FOR OFFICIAL PUBLICATION
SUPERIOR COURT OF THE VIRGIN ISLANDS
DIVISION OF ST CROIX
IN RE CATALYST THIRD PARTY LITIGATION ] MASTER CASE NO 8X 05 CV 799
) COMPLEX LITIGATION DIVISION
I
I
LEANDRE AARNDEL ) CASE NO 5X 05 CV 799
I
Plaintiff, )
I
V I
I
HESS OIL VIRGIN ISLANDS CORPORATION )
AMERADA HESS CORPORATION LITWIN )
CORPORATION SHELL OIL CORPORATION UOP )
LLC and AMERICAN CYANAMID )
I
Defendants )
I
I
HESS OIL VIRGIN ISLANDS CORPORATION and ]
HESS CORPORATION f/k/a AMERADA HESS )
CORPORATION ]
I
Defendants / Third )
Party Plaintiffs, ]
I
V I
I
CROSFIELD AXENS NORTH AMERICA )
individually and as successor in interest to )
ACREON CATALYSTS HALDOR TOPSOE )
IOHNSON MATTHEY INC indiwdually and )
successor in interest to KATALCO )
CORPORATION KATALCO CORPORATION )
CRITERION ABLEMARLE CORPORATION as )
successor in interest to AKZO NOBLE N V , )
CATALEASCO INC VIRGIN ISLANDS INDUSTRIAL )
MAINTENANCE CORPORATION RIGGERS & )
ERECTORS INTERNATIONAL INC RIGGERS & )
ERECTORS VIRGIN ISLANDS CORPORATION ]
COMMUNICATIONS SYSTEMS 8: MAINTENANCE )
CORPORATION AKZO NOBEL N V and AKZO )
NOBEL POLYMER CHEMICALS LLC )
I
Third Party )
Defendants ]
I
In re Catalyst Third Party thlg 2020 VI Super 52
Case No 8X 05 CV 799
Memorandum Opinion
Page 2 of 54
Cite as 2020 V1 Super 52
Appearances
THOMAS ALKON ESQ
Law Office of Thomas Alkon P C
Christiansted V1 00820
For PIamtzflc
CARLA BECKSTEDT Ill ESQ
Beckstedt & Associates
Christiansted V1 00820
For Hess 011 Virgin Islands Corporation and Hess Corporation
KEVIN A RAMES ESQ
Law Offices of K A Rames P C
Christiansted V1 00820
For 5719311011 Company
RICHARD H HUNTER ESQ
Hunter 8: Cole
Christiansted Vl 00820
For UOP LLC
BERNARD C PATTIE ESQ
Law Offices of Bernard C Pattie P C
Christiansted V I 00820
ForAmerIcan Cyanamid Company
CAROL G HURST ESQ
Carol G Hurst, P C
St Thomas Vl 00802
For Axens North America, Inc
I DARYL DODSON ESQ
Moore, Dodson & Russell, P C
St Thomas V100804
For Haldor Topsoe Inc
MARK W ECKARD ESQ
5030 Anchor Way
Gallows Bay V1 00824
For AbIemarIe Corporation
MICHAEL] SANFORD ESQ
THOMAS KRAEGER ESQ
Sanford Amerling 8: Associates
Christiansted VI 00820
In re Catalyst Third Party thlg 2020 Vi Super 52
Case No SX 05 CV 799
Memorandum Opinion
Page 3 of 54
For Virgin Islands Industrial Maintenance Corporations, Riggers & Erectors International, Inc,
and Riggers & Erectors Virgin Islands Corporation
SHARMANE DAVIS BRATHWAITE ESQ
Braithwaite Law LLC
St Thomas V100802
For Akzo Nobel N V & Akzo Nobel Polymer Chemicals LLC
W
MOLLOY Judge
1H BEFORE THE COURT are the following (I) a motion filed by Hess Oil Virgin Islands
Corporation ('HOV]C"] and Hess Corporation ['Hess”) for summary judgment against Virgin
Islands Industrial Maintenance Corporation ( [MC '), (2) a motion for leave to conduct discovery
filed by [MC in response to Hess' and HOVlC’s summary judgment motion, and (3) a motion for
leave to file a second amended third party complaint filed by Hess and HOVlC For the reasons
stated below, the Court will deny summary judgment without prejudice grant leave to take
discovery and grant leave to amend but sever the third party claims to be refiled separately
Additionally because Hess and HOVIC’S motion raises controlling questions of law not settled by
binding precedent, the Court will certify the questions to the Supreme Court of the Virgin Islands
Lastly because a master case is not a true case but rather a mechanism used to coordinate one
or more aspects of litigation across a number of different cases In re Alumina Dust Claims 67
VI 172 196 n 17 (Super Ct 2017] the Court will direct the Clerk 5 office to assign a new case
number to the individual case of Leandre Aarndel v Hess Oil Virgin Islands Corporation at al ,
which was used as the master case [d]ifferent cases cannot share the same case number " Id
Given the quantity of papers filed in the master case, separating out the individual filings
pertaining to Mr Aarndel's case would be simpler
l FACTUAL AND PROCEDURAL BACKGROUND
1R On December 28, 2005, eighty four men filed separate lawsuits against HOVIC, Hess,
Litwin Corporation ( Litwin ) Shell Oil Company ( Shell )1 UOP LLC ("UOP”), and American
Cyanamid Company in the Superior Court of the Virgin islands They sought damages, including
punitive damages for exposure to workplace dusts released from the chemical catalysts used at
the St Croix oil refinery between 1965 and 1998 See In re Catalyst Litig 55 VI 20 22 [Super
Ct 2010] ( Plaintiffs filed th[ese] action[s] alleging that they developed mixed dust
I Named Shell Oil Corporation in the complaints
In re Catalyst Third Party Litig
2020 VI Super 52
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Memorandum Opinion
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pneumoconiosis as a result of occupational exposure to catalyst at HOVlC's refinery on St
Croix ') On February 2, 2006, an additional three lawsuits were filed with the same companies
as defendants and the same claims and allegations The Defendants appeared and answered the
complaints Litwin crossclaimed against Shell, UOP, and American Cyanamid and they
crossclaimed against Litwin all seeking the same relief contribution and indemnification
1J3 To coordinate pre trial litigation and discovery the Court [Cabret J ) on August 21 2006
granted a motion Plaintiff had filed on July 6 2006 in Leandra Aarndel v Hess Oil Virgin Islands
Corporation, et a! , case number SX 05 CV 799 joined by Litwin on July 24.- 2006, to approve a
stipulated case management order 7— The stipulated order directed the Clerks Office to open a
master case file and docket under the caption In re Catalyst Litigation,3 and consolidate the
eighty seven lawsuits under the master case [See Stip Case Mgmt Order I entered Aug 21, 2006
{hereinafter CMO") [‘ The Court shall create a master file and a master docket number for the
cases listed in Schedule A which shall be caption[ed] In re Catalyst Litigation Master Docket No
5X 05 CV 799 )) The order did not direct the Clerks Office to assign a new case number
Consequently, Mr Aarndel 5 case number served as the master case
1M During discovery Hess and HOVlC filed a motion in the master case on December 31,
2008 for leave to file a third party complaint 4 The eighty seven plaintiffs (collectively
Plaintiffs") responded in opposition on January 13, 2009, but asked in the alternative if the
motion was granted, that the Court sever the third party litigation from the first party litigation
HOVIC and Hess [hereinafter Hess Defendants in their capacity as first party defendants and
"Hess Plaintiffs" in their capacity as third party plaintiffs) opposed severance Litwin and UOP
did not oppose the third party claims but did oppose severance The Court (D Eramo J ) granted
2 The motion was submitted to the attention of the Presiding Judge {Hodge Pl) presumably because coordination
required reassignment from the other Superior Court judges For reasons unclear from the record the judge
assigned to Aarndel granted the motion and approved the stipulated case management order
3 To distinguish between the first and third party actions the Court [Willocks, J ) on December 12 2016 ordered
that all papers captioned In re Catalyst Litigation would apply to the first party litigation whereas all papers
captioned In re Catalyst Third Party Litigation would apply to the third party litigation
4The proposed third party complaint asserted six claims contribution (two counts) common law indemnification
contractual indemnification and breach of contract (two counts) against the following companies Kaiser
Aluminum WR Grace (in its individual capacity and successor capacity to Crosfield] Crosfield Axens North
America Units individual capacity and successor capacity to Acreon Catalysts] Haldor'l‘opsoe inc ( HT] ),Johnson
Matthey inc (in its individual capacity and successor capacity to Katalco Corporation), Katalco Corporation,
Criterion Ablemarle Corporation [in its individual capacity and successor capacity to Akzo Nobel N V) Cataleasco
inc [MC Riggers & Erectors International inc, Riggers & Erectors Virgin islands Corporation and Communications
Systems & Maintenance Corporation
In re Comb/st Third Party Ling 2020 VI Super 52
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Memorandum Opinion
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the motion on February 17 2009, but reserved ruling on severance The Hess Defendants filed
their third party complaint on February 20 2009 in the Aarndel / Catalyst Litigation case and
under a dual caption
TlS [MC answered the third party complaint on April 6 2009 and demanded a jury trial Two
months later on June 8 2009 the Hess Plaintiffs moved for leave to amend to drop some third
party defendants and add others 5 Again Plaintiffs responded, not in opposition, but to renew
their request to sever In granting leave to file a third party complaint the Court had also ordered
the parties to identify four cases for trial at the end of 2009 If the first and third party claims
were not severed Plaintiffs argued trial would have to be postponed as the third party litigation
had just begun The Hess Defendants opposed, claiming ‘ [n]either judicial economy nor
convenience to the parties, witnesses, jurors, or the Court will be furthered [by] severance '
(Hess Defs Reply in Further Supp of Mot for Leave to File an Amend Third Party Comp] 8: in
Opp n to P15 Renewed Mot to Sever 3 filed june 26 2009)
1f6 On October 9 2009 the Court (Ross J) granted leave to amend and the request to sever
the third party litigation The Court agreed with Plaintiffs that neither option was fair delaying
trial to give the third party defendants time to prepare or forcing the third party defendants to
proceed to trial without having engaged in discovery The Hess Plaintiffs filed the amended
third party complaint on October 16 2009 Even though the Court severed the third party
litigation Hess and HOVlC still filed their amended third party complaint in the Aarndel /
Catalyst Litigation case Not as a new case The Clerk 3 Office also did not assign a new case
number Technically severance never occurred then Cf. Centon Elecs, Inc v Bonar 614 So 2d
999 1003 n 1 (Ala 1993] (' Normally, a new case number should be assigned once a claim is
severed from the main action ”j, accord Multibank Inc v Access Glob Capital LLC 594 B R 618,
627 [Bankr S D N Y 2018] [ It seems intuitive that if actions have truly been separated they
should ordinarily be given different case numbers )
117 For reasons not relevant to this Opinion, trial did not go forward in 2009 6 And by 2010,
Plaintiffs had resolved their claims against everyone except Hess and HOVlC Stipulations were
5 The proposed amended third party complaint would have dropped Johnson Matthey, individually and as successor
to Katalco Corporation and added Akzo Nobel N V Akzo Nobel Polymer Chemicals LLC and lndopco Inc
6 By order entered November 9 2009 the Court (Ross, ]) granted a motion to continue the November/December
2009 trial date to avoid the probability that the assigned trial judge may have to abandon the trial mid stream,
given that his designation as a senior sitting judge was nearing its end [Order 2 entered Nov 9 2009)
In re Catalyst Third Party thig 2020 Vi Super 52
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Memorandum Opinion
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filed and approved to dismiss the claims against UOP, Shell, and American Cyanamid Not Litwin
But Litwin had represented in writing and in open court that Plaintiffs had agreed to settle 7
Plaintiffs were not able to settle with the Hess Defendants Consequently the Court selected four
cases for trial in July 2010 8 Since Plaintiff did not assert claims against the third party
defendants. trial proceeded against Hess and HOVlC only on July 13 2010 Before the cases were
submitted to the jury however the attorneys informed the Court that all eighty seven Plaintiffs
had agreed to settle After granting counsel time to formalize settlement papers, the Court
(Willocks J J granted Plaintiffs' requests to dismiss their claims against the Hess Defendants with
prejudice The Order expressly provided, however, that "the cross claims and third party claims
of HOVlC and Hess shall remain open and pending and shall not be dismissed (Order 1, dated
Nov 20 2010 entered May 14 2015)
1J8 Several months later, after the first party cases were resolved but cf supra note 7 the
Hess Plaintiffs on February 11, 2011, filed the first motion addressed in this Opinion for
summary judgment against IMC Hess and HOVlC also asked for leave to exceed the page limits
imposed by Rule 56 1(e) of the Local Rules ofCivil Procedure promulgated by the District Court
of the Virgin Islands applied through Superior Court Rule 7 Roughly two weeks later, the Hess
Plaintiffs and IMC stipulated to give [MC until May 2 2011 to respond to summary judgment
However, the Court (Willocks, J J denied the motion to exceed page limits and directed Hess and
HOVIC to refile their motion As a result the Hess Plaintiffs filed an amended motion for
summary judgment on March 24 2011 9 Three days shy ofthe May 2 2011 stipulated deadline
to respond to the initial summary judgment motion, lMC filed a motion for leave to conduct
discovery The Hess Plaintiffs opposed
1J9 Four years later, the Administrative Judge of the Superior Court scheduled and then held
a global status conference to discuss with counsel options for more efficiently managing the
complex and toxic tort cases pending in the St Croix District In re Asbestos, Catalyst, & Silica
TOXIC Dust Exposure thlg 67 V l 544 547 [Super Ct 2017) [TJhe phrase complex litigation
cases" was meant ‘to encompass 'any lawsuit that alleges toxic tort claims arising from, related
to, or concerning the former oil refinery or aluminum refinery on St Croix and that also involves
7 Technically because no documentation concerning the claims Plaintiff asserted against Litwin has been filed the
eighty seven cases remain open
51See In re Catalyst thlgatlon 55w 3 3 [Super Ct 2010) for the four cases selected for trial
9 Technically Hess and HOVIC did not withdraw and refile their February 11 2011 motion
In re Catalyst Third Party thlg 2020 Vl Super 52
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Memorandum Opinion
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multiple defendants and/or third party actions " In re Alumina Dust Claims 67 V l at 185 n 9
(citation omitted) The Catalyst cases were among the cases discussed at the status conferences
During the May 14 2015 status conference the Court referred the third party litigation to
mediation and granted the parties leave to supplement pending motions in light of changes in
the law recognized by Government ofthe Virgin Islands v Connor, 60 V l 597 (2014) (per curiam)
(If In re Connor 61 V l 273 278 n 2 (2014) (per curiam) ( [P]arties may desire to be heard
on the Banks issue before the Superior Court issues a decision, which may require supplemental
briefing or even oral argument ]
1110 The next day May 15 2015 the Court by order alerted the Hess Plaintiffs to several
concerns with their third party action some third party defendants had been served but had
not appeared other third party defendants had not appeared, but proof of service was not filed
Considering the amount of absent third party defendants the Court withheld ruling on the
second motion addressed in this Opinion a motion filed on lune 21 2011, for leave to amend the
third party complaint The Court found it best to defer adding more third party defendants until
the status of the absent third party defendants was resolved
111 1 Several months later, despite having granted the parties' requests to refer the third party
litigation to mediation and allow supplemental briefing in light of Connor the Hess Plaintiffs
MC and others jointly moved the Court on June 8 2015 to defer the briefing deadline until
thirty days after the mediation If mediation was successful they argued, incurring the cost and
expense associated with a Banks analysis was unnecessary The Court granted the joint motion
and reduced its oral ruling to writing, issuing a formal mediation referral order, setting
September 16 2015 as the deadline to complete mediation
1112 But then on August 6, 2015, [MC (and others] moved to continue mediation to a date
certain The reason why was not clear until two weeks later when, on August 25 2015 the
mediator submitted his initial report, explaining that several parties (but not all) met for an
initial mediation conference then adjourned to allow the Court time to resolve several motions
But the motions the mediator identified were the same motions the parties wanted leave to
supplement As it stood, mediation could not go forward because the parties wanted certain
motions resolved But, before those motions could be resolved supplemental briefs had to be
filed Yet, the briefing deadline was deferred for mediation to go forward To resolve the catch22,
the Court granted lMC’s motion and stayed formal mediation until December 31, 2015, extended
mediation to February 19, 2016 and reinstated an abbreviated briefing deadline lMC and the
In re Catalyst Third Party Ling 2020 V1 Super 52
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Memorandum Opinion
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Hess Plaintiffs filed supplemental briefs on December 2 2015 and December 3 2015,
respectively
1113 The Court (Willocks j ) held a status conference on December 10 2015 After noting the
quantity of motions filed after the global status conferences 10 and counsel's inability to resolve
even minor issues on their own, the Court ordered that 'except for an emergency matter that
requires immediate action or a stipulation for dismissal a stay is imposed on the filing of any
further motions, stipulations, or other request for relief (whether made individually or jointly)
until September 1 2016 unless sooner lifted by court order " (Order 1, entered Dec 18, 2015 )
The mediator subsequently notified the Court that only some parties engaged in a session held
on january 22. 2016, that ultimately ended in an impasse The parties were still at a standstill
due to the confidentiality agreement regarding the original Plaintiffs' settlements and several
pending motions that address[] the confidentiality matter [but] in a different manner (Med
Report and Req for Ct Assist 2 filed Jan 27 2016)
ll DISCUSSION
1114 it is against this broad background that the Court11 turns to the Hess Plaintiffs amended
summary judgment motion 12 and [M05 motion to take discovery, as well as the Hess Plaintiffs
motion for leave to amend their amended third party complaint Because motions for leave to
take discovery must be resolved first the Court must address lMC's motion before addressing
