Mace v. Atlantic Refining & Marketing Corp.

Summary

The Pennsylvania Supreme Court held that a franchisee was contractually obligated to defend and reimburse a franchisor for costs incurred defending a personal injury action arising from the franchisee's operations. The court concluded that the Perry-Ruzzi rule, requiring clear and unequivocal language for indemnification against an indemnitee's own negligence, did not apply because the franchisor had been adjudicated not negligent. The court reversed and remanded for determination of reasonable counsel fees.

Holdings

1. The Perry-Ruzzi rule applies only when an indemnitee seeks indemnification for its own negligence; it does not apply merely because the indemnitee was charged with negligence and was later adjudicated not negligent.
2. The clear and unambiguous language of the franchise agreement and lease required Barqawi to defend Atlantic against Mace's personal-injury action.
3. Because Barqawi breached his contractual duty to defend Atlantic, Atlantic was entitled to recover the counsel fees and defense costs it reasonably incurred in defending the underlying lawsuit.

Questions Presented

1. Whether the Perry-Ruzzi rule, requiring clear and unequivocal language for indemnification against an indemnitee's own negligence, applies when the indemnitee was alleged to be negligent but was ultimately adjudicated not negligent.
2. Whether the franchise agreement and lease required Barqawi to defend Atlantic against Mace's personal-injury action.
3. Whether Atlantic was entitled to recover reasonable counsel fees incurred because Barqawi failed to provide the required defense.

Disposition

reversed_and_remanded