Kiewit Eastern Co. v. L & R Construction Co.

Opinions of the United
1995 Decisions States Court of Appeals
for the Third Circuit

1-10-1995

Kiewit v L&R Construction Co
Precedential or Non-Precedential:

Docket 94-1434

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 UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT

________________

Nos. 94-1434 & 94-1439
________________

KIEWIT EASTERN CO., INC.;
KIEWIT/PERINI, A JOINT VENTURE, ET AL.

v.

L&R CONSTRUCTION CO., INC.;
CNA INSURANCE COMPANY

Kiewit Eastern Company, Inc. and
Kiewit/Perini, A Joint Venture,
Appellants in No. 94-1434

CNA Insurance Company,
Appellant in No. 94-1439

_______________________________________________

On Appeal from the United States District Court
for the Eastern District of Pennsylvania
(D.C. Civil Action No. 91-cv-05563)
___________________

Argued September 26, 1994

Before: SCIRICA, NYGAARD and McKEE, Circuit Judges

(Filed January 10, l995 )

JERROLD P. ANDERS, ESQUIRE (Argued)
White & Williams
One Liberty Place
1650 Market Street, Suite 1800
Philadelphia, Pennsylvania 19103

Attorney for Appellants/Cross-Appellees
Kiewit Eastern Company, Inc. and
Kiewit/Perini, A Joint Venture
ALEXIS L. BARBIERI, ESQUIRE (Argued)
Lewis & Wood
1207 Spruce Street
Philadelphia, Pennsylvania 19107

Attorney for Appellee
L&R Construction Co., Inc.

R. BRUCE MORRISON, ESQUIRE (Argued)
Marshall, Dennehey, Warner, Coleman & Goggin
1845 Walnut Street
Philadelphia, Pennsylvania 19103

Attorney for Appellee/Cross-Appellant
CNA Insurance Company

__________________

OPINION OF THE COURT
__________________

SCIRICA, Circuit Judge.

In this diversity case, we are presented with disputes

over coverage under two contracts, an indemnification agreement

between a contractor and subcontractor and a subsequent insurance

contract between the subcontractor and an insurance company. The

primary issue is whether the indemnification agreement

sufficiently waived the immunity granted employers under the

Pennsylvania Workers' Compensation Act. The district court

partially granted cross-motions for summary judgment, holding the

contractor was entitled to conditional indemnification but its

general partner was not. The district court also dismissed the

insurer from the case. We will affirm in part and reverse in

part.
 I.

Kiewit/Perini, a joint venture composed of Kiewit

Eastern Company and Perini Corporation, served as general

contractor for construction of a portion of Interstate 476, known

as the Blue Route, near Philadelphia. In July 1988,

Kiewit/Perini subcontracted certain work to L&R Construction

which agreed to defend and indemnify Kiewit/Perini and obtain

insurance in order to protect the general contractor from

liability for personal injuries resulting in whole or in part

from the subcontractor's negligence. As a result, L&R

Construction purchased an insurance policy from CNA Insurance

Company covering liability resulting from L&R Construction's

incidental contracts, such as its contract with Kiewit/Perini.

During construction, a crane loaned to L&R Construction

by Kiewit Eastern came too close to a power line, injuring

Benedict Chen, an employee of L&R Construction. Chen brought two

actions in the Philadelphia County Court of Common Pleas against

Kiewit/Perini and Kiewit Eastern,1 but not against L&R

Construction, which -- as Chen's employer -- was immune from suit

under the Pennsylvania Workers' Compensation Act.2 After

Kiewit/Perini and Kiewit Eastern tendered their defense to CNA

Insurance, which refused to accept the tender, they filed a

1
. Chen v. Philadelphia Elec. Co., No. 91-1339 (Ct. C.P.
Phila. County filed Jan. 11, 1991); Chen v. Philadelphia Elec.
Co., No. 91-1753 (Ct. C.P. Phila. County filed July 10, 1991).
2
. Pa. Stat. Ann. tit. 77, § 481 (1992).
third-party complaint against L&R Construction, alleging it was

obligated to defend and indemnify them.

Kiewit/Perini and Kiewit Eastern then filed this

declaratory judgment action in federal court, seeking a defense

and indemnification from L&R Construction or CNA Insurance, as

well as reimbursement for attorneys' fees and costs. All parties

filed motions for summary judgment. The district court granted

Kiewit/Perini's motion in part, requiring L&R Construction to

defend and conditionally indemnify it, but held as a matter of

law that L&R Construction owed no duty to defend or indemnify

Kiewit Eastern. After deciding those defense and indemnification

issues, the court dismissed the claim against CNA Insurance as

moot. Kiewit Eastern Co. v. L&R Constr. Co., Civ. A. No. 91-

5563, 1993 WL 367051 (E.D. Pa. Sept. 3, 1993) ("Kiewit I"). The

district court denied a subsequent motion to amend the judgment,

Kiewit Eastern Co. v. L&R Constr. Co., Civ. A. No. 91-5563, 1994

WL 116108 (E.D. Pa. Mar. 15, 1994) ("Kiewit II"), and

Kiewit/Perini, Kiewit Eastern, and CNA Insurance appealed.

The district court had jurisdiction of the case under

28 U.S.C. § 1332 (1988).3 We have jurisdiction under 28 U.S.C. §
3
. The parties do not contest jurisdiction. The
Declaratory Judgment Act, 28 U.S.C. § 2201 (1988), permits "the
discretionary exercise of jurisdiction over suits otherwise
falling under federal subject matter jurisdiction," a form of
discretion "significantly greater" than that permitted under
traditional abstention principles. United States v. Commonwealth
of Pa., Dep't of Envtl. Resources, 923 F.2d 1071, 1074 (3d Cir.
1991).