the Hess Plaintiffs motions (If. Rivera Mercado v Gen Motors Corp 51 V1 307 332 (2009)
(Swan 1 concurring) ("[thatever its decision, it is improper for a trial court to rule on
summary judgment without first ruling on a pending 56(f) motion ’” (brackets and citation
omitted))
A Motion for Leave to Take Discovery
(1] Arguments
1i15 In its April 29 2011 motion [MC argues that Hess and HOVIC refused to provide
10 The docket for the master case reveals that approximately twenty nine motions some ministerial eg to
substitute counsel or appear by telephone, others substantive and dispositive e g to dismiss for insufficient service
of process or to vacate entry of default were filed between the months of June and December 2015
1‘ By order dated August 14 2018 entered August 20 2018, the Presiding judge of the Superior Court designated
the Catalyst cases as complex transferred them to the Complex Litigation Division and reassigned them to the
undersigned judicial officer
12 The Court will refer to the amended summary judgment motion to avoid confusion with the initial motion rejected
because it exceeded the page limits Technically the Hess Plaintiffs did not amend their summary judgment motion
But it was effectively withdrawn and refilled
In re Catalyst Third Party Ling 2020 V1 Super 52
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Memorandum Opinion
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essential discovery about [their] third party claim{s] ” (Third Party Def IMC’s Mot to Take Disc
Pursuant to R 56[d) in Resp to S] Mot 2 filed Apr 29 2011 (hereinafter Discovery Mot ) 13)
For this reason, lMC requests leave to engage in discovery because it cannot adequately respond
I MC concedes that “respiratory protection at the refinery in the early years was reportedly poor,
[but] by all accounts such protection improved dramatically by the mid to late 19805 when lMC
began working [there] Id at 4 As a result any harmful exposure to catalyst would have
been substantially reduced lMC contends, 'by the time any of the[se eighty seven] Plaintiffs
may have worked for lMC " Id Since lMC was not brought into this litigation until after Plaintiff
were deposed lMC did not have an opportunity to develop the facts it argues And, while [MC
served Hess and HOVlC with interrogatories and requests for production of documents " they
refused to provide substantive responses to any of this discovery ’ Id at 2 So lMC asks for
discovery in the following areas (1) the amount the Hess Defendants paid to settle with Plaintiff,
(2) whether settlement amounts were determined on a case by case basis or for the group as a
whole, [3] whether the Hess Defendants considered the potential risk of punitive damages in
deciding how much to settle for, [4) whether the Hess Defendants paid more than they should
have and (5) the actual costs incurred to settle See It! at 13 17 In a supporting affidavit [MC 5
attorney at the time the motion was filed detailed what he believed discovery would reveal
[flacts related to the tendering of the defense and/or tendering of the settlement
[or failure to tender) to [MC Why HOVlC and Hess paid settlements to plaintiffs
who did not present with lost work, lost wages medical bills or proven injuries
caused by identifiable incidents of negligence, and whether to do so had a basis in
fact or was reasonable On what basis HOVlC and Hess tendered all 84 cases but
now seeks indemnification in 49 cases, and what basis in fact exists for
indemnification in any of the cases Whether lMC is in fact an indemnitor and what
the specific terms and conditions are in any and all potentially applicable
indemnity agreements over the decades covered by the claims period Whether
HOVlC and Hess were volunteers' in the eyes of the law and therefore not entitled
to indemnification
13 When lMC filed its motion to take discovery in 201 1 Federal Rule of Civil Procedure 56[f) renumbered in 2010
as 56(d) without substantial change [lMC 5 Discovery Mot 9) governed in the Superior Court through Superior
Court Rule 7 Since then the Supreme Court of the Virgin Islands promulgated the Virgin islands Rules of Civil
Procedure which includes a similar rule Rule 56(d) See generally In re Adoption of the VI Rules of Civ P S Ct
Prom No 2017 001 2017 VI Supreme LEXIS 22 (VI Apr 3 2017) Rule 1 1 provides that the Virgin islands Rules
of Civil Procedure apply to all actions pending when the rules took effect March 3 1 2017 unless the Supreme Court
directs otherwise or the judge on a case by case basis determines that it would unjust or unfeasible to apply the
new rules See Vl R Civ P 1 1(c](2) The Virgin Islands Rules could not apply since the motion was filed six years
before they were promulgated However, the federal rule and the Virgin Islands rule are identical For the sake of
simplicity the Court refers to the Virgin islands rule even though the motion papers cite and discuss the federal
rule
In re Catalyst Third Party Ling 2020 v1 Super 52
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Memorandum Opinion
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Id at Ex 1 (BruceD Spector Esq Affid 1i 7 Apr 29 2011) (formatting altered]
1116 Hess and HOVIC raise procedural and substantive objections in opposition First they
dispute lMC's compliance with Rule 56(d) specifically because its memorandum of law was not
signed under oath and, therefore, cannot satisfy the affidavit requirement Second, the affidavit
[MC did submit was insufficient, they argue because it lfatally" failed to explain how the
information [MC seeks would defeat summary judgment (Hess Pls Opp’n to [MC 5 Mot to Take
Disc Pursuant to R 56(d] 4, filed May 13 2011 ) Third lMC ignored its obligations at its own
peril they argue Id at 8 [quoting Dominic v Hess 0!] VI Corp 624 F Supp 117 120 (D VI
1985) Counsel for [MC monitored trial daily and was present in [c]ourt when settlement
was announced,’ the Hess Plaintiffs explain, yet "made no objection or request to intervene Id
[f Hess and HOVIC had gone to trial with all Plaintiffs, additional expense would have been
incurred, they point out Fourth the 'case law of this jurisdiction' specifically Dominic
empowers the courts to determine as a matter of law whether settlement is reasonable Id at 5
Thus the Court should find that Hess and HOVIC were reasonable in settling with Plaintiffs and
grant judgment summarily on liability, but defer ruling on damages
11 17 In the alternative, Hess and HOVIC object to each area [MC identified for discovery First,
they assert that the Court should review settlement documents In camera Since information [MC
seeks can be disclosed differently, lMC's motion fails they contend Second concerns about the
amounts paid to each Plaintiff must also be rejected because they ’have no intention of seeking
from lMC the total settlement,’ only the portion paid to the 49 plaintiffs at issue Id at
13 And it was Plaintiffs counsel who revisited settlement during trial not the other way
around they note Id at 14 Finally Hess and HOVIC argue that lMC s motion should be denied
because what [MC seeks is confidential or privileged work product
1[18 In reply [MC rejects Hess and HOVIC s suggestion that [MC 5 entire legal analysis had to
be set forth in an affidavit, because that interpretation would result in the affidavit
subsuming the entire memorandum of law ’ [[MC 5 Reply to Hess P15 Opp n to R 56(d) Mot 3
filed May 31 2011 ] [MC also vehemently rejects the Hess Plaintiffs attempt[] to deceive this
Court into thinking that it may rule, as a matter of law, that the settlement is reasonable Id at
4 countering that [MC had to be provided "with facts of settlement, and an opportunity to
contest the reasonableness of settlement" Id [MC claims the Hess Plaintiffs are trying to
railroad [MC through a premature motion for summary judgment,‘ noting that Hess and HOVIC
had six years to prepare [their] defense to the underlying claim[s] and participated in more than
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100 depositions before joining IMC as a third party Id at 1 Finally partial summary
judgment should not be granted, IMC counters because moving for leave to take discovery "stays
the determination of all aspects of the summary judgment motion Id at 8
(2) Legal Standard and Analysts
1119 A motion to take discovery filed in response to a motion for summary judgment functions
like a continuance if granted See Rivera Mercado 51 V l at 311 To obtain the continuance, the
moving party must explain what particular information is sought, how, if learned it would
preclude summary judgment, and why it has not previously been obtained Id at 3 13 (quotation
marks and citation omitted], accord V l R Civ P 56(d) ('If a nonmovant shows by affidavit or
declaration that for specified reasons, it cannot present facts essential to justify its opposition,
the court may defer considering the motion or deny it, allow time to obtain affidavits or
declarations or to take discovery or issue any other appropriate order (internal numbers and
breaks omitted) Courts should ‘typically grant a motion to take discovery ‘as a matter of
course,” 51 V l at 31 1 (quotation marks and citation omitted), so long as the motion is supported
by an affidavit Id at 312
1j20 Before turning to the merits, the Court rejects Hess and HOVlC s challenge to the
sufficiency of the affidavit "The purpose of the affidavit is to ensure that the nonmoving party is
invoking the protections of Rule 56([d]) in good faith and to afford the trial court the showing
necessary to assess the merit ofa party 5 opposition First Chl Int 1 v Unwed Exch Co, 836 F 2d
1375 1380 (D C Cir 1988] As First Chicago International explained
several courts have held that filing an affidavit is necessary for the preservation of
a Rule 56([d]) contention, [but] other circuits have excused the absence of a Rule
56([d]) filing on the ground that other documents filed by the plaintiff such as
opposing motions and outstanding discovery requests sufficed to alert the [trial]
court of the need for further discovery and thus served as the functional
equivalent of an affidavit
Id (footnote omitted) Furthermore even though
"meticulous technical compliance with {the} requirement that a request for
delay be supported by affidavits" is strongly encouraged, the ‘failure to support a
motion by affidavit is not automatically fatal to is consideration so long as the
party informs the {trial c]ourt why delay is needed before the motion for
summary judgment can be properly considered ’
Rivera Mercado, 51 VI at 311 (alterations omitted] (quoting St Surm v VI Daily News 30 VI
373 379 [3d Cir 1994)] An affidavit is clearly required But the affidavit cannot as IMC argues,
subsume the motion What IMC submitted was more than enough to satisfy the requirements of
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the rule So, the Court rejects the Hess Plaintiffs' objections
1i21 Turning to the merits, to obtain a continuance iMC must show "‘what particular
information is sought how if uncovered, it would preclude summary judgment, and why it has
not previously been obtained Id at 313 (citation omitted) Taking the factors out of order the
Court finds that IMC satisfied the last factor why it lacks sufficient information to respond Hess
and HOVIC refused to respond to discovery demands On this point the parties agree Hess and
HOVlC do not dispute that they refused to provide the information IMC requested They cannot
provide it they contend, because the settlement agreements are confidential and not
discoverable Regarding the other information IMC seeks Hess and HOViC claim they do not
have it Plaintiffs produced it during discovery (See Hess PIS Opp n to lMC 5 Discovery Mot 4
n 3 ( [S]ome of the information sought by [MC in reiation to settlement is in possession of
plaintiffs and not Hess ’]), Id at 9 (MC ‘has been provided access to a website that contains
thousands of pages of discovery produced in this matter and Hess has agreed to produce all
relevant, non privileged documents at [its] counsel 5 office ") ]
1f22 Hess and HOVlC are partly correct lMC is not restricted to obtaining discovery only from
them Nonparties and co defendants can be served with interrogatories deposed, and asked to
produce documents Many areas iMC identified do concern Plaintiffs But the Hess Plaintiffs (and
all third parties] overlook one very important point the October 16, 2009 Order severed the
third party action Once severed the claims proceed separately as 'independent actions with
separate judgments entered in each ' Abednego v St CrozxAlumma, LLC 63 V l 153, 183 (Super
Ct 2015) (quoting DIrecTV Inc v Leta 467 F 3d 842 845 (3d Cir 2006)) Severance was
ordered, but no one followed the Order, including the Court One consequence is that a case
management order never issued to govern discovery in the third party action instead, the third
party litigation was stayed, not severed
1123 Superior Court Rule 38 which governed at the time, provided that pre trial procedure
including scheduling orders and discovery conferences, was not automatic in the Superior Court
See Super Ct R 38 ( Pre trial procedure as provided by Rule 16 of the Federal Rules of Civil
Procedure, shall not be mandatory in the superior court, but may be employed in the discretion
of the presiding judge, the trial judge or on motion of any party ) 14 cf. Robles v Beautiful Hair
14 The Court is unaware of any standing order issued by a presiding judge pursuant to Rule 38 employing pre trial
procedure in certain types of actions or all civil actions
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2020 VI Super 32
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Designs 3X 09 CV 503 2011 VI LEXIS 80 *7 8 n6 (Super Ct Aug 24 2011] [ The pretrial
conference is not automatically applicable in the Superior Court Instead [its] applicability
is contingent upon discretion [because m]andating a pretrial conference for every civil
matter filed in the Superior Court would consume precious and limited judicial resources
[quotation marks and citations omitted)) Here, a case management order issued to employ
discovery in the first party litigation, but not the third party litigation And the third parties did
not move for a discovery conference or submit a stipulated scheduling order So IMC is correct
the Hess Plaintiffs motion is premature
1] 24 The Court also finds that [MC satisfied the second factor what discovery is needed [MC
claims it cannot respond to summary judgment because it needs to know how much the Hess
Plaintiffs settled for, whether amounts were individualized per Plaintiff (and if so on what basis)
and whether the Hess Defendants paid more than they should have IMC identifies another area
of concern information ”related to the tendering of the defense and/or tendering of the
settlement [or failure to tender) to [MC (See [MC 8 Discovery Mot Spector Affid 1T 7(m))
Whether [MC is entitled to this information is the subject of other motions But pending motions
do not delay discovery Cf. Rivera Mercado 51 V i at 314 n 7 ( [Ajdditional discovery should not
be rejected solely on a court 5 View ofthe likely outcome of that discovery ’], accord V [ R Civ
P 26(d)[4) ("The filing of any motion including potentially dispositive motions such as a
motion to dismiss or a motion for summary judgment shall not stay discovery in the action
unless the judge so orders )
If 25 The Hess Plaintiffs disagree arguing that "many of the listed facts are legal conclusions
(Hess Pls Opp n 4 n 4) For example, one area [MC identifies is [wjhether HOVlC or Hess were
grossly, willfully, intentionally or recklessly negligent (IMC 5 Discovery Mot, Spector Affid 11
7(n)) And Hess and HOVIC are correct whether and to what extent a party is negligent is
determined by the fact finder But discovery uncovers facts that will or will not Show whether
and to what extent, someone was negligent Admittedly, lMC's proffer does read like a legal
conclusion But what [MC seeks is information about what caused Plaintiffs claims and what
actions Hess and HOVIC took (or failed to take) that will show whether they were negligent
(grossly solely, or otherwise) Clearly knowing this information will aid [MC in deciding
whether Plaintiffs' claims fell within or outside the scope of the agreements to indemnify Hess
and HOVIC (See [MC 5 Reply to Hess PIS Opp n to Discovery Mot 11 ( Some of these Plaintiffs
worked with catalyst for 20 years before IMC was formed and signed their first contract with
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HOVIC in 1986 MC did not reasonably expect that they would be assuming any pre existing
exposure when it signed contracts with HOVlC in 1986 and 1994 ")
1i26 Although [MC satisfied the "what' and the why’ factors, it has not satisfied the how
factor On this point, the Hess Plaintiffs are correct [MC in its submissions nowhere explains
how the information [it] seeks will preclude [s]ummary [jiudgment if uncovered [Hess Pls'
Opp'n to [MCs Discovery Mot 4) That is [MC has not explained, at least not in detail how
learning what amount Hess and HOVIC settled each case for, whether they settled out of fear of
punitive damages, or whether they paid more than they should have how discovering this
information would defeat summary judgment Cf. Rivera Mercado 51 V] at313 14 Nonetheless,
in this instance the Court is not troubled by [MC 5 failure to satisfy all three factors because as
discussed further below Hess and HOVIC's motion reveals deficiencies that preclude granting
summary judgment
1i27 Accordingly, having considered the parties arguments, and mindful of the posture of this
case, the Court concludes that [MC's motion must be granted ’Delay of summary judgment for
additional discovery is not available to litigants who act lackadaisically but requires due
diligence both in pursuing discovery before the summary judgment initiative surfaces and in
pursuing an extension of time thereafter ' Rohn v Daily News Pub! Co , SX 04 CV 158, 2015 VI
LEXIS 158 *22 (V I Super Ct Oct 21 2015) (quotation marks citation ellipses and emphasis
omitted)) Here, [MC has shown diligence before and after the Hess Plaintiffs moved for
summaryjudgment [MC has also shown the information it needs and why it has been unable to
obtain it While [MC did not explain how that information will preclude judgment the Court
agrees that the what how. and why" factors are not 'exhaustive" but simply a guide for the
court to follow in exercising its discretion " (Hess Pls Opp n to lMC’s Discovery Mot 3 n 2 (citing
Rivera Mercado 51 V l at 313)) No order issued to govern discovery Under the circumstances
the Court finds that [MC 3 motion should be granted and a case management order issued to
govern discovery
B The 'Amended Motion for Summary Judgment“?
