eNotes: Liability – June 2023 – Federal

SIGNIFICANT CASE SUMMARIES

Federal Case Summary

Johnson v. Keane Group Holdings, LLC
United States District Court for the Middle District of Pennsylvania
No. 4:20-CV-00491

Decided: May 3, 2023

A finding of gross negligence does not require evidence of recklessness.

Background

This matter arose out of a contract dispute between Seneca Resources Company, and Patrik’s Water Hauling (USA) Ltd., which were involved in the operation and maintenance of an oil and gas wellsite in Mt. Jewett, Pennsylvania. The contract between Seneca and Patrik’s contained an indemnification provision with the following exclusionary clause: “[e]xcept in the case of [Seneca’s] gross negligence or willful misconduct, [Seneca] shall not be responsible for, and [Patrik’s] shall . . . hold Company Group . . . harmless from . . . any [c]laims . . . arising out of . . . [b]odily injuries or death of any members of Contractor Group.” As used in the agreement, “Company Group” referred to Seneca and its contractors other than Patrik’s, while “Contractor Group” referred to Patrik’s and any of its agents.

An employee of Patrik’s was injured and filed suit in state court against Seneca and others in the Company Group alleging negligent maintenance of the wellsite. Defenses were tendered to Patrik’s under the indemnity provision of the contract, which were not accepted. The matter was removed to federal court based on diversity, and Third-Party Complaints were filed against Patrik’s, demanding defense or indemnity under the contract. Seneca and others in the Company Group moved for summary judgment on their third party indemnification claims based on the indemnification provision, requiring indemnification in all instances except those of Seneca’s gross negligence or willful misconduct.

Holding

The Court, noting that the Pennsylvania Supreme Court has not defined gross negligence, conducted a review of both state and federal case law to determine whether Seneca and Company’s Groups burden for summary judgment was met. In Bloom v. Dubois Reg’l Med. Ctr., 597 A.2d 671, 679 (Pa. Super. Ct. 1991), the Superior Court, in distinguishing gross and simple negligence, noted that recklessness and wantonness require a different state of mind than negligence. The Bloom court held that gross negligence does not encompass wanton or reckless behavior. This holding was in contrast to the Pennsylvania Commonwealth Court’s definition of gross negligence as the “failure to perform a duty in reckless disregard of the consequences or with such want of care as to justify a conclusion of willfulness or wantonness.” Williams v. State Civil Serv. Comm’n, 306 A.2d 419, 422 (Pa. Commw. Ct. 1973). The Pennsylvania Supreme Court has commented that the state of mind required for recklessness is greater than the state of mind for gross negligence. Additionally, the Court noted that the Eastern District of Pennsylvania had adopted the Bloom definition of gross negligence on two occasions.

Based on the foregoing, the Court was persuaded to follow Bloom, holding that a finding of gross negligence does not require evidence of recklessness. Turning to the record before it, the Court found a genuine issue of material fact regarding the moving parties’ gross negligence. It therefore denied the Motions for summary judgment.

Questions about this case can be directed to Laura Daube at (717) 441-3955 or ldaube@tthlaw.com. It may also be directed to Laura Herzog at (610) 332-7004 or lherzog@tthlaw.com, counsel for Patrik’s in this action.