Equilon Enterprises v. Brinderson

















Filed 4/26/13 Equilon Enterprises v. Brinderson CA2/8













NOT TO BE PUBLISHED IN THE
OFFICIAL REPORTS





California
Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or
relying on opinions not certified for publication or ordered published, except
as specified by rule 8.1115(b). This
opinion has not been certified for publication or ordered published for
purposes of rule 8.1115.









IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA



SECOND APPELLATE DISTRICT



DIVISION EIGHT




>

EQUILON ENTERPRISES, LLC, Plaintiff and Respondent, v. BRINDERSON, L.P. et al., Defendants and Appellants.

B232090 (Los Angeles County Super. Ct. No. TC022201)

APPEAL
from a judgment of the Superior Court of Los Angeles County. William P. Barry, Judge. Affirmed in part, reversed in part, and
remanded.



Acker &
Whipple, Stephen Acker, Leslie Anne Burnet; Lewis Brisbois Bisgaard &
Smith, Jeffry A. Miller and Matthew B. Stucky for Defendants and Appellants.



Caldwell
Leslie & Proctor, Caldwell Leslie Newcombe & Pettit, Michael R. Leslie,
David Zaft and Alison Mackenzie for Plaintiff and Respondent.





__________________________



Brinderson, L.P.
appeals from the trial court’s judgment notwithstanding the verdict (JNOV) and
alternative order granting a new trial after a jury found for Brinderson in
this action by Equilon Enterprises, LLC, seeking contractual indemnification
for costs incurred in settling a third party action for personal injuries. The third party was injured when diesel fuel
escaped from an oil pipeline built by Brinderson. Because there was substantial evidence to
support the jury’s verdict, we reverse the JNOV. However, we affirm the new trial order and
remand for further proceedings.



FACTS AND PROCEDURAL HISTORY



In
1998, Shell Pipe Line Corp. and Texaco Refining and Marketing, Inc., formed a
joint venture called Equilon Enterprises, LLC, that called for the construction
of a pipeline to transfer refined petroleum products from Texaco’s Los Angeles
refinery to Shell’s tank storage farm in Carson (the Jumpover Line
Project). Appellant Brinderson, L.P. is
the successor in interest to Hilbert & Associates, Inc., and Brinderson
Constructors, Inc., which were the contractors that constructed the Jumpover
Line Project.href="#_ftn1" name="_ftnref1"
title="">>[1] The main part of the Jumpover Line Project
was the jumpover line, a 20-inch diameter pipe intended to deliver petroleum
products from one location to another.
Another part of Brinderson’s work on the Jumpover Line Project included
a pressure relief system to handle expansion of fluid in the jumpover line
caused by hot weather: two pressure
relief valves which, when activated, discharged fluid into a 1.5-inch pressure
relief line that ran about 100 feet until it connected to a much larger 10-inch
diameter slops line.href="#_ftn2"
name="_ftnref2" title="">[2]

In
2004, Equilon hired another company to build the Commingle Line Project. The Commingle Line Project modified the
Jumpover Line Project by detaching the 1.5-inch pressure relief line from the
10-inch slops line and connecting it instead to a 6-inch line that would
thereafter function as the slops line at the end of the pressure relief
line. The existing larger 10-inch slops
line then became part of the Commingle Line Project and was no longer part of
the pressure relief system. Brinderson
did not work on the Commingle Line Project.

The
pressure relief system that Brinderson built for the Jumpover Line Project
worked without significant incident until after the Commingle Line Project was
completed. Six months after completion,
a small amount of diesel fuel was released from a pressure relief test valve
when an operator failed to close a valve and tighten the valve cap. Vibrations along the pressure relief line
were thought to have played some small role in causing the cap to come
loose. During that same period, a small
amount of fuel leaked from the pressure relief line about 100 feet from
the pressure valves, and Equilon believed that vibrations in that line played a
part in that leak as well.

In
February 2005, a weld failed on one of the pressure relief valves, causing the
release of a large amount of diesel fuel.
The leaking fuel sprayed into a nearby railroad facility, and railroad
worker Seth Vigil suffered serious injuries from breathing in the diesel
fumes. Vigil sued Equilon, which
tendered the defense of that action to Brinderson pursuant to certain
contractual indemnity provisions.
Brinderson refused to defend or indemnify Equilon, which incurred more
than $463,000 in legal fees and ultimately settled with Vigil for $450,000.

