Opinion
Civil Action No. 3:02-CV-1499.
November 2, 2004
MEMORANDUM AND ORDER
We consider in this Memorandum the "Motion of Third Party Defendant Ziegler Chemical Mineral Corp. for Entry of Judgment in its Favor and Against Third Party Plaintiff Celotex Corporation," (Doc. 161), and "Cross-Motion of Third-Party Plaintiff Celotex Corporation for Judgment Against Third-Party Defendant Ziegler Chemical Mineral Corp.," (Doc. 166). At issue in these motions is whether Ziegler must indemnify Celotex for reasonable costs and attorneys' fees following the jury's verdict in favor of Celotex. The motions have been fully briefed and are ripe for disposition. For the reasons discussed below, we deny Ziegler's motion and grant Celotex's motion.
I. Background
Although the parties differed on precisely how the accident which formed the basis of this action occurred and at trial presented evidence in support of their respective positions, many basic facts were not in dispute. Plaintiff William Kripplebauer (Plaintiff) is an independent contractor who transported a load of hot asphalt in his tanker-truck from supplier Ziegler to purchaser Celotex. The receiving facilities at the Celotex plant included a pump mechanism located in an enclosed brick structure and a hose which connected to Plaintiff's vehicle. On November 3, 1999, the day of the accident, there was a problem with the flow of the asphalt. Plaintiff disconnected the hose: according to Plaintiff he did so at the request of Celotex's employee; Celotex maintains that their employees warned him not to do so. Once the hose was disconnected, a surge of hot asphalt burned Plaintiff.Plaintiffs originally filed their Complaint in the Schuykill County Court of Common Pleas against Defendant Celotex. (Doc. 1, Ex. D.) Defendant Celotex ("Celotex") removed the case to this Court on August 26, 2002. (Doc. 1.)
Plaintiff Angela Kripplebauer withdrew her claim before trial but Plaintiffs did not move to amend the caption. Therefore, at times the charging party is referred to as "Plaintiffs" and at other times "Plaintiff," the latter being Plaintiff William Kripplebauer.
With permission of the Court, Celotex filed a Third-Party Complaint against Ziegler Chemical Mineral Corporation ("Ziegler") on November 4, 2002, (Doc. 15). The Third-Party Complaint alleged that Celotex contracted with Ziegler to purchase asphalt resin which Plaintiff delivered. Under the terms and conditions of the contract, Celotex averred that Ziegler agreed to indemnify Celotex for the claims asserted in Plaintiffs' Complaint. The relevant provision (which is located on the back of the purchase order) provided:
SELLER SHALL INDEMNIFY, DEFEND, AND HOLD HARMLESS BUYER FROM ANY AND ALL CLAIMS, LIABILITIES, DAMAGES, AND EXPENSES (INCLUDING REASONABLE ATTORNEYS FEES) ON ACCOUNT OF THE DEATH OR INJURY TO ANY PERSON OR DAMAGE TO ANY PROPERTY ARISING FROM OR IN CONNECTIONS WITH ANY GOODS OR SERVICES SUPPLIED, EXCEPT TO THE EXTENT CAUSED BY BUYER'S SOLE NEGLIGENCE OR INTENTIONAL MISCONDUCT THIS INDEMNITY SHALL APPLY WITHOUT REGARD TO CONTRACT, BREACH OF WARRANTY, NEGLIGENCE, STRICT LIABILITY OR OTHER TORT. THIS INDEMNITY SHALL SURVIVE DELIVERY AND ACCEPTANCE OF GOODS OR SERVICES.
(Doc. 15, Ex. A ¶ 8.)
Celotex maintained that its conduct was reasonable, prudent and cautious under the circumstances and did not proximately cause Plaintiff William Kripplebauer's injuries. Celotex further averred that his injuries were not caused by Celotex's sole negligence or intentional misconduct. Therefore, the above contract provision obligates Ziegler to indemnify, defend and hold harmless Celotex.
On December 23, 2002, Celotex moved for entry of default against Ziegler. (Doc. 17.) Judgment was entered on January 13, 2003, reserving the issue of damages until resolution of the case. (Doc. 22.)
On January 12, 2004, Ziegler moved to vacate the default judgment entered on January 13, 2003. (Doc. 39.) The Court heard oral argument on February 26, 2004, and granted the Motion by Order of February 27, 2004, (Doc. 59).
