OWNBEY et al v. AKER KVAERNER INDUSTRIAL CONSTRUCTORS et al

Filing 672

OPINION. Signed by Judge Katharine S. Hayden on 6/30/21. (cm, )

NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
SHELBY OWNBEY and JOYCE
OWNBEY,
Plaintiffs,

Civil No.: 07-cv-02190 (KSH) (CLW)

AKER KVAERNER
PHARMACEUTICALS, INC.; R&R
SCAFFOLDING, LTD.; IMCLONE
SYSTEMS, INC.; SAFE WORKS, LLC
d/b/a POWER CLIMBER, JOHN DOE
CORPORATIONS 1, 2, and 3; and JOHN
and JANE DOES, 1, 2, 3, 4, and 5,

OPINION

v.

Defendants.
and
IMCLONE SYSTEMS, INC.,
Third-Party Plaintiff,
v.
ADVANTAGE BUILDINGS &
EXTERIORS, INC.; MID-CONTINENT
CASUALTY CO.; LIBERTY MUTUAL
INSURANCE CO.; and ZURICH
AMERICAN INSURANCE CO.,
Third-Party Defendants,
and

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AKER KVAERNER
PHARMACEUTICALS, INC.,
Third-Party Plaintiff,
v.
ADVANTAGE BUILDINGS &
EXTERIORS, INC.; MID-CONTINENT
CASUALTY CO.; ZURICH AMERICAN
INSURANCE CO.; and NATIONAL
UNION FIRE INSURANCE CO. OF
PITTSBURGH, PA,
Third-Party Defendants,
and
R&R SCAFFOLDING, LTD.,
Third-Party Plaintiff,
v.
ADVANTAGE BUILDINGS &
EXTERIOR, INC.,
Third-Party Defendant.
KATHARINE S. HAYDEN, U.S.D.J.
Before the Court are four motions, three of which relate to the continued
coverage dispute between Mid-Continent Casualty Company (“MCC”) and Aker
Kvaerner Pharmaceuticals, Inc. (“Aker”), which was successful in its pursuit of
coverage as an additional insured under a policy MCC issued to a third party,
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Advantage Buildings and Exterior, Inc. (“Advantage”). The fourth motion is brought
by Zurich American Insurance Company (“Zurich”), to compel a jury trial for
purposes of allocating any exposure its insured, Epic Interiors, LLC (“Epic”) might
share with Advantage, and even Aker, arising out of contractual indemnification
provisions in their contracts with Aker. The Court writes for the parties who are
thoroughly familiar with the ins-and-outs of this hotly disputed litigation in which the
plaintiff, who sued for serious injuries when he fell from scaffolding on an industrial
site under construction, received an undisclosed settlement ten years ago that resolved
his liability claims against the entity defendants, including Advantage, Epic, and Aker.
The coverage issues have persisted and the motions appear on the docket as
follows: D.E. 635, Zurich’s motion to compel a jury trial to allocate liability as
between and among Aker, Advantage, and Epic; D.E. 636, MCC’s motion for
summary judgment to dismiss Aker’s third-party complaint and fee claims, which is
procedurally defective as a motion inasmuch as it only reflects MCC’s moving brief;
D.E. 638, MCC’s corrected motion for summary judgment to dismiss Aker’s thirdparty complaint and fee claims, or in the alternative, to allocate such fee claims; and
D.E. 637, Aker’s motion for attorneys’ fees.
MCC’s moving brief at D.E. 636 was improperly docketed as a motion and is
duplicative of the corrected motion docketed at D.E. 638; accordingly, it will be
terminated.

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The remaining motions fall into two categories – threshold and core. The
threshold motions are brought by the insurers (D.E. 635, 638), and seek to delay
and/or eliminate consideration of Aker’s fee application (D.E. 637) – which is the
core issue. Two previous definitive rulings in the course of this litigation render the
insurers’ threshold arguments unpersuasive, and tee up the real issue, which is not
whether Aker gets reimbursement, but what reimbursement it gets.
The rulings that stand in the way of Zurich and MCC’s motion practice here
are reflected in D.E. 340 and D.E. 589. The former sets forth the Court’s decision on
the record at oral argument on July 7, 2010, that Aker’s motion for coverage under
Zurich’s general liability insurance contract with Epic was granted, and that Epic’s
motion to dismiss Aker’s cross-claims for contractual indemnification was denied.
Therefore, Zurich’s arguments in D.E. 635, joined by MCC in D.E. 638, that a
jury trial must be held to allocate fault among Aker, Advantage, and Epic despite the
settlement paid long ago to plaintiff, are rejected. As Aker convincingly argues (and
brought to the Court’s attention long ago in its winning brief (D.E. 206-1 at 10)), the
triable factual issue relating to coverage under the contractual indemnification
provision would have been whether Aker was solely responsible for plaintiff’s injuries.
This was waived when Zurich settled with plaintiff, which occurred after Zurich lost
its summary judgment motion that sought to dismiss Aker’s cross-claims for
indemnification. Even absent this compelling fact, Aker properly points out that
allocation of fault between Epic and Advantage is irrelevant to the theory behind its
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present application for fees, because the basis is the provision in Aker’s contracts with
Epic and Advantage that provides for reimbursement of attorney’s fees to enforce
Epic and Advantage’s indemnification obligations.1
Therefore, to the extent that MCC and Zurich seek a jury trial in connection
with allocation of fault as among their insureds and Aker for purposes of deciding
what legal fees are owed to Aker under contractual indemnification, their motions are
denied.
The second definitive ruling defeating the insurers’ motions is in the Court’s
written opinion (D.E. 589) determining that Aker is an additional insured under
MCC’s policy insuring Advantage, a decision rendered over MCC’s strenuous
objection.2 For the first time, and to Aker’s considerable annoyance (see Aker’s brief
in opposition to MCC’s motion to dismiss Aker’s third-party complaint, D.E. 646),
MCC seeks to wipe out any obligation on Aker’s fee claim on the theory that MCC