We considered this discretion in a similar situation, a
case in which an insurance company sought a declaratory judgment
on its duty to defend and indemnify an insured in a pending state
1291 (1988). Because this is an appeal from a grant of summary

judgment, our review is plenary. Oritani Sav. & Loan Ass'n v.

Fidelity & Deposit Co., 989 F.2d 635, 637 (3d Cir. 1993).

Summary judgment may be granted only when there are no genuine

issues of material fact and the moving party is entitled to

judgment as a matter of law. Id. at 637-38; see also Fed. R.

Civ. P. 56(c).

II.

(..continued)
action. Terra Nova Ins. Co. v. 900 Bar, Inc., 887 F.2d 1213 (3d
Cir. 1989). In Terra Nova, we reversed the district court's stay
of the federal proceedings on the duty to defend, but affirmed
the stay on the duty to indemnify. Id. at 1228. In affirming
the district court's exercise of discretion to stay the
proceedings on the duty to indemnify, we found persuasive three
factors:

1) the general policy of restraint when the
same issues are pending in a state court; 2)
an "inherent conflict of interest" between an
insurer's duty to defend in a state court and
its attempt to characterize, in the federal
suit, the state court suit as arising under a
policy exclusion; and 3) an avoidance of
duplicative litigation.

Commonwealth of Pa., Dep't of Envtl. Resources, 923 F.2d at 1075-
76 (discussing Terra Nova). Some of those factors may be
implicated in this case. Here, a third-party complaint pleading
the right to indemnification already had been filed by the Kiewit
entities against L&R Construction in at least one of the
underlying state tort cases; thus, the Pennsylvania courts may
well have provided a more suitable and satisfactory forum for
determining the issues before us. See Brillhart v. Excess Ins.
Co. of America, 316 U.S. 491, 495 (1942) ("Ordinarily it would be
uneconomical as well as vexatious for a federal court to proceed
in a declaratory judgment suit where another suit is pending in a
state court presenting the same issues, not governed by federal
law, between the same parties."). Nevertheless, because no party
has raised the matter on appeal, we need not decide this
question.
 Section 11 of the subcontract between Kiewit/Perini and

L&R Construction provided:
INDEMNIFICATION. The Subcontractor
further specifically obligates itself to the
Contractor, Owner and any other party
required to be indemnified under the Prime
Contract, jointly and separately, in the
following respects, to-wit:

. . . .

(b) to defend and indemnify them against
and save them harmless from any and all
claims, suits or liability for . . . injuries
to persons, including death, and from any
other claims, suits or liability on account
of acts or omissions of Subcontractor, or any
of its subcontractors, suppliers, officers,
agents, employees or servants, whether or not
caused in part by the active or passive
negligence or other fault of a party
indemnified hereunder; provided, however,
Subcontractor's duty hereunder shall not
arise if such claims, suits or liability,
injuries or death or other claims or suits
are caused by the sole negligence of a party
indemnified hereunder unless otherwise
provided in the Prime Contract.
Subcontractor's obligation hereunder shall
not be limited by the provisions of any
Workers' Compensation act or similar
statute[.]4

4
. A similar indemnification provision in the subcontract
covered equipment the subcontractor borrowed from the contractor:

CONTRACTOR'S EQUIPMENT. In the event
that Subcontractor by rental, loan or
otherwise, makes use of any of Contractor's
equipment, scaffolding, or other appliances,
Subcontractor agrees to accept such "as is"
and that such use shall be at the sole risk
of Subcontractor and Subcontractor agrees to
defend, hold harmless and indemnify
Contractor against all claims of every nature
arising from its use thereof.
(emphasis added).

A.

The district court held the indemnification language

required L&R Construction to defend and conditionally indemnify

Kiewit/Perini. Kiewit I, supra, at *8. L&R Construction does

not dispute this holding, but its insurance company, CNA

Insurance, does.5

Pennsylvania law permits indemnification, even for the

indemnitee's own negligence, as long as the agreement to

indemnify is "clear and unequivocal." Ruzzi v. Butler Petroleum

Co., 588 A.2d 1, 4 (Pa. 1991); Willey v. Minnesota Mining & Mfg.

Co., 755 F.2d 315, 323 (3d Cir. 1985). In this case, CNA

Insurance claims the language of the subcontract generally is

ambiguous and should be interpreted against the indemnitee.6 We

cannot agree. Under Pennsylvania law, "[w]hen a written contract

is clear and unequivocal, its meaning must be determined by its
(..continued)
Subcontract § 22.
5
. Both L&R Construction and CNA Insurance agreed that, if
L&R Construction is found to owe a duty to defend and indemnify,
then CNA Insurance will have the obligation to fulfill that duty,
pursuant to the CNA insurance policy.
6
. CNA Insurance contends the difference in
interpretations offered by the parties to this action
demonstrates the ambiguities inherent in the contract.
Pennsylvania courts repeatedly have rejected such reasoning.
See, e.g., Vogel v. Berkley, 511 A.2d 878, 881 (Pa. Super. Ct.
1986) ("The fact that the parties do not agree upon the proper
interpretation does not necessarily render the contract
ambiguous."); Metzger v. Clifford Realty Corp., 476 A.2d 1, 5
(Pa. Super. Ct. 1984) (citation omitted) ("a contract is not
rendered ambiguous by the mere fact that the parties do not agree
upon the proper construction").
contents alone. It speaks for itself and a meaning cannot be

