Integrated Project v. HMS Interiors

1 Integrated Project Services ("General Contractor") appeals from the
June 13, 2005 order that granted the motion for judgment on the pleadings
filed by HMS Interiors, Inc. ("Subcontractor"), on the basis that
Subcontractor was not contractually obligated to indemnify General
Contractor for liability incurred after Subcontractor's employee, Joseph
Lloyd, sustained injuries on the construction work site owned by Wyeth-
Ayerst Laboratories ("Owner"). The primary issue in this case is whether a
pass-through indemnification clause in the subcontract serves to require
Subcontractor to indemnify General Contractor for that portion of the
damages attributable to General Contractor's negligence. Since the
subcontract does not clearly and unequivocally demonstrate that

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Subcontractor intended to indemnify General Contractor for damages
resulting from General Contractor's own negligence, we affirm.

2 On November 15, 1996, General Contractor and Owner entered into an
agreement to provide renovations for Owner's building in Marietta,
Pennsylvania (hereinafter, "prime contract").1 The prime contract contains
the following indemnification clause:

[Paragraph 3.12.1] To the fullest extent permitted by law,
the [General] Contractor shall indemnify, defend and hold
harmless the Owner, its agents and employees from and
against claims, damages, losses and expenses, including but not
limited to attorney's fees, arising out of or resulting from the
performance of the Work, provided that such claim, damage,
loss or expense is attributable to bodily injury, sickness, disease
or death, or to injury to or destruction of tangible property
(other than the Work itself) including loss of use resulting
therefrom, but only to the extent caused in whole or in
part by negligent acts or omissions of the [General]
Contractor or any Subcontractor, or anyone directly or
indirectly employed by them or anyone for whose acts
they may be liable for regardless whether or not such
claim, damage, loss or expense is caused in part by a
party indemnified hereunder. Such obligation shall no[t] be
construed to negate, abridge, or reduce other rights or
obligations of indemnity which would otherwise exist as to a
party or person described in Paragraph 3.12.1.
Prime Contract at 3.12.1 (emphasis added). In the next paragraph, the
prime contract provides for the following waiver of workers' compensation
immunity:

1 The term "Work" is defined in the prime contract as "all labor necessary to
design and produce the construction required by the Contract Documents,
and all materials and equipment incorporated in such construction." Prime
Contract, 11/15/96, at Article 1.

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[Paragraph 3.12.2] In claims against any person or entity
indemnified under this paragraph 3.12 by an employee of the
Contractor, a Subcontractor, anyone directly or indirectly
employed by them or anyone for whose acts they may be liable,
the indemnification obligation under this Paragraph 3.12
shall not be limited by a limitation on amount or type of
damages, compensation or benefits payable by or for the
[General] Contractor or a Subcontractor under workers'
or workmen's compensation acts, disability benefit acts or
other employee benefit acts.

Prime Contract at 3.12.2 (emphasis added). Article 9 of the prime
contract also requires General Contractor to maintain various forms of
insurance, including workers' compensation insurance and comprehensive
general public liability insurance.

3 Subsequently, on February 12, 1997, General Contractor entered into
a contract with Subcontractor for performance of certain work encompassed
by the prime contract (hereinafter the "subcontract"). The subcontract
contains the following broad, all-encompassing provisions for incorporation
of the prime contract by reference and for indemnification:

6. All work required to be performed hereunder by
SUBCONTRACTOR shall be in strict accordance with the
CONTRACT DOCUMENTS applicable to the work to be performed
and materials, articles and/or equipment to be furnished
hereunder. SUBCONTRACTOR shall be bound to
CONTRACTOR by the terms of this SUBCONTRACT and of
the CONTRACT DOCUMENTS between the Owner and
CONTRACTOR and shall assume toward CONTRACTOR all
of the obligations and responsibilities with respect to the
work to be performed hereunder by SUBCONTRACTOR
which CONTRACTOR, by the CONTRACT DOCUMENTS,
assumes toward the Owner. ….

7. SUBCONTRACTOR assumes entire responsibility
and liability for any and all claims and/or damages of any

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nature or character whatsoever for which CONTRACTOR shall
be liable under the CONTRACT DOCUMENTS, or by
operation of law, with respect to the work covered by this
SUBCONTRACT and agrees to indemnify and save
CONTRACTOR and Owner harmless from and against all
claims, demands, liabilities, interest, loss, damage, attorneys'
fees, costs and expenses of whatsoever kind or nature, whether
for property damage, personal injuries (including death) to
any and all persons, whether employees of CONTRACTOR
or others, or otherwise, caused or occasioned thereby,
resulting therefrom, arising out of or therefrom, or occurring in
connection therewith to the same extent and obligation to
which CONTRACTOR has assumed towards Owner under
the CONTRACT DOCUMENTS, or as imposed by law, limited
to the scope of the subject matter of this SUBCONTRACT.
….

Subcontract, 2/12/97, at 6, 7. Other provisions of the subcontract
include Subcontractor's agreement to maintain certain forms of insurance
such as workers' compensation insurance and comprehensive general
liability insurance. Id. at 8.

