PAUL R. CHERRY, Magistrate Judge.
This matter is before the Court on Plaintiffs' Motion for Summary Judgment [DE 142], filed by Plaintiffs ArcelorMittal Indiana Harbor LLC and ArcelorMittal USA LLC (collectively "ArcelorMittal") on September 28, 2017. Defendant Amex Nooter, Inc. ("Amex Nooter") filed a response on October 26, 2017, and ArcelorMittal filed a reply on November 9, 2017.
On April 3, 2013, a fire occurred at Blast Furnace No. 3, a part of ArcelorMittal's Indiana Harbor facility, while Amex Nooter employees Korrie Griffith and Robert Swimline were rebuilding the excess gas bleeder pilot burner cabinets pursuant to a contract between ArcelorMittal and Amex Nooter. As Griffith and Swimline were working, natural gas was released from the system and ignited. ArcelorMittal seeks from Amex Nooter approximately $3.2 million in property damage and excess fuel costs as a result of the fire. ArcelorMittal also seeks reimbursement by Amex Nooter for the cost of ArcelorMittal's defense in litigation brought against it by Robert Swimline. In the instant motion, ArcelorMittal seeks summary judgment in its favor on all three claims in its Second Amended Complaint. For the reasons set forth below, the Court denies ArcelorMittal's Motion for Summary Judgment.
On May 15, 2015, Plaintiff ArcelorMittal Indiana Harbor LLC ("ArcelorMittal Indiana Harbor") filed a Complaint against Defendant Amex Nooter, LLC. On December 15, 2015, an Amended Complaint was filed by ArcelorMittal Indiana Harbor. On September 23, 2016, a Second Amended Complaint was filed by ArcelorMittal Indiana Harbor and ArcelorMittal USA LLC ("ArcelorMittal USA") (collectively "ArcelorMittal").
The Second Amended Complaint brings three counts against Amex Nooter. Count I, brought by ArcelorMittal Indiana Harbor only, alleges a claim of negligence based on a breach of Amex Nooter's common law duty to conduct its work in a reasonably safe manner to avoid damage to ArcelorMittal Indiana Harbor's property in relation to the April 3, 2013 fire and resulting damage.
Count II, brought by both ArcelorMittal Indiana Harbor and ArcelorMittal USA, alleges a claim of "Defense" under Sections 22 and 23 of the General Terms and Conditions of the AMUSA-102 Master Agreement, alleging that Amex Nooter has refused and/or failed to defend ArcelorMittal in the lawsuit brought by Robert Swimline against ArcelorMittal.
Count III, brought by ArcelorMittal Indiana Harbor only, alleges a claim of breach of contract for, among other things,
Amex Nooter filed an Answer on October 14, 2016.
On December 29, 2017, the Court issued an Opinion and Order ruling on six evidentiary motions filed by the parties, including Amex Nooter's Motion to Strike Hearsay Statements and ArcelorMittal's motions to exclude the opinion testimony of Amex Nooter's expert witnesses Ross Smith and Richard Parry, which are relevant to the instant Motion for Summary Judgment.
The parties filed forms of consent to have this case assigned to a United States Magistrate Judge to conduct all further proceedings and to order the entry of a final judgment in this case. Therefore, this Court has jurisdiction to decide this case pursuant to 28 U.S.C. § 636(c).
The Federal Rules of Civil Procedure require that a motion for summary judgment be granted "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). Rule 56 "mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). "Summary judgment is appropriate when no material fact is disputed and the moving parties are entitled to judgment as a matter of law, meaning that no reasonable jury could find for the other party based on the evidence in the record." Carman v. Tinkes, 762 F.3d 565, 566 (7th Cir. 2014).
A party seeking summary judgment bears the initial responsibility of informing the court of the basis for its motion and identifying those portions of the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, that it believes demonstrate the absence of a genuine issue of material fact. See Celotex, 477 U.S. at 323; Fed. R. Civ. P. 56 (a), (c). When the party moving for summary judgment bears the burden of proof at trial, such as ArcelorMittal in this case, the moving party must identify the elements of the claim, cite facts supported by evidence that satisfy the elements, and "demonstrate why the record is so onesided as to rule out the prospect of a finding in favor of the non-movant on the claim." Baskin v. City of Fort Wayne, No. 1:16-CV-180, 2017 WL 4799898, at *5 (N.D. Ind. Oct. 20, 2017) (citing Reserve Supply Corp. v. Owens-Corning Fiberglass Corp., 971 F.2d 37, 42 (7th Cir. 1992); Celotex, 447 U.S. at 331)); see Celotex, 447 U.S. at 331 ("If the moving party will bear the burden of persuasion at trial, that party must support its motion with credible evidence . . . that would entitle it to a directed verdict if not controverted at trial.") (Brennan, J. dissenting).
"Once the moving party puts forth evidence showing the absence of a genuine dispute of material fact, the burden shifts to the non-moving party to provide evidence of specific facts creating a genuine dispute." Carroll v. Lynch, 698 F.3d 561, 564 (7th Cir. 2012). The non-moving party cannot resist the motion and withstand summary judgment by merely resting on its pleadings. See Fed. R. Civ. P. 56(c)(1), (e); Flint v. City of Belvidere, 791 F.3d 764, 769 (7th Cir. 2015) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)). The nonmoving party must "do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986) (quoting Fed. R. Civ. P. 56(e) (1986)). Rule 56(e) provides that "[i]f a party fails to properly support an assertion of fact or fails to properly address another party's assertion of fact as required by Rule 56(c), the court may . . . consider the fact undisputed for purposes of the motion [or] grant summary judgment if the motion and supporting materials—including the facts considered undisputed—show that the movant is entitled to it. . . ." Fed. R. Civ. P. 56(e); see also Anderson, 477 U.S. at 248-50.
In viewing the facts presented on a motion for summary judgment, a court must construe all facts in a light most favorable to the non-moving party and draw all legitimate inferences in favor of that party. See Anderson, 477 U.S. at 255; McDowell v. Vill. of Lansing, 763 F.3d 762, 764, 765 (7th Cir. 2014); Srail v. Vill. of Lisle, 588 F.3d 940, 948 (7th Cir. 2009). A court's role is not to evaluate the weight of the evidence, to judge the credibility of witnesses, or to determine the truth of the matter, but instead to determine whether there is a genuine issue of triable fact. See Anderson, 477 U.S. at 249-50.
