Filed: Jun. 10, 2004
Latest Update: Mar. 02, 2020
Summary: Opinions of the United 2004 Decisions States Court of Appeals for the Third Circuit 6-10-2004 IPSCO Steel v. Blaine Constr Corp Precedential or Non-Precedential: Precedential Docket No. 03-3109 Follow this and additional works at: http://digitalcommons.law.villanova.edu/thirdcircuit_2004 Recommended Citation "IPSCO Steel v. Blaine Constr Corp" (2004). 2004 Decisions. Paper 557. http://digitalcommons.law.villanova.edu/thirdcircuit_2004/557 This decision is brought to you for free and open access
Summary: Opinions of the United 2004 Decisions States Court of Appeals for the Third Circuit 6-10-2004 IPSCO Steel v. Blaine Constr Corp Precedential or Non-Precedential: Precedential Docket No. 03-3109 Follow this and additional works at: http://digitalcommons.law.villanova.edu/thirdcircuit_2004 Recommended Citation "IPSCO Steel v. Blaine Constr Corp" (2004). 2004 Decisions. Paper 557. http://digitalcommons.law.villanova.edu/thirdcircuit_2004/557 This decision is brought to you for free and open access b..
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Opinions of the United
2004 Decisions States Court of Appeals
for the Third Circuit
6-10-2004
IPSCO Steel v. Blaine Constr Corp
Precedential or Non-Precedential: Precedential
Docket No. 03-3109
Follow this and additional works at: http://digitalcommons.law.villanova.edu/thirdcircuit_2004
Recommended Citation
"IPSCO Steel v. Blaine Constr Corp" (2004). 2004 Decisions. Paper 557.
http://digitalcommons.law.villanova.edu/thirdcircuit_2004/557
This decision is brought to you for free and open access by the Opinions of the United States Court of Appeals for the Third Circuit at Villanova
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PRECEDENTIAL U.S. INC., a Delaware Corporation;
LIBERTY MUTUAL INSURANCE
UNITED STATES COURT OF COMPANY, a Massachusetts
APPEALS FOR THE THIRD CIRCUIT Corporation; MARSH USA, INC., a
__________ Delaware Corporation f/k/a J&H
MARSH & MCLENNAN, INC.;
No. 03-3109 LIBERTY INTERNATIONAL
__________ CANADA, a division of LIBERTY
MUTUAL INSURANCE COMPANY, a
IPSCO STEEL (ALABAMA), INC., an Massachusetts Corporation.
Alabama Corporation; IPSCO
CONSTRUCTION, INC., an Alabama *Lexington Insurance Company,
Corporation; KVAERNER U.S. INC., a Appellant
Delaware Corporation *(Pursuant to F.R.A.P. 12(a))
v. (D.C. Civil Action No. 01-cv-00440)
BLAINE CONSTRUCTION _________
CORPORATION, a Tennessee
Corporation. On Appeal from the
United States District Court for the
*Lexington Insurance Company, Western District of Pennsylvania
Appellant District Judge: Hon. Arthur J. Schwab
*(Pursuant to F.R.A.P. 12(a)) __________
(D.C. Civil Action No. 99-cv-02055) Argued on Tuesday, April 20, 2004
___________
__________
No. 03-3110 Before: SCIRICA, GARTH, and
__________ BRIGHT,* Circuit Judges
BLAINE CONSTRUCTION (Opinion Filed: June 10, 2004)
CORPORATION, a Tennessee
Corporation
v.
*
Honorable Myron H. Bright,
IPSCO CONSTRUCTION, INC., an United States Court of Appeals for the
Alabama Corporation; KVAERNER Eighth Circuit, sitting by designation.
1
Harper, Steven J. (argued)
DeCourcy, Dara A. (argued) Kirkland & Ellis LLP
Zimmer, Harry J. 200 East Randolph Drive
Zimmer Kunz Suite 6500
600 Grant Street Chicago, IL 60601
3300 USX Tower
Pittsburgh, PA 15219 Landau, Christopher
Kirkland & Ellis LLP
Attorneys for Appellant Lexington 655 15th Street, N.W.
Insurance Company Suite 1200
Washington, DC 20005
Doty, Robert W.
Ejzak, Richard A. (argued) Attorneys for Appellees IPSCO Steel
Roman, Andrew M. (Alabama) Inc. and IPSCO Construction
Cohen & Grigsby, P.C. Inc.
11 Stanwix Street, 15th Floor
Pittsburgh, PA 15222 Medved, George M.