4 On January 22, 1998, Mr. Lloyd, Subcontractor's employee, was
injured after falling off a roof while working at the construction site in
Marietta, Pennsylvania.2 Barred by the workers' compensation statute from
suing his employer (Subcontractor), Mr. Lloyd filed a complaint against
Owner and General Contractor on June 15, 1999, in which he sought

2 As described in a memorandum opinion this Court issued in an appeal in
the underlying Lloyd litigation, General Contractor's superintendent directed
Subcontractor to remove debris from an ice-coated roof at the work site. As
Subcontractor's employee, Mr. Lloyd, was removing debris from the roof into
a dumpster below, he slipped on the ice, fell off of the roof, and sustained
serious injuries. See Lloyd v. Ayerst, 817 A.2d 1191 (Pa. Super. 2002)
(unpublished memorandum).

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damages for his injuries. Lloyd Complaint, 6/15/99, at 5. General
Contractor attempted to join Subcontractor as an additional defendant in the
underlying Lloyd action, and Subcontractor responded by filing preliminary
objections to that effort. Due to General Contractor's failure to respond to
Subcontractor's preliminary objections to the joinder complaint,
Subcontractor's preliminary objections were sustained and Subcontractor
was dismissed with prejudice. See Trial Court Opinion (T.C.O.), 7/2/01, at
2-3. Indeed, in this appeal General Contractor does not argue that
Subcontractor's negligence contributed to Mr. Lloyd's injuries.3

5 On March 15, 2001, General Contractor filed a complaint against
Subcontractor and Subcontractor's insurer, the PMA Insurance Group, in
which it raised various claims for, inter alia, declaratory judgment, breach of
contract, unjust enrichment, negligent misrepresentation, and breach of the
duty of good faith and fair dealing. More specifically, with regard to issues in
this appeal, Count I of General Contractor's complaint asserted a claim
against Subcontractor only, seeking a declaratory judgment that
Subcontractor was obligated to indemnify General Contractor in the
3 Rather, as described in detail infra, General Contractor's sole argument is
that the subcontract's incorporation and indemnification provisions require
Subcontractor to indemnify General Contractor for its own
negligence/liability in the Lloyd case.

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underlying Lloyd action, pursuant to the above-noted clauses in the
subcontract.4, 5

6 On April 11, 2001, Subcontractor filed preliminary objections in which
it asserted, inter alia, that Pennsylvania's Workers' Compensation Act
(WCA)6 provides that an employee may bring a cause of action against a
third party, but the employer cannot be liable to the third party for
damages, contribution, or indemnity "unless liability for such damages,
contribution 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." Subcontractor's Preliminary
Objections, 4/11/01, at 9 (quoting 77 P.S. § 481(b)). Subcontractor
further asserted that the indemnification language contained in Paragraph 7
of the subcontract was insufficient to require Subcontractor to indemnify
General Contractor for General Contractor's own negligence in the
underlying Lloyd case. See id. at 12, 13.

4 Joseph Lloyd was included as a nominal defendant in the declaratory
judgment action. 42 Pa.C.S. §7540.

5 The other counts against Subcontractor, not at issue in this appeal, pertain
to General Contractor's claim that Subcontractor failed to procure insurance
naming General Contractor as an additional insured. PMA Insurance Group,
Subcontractor's insurer, is not participating in the instant appeal. Also, we
note that Subcontractor and counsel for PMA stipulated to amend
Subcontractor's complaint to correct PMA's name to Pennsylvania
Manufacturer's Association Insurance Company, although it appears that
General Contractor has continued to refer to "PMA Insurance Group" in the
present appeal.

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7 In the meantime, on April 27, 2001, a jury in the underlying Lloyd
case returned a verdict in favor of Mr. Lloyd in the amount of $2,000,000,
with 35% of that amount attributable to Lloyd's negligence, 55% attributable
to General Contractor's negligence, and 10% attributable to Owner's
negligence. See T.C.O., 7/2/01, at 3. Following the filing of post trial
motions, the trial court determined that General Contractor was immune
from liability under the WCA as Lloyd's statutory employer, but that General
Contractor waived its immunity with regard to any indemnification liability
incurred pursuant to the terms of the prime contract. The case was
appealed to our Court, the result of which is further described below.

8 Returning to the instant case, on July 2, 2001, the Honorable John W.
Herron entered an Order with an accompanying opinion in which he denied
Subcontractor's preliminary objections and directed Subcontractor to file an
answer to General Contractor's complaint. This decision was based, in part,
on Judge Herron's conclusion that Subcontractor was not immune from the
subcontract's indemnification requirement by virtue of section 481(b) of the
WCA.7 Id. at 7. In particular, Judge Herron decided that the language in

6 77 P.S. §§ 1-2708.

7 Section 481(b) of the WCA provides statutory immunity for an employer
as follows:

In the event injury or death to an employe is caused by a third
party, then such employe, his legal representative, husband or
wife, parents, dependents, next of kin, and anyone otherwise
entitled to receive damages by reason thereof, may bring their
action at law against such third party, but the employer, his

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Paragraph 7 of the subcontract, standing alone, was insufficiently specific to
establish that Subcontractor agreed to indemnify General Contractor for its
own negligence, but that the incorporation clause found at Paragraph 6
functioned to put Subcontractor into the shoes of General Contractor,
thereby holding Subcontractor to the indemnification provision found in
Paragraph 3.12.2 in the prime contract, which provided a sufficiently specific
waiver of workers' compensation immunity. Id. at 10-11. On August 24,
2001, Subcontractor filed an answer and new matter to General Contractor's
complaint.