Equilon then sued
Brinderson for breach of the indemnification provision in three separate
agreements that Equilon contended applied to Brinderson’s work on the Jumpover
Line Project: (1) the Hilbert agreement with Texaco to perform
unspecified work on various projects at the refinery; (2) the Brinderson Constructors agreement with
Texaco for something called the Pacific Pipeline project; and (3) a purchase order that was issued as part of
the Brinderson Constructors agreement.href="#_ftn3" name="_ftnref3" title="">>[3] Although Brinderson acknowledged that it
worked on the Jumpover Line Project, it disputed whether any of those three
agreements governed that project, and therefore contended it was not subject to
any of the alleged contractual indemnification provisions.

Even if one or all
three of those agreements applied, Brinderson also disputed whether it was
liable under the terms of their indemnification provisions. The Hilbert and Brinderson Constructors
agreements contained identical provisions, which stated that Brinderson would
defend and indemnify Equilon from claims or causes of action “which may be made
or asserted by any third party . . . on account of personal injury or death . .
. caused by, arising out of, or in any way incidental to, or in connection
with, the performance of the work hereunder, including but not limited to,
those situations where [the liability] was caused by the sole negligence [of
Brinderson or its subcontractors or any third party], by the concurrent negligence
of any combination of [Equilon, Brinderson, subcontractors, or third parties],
or where liability for such personal injury . . . with or
without fault is imposed on any theory of strict liability by operation of the
law . . . .” The purchase order issued
pursuant to Brinderson Constructors agreement contained a similar
indemnification provision that was triggered by a variety of claims “resulting
from or in connection with performance or nonperformance of work under this
Order . . . even though caused by the concurrent and/or contributory negligence
(whether active or passive or of any kind or description) or fault of a party
indemnified” unless it was later determined that the claim arose from Equilon’s
sole negligence.

Brinderson
contended that these indemnification provisions were not triggered because the
weld failure did not arise from and was not connected to its work on the
Jumpover Line Project. Resolution of
this issue turned mostly on competing expert testimony concerning the source of
vibrations along the pressure relief line that eventually caused the pressure
relief valve weld to fail. Both experts
agreed that spikes in flow pressure could cause the pressure relief line to
vibrate or move, and that the pressure relief line needed to be properly
secured in order to prevent that from happening. Both also agreed that the weld failure on the
pressure relief valve had been caused by vibrations that occurred because the
pressure relief line was not properly secured.
The parties’ dispute centered on whether those vibrations were connected
to Brinderson’s work on the pressure relief system as part of the Jumpover Line
Project, or whether they were caused solely by the modifications to the
pressure relief system that took place as part of the separate Commingle Line
Project.

An Equilon
investigation concluded that the weld failure was caused by severe short term
vibrations along the pressure relief line.
Equilon’s expert, Charles Freeny, believed the vibrations occurred in
the segment of the pressure relief line nearest to the pressure relief valves
because Brinderson did not follow the Jumpover Line Project’s plans and
specifications concerning the proper method of securing that line. Most notable was a stanchion – a concrete
pillar with an upright bracket that was meant to provide support for the
pressure relief line very near the pressure relief valves. According to Freeny, this stanchion suffered
from two defects. First, it was placed
over a pipe that ran just six inches below ground, when it should have been
sunk deeper into the ground. As a
result, the stanchion settled, and the vertical bracket that was meant to
support the pressure relief line fell out of contact with that line. Second, the stanchion’s bracket was not
attached to the pressure relief line with a U-Bolt, which meant that even
before the stanchion settled, it did nothing to stop the pressure relief line
from vibrating. Freeny also believed
that the pressure relief valves had been placed in an area subject to increased
turbulence and that one valve, not two, should have been used.

Brinderson’s
expert, David Rondinone, testified that the Jumpover Line Project’s pressure
relief system had been properly built according to the plans and
specifications. He did not believe the
defects in the stanchion caused the vibrations that led to the weld failure
because the pressure relief line was sufficiently supported in the same area by
other means. Rondinone also concluded
that Brinderson had not in fact built the stanchion because the plans did not
call for it and because some witnesses were unsure when or by whom it had been
built. According to Rondinone, the
vibrations that caused the pressure relief valve weld failure emanated about
100 feet away from the valves at the 6-inch slops line that was part of the
work on the Commingle Line Project and which replaced the original 10-inch
slops line that Brinderson had installed during its work on the Jumpover Line
Project. He based his opinion on two grounds: (1)
the 6-inch slops line attached as part of the Commingle Line Project had
less than half the capacity of the 10-inch slops line that Brinderson
installed, thereby increasing back pressure on the pressure relief line; and
(2) conflicting evidence that an Equilon inspection right after the
February 2005 weld failure found markings on the pressure relief line that
showed six inches of vertical pipeline movement had occurred, and which also
found that some of the U-Bolt restraints on that line were missing or loose,
leading Rondinone to conclude that U-Bolts on the pressure relief line had been
loosened by workers on the Commingle Line Project.