Pepper Hamilton LLP
Rogers, E. Mabry 500 Grant Street
Bradley, Arant, Rose & White, LLP 5000 One Mellon Bank Center
1819 Fifth Avenue North Pittsburgh, PA 15219
Birmingham, AL 35203
Little, J. Ford
Attorneys for Appellee Kvaerner U.S. Noell, Robert P.
Inc. Walton, Monty L.
Woolf, McClane, Bright, Allen &
Luciana, Joseph L. III Carpenter, PLLC
Lund, Kenneth J. 900 South Gay Street
Paciaroni, Richard F. Suite 900, Riverview Tower
Kirkpatrick & Lockhart LLP Knoxville, TN 37902
535 Smithfield Street
Henry W. Oliver Building Attorneys for Appellee Blaine
Pittsburgh, PA 15222 Construction Corporation
Lucas, Kevin P. Long, Kevin M.
Williams, Robert J. Van Vugt, Eric J.
Manion, McDonough & Lucas P.C. Quarles & Brady LLP
600 Grant Street 411 East Wisconsin Avenue, #2500
Suite 1414 Milwaukee, WI 53202
Pittsburgh, PA 15219
2
Sommer, Robert B. Construction, Inc. (collectively “IPSCO”),
Hergenroeder, Rega & Sommer Kvaerner U.S. Inc. (“Kvaerner”), Marsh
332 Fifth Avenue USA, Inc. (“Marsh”), and Liberty Mutual
Suite 610 Insurance Company (“Liberty Mutual”),
Pittsburgh, PA 15222 who had been embroiled in litigation
arising out of a construction project in
Attorney for Appellee Marsh USA, Inc. Alabama. The Settlement Agreements
brought to an end the two lawsuits that
Reed, Jonathan S. had been filed in Pennsylvania involving
Smith, Sean K. those parties who, among others, were the
Traub, Richard K. project owner (IPSCO), the project
Traub, Eglin, Lieberman & Straus manager (Kvaerner), the project insurer
100 Metroplex Drive (Liberty Mutual), and the insurance broker
Metroplex Corporate Center I, Suite 203 (Marsh).
Edison, NJ 08817
The instant appeal was filed by
Sherman, C. Leon L e x i n g t o n I n s u r a n ce C o mp a n y
C. Leon Sherman & Associates (“Lexington”), which had issued a $25
20 Stanwix Street million professional liability insurance
5th Floor policy to Kvaerner in 1998. Under the
Pittsburgh, PA 15222 terms of that policy, Kvaerner may look to
Lexington for insurance proceeds only
Attorneys for Appellee Liberty Mutual after any “project-specific” policies are
Insurance Company exhausted. Kvaerner is a named insured
under a $20 million policy issued by
__________ Liberty Mutual specifically for the
construction project.
OPINION
__________ Because the Settlement Agreements
effectively capped Liberty Mutual’s
“project specific” policy at approximately
Garth, Circuit Judge: $11 million,1 Lexington had registered
In a companion case decided today,
see IPSCO Steel (Alabama) Inc. v. Blaine 1
As we have discussed in the
Constr. Corp.,Docket Nos. 03-2929/2966, companion case, IPSCO Steel (Alabama)
-- F.3d -- (3d Cir. 2004), we have held that Inc. v. Blaine Constr. Corp., supra,
the District Court properly approved two Liberty Mutual had paid $5 million in
Settlement Agreements involving IPSCO court expenses for Kvaerner and had
Steel (Alabama), Inc. and IPSCO settled the Construction Action for $6
3
objections in the District Court to the appeal. Caplan v. Fellheimer Eichen
Settlement Agreements approved in the Braverman & Kaskey, 68 F.3d 828, 836
companion case, IPSCO Steel (Alabama) (3d Cir. 1995). However, our Court
Inc. v. Blaine Constr. Corp.,supra. Unlike carved out an exception to that principle in
Kvaerner, however, Lexington was not a 1992 when it decided Binker v.
named party to the proceedings and did not Pennsylvania,
977 F.2d 738 (3d Cir.
move to intervene pursuant to Federal 1992). The so-called Binker exception
Rule of Civil Procedure 24.2 After the provides that “a nonparty may bring an
District Court approved the settlements appeal when three conditions are met: (1)
and dismissed the two lawsuits, Kvaerner the nonparty had a stake in the outcome of
and Lexington filed separate notices of the proceedings that is discernible from
appeal. We have disposed of Kvaerner’s the record; (2) the nonparty has
appeal in the companion case, leaving only participated in the proceedings before the
Lexington as the Appellant here. district court; and (3) the equities favor the
appeal.” Northview Motors, Inc. v.
