The Aetna Casualty and Surety Company v. L. K. Comstock & Company, Inc., a New York Corporation

684 F.2d 1267 The AETNA CASUALTY AND SURETY COMPANY, Plaintiff-Appellee, v. L. K. COMSTOCK & COMPANY, INC., a New York Corporation, Defendant-Appellant. No. 80-5368. United States Court of Appeals, Ninth Circuit. Argued and Submitted Nov. 2, 1981. Decided Aug. 24, 1982. William S. Barker, Cromer, Barker, Michaelson, Gillock & Rawlings, Las Vegas, Nev., for defendant-appellant. Rex A. Jemison, Beckley, Singleton, Delanoy & Jamison, Las Vegas, Nev., for plaintiff-appellee. Appeal from the United States District Court for the District of Nevada (Las Vegas). Before NORRIS and REINHARDT, Circuit Judges, and HAUK, * District Judge. REINHARDT, Circuit Judge. 1 In this action for breach of contract and indemnity, defendant Comstock appeals from a denial of summary judgment, the granting of a directed verdict, and a final judgment entered after the return of special verdicts by a jury. Factual Background 2 Stearns-Roger was the prime contractor on a project owned by Nevada Power. Comstock was given an electrical subcontract for the project, and received a purchase order and a document entitled "Subcontract General Conditions" (SGC). The purchase order set forth the subcontract…

In this action for breach of contract and indemnity, defendant Comstock appeals from a denial of summary judgment, the granting of a directed verdict, and a final judgment entered after the return of special verdicts by a jury.

Factual Background

Stearns-Roger was the prime contractor on a project owned by Nevada Power. Comstock was given an electrical subcontract for the project, and received a purchase order and a document entitled “Subcontract General Conditions” (SGC). The purchase order set forth the subcontract wages and equipment prices and stated that work could begin upon receipt by Stearns- *1268 Roger of a certificate of insurance from Comstock. The SGC contained extensive provisions including the requirement that Comstock name Stearns-Roger and Nevada Power as additional insureds on its policies relating to the project (which coverage the certificate was to evidence), and also an indemnity provision. 1 There was a dispute at trial as to when the SGC was received by Comstock.

Two of Comstock’s employees were killed by an explosion resulting from sparks igniting fuel when the employees were welding on top of a fuel tank. Because Comstock is a covered. employer under…

dissenting:

We seldom encounter a case which may be resolved on the basis of black letter law. Here we are presented with just such a case. Although state worker’s compensation schemes typically provide that an employer’s liability under the worker’s compensation system is an exclusive liability, “[t]he clearest exception to the exclusive-liability clause is the third party’s right to enforce an express contract in which the employer agrees to indemnify the third party for the very kind of loss that the third party has been made to pay to the employee.” 2A A. Larson, Workmen’s Compensation Law, § 76.42 at 14-630 to 14-631 (1982). Apparently underestimating the force of the black letter rule, the majority today voids an express contract between an employer and a third party on the ground that the contract is barred by the Nevada Industrial Insurance Act (NIIA).

With but a single exception, all federal and state courts adhere to the black letter rule and recognize that an express indemnity contract is an exception to an employer’s otherwise exclusive liability under a state worker’s compensation scheme. See id. § 76.42 at 14.631 n.37 (citing cases). The single exception is…