given to it other than that expressed." Steuart v. McChesney,

444 A.2d 659, 661 (Pa. 1982) (citation omitted). It is for the

court, as a matter of law, to determine whether ambiguity exists

in a contract. Hutchison v. Sunbeam Coal Corp., 519 A.2d 385,

390 (Pa. 1986).7 In this case, we agree with the district court

that the indemnification provisions of the subcontract are

unambiguous, requiring L&R Construction to indemnify

Kiewit/Perini unless Kiewit/Perini was solely to blame for the

injury.8

7
. Under Pennsylvania law, "[t]he fundamental rule in
construing a contract is to ascertain and give effect to the
intention of the parties." Lower Frederick Township v. Clemmer,
543 A.2d 502, 510 (Pa. 1988). Contracts of indemnification often
allocate between parties the "burden of procuring insurance,"
Jamison v. Ellwood Consol. Water Co., 420 F.2d 787, 789 (3d Cir.
1970), or determine which entity bears "ultimate responsibility
for injuries on the job." Willey v. Minnesota Mining & Mfg. Co.,
755 F.2d 315, 323 (3d Cir. 1985). The indemnification provision
in this case appears to have been intended for a similar purpose,
particularly since it was accompanied by a requirement that the
subcontractor obtain insurance. See Subcontract § 10.
8
. Section 11 of the subcontract states: "Subcontractor's
duty hereunder shall not arise if such claims, suits or
liability, injuries or death or other claims or suits are caused
by the sole negligence of a party indemnified hereunder unless
otherwise provided in the Prime Contract." In Woodburn v.
Consolidation Coal Co., 590 A.2d 1273 (Pa. Super. Ct.), appeal
denied, 600 A.2d 953, 954, 955 (Pa. 1991), the court construed an
indemnification provision that also contained a limitation --
similar to the one here -- exempting from indemnification
coverage those claims arising from the "sole negligence" of the
indemnitee. The court held such a provision means, by "negative
inference," that "any injuries occurring by less than the sole
fault of [the indemnitee] fall within the scope of the
indemnification clause." Id. at 1275. See also Babcock & Wilcox
Co. v. Fischbach & Moore, Inc., 280 A.2d 582, 583-84 (Pa. Super.
Ct. 1971).
 CNA Insurance raises two other insubstantial arguments.

As we have noted, section 11 of the subcontract provides

"Subcontractor's duty hereunder shall not arise if such claims,

suits or liability, injuries or death or other claims or suits

are caused by the sole negligence of a party indemnified

hereunder unless otherwise provided in the Prime Contract."

Because the injured employee Chen sued Kiewit/Perini and Kiewit

Eastern in negligence but not L&R Construction, CNA Insurance

claims there is no duty to defend or indemnify because the "sole

negligence" of Kiewit/Perini and Kiewit Eastern is at issue. Of

course, L&R Construction was immune from suit because of the

Pennsylvania Workers' Compensation Act. Pa. Stat. Ann. tit. 77,

§ 481 (1992). Just because Chen could not sue L&R Construction

does not mean the company was blameless in the accident. As the

district court noted, legal immunity from suit between Chen and

L&R Construction does not compel a conclusion that L&R

Construction was not negligent, nor does it decide the

contractual rights and obligations between L&R Construction and

Kiewit/Perini. Kiewit I, supra, at *6. The mere absence of

allegations of negligence against L&R Construction in the

underlying suit does not negate its obligation to defend and

indemnify here.9

9
. This is not a case in which it appears reasonably
certain that the indemnitee was solely negligent for the
underlying injuries. CNA Insurance's own records indicate that
L&R Construction employees were operating the crane when Chen was
injured. Although we express no opinion on the merits of the
underlying tort claims or the negligence of any of the parties,
we note the CNA Insurance records to demonstrate the possibility
that Kiewit/Perini -- if negligent -- may not have been the only
 Second, CNA Insurance maintains L&R Construction is

immune from liability for injuries to its employees under the

Workers' Compensation Act, which provides that the "liability of

an employer under this act shall be exclusive and in place of any

and all other liability to such employes . . . ." Pa. Stat. Ann.

tit. 77, § 481 (1992) (footnote omitted). Although the statute

immunizes employers from indemnification suits by third parties

who have been sued by injured employees, it exempts from

protection any employers that contractually agreed with third

parties to waive their immunity under the statute.10

Section 11(b) of the subcontract ends with the proviso

that "Subcontractor's obligation [to defend and indemnify]

hereunder shall not be limited by the provisions of any Workers'

Compensation act or similar statute." Although the district

court found this language amounted to an express waiver of
(..continued)
negligent party. Furthermore, we concur with the district court
that "[t]he assertion by CNA's claim analyst that Kiewit/Perini
had a 'high degree of negligence' is not sole negligence, nor a
proper determination of responsibilities." Kiewit I, supra, at
*6.
10
. See Pa. Stat. Ann. tit. 77, § 481 (1992), which
provides:

[T]he employer, his insurance carrier, their
servants and agents, employes,
representatives acting on their behalf or at
their request shall not be liable to a third
party for damages, contribution, or indemnity
in any action at law, or otherwise, unless
liability for such damages, contributions or
indemnity shall be expressly provided for in
a written contract entered into by the party
alleged to be liable prior to the date of the
occurrence which gave rise to the action.
immunity provided by the Workers' Compensation Act, Kiewit I,

supra, at *8, CNA Insurance argues on appeal that the subcontract

does not "expressly provide" that L&R Construction would waive

its immunity -- as the statute requires.

