Northeast Controls, Inc. v. Fisher Controls International LLC

373 F. App'x 162
CourtCourt of Appeals for the Third Circuit
DecidedApril 1, 2010
Docket08-1357, 08-1820
StatusUnpublished
Cited by2 cases

This text of 373 F. App'x 162 (Northeast Controls, Inc. v. Fisher Controls International LLC) is published on Counsel Stack Legal Research, covering Court of Appeals for the Third Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Northeast Controls, Inc. v. Fisher Controls International LLC, 373 F. App'x 162 (3d Cir. 2010).

Opinions

OPINION

ROTH, Circuit Judge:

Fisher Controls International, LLC (“Fisher”) appeals from the District Court’s denial of Fisher’s motion to amend its counterclaim, as well as the District Court’s grant of summary judgment against Fisher and in favor of appellees Northeast Controls, Inc. and St. Paul Mercury Insurance Co. For the reasons that follow, we will reverse and remand for further proceedings.

I.

On May 20, 2000, there was an explosion and fire (“Explosion”) at a power plant located in Delaware City, Delaware (“Power Plant”). The Explosion seriously injured an employee of the Power Plant and damaged machinery surrounding the location of the blast. The incident gave rise to four lawsuits, collectively referred to hereinafter as the “Underlying Litigation.” [164]*164The plaintiffs in the four suits comprising the Underlying Litigation were, respectively, (1) Praxair Inc. (“Praxair”), an engineering company responsible for the design and construction of an ah* separation unit that was damaged in the Explosion; (2) Motiva Enterprises LLC, the operator of the Power Plant; (3) Great American Assurance Company, an insurer for several parties that suffered losses from the Explosion, including Praxair, Inc. and Mo-tiva Enterprises LLC; and (4) Ronald Olson (“Olson”), an employee of the Power Plant who was injured in the Explosion. Among the parties named as defendants in the Underlying Litigation were appellant Fisher and appellee Northeast Controls, Inc.1

According to allegations in the Underlying Litigation, the Explosion was caused by a faulty valve (“Valve”) that had been fabricated by Fisher using materials unsuitable for the Valve’s intended use. Northeast Controls, which received the original order for the Valve in its capacity as a sales representative for Fisher, was alleged to have incorrectly transmitted the desired specifications to Fisher, which then produced the Valve in accordance with the erroneous instructions. Fisher fabricated the Valve according to the erroneous instructions, utilizing the less combustion-resistant materials, and subsequently delivered it to the Power Plant, where it met its end just moments after first being activated.

Fisher obtained summary judgment in the actions brought by Praxair and Olson, and was dismissed as a defendant in the other two suits. Without admitting fault, Northeast Controls paid $601,000.00 to settle all claims against it. Northeast also voluntarily dismissed its cross-claims against Fisher in the Olson suit.

On May 28, 2006, appellees Northeast Controls and St. Paul (collectively referred to hereinafter as “Northeast”) filed a complaint against Fisher, seeking to recover the costs incurred in defending against and settling the Underlying Litigation. Northeast alleged that it was entitled to indemnification from Fisher pursuant to the indemnity clause contained in the parties’ 1998 Representative Agreement (“Agreement”).2 In response, Fisher denied its contractual obligation to indemnify Northeast, and also filed a counterclaim seeking as damages its own costs in defending against the Underlying Litigation, alleging that Northeast’s erroneous transmittal of the Valve order specifications constituted a breach of the Agreement, thereby entitling Fisher to the damages it incurred as a result — namely, the costs of defending against the Underlying Litigation.

In its initial counterclaim, filed on August 18, 2006, Fisher sought its defense costs only as an offset to any possible recovery by Northeast, but did not seek an affirmative monetary recovery. Just under one year later, on August 15, 2007, Fisher filed a motion seeking leave to amend its counterclaim to seek an affirmative monetary recovery as well, regardless of whether or not Northeast was awarded damages on its claim. On November 1, 2007, the District Court issued an order denying Fisher’s motion to amend.

Later, both parties moved for summary judgment on their respective claims, and [165]*165on January 18, 2008, the District Court granted summary judgment for Northeast on its claim for indemnity from Fisher, and against Fisher on its counterclaim against Northeast for breach of contract. On March 12, 2008, the District Court entered judgment in favor of Northeast and against Fisher in the amount of $1,207,833.50, plus prejudgment interest.

Fisher timely appealed the District Court’s denial of its motion to amend, as well as the District Court’s grant of summary judgment in favor of Northeast and against Fisher.

II.

The District Court had subject matter jurisdiction under 28 U.S.C. § 1332, and we have appellate jurisdiction pursuant to 28 U.S.C. § 1291.

III.

We now turn to the merits of the case. Northeast alleges that Fisher breached the parties’ Agreement in refusing to indemnify Northeast for the costs it incurred in defending against and settling the Underlying Litigation, and is therefore liable to Northeast for damages in the amount of those costs. Northeast’s claim is based upon a right to indemnification created pursuant to the indemnity clause included in the Agreement between it and Fisher.

The indemnity clause is composed of two parts. The first part, referred to hereinafter as the “Obligation Clause,” provides the situations in which Fisher becomes obligated to indemnify Northeast. It reads, in pertinent part:

Subject to the limitations set forth in the immediately succeeding paragraph of this Section ... Fisher agrees that it shall, at its own expense, protect, defend, indemnify and hold harmless Representative from and against any and all claims, demands, actions, losses, damages,- liabilities, costs and expenses (collectively “Losses”) which may arise out of or be made in connection with the death or injury of any person, or damage to property, by whomsoever suffered, resulting or claimed to result from any actual or alleged defect in any Product.

App. at 539.

The second part of the indemnity clause, referred to hereinafter as the “Escape Clause,” sets out the situations in which Fisher escapes from its contractual obligation to indemnify Northeast, notwithstanding an activation of that obligation pursuant to the Obligation Clause. The Escape Clause reads, in pertinent part:

Notwithstanding the provisions of the immediately preceding paragraph of this Section ... or any other provision of this Agreement, Fisher shall not be obligated to protect, defend, indemnify or hold harmless [Northeast] from and against any Losses arising from the ... [negligent acts or omissions by [Northeast],

Fisher must demonstrate that Northeast’s negligence caused the Explosion. We believe that a genuine issue of material fact exists as to whether or not Northeast’s negligence did indeed cause the Explosion, and consequently as to whether or not Northeast is entitled to immunity under the Agreement.3 The record contains at least two pieces of evidence that, particularly when viewed in a light most favorable to Fisher, point to the existence of a [166]*166causal relationship between Northeast’s negligence and the Explosion.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Amgen Inc. v. Hospira, Inc.
336 F. Supp. 3d 333 (D. Delaware, 2018)

Cite This Page — Counsel Stack

Bluebook (online)
373 F. App'x 162, Counsel Stack Legal Research, https://law.counselstack.com/opinion/northeast-controls-inc-v-fisher-controls-international-llc-ca3-2010.