Nine causes of
action went to the jury, three from each of the three agreements that Equilon
contended applied to the Jumpover Line Project:
breach of the agreement to defend, breach of the agreement to indemnify,
and breach of the implied covenant of good faith and fair dealing. After three hours of deliberations, the jury
rendered general verdicts for Brinderson on all nine.href="#_ftn4" name="_ftnref4" title="">>[4] Equilon brought a motion for JNOV as to
four causes of action: for breach
of the indemnity and defense provisions in two of the allegedly applicable
agreements. It also brought a new trial motion
as to those causes of action and two others for breach of the indemnity and defense
provisions in the third agreement with Brinderson.

The trial court
granted both the JNOV and new trial motions.
Based on the testimony of several Brinderson employees, the trial court
found that the evidence was undisputed that all three agreements applied to
Brinderson’s work on the Jumpover Line Project.
The trial court interpreted the indemnification provisions to mean that
Brinderson was liable unless the weld failure had been caused by Equilon’s sole
negligence. Even assuming that
Brinderson’s expert Rondinone’s testimony was correct, the trial court found
that Equilon expert Freeny’s testimony concerning Brinderson’s failure to
properly secure the pressure relief line when building the Jumpover Line
Project was uncontradicted, and that the jury therefore could not disregard
Freeny’s opinions. According to the
trial court, the undisputed evidence showed at most that any negligence by
Equilon had been a concurrent cause of the weld failure, in combination with
Brinderson’s omissions.

In the event JNOV
was eventually reversed, the trial court conditionally granted Equilon’s new
trial motion because it believed the jury erred in its implicit finding that
Brinderson’s expert was more credible than Equilon’s. The trial court found that Freeny “was
markedly more qualified by his background and experience to render his opinions
than was [Brinderson’s] expert, Rondinone, and testified in a more credible
fashion; Rondinone’s testimony seemed to
have been crafted to fit [Brinderson’s] claims and defenses, not the total
picture.” The trial court found that
Freeny’s opinions “were more consistent with the credible evidence, including
the sole cause of the weld failure being the unrestricted whipping motion
created by the orientation and placement of the pressure relief valves, the
role played by [Brinderson] in the construction of the stanchion, and the
stanchion’s role in the 2005 incident, the reasons why the 2004 [Commingle Line
Project] work was immaterial; and the reasons why the other pre-2005 incidents
were not significant.”

In
regard to whether any or all of the three contracts produced by Equilon applied
to Brinderson’s work on the Jumpover Line, the trial court found Equilon’s
evidence similarly persuasive.
Brinderson’s failure to produce other agreements that applied to the
Jumpover Line Project that did not contain indemnification provisions was also
significant, the court found. According
to the trial court, “Simply put, this jury did not do its job.” On appeal, Brinderson contends the trial
court erred by granting both the JNOV and new trial motions.



>STANDARDS OF REVIEW



A
trial court may grant JNOV only if, when viewed in the light most favorable to
the party in whose favor a verdict was rendered, there is no substantial
evidence to support the verdict. The
trial court cannot weigh the evidence or judge witness credibility. If the evidence is conflicting or if
reasonable inferences to support the verdict may be drawn from the evidence,
the motion should be denied. (>Linear Technology Corp. v. Tokyo Electron
Ltd. (2011) 200 Cal.App.4th 1527, 1532.) We exercise independent review of the trial
court’s order granting JNOV. This
requires us to resolve all conflicts, draw all inferences, and otherwise view
the evidence in favor of the party opposing JNOV. (Ibid.)

We
review an order granting a new trial based on insufficiency of the evidence
under the abuse of discretion standard.
Because the trial court sits as a 13th juror and is in the best position
to assess the reliability of a jury’s verdict, the Legislature has granted
trial courts broad discretion to order new trials. (Horsford
v. Board of Trustees of California State University (2005)
132 Cal.App.4th 359, 386.) So long
as the trial court states its reasons for granting a new trial, and those
reasons are supported by substantial evidence, we defer to the trial court’s
findings and will affirm its order. (>Ibid.)