9 On January 15, 2002, the trial court in the instant case granted a stay
pending final resolution of the appeal, noted above, in the underlying Lloyd
case. On December 6, 2002, this Court rendered a decision in the Lloyd
case, in which we concluded that General Contractor was Lloyd's statutory
employer for purposes of WCA immunity. Lloyd v. Ayerst, Nos. 310 & 391
EDA 2002, unpublished memorandum at 4 (Pa. Super. filed Dec. 6, 2002).
However, we also determined that General Contractor did not waive its
defense of immunity under the WCA. Id. at 5. Accordingly, we further
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.

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determined that it was error for the trial court to include General Contractor
on the verdict sheet. Id. We stated that the jury should have been
permitted only to assess liability between Lloyd and Owner. Id. Therefore,
we remanded for a new trial on the issue of Owner's liability and directed the
trial court to exclude General Contractor from the verdict sheet on the basis
of its unwaived statutory immunity under the WCA. Id. Finally, we deferred
deciding the issue of Owner's request for indemnification from General
Contractor under the terms of the prime contract until the jury in the new
trial determined the question of liability between Owner and Lloyd in a new
trial. Id. at 6.

10 Thus, a new trial in the underlying Lloyd case, with Owner as the
defendant, was held from June 16, 2003, through June 20, 2003. This time,
the jury awarded Mr. Lloyd $1,800,000 in damages, with 10% negligence
attributable to Mr. Lloyd. The trial judge then heard argument on Owner's
contractual indemnification claim against General Contractor. The trial judge
concluded that Owner's negligence accounted for 20% of the verdict and
General Contractor's negligence accounted for 80% of the verdict.
Accordingly, General Contractor's share of the verdict was determined to be
$1,400,000, which is the sum General Contractor is now seeking from
Subcontractor in the instant declaratory judgment action for indemnification
pursuant to the terms of the prime contract and subcontract.
77 P.S. § 481(b).

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11 Given the verdict of the jury in the retrial of the Lloyd case, the
Honorable Gene D. Cohen lifted the stay in the instant case on September 5,
2003. On March 9, 2004, Subcontractor filed a Motion for Judgment on the
Pleadings and/or Motion for Partial Summary Judgment to Plaintiff's (General
Contractor's) Complaint. General Contractor filed a response to this motion
on April 6, 2004.

12 After consideration of the motion and corresponding briefs of the
parties, Judge Cohen denied Subcontractor's Motion for Judgment on the
Pleadings and/or Motion for Partial Summary Judgment on October 21,
2004. In conjunction with this order, Judge Cohen filed a memorandum
opinion in which he explained that both parties agreed that the subcontract
incorporates by reference the prime contract. T.C.O., 10/21/04, at 2.
However, Judge Cohen rejected Subcontractor's argument, given in support
of its motion, that the indemnification clauses in each contract were in
conflict and, therefore, certain supremacy clauses contained in the
subcontract should prevail, resulting in no indemnification of General
Contractor by Subcontractor. Id. After determining that the indemnification
provisions in each contract were not in conflict, Judge Cohen relied on this
Court's decision in Bernotas v. Super Fresh Food Markets, Inc., 816
A.2d 225, 231 (Pa. Super. 2002), to conclude that the "flow-through" or

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"conduit clause" contained in Paragraph 7 of the subcontract,8 which
functioned to "require[] the subcontractor to stand in the shoes of the prime
contractor with regards to the rights and obligations encompassed in the
prime contract to the extent they arise within the purview of the
subcontract," was enforceable. T.C.O., 10/21/04, at 3 (quoting Bernotas,
816 A.2d at 231)). Thus, in reliance on this Court's decision in Bernotas,
Judge Cohen stated "[s]ince there is no inherent problem with [General
Contractor] attempting to pass on its liability to [Subcontractor] in this
manner, the question is whether the terms of the Prime Contract's

8 For the convenience of the reader, we reproduce Paragraph 7 of the
subcontract here:

7. SUBCONTRACTOR assumes entire responsibility and
liability for any and all claims and/or damages of any nature or
character whatsoever for which CONTRACTOR shall be liable
under the CONTRACT DOCUMENTS, or by operation of law, with
respect to the work covered by this SUBCONTRACT and agrees
to indemnify and save CONTRACTOR and Owner harmless from
and against all claims, demands, liabilities, interest, loss,
damage, attorneys' fees, costs and expenses of whatsoever kind
or nature, whether for property damage, personal injuries
(including death) to any and all persons, whether employees of
CONTRACTOR or others, or otherwise, caused or occasioned
thereby, resulting therefrom, arising out of or therefrom, or
occurring in connection therewith to the same extent and
obligation to which CONTRACTOR has assumed towards Owner
under the CONTRACT DOCUMENTS, or as imposed by law,
limited to the scope of the subject matter of this
SUBCONTRACT. ….

Subcontract, 2/12/97, at 7.

