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Click here for the full text of this decision FACTS:Kiewit Offshore Services was the general contractor performing welding services on the Skyway Bridge San Francisco Bay Project. Kiewit entered into a subcontract with R.B.T. Welders Inc. Pursuant to this contract, RBT provided welders to Kiewit to work on the project at Kiewit’s facility in Ingleside, Texas. On Jan. 6, 2003, at the facility, Mann Nguyen, an employee of RBT, entered a confined space, which resembled a large steel box, to perform a weld repair. The gas in the steel box ignited, and the resulting explosion blew off the roof. Nguyen, who was conscious after the explosion, suffered third degree burns over 65 percent of his body. He was transported to the Brooks Army Medical Center and died one week later. Ernesto Moreno, a Kiewit employee, had been standing on the roof at the time of the explosion and was killed instantly. The families of Moreno and Nguyen brought suit against Kiewit and RBT in Texas state court, alleging that Kiewit and RBT were negligent for operating the Ingleside Plant without implementing an adequate safety program for welding in confined spaces. At the time of the explosion, RBT had the following insurance policies: 1. an excess liability policy through XL Specialty Insurance Co.; 2. a commercial general liability insurance policy from Atlantic Insurance Co.; and 3. a worker’s compensation policy through American Interstate Insurance Co. After receiving service, Kiewit demanded that XL Specialty defend and indemnify Kiewit as an additional insured. XL Specialty refused and Atlantic tendered a defense. RBT settled with the Moreno family for $4 million and the Nguyen family for $1 million dollars. Kiewit subsequently began negotiating with the Nguyen family. During this time, Kiewit’s counsel prepared a report analyzing Kiewit’s potential liability to the Nguyen family. The report was prepared based on Kiewit’s internal investigation and initial discovery in the underlying suit. The evidence demonstrated that Kiewit was hired to construct bridge footings, a type of project that Kiewit had not previously undertaken. Kiewit usually worked on offshore platforms. Unlike offshore platforms, the welding on bridge footings had to be done in an enclosed space. Kiewit’s safety officer had no experience working on structures like bridge footings. Kiewit had no provision for ventilating the enclosed space during welding. Although Kiewit provided fans for welders in the enclosed spaces, these fans did not have “explosive proof” switches and were not placed fully outside the enclosed space when in use. Kiewit’s counsel concluded that the operating procedures created a foreseeable risk of an explosion and that such procedures did not adequately protect the employees from the hazards of welding in enclosed spaces. The report concluded that Kiewit was potentially liable to the Nguyen family for: 1. failing to properly execute the confined space entry permit system; 2. failing to implement a proper confined space ventilation system; and 3. providing a ventilation fan that potentially was the ignition source for the explosion. The report also estimated that Nguyen’s survival damages for the week in the hospital suffering third-degree burns could be $20 million dollars, with perhaps 50 percent to 60 percent of the fault attributed to Kiewit. Because Kiewit owned the facility, the report stated the percentage of fault could be higher. Kiewit, using RBT’s settlement with the Moreno family as a guidepost, settled with the Nguyen claimants for $4 million dollars. Subsequent to the settlements, XL Specialty filed a declaratory judgment action in federal district court, seeking a judgment that it had no duty to defend or indemnify Kiewit for Kiewit’s settlement with the Nguyen claimants, because Kiewit was not an additional insured under the XL Specialty policy. Kiewit filed a third-party claim against RBT and a cross-claim against XL Specialty, asserting that RBT had a duty to defend and indemnify Kiewit under the indemnification provision in the RBT/Kiewit subcontract. Kiewit further asserted that the XL Specialty policy provided coverage for RBT’s liability under the indemnification provision. The district court