Opinion
C.A. No. 04C-03-286 PLA.
Submitted: February 20, 2008.
Decided: February 21, 2008.
UPON DEFENDANT'S MOTION IN LIMINE GRANTED.
Lisa C. McLaughlin, Esquire, PHILLIPS, GOLDMAN SPENCE, P.A., Wilmington, Delaware, Attorney for Plaintiff.
Diane M. Andrews, Esquire, ELZUFON AUSTIN REARDON TARLOV MONDELL, P.A., Wilmington, Delaware, Attorney for Defendant First South Utility Construction, Inc.
Gary H. Kaplan, Esquire, MARSHALL, DENNEHEY, WARNER, COLEMAN GOGGIN, Wilmington, Delaware, Attorney for Defendant Shaffer Construction Co.
I. Introduction
Defendant First South Utility Construction, Inc. ("First South") has filed a motion in limine seeking to have this Court interpret two indemnification provisions in two separate contracts. First South contends that, upon reviewing the provisions in tandem, the Court will conclude that proceeding to trial would be "a complete and utter waste of judicial resources" because First South will be fully indemnified from or Shaffer Construction Co. ("Shaffer") under the theories of negligence espoused by Delmarva Power Light Co. ("Delmarva") in this litigation. In response, Delmarva contends that it has asserted a theory of direct negligence against First South, which has been recognized by this Court in this litigation, for which First South may not be indemnified by Shaffer. As a result, Delmarva contends that trial is appropriate.
As more fully discussed herein, the two indemnification provisions prevent Delmarva from recovering any money damages under the negligence theories it has argued in this case. Thus, trial would in fact be "a complete and utter waste of judicial resources." Accordingly, Defendant's Motion in limine is GRANTED.
II. Statement of Facts
This case, now ongoing for almost four years, arises out of a claim in the amount of $73,970.16 for damages to underground power lines owned by Delmarva. Shaffer, who was conducting boring operations in the vicinity of power lines owned by Delmarva, was the subcontractor of First South. During the boring operation, Delmarva discovered damage to its own power lines. Delmarva then brought suit against Shaffer and First South alleging various theories of negligence.The subcontract between Shaffer and First South (the "Subcontract") included an indemnification provision which provides, in pertinent part:
To the fullest extent permitted by law, Subcontractor [Shaffer] shall indemnify and hold harmless Owner, Contractor [First South], and their respective agents and employees from and against claims, damages, losses and expenses, including but not limited to attorney's fees, arising out of or resulting from performance of the Work [the boring at issue] under this Subcontract, provided that such claim . . . is attributable to . . . destruction of tangible property . . . but only to the extent caused in whole or part by negligent acts or omission of Subcontractor. . . .
Docket 88, Ex. A (Subcontract), at 8, § 9(a).
Soon after filing its Complaint, Delmarva settled with Shaffer and entered into a Joint Tort-Feasor Release (the "Release") on November 2, 2004. In that Release, Shaffer agreed to pay Delmarva $36,985.08 (exactly one-half the total damages) in exchange for a complete release of all claims against it. The Release expressly stated that "this payment is not to be construed as an admission of liability on the part of Shaffer Construction Co., by whom liability is expressly denied." The Release also provides:
Id., Ex. B (Joint Tort-Feasor Release), at 1.
The foregoing [Release] is intended to comply with 10 Del. C. § 6304(b), so as to preclude any liability of the released parties identified above to any other tort-feasors, if any, for contribution or otherwise. . . .
Delmarva Power Light Co. will indemnify and hold Shaffer Construction Co. harmless from and against any and all claims, liens, demands, causes of action, obligations, damages, liabilities, judgments and costs, including attorney's fees, asserted against Shaffer Construction Co. as a result of, or in connection with: . . . (b) any action or other proceeding in which Delmarva Power Light Co. . . . may have a direct or indirect interest, contrary to the provisions of this Release.
Id., Ex. B, at 2-3.