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indemnification clause, as incorporated into the Sub-Contract's
indemnification clause, are sufficiently clear to make [Subcontractor] liable
for [General Contractor's] negligent acts…." Id. at 3-4. Judge Cohen turned
to the indemnification provision in Paragraph 3.12.1 of the prime contract,
and concluded that it was sufficiently clear to hold that Subcontractor was
obligated to "indemnify and save [General Contractor] harmless from and
against all claims, but only to the extent caused by the negligent acts or
omissions of [General Contractor and Subcontractor]." Id. at 5 (relying on
language in Paragraph 3.12.1 of the prime contract). As we shall explain
below, subsequent to Judge Cohen's decision, our Supreme Court reversed
our decision in Bernotas upon which Judge Cohen's decision was based and,
essentially, concluded that there was an "inherent problem" with passthrough
indemnification provisions such as the one in the instant case.

13 Additionally, Judge Cohen concluded that Subcontractor waived its
immunity under the WCA. Specifically, Judge Cohen reiterated that the
incorporation by reference provision in the subcontract was sufficient to put
Subcontractor into the shoes of General Contractor with regard to General
Contractor's express waiver of WCA immunity found in Paragraph 3.12.2 of
the prime contract.

14 On December 22, 2004, our Supreme Court rendered its decision in an
appeal in the Bernotas case, and reversed that part of this Court's decision
that Judge Cohen relied upon, i.e., regarding enforceability of pass-through

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indemnification provisions. Bernotas v. Super Fresh Food Markets, Inc.,
863 A.2d 478 (Pa. 2004). Given this development in the case law, on
January 13, 2005, Subcontractor filed a motion for reconsideration of Judge
Cohen's decision denying their motion for judgment on the pleadings or
partial summary judgment. By an order dated February 16, 2005, Judge
Cohen granted reconsideration and vacated his October 21, 2004 order that
had denied Subcontractor's motion for judgment on the pleadings and/or
partial summary judgment.

15 On June 13, 2005, the Honorable Howland W. Abramson, who presided
over this case following Judge Cohen's retirement, entered an "Order and
Opinion" granting Subcontractor's motion for judgment on the pleadings
following Subcontractor's request for reconsideration in light of the Supreme
Court's decision in Bernotas.9 General Contractor filed a timely notice of
appeal on July 8, 2005. By an order docketed on July 15, 2005, Judge
Abramson directed General Contractor to file a concise statement of matters
complained of on appeal pursuant to Pa.R.A.P. 1925(b). General Contractor
filed a timely Rule 1925(b) statement. Judge Abramson filed a statement on
August 18, 2005, indicating that, for the reasons stated in his June 13, 2005
opinion, the issues General Contractor raised in its Rule 1925(b) statement
were without merit.

9 From this point on, unless otherwise noted, references to "Bernotas" are
to the Supreme Court's decision in that case.

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16 On June 21, 2006, we quashed the appeal on the basis that Judge
Abramson's order granting judgment on the pleadings dismissed only Count
I of General Contractor's complaint, leaving the remaining counts against
Subcontractor and PMA unresolved. Integrated Prod. Servs., Inc. v. HMS
Interiors, Inc., The PMA Ins. Group, and Joseph Lloyd, No. 2175 EDA
2005, unpublished memorandum at 2-3 (Pa. Super. filed June 21, 2006).

17 On March 8, 2007, upon return of the case to the trial court, the
parties entered into a "Stipulation of Dismissal" that was approved by Judge
Abramson, whereby the parties agreed that counts II through VII of General
Contractor's complaint would be dismissed with prejudice. The order
approving the "Stipulation of Dismissal" also incorporated the court's June
13, 2005 order that granted Subcontractor's motion for judgment on the
pleadings, which dismissed Count I of General Contractor's complaint.
General Contractor again filed a timely notice of appeal on March 29, 2007.
Again, Judge Abramson filed a statement referring this Court to his June 13,
2005 opinion that addresses the issues raised by General Contractor in this
appeal.

18 General Contractor enumerates the following issues for our review, in
the statement of questions involved portion of its brief:

1. Whether the "pass through" provisions of the
subcontract between [General Contractor] and
[Subcontractor] found at paragraphs 6 and 7 of the
subcontract meet the standard for such provisions as
recently articulated by the Pennsylvania Supreme

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Court in Bernotas v. Super Fresh Food Markets,
581 Pa. 12, 863 A.2d 478 (2004). …

2. Whether the terms of the indemnification obligations of
the [prime] contract between [General Contractor] and
[Owner] are applicable to the subcontract between
[General Contractor] and [Subcontractor] because of
the "pass through" provisions of the … subcontract so
that [Subcontractor] must indemnify [General
Contractor] for its losses in the underlying Lloyd
litigation ….

3. Whether, in light of Bernotas, supra, and paragraphs
6 and 7 of the subcontract, [Subcontractor] waived its
[WCA] immunity from suit, vis-à-vis [General
Contactor]. …

4. Whether the terms of the [prime] contract between
[General Contractor] and [Owner] as they relate to
[Subcontractor's] waiver of its [WCA] immunity are
applicable to the subcontract … because of the "pass
through" provisions of the subcontract so that
[Subcontractor] has no legal defenses to [General
Contractor's] contractual indemnification claim. ….
General Contractor's brief at 3. Essentially, the issues presented require us
to determine if the trial court committed an error of law by refusing to find
the pass-through provisions in the subcontract (Paragraphs 6 and 7)
effective to hold Subcontractor in the shoes of General Contractor with
regard to General Contractor's obligations under Paragraphs 3.12.1 and
3.12.2 of the prime contract (i.e., involving General Contractor's promise to
hold Owner harmless for liability incurred due to both General Contractor's
and Subcontractor's negligence, and General Contractor's waiver of WCA
immunity).

