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Pennsylvania American Water Co. v. Trunov

United States District Court, Third Circuit

May 28, 2013

PENNSYLVANIA AMERICAN WATER CO., Plaintiff,
v.
MIKHAYLO TRUNOV, et al., Defendants.

MEMORANDUM

WILLIAM W. CALDWELL, District Judge.

I. Introduction

We are considering the motion of defendant, U.S. Tank Painting, Inc. (USTP), to dismiss the cross-claim of defendant, Tank Industry Consultants, Inc. (TIC) for lack of jurisdiction. TIC's cross-claim seeks a declaratory judgment that USTP must indemnify TIC for any liability and for any defense costs TIC may incur in an underlying state action. The state action was filed by Mikhaylo Trunov, a USTP employee, to recover for personal injuries he suffered when he fell from the top of a water tank he was painting, owned by Pennsylvania American Water Co. (PAWC).

USTP's motion was filed under Fed.R.Civ.P. 12(b)(1) and asserts we lack subject-matter jurisdiction because TIC's claim is not ripe as the state action is still pending and liability has not yet been determined.

II. Background

In the underlying state court action, filed in the Court of Common Pleas of Lackawanna County, Pennsylvania, Trunov named USTP, PAWC, and TIC as defendants. Trunov alleged as follows. PAWC contracted with USTP to paint two water towers owned by PAWC and located in Clark's Summit, Pennsylvania. (Doc. 1-1, Ex. A, state-court complaint ¶¶ 6 and 7). USTP contracted with TIC to oversee and inspect the paint work. ( Id. ¶ 8). On December 3, 2008, Trunov suffered serious injuries when he fell thirty-one feet to the ground while he was painting on top of one of the towers. ( Id. ¶ 10). In separate counts, Trunov charged each of the three defendants with negligence, in part consisting of failing to provide him with fall protection, such as a safety harness.

In the instant action, which invokes our diversity jurisdiction, PAWC is the plaintiff and names as defendants Trunov; USTP; First Mercury Insurance Co., USTP's liability insurer; TIC; and Westchester Surplus Lines Insurance Company, TIC's liability insurer. In part, PAWC sought declaratory relief against First Mercury that it was an additional insured under the First Mercury policy and that First Mercury owed it a duty to defend and indemnify it in the underlying state court action. PAWC sought declaratory relief against USTP that if First Mercury provided no defense or indemnity, that USTP owed it contractual indemnity in regard to the state court action.

The defendants filed answers to the complaint. TIC's answer (Doc. 20) included a crossclaim against USTP, the subject of the latter's motion to dismiss for lack of jurisdiction. The crossclaim alleges that TIC is the "Engineer's Consultant" on USTP's contract with PAWC ( id. ¶ 68) and that TIC has incurred defense costs, including attorney's fees, in defending the state court action. ( Id. ¶ 81). The crossclaim seeks declaratory relief that USTP owes TIC contractual indemnity for any liability TIC may incur in the state action and its defense costs already incurred in that action, or that will be incurred in the future. Specifically, the crossclaim seeks a declaration that USTP: "must indemnify [TIC] for any judgment that may be entered against [TIC] in the state court lawsuit"; and that USTP "must indemnify [TIC] for all past or future legal fees, expert fees, and other litigation costs relating to the state court lawsuit...." (Doc. 20, ¶ 88(d) and (f)).

On February 2, 2013, the parties filed a stipulation, approved by court order one day later, that dismissed without prejudice all claims made by plaintiff PAWC against all other parties and all claims brought by the defendants against PAWC.[1]

The contract documents for painting the water towers contained the following indemnity provision in Article 6.31.1:

To the fullest extent permitted by Laws and Regulations CONTRACTOR [USTP] shall indemnify and hold harmless OWNER [PAWC], ... [or] ENGINEER'S Consultant [TIC]... from and against all claims, damages, losses, and expenses, direct, indirect, or consequential (including but not limited to fees and charges of engineers, architects, attorneys and other professionals...) arising out of or resulting from the performance of the Work, provided that any such claim, damage, loss or expense (a) is attributable to bodily injury, personal injury, sickness, disease or death... and (b) is caused in whole or in part by any negligent act or omission of CONTRACTOR... regardless of whether or not caused in part by any negligence or omission of a person or entity indemnified hereunder...

(Doc. 46-82, ECF p. 8).

III. Discussion

Article III, § 2 of the Constitution restricts federal courts to adjudicating only "cases" and "controversies." This constitutional limitation is recognized in the Declaratory Judgment Act itself, which limits declaratory relief to "a case of actual controversy." 28 U.S.C. § 2201(a). See ...


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