ArcelorMittal Indiana Harbor is a limited liability company whose sole member is ArcelorMittal USA. (ECF 143-1, ¶ 3). Amex Nooter is in the business of industrial piping and mainly employs pipefitters. (ECF 143-6, pp. 8:8-9:3).
On August 19, 2011, ArcelorMittal USA entered into a "Contractor Work Master Agreement (AMUSA-102) for ArcelorMittal Companies in the USA (June 2011)" (hereinafter "AMUSA-102 Master Agreement") with Amex Nooter. (ECF 143-2, Execution Sheet). Pursuant to the "Execution Sheet" of the AMUSA-102 Master Agreement, Amex Nooter is the "Contractor" and ArcelorMittal USA is the "Owner Signatory." Id.
Attached to the AMUSA-102 Master Agreement Execution Sheet is the "AMUSA-102 General Terms and Conditions for Contractor Work for ArcelorMittal Companies in the USA (June 2011)" (hereinafter "AMUSA-102 General Terms and Conditions"). See (ECF 143-2).
The AMUSA-102 General Terms and Conditions defines "Owner Companies" as "Owner Signatory and any entity that is organized under the laws of a state in the United States and is directly or indirectly controlled by, or under control of ArcelorMittal SA." (ECF 143-2, General Terms and Conditions § 1(xi)). "Owner" is defined as the "Owner Company issuing Purchase Order applicable to this Contractor Work Contract." Id. at § 1(x). "Owner's Indemnitees" is defined as "Owner, all Owner Companies and each of their respective directors, officers, employees, and agents." Id. at § 1(xiv).
The AMUSA-102 Master Agreement provides that an "Owner" may issue a Purchase Order to the Contractor, which is Amex Nooter. (ECF 143-2, Execution Sheet ¶ 2). Purchase Orders Nos. N489391 and N489392 ("Purchase Orders") were issued to Amex Nooter by ArcelorMittal Indiana Harbor on March 12, 2013. (ECF 143-3). The Purchase Orders, one for Blast Furnace No. 3 and one for Blast Furnace No. 4, contain the nature and scope of the services Amex Nooter was to provide to ArcelorMittal Indiana Harbor, namely rebuilding the excess gas bleeder pilot burner cabinets at each of the Blast Furnaces at ArcelorMittal Indiana Harbor's West facility in East Chicago, Indiana. Id. The "Description" in each of the Purchase Orders provides: "Amex (no sub) to provide supervision, labor, and materials to rebuild [H3/H4] excess gas bleeder pilot burner cabinets. Cabinets to be rebuilt per the drawings submitted to Amex. The demo and installation of the new piping and valving to be done on the 3rd of April. Job to be t&m." Id. at pp. 2, 4.
The AMUSA-102 Master Agreement provides that Amex Nooter may accept a Purchase Order "either by express acceptance thereof or by beginning performance of the Contractor Work specified therein." (ECF 143-2, Execution Sheet ¶ 3). The same paragraph also provides:
Id. Amex Nooter's acceptance of the Purchase Orders was an acknowledgment by Amex Nooter that it read, understood, and accepted all terms, conditions, and provisions in each of those documents that make up the Contractor Work Contract. Id.
Regarding any inconsistencies or discrepancies that arise, the AMUSA-102 Master Agreement provides:
Id. at ¶ 5.
The AMUSA-102 General Terms and Conditions provides:
(ECF 143-2, General Terms and Conditions § 2(a)).
Both Purchase Orders include this statement: "AMUSA-100 Terms and Conditions will apply to this Purchase Order." (ECF 143-3, pp. 2, 4).
Under the AMUSA-102 General Terms and Conditions, Amex Nooter owed certain obligations to the Owner, ArcelorMittal Indiana Harbor, including the following provisions identified by ArcelorMittal in the Motion for Summary Judgment:
Section 22 of the AMUSA-102 General Terms and Conditions, titled "Indemnification, Damages, and Liabilities," provides:
(ECF 143-2, General Terms and Conditions § 22(a)).
The following paragraph of the AMUSA-102 General Terms and Conditions provides:
Id. at § 22(b). "Claims" is defined as:
Id. at § 1(iii).
Frank Peters, the Senior Maintenance Planner for ArcelorMittal Indiana Harbor, was responsible for planning major outages, writing contractor scopes of work, bidding out projects, and handling daily maintenance planning for Blast Furnaces Nos. 3 and 4. (ECF 143-4, pp. 10:19-11:4). In early March 2013, he wrote the scope of work for Amex Nooter to rebuild the excess gas bleeder pilot burner cabinets at Blast Furnaces Nos. 3 and 4. Id. at pp. 12:13-13:2. Prior to writing this scope of work, Frank Peters spoke with Ray Smith, Amex Nooter's Superintendent, and explained the nature and scope of the work Amex Nooter was to perform, which was "to replace the existing piping, put new valves in, new gauges, and it was pretty clear-cut what had to be done." Id. at pp. 14:14-15:11.
Korrie Griffith was an employee of Amex Nooter from approximately March 2012 to September 2013 as a welder pipefitter. (ECF 143-7, pp. 9:23-10:24, 11:12-16). Erik Olson, an Amex Nooter foreman, was present at Blast Furnace No. 3 on the date of the fire and was the supervisor of Korrie Griffith and Robert Swimline. (ECF 143-5, pp. 23:16-21, 30:8-33:4). Prior to Griffith and Swimline beginning work at the cabinets, Olson gave them instructions on the work they were to perform: replacing the bottom half of the piping inside the excess gas bleeder pilot burner cabinet at Blast Furnace No. 3. Id. at pp. 30:8-33:11.
