Ruzzi v. Butler Petroleum Co.

OPINION OF THE COURT

PAPADAKOS, Justice.^*

In March of 1984 Edmund and Janice Zinsser entered into an agreement with Butler Petroleum Company which provided that Butler Petroleum would refurbish Zinsser’s gasoline station, fitting it, among other things, with gasoline tanks, appropriate plumbing and pumps for the tanks, a Texaco credit card imprinter, a Texaco sign, and a complete exterior painting scheme following the Texaco pattern. In return, the Zinssers would purchase petroleum products from Butler Petroleum for a certain length of time. Additionally, the agreement contained an indemnity clause which provided:

[The Zinssers] ... exonerate, discharge, and agree to protect and save harmless and indemnify [Butler Petroleum] ... from any and all liability for claims for loss, damage, injury or other casualty to persons or property ... caused or occasioned by any leakage, fire, explosion or other casualty occurring through any imperfection in, injury or damage to, or by reason of the installation, use, operation and/or repair of the said equipment or of the premises.

In keeping with its obligation under the agreement Butler Petroleum called AMG Sign Company to erect a new sign. On March 29, 1984 Gary Ruzzi, who worked for AMG, appeared at the Zinsser’s station to remove the old sign and install a new one.

Butler Petroleum had also arranged with George Shockey for the purchase and transportation of four used fiberglass gasoline tanks, three of which were to be installed below ground at Zinsser’s station, but which at the time Ruzzi arrived, were sitting on the ground near the sign. Unknown to Ruzzi, one of the tanks had a hole in the top and contained 50 to 100 gallons of gasoline.

Neither Ruzzi nor Zinsser, who was also present, saw the hole or realized that the tank contained gasoline. Ruzzi was injured when a torch he was using to cut rusted bolts from the existing sign ignited fumes escaping from the fiberglass tank, causing an explosion and fire and knocking Ruzzi from his ladder.

Thereafter, Gary and Sharon Ruzzi filed suit against Butler Petroleum Company in the Court of Common Pleas of Allegheny County, seeking damages for personal injuries Mr. Ruzzi received because of the explosion. Butler Petroleum, in turn, filed a complaint joining George Shockey and Edmund Zinsser as additional defendants. The Ruzzis subsequently filed their own complaint against Edmund and Janice Zinsser, Zincon (a corporation owned by the Zinssers), and George and Brenda Shockey d/b/a Shockey Excavating Co. A third action, filed by Butler Petroleum against the Zinssers, was based on the indemnification agreement. These actions were consolidated for trial.

The jury returned a verdict in favor of the Ruzzis and against Butler Petroleum and Shockey in the amount of $321,000.00, assigning 84% of the negligence to Butler Petroleum and 16% to Shockey. The trial court also awarded delay damages of $67,981.85 and the verdict was molded to include delay damages for a total award of $388,981.85.

Post-trial motions were filed by Butler Petroleum and Shockey and were denied. Judgments were entered on the verdict and in favor of the Ruzzis, the Zinssers and Zincon. Butler Petroleum and Shockey filed timely appeals from these judgments. Superior Court affirmed but remanded for a hearing on the question of pre-judgment delay. 385 Pa.Super. 664, 555 A.2d 254.¹ Butler Petroleum and George Shockey filed cross-petitions for allowance of appeal and this court granted allocatur on both petitions. The issue raised in Butler Petroleum’s appeal is whether the indemnity clause in the Butler Petroleum-Zinsser agreement is legally binding and, in Shockey’s appeal, whether the trial court erred in admitting the testimony of an expert witness.

Butler Petroleum claims that the indemnity clause was enforceable as a matter of law. The trial court disagreed, relying on our decision in Perry v. Payne, 217 Pa. 252, 66 A. 553 (1907). Superior Court affirmed the trial court on the grounds that Butler Petroleum was found to be 84% negligent, and was, therefore, not entitled to indemnity, citing DiPietro v. City of Philadelphia, 344 Pa.Superior Ct. 191, 496 A.2d 407 (1985).²

The law has been well settled in this Commonwealth for 87 years that if parties intend to include within the scope of their indemnity agreement a provision that covers losses due to the indemnitee’s own negligence, they must do so in clear and unequivocal language. No inference from words of general import can establish such indemnification. Perry v. Payne, 217 Pa. 252, 66 A. 553 (1907). See also, Pittsburgh Steel Co. v. Patterson-Emerson-Comstock, Inc., 404 Pa. 53, 171 A.2d 185 (1961); Tidewater Field Warehouses, Inc. v. Fred Whitaker Co., 370 Pa. 538, 88 A.2d 796 (1952); Darrow v. Keystone 5, 10, 25, $1.00 Stores, Inc., 365 Pa. 123, 74 A.2d 176 (1950); Schroeder v. Gulf Refining Co. (No. 2), 300 Pa. 405, 150 A. 665 (1930).

