371 F.3d 150 | 3rd Cir. | 2004
Opinions of the United
2004 Decisions States Court of Appeals for the Third Circuit 6-10-2004 IPSCO Steel v. Blaine Constr Corp Precedential or Non-Precedential: Precedential Docket No. 03-3109 Follow this and additional works at: http://digitalcommons.law.villanova.edu/thirdcircuit_2004 Recommended Citation "IPSCO Steel v. Blaine Constr Corp" (2004). 2004 Decisions. Paper 557. http://digitalcommons.law.villanova.edu/thirdcircuit_2004/557 This decision is brought to you for free and open access by the Opinions of the United States Court of Appeals for the Third Circuit at Villanova University School of Law Digital Repository. It has been accepted for inclusion in 2004 Decisions by an authorized administrator of Villanova University School of Law Digital Repository. For more information, please contact Benjamin.Carlson@law.villanova.edu.
PRECEDENTIAL U.S. INC., a Delaware Corporation;
LIBERTY MUTUAL INSURANCE
UNITED STATES COURT OF COMPANY, a Massachusetts APPEALS FOR THE THIRD CIRCUIT Corporation; MARSH USA, INC., a __________ Delaware Corporation f/k/a J&H MARSH & MCLENNAN, INC.; No. 03-3109 LIBERTY INTERNATIONAL __________ CANADA, a division of LIBERTY
MUTUAL INSURANCE COMPANY, a IPSCO STEEL (ALABAMA), INC., an Massachusetts Corporation. Alabama Corporation; IPSCO CONSTRUCTION, INC., an Alabama *Lexington Insurance Company, Corporation; KVAERNER U.S. INC., a Appellant
Delaware Corporation *(Pursuant to F.R.A.P. 12(a)) v. (D.C. Civil Action No. 01-cv-00440) BLAINE CONSTRUCTION _________ CORPORATION, a Tennessee
Corporation. On Appeal from the United States District Court for the *Lexington Insurance Company, Western District of Pennsylvania Appellant District Judge: Hon. Arthur J. Schwab *(Pursuant to F.R.A.P. 12(a)) __________ (D.C. Civil Action No. 99-cv-02055) Argued on Tuesday, April 20, 2004 ___________ __________ No. 03-3110 Before: SCIRICA, GARTH, and __________ BRIGHT, [*] Circuit Judges
BLAINE CONSTRUCTION (Opinion Filed: June 10, 2004) CORPORATION, a Tennessee
Corporation v. Harper, Steven J. (argued) DeCourcy, Dara A. (argued) Kirkland & Ellis LLP Zimmer, Harry J. 200 East Randolph Drive Zimmer Kunz Suite 6500 600 Grant Street Chicago, IL 60601 3300 USX Tower Pittsburgh, PA 15219 Landau, Christopher
Kirkland & Ellis LLP Attorneys for Appellant Lexington 655 15th Street, N.W. Insurance Company Suite 1200
Washington, DC 20005 Doty, Robert W. Ejzak, Richard A. (argued) Attorneys for Appellees IPSCO Steel Roman, Andrew M. (Alabama) Inc. and IPSCO Construction Cohen & Grigsby, P.C. Inc. 11 Stanwix Street, 15th Floor Pittsburgh, PA 15222 Medved, George M.
Pepper Hamilton LLP Rogers, E. Mabry 500 Grant Street Bradley, Arant, Rose & White, LLP 5000 One Mellon Bank Center 1819 Fifth Avenue North Pittsburgh, PA 15219 Birmingham, AL 35203
Little, J. Ford Attorneys for Appellee Kvaerner U.S. Noell, Robert P. Inc. Walton, Monty L.
