Jacobs Engr. Group v. ConAgra Foods
917 N.W.2d 435
Neb.2018Background
- ConAgra contracted with Jacobs (engineering firm) for limited services; their agreement contained reciprocal indemnity provisions requiring each to indemnify the other for claims caused by that party’s negligence or those under its control.
- A ConAgra contractor (ESA) was installing a large gas-fired water heater at ConAgra’s Garner, NC plant; ConAgra supervisors (not Jacobs personnel) oversaw commissioning, failed to purge a gas line, and allowed unsafe conditions that led to an explosion killing three employees and injuring others.
- Dozens of North Carolina suits followed; Jacobs requested contractual indemnity from ConAgra, which declined; Jacobs defended and settled the suits for $108.9 million and then sued ConAgra in Nebraska for indemnification.
- At a 2016 jury trial, the jury found ConAgra (70%) and ESA (30%) negligent, found Jacobs not negligent, concluded Jacobs settled in good faith and that settlement amounts were objectively reasonable, and awarded Jacobs the settlement amounts; the district court entered judgment.
- ConAgra appealed, principally arguing (1) Jacobs lacked standing/was not the real party in interest because insurers may have paid settlements (subrogation), (2) ConAgra’s workers’ compensation immunity barred indemnity for employee claims, (3) Jacobs failed to prove ConAgra caused Jacobs’ losses, and (4) the damages (particularly the Brockington portion) were excessive.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Real party in interest / standing | Jacobs: it is the indemnitee; it incurred losses and seeks contractual indemnity; insurers did not fully subrogate such that Jacobs lacks standing | ConAgra: settlements may have been paid by insurers (fully subrogated), so Jacobs may not be the real party in interest | Court: Jacobs had standing; pleadings and later evidence (policies/obligations) and ConAgra’s admissions established Jacobs as real party in interest |
| Effect of workers’ compensation immunity on indemnity | Jacobs: contract expressly indemnifies for claims by ConAgra employees caused by ConAgra’s negligence | ConAgra: NWCA immunity protects it unless it affirmatively waived immunity in contract | Court: NWCA does not bar an employer’s contractual promise to indemnify; contract construed as obligating ConAgra to indemnify for employee claims caused by ConAgra’s negligence |
| Breach / causation / control (did ConAgra cause Jacobs’ losses; was ESA under ConAgra’s control) | Jacobs: ConAgra supervisors failed to follow purge procedures, had knowledge and opportunity to prevent danger; ConAgra controlled ESA/commissioning | ConAgra: Poppe’s final act (opening 2" cap) was an independent efficient intervening cause; ESA/Poppe were independent contractors not under ConAgra’s control | Court: Sufficient evidence supported jury that ConAgra’s negligence was a proximate cause; Poppe’s act did not break causal chain; evidence supported that ESA/Poppe were under ConAgra’s control for indemnity clause purposes |
| Damages / remittitur (Brockington settlement amount) | Jacobs: settlements were paid in good faith and objectively reasonable; expert testimony supported amounts | ConAgra: Brockington component ($17.7M) was arbitrary/excessive and unsupported | Court: Jury verdict on damages was supported by evidence and reasonable; no remittitur warranted |
Key Cases Cited
- Countryside Co-op v. Harry A. Koch Co., 280 Neb. 795, 790 N.W.2d 873 (2010) (standing/real-party-in-interest precedents)
- ACI Worldwide Corp. v. Baldwin Hackett & Meeks, 296 Neb. 818, 896 N.W.2d 156 (2017) (procedural standards for jurisdictional/standing review)
- Jelinek v. Nebraska Nat. Gas Co., 196 Neb. 488, 243 N.W.2d 778 (1976) (insurer subrogation affecting real-party-in-interest analysis)
- Krause v. State Farm Mut. Auto. Ins. Co., 184 Neb. 588, 169 N.W.2d 601 (1969) (insured retains right of action when insurer indemnifies part of loss)
- Union Pacific R.R. Co. v. Kaiser Ag. Chem. Co., 229 Neb. 160, 425 N.W.2d 872 (1988) (NWCA does not preclude enforcement of express indemnity by employer)
- Oddo v. Speedway Scaffold Co., 233 Neb. 1, 443 N.W.2d 596 (1989) (contractual indemnity analyzed without implying NWCA immunity exception)