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Arcelormittal Indiana Harbor LLC v. Amex Nooter LLC

United States District Court, N.D. Indiana, Hammond Division

January 3, 2018

ARCELORMITTAL INDIANA HARBOR LLC and ARCELORMITTAL USA LLC, Plaintiffs,
v.
AMEX NOOTER, LLC, Defendant.

          OPINION AND ORDER

          PAUL R. CHERRY MAGISTRATE JUDGE

         This matter is before the Court on Plaintiffs' Motion for Summary Judgment [DE 142], filed by Plaintiffs ArcelorMittal Indiana Harbor LLC and ArcelorMittal USA LLC (collectively “ArcelorMittal”) on September 28, 2017. Defendant Amex Nooter, Inc. (“Amex Nooter”) filed a response on October 26, 2017, and ArcelorMittal filed a reply on November 9, 2017.

         On April 3, 2013, a fire occurred at Blast Furnace No. 3, a part of ArcelorMittal's Indiana Harbor facility, while Amex Nooter employees Korrie Griffith and Robert Swimline were rebuilding the excess gas bleeder pilot burner cabinets pursuant to a contract between ArcelorMittal and Amex Nooter. As Griffith and Swimline were working, natural gas was released from the system and ignited. ArcelorMittal seeks from Amex Nooter approximately $3.2 million in property damage and excess fuel costs as a result of the fire. ArcelorMittal also seeks reimbursement by Amex Nooter for the cost of ArcelorMittal's defense in litigation brought against it by Robert Swimline. In the instant motion, ArcelorMittal seeks summary judgment in its favor on all three claims in its Second Amended Complaint. For the reasons set forth below, the Court denies ArcelorMittal's Motion for Summary Judgment.

         PROCEDURAL BACKGROUND

         On May 15, 2015, Plaintiff ArcelorMittal Indiana Harbor LLC (“ArcelorMittal Indiana Harbor”) filed a Complaint against Defendant Amex Nooter, LLC. On December 15, 2015, an Amended Complaint was filed by ArcelorMittal Indiana Harbor. On September 23, 2016, a Second Amended Complaint was filed by ArcelorMittal Indiana Harbor and ArcelorMittal USA LLC (“ArcelorMittal USA”) (collectively “ArcelorMittal”).

         The Second Amended Complaint brings three counts against Amex Nooter. Count I, brought by ArcelorMittal Indiana Harbor only, alleges a claim of negligence based on a breach of Amex Nooter's common law duty to conduct its work in a reasonably safe manner to avoid damage to ArcelorMittal Indiana Harbor's property in relation to the April 3, 2013 fire and resulting damage.

         Count II, brought by both ArcelorMittal Indiana Harbor and ArcelorMittal USA, alleges a claim of “Defense” under Sections 22 and 23 of the General Terms and Conditions of the AMUSA-102 Master Agreement, alleging that Amex Nooter has refused and/or failed to defend ArcelorMittal in the lawsuit brought by Robert Swimline against ArcelorMittal.

         Count III, brought by ArcelorMittal Indiana Harbor only, alleges a claim of breach of contract for, among other things, [1] (1) refusing to reimburse ArcelorMittal Indiana Harbor for the property damage and other losses incurred by ArcelorMittal Indiana Harbor in the explosion and fire in accordance with the agreement and (2) failing to conduct its work in a reasonably safe manner to avoid damage to ArcelorMittal Indiana Harbor's property. (ECF 116, ¶¶ 90.b., 90.e.).

         Amex Nooter filed an Answer on October 14, 2016.

         On December 29, 2017, the Court issued an Opinion and Order ruling on six evidentiary motions filed by the parties, including Amex Nooter's Motion to Strike Hearsay Statements and ArcelorMittal's motions to exclude the opinion testimony of Amex Nooter's expert witnesses Ross Smith and Richard Parry, which are relevant to the instant Motion for Summary Judgment.

         The parties filed forms of consent to have this case assigned to a United States Magistrate Judge to conduct all further proceedings and to order the entry of a final judgment in this case. Therefore, this Court has jurisdiction to decide this case pursuant to 28 U.S.C. § 636(c).

