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HENRY POTTS AND NORMA G. POTTS v. DOW CHEMICAL COMPANY (12/05/79)

SUPERIOR COURT OF PENNSYLVANIA


filed: December 5, 1979.

HENRY POTTS AND NORMA G. POTTS, HIS WIFE
v.
DOW CHEMICAL COMPANY, APPELLANT V. UNITED STATES STEEL CORPORATION. ROBERT POTTS AND CHARLENE POTTS, HIS WIFE V. DOW CHEMICAL COMPANY, APPELLANT V. UNITED STATES STEEL CORPORATION. MICHAEL BAKER AND HELEN BAKER, HIS WIFE V. DOW CHEMICAL COMPANY, A CORPORATION, APPELLANT V. UNITED STATES STEEL CORPORATION, A CORPORATION. JOHN FLATT AND MARGARET FLATT, HIS WIFE V. DOW CHEMICAL COMPANY, A CORPORATION, APPELLANT V. UNITED STATES STEEL CORPORATION, A CORPORATION

No. 828 April Term, 1978, No. 829 April Term, 1978, No. 830 April Term, 1978, No. 831 April Term, 1978, Appeals from the Orders of March 22, 1978, of the Court of Common Pleas of Allegheny County, Civil Division, at Nos. G.D. 77-13267; G.D. 77-13167; G.D. 77-13258; and G.D. 77-12031, sustaining the Preliminary Objections of the Additional Defendant.

COUNSEL

George Buckler, Pittsburgh, for appellant.

Richard F. Lerach, Pittsburgh, for U. S. Steel Corp., appellee.

Cercone, President Judge, and Price, Van der Voort, Spaeth, Hester and Wieand, JJ. Spaeth, J., files a dissenting opinion.

Author: Wieand

[ 272 Pa. Super. Page 325]

Henry Potts, Robert Potts, Michael Baker, and John Flatt, employees of United States Steel Corporation, sustained injuries as a result of inhaling chemical fumes released while Dow Chemical Company was cleaning the water system of United States Steel Corporation's plant in Ambridge. The employees filed separate complaints in trespass against Dow, in which they alleged negligent handling of cleaning chemicals. Dow filed complaints in all actions joining U. S. Steel as an additional defendant on the grounds that it was solely liable to each plaintiff on the cause of action alleged or jointly liable thereon with Dow, or liable over to Dow under the terms of the contract between the parties. U. S. Steel filed preliminary objections in the nature of a demurrer to each complaint, which the trial court sustained. Dow appealed. We affirm.

Section 303(b) of The Pennsylvania Workmen's Compensation Act,*fn1 as amended by the Act of December 5, 1974, P.L. 782, No. 263, § 6, 77 P.S. § 481(b) provides as follows:

"In the event injury or death to an employe is caused by a third party, then such employe, 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, employes, 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."

In Hefferin v. Stempkowski, 247 Pa. Super. 366, 372 A.2d 869 (1977), this court held that Section 303(b) of the Workmen's Compensation Act bars the joinder of an employer as

[ 272 Pa. Super. Page 326]

    an additional defendant in an action by an employee against a third party. That decision is controlling of Dow's attempted joinder of U. S. Steel in the instant case.

Dow argues that Hefferin has no application where the third party's claim against the employer is based upon an express contract of indemnity. We agree that Section 303(b) of the Workmen's Compensation Act specifically creates an exception in favor of liability of an employer when it is based on an express agreement of indemnity. In the instant case, however, Dow's pleadings demonstrate clearly that there was no contract of indemnity. The provisions which are alleged to be a part of Dow's contract with U. S. Steel and upon which Dow relies are as follows:

"5. The liability of [Dow] for injury to persons or damage to property, including . . . injury to third parties or employees of [U. S. Steel] . . . shall be limited to that directly resulting from the sole negligence of [Dow] in the performance of this contract.

6. [Dow] shall not be liable for any special incidental, indirect, punitive or consequential damages, including, but not limited to, loss of use or loss of profit, for breach of contract, negligence or any other cause of action."

An agreement to indemnify is an obligation resting upon one person to make good a loss which another has incurred or may incur by acting at the request of the former, or for the former's benefit. 18 P.L.E. Indemnity § 1. A contract will not be construed to indemnify a party for his or her own negligence unless the contractual language and surrounding circumstances clearly indicate an intention of the parties to do so. Westinghouse Electric Company v. Murphy, Inc., 425 Pa. 166, 172, 228 A.2d 656, 660 (1967); Pittsburgh Steel Co. v. Patterson-Emerson-Comstock, Inc., 404 Pa. 53, 57, 171 A.2d 185, 187 (1961). The language relied on by Dow does not impose upon U.S. Steel an obligation to indemnify Dow against liability resulting from Dow's negligence. On the contrary, the terms of the agreement clearly impose upon Dow the responsibility for injury negligently inflicted upon employees of U. S. Steel during the course of Dow's work.

