United States District Court, Western District of Pennsylvania
David Stewart Cercone Judge.
REPORT AND RECOMMENDATION
MAUREEN P. KELLY, UNITED STATES MAGISTRATE JUDGE.
At the heart of this diversity action is an Asset Purchase Agreement ("APA") that Westinghouse Electric Corp., the predecessor to Plaintiff CBS Corporation ("CBS"), and Defendant Schindler Elevator Corporation ("Schindler") entered into in October of 1988, pursuant to which Schindler agreed to purchase certain assets and assume certain liabilities of Westinghouse Elevator Co. In particular, Schindler agreed to assume responsibility for workmen's compensation claims "incurred but not paid prior to closing." Schindler has since failed to accept that responsibility with respect certain claims tendered by CBS prompting CBS to file suit.
Presently before the Court are Schindler's Motion for Summary Judgment Based on Statute of Limitations, ECF No. 35, and Schindler Elevator Corporation's Motion for Summary Judgment Based on Contract. ECF No. 40. For the following reasons, it is respectfully recommended that Schindler's Motion for Summary Judgment Based on Statute of Limitations be granted, and that Defendant Schindler Elevator Corporation's Motion for Summary Judgment Based on Contract be dismissed as moot.
A. FACTUAL AND PROCEDURAL BACKGROUND
Under Section 4.1 of the APA, Schindler agree to assume liability for:
workmen's compensation claims of any Employees respecting the Business which were incurred but not paid prior to Closing, whenever filed, provided that such workmen's compensation claims are within the statutory structure for workmen's compensation claims.
ECF No. 1, ¶ 9; ECF No. 37, ¶ 3. On August 26, 2004, pursuant to Section 4.1 of the APA, Mary A. Bishop ("Bishop"), a paralegal at CBS, sent a letter to John S. M. Karnash ("Karnash") at Schindler enclosing the notice of a workmen's compensation claim filed by a former elevator employee, Bernard Daley. ECF No. 38-1, p. 2. In the letter, Bishop asked Schindler to take the necessary steps to defend CBS against the claim and to "confirm within 5 days [Schindler's] acceptance of this tender." Id. Having failed to receive a response either to her letter or subsequent telephone calls made to Karnash, Bishop sent a second letter of tender on October 1, 2004, reiterating that CBS had determined that Schindler was contractually responsible for Daley's workmen's compensation claim and indicating that, because the claim was already set for a hearing, Schindler's refusal to communicate gave CBS no choice but to manage the claim itself and recover the costs from Schindler at a later date. ECF No. 38-2, p. 2.
On October 15, 2004, following an apparent conversation with Bishop, counsel for CBS, Robert A. Noethiger ("Noethiger"), sent Karnash a third letter regarding the Daley claim. ECF No. 38-3, p. 2. Therein, Noethiger particularized CBS's position regarding the language of Section 4.1, stating that the "contractual language makes it clear that liability for Mr. Daley's claim is allocated to Schindler . . . ." Id. Again, no response was ever received from Karnash or anyone from Schindler.
Over eight months later, on June 29, 2005, at Noethiger's request, Bishop forwarded the letters that had been sent to Karnash to counsel for Schindler, Roy Alan Cohen ("Cohen"). On July 13, 2005, Bishop also sent Cohen a copy of the award made on the Daley claim and asked Cohen to contact Noethiger to discuss the award at his earliest convenience. ECF No. 38-4. The next day, on July 14, 2004, Cohen e-mailed Noethiger regarding the claim. ECF No. 38-4, p. 2. Therein Cohen reminded Noethiger that Section 4.1 of the APA provided that Schindler assumed liability only for workmen's compensation claims that were "incurred but not paid prior to closing, " and then discussed the definition of the word "incurred." Cohen concluded that the best interpretation was that "incurred" referred to "claims that were 'noticed' or 'known' at the time of the Agreement, " and that because Mr. Daley's claim was unknown and not reported at the time of the asset purchase, it "was not incurred or included as one which was subject to coverage or indemnification under the agreement." Id. Cohen then invited further discussion if Noethiger had any "schedules or evidence which indicates a different interpretation." Id. It appears that no such evidence was forthcoming and no further discussions or communication between CBS and Schindler relative to the Daley claim is of record.
CBS filed the instant Complaint on July 23, 2012, ECF No. 1, in which it alleges that Schindler has breached the terms of the APA by failing to reimburse or indemnify CBS for certain workmen's compensation claims that were filed against it, or its predecessors, which have been settled or otherwise resolved (Count I). In addition, CBS seeks a declaratory judgment that Schindler is bound to defend and/or indemnify CBS in connection with other more recently filed workmen's compensation claims that are currently pending (Count II).
On November 15, 2013, Schindler filed the instant Motion for Summary Judgment Based on Statute of Limitations, ECF No. 34, and Motion for Summary Judgment Based on Contract. ECF No. 40. CBS filed its briefs in opposition to the respective Motions on December 16, 2013, ECF Nos. 56 and 57, respectively, and Schindler filed ...