         SUMMARY JUDGMENT STANDARD

         The Federal Rules of Civil Procedure require that a motion for summary judgment be granted “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). Rule 56 “mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial.” Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). “Summary judgment is appropriate when no material fact is disputed and the moving parties are entitled to judgment as a matter of law, meaning that no reasonable jury could find for the other party based on the evidence in the record.” Carman v. Tinkes, 762 F.3d 565, 566 (7th Cir. 2014).

         A party seeking summary judgment bears the initial responsibility of informing the court of the basis for its motion and identifying those portions of the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, that it believes demonstrate the absence of a genuine issue of material fact. See Celotex, 477 U.S. at 323; Fed.R.Civ.P. 56 (a), (c). When the party moving for summary judgment bears the burden of proof at trial, such as ArcelorMittal in this case, the moving party must identify the elements of the claim, cite facts supported by evidence that satisfy the elements, and “demonstrate why the record is so onesided as to rule out the prospect of a finding in favor of the non-movant on the claim.” Baskin v. City of Fort Wayne, No. 1:16-CV-180, 2017 WL 4799898, at *5 (N.D. Ind. Oct. 20, 2017) (citing Reserve Supply Corp. v. Owens-Corning Fiberglass Corp., 971 F.2d 37, 42 (7th Cir. 1992); Celotex, 447 U.S. at 331)); see Celotex, 447 U.S. at 331 (“If the moving party will bear the burden of persuasion at trial, that party must support its motion with credible evidence . . . that would entitle it to a directed verdict if not controverted at trial.”) (Brennan, J. dissenting).

         “Once the moving party puts forth evidence showing the absence of a genuine dispute of material fact, the burden shifts to the non-moving party to provide evidence of specific facts creating a genuine dispute.” Carroll v. Lynch, 698 F.3d 561, 564 (7th Cir. 2012). The non-moving party cannot resist the motion and withstand summary judgment by merely resting on its pleadings. See Fed. R. Civ. P. 56(c)(1), (e); Flint v. City of Belvidere, 791 F.3d 764, 769 (7th Cir. 2015) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)). The nonmoving party must “do more than simply show that there is some metaphysical doubt as to the material facts.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986) (quoting Fed.R.Civ.P. 56(e) (1986)). Rule 56(e) provides that “[i]f a party fails to properly support an assertion of fact or fails to properly address another party's assertion of fact as required by Rule 56(c), the court may . . . consider the fact undisputed for purposes of the motion [or] grant summary judgment if the motion and supporting materials-including the facts considered undisputed-show that the movant is entitled to it . . . .” Fed.R.Civ.P. 56(e); see also Anderson, 477 U.S. at 248-50.

         In viewing the facts presented on a motion for summary judgment, a court must construe all facts in a light most favorable to the non-moving party and draw all legitimate inferences in favor of that party. See Anderson, 477 U.S. at 255; McDowell v. Vill. of Lansing, 763 F.3d 762, 764, 765 (7th Cir. 2014); Srail v. Vill. of Lisle, 588 F.3d 940, 948 (7th Cir. 2009). A court's role is not to evaluate the weight of the evidence, to judge the credibility of witnesses, or to determine the truth of the matter, but instead to determine whether there is a genuine issue of triable fact. See Anderson, 477 U.S. at 249-50.

         MATERIAL FACTS

         A. The Contract

         ArcelorMittal Indiana Harbor is a limited liability company whose sole member is ArcelorMittal USA. (ECF 143-1, ¶ 3). Amex Nooter is in the business of industrial piping and mainly employs pipefitters. (ECF 143-6, pp. 8:8-9:3).

         On August 19, 2011, ArcelorMittal USA entered into a “Contractor Work Master Agreement (AMUSA-102) for ArcelorMittal Companies in the USA (June 2011)” (hereinafter “AMUSA-102 Master Agreement”) with Amex Nooter. (ECF 143-2, Execution Sheet). Pursuant to the “Execution Sheet” of the AMUSA-102 Master Agreement, Amex Nooter is the “Contractor” and ArcelorMittal USA is the “Owner Signatory.” Id.

