circumstance where an
employer gives a contractor specifications as to how it wants something built.”84
The facts as alleged here are not substantially similar to the underlying allegations
in Star Chopper.85 Moreover, Delaware authority has acknowledged that the
exception to workers’ compensation exclusivity is a “narrow” one.86 Accordingly,
to the extent that Star Chopper exception is recognized by Delaware law, the Court
holds that it is inapplicable to the facts as alleged by Alkon.
As a result, the Court GRANTS Heritage’s Motion to Dismiss Alkon’s Third-
Party Complaint.
IV. CONCLUSION
For the reasons discussed above, Heritage’s Motions to Dismiss both Rexcon
and Alkon’s Third-Party Complaint are GRANTED.
________________________________
Danielle J. Brennan, Judge
83
SW (Del.), 450 A.2d at 890.
84
Karcher, 2022 WL 2720887, at *5.
85
See Star Chopper, 442 F.Supp. at 1020.
86
Laugelle, 88 A.3d at 120.
21