On September 18, 2007, this Court erroneously granted Delmarva's Motion for Summary Judgment. In that opinion, the Court concluded that First South could be liable for failing to discharge its statutory duties as an excavator:
Delmarva Power Light Co. v. First South Util. Constr., Inc., 2007 WL 2758777 (Del.Super.Ct. Sept. 18, 2007) [hereinafter Delmarva I].
The parties agree that neither First South nor Shaffer engaged in hand digging. As an excavator, First South had a statutory duty to take certain precautions, including hand digging, to avoid damage to underground utility lines. While Shaffer could have discharged this duty on behalf of First South, Shaffer failed to do so. Because Shaffer and First South each concede that they did not engage in the statutorily-required hand digging, and First South employed Shaffer as its subcontractor, the Court finds that First South failed to discharge its duties as an excavator. First South is therefore liable to Delmarva for any damage caused as a direct result of its failure to take adequate precautions.
Delmarva I at *3, ¶ 13.
The Court also noted that First South had a non-delegable duty to engage in hand-digging:
Considering that the Legislature's stated purpose in creating the statute [the Underground Utility Damage Prevention and Safety Act] is to protect the public from harm, and protect existing underground utility lines, allowing an excavator who subcontracts these duties to be exempt from liability would not further the purposes of the statute and would lead to an undesirable result. Accordingly, the Court finds that First South had a non-delegable duty established by the Act and is vicariously liable for any negligence of Shaffer.
Id. at *3, ¶ 16 (citations omitted).
The Court then found, as a matter of law, that First South was negligent and liable to Delmarva.
First South then filed a motion for reargument. After reconsideration, the Court vacated its September 18, 2007 Order granting summary judgment on behalf of Delmarva. In that decision, the Court concluded that its earlier conclusion that the peculiar risk doctrine was applicable to this case was incorrect. The Court also determined that First South was not liable to Delmarva as a matter of law based on the available record:
Delmarva Power Light Co. v. First South Util. Constr., Inc., 2007 WL 3105112 (Del.Super.Ct. Oct. 11, 2007) [hereinafter Delmarva II].
Delmarva II at *2, ¶ 7.
While First South would be liable as an excavator for Shaffer's negligence as its subcontractor, a jury must first determine that Shaffer was, in fact, negligent. Moreover, even if the Court could determine conclusively that Shaffer failed to engage in hand digging, the Court could not, as a matter of law, determine that Shaffer's failure to hand dig caused Delmarva's damage from this record.
Id. at *3, ¶ 10.
In response, Delmarva filed a motion asking this Court to reconsider the decision to vacate and seeking to have this Court reinstate its first decision granting Delmarva's motion for summary judgment. This motion was denied as untimely. The Court also explained that vacating its September 18, 2007 did nothing other than permit the trial to go forward:
In fact, the Court's decision to grant First South's motion does nothing more than permit both sides to try their case. By vacating its earlier decision, which the Court did only after realizing and acknowledging its own error, the litigation has not been terminated, a final order has not been entered, and neither party is prevented from pursuing its rights in court. As a practical matter, if Delmarva believes its case to be strong, Delmarva should not feel that the Court has treated it unfairly, as it now has the same opportunity to convince a jury of its position that it had when this litigation was instituted.
Delmarva Power Light Co. v. First South Util. Constr., Inc., 2007 WL 3105110, at *2, ¶ 7 (Del.Super.Ct. Oct. 17, 2007) [hereinafter Delmarva III].
Despite the Court's decision to uphold the October 11, 2007 order which denied Delmarva's motion for summary judgment and vacated the September 18, 2007 decision, Delmarva persisted in seeking to have this Court reverse itself again and reinstate the September 18, 2007 decision. Delmarva then filed another motion to reconsider the October 17, 2007 decision. The Court, relying on its decisions on October 11, 2007 and October 17, 2007, denied Delmarva's motion and allowed the litigation to proceed to trial.
Delmarva Power Light Co. v. First South Util. Constr., Inc., 2007 WL 3105238 (Del.Super.Ct. Oct. 22, 2007) [hereinafter Delmarva IV].