         Attached to the AMUSA-102 Master Agreement Execution Sheet is the “AMUSA-102 General Terms and Conditions for Contractor Work for ArcelorMittal Companies in the USA (June 2011)” (hereinafter “AMUSA-102 General Terms and Conditions”). See (ECF 143-2).

         The AMUSA-102 General Terms and Conditions defines “Owner Companies” as “Owner Signatory and any entity that is organized under the laws of a state in the United States and is directly or indirectly controlled by, or under control of ArcelorMittal SA.” (ECF 143-2, General Terms and Conditions § 1(xi)). “Owner” is defined as the “Owner Company issuing Purchase Order applicable to this Contractor Work Contract.” Id. at § 1(x). “Owner's Indemnitees” is defined as “Owner, all Owner Companies and each of their respective directors, officers, employees, and agents.” Id. at § 1(xiv).

         The AMUSA-102 Master Agreement provides that an “Owner” may issue a Purchase Order to the Contractor, which is Amex Nooter. (ECF 143-2, Execution Sheet ¶ 2). Purchase Orders Nos. N489391 and N489392 (“Purchase Orders”) were issued to Amex Nooter by ArcelorMittal Indiana Harbor on March 12, 2013. (ECF 143-3). The Purchase Orders, one for Blast Furnace No. 3 and one for Blast Furnace No. 4, contain the nature and scope of the services Amex Nooter was to provide to ArcelorMittal Indiana Harbor, namely rebuilding the excess gas bleeder pilot burner cabinets at each of the Blast Furnaces at ArcelorMittal Indiana Harbor's West facility in East Chicago, Indiana. Id. The “Description” in each of the Purchase Orders provides: “Amex (no sub) to provide supervision, labor, and materials to rebuild [H3/H4] excess gas bleeder pilot burner cabinets. Cabinets to be rebuilt per the drawings submitted to Amex. The demo and installation of the new piping and valving to be done on the 3rd of April. Job to be t&m.” Id. at pp. 2, 4.

         The AMUSA-102 Master Agreement provides that Amex Nooter may accept a Purchase Order “either by express acceptance thereof or by beginning performance of the Contractor Work specified therein.” (ECF 143-2, Execution Sheet ¶ 3). The same paragraph also provides:

Each Contractor acceptance of a Purchase Order shall create a separate binding and enforceable contract (a “Contractor Work Contract”) with respect thereto, with each Contractor Work Contract consisting of the Safety Handbook, the AMUSA-102 General Terms and Conditions, the Purchase Order (including without limitation the Contractor Work, Contract Price and Contract Schedule (or equivalent terminology) as defined and specified in the Purchase Order) and any Other Contractual Documents.

Id. Amex Nooter's acceptance of the Purchase Orders was an acknowledgment by Amex Nooter that it read, understood, and accepted all terms, conditions, and provisions in each of those documents that make up the Contractor Work Contract. Id.

         Regarding any inconsistencies or discrepancies that arise, the AMUSA-102 Master Agreement provides:

In the event any inconsistencies or discrepancies arise among any parts of the Contractor Work Contract and the precedence is not otherwise specified, (I) the Safety Handbook shall take precedence over the AMUSA-102 General Terms and Conditions, (II) the AMUSA-102 General Terms and Conditions shall take precedence over the Purchase Order; and (III) the Purchase Order shall take precedence over the Other Contractual Documents.

Id. at ¶ 5.

         The AMUSA-102 General Terms and Conditions provides:

This Contractor Work Contract represents the entire agreement of the Parties with respect to the subject matter hereof; and no agreement or understanding in any way modifying this Contractor Work Contract (including change orders) shall be binding upon Owner or Contractor unless made in a writing that both (i) states that it amends this Contractor Work Contract; and (ii) is signed by authorized representative of each of Owner and Contractor. . . . Any reference to Owner's or Contractor's general terms and conditions of purchase, sale or performance in any Purchase Order or any communication or document issued or delivered by Contractor (including, [but] not limited to acknowledgments or invoices) shall not be operative, binding or effective.