In support of its position, CNA Insurance points to the

decision in Bester v. Essex Crane Rental Corp., 619 A.2d 304 (Pa.

Super. Ct. 1993), in which the court denied an indemnity claim.

The facts in Bester resemble those in the present case: a

purported indemnitee claimed protection from liability for

injuries to one of the indemnitor's employees that may have been

caused by the indemnitee. Yet the comparison between the two

cases ends there. Unlike the indemnification contract here, the

agreement to indemnify in Bester contained no express waiver of

the protections of the Workers' Compensation Act or even a

reference thereto.11

11
. In Bester, the indemnification clause stated:

The Lessee [Russell] shall defend,
indemnify and hold forever harmless Lessor
[Essex] against all loss, negligence, damage,
expense, penalty, legal fees and costs,
arising from any action on account of
personal injury or damage to property
occasioned by the operation, maintenance,
handling, storage, erection, dismantling or
transportation of any Equipment while in your
possession. Lessor shall not be liable in
any event for any loss, delay or damage of
any kind of character resulting from defects
in or inefficiency of the Equipment hereby
leased or accidental breakage thereof. . . .

The Lessee will include the interest of
ESSEX CRANE RENTAL CORP. as an additional
named insured under their General Liability,
Excess Liability, and Automobile Insurance
 Here, the subcontract provides the obligation to defend

and indemnify "shall not be limited by the provisions of any

Workers' Compensation act or similar statute." Bester of course

did not require that an indemnity contract use any specific

wording,12 but merely that "such a clause contain plain language

which would avoid the employer's protection from double

responsibility which is afforded by the Workmen's Compensation

Act."13 We can find no Pennsylvania case rejecting an

indemnification agreement with language similar to the wording

here.14 We have little difficulty in finding that the language

of the subcontract is a sufficient waiver to permit indemnity.15
(..continued)
Policies as respect to this equipment during
the term of the rental with minimum liability
limits of $1,000,000 per occurrence and
provide a certificate of insurance to Lessor.

619 A.2d at 306.
12
. The Bester court noted that "if the indemnification
agreement is clear and includes indemnification in the event of
either the indemnitee's or the employer's own negligence, its
enforceability does not require that the employer, in addition,
expressly and in haec verba waive the immunity provided by §
481(b) of the Workmen's Compensation Act." Id. at 307.
13
. Id. at 308.
14
. See, e.g., Szymanski-Gallagher v. Chestnut Realty Co.,
597 A.2d 1225, 1229 (Pa. Super. Ct. 1991), overruled by Bester,
619 A.2d at 308; Remas v. Duquesne Light Co., 537 A.2d 881, 882
(Pa. Super. Ct.), appeal denied, 552 A.2d 251, 252 (Pa. 1988);
Gerard v. Penn Valley Constructors, Inc., 495 A.2d 210, 212 (Pa.
Super. Ct. 1985).
15
. Bester also held the contract insufficient to provide
indemnity protection for the indemnitee's own negligence. 619
A.2d at 309 n.2. In the present case, however, the subcontract
withheld indemnity only in cases of the indemnitee's "sole
negligence." See supra note 8 and accompanying text.
Therefore, we hold the subcontract requires L&R Construction to

defend and conditionally indemnify Kiewit/Perini.16

B.

Our holding, however, does not necessarily apply to

Kiewit Eastern. Kiewit Eastern was not a party to the

subcontract with L&R Construction. Instead, the agreement

expressly was "by and between" L&R Construction and

"Kiewit/Perini, A Joint Venture."

Nevertheless, as the joint venture's "managing party,"

Kiewit Eastern maintains it may claim any contractual defense

available to the joint venture itself. Kiewit Eastern asserts

that Pennsylvania partnership law would indemnify a member of a

partnership in this situation, so joint venture participants

should be indemnified as well. Although generally courts have

analogized joint ventures to partnerships,17 we do not believe

16
. As a diversity case, we must predict how the
Pennsylvania Supreme Court would decide these matters. See Hon
v. Stroh Brewery Co., 835 F.2d 510, 512 (3d Cir. 1987). Because
the Pennsylvania Supreme Court has not definitively spoken on
many of these issues, we have looked to decisions of the
intermediate Pennsylvania courts. See Wisniewski v. Johns-
Manville Corp., 759 F.2d 271, 273-74 (3d Cir. 1985) ("Although
lower state court decisions are not controlling on an issue on
which the highest court of the state has not spoken, federal
courts must attribute significant weight to these decisions in
the absence of any indication that the highest state court would
rule otherwise.").
17
. See West v. Peoples First Nat'l Bank & Trust Co., 106
A.2d 427, 431 (Pa. 1954) ("while a joint adventure is not the
same as a partnership . . . a joint adventure does partake in
many ways of the nature of a partnership, the principal
difference being that it usually, though not necessarily, applies
to a single transaction instead of being formed for the conduct
of a continuing business"); Snellbaker v. Herrmann, 462 A.2d 713,
716 (Pa. Super. Ct. 1983) ("A joint venture partakes in many ways
that proposition dictates Kiewit Eastern be covered by the

subcontract here. Pennsylvania decisions on joint ventures are

sparse and it is unclear whether the state's courts would apply

partnership law to the joint venture in this situation.

Furthermore, application of partnership law would not mandate

that L&R Construction defend and indemnify Kiewit Eastern, when

Kiewit Eastern was not even named in the subcontract.