On March 22, 2004, Ziegler filed a Motion for Summary Judgment, (Doc. 69), and on March 30, 2004, Celotex filed a cross-motion for summary judgment, (Doc. 73). In these motions, Ziegler and Celotex disputed only the interpretation of the indemnity clause. The Court concluded that Ziegler was bound to indemnify Celotex unless Celotex was found solely negligent: "The only way that Ziegler can be released from liability is if there is a factual determination that Celotex is solely responsible for Plaintiff's injuries." (Doc. 75 at 11.) Thus, we granted summary judgment in favor of Celotex on the issue of the applicability of the indemnity clause, with the question of Ziegler's ultimate duty to indemnify to be determined after a jury decided the issue of Celotex's liability. (Id.)
The case came to trial before this Court on May 24, 2004. On that date Ziegler made a motion for Directed Verdict which the Court denied. Ziegler made the motion on the basis that Celotex would have the burden of proof at trial to present evidence, witnesses or exhibits regarding attorneys' fees and expenses, and Celotex had not indicated that it intended to do so or otherwise make any argument in support if its claim at trial. (Doc. 167 Ex. C at 56-57.) In denying the motion, the Court stated that the issue of reasonable attorneys' fees and expenses would not be submitted to the jury: it was an issue for the Court to decide and not the jury. (Doc. 167 Ex. C at 59-60.)
During the course of the trial, the jury received contradictory evidence about how the accident happened both from expert and lay witnesses. The parties also produced contradictory evidence about the conduct of Defendant Celotex's employees who were present at the scene and Plaintiff's conduct, including whether he was wearing safety equipment.
On June 1, 2004, the Court met with counsel to discuss points for charge and jury interrogatories. The interrogatories were agreed upon and were distributed to the jury following closing arguments and jury instructions. The jury returned a verdict with the interrogatories in favor of Defendants. On the Special Interrogatories form, (Doc. 142), Question One asked: "Do you find that Plaintiff William Kripplebauer has proved by the fair weight and preponderance of the evidence that Defendant Celotex was negligent?" The jury answered "yes." Question Two asked: "Do you find that Plaintiff William Kripplebauer has proved by the fair weight and preponderance of the evidence that the negligence of Defendant Celotex was a substantial factor in bringing about Plaintiff William Kripplebauer's harm?" The jury answered "no." Following Question Two, the Interrogatories form instructed the jury: "If you answer `no,' you should answer no further questions and return with that report to the Court." (Doc. 142 at 1.) Because the jury answered "no" to Question Two, it answered no further questions. As a result of the jury's findings, judgment was entered in favor of Defendant Celotex and against Plaintiff William Kripplebauer. (Doc. 145.)
On June 9, 2004, the Court issued an Order setting a schedule regarding the outstanding matters in the case. Pursuant to that Order, Ziegler filed a Motion for Judgment and supporting brief on June 11, 2004, (Doc. 161). On June 30, 2004, Celotex filed a Cross-Motion for Judgment, (Doc. 166), as well as a brief both in support of its motion and in opposition to Ziegler's motion, (Doc. 167). Ziegler filed a brief in opposition to Celotex's cross-motion, (Doc. 169), on July 16, 2004, and Celotex filed a reply, (Doc. 172), on July 28, 2004. These are the motions we currently consider.
The same document (with supporting exhibits) was docketed twice, once as a "Brief in Support," (Doc. 167), and again as a "Brief in Opposition" to Ziegler's motion, (Doc. 168). We will refer to this document as Docket Entry 167, ("Doc. 167").
The same document (with exhibit) was also docketed as Docket Entry 171. We will refer to this document as Docket Entry 169, ("Doc. 169").
Plaintiffs filed a Motion for New Trial, (Doc. 164), which the Court denied by Memorandum and Order of October 19, 2004, (Doc. 179). Having disposed of the new trial motion, we are now in a position to address the pending motions. (See Doc. 179 at 1 n. 1.)
II. Discussion
A. ZIEGLER'S MOTION FOR JUDGMENT
Ziegler argues that judgment should be entered in its favor because Celotex has failed to meet its burden under the indemnity clause. (Doc. 161 at 4.) Ziegler supports this argument with the following assertions: 1) "it is entitled to a directed verdict as a matter of law for the reasons set forth in its Motion for Summary Judgment," (id.); 2) since the jury found only Celotex negligent, the indemnity clause does not apply, (id.); and 3) "even if Celotex is entitled to indemnity from Ziegler if it established that plaintiff's injuries were not due to its sole negligence . . ., Celotex failed to put on any evidence in support of its indemnity claim at time of trial and, therefore, Ziegler is entitled to judgment in its favor," (id.).
