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Spencer, White & Prentis Inc. of Connecticut v. Pfizer Inc.

decided: June 3, 1974.



Hays and Oakes, Circuit Judges, and Christensen, Senior District Judge.*fn*

Author: Christensen

CHRISTENSEN, Senior District Judge:

This is an appeal from a summary judgment entered by the district court in favor of a contractor for the balance of a construction agreement. The stated ground was that the owner's counterclaims for damages suffered in the execution of the work by the contractor constituted "the only defense asserted by the defendants" but that such defense was without merit. As a part of the same order, the district court had "severed" plaintiff's claim from these counterclaims, presumably because the latter required separate future adjudication, upon a finding that "a severance will both serve the ends of justice and further an efficient disposition of the litigation". And the case comes to us without certification for an interlocutory appeal, or any express determination by the court below that there was no just reason for delay in the entry of a "final" judgment on plaintiff's claims.

We have looked into this tangle of Rules 21, 42(b), 54(b), and 56, Fed. R. Civ. P., and Rule 5(a), (b), Fed. R. App. P. and their overlay of 28 U.S.C. ยงยง 1291 and 1292(b) only so far as seems necessary to ascertain our lack of appellate jurisdiction -- an obstacle which may prove of little surprise to anyone reading this synthesis of the record except possibly the parties,*fn1 but yet confirmed only after unraveling some interesting twists in the exercise of our jurisdiction to determine that we have no jurisdiction.*fn2

The appellee-plaintiff, Spencer, White & Prentis Incorporated of Connecticut, was employed as contractor by appellant-defendant, Pfizer Incorporated, to install foundation caissons at Pfizer's plant at Groton, Connecticut. The written contract*fn3 between the parties provided that Spencer would be paid on a "cost plus fixed fee basis". The contract proper contained the following definition of cost:

"The cost includes labor, including job supervision and engineering staff, yard expense, insurance, welfare and pension funds, losses not covered by insurance . . . materials . . . and all incidental expense required for the work. . . ."

The "general conditions" attached to and "made a part of this contract with the same force and effect as if the same were set forth at length" provided among other things that "compliance by contractor with the foregoing requirements with respect to carrying insurance*fn4 shall not relieve the Contractor from liability under the indemnity provisions hereinafter stated."

On the last-mentioned subject, paragraph 9(i) of the General Conditions provided so far as material here that "Contractor assumes the entire responsibility and liability for and agrees to hold Owner harmless from any and all damage or injury of any kind or nature whatsoever . . . to all property . . . arising out of or occurring in connection with the execution of its Work hereunder and all damage . . . of whatsoever nature resulting from the performance of its Work . . . or resulting to the Work . . . shall be borne by Contractor and all Work hereunder shall be solely at its risk. . . ."

The contractor installed the caissons and brought suit for an unpaid contract balance of $59,912.50. The owner Pfizer in an amended answer and counterclaims admitted that the $59,912.50 had not been paid but alleged by way of defense and counterclaim that it was entitled to at least $61,000 from the contractor on the theory of absolute liability of the contractor by virtue of the last quoted provisions, or on an alternate theory of negligence, for damage which had been caused in the execution of the work to an underground salt water line.

The contractor moved for severance of its unpaid balance claim from the counterclaims for damages, and for summary judgment on its claim. The district court granted the motion in all respects, and pursuant to direction in its memorandum and order a judgment in the sum of $59,912.50 was entered by the clerk in favor of the contractor and against the owner, which judgment later was amended to include interest pursuant to a supplemental order. The owner has appealed from this judgment as so amended, and states the issues to be determined upon this appeal as follows:

1. Does a cost plus fixed fee construction contract, which provides that the contractor shall be strictly responsible for any damage caused to property during the course of construction excuse the contractor from damage resulting from its own acts solely because "cost" is defined in the contract as including losses not covered by insurance?

2. Did the district court abuse its discretion by directing the entry of judgment on the complaint prior to the adjudication of the compulsory counterclaims?

The appellee in its counter-statement would have us resolve these issues by the proposition embraced in the lower court's memorandum that "any losses arising from Spencer's acts are either covered by insurance procured for Pfizer's benefit or ...

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