James Stalley, Amex Nooter's Safety Director, testified that Amex Nooter's supervisors and foremen were responsible for ensuring Amex Nooter's employees performed their work in a safe manner and that no unsafe conditions existed at their worksite. (ECF 143-6, pp. 98:21-99:8). As an Amex Nooter supervisor, Erik Olson was also required to continually monitor the safety performance of all Amex Nooter employees under his charge, including Robert Swimline and Korrie Griffith. Id. at p. 99:13-22. Amex Nooter employees, including Swimline and Griffith, were responsible for reporting hazardous conditions on the worksite to Amex Nooter supervisors. Id. at pp.101:16-102:6.
Erik Olson met with Frank Peters prior to Amex Nooter performing any work on the cabinets to discuss Amex Nooter's work for that day. (ECF 143-5, pp. 55:20-56:20). Olson testified that it was the responsibility of Amex Nooter and ArcelorMittal Indiana Harbor to identify and rectify hazards. Id. at 57:15-23. Olson agreed that it was Amex Nooter that performed an initial survey of the work site to identify any hazardous conditions. Id. at pp. 57:24-58:5. Olson walked the gas line with Frank Peters and received instructions on what valves needed to be closed, locked out, and isolated. Id. at pp. 65:23-66:19; 76:21-78:5.
Olson testified he specifically told Swimline and Griffith to "leave this valve alone," referring to the gas valve that came off in the incident. Id. at pp. 31:4-32:1. Griffith testified that Olson told him to "try not to mess with the valve" and told him that ArcelorMittal Indiana Harbor had told Olson that ArcelorMittal had not shut off the gas:
(ECF 143-7, p. 131:8-14). Olson testified that Swimline and Griffith did not have any questions about Olson's instructions on how to perform the job or on not touching the gas valve attached to the live gas line leading into the cabinet. (ECF 143-5, pp. 29:11-34:2). Eric Frahm, an Amex Nooter foreman, testified that he checked the bleeder to be sure that there was no gas past the valve. (ECF 143-9, p. 73:17-24). When asked if he had done a visual inspection of the valve that Griffith removed, Frahm testified, "You would hear a hundred pounds screaming. If there was a leak it will be screaming like nobody's business." (ECF 143-9, p. 74:1-17).
Korrie Griffith testified that he and Robert Swimline were the only two individuals who witnessed the explosion on April 3, 2013. (ECF 143-7, p. 20:12-16). He then gave the following deposition testimony regarding the gas valve.
Id. at pp. 43:23-45:23.
Id. at p. 46:4-21.
Id. at p. 47:7-20; see also id. at p. 61:5-12 (smelling gas).
Id. at p. 48:3-4, 8-9; see also id. at pp. 86:24-87:20 (double block and bleed).
Id. at p. 50:7-17.
Id. at pp. 51:12-52:1.
Id. at p. 56:8-16.
Id. at p. 60:14-23.
Id. at pp. 65:7-66:16.
Id. at p. 99:11-17.
Id. at pp. 73:19-74:1.
Id. at p. 74:4-6.
Id. at pp. 96:20-97:19.
Id. at pp. 102:17-104:18. Korrie testified that he had previously changed out live valves for other employers. Id. at pp. 104:19-105:13.
Amex Nooter's counsel then asked:
Id. at pp. 105:24-107:2.
Id. at pp. 109:21-110:15.
As soon as Griffith removed the valve, gas quickly started blowing through the valve "pretty strong" and ignited into a "big ball of fire." Id. at pp. 45:11-13,103:23-104:5.
Griffith testified that, on the day of the incident, he did not have any interaction with anyone from ArcelorMittal Indiana Harbor and that no one from ArcelorMittal Indiana Harbor told him where to go, what to do, or how to do it. Id. at pp. 136:4-10. He also testified that ArcelorMittal Indiana Harbor did not give him any specific training on how to do pipefitter work and never trained him to change out a valve while gas was still running to the point of the valve. Id. at p. 155:8-22.
When shown a photograph of the salamander heater that was present at the worksite but hidden behind a wall, Griffith testified that he did not recognize the salamander heater. Id. at p. 112:5-24. He testified that he did not know that there was a heater behind the corrugated steel wall at the cabinet work site or that the heater was on. Id. at p. 114:3-12. When shown a picture of a valve and pipe marked as Bates Arcelor 00318, Griffith testified that he did not think that the valve in the picture was the valve involved in the incident. Id. at pp. 121:20-122:23.
Robert Swimline and Eric Frahm testified that changing a gas valve out under pressure was a dangerous action.
Robert Swimline testified:
(ECF 143-8, pp. 76:10-77:4).
Eric Frahm testified:
(ECF 143-9, pp. 32:22-33:8).
Amex Nooter's Safety Director Jim Stalley testified that he interviewed Korrie Griffith after the incident:
(ECF 143-6, pp. 175:17-176:6; 193:4-194:3; 212:14-213:2).
Following the explosion, Amex Nooter foreman Eric Frahm testified that he heard Korrie Griffith state the following:
(ECF 143-9, pp. 18:3-17, 42:16-43:10).
Amex Nooter offers two expert witness opinions in response to the Motion for Summary Judgment.
Health and industrial safety professional Ross V. Smith opines on the customs and practices of the steel industry and ArcelorMittal's failure to provide "complete and correct information regarding the cabinet gas system prior to work being performed." (ECF 159-2, p. 6, ¶ 1). Smith notes, for example, that information regarding the amount of pressure of the line on which Griffith was working on April 3, 2013 was not marked. Id. Smith opines on several of ArcelorMittal's other failures to provide a safe work environment:
Mechanical engineer and process management expert Richard W. Parry opines on the root cause of the April 3, 2013 fire and places the blame on ArcelorMittal's conduct, acts, and omissions. (ECF 159-1). Parry concludes that the "root cause of the accident was the failure of ArcelorMittal to install and maintain a safe/functional gas supply system." (ECF 159-1, p. 5, ¶ 1). Specifically, Parry opines:
Parry opines that, in the pre-planning phase, the salamander heater "was missed by ArcelorMittal. It should have been shut-off and moved to storage a month before the scheduled outage." Id. at p. 7, ¶ 2. Parry opines that the failure to label and convey the magnitude of the high pressure gas line within the cabinets was a contributing factor to the incident and that it was ArcelorMittal's responsibility to "convey the magnitude of the energy source to the tradesman." Id. at p. 8, ¶ 3. Finally, Parry opines that the defective shutoff valves delayed fire suppression. Id. at p. 8, ¶ 4.