(1] Arguments
15 Ordinarily granting leave to take discovery defers ruling on summary judgment In this instance, however the
Court will exercise its discretion to address the Hess Plaintiffs motion notwithstanding granting [MC 5 motion,
because the motion highlights concerns with the posture of this litigation Additionally deferring ruling on summary
judgment would be futile if the motion is deficient regardless of the evidence [MC might marshal in opposition [MC 5
right to respond will be preserved should the Hess Plaintiffs renew their motion
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1]28 Hess and HOVIC seek summary judgment against IMC claiming [MC breached its
contracts to defend HOVIC and Hess‘ and thus they are entitled to indemnification from NC
[for] the legal expenses attorney 5 fees, and settlement amounts paid to settle with forty nine
Plaintiffs (Hess Pls Amend S] Mot 18 filed Mar 24 2011) In support they submit copies of
the following (1) their Amended Third Party Complaint and IMC 5 Answer and Counterclaim,
(2) a 1986 purchase order HOVlC issued to IMC, (3) a 1994 maintenance service agreement
between HOVlC and [MC [4) correspondence between HOVlC and IMC employees (5) excerpts
of depositions of forty five Plaintiffs and (6] social security records and other discovery for
several Plaintiffs (See generally Hess PIS Amend S] Mot Exhs A A3 ) According to Hess and
HOVIC IMC s duty to indemnify stems from
two substantially similar indemnification agreements collectively covering the
period of 1986 to 1998 Both agreements provide three terms as conditions for
indemnification (1) indemnities must be HOVlC or Its affiliates successors and
assigns (2) the occurrences giving rise to the claim must be in connection to IMC‘s
services, and [3) the indemnities collectively cannot be solely negligent for the
claimed injuries
[Hess PIS Amend S] Mot 5 (emphasis added) The tort claims of forty three Plaintiffs fall under
the 1986 purchase order, while another six Plaintiffs' claims fall under the 1994 maintenance
service agreement Forty three Plaintiffs claimed exposure to catalyst dust while working for
[MC and another six claimed exposure to catalyst dust as bystanders when IMC was responsible
for the loading and unloading of catalyst between 1986 and 1998 Id at 8 Both agreements
provide for indemnification of HOVIC unless it is determined that any liability was caused by
the sole negligence or sale willful misconduct of HOVlC Id Ex D [letter from Frank Keleman
to Roberts Lewis dated July 28 1986 (emphasis added) [hereinafter July 28 1986 letter ) 1d
at Ex H [HOVlC IMC Agmt 1] 11 1 dated Apr 4 1994 [emphasis added)) (hereinafter 1994
Maint Servs Agmt )
£29 Regarding the 43 Plaintiffs Hess and HOVlC argue that a jury could not have found them
solely negligent "because [MC [also] owed a non delegable duty [to their own employees] ”
Id at 9 Regarding the 6 "bystander ’ Plaintiffs Hess and HOVlC contend that a jury also could not
have found them solely negligent because IMC [also] owed an affirmative duty to ensure that
bystanders were not exposed to catalyst dust while conducting catalyst work ” Id Hess
and HOVIC also point out that Plaintiffs had sued Shell UOP and American Cyanamid as well,
and claimed they were strictly liability owing "a duty to warn end users [such as plaintiffs) of
their products Id at 10 11 Thus the Court should rule that HOVIC and Hess cannot be solely
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negligent for plaintiffs’ alleged injuries as a matter of law, and hold as a matter of law that
plaintiffs' claims fall within the ambit of the contractual indemnification" agreements Id at 12
This comprises their first argument for summary judgment
1130 The remaining arguments concern whether Hess and HOVIC were reasonable in settling
with the 49 Plaintiffs Hess and HOVIC only need[ed] to establish their [own] potential liability
and not their actual liability," they contend, in order to satisfy the first element ofthe reasonable
settlement analysis Id at 13 Citing Bamvzlle v Standby Power Supplies Inc
837 F 2d 128 (3d
Cir 1988] they assert that the United States Court of Appeals for the Third Circuit previously
found that the broad language” in HOVIC s indemnification agreements showed "intent to
condition indemnification on HOVIC and Hess potential liability, not actual liability' Id Since
the 1986 purchase order with IMC has the same language as the one at issue in Balm/(Ne th(is]
Court should {also} rule that HOVIC and Hess only need to show potential liability to be entitled
to indemnification from lMC " Id In BameIe Hess and HOVIC clearly faced potential liability
from the underlying plaintiffs," so here too the Court should find as a matter of law that HOVlC
and Hess acted reasonably in avoiding its [sic] potential liability exposure by settling with all
plaintiffs during the trial offour cases Id at 15 16
(2) Legal Standard and Analysis
1131 Summary judgment is a drastic remedy, and should be granted only when the pleadings,
the discovery and disclosure materials on file and any affidavits Show that there is no genuine
issue as to any material fact Machado v Yacht Haven USVI LLC 61 VI 373 379 80 (2014)
(brackets and citation omitted) The party seeking summary judgment has the burden to put
forth evidence and show how that evidence shows that material facts are no longer in dispute
and judgment should be entered summarily See United Corp v Horned
64 VI 297 309 (2016)
( The party moving for summary judgment possesses the initial burden of identifying evidence
indicating that there is an absence of any issue of material fact (brackets omitted) (quoting
Martin v Martin 54 V1 379 391 (2010) (per curlam)) This burden is the same whether the
movant is the plaintiff or the defendant whether the motion seeks judgment on a claim
crossclaim, counterclaim third party claim, or affirmative defense See, eg SeaIey Christian v
Sunny Isle Shopping Ctr Inc
52 VI 410 420 (2009) ( One of the principle purposes of the
summary judgment rule is to isolate and dispose of factually unsupported claims or defenses "
(brackets omitted) (quoting CeIotex Corp v Catrett 477 U S 317 323 24 (1986)) see also Clark
v Modern Grp 9 F 3d 321 326 (3d Cir 1993] ( A defendant meets this standard when there is
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an absence of evidence that rationally supports the plaintiffs case A plaintiff, on the other hand,
must point to admissible evidence that would be sufficient to show all elements of a prima fame
case under applicable substantive law (citation omitted)]
1132 To determine whether summary judgment is warranted, courts conduct[] an
independent review of the entire record" to see if any issues of material fact remain in dispute
Vanterpool v Gov t of the VI
63 VI 563 594 (2015) An issue of material fact is genuine and
consequently summary judgment is improper if the evidence is such that a reasonable jury
could return a verdict for the nonmoving party Palisoc v Poblete 60 V l 607 618 n 10 (2014)
(quoting Sealey Christian
52 VI at 421]) Facts are considered material if they affect the
outcome of the suit under the governing law Williams v United Corp 50 V l 191, 195 (2008)
However, when the substantive law is unsettled, the court must decide what law governs
”because summary judgment is determined according to the substantive law governing the
cause ofaction ”’ Der Ween 64 V I at 135 (quoting Perez v RItZ Carlton (VI), Inc , 59 V1 522 528
(2013)]
1133 Here, when Hess and HOVlC moved for summary judgment the law governing indemnity
agreements was settled But since then the Supreme Court of the Virgin Islands rejected
mechanistic reliance on prior precedent based on a belief that application of the Restatements
or the majority rule was mandatory pursuant to 1 V l C § 4 as in effect prior to this Court 5 ruling
in Banks ' Connor, 60 V] at 603 n 1 Now ' the Superior Court when considering a question not
foreclosed by prior precedent from this Court must perform a three part analysis as set forth in
Banks " Id at 603 Because the Virgin Islands Supreme Court has not yet addressed the law
governing indemnification agreements the Court (Willocks, J) gave the parties leave to file
supplemental briefs specifically ' to brief certain questions of law at issue in their motion papers
that may no longer be governed by binding precedent in light of Government ofthe Virgin Islands
v Connor 60 Vi 597 (2013) (Order 1 entered May 14 2015] Leave was not limited to any
particular motion, however
1134 The Hess Plaintiffs and IMC took the opportunity to supplement their respective
positions But neither side addressed whether indemnification agreements should be recognized
under Virgin islands common law Instead both sides assumed that they would be The
consequence now is that the Court has before it a motion for summary judgment But summary
judgment presupposes that the law governing the claims and defenses has been settled
Otherwise the parties could not develop the factual record And a Banks analysis also entails, not
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only deciding what common law rule to adopt but whether to recognize a specific rule at all Cf
Matthew v Herman,
56 VI 674, 684- (2012) (declining to recognize amatory torts under Virgin
Islands common law) Machado 61 Vi at 380 385 86 (adopting elements of negligence claim
and rejecting common law distinction between invitees licensees, and trespassers) accord
Carlos Warehouse v Thomas 64V] 173 184- (Super Ct App Div 2016] ( The purpose of 3 Banks
analysis where common law claims and defenses not yet recognized in binding precedent is
concerned is first to determine whether the claim or defense should be recognized under Virgin
Islands common law, and then how it should be recognized, meaning what specific rules should
be adopted (emphasis added)); see also McKenzre v Hess Oil VI Corp 70 V] 210 221 n 5
(Super Ct 2019] ( Here, a Banks analysis would entail deciding first whether to recognize loss
of consortium claims ]
{[35 Before determining whether a Banks analysis is necessary the Court must decide first
what claims are at issue 16 Accord Walters 60 V] at 775 (‘Before we consider the Superior
Court's summary judgment decision, we must determine what causes of action Aubrey actually
asserted ] This is not an action for specific performance of an indemnification agreement Cf.
CH Heist Caribe Corp v Am Home Assurance Co Civ No 79 151 1980 U S Dist LEXIS 17890
*1 (D Vl June 27, 1980) ( This is an action for declaratory judgment by an insured against its
insurance carrier seek[ing] a judicial declaration that a third party claim in another action
based on contractual indemnity is within the coverage of a policy of insurance purchased "], afl’d
in part 640 F 2d 479 (3d Cir 1981) see also Dominic
624 F Supp at 120 ( [Ojnly three options
are available to a liability insurer requested to defend an insured against claims which the
insurer believes exceed policy coverage (1) seek a declaratory judgment regarding its
obligations before or pending trial of the under lying action (2) defend the insured under a
reservation of rights or (3) refuse either to defend or seek a declaratory judgment at the
16 Although deciding what law governs is ultimately a legal question for a court to resolve when the question
concerns whether the Virgin Islands should recognize a particular cause of action or defense the parties generally
should have a chance to weigh in (I In re Connor, 61 V l at 278 n 2 see also Antilles School v Lembach 64 Vi 400
428 n 13 (2016) ( [A]bsolutely no basis in Virgin Islands Supreme Court precedent for the proposition that
attorneys are not required to fully brief all questions of law relevant to the issues that are being litigated including
all three Banks factors ] The Court granted leave to file supplemental briefs in light of Connor The Hess Plaintiffs
and NC filed briefs but only the Hess Plaintiffs addressed what law governs contractual indemnification [MC
limited its briefing to whether confidential settlement agreements should be discoverable by other parties in the
same litigation Neither side questioned whether the Virgin Islands should recognize contractual indemnification
claims Since all parties were given a chance to be heard regarding the soundest rule for the Virgin Islands the Court
proceeds to address the legal question At some point briefing must end and a decision made
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insurers peril that it might later be found to have breached its duty to defend (citation
omitted)) revd on other grounds
841 F 2d 513 (3d Cir 1988)) That is Hess and HOViC did not
commence a declaratory judgment action Instead, the Hess Defendants brought [MC [and all
other Third Party Defendants) into these cases by third party complaint Accordingly, since a
written agreement whereby one party agrees to indemnify another party is essentially a
contract, contract law governs See eg , GartSIde v Young Men's Christian Ass n 274 N W 2d 58
60 [Mich Ct App 1978) [ indemnity contracts, like other contracts, are to be enforced so as to
effectuate the intentions of the parties ) Moberly v Leonard
99 SW2d 58 63 (Mo 1936)
[‘ There are two kinds of indemnity contracts indemnity against liability, and indemnity against
loss ’), And Virgin islands common law already recognizes breach of contract as a cause of
action To establish a claim for breach of contract, the claimant must “demonstrate (1) an
agreement (2) a duty created by that agreement (3) a breach of that duty and (4) damages
Phillip v Marsh Monsanto 66V] 612 621 (2017) [citing Brouillardv DLjMortg Capital Inc 63
Vi 788 798 (2015)) Thus 3 Banks analysis is unnecessary to decide whether Virgin Islands
common law should recognize breach of contract as a cause of action it already does
1136 But a Banks analysis is required to address whether the Virgin islands should recognize
a claim for breach of an indemnification agreement, not all contracts are enforceable See, eg ,
Slack v Slack 62 V l 366 (Super Ct 2015) [conducting a Banks analysis regarding the validity of
prenuptial agreements) afl’d in part, rev'd in part and remanded on other grounds, 69 Vi 567
(2018) Compare CSX Transp v Kirby 687 N E 2d 611 615 [ind Ct App 1997) ( [Olur supreme
court has said that a 'party may not contract against his own negligence '" {quoting Freigy v
Gargaro Co 60 N E 2d 288 292 (ind 1945)) With Indem Ins Co v Koontz Wagner Elec Co 233
F 2d 380 383 [7th Cir 1956) ("Neither law nor public policy prevents the ordinary contractor
from buying from a third party indemnity from the pecuniary result of his own negligence That
is legitimate as insurance "’ [citation omitted)) and O’Callaghan v Waller & Becszth Realty Co,
146 N E 2d 198 202 [111 Ct App 1957) ( [i)n the field of indemnity contract law the trend
has been toward extending the principle of freedom of contract, as against the argument that an
agreement indemnifying one against the consequences of his own negligence is void as against
public policy ") Consequently this Court must exercise its “concurrent authority with th[e
Supreme] Court to shape Virgin islands common law Connor 60 V l at 604
1B7 The first step whether Virgin islands courts previously adopted a specific rule, asks
whether local courts have rendered reasoned decisions the Virgin islands has grown to rely
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on See 1d at 603 The second step, determining the positions taken by other jurisdictions,
requires considering all sides to examine the different approaches, if any, other states and
territories have taken See Id The third step deciding what rule is soundest for the Virgin Islands,
mandates that the Superior Court weigh all persuasive authority both within and outside the
Virgin islands and determine the appropriate common law rule based on the unique
characteristics and needs of the Virgin Islands Id (citations omitted) Each is considered below
1138 Regarding the first factor, Virgin Islands courts have recognized a cause of action for
breach of contractual indemnification for several decades now See, e g Frederick v Hess 011 VJ
Corp 17 VI 523 527 33 (DVI 1980) afi’d
642 F 2d 53 (3d Cir 1981) Below: PowerSys v Hess
Oil VI Corp 19V] 519 (D V i 1983) rev din part
757 F 2d 1427 (3d Cir 1985) and afl’dm part
757 F 2d 1431 (3d Cir 1985) Dominic
624 F Supp 117 Bamwlle
837 F 2d 128 Eastern Airlines
Inc v Ins Co ofN Am 758 F2d 132 (3d Cir 1985) Hess 011 VI Corp v FiremensFund Ins Co
22 V I 139 146 (D V i 1986) (directing entry ofjudgment on the issue of liability for breach of
the c0ntract[] for indemnification ) Innovative Comm Corp v V] Water& PowerAuth,
49
VI 57 59 (Super Ct 2007) ( Plaintiffherein sues Defendant for Breach ofContract for failing to
indemnify it in Wynter [v Innovative] ) A cause of action for contractual indemnification is
similar to its common law incarnation, except the former is limited to staying within the realm
of rights predefined by a contract ' In re Kelvin Manbodh Asbestos Ling Series, 47 V I 267 289
(Super Ct 2005) accord Martin v Frett 17 Vi 474 481 (D V] 1980) [acknowledging distinction
between contractual indemnification and tort based indemnification which, like contribution,
mergefs] into comparative negligence ’) But Virgin Islands courts also recognized that [a]n
election must be made’ Frederick, 17 V i at 528 (' [A] party cannot seek recovery under both an
express contract and common law tort principles ) Thus, the first factor favors continuing to
recognize contractual indemnification particularly given widespread acceptance by Virgin
islands courts Cf. Matthew, 56 V l at 682 (noting absence of single opinion" showed a lack of
widespread acceptance of a cause of action and supported disallowing the cause of action)
1(39 Courts in other jurisdiction also recognize a cause of action for breach of an indemnity
agreement Hg Ramos v Browning Ferns Indus Inc 510 A 2d 1152 1159 (NJ 1986)
( Indemnity contracts are interpreted in accordance with the rules governing the construction
of contracts generally ) Superintendent of Ins of N Y v Livestock Market Ins Agency, Inc 709
S W 2d 897 903 (Mo Ct App 1986) ( In the case of an indemnity against liability the covenant
is breached, and the indemnitee becomes entitled to sue, as soon as the indemnitee incurs
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liability and actual loss need not be shown to recover ), McClure v Deerland Corp 585 A 2d 19,
23 (Pa Super Ct 1991) ( Under Pennsylvania law a claim for recovery under an indemnification
agreement is an action for breach of contract ), Estate of Kriefall v Sizzler U 5 Franchise, Inc,
816 N W 2d 853 869 (Wis 2012) ( [C)laim here is breach of the Hold Harmless Agreement
by which Excel promised to defend and indemnify E&B against claims such as those asserted by
the non Kriefall plaintiffs ) Wyoming johnson Inc v Stag Indus Inc,
662 P 2d 96 102 (Wyo
1983) (' [W]hen parties have entered into a written contract which includes an express
indemnification provision, the express provision controls It is inappropriate to enlarge or add
rights of indemnification to the express provision by implication ") see also WR Hall, Inc v
Hampton Rds Sanitation Dist 641 S E 2d 472 472 (Va 2007) ( [A] contractual provision
whereby a party indemnifies itself against losses incurred as the result of personal injury caused
by its own future negligence is enforceable and does not violate the public policy of the
Commonwealth ) Thus, the second factor also favors recognizing a contractual indemnification
claim as, essentially a breach of contract claim
1140 The third and final factor, also the most important, is the most straight forward here
insofar as the underlying purpose of contract law is to hold parties to their agreements so
that they receive the benefit of their bargains " Phillip 66 V I at 621 (citations omitted) For over
a century businesses in the Virgin islands have relied on the right to seek redress in our courts
if an agreement is breached See id at 620 (collecting cases) And for the past several decades
the same has been true of indemnification agreements (Compare [MC's Discovery Mot 13 (”Just
as HOVlC was required to produce information regarding the settlements it reached in Dominic
and Bainwlle, it should also be ordered to produce such information in the Catalyst litigation
herein ) With Hess PIS ’ Amend S] Mot 6 (‘The Third Circuit has already considered HOVlC's
indemnification language to rule [sic] that it covers claims that contractors employees assert
against HOVlC " [citing Bamwlle 837 F 2d 128)) ) Virgin Islands businesses and residents, and