Woolf, McClane, Bright, Allen & Luciana, Joseph L. III Carpenter, PLLC Lund, Kenneth J. 900 South Gay Street Paciaroni, Richard F. Suite 900, Riverview Tower Kirkpatrick & Lockhart LLP Knoxville, TN 37902 535 Smithfield Street Henry W. Oliver Building Attorneys for Appellee Blaine Pittsburgh, PA 15222 Construction Corporation Lucas, Kevin P. Long, Kevin M. Williams, Robert J. Van Vugt, Eric J. Manion, McDonough & Lucas P.C. Quarles & Brady LLP 600 Grant Street 411 East Wisconsin Avenue, #2500 Suite 1414 Milwaukee, WI 53202 Pittsburgh, PA 15219 Sommer, Robert B. Construction, Inc. (collectively “IPSCO”), Hergenroeder, Rega & Sommer Kvaerner U.S. Inc. (“Kvaerner”), Marsh 332 Fifth Avenue USA, Inc. (“Marsh”), and Liberty Mutual Suite 610 Insurance Company (“Liberty Mutual”), Pittsburgh, PA 15222 who had been embroiled in litigation
arising out of a construction project in Attorney for Appellee Marsh USA, Inc. Alabama. The Settlement Agreements brought to an end the two lawsuits that Reed, Jonathan S. had been filed in Pennsylvania involving Smith, Sean K. those parties who, among others, were the Traub, Richard K. project owner (IPSCO), the project Traub, Eglin, Lieberman & Straus manager (Kvaerner), the project insurer 100 Metroplex Drive (Liberty Mutual), and the insurance broker Metroplex Corporate Center I, Suite 203 (Marsh). Edison, NJ 08817
The instant appeal was filed by Sherman, C. Leon L e x i n g t o n I n s u r a n ce C o mp a n y C. Leon Sherman & Associates (“Lexington”), which had issued a $25 20 Stanwix Street million professional liability insurance 5th Floor policy to Kvaerner in 1998. Under the Pittsburgh, PA 15222 terms of that policy, Kvaerner may look to
Lexington for insurance proceeds only Attorneys for Appellee Liberty Mutual after any “project-specific” policies are Insurance Company exhausted. Kvaerner is a named insured
under a $20 million policy issued by __________ Liberty Mutual specifically for the construction project.
OPINION
__________ Because the Settlement Agreements effectively capped Liberty Mutual’s “project specific” policy at approximately $11 million, [1] Lexington had registered
Garth, Circuit Judge: In a companion case decided today, see IPSCO Steel (Alabama) Inc. v. Blaine [1] As we have discussed in the Constr. Corp., Docket Nos. 03-2929/2966, companion case, IPSCO Steel (Alabama) -- F.3d -- (3d Cir. 2004), we have held that Inc. v. Blaine Constr. Corp., supra, the District Court properly approved two Liberty Mutual had paid $5 million in Settlement Agreements involving IPSCO court expenses for Kvaerner and had Steel (Alabama), Inc. and IPSCO settled the Construction Action for $6 objections in the District Court to the appeal. Caplan v. Fellheimer Eichen Settlement Agreements approved in the Braverman & Kaskey, 68 F.3d 828, 836 companion case, IPSCO Steel (Alabama) (3d Cir. 1995). However, our Court Inc. v. Blaine Constr. Corp.,supra. Unlike carved out an exception to that principle in 1992 when it decided Binker v. Kvaerner, however, Lexington was not a Pennsylvania, 977 F.2d 738 (3d Cir. named party to the proceedings and did not move to intervene pursuant to Federal 1992). The so-called Binker exception Rule of Civil Procedure 24. [2] After the provides that “a nonparty may bring an appeal when three conditions are met: (1) District Court approved the settlements the nonparty had a stake in the outcome of and dismissed the two lawsuits, Kvaerner the proceedings that is discernible from and Lexington filed separate notices of appeal. We have disposed of Kvaerner’s the record; (2) the nonparty has participated in the proceedings before the appeal in the companion case, leaving only district court; and (3) the equities favor the Lexington as the Appellant here.