On December 10, 2013, ArcelorMittal USA tendered its defense generally to Amex Nooter for the April 3, 2013 fire: "Pursuant to the contract, specifically Sections 22 (Indemnification, Damages and Liabilities) and 23 (Risk of Loss; Insurance), ArcelorMittal tenders the defense and indemnity of this matter to Amex Nooter." (ECF 143-14, p. 2). The letter references the contract between Amex Nooter and ArcelorMittal USA. There is no reference in this letter to litigation by Robert Swimline or any other litigation brought against ArcelorMittal. There is no reference in the letter to ArcelorMittal Indiana Harbor.
On January 9, 2014, ArcelorMittal USA issued a demand letter to Amex Nooter seeking full reimbursement of the expenses it incurred as a result of the damage to the Indiana Harbor facility from the April 3, 2013 fire. (ECF 143-13). The letter references Section 22 of the AMUSA-102 Master Agreement. Id. at p. 3. There is no reference in this letter to litigation by Robert Swimline or any other litigation brought against ArcelorMittal. There is no reference in the letter to ArcelorMittal Indiana Harbor.
On August 1, 2014, Robert Swimline filed a complaint against ArcelorMittal Indiana Harbor, only, in the Lake County, Indiana, Circuit Court, for his injuries arising out of the April 3, 2013 fire. (ECF 159-11).
On August 28, 2014, "ArcelorMittal" "renewed" its December 10, 2013 tender of defense. (ECF 143-16, p. 2) (claims administrator acceptance of defense referencing the August 28, 2014 renewed tender of defense). ArcelorMittal has not provided a copy of the August 28, 2014 renewed tender of defense.
The Court takes judicial notice that ArcelorMittal Indiana Harbor removed Swimline's complaint to this Court on September 19, 2014, that on April 2, 2015, the Court granted Swimline leave to file an Amended Complaint to add as defendants ArcelorMittal USA, Frank Peters, and Amex Nooter, and that, on April 2, 2015, this Court remanded the case to state court based on the joinder of Frank Peters, whose addition as a party defendant destroyed complete diversity of citizenship juridiction. See Cause No. 2:14-CV-343-RL-PRC.
On April 20, 2015, Amex Nooter and its insurer accepted ArcelorMittal USA's tender of defense with respect to the claim by Robert Swimline arising out of the April 3, 2013 loss. (ECF 143-16).
On January 22, 2016, counsel for ArcelorMittal wrote a two-sentence email letter: "We still haven't received payment for defense costs incurred from date of tender to acceptance. Can you please check on the status of payment and advise as to when we can expect payment." (ECF 143-17).
Plaintiffs ArcelorMittal Indiana Harbor and ArcelorMittal USA seek summary judgment in their favor on the claims in Counts I, II, and III of the Second Amended Complaint. The Court considers each count in turn.
Count I for negligence is brought by ArcelorMittal Indiana Harbor only. In the instant motion, ArcelorMittal Indiana Harbor seeks summary judgment in its favor on its negligence claim, arguing that it is undisputed that Amex Nooter caused the April 3, 2013 fire and ArcelorMittal Indiana Harbor's damages and that Korrie Griffith's actions were an unforeseeable intervening, superseding cause.
Despite having the burden of proof at trial, ArcelorMittal Indiana Harbor does not set out the elements of a negligence claim in its motion or its brief. To prevail on a claim of negligence under Indiana law, ArcelorMittal Indiana Harbor must prove: "(1) a duty owed by the defendant to the plaintiff, (2) a breach of that duty; and (3) an injury to the plaintiff proximately caused by the breach." Walters v. JS Aviation, Inc., 81 N.E.3d 1160, 1163 (Ind. Ct. App. 2017) (citing Brown v. Buchmeier, 994 N.E.2d 291, 294 (Ind. Ct. App. 2013)). "Summary judgment is generally inappropriate in negligence cases because issues of contributory negligence, causation, and reasonable care are fact sensitive and more appropriately left for the trier of fact." Id. (citing Coffman v. PSI Energy, Inc., 815 N.E.2d 522, 527 (Ind. Ct. App. 2004)).
First, ArcelorMittal Indiana Harbor does not acknowledge in either its motion or brief that duty is an element of its negligence claim, does not cite any law regarding duty, and does not identify the duty Amex Nooter owed to ArcelorMittal Indiana Harbor. Because ArcelorMittal Indiana Harbor has not met its burden on an element of its claim, the Court denies ArcelorMittal Indiana Harbor's Motion for Summary Judgment on its negligence claim in Count I. Whether a defendant owes a plaintiff a duty is a question of law to be decided by the Court, see Webb v. Jarvis, 575 N.E.2d 992, 995 (Ind. 1991); but ArcelorMittal Indiana Harbor has not offered any argument regarding duty for the Court's consideration.
Even if ArcelorMittal Indiana Harbor had identified the duty owed by Amex Nooter and assuming that Griffith's actions in removing the valve constituted a breach of that duty
Under the Act, "a broad range of potentially causative conduct initially may be considered by the fact-finder." Green v. Ford Motor Co., 942 N.E.2d 791, 795 (Ind. 2011). "`[T]he jury is first required to decide whether an actor's negligence was a proximate cause of the plaintiff's injury," and "[w]hether or not proximate cause exists is primarily a question of foreseeability." Estate of Pfafman v. Lancaster, 67 N.E.3d 1150, 1162 (Ind. Ct. App. 2017) (quoting Green, 942 N.E.2d at 795 (quoting Control Techniques, Inc. v. Johnson, 762 N.E.2d 104, 108 (Ind. 2002))). "The factfinder must evaluate whether the injury `is a natural and probable consequence, which in the light of the circumstances, should have been foreseen or anticipated.'" Id. (quoting Green, 942 N.E.2d at 795 (citations omitted)). However, "[t]he fact-finder may allocate as comparative fault only such fault that it finds to have been a proximate cause of the claimed injuries." Id. (quoting Green, 942 N.E.2d at 795). "Under comparative fault, the trier of fact can allocate fault to multiple contributing factors based on their relative factual causation, relative culpability, or some combination of both." Id. (quoting City of Gary ex. rel. King v. Smith & Wesson Corp., 801 N.E.2d 1222, 1244 (Ind. 2003)).