companies doing business in the Virgin Islands, have assumed that Virgin Islands common law
will let them agree among themselves how to allocate responsibility for loss liability, injury and
damages and further, that Virgin islands courts would enforce such agreements and provide a
remedy if breached 'The law of contracts is designed to effectuate exchanges and to protect the
expectancy interest of parties to private bargained for agreements' Phillip, 66 V] at 621
[quoting State Farm Mat Auto Ins Co v Ford Motor Co 592 N W 2d 201 206 [Wis 1999)) in
other jurisdictions, the legislatures have decided as a matter of public policy to prohibit some
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forms of indemnification See, eg Langston v Gonzalez 958 N Y 5 2d 888 897 (Sup Ct 2013)
(“This indemnification provision is clearly void and unenforceable under General Obligations
Law § 5 321 because it shifts the entire responsibility for any damages to the tenant regardless
ofthe landlord s own negligence ] Atwood Health Props LLCv Calson Constr Co 111 A 3d 311
316 n 7 (RI 2015] ( General Laws 1956 § 6 34 1 provides that a subcontractor cannot be
required to indemnify a general contractor for the general contractor's own negligence and that
any indemnification agreement to the effect is void ) cf. Arthur v State
377 P 3d 26 34 (Haw
2016) ( The purpose of this Act is to invalidate as against public policy the prevalent practice
in the construction industry of causing contractors to assume liability for the negligence of
others by contract Such so called hold harmless agreements are usually incorporated into
contracts for construction projects on a take it or leave it’ basis (i e to take out the necessary
insurance or leave the bidding to someone else) and frequently require the contractor, engineer
or architect, for example to undertake assumption of liability for personal injury or property
damage even where the same results from the sole negligence’ of persons over whom the
indemnitor has no control or right of control (citation omitted)) But the Virgin Islands
Legislature has not weighed in on indemnification agreements including agreements whereby
one party agrees to indemnify another party for that party's own negligence However the Virgin
Islands Supreme Court promulgated a rule that requires lawyers and law firms to indemnify the
financial institution servicing client trust accounts See VI 3 Ct R 211 1 15 30'] ("Every lawyer
or law firm maintaining a trust account in the Virgin Islands shall as a condition thereof, be
conclusively deemed to have consented to the reporting and production requirements by
financial institutions mandated by Rule 211 1 15 5 and shall mdemmfiz and hold harmless the
financial institution for its compliance with such reporting and production requirement "
(emphasis added)]
1i41 Having considered all three factors the Court concludes the soundest rule for the Virgin
Islands is to continue to recognize a cause of action for breach of an indemnification agreement
‘lndemnification agreements are contracts 'Stllley v James 48 S W 3d 521 528 (Ark 2001] And
the parties are free, within the limits of public policy to agree upon conditions precedent to
suit Arm v Underwriting Members of Lloyd 5 of London syndicates 33 996 A 2d 588 597 (Pa
Commw Ct 2010) (quoting Conthas Co v Strongholdlns Co Ltd 77F 3d 16 19 (2d Cir 1996]
(applying New York law]) The more challenging question and the heart of the dispute here
is whether Virgin Islands common law should further recognize indemnification agreements
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that shift one party 5 entire responsibility to another The Hess Plaintiffs contend that both the
1986 purchase order and the 1994 maintenance service agreement have the same requirement
to trigger the duty to indemnify (1) indemnities [sic] must be HOVIC or its affiliates successors
and assigns, (2) the occurrences giving rise to the claim must be in connection to NC 5 services,
and (3) the indemnities collectively cannot be solely negligent for the claimed injuries (Hess
Pls ' Amend S J Mot S ) This "501er negligent clause is what the Court turns to next
1i42 The Hess Plaintiffs contend that if the jury had returned a verdict Hess and HOVIC might
have been found negligent, perhaps even 99 9% negligent But so long as neither were found
solely negligent meaning 100% at fault and the other requirements were met,17 then [MC (and
‘7 Assuming the Hess Plaintiffs correctly state the conditions in their indemnification agreement with IMC to trigger
iMCs duty the amended motion still would have to be denied because Hess and HOVIC failed to submit proof
regarding the first condition Hess and HOVIC are not the same person under the law a crucial distinction all
parties overlook (If Hess Oil VI Corp v FIuor Daniel 2020 Vi Super 50 (HOVIC filing case on behalf of Hess but
without alleging an assignment of rights) There is no dispute Hess and HOVIC were sued by several individuals
and settled with them Court records prove that fact But whether iMC breached its agreement to indemnify Hess
HOVIC or both is disputed Yet the Hess Plaintiffs failed to distinguish between themselves in their motion or
address their respective burdens of proof instead they proceeded as if they were one and the same with one
contractual indemnification claim against MC The Hess Plaintiffs gloss over this distinction noting that the Court
should find as a matter oflaw that Hess was HOVIC s affiliate under the 1986 HOVIC lMC agreement (See Hess Pls
Amend SJ Mot S 6 ( Affiliate is a legal term ofart meaning a corporation that is related to another corporation by
shareholdings or other means of control a subsidiary parent or sibling corporation it is undisputed that Hess is
the parent company ofHOVlC and thus is an affiliate ofHOVlC Therefore the Court should rule that both HOVIC and
Hess are indemnities (emphasis added) (quoting Black 5 Law Dictionary 23 (2d pocket ed 2002))
The Legislature of the Virgin islands has defined the term affiliate for certain purposes See, e g 9 VIC §1
( Affiliate means an [sic] corporation partnership limited liability company business trust or any other legal
organization or entity that controls is controlled by, or is under common control with another such entity ) see
also 12A U S C § 402(1) (defining affiliate for purposes of the Virgin islands Uniform Debt Management Services
Act) 28 Vi C § 171(a) (defining affiliate for purposes of the Virgin Islands Uniform Fraudulent Transfers Act) No
court in the Virgin islands has addressed how the common law should define affiliate or whether courts should
adopt existing statutory definitions if applicable to harmonize the law Even if the meaning of affiliate was not at
issue here material facts are still in dispute because the Court cannot find on the present record at least that [MC
and HOVIC knew that Hess a corporation headquartered in New York and organized under New Jersey law (per
the Amended Third Party Complaint) was an affiliate under the 1986 purchase order The relevant
indemnification language HOVIC points to is not in the 1986 purchase order. but in a separate letter dated July 28
1986 which HOVIC s purchasing manager sent to [MC 5 president (See Hess Pls Amend SJ Mot Ex D (letter from
Frank Keleman to Robert S Lewis dated July 28 1986)) ) In that letter Keleman informed Lewis that HOVIC and
WC had agreed to modify their agreement substituting language stating that IMC agreed to defend indemnify
hold harmless and release Hess Oil Virgin islands Corp and its affiliates successors and assigns specifically
including but not limited to St Croix Petrochemical Corp (SCPC) Id The Hess Plaintiffs would have the Court
conclude ipse dixit that a letter from HOVIC to MC, without any signatures or indicia of acceptance proves that [MC
consented to the changes and further that lMC and HOVIC understood the term affiliate to include Hess even
though SCPC but not Hess was expressly named The only reference in the present record of Hess being considered
an affiliate of HOVIC under the 1986 purchase order is in another letter dated January 26 1994 which IMC s
president sent to HOVIC 3 contract administrator stating that [t]he indemnity applies to HOVIC Amerada Hess
and SCPC (See Hess Pls Amend SJ Mot Ex G (letter from Rocco Coiabella to Robert S Lewis (Jan 26 1994)))
But then in the next sentence Lewis wrote that [MC would indemnify HOVIC and its affiliates Id These
discrepancies raise factual questions as to whether MC and HOVIC understood that Hess was an affiliate under
their 1986 purchase order and if so when
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any other indemnitors) must assume 100% ofHess and HOVIC's liability Iii-less and HOVIC are
correct, IMC must reimburse each for the amounts they paid to settle with 49 Plaintiffs Whether
to recognize indemnification of this nature requires a separate Banks analysis because at
common law it was the "general rule that contracts to relieve one from the consequences of his
own negligence {we]re not favored in the law and if possible are construed not to confer
immunity from liability Pan Am World Airways Inc v UnIted Aircraft Corp 163 A 2d 582 587
[Del 1960)
1143 No court since Banks has addressed whether the Virgin Islands should recognize an
indemnification agreement in which one party passes its own liability entirely to another party
and, if so, under what conditions This question was extensively debated in the Virgin Islands in
the past however making the first factor especially relevant here In other words, unlike other
areas where Virgin Islands courts may have turned to the Restatements without questioning
their soundness, in this area Virgin Islands courts did not turn to the Restatements at all, and
instead reasoned their way through in developing the law 18
H44 First, some context is necessary Common law indemnity shifts the entire burden ofloss
from one party to another Ethyl Corp v Daniel Constr Co 725 S W 2d 705 708 (Tex 1987) By
contrast a contract of indemnity is construed in accordance with the rules for the construction
of contracts generally Rahmam v Park,
2011 Guam 7 II 26, accord Plumlee v Monroe Guar Ins
Co 655 N E 2d 350 359 (Ind Ct App 1995] [ Indemnification agreements are contracts and are
Further and in contrast to the 1986 purchase order IMC and HOVIC expressly agreed in the 1994
maintenance services agreement that IMC would defend indemnify and release HOVIC and its parent affiliates
successors and assigns (emphasis added) [1994 Agmt TI 11 1 p 8 (emphasis added) ) This too raises a question
why the parties included the term parent in the 1994 contract if as the Hess Plaintiffs argue IMC understood all
along that affiliate meant Hess or was synonymous with HOVIC 5 corporate parent Ultimately this may not be a
material dispute [MC has not responded yet and may concede that Hess was an affiliate under either or both
agreements But the Court cannot assume as a matter oflaw from the present record that [MC knew that Hess was
an affiliate of HOVIC Instead each plaintiff or third party plaintiff must carry its own burden of proof
‘3 The Hess Plaintiffs assert by contrast that Virgin Islands Courts have routinely adopted the indemnification
provisions of Restatement (Third) of Torts Apportionment of Liability both before and after Banks (Hess PIS
Supp Br 6) But they are incorrect The cases cited in their supplemental brief did apply the Restatements See id
(citing Dams v Sunrise Med (US) LLC Civ No 2012 29 2013 U S Dist LEXIS 99711 *6 7 [D VI July 17 2013]
Whitecap lnv Corp v Putnam Lumber& Exp Co Civ No 2010 139 2013 US Dist LEXIS 39062 *16 17 (DVI Mar
21 2013) Vandenhouten v Olde Towne Tours LLC
52 VI 551 559 60 (DVl 2009) jacobs v Roberts ST 14 CV
193 2015 VI LEXIS 58 *8 (VI Super Ct May 21 2015] Petersv Vl Water& PowerAuth ST 11 CV 219 2013 VI
LEXIS 65 *12 13 (VI Super Ct Oct 7 2013) In re Kelvm Manbodh Asbestos Ling Series 47V] 375 393 [Super Ct
2005) But each case except Dams involved common law indemnification not contractual indemnification and the
Court finds Dams unpersuasive because the District Court uncritically applied the Restatements after Banks as if
they were still binding, see 2013 U S Dist LEXIS 99711 at *7 n 2 [citing 1 V I C § 4] which was in error (If Bertrand
v Mystic Granite & Marble Inc
63 VI 772 783 n S [2015)
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governed by the law of contracts ) But contracts whereby the indemnitor holds the indemnitee
harmless even for the indemnitee s own negligence are somewhat unusual," Rahmani
2011
Guam 7 at 1} 26 and thus strictly construed Pugh v Prairie Constr Co 602 N W 2d 805 809
(Iowa 1999) Thus, "as a general rule, a contract of indemnity will not be construed to indemnify
the indemnitee against losses resulting from its own negligent acts unless such intention is
expressed in clear and unequivocal terms Rahmani,
2011 Guam 7 at 1i 27 (emphasis added)
Herein lies the heart of the issue because the 1986 purchase order as amended, provides that
Seller shall defend indemnify hold harmless and release HESS OIL VIRGIN
ISLANDS CORP and its affiliates, successors and assigns from and against any
and all suits actions claims, demands, damages liabilities, attorneys fees costs
and related expenses which HOVIC may suffer 0y reason of injury (including
death) to any person, or damage to any property, excluding property owned by
Seller in any manner directly or indirectly caused, occasioned or contributed to in
whole or in part or claimed to be caused by occasioned or contributed to in whole
or in part, by reason of any act, omission, fault or negligence, whether active or
passive, of the Seller, its subcontractors or their officers employees, agents or
representatives, or of anyone for whose acts they are liable, or of anyone acting
under their direction or control or on its or their behalf in connection with, or
incident to, performance of the purchase order Seller 5 aforesaid indemnity hold
harmless and release agreement shall not be applicable to any liability caused by
the sole negligence or sole willful misconduct of HOVIC In the event that it is
determined that any liability was caused by the sole negligence or sale WilIful
misconduct of HOVlC, then HOVIC shall reimburse Seller and/or its insurance
carrier for all judgments and expenses incurred including the costs incurred in
defending any claim arising from such liability
(iuly 28, 1986 letter) And the 1994 maintenance services agreement which is largely identical,
provides that
CONTRACTOR will defend indemnify, and release HOVIC and its parent affiliates
successors and assigns against all claims, causes of action damages, liabilities
attorneys fees and related expenses (herein Claims") which HOVIC may suffer or
for which HOVIC may be liable, [whether such Claims result by reason of any other
contract imposing or requiring the assumption of Claims by HOVlC], by reason of
the actual or claimed injury (including death) to any person or actual or claimed
damage to any proper, (including loss of use] directly or indirectly caused or
contributed to, or claimed to be caused or contributed to by reason of any act
omission or negligence whether active or passive of CONTRACTOR [its
employees or its subcontractors, or of anyone for whose acts they are liable, or of
anyone acting under their direction or control or in connection with or incident
to performance of this Contract unless caused by the sole negligence or sale
Willful misconduct of HOVlC CONTRACTOR will do this notwithstanding the
Virgin Islands Comparative Negligence Statutes, Title 5 V l C Section 1451 In all
cases covered hereunder CONTRACTOR will initially defend HOVlC until it is
judicially determined that any liability was caused by the sole negligence or sale
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Willful misconduct of HOVIC exclusive of any fault of the plaintiff plaintiff’s
employer, or any other party or non party to the lawsuit If it is so determined
HOVIC will reimburse CONTRACTOR or its insurance carrier for all judgments and
expenses incurred including the costs incurred by CONTRACTOR or its insurer in
defending any Claims arising from such liability
[1994 Maint Servs Agmt)
1145 In one of the earliest decisions regarding contractual indemnification Tropic Plumbing,
Inc v Thomspon Staret International Inc 8 VI 232 239 (DVI 1971) revd8 VI 525 (3d Cir
1972) the District Court rejected implying a duty on the part of a subcontractor to indemnify a
contractor, concluding that “[a] party should not be held to suffer the consequences of another 5
mistakes unless he has clearly and unmistakeably [sic] agreed to do so' On appeal the Third
Circuit reversed not because it disagreed with the District Court 5 reasoning, however Rather,
the appellate court concluded that the trial court had erred by resolving factual ambiguities on
a motion for summary judgment See
8 VI at 530 judicial concern with implied contractual
indemnification continued, however Perhaps in response all Virgin Islands cases after Tropic
Plumbing involve express or written, indemnification agreements Cf Frederick 17 V] at 527
( Hess originally sought indemnity under various alternative theories However, at oral
argument counsel for Hess conceded that their claim was being advanced on the basis of express
contractual liability )
1146 Frederick involved a lawsuit by an employee of D 8: M Electric Company Inc [' D & M )
against Hess 19 and Hess attempt to seek indemnification from D & M via third party complaint
for the money paid to Frederick to settle his claims Id at 525 26 After Frederick had agreed to
settle with Hess the court entered a stipulated judgment in favor of Frederick for $98 000 Id at
526 D & M 'did not contest the reasonableness of the stipulated judgment and further
advanced $49,000 to be applied in satisfaction of the judgment while reserving all of its rights
against Hess in th[e] indemnity action Id In discussing Hess rights, the court found that the
contract between D & M and Hess was the only possible source of indemnity
[there a third party plaintiff seeks indemnification from the employer of the
plaintiff for money paid to the employee for injuries sustained on the job it is
highly questionable whether any other basis of liability could be advanced
Indemnification under common law tort principles cannot be allowed since it
would run contrary to the provisions of the Workmens Compensation Act
19 Both the District Court of the Virgin Islands and the United States Court of Appeals for the Third Circuit in their
respective opinions abbreviated Hess Oil Virgin Islands Corporation as Hess Amerada Hess Corporation was not
named as a party according to the caption Thus, Hess in the Frederick opinions was HOVIC
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Furthermore, a party cannot seek recovery under both an express contract and
common law tort principles An election must be made Therefore, in the matter
sub judzce the respective rights of Hess and D 8: M must be determined by
reference to their contractual agreements
Id at 527 28 (citations omitted) Because Hess and D & M had two different indemnification
agreements (one in a purchase order, the other in a stand alone contract) the court first found
that the later contract controlled See Id at 532 ( As between two inconsistent contracts the one
later in time will prevail over the earlier contract (citing 17 Am Jur 2d Contracts§ 265 (1964))
The later agreement provided that D & M must indemnify Hess for loss due to any injury
connected with the work of D & M unless the liability was attributable solely to Hess s
negligence Id at 530 [emphasis added) Because Frederick and D & M were both found partly
at fault, the court concluded that D & M had to indemnify Hess for the entire amount Hess paid
to Frederick, since Hess was not found solely negligent Id at 534 35 The court still expressed
concern albeit in dicta, with the position Hess seemed to take,” that no matter what, “unless
Hess [was] 100% responsible for an injury, ' D & M would have to indemnify Hess for Hess own
negligence Id at 530 n 2 While this may have been Hess' intent the court explained the
indemnification agreement was ‘not sufficiently clear and unequivocal to allow Hess indemnity
for its own negligence ' Id "The word solely’ creates some question, the court reasoned, but
any doubt is resolved against Hess who both drafted the agreement and seeks indemnity from
its own negligence Id
1M7 The Third Circuit affirmed See Frederick 642 F 2d at 55 The court agreed that the
exclusive remedy section of the Virgin Islands Workmen's Compensation statute would prevent
