Bracken, T. v. Burchick Construction Co. ( 2014 )

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NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
TONI BRACKEN, ADMINISTRATRIX OF IN THE SUPERIOR COURT OF
THE ESTATE OF WILLIAM BRACKEN, PENNSYLVANIA
DECEASED
v.
BURCHICK CONSTRUCTION COMPANY,
INC., PATENT CONSTRUCTION COMPANY
AND HARSCO CORPORATION
APPEAL OF: BURCHICK CONSTRUCTION
No. 1432 WDA 2012
COMPANY, INC.
Appeal from the Judgment Entered September 14, 2012
In the Court of Common Pleas of Allegheny County
Civil Division at No(s): GD-09-015529
BEFORE: FORD ELLIOTT, P.J.E., PANELLA AND OLSON, JJ.
DISSENTING MEMORANDUM BY OLSON, J.: FILED OCTOBER 10, 2014
I agree with the Learned Majority that the contract between Burchick
Construction Company, Inc. (Burchick) and Kusler Masonry, Inc. (Kusler)
does not require Kusler to indemnify Burchick for liability arising from
Burchick’s negligence. I am compelled to dissent, however, as I cannot
agree with the Majority’s conclusion that Kusler is obligated to indemnify
Burchick for liability stemming from Kusler’s own negligence.
The Majority has accurately summarized the factual and procedural
history of this case. Hence, I need not repeat that material here. Both the
Majority and the parties examine the issues in this case by looking first at
whether the indemnification provisions of the parties’ agreement require
indemnity for Burchick’s negligence and then at whether the contract
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compels indemnity for Kusler’s own negligence. I shall do the same. As I
agree with the Majority’s first conclusion, I only briefly comment on how my
analysis differs from that of the Majority. I devote the lion’s share of my
discussion to the second issue in this case where my conclusion parts ways
from that reached by the Majority.
There is no dispute regarding the principles that govern this appeal.
For convenience and ease of reference, I recite them briefly.
The Workers' Compensation Act (the Act) is the sole and
exclusive means of recovery against employers for all injuries
arising out of accidents occurring within the course of
employment. 77 P.S. § 481(a). The exclusivity provision of the
[Act] essentially “bars tort actions flowing from any work-related
injury.” Kline v. Arden H. Verner Co., 469 A.2d 158, 160 (Pa.
1983). An employer may, however, consistent with the
indemnification provision in the Act, 77 P.S. § 481(b), enter into
an indemnity contract with a third party; the employer, then,
may expressly assume liability for the negligence of a third party
which results in injury to the employer's employee.
The relevant portion of the Act provides:
In the event injury or death to an employee is caused by a
third party, then such employee, his legal representative,
husband or wife, parents, dependents, next of kin, and
anyone otherwise entitled to receive damages by reason
thereof, may bring their action at law against such third
party, but the employer, his insurance carrier, their
servants and agents, employees, representatives
acting on their behalf or at their request shall not be
liable to a third party for damages, contribution, or
indemnity in any action at law, or otherwise, unless
liability for such damages, contributions or indemnity
shall be expressly provided for in a written contract
entered into by the party alleged to be liable prior to
the date of the occurrence which gave rise to the
action.
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77 P.S. § 481(b) (emphasis added).
Though specifically provided for in the statute, indemnification
contracts in this context are not favored in the law and every
intendment must be construed against the party seeking
protection from liability or indemnification from the employer.
See Pittsburgh Steel Co. v. Patterson–Emerson–Comstock,
Inc., 171 A.2d 185 (Pa. 1961); Gerard v. Penn Valley
Constructors, Inc., 495 A.2d 210 (Pa. Super. 1985); see
generally Standard Pennsylvania Practice § 167:297. The
language in such contracts must be clear and unequivocal; the
parties to the contract must specifically provide that a named
employer agrees to indemnify a named third party from liability
for the acts of that party's negligence which cause harm to the
named employer's employees. Bester v. Essex Crane Rental
Corp., 619 A.2d 304 (Pa. Super. 1993). Furthermore, the
burden of proving the applicability of an indemnification
provision is on the party seeking relief from liability, and the
burden increases if the party seeking such relief has drafted the
agreement. Donaldson v. Commonwealth, Department of
Transportation, 596 A.2d 269 (Pa. Commw. 1991).
Snare v. Ebensburg Power Co., et al., 637 A.2d 296, 298 (Pa. Super.
1993), appeal denied, 646 A.2d 1181 (Pa. 1994).