(ECF 143-2, General Terms and Conditions § 2(a)).

         Both Purchase Orders include this statement: “AMUSA-100 Terms and Conditions will apply to this Purchase Order.” (ECF 143-3, pp. 2, 4).

         Under the AMUSA-102 General Terms and Conditions, Amex Nooter owed certain obligations to the Owner, ArcelorMittal Indiana Harbor, including the following provisions identified by ArcelorMittal in the Motion for Summary Judgment:

- Amex Nooter has read and understands ArcelorMittal Indiana Harbor's “Code of Business Conduct” and Amex Nooter “shall not take any action inconsistent with or contrary to Owner's Code of Business Conduct in the performance of this Contractor Work Contract.” A violation of the Code of Business Conduct may constitute a material breach of the Contractor Work Contract. (ECF 143-2, General Terms and Conditions, “Compliance with Laws, Rules and Policies”, § 4(e)).
- Amex Nooter was required to comply with the “safety, health and environmental rules specified by Applicable Laws or the Safety Handbook or other rules of Owner especially applicable at the Job Site” during the performance of the Contractor Work Contract. (ECF 143-2, General Terms and Conditions, “Sustainable Development; Safety”, § 3(a)).
- “Disregard for . . . the Safety Handbook or any other applicable safety rules shall be deemed to be a material breach of this Contractor Work Contract.” Id. at § 3(b).
- Amex Nooter was obligated to “control access to the Job Site and be responsible for all persons and Work at the Job Site.” Id. at § 3(c).

         Section 22 of the AMUSA-102 General Terms and Conditions, titled “Indemnification, Damages, and Liabilities, ” provides:

Contractor shall . . . indemnify, defend and save harmless the Owner's Indemnitees from and against any and all Claims made by any person or persons by reason of any act or omission on the part of Contractor or any of its Subcontractors or any employee, agent or invitee of Contractor or any of its Subcontractors, including any breach or alleged breach of any statutory duty that is to be performed by Contractor under this Contractor Work Contract but is, or may be the duty of, any of the Owner Indemnitees under Applicable Laws. Notwithstanding the foregoing obligations in this Section 22(a), Contractor shall not be required to indemnify and save harmless Owner's Indemnitees from Claims that are finally determined by a court with jurisdiction to have been caused solely by the negligence or willful misconduct of Owner's Indemnitees; provided, however, that the condition or operation of Owner's Indemnitees' production and manufacturing facilities in the normal course of Owner's Indemnitees' businesses shall be deemed not to be negligence or willful misconduct.

(ECF 143-2, General Terms and Conditions § 22(a)).

         The following paragraph of the AMUSA-102 General Terms and Conditions provides:

In the event of any Claim covered under Section 22(a) above, immediately upon Owner's demand Contractor shall assume at its expense, on behalf of Owner's Indemnitees, the defense of any action at law or in equity that may be brought against Owner's Indemnitees . . . . In the event Contractor fails or refuses to indemnify, defend and save harmless as specified in this Contractor Work Contract, then, in addition to any other damages allowable by law, Contractor shall be liable to Owner for the costs (including without limitation reasonable attorney's fees) of enforcing Contractor's agreement to indemnify, defend and save harmless.

Id. at § 22(b). “Claims” is defined as:

Any and all claims, actions, suits, demands, arbitrations, and causes of actions or other similar activity made, filed, done or attempted or submitted for or on account of any actual or alleged liabilities, losses, damages, fines, penalties, awards, judgments, decrees, orders, holdings, determinations, opinions, costs and expenses of every kind and amount whatsoever (including without limitation reasonable attorney's fees), on account of or as a result of any actual or alleged loss of, damage to or defect in property or any actual or alleged disease, illness or injury, including death, of one or more persons.

Id. at § 1(iii).