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See, e.g., Article 16.1 in the Epic Contract, which states: “Contractor [Epic] agrees to release,
indemnify, hold harmless and defend Kvaerner Process and Owner [ImClone], the affiliated
companies of each, and all of their directors, officers, employees, agents and representatives, from
and against any claim, expense, or liability, cost and expenses (including court costs and attorney
fees) on account of injury or death of persons (including the employees of Kvaerner Process,
Owner, contractor and contractor’s lower tier subcontractors and suppliers and any other
contractors or subcontractors) or damage to or loss of property (including the property of Kvaerner
Process or Owner) or delay (including all attorney’s fees to enforce Contractor’s
indemnification obligations) arising out of this Contract, irrespective of any fault or negligence of
Kvaerner Process and/or Owner, their affiliated companies, their respective officers, agents or
employees excepting where the sole cause of such injury or death of persons or damage to or loss of
property is the negligence of Kvaerner Process or Owner.” (D.E. 206-1 at 4 (emphasis added).)
2
Even now MCC devotes pages of its moving brief explaining why that ruling is wrong and that it
does not owe Aker coverage as an additional insured.

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“stepped up” and paid on an “insured contract” theory in the policy issued to
Advantage.
The Court sympathizes with Aker. In its reply brief on its motion, MCC notes,
breezily, that it “had already agreed to provide coverage benefitting AKP [Aker]
(including AKP’s negligence and to pay their legal defense fees) by acknowledging
coverage for the Advantage contractual indemnity obligation owed AKP. With that
concession in hand, what more could AKP achieve by pursuing a coverage
determination?” (D.E. 655 at 7.) The question is cringe-worthy in the face of the
Court’s definitive ruling that Aker is an additional insured and despite Aker’s having
steadily secured favorable rulings on its coverage claims. The Court further agrees
with Aker that MCC’s arguments in support of summary judgment denying Aker’s fee
claims amount to an improper “re-reargument” of the decision in D.E. 589, and they
are not worthy of exploration beyond that observation.
Therefore, MCC’s corrected motion (D.E. 638) that seeks dismissal of Aker’s
third-party complaint and fee claims is denied.
This brings the Court to the core motion, Aker’s motion for an award of
attorney fees (D.E. 637). As Aker observes in its introductory paragraph to the
moving brief:
After over a decade of litigation, Aker has prevailed on all of
its insurance coverage and contractual indemnity claims
against MCC, Zurich, Advantage and Epic and is therefore
entitled to recover its coverage counsel legal costs for two
reasons. First, Aker is entitled to recover legal costs incurred
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prosecuting its claims for additional insured coverage against
MCC and Zurich because, under this Court’s opinion and
Order dated September 1, 2017 [DE 589 & 590] . . . , Aker
is a “successful claimant” in an insurance coverage dispute
under New Jersey Court Rule 4:42-9(a)(6). Second, Aker is
entitled to recover legal costs incurred prosecuting its claims
for contractual indemnification against Advantage and Epic
because their contracts include attorneys’ fee provisions that
obligate them to reimburse Aker for all legal costs Aker
incurred to enforce their respective contractual indemnity
obligations.
(D.E. 637-1 at 1.)
To be clear: Aker won summary judgment in its favor that it is an additional
insured under MCC’s policy to Advantage by opinion of this Court (D.E. 589). By
the same decision, Aker won summary judgment in its favor that it is an additional
insured under Zurich’s policy insuring Epic. After oral argument, Aker won its
motion seeking summary judgment (D.E. 206) on Epic’s contractual obligation to
indemnify Aker as set forth in the Order on Motion Practice Related to Contractual
Indemnification (D.E. 340) filed July 8, 2010. MCC recognized its insured,
Advantage’s obligation to Aker under contractual indemnification in settling plaintiff’s
claims in 2011. (As noted above, MCC characterizes its capitulation on that issue as
justification for denying Aker’s fee claim as a “successful applicant.”)
Plainly, Aker prevailed, and it is entitled to an award of legal fees and expenses;
in that respect, its motion (D.E. 637) is granted. Remaining for determination are the
amounts to which it is entitled (1) from the insurers, MCC and Zurich, under Rule
4:42-9(a)(6), and (2) from Advantage and Epic under the attorney’s fee provisions
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contained in their contracts with Aker. Under Rule 53, the Court may appoint a
special master under certain conditions, after giving the parties “notice and an
opportunity to be heard.” Fed. R. Civ. P. 53(b)(1). Based on the complex issues and
history underlying resolution of the fee dispute, the Court intends to appoint a special
master to aid in efficiently and effectively resolving the foregoing issues in a timely
manner, and is considering appointing the Hon. Jose L. Linares, U.S.D.J. (ret.), former
Chief Judge of the District of New Jersey. Accordingly, no later than July 9, 2021,
the parties shall file position papers of no more than 4 pages with respect to the
appointment of a special master, the matters set forth in Rule 53(b)(2), any
stipulations under Rule 53(f)(3), and any other issues a party wishes the Court to
address in considering and/or issuing its appointment order.
An appropriate order will issue.
/s/ Katharine S. Hayden
Katharine S. Hayden, U.S.D.J.

Date: June 30, 2021

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