IPI, Inc. v. Axiall Corp.

897 S.E.2d 572

IPI, INC. and Matthew Joseph Taylor, Plaintiffs Below, Petitioners,

v.AXIALL CORPORATION and Eagle Natrium, LLC, Defendants Below, Respondents.

No. 22-ICA-164

West Virginia Intermediate Court of Appeals.

Submitted: September 21, 2023

Filed: January 30, 2024

Appeal from the Circuit Court of Marshall County, Honorable Jeffrey D. Cramer, Judge, Civil Action No. 18-C-14

Peter G. Markham, Esq., Patrick C. Timony, Esq., Zachary J. Rosencrance, Esq., J. Tyler Barton, Esq., Bowles Rice LLP, Charleston, West Virginia, Counsel for Petitioners

William D. Wilmoth, Esq., Steptoe & Johnson, PLLC, Wheeling, West Virginia, John R. Callcott, Esq., Steptoe & Johnson, PLLC, Morgantown, West Virginia, Counsel for Respondents

SCARR, CHIEF JUDGE:

Petitioners IPI, Inc. ("IPI") and Matthew J. Taylor appeal the September 12, 2022, order from the Circuit Court of Marshall County that granted respondents’ motion for partial summary judgment on their counterclaims for indemnity and breach of contract. In its order, the circuit court found that, pursuant to Pennsylvania law, the indemnity provisions within the parties’ contract applied to claims petitioners brought against the respondents related to a chlorine gas leak at respondents’ facility. For the reasons mentioned below, this Court affirms in part, and vacates in part, the September 12, 2022, order from the Circuit Court of Marshall County, and remands this matter to the lower court with directions for further proceedings consistent with this opinion.

I. FACTUAL AND PROCEDURAL BACKGROUND

IPI is a small contracting company based in Elkview, West Virginia, that provides industrial painting and power washing services to businesses throughout West Virginia. Mr. Taylor is IPI’s president and routinely works hands-on at many of IPI’s jobsites. Respondent Eagle Natrium, LLC ("Eagle Natrium") is the owner and operator of a large chemical plant where the chlorine leak at issue occurred. Respondent Axiall Corporation ("Axiall") is the parent corporation of Eagle Natrium through a series of intermediaries. Prior to the leak at issue on this appeal, the parties had maintained a long-term commercial relationship.¹

On August 27, 2016, IPI and Mr. Taylor were onsite at respondents’ chemical plant in Natrium, West Virginia, performing power washing and painting services on a large chemical storage tank. Contemporaneously, but unrelated to IPI’s services, in another part of the plant, respondents were attempting to load hundreds of thousands of pounds of chlorine gas into a 1979 railcar for transport. This railcar utilized a subframe that the Federal Railroad Administration had advised in 2006 was prone to defects such as tank head cracks, pad-to-tank cracks, sill web cracks, and tank shell buckling that in some instances led to release of hazardous materials. The loading was occurring hundreds of feet away in an entirely different department within the plant than where IPI was working. This loading was not related to, part of, or required for IPI to perform its work. There is no dispute that IPI had no control over the area where the railcar was being loaded, that none of its employees were involved in the loading, and that it had no involvement in the maintenance or usage of the railcar.

The subject railcar had recently been returned to service after lengthy repairs necessitated by extensive corrosion, which had been performed by outside contractors. The railcar had a crack near the inboard end of the stub sill cradle pad, and when it was filled with chlorine gas, the crack widened and the tank ruptured, releasing 178,400 pounds of toxic chlorine gas throughout the plant, some of which drifted into the area where Mr. Taylor and two IPI employees were working on forty-foot platforms. According to Mr. Taylor, he did not hear any emergency alarms or sirens when the leak occurred. He first became aware of the leak when he noticed a large green cloud coming toward him. He put his escape respirator in his mouth but removed it long enough to yell for his employees to apply their own respirators. In the process, Mr. Taylor inhaled chlorine gas. It is alleged that Mr. Taylor and his employees attempted to escape the area, but were impeded by a locked gate, resulting in more prolonged exposure to the leak.²

Due to his chlorine exposure, Mr. Taylor reported to the plant’s onsite medical clinic before being transferred by ambulance to a local hospital. There, the treating physician determined the effects of Mr. Taylor’s chlorine exposure could not be adequately treated at the hospital, and Mr. Taylor was then life-flighted to a larger hospital for further evaluation and treatment. In addition to Mr. Taylor’s personal injuries, it was alleged that the first leak damaged hundreds of thousands of dollars’ worth of IPI equipment.