         B. Amex Nooter's Scope of Work on April 3, 2013

         Frank Peters, the Senior Maintenance Planner for ArcelorMittal Indiana Harbor, was responsible for planning major outages, writing contractor scopes of work, bidding out projects, and handling daily maintenance planning for Blast Furnaces Nos. 3 and 4. (ECF 143-4, pp. 10:19-11:4). In early March 2013, he wrote the scope of work for Amex Nooter to rebuild the excess gas bleeder pilot burner cabinets at Blast Furnaces Nos. 3 and 4. Id. at pp. 12:13-13:2. Prior to writing this scope of work, Frank Peters spoke with Ray Smith, Amex Nooter's Superintendent, and explained the nature and scope of the work Amex Nooter was to perform, which was “to replace the existing piping, put new valves in, new gauges, and it was pretty clear-cut what had to be done.” Id. at pp. 14:14-15:11.

         C. The April 3, 2013 Fire

         Korrie Griffith was an employee of Amex Nooter from approximately March 2012 to September 2013 as a welder pipefitter. (ECF 143-7, pp. 9:23-10:24, 11:12-16). Erik Olson, an Amex Nooter foreman, was present at Blast Furnace No. 3 on the date of the fire and was the supervisor of Korrie Griffith and Robert Swimline. (ECF 143-5, pp. 23:16-21, 30:8-33:4). Prior to Griffith and Swimline beginning work at the cabinets, Olson gave them instructions on the work they were to perform: replacing the bottom half of the piping inside the excess gas bleeder pilot burner cabinet at Blast Furnace No. 3. Id. at pp. 30:8-33:11.

         James Stalley, Amex Nooter's Safety Director, testified that Amex Nooter's supervisors and foremen were responsible for ensuring Amex Nooter's employees performed their work in a safe manner and that no unsafe conditions existed at their worksite. (ECF 143-6, pp. 98:21-99:8). As an Amex Nooter supervisor, Erik Olson was also required to continually monitor the safety performance of all Amex Nooter employees under his charge, including Robert Swimline and Korrie Griffith. Id. at p. 99:13-22. Amex Nooter employees, including Swimline and Griffith, were responsible for reporting hazardous conditions on the worksite to Amex Nooter supervisors. Id. at pp.101:16-102:6.

         Erik Olson met with Frank Peters prior to Amex Nooter performing any work on the cabinets to discuss Amex Nooter's work for that day. (ECF 143-5, pp. 55:20-56:20). Olson testified that it was the responsibility of Amex Nooter and ArcelorMittal Indiana Harbor to identify and rectify hazards. Id. at 57:15-23. Olson agreed that it was Amex Nooter that performed an initial survey of the work site to identify any hazardous conditions. Id. at pp. 57:24-58:5. Olson walked the gas line with Frank Peters and received instructions on what valves needed to be closed, locked out, and isolated. Id. at pp. 65:23-66:19; 76:21-78:5.[2] Olson communicated all of this information to Korrie Griffith and Robert Swimline later that day. Id. at pp. 65:22-66:8; 76:21-78:5. Before Griffith and Swimline arrived at the cabinet on April 3, 2013, the top part of the cabinet was already completed. Id. at p. 30:3-17.

         Olson testified he specifically told Swimline and Griffith to “leave this valve alone, ” referring to the gas valve that came off in the incident. Id. at pp. 31:4-32:1. Griffith testified that Olson told him to “try not to mess with the valve” and told him that ArcelorMittal Indiana Harbor had told Olson that ArcelorMittal had not shut off the gas:

Q. So you and Robert were going to replace the piping and valves inside of the cabinet?
A. Right, which was already started.
Q. Korrie, did you place your lock on - Strike that. Before you started to work on the cabinet, did you place your lock on anything?
A. Not that lock box, but it was on for a different job.
Q. Did you see any locks on any of the -
A. They had lock boxes there.
Q. Did you see any locks on any of the piping going into the cabinet?
A. No.
Q. Was it represented to you that the line going into the cabinet that you and Robert were going to work on had locks placed on it?
A. They said it was locked out.
Q. Who is “they, ” .. . .
A. Our supervision, Olson, he said that - you know, there is a lock box but, you know -
Q. There is a lock -
A. Once they are going to lock out, there is nothing to lock out, and they didn't lock it out.
Q. What exactly did Olson tell you?
A. Go up there and finish the job, that's basically it.
Q. Did he even mention anything about -
A. He said don't - try not to mess with the valve, and they knew it was live, and he said they denied shutting it off. So they knew what the situation was.