a direct action in negligence against D 8; M but nothing in that or any other Virgin Islands law
prohibits an indemnity agreement with an employer Id at 54 The court rejected D 8; M s
argument that it was being forced to indemnify Hess for Hess' own negligence, concluding that
neither party “introduced any evidence of Hess' negligence Id at 55 “Perhaps what is meant ’
the Third Circuit explained, is that because the parties stipulated to a $98 000 judgment, Hess s
negligence is established as a matter of law But the indemnity agreement indemnifies against
all demands loss or liability Id Even if Hess’s "actual negligence been proved" in addition to
the negligence of Frederick and D & M the contract would still apply," the court concluded Id
Hess was not solely negligent so D & M must indemnify Hess
1148 Chief Judge Collins 1 Seitz dissented He reasoned that both the district court and the
majority have misinterpreted the indemnity agreement and ”overlooked an important
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issue ’ that should be resolved by the application of traditional indemnity principles ‘ Id at 55
[Seitz, C j , dissenting) The dissent pointed out that the agreement had two different triggers a
demand and a loss or liability D 8: M agreed to indemnify Hess only for its own, meaning D 8;
M's negligence 'Frederick's complaint d[id] not allege any negligence on the part of D & M or its
agents so Frederick s demand could not have triggered D & M’s duty to indemnify Hess Id at
55 56 [Seitz, C] , dissenting) The dissent further reasoned that because
{t]he trier of fact ultimately found that Hess was not negligent it could not have
been held liable in the Frederick action for any injuries caused by an ‘act or
neglect of D & M or its agents The district court however, stated that Hess right
to indemnification should be determined ‘without regard to what may have been
the result in a trial Thus, the district court interpreted "loss or liability to
mean a potential loss or liability at the time of settlement But the indemnity
agreement sheds no light on whether D & M s obligation to indemnify is triggered
by compensation paid by Hess in response to a potential loss or liability Because
the intent of the parties cannot be ascertained by the terms of the agreement it is
necessary to refer to traditional indemnity principles to determine whether Hess
must Show potential or actual liability before it is entitled to indemnification
The general rule is that the indemnitee must Show actual liability Many
courts however, hold that the indemnitee must show only potential liability if it
settles a claim for a reasonable amount after giving the indemnitor an opportunity
to approve the settlement or to defend the primary action
The decision whether to require actual liability in all situations or to
recognize a potential liability exception is an important one On the [one] hand, if
actual liability is always required, settlements will be discouraged because of the
difficult burden placed upon the indemnitee to establish its right to
indemnification 0n the other hand, the rule adopted must not be unfair to the
indemnitor who should be able to Show that the indemnitee was not under a legal
compulsion to pay the settled claim Because the district court did not have an
opportunity to review these principles and apply them to the present case i
believe that it is inappropriate to do so on appeal, especially given the record
before us Therefore, in the interest of fairness, I would vacate the judgment of the
district court and remand for proceedings consistent with this opinion
1d at 56 (Seitz, Cl, dissenting] [emphasis added) (citations and footnote omitted) it is this
dispute whether "actual ’ or “potential liability must be shown before a sole liability' provision
is triggered is the question before the Court
1H9 Contractual indemnification resurfaced after Frederick in the Belozt line of cases See 19
V] at 521 22 ['At issue in this lawsuit is which party must either ultimately bear the entire
burden of paying a sizeable civil judgement [sic] entered against the plaintiff in Norwrlton
Murray v BeIOIt Power Systems, Inc or shar[e] the load with plaintiff Beloit Power Systems,
Inc (hereinafter Belortl ) Beloit sold equipment to HOVIC for use at the oil refinery and HOVIC
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contracted with Litwin to install it Id at 522 The plaintiff Murray worked for Litwin Id He was
seriously injured while installing the equipment and sued Beloit claiming strict liability and
negligence Id He could not sue his employer Litwin, because of the Workers’ Compensation Act
The jury found Beloit 95% at fault and Murray 5% at fault Id see also Murray v Belozt Power
Sys Inc 79 F R D 590 591 [D VI 1978) afl’d sub nom Murray v Fairbanks Morse 16 Vl 647
(3d Cir 1979) The verdict was affirmed on appeal
1150 Beloits insurer Kemper insurance Company, satisfied the judgment and filed a new
lawsuit with Beloit as co plaintiff for contractual indemnification from HOVIC See Belozt I, 19 V I
at 522 HOVIC brought Litwin in by third party complaint alleging that if HOVIC owes anything
to Beloit then through the operation of an indemnity provision in HOVIC 5 contract with Litwin,
Litwin is required to indemnify HOVIC ” Id The agreement between Beloit and HOVIC had
provided that
[u]nder no circumstances shall [Beloit] have any liability for claims of
negligent manufacture or otherwise The aggregate total liability of [Beloit]
under this contract whether for breach of warranty or otherwise shall in no event
exceed the contract price {HOVIC} agrees to indemnify and hold harmless {Beloit}
from all claims by third parties which extend beyond the foregoing limitations on
[Beloit s] liability
Id at 523 By contrast the agreement between Litwin and HOVlC provided only that Litwin must
‘indemnify and hold HOVIC harmless from and against any and all loss damage, injury liability
and claims thereof, including claims for personal injuries death and property damage and loss
unless caused by the sole negligence of HOVIC Id at 532 (emphasis added]
Il51 The District Court turned to the Beloit HOVIC contract first, observing that 'for a party to
be contractually indemnified for its own negligence, such an intention must be clearly and
unambiguously expressed in the contract " Id at 524 Courts must be firmly convinced,’ the
District Court reasoned, "that such an interpretation reflects the intention of the parties," finding
‘[t]his principle accepted with virtual unanimity among American jurisdictions " Id (quoting
United States v Seakmger 397 U S 203 211 (1970)] Further the party seeking indemnification
has the burden and ‘[t]his burden is even greater where the party seeking indemnification
drafted the language Id Beloit failed to carry its burden, the court found because the contract
did not clearly or unequivocally Show an intention that Beloit be indemnified for third party
personal injury claims caused by Beloit's negligence Id at 525 Since Beloit included the
indemnification language, any ambiguity" had to “be construed 'most strongly’ against Beloit as
drafter,’ the court found Id at 524- Beloit couched the indemnity language “in contract and
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warranty terms, with the exception of the final two sentences which neither mention personal
injury claims or indemnification for Beloits own negligence Id at 526 27 A mention of
negligent manufacture' in connection with language limiting warranty or contract claim is
{in]sufficient to demonstrate a clear intention that Beloit be indemnified for personal injury
claims caused by its negligent manufacture of its product the court concluded Id at 527
Relying on other cases, including Draper v Airco, Inc, 580 F 2d 91 101 (3d Cir 1978) with
clearer language the court rejected Beloit s interpretation and granted summary judgment in
favor of HOVIC See id at 530 533
ii 52 Turning to the Litwin HOVIC agreement, the District Court rejected Litwin's contention
that it never agreed to indemnify HOVIC for HOVIC's own negligence The court reasoned that if
HOVIC were found liable then there would “be at least three tortfeasors id at 533, Beloit
Murray and HOVIC Consequently Murray 5, “injuries would not have been caused by the ‘sole
negligence of HOVlC' Thus, according to the indemnity provision HOVIC is entitled to
indemnification from Litwin, id at 533, the court concluded lfHOVlC were found to be the only
negligent party,’ id (emphasis added) then Litwin would not have a duty to indemnify But since
HOVIC was not the only negligent party Litwin had to indemnify HOVIC
1153 On appeal, the Third Circuit, in separate opinions 2" reversed the Beloit HOVlC decision
and affirmed the Litwin HOVIC decision See generally 757 F 2d at 1431 (Beloit HOVIC)
(hereinafter Belmt ll ] 757 F 2d at 1434 (Litwin HOVIC) (hereinafter Belozt llI )21 The Third
Circuit disagreed with the District Court about the Beloit HOVIC contract, finding the language
sufficient to pass liability from Beloit to HOVIC 'lt is hard to imagine language that would be
more absolute or unequivocal,’ the Third Circuit concluded, than all claims by third parties
Below II, 757 F 2d at 1430 The appellate court rejected the trial court's concerns about
manufacturers potentially escaping all liability for negligently manufacturing products See
Below I, 19 V l at 530 (expressing 'concerns against allowing a party to indemnify himself against
his own negligence which Were even greater in a products liability context, where the purpose
is to impose liability for defective products on the manufacturer’ (citing Price v Shell 01160 466
20 Because the contribution claims remained the decision was not a final appealable order so the District Court
certified it for interlocutory appeal which the Third Circuit accepted See 757 F 2d at 1429
21 Whereas this Court uses Below I to refer to the trial courts decision and Belmt II and Below III for the appellate
courts decisions the Third Circuit in Eastern Airlines used Belmtl and Belozt ll respectively to refer to its
opinion The distinction is noted here to avoid confusion
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P 2d 722, 730 (Cal 1970] (en banc)) Rejecting anachronistic aversion to contracts that
indemnify the indemnitee against losses resulting from its own negligence Beloit II, 757 F 2d at
1431 the Third Circuit concluded that ‘ {t]he law now permits the indemnitee to recover for its
own negligence if the court is firmly convinced that such an interpretation reflects the intention
of the parties Id [citing Seckmger 397 U S at 211) Beloit had submitted an affidavit from its
negotiator with HOVlC John Ivey in which lvey explained that Beloit had rejected HOVIC 5
standard terms and insisted instead on full indemnification, which HOViC agreed to This proof,
the appellate court found was un rebutted by HOVlC and not considered by the trial court and
it showed that HOVIC had agreed to indemnify Beloit for all claims against Beloit
if“ The Third Circuit did agree with the District Court regarding the Litwin HOVIC contract
however, concluding that since 'Beloit had already been found to be negligent in the action
brought by Murray, his injury could not have been caused by HOVIC‘s 'sole negligence Below
III 757 F 2d at 1433 Since the jury in the Murray action found Beloit liable for negligence and
strict liability Id, 'the loss was, at least in part the responsibility ofa party other than [HOVIC],
the court reasoned Id So under these circumstances, the indemnity agreement was applicable
and the District Court correctly concluded that Litwin must indemnify HOVIC Id The Third
Circuit further agreed with the District Court regarding the requirement to obtain insurance The
District Court had found that because "the indemnity provision {wa]s tied to a provision
requiring Litwin to purchase insurance for the risks enumerated in the indemnity provision
it “evidences a conscious risk shifting, the function of which is to allocate the burden of procuring
insurance ” Belozt I, 19 VI at 529 The Third Circuit concurred "This agreement unlike that
between Hess as buyer and Beloit as seller arises in the paradigmatic context of a contractor
and the owner and hence the insurance provision does manifest an intent to shift the risk to
Litwin 757 F 2d at 1433 (internal citations omitted)
“55 in an effort to harmonize the two opinions, the Third Circuit acknowledged a concern
Litwin had raised if HOVIC must indemnify Beloit and Litwin must indemnify HOVIC that it
would be indemnity on indemnity Id at 1434 But the appellate court dismissed the concern
noting that Litwin did not agree to indemnify HOVIC for contractual liability only tort liability
Id at 1434 The court did concede, however that the result would
present a somewhat anomalous situation on remand since it will be to [HOVIC s]
advantage to maximize the amount of its own negligence vis a vis Beloit and
thereby increase the amount of the indemnity for which Litwin will be responsible
Furthermore Beloit having succeeded on its claim that [HOVIC] must indemnify
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it in the full amount of its payment to Murray less the contract price no longer
has an interest in the outcome of the remainder of this litigation
[d But this was the unavoidable result," the court reasoned "of the juxtaposition of the two
indemnity contracts entered into by the parties,” particularly [s]ince neither Litwin nor Hess
apparently sought to intervene in the Murray action Id
156 On the heels of the Belozt trilogy came Eastern Airlines, Inc v Insurance Company ofNorth
America 758 F 2d 132 (3d Cir 1985) Decided the same day as Belozt II and III and by the same
panel Eastern Airlines also involved an indemnity agreement and a sole negligence" clause
Eastern Airlines had contracted with ABC Services to provide custodial services at the airport on
St Thomas
758 F 2d at 132 Brenda Bedford an employee of ABC Services ( ABC ) injured her
back on the job Id at 133 She sued Eastern and Eastern demanded that ABC take over the
defense of the lawsuit under an indemnification agreement ABC 5 insurance company,
Insurance Company of North America ( [NA ) refused, initially, to provide counsel, but once the
first trial ended in a hung jury it assumed the defense reserving ‘the right to challenge its
obligation to pay any judgment awarded or costs of defending the suits Id The jury in the
second trial found Bedford twenty percent at fault and Eastern eighty percent Since lNA had
'continued to deny any obligation to pay Eastern under the indemnity agreement Eastern filed
its own "action for declaratory judgment against WA to determine the rights and obligations of
the parties Id
167 The District Court, in the declaratory judgment action, ruled in favor of Eastern on cross
motions for summary judgment On appeal the Third Circuit rejected the insurance company s
argument that, because the agreement did not say that ABC would indemnify Eastern for
Eastern’s own negligence it should not be construed Id at 134 Citing Belozt II the court
concluded that if the language is sufficiently broad and unambiguous' an indemnity provision
need not specifically refer to the indemnitee’s negligence Id The court also concluded citing
Belozt III, that ABC's obligation to secure insurance manifest[ed] an intent to shift the risk Id
(quoting 757 F 2d at 1433) And to the broader public policy concerns INA raised the Third
Circuit resoundingly rejected them
The widespread use of sole negligence provisions may be explained in part by the
reluctance of many courts to enforce an ali inclusive indemnity provision instead
they read such language as if there were an additional provision whereby injuries
caused by the sole negligence of the indemnitee were excepted from the scope of
the indemnity provision Even now, in some jurisdictions, a provision which
guarantees indemnification for the sole negligence of the indemnitee is void as
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against public policy Thus, sole negligence provisions may have evolved because
of a belief that they were judicially required or would preserve an otherwise
invalid broad indemnity provision Moreover, by imposing on the indemnitee the
obligation to bear the cost when its own negligence was the only cause of the
injury, a sole negligence clause reflects the concern about fairness which underlay
some of the judicial decisions This may also account for what appears, at least
from the reported cases, to be its present widespread use
Do the other hand this court has already concluded that there is no public
policy that prevents judicial enforcement of the parties agreement to shift the cost
of or liability for the consequences of one's own negligence provided it is done
clearly and unambiguously We do not share the aversion of some courts to
contractual efforts to shift the perceived risks among the parties to a business
transaction
[T]here are a plethora of suits by injured workers against owners of
premises Those suits are brought in many instances as attempts to escape the
limitations of workmen's compensation and are often encouraged by workmen's
compensation carriers seeking subrogation recoveries Exposure to such liability
explains why owners seek to have contractors and subcontractors bear the risk of
insuring against claims by their own workers If we were to adopt lNA‘s position
and disregard the employee's own negligence in applying the sole negligence
exception, the exception would preclude use of the indemnity provision in one of
the primary circumstances for which indemnity was intended
We have recently rejected the claim that a sole negligence clause must be
construed by looking only at the negligence of the indemnitee vis a vis the
indemnitor We held that if a third party also bears some of the responsibility for
the injury the sole negligence provision is inapplicable in fact in that case, the
indemnitor was not itselfnegligent but we held that was irrelevant for purposes
of enforcing the obligation it had undertaken
Whatever the reason for Eastern’s willingness to bear the liability when it
was solely negligent, it is apparent that it was not willing to do so if someone else
was also responsible The language of the indemnity contract at issue here
explicitly contemplates the possibility that ABC 3 employees may be injured and
also that their acts may cause injury ABC’s agreement to indemnify Eastern
specifically covers Eastern 5 liability arising out of or resulting from any acts of
ABC 5 employees Redford s negligence clearly meets this description, and we see
nothing in the language of the sole negligence clause that requires a different
result simply because her negligence caused injury only to her
The basis for ABC‘s responsibility in this case is not imputed negligence,
the theory of respondent superior, but instead a specific contractual obligation
Therefore, we need not determine whether Bedford s negligence will be imputed
to ABC ABC agreed to be responsible to Eastern for what she did
Id at 134 36 (internal quotation marks, citations and alterations omitted]
1158 judge John J Gibbons dissented, concluding that the sole negligence‘ provision of the
indemnity agreement" should be construed 'to mean that Eastern is not entitled to
indemnification when its liability for damages is solely attributable to its own negligence Id at
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136 (Gibbons, I , dissenting) The exception for sole negligence he explained,
should mean that the indemnitor is liable in every instance in which some party
other than the indemnitee has engaged in conduct resulting in the indemnitee’s
liability to a claimant Contributory negligence is not conduct resulting in liability
to the claimant because the claimant’s award is reduced in proportion to his or her
own negligence The only party which engaged in conduct resulting in liability to
a claimant is Eastern Airlines Thus the sole negligence exception to the indemnity
undertaking should apply Construing the contract language as the majority does
wrenches it from its context
Id [Gibbons ] dissenting)
1159 After the Belozt and Eastern Airlines cases were decided, questions whether tort liability
could be discharged by contract ended Cf. Firemen’s Fund, 22 Vi at 143 ("There is no public
policy which prevents judicial enforcement of an agreement to shift liability for the
consequences of one's own negligence There is no longer any question that such agreements
are enforceable (internal citations omitted)), see also Domzmc 624 F Supp at 119 ( Repeatedly