Distilled to its pertinent language, the indemnity clause in question provides that
[Ziegler] shall indemnify, defend and hold harmless [Celotex], its officers, directors, agents, representatives, [and] employees . . . from any and all claims, liabilities, damages and expenses (including reasonable attorney fees) on account of . . . injury to any person . . . arising from or in connection with any goods . . . supplied, except to the extent caused by the buyer's sole negligence . . ., this indemnity shall apply without regard to . . . negligence, strict liability or other tort. This indemnity shall survive delivery and acceptance of goods.
(See Doc. 75 at 7.)
1. Directed Verdict for Reasons Set Forth in Summary Judgment Motion
In its summary judgment motion, Ziegler argued that it was entitled to judgment as a matter of law in that the indemnity clause did not apply because Plaintiffs' and Celotex's causes of action do not arise from or in connection with any goods or services supplied by Ziegler. (Doc. 75 at 7.) Although Ziegler and Celotex interpreted the clause differently, both agreed it is unambiguous. (Id. at 6-7.) We concurred and held as a matter of law the claim unambiguously means, "the only way that Ziegler can be released from liability is if there is a factual determination that Celotex is solely responsible for Plaintiff's injuries." (Id. at 11.) Given the undisputed facts of this case and the language of the indemnity clause, the Court has no reason to alter its previous decision. Therefore, we conclude that our summary judgment determination was proper and this claimed basis for entry of judgment in Ziegler's favor is without merit.
2. The Jury's Finding on Celotex's Negligence
Citing the Court's previous statement that "Ziegler will indemnify the buyer unless the injury is caused by the buyer's sole negligence," (Doc. 161 at 4 (quoting Doc. 75 at 10)), Ziegler maintains that the jury found that the accident was the result of the negligence of Celotex and "since the jury found only Celotex negligent, the indemnity clause does not apply." (Doc. 161 at 4.)
There may be some merit to this argument if the jury had found as Ziegler argues. However, the jury did not find that the accident was a result of Celotex's negligence. The jury found precisely the opposite. The jury found Celotex negligent but found that Celotex's negligence did not cause the accident. (See Doc. 145.) The Court discussed at length the possible implications of the jury's findings in our Memorandum and Order on Plaintiff's Motion for New Trial. (See Doc. 179.) We will not repeat our discussion here, but reinforce our decision with the observation that Celotex's sole responsibility for the accident was not among the possible implications of the jury's verdict. (Id.) Therefore, this claimed basis for entry of judgment is Ziegler's favor is also without merit.
3. Celotex's Failure to Present Evidence of its Indemnity Claim
Ziegler argues that the Court's ruling at the time of trial was in error, maintaining that, because it did not consent to a bifurcated trial, it was entitled to have Celotex's claim decided by the jury in the underlying lawsuit. (Doc. 161 at 4-5.) Further, because Celotex was obligated to make out a prima facie case at trial that it was entitled to indemnity from Ziegler and to present evidence of damages, the fact that it failed to put on evidence of its indemnity claim at the time of trial entitles Ziegler to judgment. (Id.) Ziegler also claims that even if Celotex was entitled to proceed with its indemnity claim after the trial of the underlying lawsuit, its failure to present any documentation or evidence of its alleged damages prior to the start of trial would preclude it from doing so at any subsequent trial. (Id.)
As support for its argument that it was the jury's responsibility to decide the issue of indemnity as well as the reasonableness of the attorney's fees and costs, Ziegler cites Federal Rule of Civil Procedure 54(d)(2)(A) and its advisory committee notes as well as several cases: Gradel v. Inouye, 421 A.2d 674, 680-81 (Pa. 1980); Allison v. Bank One, 289 F.3d 1223, 1247-48 (10th Cir. 2002); Sokoloff v. General Nutrition Companies, No. Civ. A. 00-641, 2001 WL 536072 (D.N.J. May 21, 2001); and In re Pennsylvania Footwear Corp., 204 B.R. 165 (Bankr. E.D. Pa. 1997). (Doc. 161 at 5-6; Doc. 169 at 3-5.) Ziegler maintains this legal authority establishes that attorney's fees sought under the terms of a contract, as is the case here, are an element of damages that must be proved at trial. (Id.)