granted summary judgment, holding that RBT had contracted to indemnify Kiewit for Kiewit’s negligence with respect to the explosion and that the XL Specialty policy provided coverage for RBT’s contractual duty to indemnify. RBT and XL Specialty appealed. HOLDING:Affirmed. RBT and XL Specialty, the court stated, contended that the district court erred in finding that the indemnity provision at issue expressly provided that RBT would indemnify Kiewit for Kiewit’s own negligence. RBT and XL Specialty argued that the indemnity clause did not satisfy the express negligence rule. Under the express negligence rule, the court stated, “contracting parties seeking to indemnify one party from the consequences of its own negligence must express that intent in specific terms, within the four corners of the document. The indemnification provision at issue, the court stated, reads: “To the fullest extent permitted by law, Subcontractor [RBT] specifically obligates itself to Contractor [Kiewit], Contractor’s partners, individually, and all Kiewit companies (defined as any company or business entity in which Peter Kiewit Sons, Inc. directly or indirectly holds a controlling interest). Contractor’s surety, Owner and any other party required to be indemnified under the Prime Contract, jointly and severally, (hereinafter “Contractor Indemnified Parties”) in the following respects, to-wit. . . . “(b) TO DEFEND AND INDEMNIFY THEM AGAINST AND SAVE THEM HARMLESS FROM ANY AND ALL CLAIMS, SUITS OR LIABILITY FOR DAMAGES TO PROPERTY, INCLUDING LOSS OF USE THEREOF, INJURIES TO PERSONS, INCLUDING DEATH, AND FROM ANY OTHER CLAIMS, SUITS OR LIABILITY ON ACCOUNT OF ACTS OR OMISSIONS OF SUBCONTRACTOR, OR ANY OF ITS SUBCONTRACTORS, SUPPLIERS, OFFICERS, AGENTS, EMPLOYEES OR SERVANTS, WHETHER OR NOT CAUSED IN PART BY THE ACTIVE OR PASSIVE NEGLIGENCE OR OTHER FAULT OF A CONTRACTOR INDEMNIFIED PARTY; PROVIDED HOWEVER SUBCONTRACTOR’S DUTY HEREUNDER SHALL NOT ARISE IF SUCH CLAIMS, SUITS OR LIABILITY, INJURIES OR DEATH OR OTHER CLAIMS OR SUITS ARE CAUSED BY THE SOLE NEGLIGENCE OF CONTRACTOR, UNLESS OTHERWISE PROVIDED IN THE PRIME CONTRACT. SUBCONTRACTOR’S OBLIGATION HEREUNDER SHALL NOT BE LIMITED BY THE PROVISIONS OF ANY WORKERS’ COMPENSATION ACT OR SIMILAR STATUTE.” Texas precedent, the court stated, supported a finding that the indemnification clause satisfied the express negligence rule. The indemnity clause provides that RBT will indemnify Kiewit “on account of” the acts or omissions of RBT regardless of whether such acts were caused in part by the negligence of Kiewet. In sum, the court found that the district court properly granted summary judgment finding that the indemnity provision satisfied the express negligence rule. Next, the court stated, RBT and XL Specialty argued that the case should be remanded for a trial to determine whether Kiewit was solely or grossly negligent because the indemnity clause expressly precludes indemnity if Kiewit was solely or grossly negligent. But the district court found these arguments to be waived, because neither argument was raised as an affirmative defense in their pleadings. Thus, in the matter of waiver of the sole or gross negligence arguments, the court found that RBT and XL Specialty failed to show that the district court erred in finding that they did not satisfy their burden. Finally, RBT and XL Specialty argued that the district court erred in ruling that Kiewit’s $4 million settlement with the Nguyens was reasonable and prudent. But the court disagreed. The bottom line, the court stated, is that RBT first settled with Moreno’s family for $4 million, and Kiewit, using that settlement as a guidepost, likewise settled with Nguyen’s family for $4 million. Additionally, RBT settled with Nguyen’s family for $1 million. In light of Kiewit’s undisputed potential liability, and the evidence indicating that Kiewit considered the possible defenses, the court found that the $4 million settlement was prudent and reasonable from Kiewit’s perspective. RBT and XL Specialty, the court stated, thus failed to establish a genuine issue of material fact with respect to the reasonableness of Kiewit’s settlement with the Nguyens. OPINION:Benavides, J.; King, Garza and Benavides, JJ.

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