On January 29, 2008, First South filed a motion in limine, after the deadline for such motions had lapsed. The Court apparently misread First South's motion and believed that First South requested an interpretation of the indemnification provision in the Subcontract with Shaffer. Based on that understanding, the Court refused to entertain First South's motion as untimely, premature and irrelevant to Delmarva's claims of negligence against First South. After re-reading the Release and Subcontract, however, the Court realized that it may have erred in denying the motion because the motion addressed whether a trial was even necessary. As a result, at the pre-trial conference, the Court granted Delmarva five days in which to file a response to First South's motion.
III. Parties' Contentions
In its motion, First South requests that this Court interpret the indemnification provisions in the Release and Subcontract. First South contends that proceeding to trial would be "a complete and utter waste of judicial resources" because Delmarva could not recover any money damages under the theories of negligence it has argued to this Court. First South also seeks to have this Court preclude Delmarva from mentioning the Release at trial as an admission of liability. First South apparently filed a motion in limine on August 9, 2007 to address this additional issue, but the Court never ruled on that motion.In response, Delmarva argues that proceeding to trial would not waste judicial resources. Delmarva relies on language in this Court's September 18, 2007 vacated decision in which this Court concluded that First South was an excavator under the Underground Utility Damage Prevention Act (the "Act"). As an excavator, this Court ruled that First South had a statutory duty to hand dig under the Act. Delmarva contends that, although this decision was vacated, the Court did not vacate these specific holdings, making them the law of the case. If First South breached a non- delegable duty, it cannot recover indemnification from Shaffer under the Subcontract and will be liable to Delmarva. Thus, Delmarva argues that it would not be "litigating against itself" and could recover directly from Delmarva.
26 Del. C. §§ 801-813.
Delmarva I, at *3, ¶ 13. As explained hereinafter, Delmarva misstates the Court's September 18, 2007 ruling.
IV. Analysis (1) Neither Party May Use the Release as an Admission of Liability
The Court will first address First South's motion in limine, filed August 9, 2007. In that motion, First South asked this Court to "prohibit the use by all parties of Shaffer's settlement to constitute an admission of liability for the incident that gave rise to this litigation. . . ." In Alexander v. Cahill, the Supreme Court interpreted D.R.E. 408 and determined that a judge may disclose the existence of a settlement to explain the absence of a defendant "for the purpose of avoiding jury confusion." A judge may not, however, reveal the amount of the settlement. Nor may a judge reveal facts about the settlement that may lead to "the inadvertent admission of misleading evidence about any settlement that would prejudice one or more parties." In Alexander, for example, the Supreme Court barred testimony about a settlement agreement that only served the purpose of "persuading the jury that the persons to blame for the accident had already admitted liability."
829 A.2d 117 (Del. 2003).
Alexander, 829 A.2d at 123 (citing Kennon v. Slipstreamer, Inc., 794 F.2d 1067, 1070 (5th Cir. 1986)).
Id. at 124-25.
Id. at 127.
Id.
Pursuant to D.R.E. 408 and Alexander, this Court may explain Shaffer's absence from trial by mentioning the Release to avoid any jury confusion. It may not, however, mention the settlement amount, nor permit either party to do so. The Court must also preclude any mention of the Release as an admission of liability on First South's part under Alexander and D.R.E. 408. More importantly, because the Release explicitly states that "this settlement . . . is not to be construed as an admission of liability on the part of Shaffer Construction Co., by whom liability is expressly denied[,]" any attempt by any party to mention that Shaffer or First South admitted liability would be contrary to the Release and thus misleading. Accordingly, neither party may use the Release to establish an admission of liability by either party.