19 Initially, we note the applicable scope and standard of review:

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A motion for judgment on the pleadings should be granted only
where the pleadings demonstrate that no genuine issue of fact
exists, and the moving party is entitled to judgment as a matter
of law. Pa.R.C.P. 1034[.] Thus, in reviewing a trial court's
decision to grant judgment on the pleadings, the scope of
review of the appellate court is plenary; the reviewing court
must determine if the action of the trial court is based on a clear
error of law or whether there were facts disclosed by the
pleadings which should properly go to the jury. An appellate
court must accept as true all well-pleaded facts of the party
against whom the motion is made, while considering against
him only those facts which he specifically admits. Neither party
can be deemed to have admitted either conclusions of law or
unjustified inferences. Moreover, in conducting its inquiry, the
court should confine itself to the pleadings themselves and any
documents or exhibits properly attached to them. It may not
consider inadmissible evidence in determining a motion for
judgment on the pleadings. Only where the moving party's case
is clear and free from doubt such that a trial would prove
fruitless will an appellate court affirm a motion for judgment on
the pleadings.

Southcentral Employment Corp. v. Birmingham Fire Ins. Co. of
Pennsylvania, 2007 PA Super 156, 5 (filed May 31, 2007) (quoting
Consulting Eng'rs, Inc. v. Insurance Co. of N. Am., 710 A.2d 82, 83-84
(Pa. Super. 1998) (citations and quotation marks omitted)). Additionally,
"[t]he interpretation of a contract is a matter of law and, as such, we need
not defer to the trial court's reading of the Agreement." Welteroth v.
Harvey, 912 A.2d 863, 866 (Pa. Super. 2006).

20 Resolution of the issues on appeal require a close examination of
Bernotas, as the trial court relied on that decision to conclude, upon
reconsideration of Subcontractor's motion for judgment on the pleadings,
that the pass-through provisions in the subcontract were ineffective to

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require Subcontractor to indemnify General Contractor for its liability in the
Lloyd case. In Bernotas, Barbara Bernotas, a customer at the Super Fresh
Food Market, was injured when she fell through a hole at a construction site
in the store. Bernotas, 863 A.2d at 479. The store had contracted with a
general contractor, who hired a subcontractor to perform electrical work at
the site in accordance with plans and specifications set forth in the general
(or prime) contract between the general contractor and the store's parent
company. Id. Ms. Bernotas sued the store, and the store filed cross claims
for contractual indemnification against the general contractor and the
subcontractor. Id. The parties settled the case for $200,000, with each
defendant deemed responsible for 1/3 of the amount. Id. The store then
sought indemnification under the terms of the general contract, which
required "[t]he Contractor … [to] assume entire responsibility and liability for
any and all damage or injury of any kind … caused by … the execution of the
work provided for in this Contract …," provided the store was not solely
negligent. Id. (quoting from general contract). The issue became whether
the general contractor was required to indemnify the store under the terms
of the general contract and, in turn, whether the subcontractor was required
to indemnify the general contractor under the terms of the subcontract. Id.

21 The trial court in Bernotas determined that the store was not solely
negligent; therefore, the indemnification provisions in the general contract,
requiring the general contractor to indemnify the store, were triggered. Id.

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at 480. Thus, the general contractor became responsible for 2/3 of the
settlement award (its portion and the store's portion); however, the general
contractor appealed, arguing that subcontractor was responsible for the
entire amount of the settlement because of its agreement, through passthrough
or incorporation clauses in the subcontract, to indemnify the general
contractor. Id.

22 On appeal to our Court, we determined that the subcontractor was
obligated to indemnify the general contractor and was, therefore,
responsible for the entire settlement amount. Bernotas, 816 A.2d at 234.
The parties agreed that the indemnification provisions in the general
contract were sufficiently specific to indemnify the store unless it was solely
negligent. Bernotas, 863 A.2d at 480. The issue in dispute was whether
the terms of the subcontract, incorporating by reference the terms of the
general contract, required the subcontractor to indemnify the general
contractor for acts that were not solely the result of the negligence of either
the general contractor or the store. Id. Our Court determined that the
language of the pass-through provisions was sufficient.

23 In analyzing our Court's decision, the Supreme Court set forth the
following clauses from the subcontract, which our Court had previously
determined were sufficient to create "a conduit through which the obligations
embodied in the prime contract flowed … to the [subcontract] to the extent
that the obligations were within the ambit of the subcontract." Id. (citing

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Bernotas, 816 A.2d at 231). These conduit provisions in the subcontract
included the following:

• "[the prime] Contract Documents form a part of this
Subcontract, and are as fully a part of this Subcontract as if
attached to this agreement and as if herein set forth at length."

• "[subcontractor] agrees to fully perform and to assume all
obligations and liabilities of [general contractor] under the
General Contract for the work, or as may be imposed
[thereafter] by law, including but not limited to all warranties
and guaranties."

• "[subcontractor] hereby releases [general contractor and store]
from any and all claims … for personal injury … arising out of
any matter occurring at location of the Work … and further,
[subcontractor] agrees to indemnify and to hold harmless
[general contractor and store] … from and against any claim,
loss, damage, liability or expense … occurring to any property or
for personal injury … as … may result from or arise from the
performance, lack of performance or improper performance of
the Work whether such matter may arise or occur on the
location of the Work…."