In Perry v. Payne, supra, Payne and Company were hired to construct a building for Perry. Payne agreed to indemnify Perry:

... from all loss, cost or expense ... arising from accidents to mechanics or laborers employed in the construction of said work, or to persons passing where the work is being constructed ...

Additionally, Payne agreed to:

... protect and keep harmless the said Edward Perry of and from all loss, costs and damages, for non-fulfillment of same, or by reason of any liens, claims or demands for material for labor furnished for the construction of said work, or from damages arising from accidents to persons employed in the construction of, or passing near the said work, or for damages done to adjacent properties by reason of the construction of said work, or by depositing material in such a manner as to damage either the city or the individual.

Perry’s employee negligently lowered an elevator and crushed to death one of Payne’s employees, who was painting the bottom of the elevator shaft. The estate of the employee recovered a judgment against Perry who then sought indemnification from Payne based on their agreement. We ruled that “a contract of indemnity against personal injuries should not be construed to indemnify against the negligence of the indemnitee, unless it is so expressed in unequivocal terms. The liability on such indemnity is so hazardous, and the character of the indemnity so unusual and extraordinary, that there can be no presumption that the indemnitor intended to assume the responsibility unless the contract puts it beyond doubt by express stipulation. No inference from words of general import can establish it.” Perry, at page 262, 66 A. 553.

The indemnification clause included in the agreement between the Zinssers, as indemnitors, and Butler Petroleum, as indemnitee, provided in pertinent part:

[The Zinssers] ... exonerate, discharge, and agree to protect and save harmless and indemnify [Butler Petroleum] ... from any and all liability for claims for loss, damage, injury or other casualty to persons or property ... caused or occasioned by any leakage, fire, explosion or other casualty occurring through any imperfection in, injury or damage to, or by reason of the installation, use, operation and/or repair of the said equipment or of the premises.

Because Perry was the law in this jurisdiction when Butler Petroleum and the Zinssers entered into their indemnification agreement we must assume that they knew that the law would not recognize as effective their agreement concerning the negligent acts of the indemnitee (Butler Petroleum) unless an express stipulation concerning negligence was included in the document. This rule of contract interpretation like the law applicable to any contract is a part of this agreement as if expressly incorporated in its terms. De Paul v. Kauffman, 441 Pa. 386, 272 A.2d 500 (1971); Northwestern National Bank v. Commonwealth, 345 Pa. 192, 27 A.2d 20 (1942).

We must assume that the parties knew that the law gives to the words used herein a specific meaning and that the words, therefore, must be interpreted in their legal sense. We must also assume that the parties wrote this agreement in conformity to these well established rules of contract construction. That being the case, we conclude that the only intent that can be gleaned from this document is that the parties did not intend to indemnify for acts of the indemnitee’s negligence, since words of general import are used. We can discern no reason to abandon the Perry rule of contract interpretation which is still a valuable rule of construction, rooted in reason and authority and reject Butler Petroleum’s contrary arguments.

With respect to the Shockey appeal, the question is whether an expert witness was erroneously permitted to testify as to Ruzzi’s loss of earning capacity. In particular, Shockey raises the issues of whether the witness who testified with respect to Ruzzi’s loss of earning capacity had a reasonable pretense of expertise in this area; whether earning capacity should have been determined by the jury without the aid of expert testimony; whether the expert testimony in question was speculative, lacking in foundation, and contrary to the evidence; and whether the expert testimony went beyond the scope of the witness’s pretrial report.

In reviewing the various pertinent cases of our Court, the Superior Court has properly summarized the law of expert witnesses in Erschen v. Pa. Independent Oil Co., 259 Pa.Superior Ct. 474, 477, 393 A.2d 924, 926 (1978) as follows:

In general, it is for the trial judge to determine whether a particular witness qualifies as an expert[,] Griffith v. Clearfield Truck Rentals, Inc., 427 Pa. 30, 233 A.2d 896 (1967), and his decision on this matter will be reversed only for a clear abuse of discretion. Houston v. Canon Bowl, Inc., 443 Pa. 383, 278 A.2d 908 (1971)....

