Ratti v. Wheeling Pittsburgh Steel Corp.
2000 Pa. Super. LEXIS 2107, 2000 Pa. Super. 239, 758 A.2d 695 (2000)
Premium Feature
Subscribe to Lexplug to listen to the Case Podcast.
Rule of Law:
An indemnification agreement will not be construed to cover losses caused by an indemnitee's own gross negligence unless the intent to do so is expressed in clear and unequivocal language. The general term 'negligence' in such an agreement is insufficient to encompass the more egregious conduct of gross negligence.
Facts:
- Wheeling-Pittsburgh Steel Corporation (Wheeling-Pitt) hired P.J. Dick Contracting, Inc. (P.J. Dick) as the general contractor for an extensive repair project at its plant.
- The contract between Wheeling-Pitt and P.J. Dick contained an indemnification clause drafted by Wheeling-Pitt.
- P.J. Dick subcontracted Mendel Steel and Ornamental Iron Company (Mendel Steel) to perform welding work on a saturator vessel.
- An employee of Wheeling-Pitt turned off a steam purge system, a safety feature required before welding could begin on the vessel.
- A Wheeling-Pitt foreman then issued a Burning/Welding Permit, certifying that the steam purge was on, despite knowing it had been turned off.
- While a Mendel Steel employee, John Ratti, Jr., was welding on the vessel, it exploded, causing him serious injuries.
Procedural Posture:
- John Ratti, Jr. and his wife sued Wheeling-Pitt in a state trial court for personal injuries.
- Wheeling-Pitt filed a complaint to join P.J. Dick, Mendel Steel, and Kaiser as additional defendants, seeking contractual indemnification.
- P.J. Dick filed a cross-claim against Mendel Steel for indemnification.
- Wheeling-Pitt settled the Rattis' claim for $1,150,000 and continued its indemnification action against the other defendants.
- The trial was bifurcated. In Phase I, a jury found Wheeling-Pitt 99% grossly negligent and P.J. Dick 1% ordinarily negligent.
- In Phase II, a non-jury trial, the trial court found that P.J. Dick was contractually required to indemnify Wheeling-Pitt for the full settlement amount.
- The trial court denied all post-trial motions filed by P.J. Dick and Wheeling-Pitt.
- P.J. Dick, the appellant, now appeals the trial court's judgment to the intermediate appellate court.
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
Does an indemnification agreement that requires a contractor to indemnify a property owner for losses arising from the owner's 'negligence' also require indemnification for losses caused by the owner's gross negligence when the term 'gross negligence' is not specified in the agreement?
Opinions:
Majority - Orie Melvin, J.
No. An indemnification agreement that explicitly covers losses due to an indemnitee's 'negligence' does not require indemnification for losses caused by the indemnitee's gross negligence unless the contract puts that intent beyond doubt by express stipulation. Given the requirement for specificity in indemnity clauses and the substantive difference between ordinary and gross negligence, the court will not read the term 'gross negligence' into a provision where it is not specifically manifested. Courts must strictly construe such agreements against the drafter, Wheeling-Pitt. The law recognizes that gross negligence is more egregious conduct than ordinary negligence, described as flagrant, a gross deviation from the standard of care, or the want of even scant care. Because the liability for indemnifying another for their own gross negligence is so hazardous and extraordinary, the indemnitor's intent to assume that specific risk must be expressed in words of absolute certainty. Therefore, Wheeling-Pitt's use of the general term 'negligence' is insufficient to shift the risk of loss for its own grossly negligent actions to P.J. Dick.
Analysis:
This decision reinforces the principle of strict construction for indemnity clauses, particularly when an indemnitee seeks coverage for its own fault. By creating a clear distinction between 'negligence' and 'gross negligence' for contractual purposes, the court significantly raises the drafting standard required to indemnify a party for its most egregious, non-intentional conduct. This holding protects indemnitors from assuming extraordinary risks they did not explicitly agree to take. Going forward, parties seeking indemnification for their own gross negligence must use express and specific language, such as the term 'gross negligence' itself, to ensure the provision's enforceability.