Celotex contends that the cited cases do not provide the suggested support. (Doc. 172 at 4.) Rather, they are either inapposite or support Celotex's position that "the reasonableness of attorneys' fees (where liability for such fees is shifted by contractual agreement) is for the Court to decide." (Doc. 172 at 3-4 (also citing Krueger Assocs., Inc. V. American Dist. Tel. Co., 247 F.3d 61 (3d Cir. 2001); Lougher v. Univ. of Pittsburgh, 260 F.3d 173 (3d Cir. 2001); Pa. Environmental Defense Foundation v. Cannon-McMillan School District, 152 F.3d 228, 231-33 (3d Cir. 1998); and Francois v. Francois, 599 F.2d 1286, 1295-96 (3d Cir. 1979).)
Before we address the merits of the parties' positions on the propriety of the Court deciding attorney's fees and costs, we note that there is no basis for Ziegler's argument that it was for the jury to decide whether Celotex was entitled to indemnity. As stated above, see supra pp. 7-8, in our Memorandum and Order granting Celotex's Cross-Motion for summary judgment, we held as a matter of law that the indemnity provision was applicable to this case and, under its terms, "the only way that Ziegler can be released from liability is if there is a factual determination that Celotex is solely responsible for Plaintiff's injuries." (Doc. 75 at 11.) Based on this holding, Ziegler's duty to indemnify was automatically triggered by the jury's determination that Celotex's negligence was not a substantial factor in causing Plaintiff's injuries. Conversely, if the jury had found that Celotex's negligence was a substantial factor and Plaintiff was not contributorily negligent, as a matter of law Ziegler would not have had to indemnify Celotex. Because the jury did not make this finding, the matter of indemnification is settled.
We also agree with Celotex that we did not err in our previous decision that the award of attorneys' fees and reasonable expenses is properly considered by the Court following the jury's verdict. When Ziegler raised this issue at trial, the Court determined that it would not be presented to the jury. (See Doc. 167 Ex. C at 59-60.) The authority cited in support of its position now does not persuade us otherwise.
Ziegler cites Rule 54(d)(2)(A) of the Federal Rules of Civil Procedure which provides that "[c]laims for attorneys' fees and related non-taxable expenses shall be made by motion unless the substantive law governing the action provides for the recovery of such fees as an element of damages to be proved at trial." Fed.R.Civ.P. 54 (d)(2)(A). Ziegler also quotes the advisory committee notes to the subsection: "The Rule, does not `apply to fees recoverable as an element of damages, as when sought under the terms of a contract; such damages typically are to be claimed in a pleading and may involve issues to be resolved by a jury.'" (Doc. 169 at 4 (quoting Fed.R.Civ.P. 54(d)(2)(A) advisory committee notes).)
This statutory and committee note cannot be read to mean that any time recovery of attorneys' fees are sought pursuant to the terms of a contract, the amount of damages must be presented to a jury. Significantly, the committee note uses the words "typically" and "may." The choice of these permissive modifiers indicates that when fees are sought under the terms of a contract there are atypical cases in which the amount of fees are not sought in a pleading and/or the case does not involve issues for a jury to resolve. This is such a case. Celotex's Third-Party Complaint, (Doc. 15), sought indemnification from Ziegler. The Court's summary judgment Memorandum and Order, (Doc. 75), established the conditions which would trigger Ziegler's duty as a matter of law after the jury reached a decision on liability. Celotex has moved the Court to recognize that the conditions establishing Ziegler's responsibility for attorneys' fees and costs have been satisfied, (Doc. 166). Nothing in the statutory provision or notes precludes recovery of attorneys' fees through the procedure used in this case.
Similarly, Ziegler's cited cases at most support that it is within a court's discretion to put the award of contractually based attorneys' fees and expenses to the jury, Allison, 289 F.3d at 1247, and that some courts in Pennsylvania have implied in facts distinguishable from the case at bar that contractual attorneys' fees are an element of damages to be proved at trial,Sokoloff, 2001 WL 536072 at *6 (citing In re Pa. Footwear, 204 B.R. at 180-81). These cases do not indicate that the Court's procedural determination regarding attorneys' fees is improper.