To support its contention, Kiewit Eastern cites cases

holding partners liable to third parties for debts incurred by

other partners on behalf of the partnership. See, e.g., McEvoy

v. Grant, 153 A. 763 (Pa. 1931). Such a proposition comes as no

surprise. Indeed, that doctrine -- holding partners individually

liable for partnership debts -- lies at the heart of partnership

law18 and fundamentally distinguishes partnerships from

corporations.19 Pennsylvania courts have applied this principle
(..continued)
of a partnership . . . ."); see also 48A C.J.S. Joint Ventures §
5 (1981) (footnotes omitted) ("The relation of the parties to a
joint venture is so similar to that in a partnership that their
rights, duties, and liabilities are usually tested by partnership
rules, and in numerous decisions it has been broadly held that
both joint venture and partnership are governed by the same rules
of law.").
18
. See, e.g., 15 Pa. Cons. Stat. Ann. § 8327 (Supp. 1994)
(holding partners liable for debts of the partnership, including
debts incurred by individual partners); LaFountain v. Webb Indus.
Corp., 759 F. Supp. 236, 242 n.3 (E.D. Pa.) ("Under Pennsylvania
. . . law, a partner is individually liable for wrongs committed
by the partnership."), aff'd, 951 F.2d 544 (3d Cir. 1991).
19
. See, e.g., Board of Trustees of W. Conference of
Teamsters Pension Trust Fund v. H.F. Johnson, Inc., 830 F.2d
1009, 1015 (9th Cir. 1987) (noting the "fundamental difference
between corporations and partnerships" is "shareholders and
officers enjoy limited liability; partners do not").
of partnership law to joint ventures.20 But here we are

confronted not with joint venturers' liabilities under the law,

but with their rights -- or lack thereof -- under a contract.

That Kiewit Eastern may be burdened by the liabilities of

Kiewit/Perini is the result of statutory and case law; that

Kiewit Eastern may not benefit from the indemnity afforded

Kiewit/Perini, however, is the result of contract.21

Thus, the law on joint ventures does not permit venture

participants to claim all defenses available to the entity

20
. See, e.g., Snellbaker, 462 A.2d at 716 ("Absent a
limitation in the [joint venture] agreement, a joint venturer
will be held responsible with his or her associates for the
losses sustained by the enterprise."); Newlin Corp. v.
Commonwealth of Pa., Dep't of Envtl. Resources, 579 A.2d 996 (Pa.
Commw. Ct. 1990) (holding joint venturers liable for pollution
emanating from a landfill owned by the joint venture), appeal
denied, 588 A.2d 915 (Pa. 1991).
21
. Other states' courts concur with this reasoning. For
example, in Azer v. Myers, 793 P.2d 1189, 1209 (Haw. Ct. App.),
rev'd in part on other grounds, 795 P.2d 853 (Haw. 1990), the
court held an indemnification clause inapplicable to a partner
because it "applies to acts or omissions of the partnership, not
to [defendant] Gromet's individual negligence while acting for
the partnership." Contrary to Kiewit Eastern's assertions,
O'Brien & Gere Engineers, Inc. v. Taleghani, 504 F. Supp. 399
(E.D. Pa. 1980), does not require a different result. In
O'Brien, the plaintiff sought to hold defendants liable as
"partners by estoppel," rather than under the written contracts
between the parties. The court held an individual could not be
found liable for the business's debts, under the terms of the
Pennsylvania "partner by estoppel" statute, without benefit of
any defenses the company would have under the contract. Id. at
401. Thus, the courts in Azer and O'Brien agreed the terms of
the relevant contracts should control an individual partner's
rights, which is precisely what we have decided here.
Furthermore, the O'Brien plaintiff was attempting to hold the
defendant "liable for the business entity's debts," id.; in the
present case, Kiewit Eastern is being sued for its own alleged
negligence, not that of Kiewit/Perini.
itself. Certainly, Pennsylvania courts have not so held, and we

decline to extend the law to permit such a claim in this case.

But our decision does not require members of joint ventures to

remain unguarded against potential liability. If joint venturers

wish indemnity protection to cover themselves as well as the

joint venture, they need only so specify in their contracts.22

Our holding here is consistent with Pennsylvania law

governing indemnity contracts. Pennsylvania courts require that

an indemnity agreement be strictly construed against the party

asserting it.23 In addition, if an agreement is ambiguous, it is

to be construed "most strongly" against the party who drafted

it.24 Both maxims support our interpretation of the subcontract
22
. Joint venturers, such as Kiewit Eastern, could ensure
that any indemnity agreements for the joint venture specifically
cover the venturers. The venturers also could limit their
potential liability in the original agreement forming the
venture. See Snellbaker, 462 A.2d at 716 ("The liability of a
joint venturer for a proportionate part of the losses or
expenditures of the enterprise may be fixed by the terms of the
[joint venture] agreement."). Depending upon the terms of the
relevant formation agreement here, Kiewit Eastern may have a
claim for reimbursement against Kiewit/Perini for any damages it
pays in the underlying tort suits. See 15 Pa. Cons. Stat. Ann. §
8331(2) (Supp. 1994) (subject to any agreement between the
parties, "[t]he partnership must indemnify every partner in
respect of payments made and personal liabilities reasonably
incurred by him in the ordinary and proper conduct of its
business").
23
. See Phillippe v. Jerome H. Rhoads, Inc., 336 A.2d 374,
376 (Pa. Super. Ct. 1975); Lackie v. Niagara Mach. & Tool Works,
559 F. Supp. 377, 378 (E.D. Pa. 1983); cf. Topp Copy Prods., Inc.
v. Singletary, 626 A.2d 98, 99 (Pa. 1993).
24
. Pittsburgh Steel Co. v. Patterson-Emerson-Comstock,
Inc., 171 A.2d 185, 189 (Pa. 1961) (if the meaning of an
indemnity clause "is ambiguous or reasonably susceptible of two
interpretations, it must be construed most strongly against the
party who drew it"); cf. Hutchison v. Sunbeam Coal Corp., 519
as not requiring the defense and indemnification of Kiewit

Eastern.25

C.