An expert witness has been defined as a person who possesses knowledge not within the ordinary reach and who, because of this knowledge is specially qualified to speak upon a particular subject. Steele v. Shepperd, 411 Pa. 481, 192 A.2d 397 (1963)____ It is not necessary that the witness possess all the knowledge in his special field of activity____ However, the witness must have a reasonable pretension to specialized knowledge on the subject under investigation. Kuisis v. Baldwin-Lima-Hamilton Corp., 457 Pa. 321, 319 A.2d 914 (1974)....

Jarrell’s qualifications as an expert in this matter were that he was the managing partner of an employment agency in Pittsburgh where he had worked for 32 years, that this agency operates nationwide, that he had experience in determining the employability and earning capacity of injured persons, that he was active or formerly active in a number of business organizations, and that he taught a graduate course in recruitment and selection at LaRoche College. As part of his responsibilities at the employment agency, he periodically reviewed a number of publications having to do with statistics on incomes within various industries and for various occupations throughout the United States.

At trial, Jarrell testified that Ruzzi’s earning capacity was diminished by 17%, based on studies he had read concerning the earning capacities of injured employees, and that persons with physical limitations had twice the unemployment rate of those who are not injured. Jarrell had a reasonable pretension of expertise as to the degree of impairment of Ruzzi’s earning capacity in that he had 32 years of experience placing employees in jobs, including injured employees, and in that, as part of his work, he regularly reviewed studies on employment trends, including trends in job placement for injured persons. Shockey’s first assertion of error, therefore, is rejected.

The second issue, whether earning capacity should have been determined by the jury without the aid of expert testimony, is subsumed in the first. Since Jarrell had a reasonable pretension of expertise in the subject under consideration, i.e., the degree of impairment of Ruzzi’s earning capacity, by definition, he had knowledge relevant to the matter under investigation that was not within the ordinary reach. Since this knowledge was relevant to the issues at trial, and since the jury would not have been aware of this knowledge absent Jarrell’s testimony, it was not error to permit the introduction of this expert testimony.

Next Shockey claims that Jarrell’s testimony was speculative, lacking in foundation and contrary to the evidence.

The first assertion, that Jarrell’s testimony was speculative, is based on the idea that because Jarrell used general terms such as “unemployed handicapped” to describe the class to which Ruzzi belonged, and because he failed to explain Ruzzi’s physical capabilities and limitations in relation to potential jobs or vocations, his testimony was speculative. The speculation, presumably, is whether Ruzzi is in fact a member of the class to which Jarrell referred and whether Ruzzi was limited at all with respect to his economic horizons.

As Ruzzi points out, it was not speculative for Jarrell to rely on the testimony of Dr. Flit, Ruzzi’s medical expert, which established that Ruzzi suffered from a permanent back injury and that he was limited to jobs requiring light exertion. Neither is Ruzzi’s work history both before and after the injury speculative. Ruzzi, a high school graduate, worked in the sign business installing signs his entire working life, and he lost considerable time from work following the accident. It is clear that the doctor’s testimony and the work history, including Ruzzi’s educational background, establish that Ruzzi’s economic horizons were limited. He could not pursue his former job and his work history suggested no obvious alternatives. It is perhaps less clear that the government studies cited by Jarrell were applicable to Ruzzi’s case, since the jury was not told how the injuries of those in the studies compared to Ruzzi’s injuries, but this goes to the weight of the evidence, not its admissibility. If defense counsel wished to challenge the application of these studies to Ruzzi’s case, cross-examination and closing argument were available for that purpose.³ We conclude, therefore, that Jarrell’s testimony was not speculative.

Next, Shockey claims that Jarrell’s testimony was lacking in foundation. This assertion is without merit. As we have seen, Jarrell had examined Ruzzi’s work history and earnings, had viewed the testimony of Dr. Flit, and had interviewed Ruzzi. When Jarrell took the stand, all of the evidence in the case suggested that Ruzzi had a permanent back injury. The foundation for his testimony was adequate.