(2) Trial in this Matter Would be a "Complete and Utter Waste of Judicial Resources"
"The proper construction of any contract . . . is purely a question of law." "When interpreting a contract, the court's ultimate goal is to determine the parties' shared intent." To interpret a contract, the court "looks to the most objective indicia of that intent: the words found in the written instrument . . . [and] ascribes to the words their `common or ordinary meaning," and interprets them as would an `objectively reasonable third-party observer.'" "When the plain, common, and ordinary meaning of the words lends itself to only one reasonable interpretation, that interpretation controls the litigation."Initially, the Court finds that the provision in the Release that discharges Shaffer from any contribution or indemnification to First South is unenforceable because First South was not a party to the Release between Shaffer and Delmarva. In a similar context, the Court of Chancery refused to impose contractual liability on a non-signing party to a land sale, holding that "while other owners may voluntarily elect to participate in the contract and be subject to its benefits and obligations, there is no basis for imposing contractual liability on any non-signatory without that person's consent." Likewise, because First South was not a signatory to the Release and has not consented to the provision in the Release, there is no basis for permitting Delmarva to preclude Shaffer from having to indemnify First South in the event of a finding of negligence — in direct contradiction to the Subcontract. To hold otherwise would permit Delmarva to void portions of the Subcontract to which it was never a party and to which First South never consented. To the extent that Delmarva and Shaffer have agreed in the Release to eliminate any requirement for indemnification between Shaffer and First South, that provision is unenforceable between First South and Shaffer.
In re 53.1 Acres of Land in Mispillion Hundred, 2002 WL 31820972, at *2 (Del.Ch. Nov. 27, 2002).
Turning to the application of the indemnification provisions to this case, the Release between Delmarva and Shaffer explicitly provides that Delmarva will indemnify Shaffer for any damages or obligations asserted against it in this matter. Because the Court's duty is to determine the parties' intent by objectively interpreting the written words according to their "common or ordinary meaning," the words in the Release objectively demonstrate that Delmarva agreed to indemnify Shaffer for any damages or obligations it may owe to First South arising from this litigation. Nothing in the Agreement, nor anything either party has offered, contradicts this interpretation. Since there is no evidence that the Court has misconstrued the parties' intent, the Court finds as a matter of law that the Release mandates Delmarva to indemnify Shaffer for any money damages or contribution it might owe to First South as a result of this litigation.
Docket 88, Ex. B, at 2.
Sassano, 2008 WL 152582 at *5.
Similarly, the plain language of the indemnification provision in the Subcontract objectively indicates that Shaffer must indemnify First South for any negligence it commits in the event First South is found vicariously liable. The parties do not appear to dispute this interpretation. Thus, the Court concludes as a matter of law that Shaffer must indemnify First South for any negligent act or omission it committed when conducting the boring.
When read in tandem, the two indemnification provisions establish that if Delmarva proves at trial that First South is vicariously liable for Shaffer's negligence: (1) Shaffer must indemnify First South, under the Subcontract, for its own negligence as a subcontractor; and (2) Delmarva would have to indemnify Shaffer for any payments made to First South as a result of its negligence. Thus, as a practical matter, Delmarva would be paying its own damages and, in essence, be "litigating against itself." Trial would thus be "a complete and utter waste of judicial resources."
Importantly, because Delmarva has settled with Shaffer, who expressly denied liability, Delmarva cannot establish that Shaffer was negligent.
In this case, Delmarva has advanced various theories of vicarious liability and direct liability against First South. Delmarva concedes that, in the event that First South is found vicariously liable for Shaffer's negligence, the indemnification provisions would preclude any recovery by Delmarva because the Subcontract would require indemnification of First South by Shaffer, who would be indemnified by Delmarva under the Release. Delmarva's only argument that First South is directly liable to Delmarva — and for which the indemnification provisions would have no effect — is that First South allegedly violated a non-delegable duty to hand dig under the Act. Delmarva relies on this Court's vacated September 18, 2007 decision to draw support for this conclusion.
The only other basis for direct liability of First South put forth by Delmarva is the claim that First South is liable under the peculiar risk doctrine. The Court, however, has already determined that the peculiar risk doctrine is inapplicable to this case. Delmarva II at *2, ¶ 7. Aside from this basis, and as explained more fully herein, Delmarva has not argued any other basis suggesting that First South, and First South alone, is liable to Delmarva.