Section 20 of the subcontract between L&R Construction

and Kiewit/Perini provides that "[i]n the event either party

institutes suit in court against the other party or against the

surety of such party, in connection with any dispute or matter

arising under this Subcontract, the prevailing party shall be

(..continued)
A.2d 385, 390 n.5 (Pa. 1986); Raiken v. Mellon, 582 A.2d 11, 13
(Pa. Super. Ct. 1990).
25
. Kiewit Eastern notes that joint venturers are
considered agents and principals of the joint venture. See Gold
& Co. v. Northeast Theater Corp., 421 A.2d 1151, 1153 n.1 (Pa.
Super. Ct. 1980) (citing 46 Am. Jur. 2d Joint Ventures § 1
(1969); McRoberts v. Phelps, 138 A.2d 439, 443 (Pa. 1958)). As
an agent, Kiewit Eastern claims it is entitled to the benefits of
the joint venture's contracts with third parties, but it cites no
authority for that proposition. We believe Kiewit Eastern
misinterprets the implication of the statements referring to
joint venturers as agents and principals. Such statements merely
reiterate that each joint venturer has the right to participate
in both the creation and implementation of the joint venture's
policies. See 46 Am. Jur. 2d Joint Ventures § 1 (1969) ("each
joint venturer shall stand in the relation of principal, as well
as agent, as to each of the other coventures, with an equal right
of control of the means employed to carry out the common purpose
of the venture"). Even if Kiewit Eastern were technically
considered Kiewit/Perini's "agent," we still would not be
permitted to "read in" Kiewit Eastern as a party to the
subcontract and thereby ignore the plain language of the
agreement. See Restatement (Second) of Agency § 323 (1957) ("If
it appears unambiguously in an integrated contract that the agent
is a party or is not a party, extrinsic evidence is not
admissible to show a contrary intent . . . ."). As noted, the
subcontract in this case was unambiguous in stating it was "by
and between" L&R Construction and "Kiewit/Perini, A Joint
Venture," with only their representatives signing it. See id. §
323 cmt. a ("The statement as to parties may appear either in the
body of the instrument or in the signature . . . .").
entitled to recover reasonable attorney fees in addition to any

other relief granted by the court."26 In this case,

Kiewit/Perini has prevailed on at least some of its claims.

Nevertheless, the district court denied its request for

attorneys' fees against L&R Construction, holding that the

request had not been properly raised.27

On appeal, Kiewit/Perini renews its call for attorneys'

fees and costs from L&R Construction.28 Although Kiewit/Perini

concedes its summary judgment memorandum did not contain a

separate section asking L&R Construction for attorneys' fees, it

asserts it generally requested such fees in the memorandum.

After reviewing the memorandum, we believe the district court did

not err in concluding the issue had been waived. At most,

Kiewit/Perini made vague references that could be construed only

26
. Section 11 of the subcontract contains a similar
provision: "The Subcontractor shall defend and indemnify the
Contractor . . . from, any and all loss, damage, costs, expenses
and attorneys' fees suffered or incurred on account of any breach
of the aforesaid obligations . . . ."
27
. The district court, in its initial ruling on the
motions for summary judgment, stated that Kiewit/Perini had not
sought attorneys' fees against L&R Construction, but only against
CNA Insurance. Kiewit I, supra, at *9 n.5. In a motion to amend
the judgment under Rule 59(e), Kiewit/Perini argued it had
requested fees against L&R Construction in the summary judgment
papers, and it renewed its claim for fees. The district court
again rejected the request, explaining "[t]he issue of attorneys
fees against L&R, whether or not sought in the pleadings, was not
briefed and argued in the motion for summary judgment, which
motion sought complete judgment." Kiewit II, supra, at *6.
28
. Kiewit Eastern also claims a right to attorneys' fees
and costs, but it clearly is not a "prevailing party," within the
meaning of the subcontract.
in hindsight as seeking fees from L&R.29 See, e.g., Brickner v.

Voinovich, 977 F.2d 235, 238 (6th Cir. 1992) (noting arguments

not "adequately raised" in the district court are waived on

appeal), cert. denied, 113 S. Ct. 2965 (1993).

Kiewit/Perini also claims it specifically included a

request for attorneys' fees and costs from L&R Construction in

its motion for summary judgment. Yet, under local district court

rules, "[e]very motion not certified as uncontested shall be

accompanied by a brief containing a concise statement of the

legal contentions and authorities relied upon in support of the

motion." E.D. Pa. R. Civ. P. 20(c). As we have noted, this was

not done.30

Finally, Kiewit/Perini points out that it briefed the

issue of fees and costs against L&R Construction in a motion to

amend the judgment under Rule 59(e), which the district court

denied. Courts often take a dim view of issues raised for the

first time in post-judgment motions. Generally, this is a

decision within the sound discretion of the district court. In

29
. In that same memorandum of law, however, Kiewit/Perini
devoted an entire subsection to the reasons it should receive
attorneys' fees from CNA Insurance.
30
. We have noted the importance of similar rules at the
appellate level requiring that issues raised on appeal must be
accompanied by supporting arguments. See, e.g., Travitz v.
Northeast Dep't ILGWU Health & Welfare Fund, 13 F.3d 704, 711 (3d
Cir.) (citations omitted) ("Under Fed.R.App.P. 28(a)(5), an
appellant is required to list the issues raised on appeal and
present an argument in support of them. When an issue is not
pursued in the argument section of the brief, the appellant has
abandoned and waived that issue on appeal."), cert. denied, 114
S. Ct. 2165 (1994).
this case, the issue of attorneys' fees and costs related to the

contract dispute at the center of the summary judgment motions,

but it was not adequately raised at the time. Thus, we do not

believe the district court abused its discretion in denying

Kiewit/Perini's Rule 59(e) motion.

