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The Premcor Refining Group, Inc. v. Matrix Service Industrial Contractors, Inc.

Superior Court of Delaware, New Castle County

November 18, 2013

THE PREMCOR REFINING GROUP, INC., and VALERO ENERGY CORPORATION, Plaintiffs,
v.
MATRIX SERVICE INDUSTRIAL CONTRACTORS, INC., MATRIX SERVICE COMPANY, PRO-TECH ENGINEERING, INC., THE DRASS INSURANCE AGENCY, AMERICAN HOME ASSURANCE COMPANY, NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, P.A., and MARYLAND CASUALTY COMPANY, Defendants,
v.
CATALYST HANDLING SERVICE CO., LLC, Third-Party Defendants.

Submitted: September 10, 2013.

David A. Felice, Esquire of Ballard Spahr LLP, Wilmington, Delaware, Christoper R. Carroll, Esquire, and Heather E. Simpson, Esquire, of Carroll McNulty Kull LLC, Basking Ridge, New Jersey, Attorneys for Premcor Premcor Refining Group, Inc. and Valero Energy Corporation.

Robert M. Greenberg, Esquire, of Tybout Redfearn & Pell, Wilmington, Delaware, J. Randolph Evans, Esquire, Christine Landis, Esquire, and Joanne Zimolzak, Esquire, of McKenna Long & Aldridge, LLP, Atlanta, Georgia, Attorneys for Defendant Maryland Casualty Insurance Company.

Andrea L. Rocanelli.

John J. Ferguson Jr. and John Lattanzi died while working at an oil refinery owned and operated by Premcor Refining Group, Inc. and Valero Energy Corporation (collectively "Premcor"). This litigation arises from settlement payments made by Premcor to resolve wrongful death claims by the estates of Ferguson and Lattanzi.

Turn-Around Project at the Oil Refinery and Insurance Coverage

Premcor contracted with Matrix Service Company ("Matrix") for turnaround work at the oil refinery. Ferguson and Lattanzi were employed by Matrix as boilermakers. Premcor also contracted with Pro-Tech Engineering, Inc. ("Pro-Tech") as a contract administrator. Pro-Tech was responsible for coordinating the work of other contractors working at the oil refinery, including Matrix.

The Pro-Tech contract required that Pro-Tech "maintain a system of internal controls sufficient to provide reasonable assurance" that personnel had the requisite training to perform the work.[1] Pro-Tech also agreed to provide a safe workplace, specifically:

[Pro-Tech] agrees that it has assumed the sole obligation and duty to provide a safe place to work for its employees and its subcontractors' employees in the WORK area on premises, and agrees that [Premcor] has no responsibility therefore, and that any claim for damages by employees of [Pro-Tech] or its subcontractors against [Premcor] alleging that [Premcor] failed to furnish a safe place to work shall not be construed as relieving [Pro-Tech] of its indemnity obligations to [Premcor] . . .[2]

Further, Pro-Tech agreed to perform the work in a "manner protective of the site, its employees, the public and the environment" by taking all reasonable steps to follow site work rules, industry practices and duties required by law.[3] In the contracting agreement, Pro-Tech also agreed to maintain $10 million liability insurance naming Premcor as an additional insured, which was to be primary to any insurance held by Premcor.[4]

To fulfill the contract requirements, Pro-Tech held an insurance policy with Maryland Casualty Insurance Company ("Maryland Casualty") for July 23, 2005 – July 23, 2006 which provided limits of $1 million per occurrence and $2 million total ("Primary Policy") and included umbrella liability coverage with a limit of $10 million per occurrence ("Umbrella Policy").

The Primary Policy defines an additional insured as follows:

Any person or organization with whom you agree, because of a written contract to provide insurance such as is afforded under this policy, but only with respect to liability arising out of your operations, "your work" or facilities owned or used by you.

"Your work" means:

a. Work or operations performed by you or on your behalf; and b. Materials, parts or equipment furnished in ...

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