[ 272 Pa. Super. Page 327]

Because the pleadings negative the existence of an agreement of indemnity, we do not consider whether the 1969 amendments to Pa.R.C.P. 2252(a) have changed the prior rule which prohibited the joinder of an express indemnitor as an additional defendant in an action of trespass. See: Wampler v. F. C. Haab Co., Inc., 401 Pa. 178, 162 A.2d 389 (1960).

The dissenting opinion argues that joinder can be sustained because the written contract contains by "necessary implication", an agreement whereby U. S. Steel will make "contribution" in the event that injury to an employee is caused in whole or in part by its own negligence. This argument is made for the first time by the writer of the dissent. It was not considered by the court below and has not been made by the appellant in its brief or during argument in this court. It is an argument, in any event, which is untenable. The written contract clearly contains no language by which U. S. Steel has agreed to become liable for contribution to Dow in the event that Dow's negligence causes injury to an employee of U. S. Steel. To insert such a provision in the instant contract by implication is to rewrite the parties' agreement. Moreover, the statute (77 P.S. § 481(b)) specifically bars an employer's liability to a third person, e. g., Dow, "unless liability for such damages, contributions or indemnity shall be expressly provided for in a written contract . . . ." An "express" provision, as the dissent concedes, is not present in the written contract between Dow and U. S. Steel.

The attempted joinder of U. S. Steel was improper, and the trial court correctly sustained preliminary objections thereto.

Affirmed and remanded for further proceedings.

SPAETH, Judge, dissenting:

The majority, I believe, misses entirely a central issue that is raised on this appeal. The majority states:

[ 272 Pa. Super. Page 328]

The language relied on by Dow does not impose upon U.S. Steel an obligation to indemnify Dow against liability resulting from Dow's negligence. On the contrary, the terms of the agreement clearly impose upon Dow the responsibility for injury negligently inflicted upon employees of U.S. Steel during the course of Dow's work. at 1222.

The issue raised by Dow, however, is not limited to whether its contract with U.S. Steel provided that U.S. Steel would indemnify Dow against liability resulting from Dow's negligence. The issue also extends to whether Dow's contract with U.S. Steel preserved from the force of section 303(b) of the Workmen's Compensation Act, 77 P.S. § 481(b) (Supp. 1978-79), Dow's right to contribution from U.S. Steel for liability resulting from U.S. Steel's negligence.

In its Summary of Argument, Dow frames its argument as follows:

By the terms and conditions of the contract entered into between Dow Chemical Company and U.S. Steel Corporation on June 2, 1975, confirmed by the Dow Industrial Service Order and Receipt of July 15, 1975, signed by U.S. Steel, the additional defendant [U.S. Steel] agreed that Dow Chemical Company would not be liable for any damages for breach of contract, negligence or any other cause of action. Further, under the terms of this contract, the liability of Dow Chemical Company for injury to persons or injury to employees of United States Steel Corporation was limited to that directly resulting for the sole negligence of Dow Chemical Company in the performance of the service contract.

Appellant's Principal Brief at 9 (original emphasis).*fn1

Dow's argument is based on paragraph seven of its amended complaint, which alleges:

Further, under the terms of said contract, it was specifically set forth that the liability of Dow Chemical Company

[ 272 Pa. Super. Page 329]

    for injury to persons -- (or) injury to -- employees of U.S. Steel Corporation shall be limited to that directly resulting from the sole negligence of Dow Chemical Company in the performance of said contract. That under the terms of said provision U.S. Steel Corporation, employer of the Plaintiff, has agreed that it may be liable to Dow Chemical Company for damages or contribution or indemnity and such liability is expressly provided for under the terms of said contract entered into prior to the date of the occurrence giving rise to this action. (Emphasis added.)

Given Dow's argument, I believe that the majority was compelled to consider whether Dow's complaint adequately alleged an action for contribution against U.S. Steel. I further believe that if the majority had considered this issue, it would have been compelled to reverse the order of the lower court dismissing Dow's complaint.*fn2

77 P.S. § 481(b) states:

(b) In the event injury or death to an employe is caused by a third party, then such employe, his legal representative, husband or wife, parents, dependents, next of kin,

[ 272 Pa. Super. Page 330]

    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, employes, 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.*fn3

From this statute it may be seen that an employer [U.S. Steel] may be liable for injury to an employee [plaintiffs] caused by the joint negligence of the employer and a third party [Dow] if liability for contribution is 1) expressly provided for, 2) in a written contract entered into by the employer, 3) prior to the occurrence that gave rise to the action.

