WILLIAMSPORT – A federal judge recently has partially granted a dismissal motion from Penn State University’s Inter-Fraternity Council (IFC), which argued it was not responsible for indemnifying and defending a named security company defendant in litigation brought by the parents of a student who died at a fraternity chapter house in 2017.
James and Evelyn Piazza first filed suit in the U.S. District Court for the Middle District of Pennsylvania on Jan. 31, 2019 versus St. Moritz Security Company, Inc. and 28 members of Beta Theta Pi’s Alpha Upsilon Chapter at Penn State.
The Piazzas argued that the defendant fraternity members were negligent when they failed to help their son, Timothy Piazza, who died not long after he fell down the stairs at the Beta Theta Pi fraternity’s chapter house during Bid Acceptance Night in February 2017.
St. Moritz filed a third-party complaint against, among others, the IFC, seeking to hold the third-party defendants jointly and severally liable, in the event that the Piazzas are entitled to a recovery from St. Moritz.
Nearly five years after the initiation of the litigation, St. Moritz filed a motion to amend its third-party complaint to include a claim against the IFC for breach of contract, based on the IFC’s refusal to defend and indemnify St. Moritz in accordance with the following provision in a Security Services Agreement entered into by the parties in September 2014.
According to that agreement, “Client acknowledges that the furnishing of the security services provided for herein by the contractor does not guarantee protection against all contingencies [and] St. Moritz is NOT RESPONSIBLE FOR ANY AGE IDENTIFICATION and will be held harmless in the event that any individuals under the age of 21 bring or consume alcohol at any event.”
U.S. District Court for the Middle District of Pennsylvania Judge Matthew W. Brann explained, in a March 26 memorandum opinion, that “though the Court agreed with the IFC that the failure to raise this issue until years into the litigation militated against allowing amendment, the Court ultimately granted St. Moritz’s motion on the grounds that, despite the delay, the claim was timely under Pennsylvania law.”
“At issue is whether the provision that St. Moritz will be ‘held harmless in the event that any individuals under the age of 21 bring or consume alcohol at any event’ requires the IFC to indemnify St. Moritz in such circumstances. Though it does not appear any Pennsylvania court has directly addressed the question, the majority rule is that the terms ‘indemnify’ and ‘hold harmless’ are synonymous. Further, Black’s Law Dictionary’s definition of ‘hold harmless’ cites to ‘indemnity’ and vice-versa. In the absence of any authority to the contrary, the Court assumes that if the Supreme Court of Pennsylvania were to take up the issue, it would follow the majority rule. Therefore, the Court finds that ‘hold harmless’ provision of the Agreement requires the IFC to indemnify St. Moritz from claims arising from the underage consumption of alcohol,” Brann said.
“Nevertheless, the Court agrees with the IFC’s argument that an interpretation of the provision which would require it to indemnify St. Moritz ‘for any and all claims even remotely related (or not related at all) to underage possession or consumption of alcohol’ is untenable. However, as the Court noted in its prior memorandum opinion, that the Agreement may not reach certain claims does not preclude indemnification for damages that may have been proximately caused by underage drinking. To that end, the scope of the basis for St. Moritz’s liability, if any, and any right it has to indemnification from the IFC is not an issue fit for resolution on a motion to dismiss. Finally, though the Court has found that the Agreement may obligate the IFC to indemnify the St. Moritz, ‘the duty to defend is separate from the duty to indemnify.’ As there is no such duty expressed in the Agreement, the IFC is not obligated to defend St. Moritz against the claims brought against it by the Piazzas.”
Brann then ordered, that for the reasons outlined above, the IFC’s motion to dismiss is granted in part and denied in part.
U.S. District Court for the Middle District of Pennsylvania case 4:19-cv-00180
From the Pennsylvania Record: Reach Courts Reporter Nicholas Malfitano at nick.malfitano@therecordinc.com