Shockey also claims that Jarrell’s testimony was contrary to the evidence. The basis of this claim is that at the time of trial Ruzzi was employed by AMG Sign Company at a less physically demanding job, but at the same salary he made before the injury. The error in this claim is that it ignores the difference between actual loss of earnings and loss of earning capacity. This court discussed the difference between these concepts as follows:

The defendants contend that there was no evidence of impairment of earning power and that the fact that Bochar’s wages were higher after the accident than before proves no deterioration of earning ability. A tortfeasor is not entitled to a reduction in his financial responsibility because, through fortuitous circumstances or unusual application on the part of the injured person, the wages of the injured person following the accident are as high or even higher than they were prior to the accident. Parity of wages may show lack of impairment of earning power if it confirms other physical data that the injured person has completely recovered from his injuries. Standing alone, however, parity of wages is inconclusive. The office worker, who loses a leg has obviously had his earning ability impaired even though he can still sit at a desk and punch a comptometer as vigorously as before. It is not the status of the immediate present which determines capacity for remunerative employment. Where permanent injury is involved, the whole span of life must be considered. Has the economic horizon of the disabled person been shortened because of the injuries sustained as the result of the tortfeasor’s negligence? That is the test.

Bochar v. J.B. Martin Motors, Inc., 374 Pa. 240, 244, 97 A.2d 813, 815 (1953). (Footnotes omitted.) Shockey’s claim is without merit, for the fact of Ruzzi’s current employment at the same salary as before the injury does not, as this court explained in Bochar, negate his claim for a diminished earning capacity. Earning capacity has to do with the injured person’s economic horizons, not his actual earnings, and the fact that Ruzzi was fortunate enough to earn as much as he had formerly earned, but at a new and less physically demanding job, does not establish that a loss of earning capacity, on these facts, is contrary to the evidence.

Finally, Shockey contends that the expert testimony was inadmissible because it went beyond the scope of Jarrell’s pretrial report. In particular, Shockey claims that although the pretrial report addresses future wage loss, it does not address diminished earning capacity, and thus, does not place Shockey on notice that the expert would testify as to diminished earning capacity. We disagree with Shockey’s characterization of Jarrell’s pre-trial report furnished to Shockey pursuant to pertinent discovery rules.

As stated earlier in Bochar v. J.B. Martin Motors, Inc., lost earning capacity involves the question, “Has the economic horizon of the disabled person been shortened because of the injuries sustained as a result of the tortfeasor’s negligence?”

Jarrell’s report states that, based on his understanding of Dr. Flit’s testimony, Ruzzi was permanently injured and would never again be able to perform work of the type he had performed before the accident. Instead, he would be limited to light duty work where he could frequently change positions and not lift over twenty pounds. Jarrell also stated, in the last paragraph of his report:

It [future earnings loss] is based on AMG Sign Company’s continuing willingness to provide Mr. Ruzzi with employment on an “as able to work, as light duty work is available” basis. Should that willingness cease or should AMG Sign Company go out of business, Mr. Ruzzi would have to re-enter the open labor market where he would face the well known difficulties of the unemployed handicapped. Their unemployment rate is typically twice that of the non-handicapped, and their average earnings are 54%-82% of those of the non-handicapped (Employer Attitudes Towards Hiring Persons With Disabilities, Human Resources Center publication, 1978).

At trial, Jarrell testified that “countless studies done on the earnings of an impaired handicap [sic] versus the earnings of a nonimpaired, nonhandicapped” person indicate that the handicapped person suffers a loss of 17% earning capacity.

Since lost earning capacity is the limitation of economic horizons, and since Jarrell’s report describes not only the nature of Ruzzi’s injuries, but also, in Jarrell’s opinion, what would happen to Ruzzi were he forced to compete on an open job market, including a prediction that he would be able to earn no more than 82% of his former salary (an 18% loss of earning capacity), the testimony was within the scope of the report and it was not error to admit Jarrell’s expert testimony.

The order of Superior Court is affirmed.

NIX, C.J., did not participate in the decision of this matter. ZAPPALA, J., did not participate in the consideration or decision of this matter. LARSEN, J., files a concurring opinion. FLAHERTY, J., files a dissenting opinion.

* Reassigned to the writer.

1 . The trial court has again imposed delay damages. Appeals of this ruling are pending before Superior Court at Nos. 385, 386, 387, 388, 389 and 390 Pittsburgh, 1989, and is not before us.

2 . In DiPietro, the Superior Court concluded: “Under Pennsylvania law, indemnity is disallowed if the indemnitee is actively negligent.” 344 Pa.Super. at 195, 496 A.2d 407. That court’s ultimate authority for this proposition is Pittsburgh Steel v. Patterson-Emerson-Comstock, 404 Pa. 53, 171 A.2d 185 (1961), which in turn relied heavily on Perry v. Payne, 217 Pa. 252, 66 A. 553 (1907). Because the rule announced in Perry is dispositive of the issues raised by the parties, we feel no further need to discuss the Superior Court’s reasoning on this issue.

3 . The entire cross-examination of Jarrell by two lawyers is contained in three pages of testimony.