On appeal, Lexington presents two Chrysler Motors Corp., 186 F.3d 346, 349
arguments as to why the District Court (3d Cir. 1999).
should not have approved the Settlement
Agreements. However, IPSCO has moved Lexington contends that it fits
to dismiss Lexington’s appeal on grounds within the Binker exception because (1) it
of standing. Quoting from Marino v. may potentially be liable to pay a judgment
Ortiz,
484 U.S. 301 (1988), IPSCO argues that, in the absence of the Settlement
that “only parties to a lawsuit, or those that Agreements, Liberty Mutual, as the
properly become parties, may appeal an “project-specific” insurer, would have had
adverse judgment.”
Id. at 304. to pay; (2) it attended a settlement
conference and mediation before the
Ordinarily, only parties of record District Court and submitted a brief in
before the district court have standing to opposition to the motion to approve the
Settlement Agreements; and (3) it seeks to
protect not only its own interests, but also
million for a total expenditure of $11 those of its insured, Kvaerner.
million under the $20 million policy.
2
In its Notices of Appeal, Even if we were satisfied that
Lexington incorrectly states that it was Lexington met all three prongs of the
an “Intervenor” in the District Court. Binker exception, which we need not
Although Lexington filed briefs in the decide, we are persuaded that it does not
District Court opposing the proposed have standing to pursue this appeal. To
settlements and participated in the understand why that is so, we must
hearing, it did not move to intervene in consider three distinct but related
the District Court or in our Court. concepts: intervention pursuant to Federal
4
Rule of Civil Procedure 24; Article III Jurisdiction 2d § 3902.
standing to pursue the original
controversy; and standing to appeal a The issue here is whether
district court ruling. Although the Binker Lexington was sufficiently aggrieved by
Court couched its three-part test in terms the District Court’s order such that it has
of “standing to appeal,” see Binker, 977 standing to appeal. Our decision in
F.2d at 745, the first prong of the Binker Travelers Insurance Company v. H.K.
test focused on Article III standing to Porter Co., 45 F.3d 737 (3d Cir. 1995) is
pursue the original controversy because it particularly instructive. There, the
required that the non-party had a stake in plaintiff-insurer (Travelers) appealed a
the proceedings before the District Court, bankruptcy court order granting a motion
thereby satisfying Article III’s “case-or- to vacate the withdrawal of certain
controversy” requirement. creditors who had asbestos-related claims
against the bankrupt defendant-insured.
Statutory standing to appeal, by We held that Travelers lacked standing to
contrast, need not meet the case-or- appeal because it was not a “person
controversy standard, but must meet the aggrieved” by the order since its “potential
test of a party that is aggrieved. “In order exposure [was] doubly removed, turning
to have standing to appeal a party must be both on the success of the Claimants in
aggrieved by the order of the district court their prosecution of claims against [the
from which it seeks to appeal.” insured party], and on a judicial
McLaughlin v. Pernsley, 876 F.2d 308, determination that the policy issued by
313 (3d Cir. 1989) (citing Watson v. Travelers cover[ed] the claims, a
Newark,
746 F.2d 1008 (3d Cir. 1984). construction which Travelers strenuously
“The rule is one of federal appellate reject[ed].”
Id. at 742.
practice, however, derived from the
statutes granting appellate jurisdiction and The same considerations that drove
the historic practices of the appellate our decision in Travelers are present here.
courts; it does not have its source in the Under the two Settlement Agreements
jurisdictional limitations of Art. III.” approved by the District Court, Liberty
Deposit Guar. Nat’l Bank v. Roper, 445 Mutual and Marsh had agreed to pay a
U.S. 326, 333 (1980). Thus, a party who total of $6.5 million to settle various
does not intervene in the district court (or claims brought against them in the
did not have Article III standing to pursue Pennsylvania lawsuits.3 The Settlement
the original action) may nevertheless have Agreements do not require Lexington to
standing to pursue an appeal if it can show
that it was adversely affected by the
judgment. See e.g.,
Binker, 977 F.2d at 3
Liberty Mutual paid $6 million
745; see also 15A Wright, Miller & in settlement; Marsh paid $500,000 in
Cooper, Federal Practice and Procedure: settlement.
