Bethlehem Steel Corp. v. Andco, Inc.

42 Pa. D. & C.3d 34, 1986 Pa. Dist. & Cnty. Dec. LEXIS 265
CourtPennsylvania Court of Common Pleas, Northampton County
DecidedMay 28, 1986
Docketno. 1985-C-3559
StatusPublished

This text of 42 Pa. D. & C.3d 34 (Bethlehem Steel Corp. v. Andco, Inc.) is published on Counsel Stack Legal Research, covering Pennsylvania Court of Common Pleas, Northampton County primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Bethlehem Steel Corp. v. Andco, Inc., 42 Pa. D. & C.3d 34, 1986 Pa. Dist. & Cnty. Dec. LEXIS 265 (Pa. Super. Ct. 1986).

Opinion

GRIFO, J.,

This matter is before, the court for determination of the validity and enforceability of an indemnification clause contained in a contract between plaintiff and defendant. This clause has become extremely important since, on May 7, 1986, a jury rendered a verdict against Bethlehem Steel in the amount of $375,000 in the case of John J. Krchnavy and Dianne R. Krchnavy v. Bethlehem Steel Corporation, no. 1984-C-1362. After this jury verdict, it was determined by the parties to this action that the resolution of liability for this verdict would be resolved by the court from the testimony presented at a non-jury trial immediately following the Krchnavy trial, and from the many documents introduced into evidence' at both trials.

After reviewing the entire record in Krchnavy v. Bethlehem Steel, and in the present case, and after considering the briefs of the parties, we now make the following

FINDINGS OF FACT

1. Plaintiff and defendant entered into a. written contract on March 21, 1983, for work at defendant’s [36]*36Bethlehem plant. The specific work which was the subject of this contract was the refining of Blast Furnace C.

2. Subsequent to the original contract for the blast furnace work, many change orders were negotiated between the parties. After a specific change was requested by Bethlehem Steel, the change order would be drafted by Andco and submitted to Bethlehem Steel for approval.

3. Change order no. 21, for additional work on the cast house floor of blast Furnace C, in the amount of $56;000, was issued on’July 27, 1983.

4. The second paragraph of the cover letter for change order no. 21 specifically incorporates the terms and provisions of the. original written contract.

5. While Andco was in the course of performing work specified in this change order, one of its employees, John Krchnavy, was injured when a chipping gun that he was operating exploded.

6. Evidence at the trial of Krchnavy v. Bethlehem Steel Corporation revealed that co-workers of John Krchnavy, also Andco employees, hooked up the hose connected to the chipping gun to an oxygen fine rather than an air fine, resulting in the explosion.

7. Plaintiffs theories of negligence against Bethlehem Steel at the trial of Krchnavy v. Bethlehem Steel Corporation were that: (1) plaintiff, as a landowner, allowed a hazardous condition to exist on its property; and (2) plaintiff violated various OSHA and other industrial standards in failing to color code and label the oxygen fines on its premises. .

8. The jury found Bethlehem Steel 100 percent negligent and plaintiff not negligent, and rendered a verdict in the amount of $375,000, allocated as follows: $50,000 to the wife, Dianne Krchnavy, for loss [37]*37of consortium, and $325,000 to John Krchnavy for his injuries and lost wages.

9. Paragraph 7 in the original contract between Andco arid Bethlehem-Steel, identified as contract no. 100-321-61-DC, provided the following indemnification provision:

“The contractor shall indemnify and save harmless each of the Bethlehem companies' from and against all loss or liability for or on account of any injury (including death) or damages received or sustained by the contractor or any-of its subcontractors or any employee, agent or invitee of the contractor or any of its subcontractors by reason of any act or omission, whether negligent or otherwise, on the part of any of the Bethlehem companies or any employee, agent or invitee thereof or the condition of the site or other property of any of the Bethlehem companies or otherwise. The contractor shall further idemnify and save harmless each of the Bethlehem companies from and against all loss of liability for or on account of any injury (including death) or damages received or sustained by any person or persons by reason of any act or neglect on the part of the contractor or any of its subcontractors or any employee, agent or invitee of the contractor or any of its subcontractors, including any breach or alleged breach of any statutory duty which is to be performed by the contractor hereunder but which is or may be the duty of any Bethlehem companies under applicable provisibns of law. For the purpose of this agreement, the term ‘Bethlehem companies’ shall include Bethlehem Steel Corporation, a Delaware corporation, its successors and assigns, and any and all companies and corporations directly or indirectly subsidiary to said Bethlehem Steel Corporation and the successors and assigns of any of them.”

[38]*38DISCUSSION

Section 6 of the Workmen’s Compensation Act, 77 P.S. §481(b), precluded Andco’s employee, John Krchnavy, from bringing suit against Andco for his injuries. As a result, Krchnavy pursued his legal remedies against Bethlehem Steel, a third party which may be sued under §6 of the act. The instant litigation arises as a result of the idemniñcation provision present in the contract between Bethlehem Steel, the owner, and Andco, the contractor.

Section 6 of the Workmen’s Compensation Act provides:

“(b) In the event injury or death to any employe is caused by a third party, then such employe, his legal representative, husband or wife, parents, dependents, next of kin, and anyone else 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.” 77 P.S. §481(b). (Emphasis added.) Thus, an employer may waive immunity from claims by third-party defendants, sued by employer’s employees, when the employer has expressly contracted to incur such liability, and to indemnify third-party defendants for it. These contractual waivers must be carefully scrutinized and are subject to strict construction. Girard v. Penn Valley Constructors, Inc., 343 Pa. Super. 425, 495 A.2d 210 (1985). As the in[39]*39demnification clause quoted in finding of fact no. 8 above reveals, Andco has expressly contracted to indemnify Bethlehem Steel.

Andco, however, claims for various reasons that this indemnification clause is either unenforceable under the law, or inapplicable to John Krchnavy’s accident. Andco’s first argument is that the indemnification agreement is void by virtue of 68 P.S. §491, which reads as follows:

“Preparation of Plans; giving or failure to give directions; indemnification agreement:

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Bluebook (online)
42 Pa. D. & C.3d 34, 1986 Pa. Dist. & Cnty. Dec. LEXIS 265, Counsel Stack Legal Research, https://law.counselstack.com/opinion/bethlehem-steel-corp-v-andco-inc-pactcomplnortha-1986.