In its response to the instant motion, Amex Nooter offers facts regarding ArcelorMittal Indiana Harbor's own alleged negligent acts, omissions, and failures prior to Korrie Griffith's work on April 3, 2013, sufficient to create a genuine issue of material fact on causation for trial. Two of Amex Nooter's expert witnesses, Ross V. Smith and Richard W. Parry, have offered expert opinions that ArcelorMittal failed to provide a safe work environment and that ArcelorMittal's failures are the "root cause" of the fire. See Blasius v. Angel Auto., Inc., 839 F.3d 639 (7th Cir. 2016) (noting that expert witness testimony on causation may be used on a motion for summary judgment to help the party "get to the fact finder"). Smith opines, in part, that ArcelorMittal Indiana Harbor failed to provide complete and correct information regarding the cabinet gas system prior to the work being performed, did not provide Amex Nooter with an effective Energy Control Procedure for the Cabinet, failed to operate the Excess Gas Bleeder Pilot Ignitor System in the West Cabinet in accordance with its own Operating/Instruction Manual, and failed to make Amex Nooter aware of hazardous conditions associated with the rebuild of the Cabinet. Smith also opines that ArcelorMittal Indiana Harbor's Energy Control Procedure to lock out the involved excess gas bleeder cabinet took precedence over any lock out/tag out program of Amex Nooter. Parry opines that ArcelorMittal Indiana Harbor is at fault for the April 3, 2013 fire. Parry opines that ArcelorMittal Indiana Harbor should have installed a header shutoff valve in the feed line to the H3/H4 ignitor cabinet, failed to maintain its high pressure natural gas system such that several parts of the system's critical shutoff valves could not be closed or when closed did not effectively block the flow of the high pressure gas, and failed to follow the accepted good engineering practice of using a "double block and bleed" isolation methodology, which resulted in the failure of the single shutoff valve that was utilized. And, Parry opines that the salamander heater should have been shut-off and moved to storage by ArcelorMittal Indiana Harbor a month before the scheduled outage.
Viewing the facts in the light most favorable to Amex Nooter, a reasonable jury could find, based on Korrie Griffith's testimony and the opinions of Amex Nooter's expert witnesses, that Griffith only removed the valve because it had come loose during the repairs inside the cabinet and was leaking and that he was trying to repair it and, thus, was not negligent, that ArcelorMittal Indiana Harbor was negligent by failing to lock out the pipe upstream from the valve, that ArcelorMittal Indiana Harbor was negligent by failing to remove the salamander heater from the worksite, and that a foreseeable consequence of a failure to properly isolate a gas line under repair is a fire. Alternatively, a reasonable jury could find that each party was negligent but that Griffith's action of removing the valve would not have resulted in the fire if ArcelorMittal Indiana Harbor had not been negligent in relation to the lock out of the pipe upstream from the valve and/or in failing to remove the functioning salamander heater. A reasonable jury could find it foreseeable to ArcelorMittal Indiana Harbor that natural gas could leak from a valve during a repair to a natural gas line for any number of reasons, ranging from inadvertent damage as a result of other work on the same pipe (such as Griffith's work inside the Cabinet) to pipefitter error, and cause a fire.
In anticipation that Amex Nooter would assert its affirmative defense of comparative fault, ArcelorMittal Indiana Harbor argues in its Motion for Summary Judgment that "[a]ny alleged action/inaction on the part of AM Indiana Harbor as a cause of the fire is . . . cut off by the intervening, superseding cause doctrine" because of Korrie Griffith's unforeseeable conduct of removing a valve from a live gas line. (ECF 143, pp. 15, 16). In support, ArcelorMittal Indiana Harbor cites four cases addressing intervening cause; however, none of the cases addresses contributory negligence. (ECF 143, pp. 16-17) (citing Arnold v. F.J. Hab., Inc., 745 N.E.2d 912, 917 (Ind. Ct. App. 2001); Straley v. Kimberly, 687 N.E.2d 360 (Ind. Ct. App. 1997); Walker v. Jones, 511 N.E.2d 507, 508 (Ind. Ct. App. 1987); Crull v. Platt, 471 N.E.2d 1211, 1213 (Ind. Ct. App. 1984)). Rather, in all four cases, the alleged tortfeasor defendant invokes the theory of intervening cause to cut off the defendant's liability based on a third party actor's negligence. ArcelorMittal Indiana Harbor does not cite any case in which intervening cause is used by a plaintiff to counter a defendant's assertion of the affirmative defense of the plaintiff's contributory fault.
In 2002, in Control Techniques, Inc. v. Johnson, the Indiana Supreme Court recognized that the doctrine of superseding or intervening causation "has long been a part of Indiana common law" that provides that "when a negligent act or omission is followed by a subsequent negligent act or omission so remote in time that it breaks the chain of causation, the original wrongdoer is relieved of liability." 762 N.E.2d at 107 (citing Vernon v. Kroger Co., 712 N.E.2d 976, 981 (Ind. 1999)). The court defined a "subsequent act" as "`superseding' when the harm resulting from the original negligent act `could not have reasonably been foreseen by the original negligent actor.'" Id. The Indiana Supreme Court noted that, since the enactment of Indiana's Comparative Fault Act, the doctrine of superseding cause "has been viewed by some as subsumed in the Act, and by others as retaining continued viability." Id. at 108 (citing cases); see also Estate of Pfafman, 67 N.E.3d at 1157 (discussing this reasoning in Control Techniques, Inc., 762 N.E.2d at 108). The Indiana Supreme Court then concluded that
Control Techniques, Inc., 762 N.E.2d at 108.