the circuit court has held that there is no public policy which prevents judicial enforcement of
an agreement to shift liability for the consequences ofone s own negligence’)
1160 Turning to the second factor the Supreme Court of the United States summarized the
different approaches courts have taken to sole negligence clauses in United States v Seckmger
A number of courts take the View frequently in a context in which the indemnitee
was solely or principally responsible for the damages, that there can be
indemnification for the indemnitee s negligence only if this intention is explzcttly
stated in the contract Other cases do not require that indemnification for the
indemnitee s negligence be specifically or expressly stated in the contract if this
intention otherwise appears with clarity
397 U S at 211 n 15 (citations omitted) [emphasis added) Thus the question boils down to
whether an agreement to assume liability for another’s negligence must be stated in clear and
explicit terms or whether courts can look to the intent of the parties How Nevada approached
the same question is instructive here Cf. Connor, 60 V l at 603 ("The second step directs the
Superior Court to consider all potential sides of an issue by viewing the potentially different
ways that other states and territories have resolved a particular question ')
1T61 The United States District Court for the District of Nevada assume[cl] in Aetna Casualty
and Surety Company v L K Comstock and Company Incorporated 488 F Supp 732 742 (D Nev
1980) rev d
684 F 2d 1267 (9th Cir 1982] that Nevada would follow what it believed was the
more enlightened View even though it was the modern minority View And the modern
minority View of sole negligence indemnification agreements provides
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that an indemnity provision "for any and all liability means all liability, including
that arising from the indemnitee 5 concurrent negligence This rule rejects the
majority's rationale that one person indemnifying another person for the other's
own negligence is such an unusual or hazardous situation that close judicial
interpretation is called for instead, the minority View is that such indemnity
contracts are so common in the modern business world that courts should leave
the parties with their bargain for "any and all liability
Id The United States Court of Appeals for the Ninth Circuit reversed but not because the District
Court adopted the minority approach See 684 F 2d at 1273 Instead the appellate court
concluded that the indemnification agreement was void under Nevada's workers compensation
statute to the extent that it indemnifies a third party against damages paid to the employer 5
employees as the result of an industrial accident Id at 1272 judge William A Norris dissented
reasoning that all federal and state courts recognize that an express indemnity contract is an
exception to an employer's otherwise exclusive liability under a state worker's compensation
scheme" except Alabama whose courts stand alone in their refusal to follow the mainstream of
worker s compensation decisions involving express indemnity contracts Id at 1273 (Norris, j ,
dissenting] The dissent concluded that if the Nevada Supreme Court were to address the issue
squarely, it would look to the well reasoned decisions of other jurisdictions and hold that the
Nevada worker's compensation scheme does not void express indemnity contracts between an
employer and a third party ‘ Id at 1275 (Norris ] dissenting) Neither opinion addressed the
majority or minority rule
1i62 Some thirty years later, the Supreme Court of Nevada overwhelmingly rejected Aetna’s
prediction See George L Brown Ins Agency Inc v Star Ins Co
237 P 3d 92 97 (Nev 2010)
We reject the rationale of the so called minority rule because a general clause is
not sufi’rcrent to impose such an extraordinary remedy Instead we adopt the
majority rule an express or explicit reference to the indemnitee’s own
negligence is required to indemnify an indemnitee for his or her own negligence
because ‘the character of such an indemnity is so unusual and extraordinary, that
there can be no presumption that the indemnitor intended to assume the
responsibility unless the contract puts it beyond doubt by express stipulation and
no inference from words of general import can establish it
Id (brackets omitted) (emphasis added) [quoting 41 Am Jur 2d Indemnity § 16 (2005)] The
Nevada Supreme Court viewed the minority approach as permitting too much to be read into
the terms of a contract that the parties may not have intended [which] could substantially benefit
one party to the extreme detriment of the other Id The majority approach however, permits
"the wrongdoer [to] face[] the consequences of his or her actions rather than 'casting the burden
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of negligent actions upon those who were not actually at fault " Id (brackets omitted) (quoting
Seckmger 397 U S at 212)
1163 One Virgin Islands decision also addressed the minority approach in depth before
rejecting it In Damldaux v Hess 011 Virgin Islands Corporation Case No 55/1978, 1981 U S Dist
LEXIS 10733 *4 [D VI Feb 19 1981) a Territorial Court judge sitting by designation in the
District Court of the Virgin Islands, examined [tlhe modern minority rule discussed and
adopted in Aetna The Damldaux court did not believe that
indemnity for another’s negligence [w]as an ordinary business arrangement It is
not simply analogous to an insurance contract With insurance, the contract is
centered on the reimbursement arrangement, the bargain between the parties is
money exchanged for protection against claims An indemnity contract is often
a minor clause in a contract that is centered on work exchanged for money
[T]he indemnitor is usually the party who did not draft the contract and
coincidentally the party with less bargaining power It is a harsh obligation to
require this party to pay for indemnitee‘s own negligence The argument that this
is in practice simply a method of arranging which party should obtain insurance
is not convincing Both parties will often have insurance in the commercial
context the conflict is over which insurance company will be liable While some
contracts will specify which party must buy insurance for the negligence of both,
the scope of indemnification is a function of the words of the contract not the
scope of insurance
For the same reason of insurance, the argument that it should be against
public policy to indemnify a party against its own negligence is decried insurance
will protect a company from its own negligence in any case Yet some vitality may
remain to this point an insurance company may respond to a lawsuit it defends
and loses by raising its rates or suggesting new methods of operation for the
company the negligent company will probably not be unaffected The indemnitor
is likely in a much weaker position to affect the negligent indemnitee 5 future
actions
Finally, from a moralistic perspective there is a significant difference
between the insurance and indemnity contexts There seems nothing wrong in
requiring an insurance company to "pay up” The insurance company has received
tangible benefits in return for subjecting itself to the business risk that it may be
compelled to reimburse its insured Yet requiring a company to indemnify
another's negligence has an aura of unfairness If this were always a method of
allocating the burden of insurance, the Court would not be troubled but this
rationale will not be relied on absent such universal practice The suspicion still
lurks that often a weak or naive party will be the indemnitor of another's
negligence The notice aspect ofspeczfic, clear and unequivocal language operates
as appropriate protection for such parties If parties truly do Wish one party to
indemnijj/ another’s negligence, speczficrly is not too onerous a burden
Id at *4 6 Damidaux did not carry the day In fact, no court cited it But the concerns it raised
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are still relevant today Accord George L Brown Ins Agency Inc
237 P 3d at 97 Ethyl Corp
725
S W 2d at 708 cf Rahmani
2011 Guam 7 at 1T 33
1M4 Unlike Aetna George L Brown. and Damidaux most courts have not characterized the
different approaches as minority or majority But the Restatement (Third) of Torts
Apportionment ofLiability, while not using either term explicitly, does distinguish between cases
that require “clear and unequivocal language with those that do not require particular words
Restatement (Third) of Torts Apportionment ofLiability § 22 cmt f (2000) (collecting cases) See
also Rahmani,
2011 Guam 7 at 1f 28 ("Courts have split on the question of how the clear and
unequivocal requirement is met when the requirement is applied to indemnity provisions that
contain general language such as any and all claims "’ (citation omitted]) And whether
characterized as a minority or "majority approach the question ultimately is whether
language in an agreement allowing A to pass liability to B for A s own negligence must be clear
and unambiguous or determined by the intent of the parties 22 This same dichotomy is also borne
out in the Belozt and Eastern Airlines decisions broad language and intent of the parties versus
clear and unambiguous language
W65 Having considered the past approach taken by Virgin island courts and the approaches
22 Compare eg Westinghouse EIec Corp v Williams 360 S E 2d 411 413 (Ga Ct App 1987) ( in the absence of
expliat language to the contrary courts will not interpret an indemnity agreement as a promise by the indemnitor
to save the indemnitee harmless on account of the latter 5 own negligence (emphasis added] (citation omitted));
McNaIIy & Nimergood v Neumann Kiew1t Constrs Inc 648 NW2d 564 571 (Iowa 2002) ( [l]ndemnification
contracts will not be construed to permit an indemnitee to recover for its own negligence unless the intention of
the parties is clearly and unambiguously expressed It is also the prevailing rule in other jurisdictions The traditional
reluctance of courts to allow the burden of one who is negligent to be transferred to another who is not at fault
especially where there is a disparity in the bargaining power and economic resources of the parties can be traced
to public policy considerations (emphasis added) (citations omitted)) Ramos v Browning Ferris Indus, Inc 510
A 2d 1152, 1159 (NJ 1986) ( [A] contract will not be construed to indemnify the indemnitee against losses resulting
from its own negligence unless such an intention is expressed in unequivocal terms (emphasis added] (citations
omitted)) Dresser Indus, Inc v Page Petroleum, Inc,
853 S W 2d 505 508 (Tex 1993) ( Because indemnification of
a party for its own negligence is an extraordinary shifting of risk, this Court has developed fair notice requirements
which apply to these types of agreements The fair notice requirements include the express negligence doctrine and
the conspicuousness requirement The express negligence doctrine states that a party seeking indemnity from the
consequences of that party 5 own negligence must express that intent in spew/it terms within the four corners of the
contract The conspicuous requirement mandates that something must appear on the face ofthe contract to attract
the attention of a reasonable person when he looks at it (citations and brackets omitted” With, C1 M Constr Inc
v Chandler Plumbing & Heating Inc
708 P 2d 60 64 (Alaska 1985) ( It is no longer necessary under Alaska law that
an indemnity clause contain words specifying indemnity for the indemnitee s own negligence ) Bartlett v Davis
Corp
547 P 2d 800 808 (Kan 1976) ( Although recognizing the general rule a great majority of courts hold that it
is not necessary that the agreement contain specific or express language covering the owner 5 negligence if the
intention to afford such protection clearly appears from the contract, the surrounding circumstances and the
purposes and objects of the parties ) Drzewmski v At] Scaffold & Ladder Co 515 N E 2d 902 904 (N Y 1987) ( A
party is entitled to full contractual indemnification provided that the intention to indemnify can be cleaer implied
from the language and purposes of the entire agreement and the surrounding facts and circumstances (emphasis
added) (quoting Margolin v N Y Life Ins Co 297 N E 2d 80 83 [N Y 1973))
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taken by other courts around the country this Court holds that the soundest rule for the Virgin
Islands is to follow the majority approach and adopt the express negligence doctrine
[Specificity is not too onerous a burden ” Damidaux, 1981 U S Dist LEXIS 10733 at *6 The
express negligence doctrine provides that parties seeking to indemnify the indemnitee from the
consequences of its own negligence must express that intent in specific terms Ethyl Corp
725
S W 2d at 708 The observations of the Supreme Court of Texas, concerning its journey from
clear and unambiguous to "express negligence‘ is instructive here
As we have moved closer to the express negligence doctrine, the scriveners of
indemnity agreements have devised novel ways of writing provisions which fail to
expressly state the true intent of those provisions The intent of the scriveners is
to indemnify the indemnitee for its negligence yet be just ambiguous enough to
conceal that intent from the indemnitor The result has been a plethora of law suits
to construe those ambiguous contracts We hold the better policy is to cut through
the ambiguity of those provisions and adopt the express negligence doctrine
Id at 707 08 Under the doctrine of express negligence, the intent of the parties must be
specifically stated within the four corners of the contract Id at 708, accord Rahmam 2011
Guam 7 at 1T 33 ( Thus we hold that an indemnity provision in a lease agreement will not be
construed to indemnify the indemnitee against losses resulting from its own negligent acts
unless such intention is expressed in clear and unequivocal terms, and words of general import
that do not specifically reference an indemnitee's negligence do not satisfy the clear and
unequivocal requirement ”)
1166 In this instance, examining the approach Virgin Islands courts have taken in the past has
been key requiring careful consideration before 'disrupting the state of the law in the Virgin
Islands by modifying our past approach Walters 60 VI at 776 (brackets omitted) (quoting
Banks
55 VI at 981) Clearly, Virgin Islands companies and companies doing business in the
Virgin islands have come to rely on the Frederick, Dominic Belozt and Bamvzlle lines of cases
including the parties to these cases The Court also acknowledges that, during all times relevant
to this litigation the District Court of the Virgin Islands functioned as the main source of Virgin
Islands jurisprudence Cf Maynard v Rivera
56 VI 885 893 94 (3d Cir 2012] ( (W]ith the
creation of the Superior Court of the Virgin Islands (formerly the Territorial Court), the District
Court has long been divested of original jurisdiction over matters arising purely under territorial
law An inexorable consequence of divestment was the District Court's inability to continue
contributing to the development of Virgin Islands local law (citations omitted)}, accord People
V Parrllla
58 VI 148 160 (Super Ct 2013) ( As this Courts jurisdiction expanded through
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legislative enactment, the Court necessarily looked to the district court's jurisprudence and rules
for guidance ) Likewise, the United States Court of Appeals for the Third Circuit served as the
de facto supreme court for the Virgin Islands until the Supreme Court of the Virgin Islands
assumed appellatejurisdiction in 2007 Cf Rawlms v People
61 VI 593 610 n 10 (2014) ( The
Third Circuit served as the de facto court of last resort for the Virgin Islands before this Court
commenced operations in 2007 '] Clearly the Frederick, Dominic, Beloit, and Bamvzlle line of
cases are entitled to great respect' Carola v Carma 59 V I 758, 776 (2013) (citation omitted)
But that does not make their decisions binding Cf. Connor, 60 VI at 605 n 1 In fact in explaining
why the District Court erred in Belmt II the Third Circuit provided the very reason why this
Court must exercise its concurrent authority see id at 604, to decline to follow this past
precedent
1i67 The District Court relied on K& S Oil Well Serwce, Inc v Cabot Corporation
491 S W 2d
733 (Tex Civ App 1973) a state court decision to reject the conclusion that the Beloit HOVIC
contract required Beloit to indemnify HOVIC for HOVIC s own negligence See Belmt I 19 V] at
526 The Third Circuit rejected the Texas case see Below II 757 F 2d at 1430 31 in part based
on Seckmger which appli[ed] federal law id at 1430, and based on prior Third Circuit
precedent, where the court concluded ’that ‘a broadly worded indemnification clause need not
also recite the specific sorts of loss within its coverage Id (quoting First jersey Nat’l Bank v
Dome Petroleum Ltd
723 F 2d 335 340 (3d Cir 1983)) (citing Draper
580 F 2d at 101 jamison
v Ellwood Consolidated Water Co
420 F 2d 787 788 90 (3d Cir 1970)) But those prior cases
had applied Newjersey and Pennsylvania law respectively Cf. BeIOitII 757 F 2d at 1430 In fact
in all three cases Belozt II, Belmt III, and Eastern Airlines, the Third Circuit reiied almost
exclusively on federal precedent even though the question at issue in each case involved Virgin
Islands common law and whether Virgin Islands public policy prevents judicial enforcement
of the parties“ agreement to shift the cost of or liability for the consequences of one‘s own
negligence, provided it is done clearly and unambiguously Eastern Airlines,
758 F 2d at 135
[citing Below II 757 F 2d at 1430) No Virgin Islands cases were examined No Virgin Islands
statutes were considered even though the court acknowledged that in some jurisdictions a
provision which guarantees indemnification for the sole negligence of the indemnitee is void as
against public policy' Eastern Airlines 757 F 2d at 134 (quoting Harbenski v Upper Peninsula
Power Co 325 N W 2d 785 791 (Mich Ct App 1982) (citing Chicago& Nw Transp Co v V& R
Sawmill Inc
501 F Supp 278 (D S D 1980)) Without citing any Virgin Islands case law statutes
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rules, or regulations to support its decision, the Third Circuit found no public policy barring
judicial enforcement of sole negligence contracts Contra Twm City Pipe Line Co v Harding Glass
Co 283 U S 353 357
51 S Ct 476 477 78 (1931) ( In determining whether the contract here
in question contravenes the public policy of Arkansas the constitution, laws andjudIClal deczszons
of that State and as well the applicable prmcrples of the common law are to be conSIdered
Primarily it is for the lawmakers to determine the public policy of the State" (emphasis added}),
accord Bloch v Bloch 9 V l 554 558 (3d Cir 1973) [ [find nothing in the statutory or decisional
law in the Virgin Islands to indicate that a common law marriage, even if prohibited, is against
the public policy of this forum (citation omitted]) The Third Circuit did not attempt to identify
the best approach for the Virgin Islands Contra Comes v Brodhurst
394 F 2d 465 469 [3d Cir
1967) (relying on state supreme court decisions to modify Virgin Islands common law) accord
Govt ofthe V] v Parrllla
29 VI 353 370 (3d Cir 1993) {Becker C] dissenting) ( [Wle serve
here as the equivalent of a state supreme court (for the Virgin Islands) ) It is this failure to
consider what the common law of the Virgin Islands should be that undermines Below and
Eastern Airlines
1T68 Again the Court agrees that the soundest rule for the Virgin Islands is to recognize a cause
of action for breach of an indemnification agreement And whether an indemnification
agreement covers A s negligence, B’s negligence or A through Z's negligence is for the
contracting parties to decide But specificity is not too onerous a burden ' Damzdaux, 1981 U S
Dist LEXIS 10733 at *6 And if, as discussed further below, the question whether in contract
indemnity cases actual liability is a prerequisite to the duty to indemnify,’ can only be
answered by reference to what the parties by virtue of their contractual capacity intended, as
reflected in the language ofthe indemnity clause Bamvzlle 837 F 2d at 131 (emphasis omitted)
then the parties must be clear in drafting their agreements An indemnification agreement is a
contract and Virgin Islands public policy favors clarity and simplicity in contracts Cf. 12A V l C
§ 252 ['A consumer contract shall be written in clear, simple, understandable and easily
readable language ) Cacczamam& Rover Corp v Banco Popular de PR