In determining whether the parties’ contract requires Kusler to
indemnify Burchick for Burchick’s negligence, the Majority looks to both
Article IV and Article VI of the agreement. See Majority Memorandum at
7-12. I disagree with this approach. In my view, Article IV addresses
indemnity based upon Kusler’s negligence while Article VI governs
indemnification predicated upon Burchick’s negligence. Article IV bears the
heading “Subcontractor’s Liability” and states that, “[i]f any person
(including employees of [Kusler]) suffers injury or death . . . as a result, in
whole or in part, of negligence (or other act for which there is legal liability)
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of [Kusler] . . . then [Kusler] shall assume the entire liability therefore[.]”
Burchick Construction Company, Inc. Subcontract Agreement, 6/12/07, at 3.
In contrast, Article VI carries the heading “Indemnification” and provides, in
relevant part, “[Kusler] agrees to defend, indemnify and hold harmless
[Burchick] and Owner . . . from and against any and all claims . . . damages
and liabilities of every nature (including contractual liability “Losses”), arising
from or relating to Work performed by [Kusler] on the Project . . . whether
or not [Burchick] was alleged to be negligent, unless [Burchick] was alleged
to be solely negligent.” Id. at 4. In Article IV, Kusler agrees to assume
liability if injury or death results, in whole or in part, from its negligence.
Under Article VI, however, Kusler agrees to indemnify Burchick against
claims, damages, and liabilities arising from Kusler’s work on the project,
whether or not Burchick is alleged to be negligent, so long as Burchick is not
alleged to be solely negligent. Accordingly, the plain language of the parties’
contract leads me to conclude that we should look only to Article VI in
determining whether Kusler is obligated to indemnify Burchick for Burchick’s
negligence.
Focusing exclusively upon Article VI, I would conclude that Kusler is
not obligated to indemnify Burchick for Burchick’s own negligence. Although
Article VI employs the term ‘indemnify,’ Article VI does not expressly provide
that Kusler agrees to indemnify Burchick for Burchick’s negligence that
causes harm to Kusler’s employees. For this reason alone, I would
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conclude that the language of Article VI is not sufficiently clear and
unequivocal to meet the requirements of Pennsylvania law.1 See Bester,
supra (contract must specifically provide that a named employer agrees to
indemnify a named third party from liability for the acts of that party's
negligence which cause harm to the named employer's employees).
I turn now to Burchick’s second claim in which I consider its right to
indemnity under Article IV based upon Kusler’s negligence. Again, I find
that Article IV is the contractual provision applicable to indemnification
claims based upon Kusler’s negligence. It provides that, “[i]f any person
(including employees of [Kusler]) suffers injury or death . . . as a result, in
whole or in part, of negligence (or other act for which there is legal liability)
of [Kusler] . . . then [Kusler] shall assume the entire liability therefore[.]”
Burchick Construction Company, Inc. Subcontract Agreement, 6/12/07, at 3.
Here, too, I find the parties’ contract to be deficient because Article IV does
not expressly state that Kusler will indemnify Burchick for damages
sustained by Kusler’s employees that result, in whole or in part, from
Kusler’s negligence.
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1
I also agree that, pursuant to Greer v. City of Philadelphia, 795 A.2d
376 (Pa. 2002), the “whether or not” clause in Article VI serves merely to
clarify that any contributory negligence on the part of Burchick would not bar
its indemnification for damages arising from Kusler’s work on the project. I
find this discussion to be superfluous, however, given the contract’s
deficiencies under Bester.
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I reach this conclusion because, in my view, the Act and our
interpretive case law require the same clear and unequivocal statement of
intent to indemnify regardless of whether the right to indemnity is
predicated upon the negligence of the indemnitee (in this case, Burchick) or
that of the indemnitor (here, Kusler). In Bester, we said that the language
in an indemnification contract clearly and unequivocally establishes a right to
indemnity where the parties to the contract “specifically provide that a
named employer agrees to indemnify a named third party from liability for
the acts of that party's negligence which cause harm to the named
employer's employees.” See Bester, 619 A.2d at 309. Admittedly, this
formulation does not refer to indemnification of a named third party against
liability arising from the indemnitor’s negligence that harms the indemnitor’s
employees. In Bester, however, we said that “th[e foregoing] level of
specificity in the language employed in [a] contract of indemnification” was
necessary to avoid the ambiguities that could arise out of the use of general
language and that, in the absence of such language, the Act precludes the
imposition of liability upon an employer. Id. at 308-309. We also said that
“[t]he intent to indemnify against claims by employees of the alleged
indemnitor [] must clearly appear.” Id. at 307. Thus, in keeping with the
spirit of our holding in Bester, I would conclude that where an
indemnification clause purports to indemnify a third party against liability
arising from the indemnitor’s negligence that harms the indemnitor’s
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employees, the language of the contract should parallel the unequivocal
provisions prescribed in Bester.