appeal.” Northview Motors, Inc. v. Chrysler Motors Corp., 186 F.3d 346, 349 On appeal, Lexington presents two (3d Cir. 1999). arguments as to why the District Court should not have approved the Settlement Agreements. However, IPSCO has moved Lexington contends that it fits to dismiss Lexington’s appeal on grounds within the Binker exception because (1) it of standing. Quoting from Marino v. may potentially be liable to pay a judgment Ortiz, 484 U.S. 301 (1988), IPSCO argues that, in the absence of the Settlement that “only parties to a lawsuit, or those that Agreements, Liberty Mutual, as the properly become parties, may appeal an “project-specific” insurer, would have had adverse judgment.” Id. at 304. to pay; (2) it attended a settlement
conference and mediation before the Ordinarily, only parties of record District Court and submitted a brief in before the district court have standing to opposition to the motion to approve the Settlement Agreements; and (3) it seeks to protect not only its own interests, but also
million for a total expenditure of $11 those of its insured, Kvaerner. million under the $20 million policy. Even if we were satisfied that [2] In its Notices of Appeal, Lexington met all three prongs of the Lexington incorrectly states that it was Binker exception, which we need not an “Intervenor” in the District Court. decide, we are persuaded that it does not Although Lexington filed briefs in the have standing to pursue this appeal. To District Court opposing the proposed understand why that is so, we must settlements and participated in the consider three distinct but related hearing, it did not move to intervene in concepts: intervention pursuant to Federal the District Court or in our Court. Rule of Civil Procedure 24; Article III Jurisdiction 2d § 3902. standing to pursue the original controversy; and standing to appeal a The issue here is whether district court ruling. Although the Binker Lexington was sufficiently aggrieved by Court couched its three-part test in terms the District Court’s order such that it has of “standing to appeal,” see Binker, 977 standing to appeal. Our decision in F.2d at 745, the first prong of the Binker Travelers Insurance Company v. H.K. test focused on Article III standing to Porter Co., 45 F.3d 737 (3d Cir. 1995) is pursue the original controversy because it particularly instructive. There, the required that the non-party had a stake in plaintiff-insurer (Travelers) appealed a the proceedings before the District Court, bankruptcy court order granting a motion thereby satisfying Article III’s “case-or- to vacate the withdrawal of certain controversy” requirement. creditors who had asbestos-related claims
against the bankrupt defendant-insured. Statutory standing to appeal, by We held that Travelers lacked standing to contrast, need not meet the case-or- appeal because it was not a “person controversy standard, but must meet the aggrieved” by the order since its “potential test of a party that is aggrieved. “In order exposure [was] doubly removed, turning to have standing to appeal a party must be both on the success of the Claimants in aggrieved by the order of the district court their prosecution of claims against [the from which it seeks to appeal.” insured party], and on a judicial McLaughlin v. Pernsley, 876 F.2d 308, determination that the policy issued by 313 (3d Cir. 1989) (citing Watson v. Travelers cover[ed] the claims, a Newark, 746 F.2d 1008 (3d Cir. 1984). construction which Travelers strenuously “The rule is one of federal appellate reject[ed].” Id. at 742. practice, however, derived from the statutes granting appellate jurisdiction and The same considerations that drove the historic practices of the appellate our decision in Travelers are present here. courts; it does not have its source in the Under the two Settlement Agreements jurisdictional limitations of Art. III.” approved by the District Court, Liberty Deposit Guar. Nat’l Bank v. Roper, 445 Mutual and Marsh had agreed to pay a U.S. 326, 333 (1980). Thus, a party who total of $6.5 million to settle various does not intervene in the district court (or claims brought against them in the did not have Article III standing to pursue Pennsylvania lawsuits. [3] The Settlement the original action) may nevertheless have Agreements do not require Lexington to standing to pursue an appeal if it can show that it was adversely affected by the judgment. See e.g., Binker, 977 F.2d at [3] Liberty Mutual paid $6 million 745; see also 15A Wright, Miller & in settlement; Marsh paid $500,000 in Cooper, Federal Practice and Procedure: settlement. make any payments, inasmuch as the judgment being entered in the Alabama “project-specific” insurer is Liberty lawsuit against Kvaerner and in favor of Mutual. Hence, Lexington was not IPSCO, an event that has not yet occurred. directly aggrieved by either the Settlement As in Travelers, Lexington is at least two Agreements or the District Court’s orders steps removed from any real effect to its approving them. policy because IPSCO must first succeed