61 VI 247 253 (2014)
( [H]old the parties to a contract to the terms of their agreement ) As the Court of Appeals of
the District of Columbia reasoned indemnification agreements have to be
narrowly construed by the courts so as not to read into them any obligations the
parties never intended [and ilf parties seek to provide indemnification not just
for the actions of the indemnitor, but also for the actions of the indemnitee so that
the indemnitee would be entitled to full reimbursement when the indemnitee
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is itself negligent, the criterion is even stricter In order to find that a party
contracted away its own liability by receiving full indemnity therefor there must
be a clear intention to do so that is apparent from the face of the contract
Rivers & Bryan Inc v HBE Corp 628 A 2d 631 635 (D C 1993] (quotation marks citations and
alteration omitted) Consequently, this Court agrees with the Hess Plaintiffs 'that parties'
contractual limitations on liability should be enforced [Hess Pls Supp Br 7] so iong as the
limitations on [and assumptions of) negligence are made clear in that contract Clearly, however
this is a controlling question of law as to which there is substantial ground for difference of
opinion," 4 V l C § 33(c) so the Court will certify it to the Supreme Court of the Virgin Islands
‘{A]n immediate appeal [will] materially advance the ultimate termination of litigation 1d ,
both in the Catalyst cases and hundreds of other asbestos cases Cf Hess 011 VI Corp v Fluor
Daniel 2020 VI Super 50 11 S6 (noting that the impact that an appeal will have on other cases
is a factor [courts] take into account in deciding whether to certify or accept questions of
law (citation omitted])
1f69 The last question to address is whether the indemnitee must Show actual liability to
trigger a contractual duty to indemnify or is showing potential liability sufficient? Cf Frederick,
22 Vi at 145 ( [W}hether an indemnitee such as HOVIC need only Show potential liability to
recover from an indemnitor ’) The Hess Plaintiffs contend that a jury could not have found them
solely negligent because lMC also owed a duty to its own employees and any bystanders In
addition Plaintiffs sued Sheli UOP and American Cyanamid Since Hess and HOVlC would not
have been found solely negligent' for any Plaintiff’s alleged injuries, lMC must indemnify them
This too requires a Banks analysis
1f70 Turning to the first factor, Virgin Islands courts were prolific here too And the first case
to address actual versus potential in some depth was Dominic
624 F Supp at 118 Leonard
Dominic had fainted and injured himself while working with a chemical solvent at the oil
refinery Id He was employed by Communication Systems 8L Maintenance Corporation
(' CS&M"), who, in a purchase order with HOVlC had agreed to
indemnify, hold harmless and defend HOVlC and its affiliates, successors and
assigns from and against any and all demands liability, losses, damages and/or
expenses by reason of injury or damage arising out of or in any manner
connected with the operation to be performed under this purchase order, whether
or not due in whole or any part to any act omission or negligence ofHOVlC or
by any other person
Id at 118 19 CS&M had also agreed to indemnify HOVIC notwithstanding and regardless of
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title 4 section 1451 of the Virgin Islands Code regarding apportionment of liability See 1d After
Dominic sued HOVIC HOVlC issued a demand letter to CS&M which CS&M rejected See 1d at
119 Discovery later revealed that Shell might hear some responsibility so Dominic 'promptly
added Shell as a defendant Id HOVlC in turn brought CS&M into the case by third party
complaint on a contractual indemnification claim and then moved for summary judgment
HOVIC and Dominic eventually settled for $50 000 See 1d CS&M declined to weigh in on whether
the amount was reasonable See Id In granting summary judgment in favor of HOVlC, the District
Court rejected CS&M s argument about what affirmative defenses HOVlC should have pied,
explaining that
the duty to defend comes into play if the allegations of the complaint state on
their face a claim which potentially applies ' Had CS&M met its initial obligation to
take over the defense of HOVIC there is no question it would be entitled to dictate
litigation strategy and raise such defenses as it considered appropriate By failing
to even defend however we find that CS&M is estopped from criticizing HOVIC s
strategy as a means of escaping obligations under the indemnity agreement it
ill befits CS&M to carp at HOVIC over the manner in which it defended itself after
violating its contractual duty in the first instance
1d at 120 (ellipses and citations omitted] (quoting C H Heist Canbe Corp 640 F 2d at 483) But
CS&M could raise issues ofliability and reasonableness 1d, the court concluded
1171 Regarding liability the court found it "difficult to ascertain whether HOVIC was actually
liable to Dominic since it contested liability until settlement, and no fact finder made a
determination in that regard Id HOVlC was potentially liable to Dominic as the possessor of
land 1d the court reasoned But whether an indemnitee, such as HOVlC, need show only
potential liability to recover from an indemnitor such as CS&M,” Id at 121 that was unclear
Relying on Chief Judge Seitz s dissent in Frederick the court reasoned that
[s]ome courts have adopted an exception to the general rule and allowed the
indemnitee who settles with the injured party to secure indemnification upon
proof of only potential liability But, to fall within this category the indemnitee
(HOVlC) would have to offer the indemnitor [CS&M] the choice of either approving
the settlement or taking over the defense Since HOVIC tendered the defense and
it was rejected, the inference is clear proof of only potential liability [will]
suffice
Id at 121 (citing Frederick 642 F 2d at 56 (Seitz C] dissenting)] (citations omitted) As for
whether the amount HOVIC settled for was reasonable the District Court gave that question little
time See 1d ('HOVlC acted reasonably in cutting its losses for $ 50 000 ")
H72 The District Court reaffirmed Dominic in Firemen’s Fund, see 22 VI at 145 and again in
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Bainville reiterating that an indemnitee seeking indemnification after settling with a plaintiff
need only show potential liability in order to recover from the indemnitor 22 VI at 451
(comma omitted) (hereinafter BamVIIIe I ) Robert Bainville worked for Standby Power
Supplies Id at 452 Standby had an agreement to indemnify HOVlC unless the 'liability, claim,
demand or cause of action [was] attributable solely to the negligence of HOVIC Id Bainville was
injured while working at the refinery and sued HOVlC See Id HOVIC tendered the defense to
Standby [but] Standby refused Id HOVIC brought Standby in on a third party complaint for
contractual indemnification and moved for summary judgment See Id The court withheld ruling
pending the outcome of the first party litigation See Id HOVIC and Bainville continued
settlement discussions and reached an agreement but allowed the jury to return a verdict so that
liability was determined See Id The jury found Bainville and HOVlC each fifty percent at fault
and further that Bainville was HOVIC's borrowed employee Id at 453
1173 Relying on the verdict to oppose summary judgment Standby argued that the jurys
finding that Bainville was the borrowed servant of HOVIC imputes Bainville's negligence to
HOVIC under principles of respondentsuperlor so that Bainville‘s injuries were attributable solely
to the negligence of HOVIC Id at 453 n 4 (emphasis added) In other words Bainville s and
HOVIC were one and the same The District Court disagreed but declined to address the imputed
liability Instead the court applied FIremens Fund and DomInIc and concluded that, because
HOVIC was potentIaIIy liable when HOVIC tendered the defense and Standby rejected it HOVIC
could seek indemnification even after the jury returned its verdict See Id at 453 54
[W]hen HOVIC, faced with the potential liability of Bainville's claim offered
Standby the opportunity to accept Bainville 8 $200 000 demand Standby had only
three choices in the context of this case it could 1) accept the offer, 2] take over
the defense and hold HOVIC harmless or 3) reject the offer and breach its
agreement By rejecting the offer Standby failed to uphold its bargain to hold
HOVIC harmless Consequently Standby may not be heard to complain at the
outcome, for what occurred thereafter occurred at its peril
Id at 454 55 (quotation marks and citation omitted)
1W4 On appeal the Third Circuit affirmed See 837 F 2d at 129 (hereinafter BaInVIIIe II )
Whether actual or potential liability must be shown before indemnification is triggered, the
court 5 answer was, it depends on the type of indemnification at issue
Contractual indemnity clauses are typically drafted to cover the circumstances
created by agreements between the companies which contract out jobs and
general contractors which perform them As such, the duty’s scope, in
particular its applicability to stipulated judgments is determined by the parties
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mutual intent expressed in the contract, rather than by general principles of
equity It is well settled that parties can allocate the financial responsibility for the
consequences of negligence as they see fit This capacity to shift financial
responsibility by contract naturally includes the capacity to contractually allocate
financial responsibility for stipulated judgments where cases are settled without
the benefit of an adjudication of actual liability Thus, in contract indemnity cases,
as distinguished from cases where liability arises as a matter of law, the question
of whether actual liability is a prerequisite to the duty to indemnify is answered
by reference to what the parties, by virtue of their contractual capacity intended,
as reflected in the language of the indemnity clause
This method of determining if the duty encompasses payments based on
potential, as opposed to only actual, liability, contractual interpretation, is entirely
different from the approach propounded by Chief ludge Seitz in Frederick In
Chief Judge Seitz's approach an actual liability requirement is assumed to be the
general rule from which a ‘potential liability exception ’ is made on the basis of
weighing the policy interests in encouraging settlements against considerations
of fairness to the putative indemnitor Other courts have further elaborated the
circumstances in which such a potential liability exception should apply
specifically, when the indemnitor has had the opportunity either to take over the
defense of the original action or approve the terms of the settlement or more
broadly when the indemnitor has been substantially protected against the
awkward possibility of having to prove the original plaintiff’s case against himself
This court, while not having committed itself, has signaled some inclination
toward adopting this balancing of the equities formula as a guide to when to
recognize exceptions to the general rule of an actual liability requirement
It must be emphasized, however, that the balancing the equities approach
applies only to cases where the duty to indemnify arises as a matter of law
Balancing the interest in promoting settlements against considerations of fairness
to the indemnitor is simply irrelevant to the determination of whether a
contractual duty to indemnify requires a demonstration of actual liability as a
precondition or whether alternatively an assertion of potential liability is
sufficient to trigger the duty That determination according to elementary
principles of contract law is clearly a matter of the intent of the parties
Id at 130 31 (citations omitted) After Bamwlle II held that the language of the contract governs
Virgin Islands courts no longer questioned actual or potential liability presuming Third Circuit
precedent to be binding
1i75 Turning to the second factor most courts generally agree with Bamwlle II, that in the
area of contractual indemnity an application of the theories of active or passive as well as
primary or secondary negligence is inappropriate "' Parfait v jahncke Serv, Inc 484 F 2d 296
303 (5th Cir 1973) (emphasis added) [quoting Weyerhaeuser Steamship Co v Nacirema
Operating Co Inc 355 U S 563, 569 (1958)) Because '[i]ndemnity may arise either in contract
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or in tort 1d (quoting Gen Elec Co v Cuban Am Nickel Co
396 F 2d 89 90 (5th Cir 1968)) the
actual versus potential liability problem is restricted to indemnification based on tort, not
contract And [t]he actual versus potential liability problem is unique to cases in which the
original defendant (indemnitee) has settled with the original plaintiff without giving the third
party defendant (indemnitor) an opportunity to approve the amount of the settlement or to
conduct the defense Id at 304 But not all courts agree
1i76 The Supreme Court of New Hampshire illustrated several concerns courts have with
actual versus potential liability in Morrisette v Sears, Roebuck, & Company 322 A 2d 7 (N H
1974) Morrisette sued her sister in law, Przybyla when a lawn mower injured her See id at 8
Przybyla brought Sears into the suit on a third party complaint See id Halfway through trial, the
sisters in law settled The judge refused to go forward on the third party claims and certified
several questions for interlocutory appeal See It! Addressing what the burden of proof is for a
defendant/third party plaintiff after settling with the first party plaintiff the New Hampshire
Supreme Court explained that ‘[s]ome cases adopt a less precise statement that one voluntarily
paying a claim ‘should be required to Show that he was legally liable for it " 1d at 9 (quoting
Ashland 0118: Refining Co v General Tel Co
462 SW 2d 190 193 (Ky 1970)) However [olther
cases say that the third party plaintiff must 'establish potential liability' but need not prove the
case against himself ’ Id (citing St Paul Fire & Marine Ins Co v Michelin Tire Corp , 98 N E 2d 289
(Ill Ct App 1973)) The real concern however was encouraging settlement while preserving
the right to challenge it
if a third party plaintiff is not to be discouraged from making a settlement his
burden in an action for indemnity must not be too great He would in effect be
forced to proceed to trial against the original plaintiff and would find settlement
to little advantage 0n the other hand, equitable considerations require that the
third party defendant have a reasonable opportunity to Show that the third party
plaintiff was not liable to the original plaintiff but paid the claim as a volunteer
1d at 10 Morrtssette turned to the three part test recognized by Parfait to hold ‘that if it appears
that Sears was not afforded the alternative of participating in the settlement or conducting the
defense then Morrissette will have the burden of establishing her actual liability to Przybyla
rather than the lesser burden of showing potential liability [d at 11 (emphasis added)
1177 Although Morrisette concerned equitable or common law indemnification, not
contractual indemnification, courts continue to rely on the factors it identified, even for
contractual indemnification claims See, e 9, MT Builders, L L C v Fisher Roofing Inc 197 F 3d
758, 769 (Ariz Ct App 2008) ("[W]hen an indemnitee settles a lawsuit covered by an indemnity
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agreement, it may obtain indemnity from its indemnitor if it gave the indemnitor notice of the
action and an opportunity to defend and demonstrates the decision to settle was, under the
circumstances, reasonable and prudent If the indemnitee satisfies these conditions, it may
obtain indemnity without having to Show it was actually liable to the third person, it need only
show its potential liability” (citations omitted)) For example, in Vallorzc v Bravo Corporation
357 S E 2d 207 211 (W Va 1987) the Supreme Court of West Virginia held that the issue of
whether actual or potential liability must be shown depends on whether the indemnitor had
actual notice of the underlying claim an opportunity to defend it, and the right to participate in
any settlement negotiations ” The court characterized these factors as prerequisites for an
indemnitee to have the benefit of the potential liability standard along with the further element
that the settlement amount must be deemed to be reasonable in View of the potential liability
Id In support, the West Virginia Supreme Court cited thirteen cases, federal and state, where
courts applied this same three factor test See 1d (collecting cases) Several of those cases
involved contracts See eg Fontenot v Mesa Petroleum Co
791 F 2d 1207 1216 (5th Cir 1986)
(‘The District Court held that Mesa was not entitled to contractual indemnity from Bristow
because Mesa could not establish that it was potentially liable to Fontenot when it settled the
plaintiff's claim ) Burlington Northern Inc v Hughes Bros Inc 671 F2d 279 283 (8th Cir
1982) ("When liability under an indemnity contract has been denied by the indemnitor proof of
actual legal liability to the injured party is not a requirement "), Morris v Schlumberger, 445 So
2d 1242, 1246 (La Ct App 1984) (“The indemnity clause in question is silent on the issue of
tender and notification, therefore equitable principles of indemnity apply ) Fireman '5 Fund Ins
Co v Comm Standard Ins Co 490 S W 2d 818 824 (Tex 1972) ( Somejurisdictions require that
the indemnitee prove actual rather than potential liability to the plaintiff with whom he has
settled before he can recover the amount of the settlement from the indemnitor This rule
obviously is a discouragement to settlements of cases when there is a future indemnity suit yet
to be tried Texas does not follow this rule ) see also Horn Constr Co Inc v MTSec Serv Corp
489 N Y 3 2d 254 255 (App Div 1985) ( {W]e find that Horn has met its burden ofproving that
the settlement it entered into of the underlying action was reasonable Moreover ample
evidence exists to support the jurys finding that Horn could have been found liable had it
proceeded to trial in the underlying action ’)
1178 Turning to the third factor it is not clear that litigants and courts in the Virgin lslands
have come to rely on Bamvzlle II The District Court of the Virgin Islands has Hg Hess Oil VI
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Corp v Ingersoll Rand Co Case No 03 0147 2005 U S Dist LEXIS 50921 *4 (D V] Oct 21
2005) see also SulIIvan v Sabharwal Case No 2016 21 2018 U S Dist LEXIS 41941 *4 (DVI
Mar 14 2018) But no decisions of the Territorial or Superior Courts ofthe Virgin Islands have
cited BaInVIIIe II Clearly Hess and HOVlC have come to rely on BaInVIIIe [I (See Amended S J Mot
6 7 ( The Third Circuit has already considered HOVlC s indemnification language to rule that it
covers claims that contractor's employees assert against HOVIC (emphasis added) (citing
BaInVIIIe [I] ) But 'the parties cannot stipulate to the law especially where the decision may
impact other pending or future cases Matthew, 56 V l at 682 And one concern with BaIrIVIIle II
is that the court rejected the balancing the equities approach 837 F 2d at 131, in favor of the
language of the indemnity clause Id but where the language was silent The words actual and
'potential do not appear anywhere in the language of the indemnification clause excerpted in
the opinion See Id at 129 (quoting indemnification language) However, because [tjhe language
of the contract [wa]s not limited to cases in which the indemnitee is found liable to the injured
person, Id at 132, the Third Circuit saw no reason to imply such a limit Id Instead the Third
Circuit inferred potential liability" from the intent of the parties " Id at 131 ( We have no
trouble concluding that here the intent ofthe parties was not to require a determination ofactual
liability as a precondition of the duty to indemnify ) But courts only turn to ’the subjective
intent of the parties where the documents are ambiguous or incomplete and, in such
circumstances the court 5 determination of the unexplained subjective intent is a finding of fact ”
Sun Oil Co v Comm r oflnternal Revenue
562 F 2d 258 262 (3d Cir 1977) And where there is
ambiguity the words are construed against the drafter In re Cmty Med Ctr
623 F 2d 864, 866
(3d Cir 1980) (applying New Jersey law) Yet no facts were found in Bamvzlle II because the
District Court granted summary judgment See