Id. (quoting provisions of subcontract). In contrast to our Court's prior
determination in Bernotas, our Supreme Court concluded that these passthrough
provisions were not enforceable against the subcontractor because
they did not clearly and unequivocally evidence subcontractor's intent to
indemnify the general contractor for the general contractor's own
negligence. Id. at 481.

24 In reaching this conclusion, our Supreme Court engaged in a thorough
examination of the enforceability of pass-through clauses, noting that
various other jurisdictions upheld pass-through clauses that held a
subcontractor to provisions in the prime contract relating to, for example,

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delay damages and arbitration. See id. (describing various cases).
However, the Court went on to distinguish these cases from cases that
struck-down pass-through provisions that purported to hold an indemnitor
responsible for an indemnitee's negligence. The Court explained:
Several courts have directly rejected the pass-through or
implied indemnity theory in the context of indemnification for
negligence clauses. The Supreme Court of California held that
without specific and unambiguous language in the subcontract,
a subcontractor was not obligated to indemnify the contractor
against its own negligence, even when the subcontract provided
the subcontractor was bound "in the same manner and to the
same extent as [contractor] is bound to Owner under the
General Contract" and the prime contract contained an
indemnification from negligence provision regardless of who was
responsible. Goldman v. Ecco-Phoenix Electric Corp., 62
Cal.2d 40, 41 Cal.Rptr. 73, 396 P.2d 377 (1964). The court
required an express undertaking in the document to protect the
indemnitee from its own negligence. Id., at 379. Applying
Goldman, the Court of Appeals of Arizona rejected the
argument that an indemnification clause in the prime contract
required the subcontractor to indemnify the contractor for acts
of the contractor's negligence even when the prime contract was
incorporated by reference in the subcontract. Allison Steel
Manufacturing Co. v. Superior Court of Arizona, 22
Ariz.App. 76, 523 P.2d 803 (1974). The court expressed
support for the rule that a contract for indemnity will not be
construed to cover the contractor's liability for its own
negligence unless this intention is expressed in clear and
unequivocal terms. Id., at 806. The court noted the general
contractor drafted the agreement and the terms of the
agreement were not arrived at by negotiations between the
parties, and nothing prevented the contractor from including a
specific provision in the subcontract. Id., at 807. Similarly, the
prime contract in General Electric v. Hatzel & Buehler, Inc.,
19 A.D.2d 40, 240 N.Y.S.2d 636 (1963), included an
indemnification provision for losses for personal injuries
resulting from performance of the work. Id., at 638. Despite
finding the subcontract plainly indicated the subcontractor would
comply with "all provisions, terms, specifications, and
requirements" of the general contract, the court held the

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subcontractor did not undertake to assume the absolute liability
imposed in the general contract because the indemnity clause in
the subcontract was not broad enough to cover such liability.
Id. The separate indemnification provision contained in the
subcontract governed because it simply carved out a smaller
portion of the large area of liability imposed by the prime
contract. Id., at 638-39.

Various jurisdictions consider clauses providing
indemnification from a subcontractor for negligence not caused
by the subcontractor a violation of public policy. See Vey v.
Port Authority of New York, 79 A.D.2d 920, 434 N.Y.S.2d
412, 414 (1981) (subcontract evidenced no intent by parties to
be bound by indemnification arising out of separate contract
between different parties, but only against claims arising out of
work covered by subcontract); Ghilardi v. Natl. Riverside Co.,
1995 Mass.Super. LEXIS 729 (1995) (indemnity provisions
contained in construction contracts void when subcontractor is
obligated to indemnify any party for injury not caused by the
subcontractor); IU North Am. v. The Gage Co., 2002 U.S.
Dist. LEXIS 10275 at *14 (E.D.Pa.2002) (applying Pennsylvania
law narrowly construing indemnity provisions to negligence and
strict liability, no presumption indemnitor intended to assume
contractual liability of indemnitee unless subcontract expressly
stipulates).

It is well-settled in Pennsylvania that provisions to
indemnify for another party's negligence are to be narrowly
construed, requiring a clear and unequivocal agreement before
a party may transfer its liability to another party. Ruzzi v.
Butler Petroleum Co., 527 Pa. 1, 588 A.2d 1, 7 (1991); Perry
v. Payne, 217 Pa. 252, 66 A. 553 (1907). Accordingly,
indemnification provisions are given effect only when clearly and
explicitly stated in the contract between two parties. Greer v.
City of Phila., et al., 568 Pa. 244, 795 A.2d 376, 380 (2002)
("[u]nless the language is clear and unambiguous ... we must
opt for the interpretation that does not shoulder [subcontractor]
with the fiscal responsibility for [contractor's] and [owner's]
negligence."). The Superior Court acknowledged the dearth of
case law pertaining to its pass-through theory as applied to
indemnification for negligent acts, but concluded pass-through
provisions are an accepted means of transferring risk. However,
the court did not cite cases recognizing pass-through indemnity

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for negligence via a general incorporation clause in a
subcontract.