The jury will have to evaluate whether the fire and resulting damage "is a natural and probable consequence, which in light of the circumstances, should have been foreseen or anticipated" by both ArcelorMittal Indiana Harbor and Amex Nooter. Estate of Pfafman, 67 N.E.3d at 1157. This is not a case in which the apportionment of fault becomes a question of law for the court, which occurs only when "there is no dispute in the evidence and the factfinder is able to come to only one logical conclusion." Robbins v. McCarthy, 581 N.E.2d 929, 934 (Ind. Ct. App. 1991), reh'g denied, trans. denied. Based on the foregoing, the Court denies ArcelorMittal Indiana Harbor's Motion for Summary Judgment on the claim for negligence in Count I.
Setting aside Count II to address last, the Court next considers Count III, which is brought only by ArcelorMittal Indiana Harbor for damages for Amex Nooter's breach of the Contractor Work Contract and specifically the breach of certain provisions of the AMUSA-102 General Terms and Conditions.
"The essential elements of a breach of contract claim are the existence of a contract, the defendant's breach thereof, and damages." Breeding v. Kye's Inc., 831 N.E.2d 188, 190-91 (Ind. Ct. App. 2005) (citing Fairfield Dev., Inc. v. Georgetown Woods Sr. Apartments Ltd. P'ship, 768 N.E.2d 463 (Ind. Ct. App. 2002), trans. denied).
As an initial matter, Amex Nooter argues that there is a genuine issue of material fact as to which "Terms and Conditions" apply to certain aspects of this lawsuit. Both parties appear to agree that the Contractor Work Contract is the operative contract. However, ArcelorMittal contends that the AMUSA-102 General Terms and Conditions govern, whereas Amex Nooter argues that the AMUSA-102 Master Contract was materially changed, modified, and/or superseded by Purchase Orders Nos. N489391 and N489392 ("Purchase Orders"), which provide that the AMUSA-100 Terms and Conditions govern.
When the language of a contract is unambiguous, its language is "conclusive upon the parties and upon the courts." Boonville Convalescent Ctr., Inc. v. Cloverleaf Healthcare Servs., 834 N.E.2d 1116, 1121 (Ind. Ct. App. 2005). In this case, the Contractor Work Contract is unambiguous; the AMUSA-102 General Terms and Conditions apply, not the AMUSA-100 Terms and Conditions.
The AMUSA-102 Master Agreement provides that the Contractor Work Contract consists of the Safety Handbook, the AMUSA-102 General Terms and Conditions, and the Purchase Orders. (ECF 143-2, Execution Sheet ¶ 3). Amex Nooter is correct that each of the Purchase Orders indicates that the "AMUSA-100 Terms and Conditions will apply to this Purchase Order." (ECF 143-3, pp. 2,4). However, the AMUSA-102 General Terms and Conditions provides that "[a]ny reference to Owner's or Contractor's general terms and conditions of purchase, sale or performance in any Purchase Order or any communication or document issued or delivered by Contractor (including, not limited to acknowledgments or invoices) shall not be operative, binding or effective." (ECF 143-2, General Terms and Conditions § 2(a)) (emphasis added). Thus, the reference to the AMUSA-100 Terms and Conditions in the Purchase Orders is not operative, binding, or effective.
Moreover, to the extent that this could be perceived as a discrepancy between the AMUSA-102 General Terms and Conditions and the Purchase Orders, both of which are parts of the Contractor Work Contract, the AMUSA-102 Master Agreement provides that, in the event of any inconsistencies or discrepancies among any parts of the Contractor Work Contract, the Safety Handbook takes precedence over the AMUSA-102 General Terms and Conditions, the AMUSA-102 General Terms and Conditions takes precedence over the Purchase Order, and the Purchase Order takes precedence over the Other Contractual Documents. (ECF 143-2, Execution Sheet ¶ 5) (emphasis added).
Also, the AMUSA-102 General Terms and Conditions provides that the Contractor Work Contract represents the entire agreement of the parties and is binding unless a modification is made in writing that both states that it amends the Contractor Work Contract and is signed by an authorized representative of both the Owner and the Contractor. (ECF 143-2, General Terms and Conditions § 2(a)). There is no such written document in this case. Therefore the AMUSA-100 Terms and Conditions are not in effect, and the AMUSA-102 General Terms and Conditions are controlling.
First, ArcelorMittal Indiana Harbor argues in its Motion for Summary Judgment that Amex Nooter breached the Contractor Work Contract, which required Amex Nooter to perform its work safely, when Korrie Griffith intentionally removed the valve from a live gas line, causing the fire. "A party breaches a contract when it fails to perform all of the obligations that it has agreed to undertake." Breeding, 831 N.E.2d at 191 (Ind. Ct. App. 2005) (citing Worrell v. WLT Corp., 653 N.E.2d 1054, 1057 (Ind. Ct. App. 1995), trans. denied). The contract provision regarding safety that ArcelorMittal Indiana Harbor references in support of this argument is AMUSA-102 General Terms and Conditions Section 3, which ArcelorMittal only references generally in a parenthetical citation. However, Section 3 contains eight subsections lettered (a) through (h), (ECF 143-2, General Terms and Conditions, § 3(a)-(h)); in its analysis, ArcelorMittal Indiana Harbor does not identify which provisions it is attempting to prove Amex Nooter breached. (ECF 143, pp. 19-22). In its Statement of Undisputed Material Facts, ArcelorMittal Indiana Harbor cites Sections 3(a), 3(b), and 3(c). Therefore, the Court considers those sections to be the basis of this breach of contract claim.
Section 3(a) of the AMUSA-102 General Terms and Conditions requires Amex Nooter to comply with the "safety, health and environmental rules specified by Applicable Laws or the Safety Handbook or other rules of Owner especially applicable at the Job Site" during the performance of the Contractor Work Contract. (ECF 143-2, § 3(b)). Section 3(b) provides that "[d]isregard for, or multiple or continued violations of, the Safety Handbook or any other applicable safety rules shall be deemed to be a material breach of this Contractor Work Contract." Id. at § 3(b). Section 3(c) requires Amex Nooter to "control access to the Job Site and be responsible for all persons and Work at the Job Site." Id. at § 3(c). Nowhere does ArcelorMittal Indiana Harbor explain how Griffith's action of removing the valve constituted disregard for the Safety Handbook or "applicable safety rules." ArcelorMittal Indiana Harbor does not reference either the Safety Handbook or "applicable safety rules" in its analysis. Therefore, ArcelorMittal Indiana Harbor has not met its burden of demonstrating that Amex Nooter breached Sections 3(a), 3(b), and 3(c) of the AMUSA-102 General Terms and Conditions. ArcelorMittal Indiana Harbor has not offered any other basis for its breach of contract claim based on Amex Nooter's performance of the work on April 3, 2013. The Court denies the Motion for Summary Judgment on the claim in Count III for breach of contract based on Section 3 of AMUSA-102 General Terms and Conditions. As a result, the Court does not reach ArcelorMittal Indiana Harbor's argument regarding causation. See (ECF 143, p. 20).