The Majority asserts that there is a dearth of Pennsylvania law
relevant to Burchick’s second claim. See Majority Memorandum at 15. My
study of prior cases reveals, however, that although we have not extensively
discussed the issue of indemnification based upon the negligence of an
employer/indemnitor, we have never materially distinguished such claims
from the treatment accorded indemnification predicated upon the negligence
of an indemnitee. Our decision in Snare, supra illustrates this point. In
that case, the plaintiff was a pipefitter employed by Sauer, Inc. (Sauer) at
the Ebensburg Power Company (Ebensburg) in Ebensburg, Pennsylvania. At
that time, Sauer was engaged as a subcontractor on a power plant
construction project for which Ebensburg was the owner and UE & C
Catalytic (Catalytic) was the general contractor. The plaintiff sustained
injuries when a crane he was operating on a turbine floor fell into a hole. To
recover for his injuries, the plaintiff filed a complaint against Ebensburg and
Catalytic alleging that they negligently failed to provide a safe worksite.
Thereafter, Ebensburg filed a third party complaint against United Engineers
& Constructors, Inc. (United), a sister corporation of Catalytic. Catalytic and
United subsequently filed a third party complaint against Sauer requesting
indemnification and contribution in the event they were found liable to the
plaintiff. Catalytic and United based their claims on the indemnity provisions
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in a written contract between United and Sauer. United and Catalytic denied
any negligence and alleged that if the plaintiff were injured in the manner
that he claimed, then his injuries were caused by Sauer’s negligence and the
contract between Sauer and United required Sauer, as the subcontractor, to
indemnify United and Catalytic for personal injuries caused by its negligence.
Applying Bester and related cases, this Court rejected the indemnity claims
advanced by United and Catalytic, concluding that the disputed contractual
language was not sufficiently specific to compel Sauer, as an employer, to
indemnify a third party.2 The panel in Snare followed Bester without
distinguishing or discussing whether the indemnity claims forwarded by
United and Catalytic were based upon the negligence of an indemnitor or
that of an indemnitee. See Snare, 637 A.2d at 299.
I derive further support for my position from the plain terms of the
Act. The Act unmistakably declares that it is the sole means of recovery
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2
The indemnity provision we rejected in Snare was remarkably similar to
the one found in Article VI of the parties’ agreement, which the Majority
upholds. It read:
5. [Subcontractor/Sauer] Agrees to indemnify and hold harmless
the Owner [Ebensburg Power Company] and Contractor [United]
their successors and assigns, from and against any and all
claims, demands, suits, actions, losses, liens, damages, or
expenses and attorneys' fees, however caused, resulting from,
arising out of or in any way connected with the Contract....
See Snare at 637 A.2d at 299. Like Article VI in the case before us, the
indemnity provision in Snare did not expressly provide that Sauer agreed to
indemnify United for United’s negligence that harmed Sauer’s employee.
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against an employer for all injuries arising out of accidents occurring within
the course of employment. 77 P.S. § 481(a). Given that an employer will
assume responsibility for injuries to its workers under this provision, we
should not lightly presume that an employer would be willing to double its
liability exposure by agreeing, through general terms, to indemnify a third
party for injuries sustained by its employees as a result of its negligence.
See Bester, 619 A.2d at 308 (indemnification clauses must contain express
provisions in order to overcome employer’s protection from double
responsibility afforded under the Act). I also note that the Act specifically
states that, “[an] employer . . . shall not be liable to a third party for
damages, contribution, or indemnity in any action at law, or otherwise,
unless liability for such damages, contributions or indemnity shall be
expressly provided for in a written contract entered into by the party alleged
to be liable prior to the date of the occurrence which gave rise to the action.”
77 P.S. § 481(b) (emphasis added). Contribution is nothing more, and
nothing less, than judicially imposed indemnification for liability arising from
the indemnitor’s negligence in the absence of a contract. See Nancy J.
White, Death, Taxes, and . . . Insurance: Current Legal Issues Relating to
Insurance in the Construction Industry, 36 Real Est. L.J. 154, 157 (under
limited form indemnity agreement, subcontractor is legally liable to general
contractor for any sums the general must pay as a result of defects in the
subcontractor’s work and limited form agreement does nothing more than
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what the law requires under the doctrine of contribution). Since the Act
provides that a third party cannot assert a claim for contribution (or a
contractual claim for indemnity based upon the indemnitor’s negligence) in
the absence of an express provision in a written contract, I would argue that
a provision which allows such a claim should meet the requirements set forth
in Bester. In this case, neither Article IV nor Article VI meets Bester’s
specificity requirements; hence, neither provision permits indemnity on any
ground.
For the foregoing reasons, I am unable to agree that the contract
between Burchick and Kusler required Kusler to indemnify Burchick for
liability arising either from Burchick’s negligence or Kusler’s own negligence.
Accordingly, I dissent.
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