Delmarva, however, incorrectly interprets this Court's previous rulings. As an initial matter, Delmarva's reliance on this Court's September 18, 2007 decision, in which this Court concluded that First South was an excavator who had a duty to hand dig, is highly improper. That opinion was vacated and thus has no effect. Similarly, because the Court vacated its earlier decision and explicitly denied Delmarva's Motion for Summary Judgment, any language in that opinion, regardless of whether the Court specifically addressed it in Delmarva II, is also of no effect. Delmarva's reliance on this Court's decision in Delmarva I is thus completely inappropriate and misleading.
See Cede Co. v. Technicolor, Inc., 884 A.2d 26, 42 n. 75 (Del. 2005) (quoting Riha v. Int'l Tel. Tel. Corp., 533 F.2d 1053, 1054 (8th Cir. 1976) ("A judgment vacated on appeal is of no further force and effect.").
Despite the fact that the September 18, 2007 decision has no effect, Delmarva maintains that this Court's statement regarding a non-delegable duty was not vacated and remains "the law of the case." Under the "law of the case" doctrine, issues that the Court has already decided "should be adopted without relitigation, and `once a matter has been addressed in a procedurally appropriate way by a court, it is generally held to be the law of that case and will not be disturbed by that court unless [a] compelling reason to do so appears.'" In this case, as recognized in its subsequent decisions on October 11, 2007 and October 17, 2007, the Court found a compelling reason to reverse its September 18, 2007 opinion granting Delmarva's motion for summary judgment. Specifically, the Court determined that it had "improperly extended the reach of the peculiar risk doctrine" and "failed to view the evidence in the light most favorable to First South[.]" The Court then vacated is prior opinion. Thus, any holding in the Court's earlier decision has no effect and cannot be "the law of the case."
Taylor v. Jones, 2006 WL 1566467, at *5 (Del.Ch. May 25, 2006); see also Kenton v. Kenton, 571 A.2d 778, 794 (Del. 1990) ("The `law of the case' is established when a specific legal principle is applied to an issue presented by facts which remain constant throughout the subsequent course of the same litigation.").
Delmarva II at *3.
Id.
In any event, even assuming that this Court's holding that First South had a duty to hand dig were the law of this case — which it is not — Delmarva misinterprets this Court's September 18, 2007 decision and misapplies it to the facts of this case. While the Court acknowledges that its language could have been more precise, that same decision actually expressly indicates that Shaffer could have discharged First South's duty as an excavator to hand dig, thus indicating that the duty was indeed delegable:
The parties agree that neither First South nor Shaffer engaged in hand digging. As an excavator, First South had a statutory duty to take certain precautions, including hand digging, to avoid damage to underground utility lines. While Shaffer could have discharged this duty on behalf of First South, Shaffer failed to do so. Because Shaffer and First South each concede that they did not engage in the statutorily-required hand digging, and First South employed Shaffer as its subcontractor, the Court finds that First South failed to discharge its duties as an excavator. First South is therefore liable to Delmarva for any damage caused as a direct result of its failure to take adequate precautions.
The Court regrets using the term "non-delegable", as that term means that First South, and First South alone, could discharge this duty. However, when the Court's September 18, 2007 opinion, as well as its decision on October 11, 2007, are read in full, it should be clear that the Court used the term "non-delegable" to merely recognize that First South could not avoid liability for its subcontractor's failure to hand dig. It was not used, however, to indicate that First South could not delegate its duty to hand dig under the Act. As more fully explained in this opinion, the language of the September 18, 2007 vacated order actually makes it clear that First South could delegate its duties under the Act.
Delmarva I at *3, ¶ 13 (emphasis added).