ArcelorMittal Indiana Harbor also argues in the Motion for Summary Judgment that Amex Nooter breached the Contractor Work Contract when it refused to reimburse ArcelorMittal Indiana Harbor for the $3,244,292.83 in property damage and costs ArcelorMittal Indiana Harbor sustained due to Amex Nooter's negligence, citing Section 22(a) of the AMUSA-102 General Terms and Conditions.
Section 22(a) of the AMUSA-102 provides
(ECF 143-2, General Terms and Conditions § 22(a)) (emphasis added). As explained above, Amex Nooter is the "Contractor," and ArcelorMittal Indiana Harbor is the "Owner Indemnitees."
The AMUSA-102 further defines "Claims" as:
Id. at § 1(iii).
ArcelorMittal Indiana Harbor argues in its brief that, under these provisions, its January 9, 2014 demand to Amex Nooter for reimbursement constitutes a claim under Section 22(a) of the AMUSA-102. (ECF 143, p. 21); (ECF 143-13) (January 9, 2014 demand letter). And, ArcelorMittal Indiana Harbor argues that, upon receipt of that letter, Amex Nooter was required to reimburse ArcelorMittal Indiana Harbor for the $3,244.292.83 in property damages and costs it sustained due to Amex Nooter's negligence.
Based on the plain language of these contract provisions, Amex Nooter is required to indemnify, defend, and save harmless ArcelorMittal Indiana Harbor from claims made by others against ArcelorMittal Indiana Harbor. For example, as discussed below in the context of Count II, Section 22(a) applies to ArcelorMittal USA's claim against Amex Nooter for defense in the lawsuit filed by Robert Swimline against ArcelorMittal USA. Section 22(a) does not apply to ArcelorMittal Indiana Harbor's own negligence claim brought directly against Amex Nooter. Thus, the Court denies ArcelorMittal's Motion for Summary Judgment on the claim in Count III for breach of contract based on Section 22 of the AMUSA-102 General Terms and Conditions.
Count II for breach of contract is brought by both ArcelorMittal Indiana Harbor and ArcelorMittal USA under Section 22(a) of the AMUSA-102 General Terms and Conditions, alleging that Amex Nooter failed to defend "ArcelorMittal" in the Robert Swimline litigation against "ArcelorMittal" that seeks compensation for injuries Swimline sustained on April 3, 2013.
As set out in the Material Facts and in the previous section, Section 22(a) of the AMUSA-102 General Terms and Conditions provides:
(ECF 143-2, General Terms and Conditions § 22(a)) (emphasis added). In the event of such a claim, the Contractor is required to immediately, upon demand, assume the defense of any action at law brought against the Owner's Indemnitees. Id. at § 22(b).
The AMUSA-102 further defines "Claims" as:
Id. at § 1(iii).
The "Contractor" is Amex Nooter. See (ECF 143-2, General Terms and Conditions § 1(viii); Execution Sheet). The "Owner's Indemnitees" is both ArcelorMittal Indiana Harbor and ArcelorMittal USA because (1) "Owner's Indemnitees" means "Owner" and "all Owner Companies," id. at § 1(xiv); (2) "`Owner' means the Owner Company issuing the Purchase Order applicable to this Contractor Work Contract," id. at § 1(x), and ArcelorMittal Indiana Harbor issued the Purchase Orders, (ECF 143-3); and (3) "Owner Companies" includes the "Owner Signatory," (ECF 143-2, General Terms and Conditions § 1(xi)), and ArcelorMittal USA is the "Owner Signatory," (ECF 143-2, Execution Sheet).
Therefore, Amex Nooter is required to "immediately, upon demand, assume the defense of any action at law brought against ArcelorMittal Indiana Harbor or ArcelorMittal USA." Indiana law provides that an "`insurer's duty to defend is broader than its duty to indemnify.'" Barnard, 25 N.E.3d at 760 (quoting Liberty Mut. Ins. Co. v. OSI Indus., Inc., 831 N.E.2d 192, 198 (Ind. Ct. App. 2005)). A court "will `determine the insurer's duty to defend from the allegations contained within the complaint and from those facts known or ascertainable by the insurer after reasonable investigation.'" Id. (same); see also Transamerica Ins. Servs. v. Kopko, 570 N.E.2d 1283, 1385 (Ind. 1991) ("The duty to defend is determined solely by the nature of the complaint.").
On December 10, 2013, ArcelorMittal USA tendered a general defense, without reference to any specific claim, action, suit, demand, arbitration, or cause of action. (ECF 143-14) (tender letter); see also (ECF 143-2, §§ 1(iii), 22(a)) (definition of "claim" and duty to defend provision). Both the Second Amended Complaint in this case, as well as the instant Motion for Summary Judgment, refer to ArcelorMittal Indiana Harbor and ArcelorMittal USA jointly as "ArcelorMittal" (just as this Court does). And, both documents represent that "ArcelorMittal" (meaning both ArcelorMittal Indiana Harbor and ArcelorMittal USA) tendered a defense on December 10, 2013. (ECF 116, pp. 1, 11 (¶ 59 )); (ECF 143, pp. 1, 23). However, the December 10, 2013 tender of defense letter is written on behalf of ArcelorMittal USA only.
On August 1, 2014, Robert Swimline filed a complaint against ArcelorMittal Indiana Harbor, only, in the Lake County, Indiana, Circuit Court, for his injuries arising out of the April 3, 2013 fire. The Second Amended Complaint in the instant case incorrectly represents that Swimline's August 1, 2014 state court complaint was brought against both ArcelorMittal Indiana Harbor and ArcelorMittal USA.
