Opinion ID: 3045604
Heading Depth: 2
Heading Rank: 3

Heading: Swiss Re’s Right to Indemnification

Text: If, on remand, the District Court deems the Agreement enforceable, Swiss Re’s right to indemnification would still be subject to any defenses arising from its own conduct. See Johnson v. Pa. Nat. Ins. Cos., 527 Pa. 504, 508, 594 A.2d 296, 299 (1991) (“The rights of an alleged third party beneficiary may [rise] no higher than the rights of the parties to the contract ... .”) (quotation omitted); Restatement (Second) of Contracts § 309(4) (“A beneficiary’s right against the promisor is subject to any claim or defense arising from his own conduct or agreement.”). The Agreement makes Appellees liable for certain amounts Swiss Re paid “in good faith under the belief that 1) Principal was in default as hereinafter described in Section 3 of this agreement; 2) surety was or might be liable therefor; 3) such payments were necessary or advisable to protect any of surety’s rights as to avoid or lessen surety’s liability or alleged liability.” (App. at 493 ¶ 2.A.) Appellees assert that “[b]ecause Amwest caused PEC to commit a material breach of PEC’s contract with the United States, then Swiss Re, in the shoes of Amwest, should 14 As Judge Rendell correctly notes, Appellees failed to raise the definitional issues we highlight here. Similarly, Swiss Re did not directly raise the issue of whether its reinsurance agreement qualifies as a “Bond” separate and apart from the Amwest-issued performance bond. The District Court is in the best position to consider these issues in the first instance, with the benefit of any custom and usage evidence the parties choose to provide. 14 not be able to obtain an indemnity under the [Agreement] ... .” (Answering Br. at 6-7.) In other words, Swiss Re cannot be the beneficiary of any indemnity because the fault for PEC’s breach is, according to Appellees, wholly Amwest’s, and the parties would have to have been more explicit about indemnifying for such wrong-doing. Cf. Greer v. City of Philadelphia, 568 Pa. 244, 248, 795 A.2d 376, 379 (2002) (“‘[I]f 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.’”) (quoting Ruzzi v. Butler Petroleum Co., 527 Pa. 1, 7, 588 A.2d 1, 4 (1991)).15 We are not encouraging the mounting of new contentions in the case, but we do suggest that the parties directly address the issue of the apportionment of fault for the breach, should the District Court deem it relevant on remand.16 15 The Greer court referred to the quoted declaration as the “Perry-Ruzzi rule.” 795 A.2d at 379 (citing Perry v. Payne, 217 Pa. 252, 66 A. 553 (1907), and Ruzzi, 588 A.2d at 4). 16 We do not mean to imply that a finding, if any, regarding apportionment of fault would be dispositive as to whether Swiss Re made payments “in good faith” (App. at 493 ¶ 2.A), but it may be relevant. 15