As the Third Circuit recently acknowledged, this Court has
not addressed whether an indemnity provision in a subcontract
extends to a contractor's liability to indemnify a third party,
where the obligation is not expressed in clear and unequivocal
terms. Jacobs Constructors, Inc. v. NPS Energy Srvcs.,
Inc., 264 F.3d 365, 371 (3d Cir. 2001). Applying substantive
Pennsylvania law, the court reviewed the underlying policies of
the Perry-Ruzzi rule and ultimately determined this Court
would hold the Perry-Ruzzi doctrine applies to indemnity
claims for losses contractually assumed by the indemnitee. Id.,
at 371-72. Citing Perry,[10] the court noted, "[S]uch
indemnification imposes an ‘unusual' and ‘extraordinary'
obligation in the same manner as indemnification for one's own
negligence." Id., at 372. Although the aforementioned
authorities confirm pass-through clauses may be generally
enforceable, as noted by the Third Circuit, upholding these
provisions strictly in the case of indemnification clashes with our
rule of law requiring indemnification language to be
unequivocally stated in the contract.
Bernotas, 863 A.2d at 481-483.

25 The Bernotas Court, in reversing our Court's decision to uphold the
pass-through provision in that case, applied the above principles to conclude
10 The Perry Court stated: "[A] contract of indemnity ... should not be
construed to indemnify against the negligence of the indemnitee, unless it is
so expressed in unequivocal terms. The liability on such indemnity is so
hazardous, and the character of the indemnity so unusual and extraordinary,
that there can be no presumption that the indemnitor intended to assume
the responsibility unless the contract puts it beyond doubt by express
stipulation." Perry, 66 A. at 557.

Additionally, with regard to such provisions being deemed against
public policy, the Greer Court relied on Perry to reiterate that "it would be
‘contrary to experience and against reason' for a contractor to agree to
indemnify another for the other's negligence, when such indemnification
would subject it to ‘uncertain and indefinite' liability." Greer, 795 A.2d 376,
379 (Pa. 2002) (quoting Perry, 66 A. at 555)).

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that the terms of the subcontract, set forth supra, did not "clearly express
the parties' intentions regarding the issue of indemnification." Id. at 483.

The Court stated:

We therefore hold, unless expressly stated, pass through
indemnification clauses violate the long standing policy
underlying the rule narrowly construing indemnification
provisions. When the provision sought to be "passed through"
involves indemnification for acts of another party's negligence,
the theory will not be applied, unless the contract language is
clear and specific. Sound public policy requires an unequivocally
stated intention to be included in the subcontract for this
particular type of provision to pass through from the general
contract. The general language of a standard incorporation
clause cannot trump the specific language of the subcontract,
when the former supports indemnification for negligent acts but
the latter is ambiguous regarding the circumstances under
which indemnification will occur.
Id. at 484.

26 General Contractor, in the instant case, argues that the pass-through
provisions in the Subcontract are distinguishable from those in Bernotas
because, here, the subcontract indicated that Subcontractor "shall be bound"
to General Contractor by the terms of the subcontract and the prime
contract. General Contractor's brief at 8-15 (citing phrasing in Paragraph 6
of subcontract). We are not persuaded that the presence of the phrase
"shall be bound" in the Subcontract serves to unequivocally evidence
Subcontractor's intention to indemnify General Contractor for General
Contractor's own negligence, as is required by the Supreme Court's
Bernotas decision. Rather, we conclude that Judge Abramson did not err

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by refusing to enforce the pass-through provisions of the Subcontract to
require indemnification by Subcontractor to General Contractor for liability
incurred by General Contractor for its own negligence. Judge Abramson
correctly applied the above holding in Bernotas to find that the Subcontract
"does not contain an unequivocally stated intention to have [Subcontractor]
indemnify [General Contractor] for [General Contractor's] own negligence;
instead of being clear and specific, the Sub-Contract is, at best, ambiguous
on the issue." T.C.O., 6/13/05, at 4. We agree that the plain language of
Paragraph 6 and Paragraph 7 does not clearly and unequivocally evidence
Subcontractor's intent to take on liability for General Contractor's own
negligence, and those provisions are, therefore, unenforceable for that
purpose. Accordingly, the first issue raised by General Contractor in this
appeal is without merit and, consequently, the second issue, which is
premised on General Contractor's contention that the pass-through
indemnification provision is enforceable, is likewise without merit.

27 In its final two issues, General Contractor contends that Judge
Abramson erred by finding that the pass-through provisions of the
subcontract did not have the effect of waiving Subcontractor's WCA
immunity. As described in the above procedural history, Judge Herron
previously determined, on July 2, 2001, that the pass-through provision of
Paragraph 7 of the subcontract was sufficient to bind Subcontractor to the
waiver of WCA immunity found in Paragraph 3.12.2 of the prime contract.

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However, Judge Abramson later determined that, based on the specificity
requirements of our Supreme Court's decision in Bernotas, which Judge
Herron did not have the benefit of at the time he made his decision, and this
Court's decision in Bester v. Essex Crane Rental Corp., 619 A.2d 304 (Pa.
Super. 1993) (en banc), the pass-through language was in fact "not specific
enough to create a waiver by [Subcontractor] of its own WCA immunity visà-
vis [General Contractor]." T.C.O., 6/13/05, at 6. We agree with Judge
Abramson's interpretation and application of Bernotas and Bester, and
therefore conclude that he did not commit an error of law.