[ 272 Pa. Super. Page 331]

Dow's amended complaint sufficiently alleges that it had a written contract with U.S. Steel for contribution. Attached to the complaint is the Service Quotation Contract that Dow submitted to U.S. Steel for the work Dow subsequently performed at U.S. Steel's Ambridge plant -- which work ultimately led to the present action. The contract contained a price quotation and the terms and conditions of Dow's services. U.S. Steel argues that because it did not sign the Service Quotation Contract, the contract was not a "written contract." However, "[a]n unsigned agreement all the terms of which are embodied in a writing, unconditionally assented to by both parties, is a written contract." 1 Corbin on Contracts § 31 at 117 (1950) (emphasis added). See also Hostetter v. Giffen, 268 Pa. 530, 112 A. 150 (1920). Because this appeal arises from an order sustaining a demurrer to Dow's complaint, we must assume that the Service Quotation Contract embodied all the terms of the agreement between Dow and U.S. Steel, and that U.S. Steel unconditionally assented to those terms. See generally Clouser v. Shamokin Packing Co., 240 Pa. Super. 268, 273, 361 A.2d 836, 840 (1976) ("In considering the demurrer, every well-pleaded material fact set forth in the complaint, as well as inferences reasonably deducible therefrom, must be taken to be admitted").*fn4

Dow's complaint also sufficiently alleges that Dow's Service Quotation Contract was entered into on or about June 2,

[ 272 Pa. Super. Page 3321975]

, or over a month prior to the occurrence that gave rise to the present action.

Finally, Dow's Service Quotation Contract contained an express provision that Dow would not be liable for the consequences of U.S. Steel's negligence. Paragraph five of the contract provides:

The liability of DIS for injury to persons or damage to property, including, but not limited to, injury to third parties or employees of Buyer and property of third parties or property of Buyer, shall be limited to that directly resulting from the sole negligence of DIS in the performance of this contract.

[ 272 Pa. Super. Page 333]

Although the word "contribution" does not appear in this provision, it is necessarily implied. The paragraph contemplates that if Dow is sued by a third party for damages caused wholly or partly by U.S. Steel's negligence, Dow may sue U.S. Steel for contribution or liability over. Otherwise, Dow would be denied the only means of exercising its right under this paragraph not be liable for U.S. Steel's negligence.*fn5

U.S. Steel argues, however, that even if it is liable to Dow for contribution or liability over, our rules of civil procedure nevertheless prevent its joinder as an additional defendant in this action. It maintains that a person cannot be joined as an additional defendant on the basis of a written contract to indemnify the original defendant.

Such was the law of Pennsylvania prior to the amendment of Pa.R.C.P. 2252(a) in 1969; whether such is still the law is more questionable.*fn6 One commentator has taken the position

[ 272 Pa. Super. Page 334]

"that the 1969 amendments to Rule 2252 do not change the rule forbidding joinder of an express insurer or indemnitor." 8 Goodrich-Amram 2d § 2252(a):7.1 at 46. Yet, Goodrich-Amram also notes "that in the other states of the United States, in England and in the British Dominions which have an additional defendant procedure, the joinder of express indemnitors and insurance companies is generally permitted and that such joinder is permitted under Fed.R.C.P. No. 14." Id. at 50 (footnote omitted). Furthermore, Goodrich-Amram states:

The real reason behind the rule [in Pennsylvania] is found in the Pennsylvania policy prohibiting the disclosure in personal injury cases of the fact that the defendant is insured. The courts were fearful of the harmful consequences which might attend the joinder of insurers and express indemnitors as additional defendants. They also felt that trial would be unnecessarily complicated by the introduction of indemnity agreements executed by strangers to the proceedings.

Id. at 49 (footnotes omitted).

It is unnecessary to reach the issue of whether, as a general rule, Pa.R.C.P. 2252(a) as amended does or does not allow the joinder of express insurers and indemnitors. Dow's Service Quotation Contract with U.S. Steel was not a usual contract for indemnity: It only attempted to make U.S. Steel liable for the consequences of its own negligence, for which in most instances U.S. Steel would be liable anyway. The reasons Goodrich-Amram cites in support of the prohibition against joinder of express insurers and indemnitors are weak ones, since Pa.R.C.P. 213(b) already

[ 272 Pa. Super. Page 335]

    allows courts "in furtherance of convenience or to avoid prejudice" to order a separate trial of any cause of action. Yet, whatever validity those reasons may have in other kinds of cases, they are completely inapplicable in cases involving contracts to protect contribution rights. There is no danger that because Dow has preserved its right to recover contribution from U.S. Steel, a jury will render an excessive verdict for the original plaintiffs. Nor is there danger that the trial will be unnecessarily complicated by the introduction of Dow's contract with U.S. Steel.*fn7

Goodrich-Amram's commentary strongly indicates that if indeed the 1969 amendments to Pa.R.C.P. 2252 do not permit the joinder of express insurers and indemnitors as additional defendants, the reason is to be found neither in logic nor in the philosophy that lies behind the amendments, which is that "rigid rules of exclusion" should be avoided, 8 Goodrich-Amram 2d § 2252.1 at 22, but rather in a superannuated custom that has survived in an otherwise modernized code of civil procedure. I see no reason to extend such a custom beyond the kinds of indemnity contracts out of which it grew.

For the reasons above, I should reverse the order of the lower court.


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