At the time of the August 2016 leak, IPI’s work at the plant was subject to two separate indemnity provisions. First, there was an indemnity paragraph in an Agreement for On-Site Services ("AOS") that IPI signed in 2007, prior to Axiall’s acquisition of the plant.³ Second, there was an indemnity paragraph in the General Terms and Conditions ("Terms and Conditions") that were incorporated by reference in each Purchase Order ("PO").

Section 4 of the AOS contains the following indemnification provision:

[IPI] assumes the risk of all damages, losses, costs and expenses, and agrees to indemnify, defend and hold harmless [Axiall and Eagle Natrium], their directors, officers, agents, and employees from and against any and all claims, liability, damage, loss, penalties, fines, cost and expense of any kind whatsoever whichmay accrue to or be sustained by [Axiall and Eagle Natrium], their directors, officers, agents or employees, arising out of this Agreement and/or the Services, including, without limitation, for the death of or injury to persons or destruction of property involving [IPI], its employees, agents and representatives, sustained in connection with performance of the Services, arising from any cause whatsoever (including without limitation, injuries resulting from failure of or defect in any equipment, instrument or device supplied by [Axiall and Eagle Natrium] or their employees to [IPI], its employees, agents or representatives at the request of [IPI], its employees, agents or representatives), except to the extent arising out of the sole negligence or willful misconduct of [Axiall and Eagle Natrium] or [their] employees acting within the scope of their employment. The indemnification obligation of this Section 4. shall be deemed modified as required to exclude that degree of indemnification required aforesaid which is expressly prohibited by applicable law, statute or regulation, if any; but to the extent the aforesaid indemnification obligation is valid and enforceable, it shall remain in effect though modified. The indemnity obligations of [IPI] hereunder shall survive the termination or expiration of this Agreement and of any applicable Accepted Order.

(Emphasis added).

Section 1 of the AOS defines its Scope of Services, in part, as: "certain on-site services to be performed by [IPI], at the [Plant], per the performance schedule, the pricing therefor, and for [Axiall and Eagle Natrium] as shall be specified and described in an ‘Accepted Order’, and as required by and in accordance with [the AOS]." "Accepted Order" is defined as, among other things, a purchase order ("PO").

The Scope of Services section in the AOS also contained wording addressing how to resolve any inconsistencies or conflicts between the AOS and a PO with its incorporated Terms and Conditions. According to the AOS Scope of Services, the following priority was to be followed in the event of conflict or inconsistency:

If there are any terms or conditions in an Accepted Order which are inconsistent with or in conflict with this Agreement, the terms and conditions of the various documents constituting this Agreement shall control in the following priority and order: the front of the Accepted Order; this Agreement; and, then the reverse side terms and conditions of the Accepted Order.

The work involved in this appeal was subject to PO 4510044817 which related to IPI’s August 2016 job assignment.⁴ The front page of this document contained no language relating to indemnity. The back of the page, however, contained the following language, in bold capital letters: "THIS PURCHASE ORDER IS SUBJECT TO, INCLUDES AND INCORPORATES HEREIN BY REFERENCE THE UNITED STATES PURCHASE ORDER GENERAL CONDITIONS FOR Eagle Natrium LLC LOCATED AT HTTP://WWW.AXIALL.COM/COMPANY." The Terms and Conditions document contains its own indemnification provision. Section 13 provides:

[IPI] assumes the risk of all damage, loss, costs and expense, and agrees to indemnify, defend and hold harmless [Axiall and Eagle Natrium], [their] officers, employees and representatives, from and against any and all damages, claims, demands, expenses (including reasonable attorneys’ fees), losses or liabilities of any nature whatsoever, and whether involving injury or damage to any person (including employees of [IPI] and [Axiall and EagleNatrium]) or property, and any and all suits, causes of action and proceedings thereon arising or allegedly arising from or related to the subject matter of this Purchase Order, except where such injury or damage was caused by the sole negligence of [Axiall and Eagle Natrium]. This indemnity shall survive the termination or cancellation of this Purchase Order, or any part hereof.

(Emphasis added).

On January 29, 2018, approximately a year and a half after the first chlorine leak, IPI and Mr. Taylor filed their complaint against Axiall and Eagle Natrium with respect to both gas leaks, raising claims for personal injury and property damage under several legal theories. On June 17, 2019, Axiall and Eagle Natrium amended their Answer to include a counterclaim for, among other things, IPI’s alleged failure to hold them...