In the Second Amended Complaint in this case, there is a reference to a "renewed" tender of defense on August 28, 2014, by "ArcelorMittal." (ECF 116, ¶ 59). And, the April 20, 2015 letter from Amex Nooter's insurance company accepting the defense references the August 28, 2014 "renewed" tender of defense. (ECF 143-16). Although the August 28, 2014 renewed tender of defense itself is not attached as an exhibit to the instant motion, viewed in the light most favorable to Amex Nooter, the reasonable inference is that it was ArcelorMittal USA that "renewed" its December 10, 2013 tender of defense.
On September 19, 2014, ArcelorMittal Indiana Harbor removed Robert Swimline's state court complaint to this Court. On April 2, 2015, this Court granted Swimline's motion to amend the complaint to add defendants ArcelorMittal USA, Frank Peters, and Amex Nooter. Because the addition of Frank Peters destroyed diversity jurisdiction, the Court remanded the case to state court.
On April 20, 2015, Amex Nooter and its insurer accepted "ArcelorMittal's" tender demand in relation to the Swimline litigation, referencing the December 10, 2013 tender of defense and the August 28, 2014 renewed tender of defense. The heading of the letter identifies "Your Client" as "ArcelorMittal USA, LLC." (ECF 153-16).
On January 22, 2016, counsel for ArcelorMittal wrote a two-sentence email letter: "We still haven't received payment for defense costs incurred from date of tender to acceptance. Can you please check on the status of payment and advise as to when we can expect payment." (ECF 143-17).
In the instant Motion for Summary Judgment, "ArcelorMittal" seeks reimbursement of defense costs beginning on December 10, 2013, the original date of the general tender of defense by ArcelorMittal USA, through April 20, 2015, the date of acceptance of the tender of defense by Amex Nooter and its insurance company. First, ArcelorMittal Indiana Harbor has not demonstrated that it tendered a defense to Amex Nooter; the only evidence of record is that ArcelorMittal USA tendered its defense on December 10, 2013, and renewed the tender of defense on August 28, 2014. Therefore, the Court considers this claim only as to ArcelorMittal USA.
ArcelorMittal USA argues that, under Indiana law, it is entitled to reimbursement of defense costs beginning on the date of tender of the defense, citing Barnard v. Menard, Inc., 25 N.E.3d 750, 761 (Ind. Ct. App. 2015). See (ECF 143, p. 23). In Barnard, the court found that the insurance company had a duty to defend based on the language of the policy and the allegations of the injured party's complaint, affirming the grant of summary judgment in favor of the insureds and against the insurance company. 25 N.E.3d at 760. In the conclusion of the opinion, the court ordered that the insureds "are entitled to reimbursement for the defense costs they have incurred since the date they tendered defense to Capitol," id. at 761 (emphasis added), which is the language quoted by ArcelorMittal USA in the instant motion. However, in Barnard, the injured plaintiff brought a lawsuit against the insureds, and only then did the insureds tender their defense by bringing a thirdparty complaint against the insurer to invoke the insurer's duty to defend. Id. at 752. Thus, Barnard does not address ArcelorMittal USA's assertion that it is entitled to the costs of defense prior to the lawsuit by Swimline being filed against ArcelorMittal USA on April 2, 2015.
In the context of an insured failing to comply with the insurance policy's notice requirement, the Indiana Supreme Court found that "an insurer cannot defend a claim of which it has no knowledge." Dreaded, Inc. v. St. Paul Guardian Ins. Co., 904 N.E.2d 1267, 1273 (Ind. 2009). In that case, the insurance company did not have a duty to defend until the insured complied with the policy's notice requirement. Id. In the instant case, no "claim" was brought against ArcelorMittal USA, the entity that made a defense demand on December 10, 2013, until the Amended Complaint was filed in the Swimline litigation on April 2, 2015, adding ArcelorMittal USA as a defendant. Thus, Amex Nooter and its insurance company could not have determined whether there was a duty to defend ArcelorMittal USA until the filing of Swimline's Amended Complaint.
In its reply brief, ArcelorMittal USA cites Trisler v. Indiana Insurance Co. for its statement that the determination of an insurer's duty to defend is not limited solely to what is alleged in a plaintiff's complaint but also considers "those facts known to or ascertainable by the insurer after reasonable investigation." (ECF 168, p. 14 (citing Trisler v. Ind. Ins. Co., 575 N.E.2d 1021, 1022 (Ind. Ct. App. 1991)). While this is a correct statement of the law, Trisler does not address the question of whether the costs of defense incurred prior to the filing of litigation must be reimbursed. In Trisler, the question of whether the insurance company owed a duty of defense arose after claims were filed against the insured. Trisler, 575 N.E.2d at 1022.
The Court notes that there is no factual showing of what alleged defense costs Amex Nooter has not reimbursed ArcelorMittal USA, what defense costs ArcelorMittal USA incurred prior to Swimline bringing suit against it on April 2, 2015, or what Amex Nooter has reimbursed ArcelorMittal USA in relation to the claims brought against ArcelorMittal USA on April 2, 2015. There is no allegation that Amex Nooter has not paid ArcelorMittal USA's defense costs from the date of acceptance—April 20, 2015—forward.
In its reply brief, ArcelorMittal USA changes the basis of this claim. In addition to arguing for defense costs beginning on December 10, 2013, through April 20, 2015, ArcelorMittal USA also argues, for the first time, for defense costs beginning August 1, 2014, based on the date Robert Swimline filed his state court complaint. First, because ArcelorMittal USA did not make this argument in its opening motion, it is waived for purposes of this motion. Second, ArcelorMittal USA has failed to address the fact that Swimline's August 1, 2014 state court complaint was filed against ArcelorMittal Indiana Harbor only and that Swimline did not bring a claim against ArcelorMittal USA until his Amended Complaint on April 2, 2015.
Based on the foregoing, neither ArcelorMittal Indiana Harbor nor ArcelorMittal USA has met its burden of proving this claim, and the Court denies the Motion for Summary Judgment on Count II.
Based on the foregoing, the Court hereby
SO ORDERED.