28 Specifically, the Bester case involved injury to a construction
company's employee resulting from the negligence of a company that leased
construction equipment to the construction company. Essentially, the
injured employee sued the leasing company and the leasing company sought
to join the construction company, which was the injured employee's
employer, on the basis of the following indemnification clause in the lease
agreement:

The Lessee … shall defend, indemnify and hold forever harmless
Lessor … 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....

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Bester, 619 A.2d at 306 (quoting from lease agreement). Turning to
section 481(b) of the WCA (set forth in full herein at footnote 7, supra), we
stated that:

Since the injured party, Bester, was an employee of [the
construction company], under the terms of the Workmen's
Compensation Act, any indemnity in favor of [the leasing
company] would have to be expressly provided for in a written
contract. 77 P.S. § 481(b). Under this section a third party
may not seek contribution or indemnity from the employer,
even though the employer's own negligence may have been the
primary cause of the employee's injury, see Tsarnas v. Jones
& Laughlin Steel Corporation, 488 Pa. 513, 518, 412 A.2d
1094, 1096 (1980), absent an express provision for indemnity
in a written contract.

Bester, 619 A.2d at 306-307 (footnote omitted). "Case law has established
that the indemnity provision in the Workmen's Compensation Act must be
construed strictly, and general indemnity language such as ‘any or all' or
‘any nature whatsoever' is insufficient." Id. at 307. We noted that "[a]
court will not materially rewrite the contract of the parties and insert terms
which are not there in the absence of an explicit expression to waive the
protection afforded by the Workmen's Compensation Act." Id. Additionally,
we agreed 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 [section 481(b)]." Id. (emphasis added). However, "[t]he
intent to indemnify against claims by employees of the alleged indemnitor,

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however, must clearly appear from the terms of the agreement." Id. In
sum, we crafted the following holding:

[I]n order for an employer to be held liable in indemnification
for injuries to its own employees caused by the negligence of
the indemnitee there must be an express provision for this
contingency in the indemnification clause. The absence of a
provision in the hold-harmless clause that lessee [i.e., the
construction company] would indemnify lessor [the equipment
leasing company] against the negligence of lessor in a claim by
lessee's employee requires the conclusion that the clause does
not meet the requirements of the Workmen's Compensation Act
concerning express waiver, 77 P.S. § 481(b).

In order to avoid the ambiguities which grow out of the
use of general language, contracting parties must
specifically use language which demonstrates that a
named employer agrees to indemnify a named third party
from liability for acts of that third party's own negligence
which result in harm to the employees of the named
employer. Absent this level of specificity in the language
employed in the contract of indemnification, the
Workmen's Compensation Act precludes any liability on
the part of the employer.

Id. at 308-309 (footnote omitted, emphasis added).

29 Judge Abramson did not commit an error of law by relying on Bester
and Bernotas to conclude that the pass-through provisions of the
subcontract do not contain an express waiver of Subcontractor's WCA
immunity. T.C.O., 6/13/05, at 4-5. The subcontract does not contain
specific language demonstrating that Subcontractor agreed to indemnify
General Contractor from liability for General Contractor's own negligence
that resulted in harm to Mr. Lloyd, Subcontractor's employee. In turn, given
this lack of specificity in the subcontract, Subcontractor cannot be bound to

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the waiver of WCA immunity provided in the prime contract at Paragraph
3.12.2.

30 Moreover, we are not persuaded by General Contractor's reliance on
Hackman v. Moyer Packing, 621 A.2d 166 (Pa. Super. 1993). In that
case, an employee of Currie Cleaning Service sued a customer, Moyer
Packing Company, alleging that she had fallen while working for her
employer Currie at Moyer's premises. Hackman, 621 A.2d at 167. Moyer
joined Currie as an additional defendant, claiming that Currie had agreed to
indemnify it for such claims. Id. at 167-68. In reliance on the law provided
in Bester, the Hackman court concluded that the indemnification
agreement in that case was specific enough and effective to provide that
Currie would indemnify its customer, Moyer.

31 In stark contrast to the ambiguous terms in the subcontract in the
instant case, the indemnification clause between the indemnitor (Currie) and
the indemnitee (Moyer) provided as follows:

[Currie] ... agrees to indemnify, save and hold harmless Moyer
Packing Company, its subsidiaries, affiliates, their directors,
officers, agents, workmen, servants or employees, against any
and all claim or claims brought by the agents, workmen,
servants or employees of [Currie] for any alleged negligence or
condition, caused or created, [in] whole or in part, by Moyer
Packing Company.

Hackman, 621 A.2d at 167 (citing contract in that case). The Hackman
Court concluded:

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By this language Currie specifically agreed to indemnify Moyer
for liability arising from harm suffered by Currie's employees
while working on Moyer's premises, even though Moyer may
have been negligent in causing or contributing to the employees'
injuries. As such, the requirements for waiver under the
Workmen's Compensation Act have been met. The trial court did
not err in concluding that the indemnity agreement was
enforceable against Currie.

Id. at 168. The same cannot be said for the language in Paragraphs 6 and 7
of the subcontract in the instant case, which does not specifically provide
that Subcontractor agrees to indemnify General Contractor for liability from
harm suffered by Subcontractor's employees. Accordingly, General
Contractor's reliance on Hackman is misguided.

32 For the foregoing reasons, we affirm the June 13, 2005 order that
granted Subcontractor's (i.e., HMS Interior, Inc.'s) motion for judgment on
the pleadings.

33 Order affirmed