Our conclusion is reinforced by the Third Circuit Court of Appeals decision in Kreuger. Although the procedural context in which attorneys' fees were awarded was not at issue, the court considered whether the district court's award of fees was excessive in a situation similar to the instant case. Kreuger, 247 F.3d at 69. Kreuger reviewed a district court case in which the defendant and third-party plaintiff filed a third-party complaint against the third-party defendant for defense and indemnification pursuant to a contractual indemnification provision. Kreuger, 247 F.3d at 64-65. The court granted summary judgment in favor of the third-party plaintiff on its indemnification claim. Id. at 65. When the remaining issues in the case were resolved, the district court quantified the amount of attorneys' fees recoverable by the third-party plaintiff pursuant to its contract with the third-party defendant. Id. The Circuit Court affirmed the lower court's award of attorneys' fees without reference to the procedural context of the award, noting that the applicable standard of review is abuse of discretion. Id. at 69. If the district court had abused its discretion in deciding the amount of contractually-based fees owed, we can assume that the Circuit Court would have so stated. Therefore, we proceed with the conclusion that it is within this Court's discretion to determine the amount of fees and expenses due Celotex pursuant to its contractual indemnity agreement with Ziegler.
B. CELOTEX'S CROSS-MOTION FOR JUDGMENT
In its motion, Third-Party Plaintiff Celotex moves for judgment in its favor on the contractual obligation of Third-Party Defendant Ziegler to pay Celotex all of its reasonable expenses and reasonable attorneys' fees in defending Plaintiffs' claims. (Doc. 166 at 1.)
Celotex argues that judgment in its favor is appropriate for the following reasons: 1) the jury rendered a verdict in favor of Celotex on all of Plaintiff's claims, (Doc. 167 at 5); 2) the "Court already decided the only issue to be decided at trial regarding Ziegler was the extent to which Celotex was (or was not) responsible for Plaintiff's injuries," (id. at 7); 3) "Celotex was not required to introduce evidence to the jury of its costs and expenses," (id.); and 4) "the jury's verdict exonerated Celotex," (id. at 8.)
Having discussed all of these arguments in the context of our consideration of Ziegler's motion, we need not repeat our analysis here. We agree that the jury rendered a verdict in favor of Celotex on Plaintiff's claims, Celotex properly framed the trial issue regarding Ziegler, Celotex was not required to present fees and costs evidence to the jury, and the jury determined that Celotex did not cause Plaintiff's injuries. Therefore, pursuant to the terms of the indemnity provision — whereby Ziegler would only be relieved of its duty to indemnify Celotex if Celotex was solely responsible for Plaintiff's injuries — Celotex is entitled to judgment in its favor because the jury did not find it solely responsible. On this basis we grant Celotex's cross-motion for judgment, (Doc. 166).
C. METHOD FOR QUANTIFICATION OF RECOVERABLE FEES AND COSTS
We reject Ziegler's requests that the amount of fees and costs recoverable be determined by the original trial jurors or a bench trial. Rather, we will require Celotex to present its claim for fees and costs to the Court, allow Ziegler an appropriate period of time to respond to the request and Celotex an appropriate period of time to reply to Ziegler's response. After we review the submitted documents, we will set a date for a hearing if the Court finds it is necessary.
III. Conclusion
For the reasons discussed above, Ziegler's motion for entry of judgment in its favor, (Doc. 161), is denied and Celotex's cross-motion for judgment, (Doc. 166), is granted. An appropriate Order follows.
ORDER
AND NOW, THIS 2nd DAY OF NOVEMBER 2004, FOR THE REASONS SET FORTH IN THE ACCOMPANYING MEMORANDUM IT IS HEREBY ORDERED THAT:
1. "Motion of Third Party Defendant Ziegler Chemical Mineral Corp. for Entry of Judgment in its Favor and Against Third Party Plaintiff Celotex Corporation," (Doc. 161), is DENIED;
2. "Cross-Motion of Third-Party Plaintiff Celotex Corporation for Judgment Against Third-Party Defendant Ziegler Chemical Mineral Corp.," (Doc. 166), is GRANTED;
3. Celotex is to submit its claim for fees and costs to the Court on or before November 15, 2004;
4. Ziegler is to file a statement or brief regarding the reasonableness of Celotex's fees and costs if it intends to do so within ten days of the date of Celotex's submission to the Court;
5. Celotex is to file a reply brief if it intends to do so within five days of the date of Ziegler's filing;
6. Following review of the parties' submissions, the Court will determine if a hearing is necessary;
7. The Clerk of Court is directed to mark the docket.