|
|
CONTRACTOR’S INDEMNITY TO OWNER CONSTRUED BROADLY,
SO AS TO INCLUDE AFTER-CREATED STATUTORY LIABILITY
Jack W. Plowman*
A contractor’s undertaking to
indemnify an owner was construed broadly so as to extend to a
statutory liability that did not come in existence until after the
contract was performed, in County of Delaware v. J.P. Mascaro &
Sons, Inc., 2003 Pa. Super. 284.
The Superior Court, in an opinion by retired Supreme Court Justice
Montemuro, affirmed a lower court decision awarding judgment in favor
of Delaware County. The judgment in the amount of $305,910.00 was for
a liability arising under an agreement by the contractor, Mascaro, to
indemnify the County against liability incurred in actions brought
against it by the state and federal governments for alleged violations
of the Comprehensive Environmental Response, Compensation and
Liability Act, 42 U.S.C.A. §§9601, et seq. (CERCLA). What was
particularly unusual about the liability imposed was that CERCLA was
not enacted until after the contract had been performed.
Mascaro entered into a contract with the County whereby it was to haul
and dispose of solid waste generated by an incinerator that had been
operated by the County for county residents and businesses. The term
of Mascaro’s contract was for the year 1976. Mascaro in turn entered
into an agreement with a New Jersey landfill approved by the County.
It appeared that Mascaro simply delivered the waste to the landfill
and relied upon the landfill operator to properly dispose of the waste
at the site. The landfill owner was sued by the New Jersey Department
of Environmental Protection, to enforce CERCLA. The landfill owner
joined the County as an additional defendant. The County ultimately
settled, Mascaro having refused to indemnify it.
Mascaro took the position that it had no obligation to indemnify the
County because CERCLA was not mentioned in the agreement. The Court
rejected this contention, pointing to the broad contractual
indemnification provision:
“[Mascaro] shall defend, indemnify and save harmless [Delaware County]
from and against all suits for claims that may be based on any alleged
injury (including death) to any person or property that may be alleged
to have occurred in the course of the performance of this contract.”
(Emphasis added)
Mascaro, according to the Court, had the responsibility of choosing
the particular location for disposal. It was the alleged improper
waste dumping which gave rise to the liability. In holding that
Mascaro’s obligation to indemnify the County included CERCLA
liability, the trial and Superior Courts ignored the qualification
emphasized in the preceding quotation, namely that the indemnification
extended to injury or death “to any person or property” and not to all
claims. Nothing in the reported decision indicated that any of the
litigation against the County was for injury to any person or
property. Be that as it may, the Court unhesitatingly held that the
indemnification clause extended to a CERCLA liability, although the
contract was executed prior to the enactment of CERCLA, noting that
other jurisdictions have so held.
Mascaro questioned the reasonableness of the County’s
settlement, particularly in view of the County’s failure to join other
municipalities that had contributed to the problem. The County
justified its not doing so because it was desirous of resolving the
matter quickly, “avoiding further possible litigation with those
municipalities.” There would appear to be no reason why Mascaro could
not have joined those municipalities as additional defendants in the
litigation commenced by the County to recover the indemnity. The
Court held that Mascaro’s decision not to defend the County “was a
decision made at its own peril.” Ordinarily the Courts construe
contracts of indemnity provisions strictly. See May 2002 and June
2002 Construction News, copies of which are available on request.
*Of counsel, Bentz Law Firm, P.C.; fellow, American
College of Trial Lawyers; member, American Bar Association Forum on
the Construction Industry; member, American Bar Association Fidelity
and Surety Committee; Member, National Bond Claims Association;
Adjunct Professor, Emeritus, Duquesne University School of Law,
Author, Pennsylvania Mechanics’ Liens (Professional Education Systems,
1989); Author, with K.W. Lee, Construction Contracting for Public
Entities in Pennsylvania (Lorman Education Services, 2002).
|
|