III.

Having determined that L&R Construction owes

Kiewit/Perini a duty of defense and conditional indemnification,

we turn to the question whether the district court properly

dismissed CNA Insurance from the case. Once the district court

ruled that the subcontract entitled Kiewit/Perini to a defense

and indemnification, it dismissed the claims against CNA

Insurance as moot. Kiewit I, supra, at *8. We believe a

determination of the responsibilities of CNA Insurance is

necessary, however, to resolve not only whether CNA Insurance

must defend and indemnify Kiewit/Perini, but also whether it

acted in bad faith in denying Kiewit/Perini's tenders of defense,

thereby justifying an award of attorneys' fees and costs.31

A.

Section 10 of the subcontract between Kiewit/Perini and

L&R Construction provided:
INSURANCE. Prior to commencement of
Work, Subcontractor shall procure and at all
times thereafter maintain with insurers
acceptable to Contractor the following
minimum insurance protecting the

31
. That CNA Insurance appealed from the district court's
judgment, which dismissed the complaint against it as moot,
demonstrates it continues to have a vital stake in the outcome of
this proceeding.
 Subcontractor, Owner and the Contractor
against liability from damages because of
injuries including death, suffered by
persons, including employees of the
Subcontractor . . . in connection with the
performance of this Subcontract.

After the subcontract was signed, L&R Construction purchased from

CNA Insurance a policy covering liability arising out of L&R

Construction's incidental contracts. CNA Insurance concedes that

this policy requires it to fulfill any duty to defend and

indemnify that L&R Construction has under the subcontract.32

Because we ruled that L&R Construction owes a duty to defend and

conditionally indemnify Kiewit/Perini under the subcontract, see

supra section II.A, it is evident that CNA Insurance now bears

the same duty.33

B.

Now that we have decided CNA Insurance must defend and

conditionally indemnify Kiewit/Perini, the question arises as to

whether it must reimburse Kiewit/Perini for its costs. To

resolve this issue, we must consider the scope of the insurer's
duty to defend:

32
. Brief of Appellees/Cross Appellant CNA Insurance
Company, at 43 ("CNA agrees, that if, an indemnification
obligation arose from the language of the L&R-Kiewit/Perini
subcontract, the coverage obligations of the L&R-CNA contractual
liability coverage would trigger, i.e., CNA would have to fulfill
the defense and indemnification obligations to which its insured
had contractually agreed.").
33
. Our resolution of this issue makes it unnecessary for
us to determine whether Kiewit/Perini was an additional insured
or a third-party beneficiary of the insurance policy between L&R
Construction and CNA Insurance.
 Under Pennsylvania law, an insurance company
is obligated to defend an insured whenever
the complaint filed by the injured party may
potentially come within the policy's
coverage. The obligation to defend is
determined solely by the allegations of the
complaint in the action. The duty to defend
remains with the insurer until the insurer
can confine the claim to a recovery that is
not within the scope of the policy.

American States Ins. Co. v. Maryland Casualty Co., 628 A.2d 880,

887 (Pa. Super. Ct. 1993) (quoting Pacific Indemnity Co. v. Linn,

766 F.2d 754, 760 (3d Cir. 1985)) (citations omitted). Because

CNA Insurance has failed to satisfy its duty to defend,

Kiewit/Perini asserts it should be reimbursed for its costs

incurred in defending the underlying tort suits and in bringing

this declaratory judgment action.

First, we consider those costs that Kiewit/Perini

already has incurred in defending itself from the personal injury

claims made by Chen, the injured worker. As previously noted,

CNA Insurance has conceded, if L&R Construction had a duty to

defend and indemnify Kiewit/Perini, then CNA Insurance must

fulfill that duty on behalf of L&R.34 When an insurer

erroneously denies its duty to defend, fulfillment of the duty

requires the insurer to pay for any defense costs already

incurred.35 Such fees only can be awarded for services rendered

34
. See supra note 32.
35
. See, e.g., Carpenter v. Federal Ins. Co., 637 A.2d
1008, 1013 (Pa. Super. Ct. 1994) ("If a duty to defend is found
on the part of an insurer, it is also the insurer's
responsibility to pay for attorneys' fees and costs incurred by
the insured in the underlying action."); Imperial Casualty &
Indem. Co. v. High Concrete Structures, Inc., 858 F.2d 128, 131
from the time "the duty to defend arose." Heffernan & Co. v.

Hartford Ins. Co. of Am., 614 A.2d 295, 299 (Pa. Super. Ct.

1992). Thus, because CNA Insurance had a duty to defend but

denied that duty, the insurer must reimburse Kiewit/Perini for

the costs it has incurred so far in defending the underlying tort

claims.

Second, we must determine whether Kiewit/Perini is

entitled to its costs in pursuing the present declaratory

judgment action. For more than a decade, Pennsylvania courts

have permitted attorneys' fees in this situation, but only when

the insurer has acted in bad faith.36 Carpenter v. Federal Ins.

