Facts

On Feb. 5, 2005, a pressure relief system failed at a Wilmington refinery operated by plaintiff Equilon Enterprises LLC, resulting in a release of diesel mist for approximately four minutes. In an earlier related action, a fireman in training working on a passing train claimed that he sustained injuries after inhaling the fumes, and sued Equilon, Union Pacific Railroad Company, Brinderson, LP – the successor to two contractors that performed design and installation work on the pressure relief system at the refinery – and two other contractors.

Equilon claimed that the contracts between its predecessor, Texaco Refining and Marketing Inc. and the two Brinderson predecessors, Brinderson Constructors Inc., and Hilbert & Associates Inc., required Brinderson to defend and indemnify Equilon against the claims brought by the Union Pacific employee. Brinderson repeatedly rejected Equilon's demands that Brinderson defend and indemnify Equilon in the action. Equilon and the other defendants, except Brinderson, ultimately settled with the injured party, but Brinderson refused to participate in the settlement. In the settlement agreement and motion for good faith settlement determination, Equilon expressly reserved its rights to recoup its settlement payment, attorney fees, and costs from Brinderson in an indemnity action. Brinderson was then dismissed.

PLAINTIFF'S CONTENTIONS:
Equilon sued Brinderson as well as BCI and Hilbert, and sought damages for breach of the defense and indemnity provisions in three separate contracts between Texaco and BCI and Hilbert, as well as breach of the covenant of good faith and fair dealing inherent in the three contracts. Equilon claimed that each of the three contracts contained indemnity clauses, which required Brinderson, as the successor to BCI and Hilbert, to defend and indemnify Equilon against third party personal injury claims caused by, arising out of, or in any way incidental to, or in connection with, the work of BCI and/or Hilbert at the refinery. Equilon claimed that the contracts also required Brinderson to obtain insurance coverage for Equilon.

Equilon claimed that the underlying personal injury claim arose out of BCI's and Hilbert's work on the pressure relief system at the refinery, and that Brinderson breached the indemnity provisions in the three agreements by rejecting Equilon's demands that Brinderson defend and indemnify in the underlying case. Equilon also claimed that Brinderson breached the covenant of good faith and fair dealing by failing to provide Equilon with information regarding the insurance coverage that Brinderson was required to obtain for Equilon pursuant to the contracts.

DEFENDANT'S CONTENTIONS:
Defendants contended that the injured party's claims did not arise from their work, because the pressure relief system at issue, which failed, was subsequently changed. Brinderson also asserted other legal and factual defenses to the claim, and claimed that the indemnity contracts did not apply to the claim.

The pressure release system had failed once before and oil sprayed onto the same adjoining roadway. After that earlier incident Equilon did not take certain actions in response to the prior incident as called for by its own company rules. Shortly afterwards, the second failure and resulting injury occurred. The pressure release system had been in operation for many years without incident and following changes to the system made by Equilon the two failures then occurred.

Settlement Discussions

Prior to trial, Equilon made a CCP 998 demand of $750,000. Defendants offered $450,000.

Damages

Equilon sought damages for the amount it paid to defend and settle the underlying personal injury case.

Result

Jury verdict for defense. Judgment by the Court entered on plaintiff's motion for judgment notwithstanding the verdict: $1,281,167 ($913,713 in damages; $367,454 in prejudgment interest, expert fees and costs).

Other Information

The court granted Equilon's motion for judgment notwithstanding the verdict and entered judgment in favor of Equilon. The court determined that the evidence, as a matter of law, supported Equilon's claims that Brinderson's predecessors BCI and Hilbert performed work on the pressure relief system that failed, causing the underlying claim, and that the indemnification clauses in the agreements between Equilon and defendants applied to that work. The court held there was no substantial evidence supporting the jury's defense verdict and that the uncontested evidence established that defendants were contractually obligated to defend and indemnify Equilon in connection with the underlying personal injury lawsuit. The court also granted Equilon's motion for a new trial in the alternative, on the grounds that the evidence was insufficient to justify the jury's verdict, and that that verdict was against the law. Brinderson has filed a notice of appeal. The court did not permit Brinderson to introduce evidence in support of certain of its affirmative defenses.

Deliberation

four hours

Length

12 days