(ECF 143-7, p. 131:8-14). Olson testified that Swimline and Griffith did not have any questions about Olson's instructions on how to perform the job or on not touching the gas valve attached to the live gas line leading into the cabinet. (ECF 143-5, pp. 29:11-34:2). Eric Frahm, an Amex Nooter foreman, testified that he checked the bleeder to be sure that there was no gas past the valve. (ECF 143-9, p. 73:17-24). When asked if he had done a visual inspection of the valve that Griffith removed, Frahm testified, “You would hear a hundred pounds screaming. If there was a leak it will be screaming like nobody's business.” (ECF 143-9, p. 74:1-17).

         1. Korrie Griffith Removed a Live Gas Valve

         Korrie Griffith testified that he and Robert Swimline were the only two individuals who witnessed the explosion on April 3, 2013. (ECF 143-7, p. 20:12-16). He then gave the following deposition testimony regarding the gas valve.

Q. And then one of the other things you told me was that -- now, let me stop there.
I know the valve came off.
A. Right.
Q. Before we get to how it came off, I just want to make sure I understand what you told me when we were on the phone: You mentioned that you knew that that valve was leaking gas, right?
A. Yes.
MR. RITCHIE: Objection, vague.
BY MR. RELIFORD:
Q. And you knew that valve was leaking gas at the time that you guys attempted to do your work, correct?
MR. RITCHIE: Objection, leading.
THE WITNESS: Yes.
BY MR. RELIFORD:
Q. The other thing I'm just trying to rack my brain with here, I believe you said that when the valve -- after the valve came off, you spent about a minute or two trying to get that valve back on?
A. I tried --
MR. RITCHIE: Objection, form and foundation, go ahead.
THE WITNESS: I did try to get it on, but it wasn't even that long.
BY MR. RELIFORD:
Q. Do you remember how long it was, because I can't remember what you told me on the phone?
A. Honestly, everything happened so fast.
Q. Okay.
A. And the next thing I knew it was a big bright yellow flash, and I took and run. And Robert Swimline was looking for me, and I didn't -- he said he looked for me, and I was already gone, so I don't know.
MR. RELIFORD: Okay.
BY MR. RELIFORD:
Q. So you remember -- and I know there was a big ball of fire, right?
A. Right.
Q. But you remember trying to put the valve back on?
A. Yes.
MR. RITCHIE: Objection, form and foundation.
MR. RELIFORD: I'm sorry, I didn't get your answer.
THE WITNESS: Yes.
BY MR. RELIFORD:
Q. And you spent, what, about a minute trying to get that valve back on?
A. Yes.

Id. at pp. 43:23-45:23.

Q. Were you able to get it back on?
A. No.
Q. And when you were trying to get the valve back on, okay, and I know we didn't talk about this during our phone call, but when you were trying to get that valve back on, were you using your hands or were you using some sort of pipe wrench or some other pieces of equipment?
A. My hand.
MR. RITCHIE: Objection, form and foundation.
THE WITNESS: Honestly, I just remember trying to get the screw back on.
BY MR. RELIFORD:
Q. With your hands?
A. Yeah.
Q. Do you recall using any sort of equipment?
A. To try to get it back on?
Q. Yes, sir.
A. No, I am a human being, my left hand.

Id. at p. 46:4-21.

Q. . . . Now, when you started working on the cabinet, the subject valve that came off, was that loose?
MR. RITCHIE: Objection, form and foundation, go ahead.
MR. RELIFORD: You can answer.
THE WITNESS: It wasn't on very tight.
BY MR. RELIFORD:
Q. And you saw that with your own eyes?
A. Yes.
Q. So when you saw that that valve was not on very tight, you could also smell gas leaking, correct?
MR. RITCHIE: Objection to form and foundation, it's ...

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