837 F 2d at 129 ( Since we review a summary
judgment our review is plenary ) in reality then, the language of the contract did not control
1179 Insofar as the indemnification language at issue here is the same as that already
considered in BaInVIIIe II (Hess P15 Amended S] Mot 6), this Court has concerns about
"holdfingj as a matter of law Id at 7, that Hess and HOVIC only have to show potential liability
and declines to follow BaInVIIle II Hess and HOVlC seem to believe the Third Circuit was
interpreting a statute See Id at 13 [' The Third Circuit has already considered HOVlC's
indemnification contracts and ruled that the broad language contained therein, such as any
suits, claims, demands judgment or causes of action for personal injury,’ evidences the intent by
the contracting parties to condition indemnification on HOVIC and Hess potential liability not
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actual liability (quoting Bamwlle II
837 F 2d at 131]) Hess and HOVlC may argue that
Bamvzlle ll put IMC on notice of what HOVIC understood the language to mean But Bamvzlle II is
not controlling on the agreements between HOVIC and [MC The agreements are silent The
words actual' and 'potential” do not appear in either agreement
$80 Having considered the positions of other jurisdictions this Court believes the Louisiana
approach is the soundest rule for the Virgin Islands [then the basis for indemnity is a written
contract or when the indemnitee tenders to the indemnitor its defense of the underlying lawsuit
the indemnitee need only prove potential liability and the reasonableness of any ensuing
settlement Chevron Oromte Co LLCv jacobs FieldServs N Am Inc Civ No 18 2799 2018 U S
Dist LEXIS 174194 *10 (E D La Oct 10 2018] (citing Vaughn v Franklin 785 So 2d 79 87 (La
Ct App 2001]), see also 1d at *9 n 33 (noting that Louisiana 5 framework is “virtually identical
to that apply by federal courts in the Fifth Circuit in maritime law) [E]quitable principles of
indemnity [also] apply when the contract is silent Id When a contract is silent a court
should not remedy the deficiency by divining from its crystal ball the drafter s intent Pasteur
Health Plan v Salazar 658 So 2d 543 544 [Fla Dist Ct App 1995] And [w]here acontract
is negotiated by sophisticated parties at arm 3 length [C]ourts should be extremely reluctant to
interpret an agreement as impliedly stating something which the parties have neglected to
specifically include Hence, courts may not by construction add or excise terms, nor distort the
meaning of those used under the guise of interpreting the writing ]A Apparel Corp v Abboud,
682 F Supp 2d 294 302 [S D N Y 2010) Again specificity is not too onerous a burden
DamIa'aux 1981 U S Dist LEXIS 10733 at *6 lfparties want to agree that indemnification should
be limited to a showing of actual liability they can make that clear in their contract
1181 Applying this standard, the Court cannot find in favor of the Hess Plaintiffs First it is
unclear if Hess' and HOVIC s contractual indemnification claims also includes a claim for
attorney 5 fees due to [MC not having taken over the defense of 49 the 87 lawsuits [T]he duty
to defend and the duty to indemnify are separate Firemen 5 Fund 22 V l at 143 And ' {d]ifferent
elements of proof are required to establish a breach of each obligation CH Heist Canbe Corp ,
640 F 2d at 481 in their motion papers the Hess Plaintiffs state they sent a demand letter to [MC
on December 11 2008 to take over the defense of the eighty seven lawsuits [See Hess Pls ’
Amended S I Mot 2 ] They also state that [MC refused that demand and this third party action
ensued See id at 3 But assertions of counsel are not evidence See Walters 60 VI at 775 n 7
Because the Hess Plaintiffs did not submit copies of the demand and rejection letters in support
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the Court cannot find that the potential liability standard announced above applies here
1182 Second, and contrary to the Hess Plaintiffs assertions, the present record shows material
facts in dispute Regarding the 49 Plaintiffs who form the basis for Hess and HOVIC s contractual
indemnification claims against {MC 43 Plaintiffs worked for IMC for different lengths of time
For example John Bully whose case was selected for trial, stated in his deposition that he was
employed by [MC from 1986 to 1992 that he worked with catalyst, and that he sometimes wore
a mask for protection (See Hess Pls Amend S) Mot Ex U [Dep oflohn Bully 118 7 21 117 5
7 117 16 18 [Aug 26 2008)) ) But Bully also worked for Litwin from 1974 to 1975 and Litwin
Panamerican Corporation from 1979 to 1986, working with catalyst and wearing a mask if
available See id at 113 8 18, 186 21 25 Presumably if Bully’s complaint limited his claims to
exposure to catalyst dust from 1986 to 1992 only then the Court could conclude that the 1986
purchase order might be triggered here But all Plaintiffs including Bully named Litwin as a
defendant, and most alleged that they worked with catalyst for several years even decades (See
Hess Pls Amend SJ Mot Ex V1 (Compl 11 13 filed Dec 28 2005 Allck Lockhartv Hess 011V]
Corp at a! SX 05 CV 850) ( Plaintiff performed this work [handling catalyst] from the mid
19705 to 2001 )) accord id at Ex 02 (Compl 11 13 filed Dec 28 2005 Skennny Sylvesterv Hess
011V] Corp at a] SX 05 CV 827 ( Plaintiffworked at the refinery from 1976 until 2002 D)
1183 Regarding the 6 Plaintiffs HOVIC contends that even though they were not employed by
[MC, they were still ‘ indirectly exposed to catalyst dust while NC was performing catalyst work"
at the refinery (Hess Pls Amend S] Mot 6) Presumably the 1994 agreement covers the 6
Plaintiffs’ claims while the 1986 purchase order covers the 43 Plaintiffs claims, but that is not
clear 23 Both agreements condition indemnification on injuries being caused, or allegedly caused,
by some act omission or negligence of IMC [including IMC 3 employees) Hess and HOVIC did
not submit any evidence to show what duties IMC agreed to perform under the 1986 purchase
order and the purchase order, itself, states only that IMC will provide labor and services as
required by HOVIC and SCPC (Hess Pls Amend S] Mot Ex C Purchase Order (dated July 28
1986) ] A letter dated July 28 1986 the same date as the purchase order modified the terms of
the indemnification agreement It appears [MC accepted the modification on August 4 1986 (See
23 The record further shows (in exhibits C through G) that the monetary limits under the 1986 purchase order were
adjusted from time to time by the parties which in turn raises a related question whether HOVIC is limited to the
monetary limit that was in place during the years when the plaintiff worked for MC or whether HOVIC can invoke
the coverage limits the parties last agreed to
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1986 Letter at 2) But the duty to indemnify still extended only to acts or omissions in
connection with, or incident to, performance of the purchase order ‘ Id at 1 And the purchase
order does not state what duties [MC agreed to perform The 1994 maintenance services
agreement has similar language providing that lMC will defend indemnify, and release HOVIC
for “any act, omission or negligence whether active or passive, of [IMC} [1994 Maint Servs
Agmt 1T 11 1 p 8) But HOVlC and MC also agreed according to Schedule A attached to the 1994
agreement that lMC would also "[p]rovide managerial supervisory, technical and craft labor in
addition to turnaround field execution painting and power generation maintenance, as well as
administrative and clerical duties among other services (See 1994 Agreement Sch A) Even if
the Court did not depart from Third Circuit precedent the Court still cannot determine from the
record whether any of the 49 Plaintiffs lawsuits triggered the 1986 purchase order the 1994
service agreement, or perhaps both But cf Frederick, 17 Vi at 532 ('As between two
inconsistent contracts the one later in time will prevail over the earlier contract )
1184 Finally and perhaps most importantly HOVlC may have drafted the language in the 1986
purchase order and the 1994 agreement in reliance on Third Circuit precedent Courts have
recognized that [t]he judicial overruling of a precedent should not be given retroactive effect
where this would interfere with rights, especially contractual rights, duly acquired pursuant to
the law as it prevailed prior to the overruling decision ” De Martino v Zurich Ins Co , 307 F Supp
571 573 (W D Pa 1969) (quoting 20 Am lur 2d Courts § 235)] Because the Courts decision
could significantly delay rather than “materially advance the ultimate termination of litigation
4 V l C § 33(c) if the Supreme Court of the Virgin islands were to agree with Bamwlle I], or find
that it was binding the Court will also certify for interlocutory appeal the question whether
actual or potential liability must be shown when an indemnification agreement is silent For
these reasons, the Court finds that the Hess Plaintiffs summary judgment motion is premature,
even though lMC has not responded yet
1i85 There is one more reason why summary judgment must be denied concern over the
posture of the third party action What Hess and HOVlC seek to recover through their
contribution and indemnification claims is the monies they paid out to settle with eighty seven
individuals Through the instant motion they seek summary judgment against lMC on Count
Four contractual indemnification but only for 49 of the 87 lawsuits Summary judgment cannot
be granted on fractions of a claim ln other words, the Court cannot enter judgment in favor of
HOVIC or Hess on 49/87 of Count Four and only as to one of seventeen Third Party Defendants
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named in that count What the amended motion highlights is that Hess and HOVIC have each
asserted 87 contractual indemnification claims, 87 common law indemnification claims, and 87
contribution claims in addition to their claims for breach of the duty to obtain insurance and
breach of the duty to name them as an insured Having all these claims plead en masse in one
third party complaint filed in a master case underscores the herculean task that awaits any fact
finder who must parse the evidence that will be presented by two third party plaintiffs to prove
six claims apiece against multiple third party defendants, including some yet be added to this
litigation Clearly, Hess’ and HOVlC's motion must be denied without prejudice at this time
C Motion for Leave to File Second Amended Third Party Complaint
1186 The last motion before the Court is the Hess Plaintiffs motion, filed on June 21 2011 for
leave to amend their amended third party complaint The reason for the motion is ‘to add [Cl
Americas, Inc as an additional Third Party Defendant and to clarify that Counts Four and Five
apply to the catalyst manufacturers (Hess Pls Mot to File Second Amend Third Party Compl
1 filed June 21 2011 (hereinafter Amend Mot ]) At the time the Hess Plaintiffs filed their
motion, ’amendments to pleadings were governed by Superior Court Rule 8 which 'allowed a
pleading to be amended at any time during a civil proceeding Martinez v Hess 011 VI Corp 69
VI 519 528 (Super Ct 2018) (brackets and citation omitted) [G]ranting leave to amend is
reposed in the sound discretion of the trial court’ and 'when justice so requires is the mandate
Id (citation omitted] Leave to amend need not be granted, however if granting leave to amend
would be futile Id at 529 [citing Cacczamam & Rover Corp v Banco Popular de P R 61 V l 247
255 n S [2014]] And futility has been upheld when the relief requested in the amended
complaint was not authorized under Virgin Islands law Id (quoting Adams v N W Co Inc
63 V] 427 453 (Super Ct 2015))
1187 In their motion, the Hess Plaintiffs give the following reason for seeking leave to amend
to add another third party defendant
Through our investigative efforts, we discovered that Katalco Corporation merged
with lCl Americas, Inc and ceased to exist in 1986 as a result of the merger The
discovery records indicate that Katalco Catalyst was used at the HOVIC Refinery
between 1975 and 1986 Based on this evidence HOVIC and Hess believe that
lndopco Inc and/or 1C1 Americas, inc assumed Katalco Corporation's liability
with regard to its catalyst used at the HOVIC Refinery
(Hess Pls Amend Mot 2 ) Additionally, they want to resolve the confusion‘ and make it clear
that count four contractual indemnification, and count five, breach of contract claim for failure
to obtain insurance, do ‘apply to the catalyst manufacturers Id at 4 Since this matter has not
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been case managed by the Court and only limited discovery has been exchanged, the third party
defendants would not be prejudiced, the Hess Plaintiffs contend Id at 3 For this reason, and
because the "ends of justice will be promoted,’ Id (quoting Choote v Skinner, 19 V I 399, 406
(Terr Ct 1983)) the Court should grant the motion and allow the amendment
fl88 Only one third party defendant, Axens North America Inc ("Axens ) responded in
opposition But its opposition was rendered moot on July 5, 2016 when the Court (Willocks, ] ),
approved a stipulation for dismissal filed by Axens Hess and HOVIC Axens opposition is still
noteworthy because it highlights the issues surrounding the posture of the third party claims
namely which claims are pending and as to which third party defendants 2“ Furthermore with
Axens now having been dismissed the Court would have to reject the proposed second amended
third party complaint since it retains the claims against Axens Rather than continue to
perpetuate prior errors by allowing claims pertaining to all Plaintiffs whose cases was grouped
under this master cases to be asserted in a mass third party complaint filed in the master case
the Court will instead follow the approach taken by another Superior Court judge See generally
In re Kelvin Manbodh Asbestos thlg Series 69V] 394 444 50 (Super Ct 2018)
1189 Along the same lines as Manbodh the Court will grant the Hess Plaintiffs‘ motion, but
reject their proposed amended complaint The Court will sever the Hess Plaintiffs claims and
order them to refile one third party complaint within each Plaintiff’s case and name as third
party defendants in each complaint only those companies whom the Hess Plaintiffs claim that
specific first party plaintiff may have been liable Accord In re Refinery Dust Claims, 3X 06 CV
78 2016 VI LEXIS 48 *18 19 (VI Super Ct May 3 2016) ( Thus the Court believes that it will
be cleaner and clearer for the record for Defendant HOVlC and Defendant Hess to file a third
4 In its response Axens a manufacturer of catalyst opposed leave but only because the Hess Plaintiffs should be
seeking to amend their complaint to remove Axens, instead of trying to retrench Axens in this litigation (Def Axens
N Am 3 Opp n to Hess Pls Mat 8 filed July 7 2011 (emphasis added) ) According to Axens the Hess Plaintiffs are
on record stating that their contribution claim (count one) and their failure to insure claim (count five) were not
applicable to Axens and were subject to dismissal Id at S Axens is correct Axens attached to its opposition a
response the Hess Plaintiffs had filed on December 14 2009, in opposition to Axens October 23 2009 motion for
summary judgment In their December 14 2009 response the Hess Plaintiffs conceded that Axens request to
dismiss {sic} Count Five (breach of contract failure to insure) [wa]s moot because Count Five does not apply to any
of the third party catalyst manufacturers including Axens Id at Ex D (Hess Pls Resp in Partial Opp n to Axens N
Am 5 S] Mat 3) Yet now in seeking leave to amend the Hess Plaintiffs want to make the opposite clear Axens
claims the Hess Plaintiffs delayed for six years Id at 7, and their motion is nothing but a bad faith attempt to
further delay this case and to avoid an adverse summary judgment ruling in Axens favor Id in reply to Axens the
Hess Plaintiffs attempt to assure both the Court and Axens that they are not attempting to thwart Axens summary
judgment motion or resurrect their contribution or breach of contract for failure to obtain insurance claims
against Axens (Hess Pls Reply to Axens N Am 5 Opp n 3 filed july 14, 2011 ) Although Axens was dismissed its
opposition highlights concerns with managing all the parties and claims here
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party complaint under each plaintiff's individual docket and only implead third party
defendants that they allege are liable (on a contribution and/or indemnification claim) for all or
part of that specific plaintiff‘s claims against Defendant HOVlC and Defendant Hess ] vacated
on othergrounds by 2019 V1 Super 170
1190 The cases grouped under this master case have not been closed technically because
Plaintiffs' claims against Litwin have not been dismissed But none of the first party plaintiffs or
defendants will be able to appeal if the third party litigation continues for several more years
To ensure the parties appellate rights, the Court will sever the individual claims but require the
first parties (Plaintiff Hess HOVlC UOP, American Cyanamid, and Litwin) to file a notice in each
case, jointly if possible stating whether they intend to appeal any orders issued in the individual
cases in the master case The Court will further order Litwin and each Plaintiff to reduce their
dismissal to writing If any party indicates an intent to appeal the Court instead direct Hess and
HOVlC to file eighty seven first party complaints Furthermore and notwithstanding severance
the Court will direct the parties to meet and confer and submit a proposed case management
order to govern discovery Discovery should not be delayed while counsel reorganize their
pleadings
If91 Assuming the third party claims will proceed within the first party cases the Court will
also direct the Clerk's Office to assign a new number to Mr Aarndel’s case and refile and re
docket all papers specific to his claims under that new case number See Manbodh, 69 V l at 394
n 3 (' A master case should not share the same case number as one of the individual cases in the
event that the individual case is terminated prior to the termination of the remainder of the
litigation (brackets omitted) (quoting In re Alumina Dust Claims 67 VI at 196]) Whether
eighty seven new complaints are filed or eighty seven third party complaints the master case
will remain in place to ensure the record is preserved and all motions remain pending SeeAIbert
v Hess 011 VI Corp
70 VI 316 327 n 6 (Super Ct 2019) ( [S]everance should not require
the parties to re file or re brief pending motions )
Ill CONCLUSION
1192 For the reasons stated above the Court will grant Hess and HOVlC s motion for leave to
file a second amended complaint but reject the proposed pleading because several third party
defendants have been dismissed and others dropped from this action Furthermore, allowing
third party claims asserted by multiple third party plaintiffs arising from eighty seven
individual lawsuits to be filed in a ‘mass third party complaint in a master case was in error To
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correct it the Court will sever the third party claims of Hess and HOVlC and order them to be
refiled either in each individual case so as long as the first party litigants rights of appeal would
not be compromised Otherwise, new complaints must be filed The Court will also grant IMC's
motion for leave to conduct discovery and direct the parties to meet and confer and submit a
proposed a case management order to govern discovery in the third party litigation Finally, and
notwithstanding that IMC requested a stay of summary judgment by moving for leave to take
discovery, the Court will deny the Hess Plaintiffs‘ summary judgment motion without prejudice
The materials submitted show many facts in dispute Moreover, this Court holds that the
soundest rule for the Virgin Islands is to continue to recognize indemnification agreements but
require explicit language when one party agrees to pass on their own negligence to another and
further where the language in an indemnification agreement is silent on whether actual or
potential liability must be shown, to require proof of actual liability unless the indemnitee
tendered the defense and it was refused Lastly, since these questions are controlling, the Court
will certify them to the Supreme Court of the Virgin islands Orders consistent with this Opinion
follow
/
Date April 13 2020 ’ A“
ROBE A o".
ATTEST Judge of the Superior Court
TAMARA CHARLES
Clerk of the C or
By /’
Court Ci k
Dated z [I .7120 :0