on its claims against Kvaerner and, even if The only other lawsuit that has it is successful, Kvaerner must prove that been brought to our attention which the policy covers the damages awarded in the Alabama action. [5] potentially implicates the policy issued by Lexington is an action filed in Alabama by IPSCO, the project owner, against Lexington has tried to distinguish Kvaerner for alleged cost overruns. That our holding in Travelers on the ground lawsuit, which is ongoing and was not that it involved an appeal from a affected by the two Settlement bankruptcy court, which triggers its own Agreements approved by the District unique set of standing principles. It is true Court, has resulted in substantial defense that “the standing requirement in costs for Kvaerner. But almost all of those bankruptcy appeals is more restrictive than defense costs have been paid and are continuing to be paid by Liberty Mutual. [4] Therefore, any real exposure to which [5] We recognize two other factors Lexington is subject is contingent on a that further attenuate Lexington’s standing to appeal. First, Lexington might well resist paying any judgment
the ‘case or controversy’ standing [class action] settlement . . . that would requirement of Article III, which ‘need not bind class members only after a hearing be financial and need only be ‘fairly and on finding that the settlement . . . is traceable’ to the alleged illegal action.” fair, reasonable, and adequate.”). Because Travelers, 45 F.3d at 741 (quoting Kane v. the lawsuits before the District Court here Johns-Manville Corp., 843 F.2d 636, 642 were not class actions, the District Court n.2 (2d Cir. 1988)). Yet in a non- was under no duty to review the proposed bankruptcy context the Supreme Court has Settlement Agreements for fairness or stated that “[o]rdinarily, only a party reasonableness. The parties’ relationships aggrieved by a judgment or order of a were defined entirely by fully-integrated district court may exercise the statutory contracts and there was no reason for the right to appeal therefrom.” Deposit Guar., District Court to examine the fairness or 445 U.S. at 333 (emphasis added). Thus, reasonableness of the two Settlement it does not follow that we would have Agreements, which were negotiated by reached a different outcome in Travelers sophisticated parties and their counsel. under Article III’s slightly more relaxed standing requirement. Even under the For the foregoing reasons, we will two appeals [6] “fairly traceable” standard, we hold that dismiss the taken by Lexington does not have standing to Lexington from the District Court’s orders appeal because its injury, if any, is far too entered on June 6, 2003. speculative and far too attenuated for Lexington to be aggrieved.
Moreover, even if Lexington had standing to appeal, we would not be persuaded by the arguments that it has raised in its appellate briefs. Lexington’s primary argument is that the District Court abused its discretion because it did not determine whether the proposed Settlement Agreements were fair and reasonable before approving them. The “fair and reasonableness” analysis is, however, generally reserved for settlements in class action lawsuits (or derivative shareholder lawsuits), where the [6] Lexington appealed from district court must be vigilant in protecting IPSCO Steel (Alabama) Inc. v. Blaine the due process rights belonging to the Constr. Corp., Civil Action Nos. 99-CV- class members. See Fed. R. Civ. P. 2055 and 01-CV-440, without having 23(e)(1)(C) (“The court may approve a intervened in either.
NOTES
[*] Honorable Myron H. Bright, IPSCO CONSTRUCTION, INC., an United States Court of Appeals for the Alabama Corporation; KVAERNER Eighth Circuit, sitting by designation.
[4] In a separate agreement, which rendered against Kvaerner unless the has been sealed by both the District judgment exceeds $6.5 million because Court and by us, Liberty Mutual agreed IPSCO has already been reimbursed for to pay 89% of Kvaerner’s defense costs damages in that amount through the in the Alabama action, with Kvaerner Settlement Agreements with Liberty paying the remaining 11%. If Kvaerner Mutual and Marsh. Second, Kvaerner prevailed on its counterclaims against has informed us in the companion case IPSCO, Liberty Mutual could recover its of IPSCO Steel (Alabama) Inc. v. Blaine costs. Although this agreement is sealed, Constr. Corp., supra, that even if IPSCO at least this provision was discussed at was to obtain a judgment against oral argument. The record does not Kvaerner in the Alabama lawsuit, disclose whether the obligation Lexington may argue that it has no undertaken by Liberty Mutual is obligation to indemnify or reimburse exclusive of the $11 million that Kvaerner because the Liberty Mutual remained under the Liberty Mutual policy was not fully exhausted as a result policy. of the Settlement Agreements.