5
make any payments, inasmuch as the judgment being entered in the Alabama
“project-specific” insurer is Liberty lawsuit against Kvaerner and in favor of
Mutual. Hence, Lexington was not IPSCO, an event that has not yet occurred.
directly aggrieved by either the Settlement As in Travelers, Lexington is at least two
Agreements or the District Court’s orders steps removed from any real effect to its
approving them. policy because IPSCO must first succeed
on its claims against Kvaerner and, even if
The only other lawsuit that has it is successful, Kvaerner must prove that
been brought to our attention which the policy covers the damages awarded in
potentially implicates the policy issued by the Alabama action.5
Lexington is an action filed in Alabama by
IPSCO, the project owner, against Lexington has tried to distinguish
Kvaerner for alleged cost overruns. That our holding in Travelers on the ground
lawsuit, which is ongoing and was not that it involved an appeal from a
affected by the two Settlement bankruptcy court, which triggers its own
Agreements approved by the District unique set of standing principles. It is true
Court, has resulted in substantial defense that “the standing requirement in
costs for Kvaerner. But almost all of those bankruptcy appeals is more restrictive than
defense costs have been paid and are
continuing to be paid by Liberty Mutual.4
Therefore, any real exposure to which 5
We recognize two other factors
Lexington is subject is contingent on a that further attenuate Lexington’s
standing to appeal. First, Lexington
might well resist paying any judgment
4
In a separate agreement, which rendered against Kvaerner unless the
has been sealed by both the District judgment exceeds $6.5 million because
Court and by us, Liberty Mutual agreed IPSCO has already been reimbursed for
to pay 89% of Kvaerner’s defense costs damages in that amount through the
in the Alabama action, with Kvaerner Settlement Agreements with Liberty
paying the remaining 11%. If Kvaerner Mutual and Marsh. Second, Kvaerner
prevailed on its counterclaims against has informed us in the companion case
IPSCO, Liberty Mutual could recover its of IPSCO Steel (Alabama) Inc. v. Blaine
costs. Although this agreement is sealed, Constr. Corp., supra, that even if IPSCO
at least this provision was discussed at was to obtain a judgment against
oral argument. The record does not Kvaerner in the Alabama lawsuit,
disclose whether the obligation Lexington may argue that it has no
undertaken by Liberty Mutual is obligation to indemnify or reimburse
exclusive of the $11 million that Kvaerner because the Liberty Mutual
remained under the Liberty Mutual policy was not fully exhausted as a result
policy. of the Settlement Agreements.
6
the ‘case or controversy’ standing [class action] settlement . . . that would
requirement of Article III, which ‘need not bind class members only after a hearing
be financial and need only be ‘fairly and on finding that the settlement . . . is
traceable’ to the alleged illegal action.” fair, reasonable, and adequate.”). Because
Travelers, 45 F.3d at 741 (quoting Kane v. the lawsuits before the District Court here
Johns-Manville Corp.,
843 F.2d 636, 642 were not class actions, the District Court
n.2 (2d Cir. 1988)). Yet in a non- was under no duty to review the proposed
bankruptcy context the Supreme Court has Settlement Agreements for fairness or
stated that “[o]rdinarily, only a party reasonableness. The parties’ relationships
aggrieved by a judgment or order of a were defined entirely by fully-integrated
district court may exercise the statutory contracts and there was no reason for the
right to appeal therefrom.” Deposit Guar., District Court to examine the fairness
or
445 U.S. at 333 (emphasis added). Thus, reasonableness of the two Settlement
it does not follow that we would have Agreements, which were negotiated by
reached a different outcome in Travelers sophisticated parties and their counsel.
under Article III’s slightly more relaxed
standing requirement. Even under the For the foregoing reasons, we will
“fairly traceable” standard, we hold that dismiss the two appeals 6 taken by
Lexington does not have standing to Lexington from the District Court’s orders
appeal because its injury, if any, is far too entered on June 6, 2003.
speculative and far too attenuated for
Lexington to be aggrieved.
Moreover, even if Lexington had
standing to appeal, we would not be
persuaded by the arguments that it has
raised in its appellate briefs. Lexington’s
primary argument is that the District Court
abused its discretion because it did not
determine whether the proposed
Settlement Agreements were fair and
reasonable before approving them. The
“fair and reasonableness” analysis is,
however, generally reserved for
settlements in class action lawsuits (or
derivative shareholder lawsuits), where the 6
Lexington appealed from
district court must be vigilant in protecting IPSCO Steel (Alabama) Inc. v. Blaine
the due process rights belonging to the Constr. Corp., Civil Action Nos. 99-CV-
class members. See Fed. R. Civ. P. 2055 and 01-CV-440, without having
23(e)(1)(C) (“The court may approve a intervened in either.
7