Most importantly, in its September 18, 2007 decision, the Court expressly held that First South could delegate this duty to Shaffer and fulfill its statutory duties:
This Court stresses that it does not mean to suggest that an excavator itself must conduct the hand digging. Excavators are permitted to subcontract the work to independent contractors, and those independent contractors can fulfill the statutory duty of conducting hand digging on behalf of the excavator. The Court, however, concludes that an excavator cannot escape liability if the subcontractor fails to fulfill the excavator's statutorily-imposed duties merely by subcontracting with an independent contractor who performs all of the work.
Id. at *4 n. 35.
This footnote, which establishes that First South could, in fact, delegate the duty to hand dig, was conspicuously and misleadingly absent from Delmarva's response. What is important, however, is that the footnote emphasizes that First South could delegate the duty to hand dig to Shaffer but not the liability.
Any confusion as to the term "non-delegable" should have been removed by the Court's October 11, 2007 decision where the Court explicitly stated:
In its [September 18, 2007] opinion, the Court determined, inter alia, that First South was liable under the Underground Utility Damage Prevention and Safety Act (the "Act") as an excavator for the failure of its subcontractor, Shaffer Construction Co., to engage in the statutorily-required hand digging.
Delmarva II at *1, ¶ 1 (emphasis added).
The Court later added:
While First South would be liable as an excavator for Shaffer's negligence as its subcontractor, a jury must first determine that Shaffer was, in fact, negligent. Moreover, even if the Court could determine conclusively that Shaffer failed to engage in hand digging, the Court could not, as a matter of law, determine that Shaffer's failure to hand dig caused Delmarva's damage from this record.
Id. at *3, ¶ 10 (emphasis added).
What was implicit in that holding — and should have been obvious to Delmarva — was that Shaffer could have discharged First South's duty to hand dig on its behalf. In fact, the Court cannot find any decision or statute that expressly prevents First South or any general contractor from delegating the duty to hand dig.
Importantly, that Shaffer could discharge First South's excavator duties under the Act — notably, hand digging — is a basis for vicarious liability, not direct liability. In this case, there is no dispute that First South contracted with Shaffer to perform the boring work and delegated its duties, including the duty to hand dig, to Shaffer. In the Subcontract, Shaffer agreed to discharge all duties applicable under the contract and the law, which would include hand digging under the Act. Shaffer also agreed to indemnify First South for any "negligent acts or omissions" on its part. As a result, if a trial went forward and Delmarva could establish that First South or Shaffer failed to hand dig, First South would be indemnified by Shaffer under the Subcontract, and Shaffer would then be indemnified by Delmarva "from and against any and all claims . . . obligations, . . . including attorney's fees, asserted against Shaffer Construction Co." under the Release. Thus, Delmarva would ultimately be unable to recover any money damages from First South.
See Docket 88, Ex. A, at 6, ¶ 6(a) ("Subcontractor agrees that it has made and is bound by . . . [the] applicable law.").
Aside from its contention that First South had a non-delegable duty to hand dig under the Act, which would be a basis for vicarious liability and thus subject to the indemnification provisions, Delmarva has not asserted any other basis of direct liability against First South for which the indemnification provisions would be inapplicable. Without a separate basis for direct liability, Delmarva has only two outcomes at trial. Under the first outcome, if Delmarva loses at trial, it would have to reimburse First South for attorney's fees and costs and not recover any damages. Under the second outcome, if Delmarva proceeded to trial on its theory and won a judgment in its favor, First South would be required to pay damages and attorney's fees to Delmarva. At that point, First South would seek indemnification, including attorney's fees and costs, from Shaffer for its negligent omission in failing to hand dig. Shaffer would then seek indemnification — again, including attorney's fees and costs — from Delmarva under the Release. Thus, even if Delmarva succeeded at trial, it would ultimately be unable to recover anything from First South.
With either outcome, trial would be a "complete and utter waste of judicial resources." Delmarva has offered no basis on which it can proceed on a direct liability theory against First South. Under the theories argued by Delmarva, all of which would render First South vicariously liable, the Court concludes that the indemnification provisions in the Subcontract and the Release preclude Delmarva from recovering any damages from First South. Accordingly, Defendant's Motion in limine is hereby GRANTED.