(..continued)
n.2 (3d Cir. 1988) ("[i]f an insurer has a duty to defend a suit
and is requested to provide a defense, then that insurer is
clearly obligated to pay fees and costs incurred by the insured
in defending the suit," including reimbursing the insured for
fees and costs already paid).
36
. Awards for the "bad faith" conduct of insurers appear
possible under at least two theories. First, a 1990 Pennsylvania
statute permits an insured to bring an action for interest,
attorneys' fees, court costs, and punitive damages against an
insurer for its bad faith acts under an insurance policy. 42 Pa.
Cons. Stat. Ann. § 8371 (Supp. 1994). Second, Pennsylvania
courts have long held that "an insured who is compelled to bring
a declaratory judgment action to establish his insurer's duty to
defend an action brought by a third party may recover his
attorneys' fees incurred in the declaratory judgment action if
the insurer has, in bad faith, refused to defend the action
brought by the third party." Kelmo Enters., Inc. v. Commercial
Union Ins. Co., 426 A.2d 680, 685 (Pa. Super. Ct. 1981). We do
not believe the statutory remedy is implicated here because
Kiewit/Perini has not brought a separate cause of action for
damages, but has merely claimed the fees incidental to this
declaratory judgment suit. See, e.g., Asplundh Tree Expert Co.
v. Pacific Employers Ins. Co., Civ. A. No. 90-6976, 1991 WL
147461, at *5-10 (E.D. Pa. July 25, 1991) (distinguishing between
claims brought under the Pennsylvania statute and those sought
under the Kelmo rationale); Liberty Fish Co. v. Home Indem. Co.,
Civ. A. No. 89-5201, 1990 WL 161139, at *1 (E.D. Pa. Oct. 18,
Co., 637 A.2d 1008, 1013 (Pa. Super. Ct. 1994) (citing First Pa.

Bank v. National Union Fire Ins. Co., 580 A.2d 799, 803 (Pa.

Super. Ct. 1990)) ("an insured who is compelled to bring a

declaratory judgment action to establish his insurer's duty to

defend an action brought by a third party may recover attorneys'

fees if the insurer has, in bad faith, refused to defend the

action brought by the third party"). See also Kelmo Enters.,

Inc. v. Commercial Union Ins. Co., 426 A.2d 680, 685 (Pa. Super.

Ct. 1981); Pacific Indem. Co. v. Linn, 766 F.2d 754, 769 (3d Cir.

1985). As the court stated in Carpenter, 637 A.2d at 1013, "[t]o

compel appellees to expend thousands of dollars to enforce their

contractual right to a defense and indemnification would fly in

the face of equity."

The language of some of these decisions, however, seems

to limit this award of costs to an "insured" against its insurer.

In this case, Kiewit/Perini may not be an "insured" of CNA

Insurance.37 But we believe such a distinction does not matter

here because an award of fees does not rest on a contract between

the parties. As this court stated in Trustees of University of
Pennsylvania v. Lexington Insurance Co., 815 F.2d 890, 910-11

(3d. Cir. 1987):

(..continued)
1990) ("The allegations of bad faith are not put forth as a
separate claim for damages, but seek the incidental award of
attorneys' fees.").
37
. As we have noted, we decline to decide whether
Kiewit/Perini is an additional insured or a third-party
beneficiary of the insurance contract between CNA Insurance and
L&R Construction. See supra note 33.
 Although the Kelmo court purported to connect
its holding to a contract analysis, the
holding truly rested on a quasi-tort view
that attorneys' fees represent compensation
for an insurer's violation of its obligation
to act in good faith. The mere contractual
obligation of the insurer to pay for the
costs of defending its insured does not
include the obligation to pay for the
insured's suit against its insurer.38

In this case, as we have already found, CNA Insurance

owed Kiewit/Perini the duty to defend, and CNA Insurance breached

that duty. As a result of the breach, Kiewit/Perini was forced

to defend itself in the underlying tort suits and incur the

expense of bringing this declaratory judgment action. We are

satisfied the necessary "quasi-tort" elements exist here to

permit the possibility of an award of costs and attorneys' fees

to Kiewit/Perini. Therefore, we remand this case to the district

court to determine whether CNA Insurance acted in "bad faith" so

as to justify an award of costs and attorneys' fees arising out

of this declaratory judgment action. The district court should

also determine the fees and costs to which Kiewit/Perini is

entitled for defending itself in the underlying tort suits.39

38
. See also Liberty Fish Co. v. Home Indem. Co., Civ. A.
No. 89-5201, 1990 WL 161139, at *1 (E.D. Pa. Oct. 18, 1990) (in
Lexington Insurance, "the Third Circuit emphasized that its
holding was not based on the particular contractual obligations
involved, but rested instead on the general principle of tort
that reimbursement is due where expenses are incurred as the
result of the fault of another").
39
. The district court should award only those fees and
costs related to Kiewit/Perini's claims. Since neither L&R
Construction nor CNA Insurance has a duty to defend or indemnify
Kiewit Eastern, the fee award should not include any costs
attributable to Kiewit Eastern.
 IV.

Overall, we believe that L&R Construction and CNA

Insurance have a duty to defend and conditionally indemnify

Kiewit/Perini, but not Kiewit Eastern. We remand to the district

court to determine whether the insurance company's actions rise

to the level of "bad faith." In any event, CNA Insurance must

reimburse Kiewit/Perini for the costs and fees it has incurred in

defending itself against the underlying tort claims. In all

other respects, we will affirm the district court.