>DISCUSSION



1.
The JNOV
Was Not Warranted Because There Was Substantial Evidence

That the Weld
Failure Did Not Arise From Brinderson’s Work



The trial court
focused on the indemnification clauses’ exception for damage or injury caused
solely by Equilon.href="#_ftn5" name="_ftnref5"
title="">[5] Because the trial court believed there was no
evidence that Equilon was the only cause of the weld failure, it found that even
if Brinderson’s expert was correct that vibrations in the pressure relief line
were caused by work done on the Commingle Line Project, the undisputed evidence
showed that this was a concurrent cause of the failure along with Brinderson’s
improper construction of the pressure relief line’s pipe restraints. Brinderson contends there was sufficient
evidence that it correctly installed those restraints and that the weld failure
was caused by only the Commingle Line Project’s modifications to the pressure
relief system.



>A.
Interpretation
of Indemnification Agreements, an Overview



We begin with the
rules applicable to interpreting indemnification agreements. Contracting parties have great freedom to
bargain for such provisions, including the right to indemnity even if the
indemnitor was not negligent. (>Crawford v. Weather Shield Mfg., Inc.
(2008) 44 Cal.4th 541, 551.)
Indemnity provisions are construed under the general rules of contract
interpretation. Unless the parties have
indicated a special meaning, the terms are to be understood in their ordinary
and popular sense. (Id. at p. 552.)
However, if the indemnified party “seeks, in a noninsurance agreement,
to be indemnified for his or her own active negligence, or regardless of the
indemnitor’s fault – protections beyond those afforded by the doctrines of
implied or qualified indemnity – language on the point must be particularly
clear and explicit, and will be construed strictly against the
indemnitee.” (Ibid.)

The
indemnification provision in the Hilbert and Brinderson Constructors agreements
does not expressly state that it is inapplicable for loss caused by Equilon’s
sole negligence. Instead, it states that
it applies in various circumstances:
(1) the sole negligence of Brinderson, its subcontractors, or
unidentified third parties; (2) the concurrent negligence of
Brinderson and Equilon, subcontractors, or third parties; and
(3) where strict liability is imposed by operation of law. This language suggests that Equilon’s sole
negligence will relieve Brinderson of its indemnification duties. Assuming for discussion’s sake that this is
so, the indemnification provision is still subject to another limitation: that the loss or injury was caused by, arose
from, or was in any way incidental or connected to Brinderson’s performance on
the Jumpover Line Project.href="#_ftn6"
name="_ftnref6" title="">>[6]

Both
parties agree that a “but for” test requiring some minimal causal link applies
to determining whether the failure of the pressure relief valve weld arose from
or was incidental to Brinderson’s performance of its work on the Jumpover Line
Project. (Vitton Construction Co. Inc. v. Pacific Ins. Co. (2003)
110 Cal.App.4th 762, 766; St. Paul
Fire & Marine Ins. Co. v. American Dynasty Surplus Lines Ins. Co.
(2002) 101 Cal.App.4th 1038, 1049-1051.)

Both
parties also rely heavily on Continental
Heller Corp. v. Amtech Mechanical Services, Inc. (1997) 53 Cal.App.4th
500 (Continental Heller), a decision
that concerned an indemnification provision similar, but not identical, to the
ones at issue here. Continental Heller
was the general contractor on a project to expand an Oscar Meyer meat packing
plant, and Amtech was the subcontractor installing an ammonia refrigeration
system. Eleven years after the project
was finished, a valve installed by Amtech exploded, causing property damage and
personal injuries. After being sued,
Continental Heller tendered the defense to Amtech under the subcontract’s
indemnification provision, which was triggered by any loss “which arises out of
or is in any way connected with the performance of work under” the subcontract,
and which applied to “any acts or omissions, willful misconduct or negligent
conduct, whether active or passive, on the part of [Amtech].” (Id.
at p. 505, italics omitted.)

Amtech
rejected the tender, and, after settling the damage claims, Continental Heller
sued to enforce the indemnity provision.
The trial court found for Continental Heller, and the Court of Appeal
affirmed, rejecting Amtech’s contention that the indemnification clause was not
triggered unless Amtech’s work was somehow faulty, and that such failure in the
performance of its work was a substantial factor or predominating cause of the
accident. Under the plain terms of the
contract, Amtech’s installation of the faulty valve was an act carried out in
the performance of its work under the contract, and the loss was in some way
connected with that act, the court held.
(Continental Heller, supra,
53 Cal.App.4th at pp. 504-505.)
By combining “any acts or omissions” with “willful misconduct or
negligent conduct,” the contract made clear that the parties intended Amtech’s
duty to indemnify would arise for any reason except for the sole negligence or
willful misconduct of Continental Heller.
(Id. at p. 505.)

The
Continental Heller court rejected
Amtech’s contention that in order to conform the agreement to the parties’
reasonable expectations, its duty to indemnify did not arise unless its act or
omission was a substantial factor or predominating cause of the valve failure. The court held that the risk allocation was
neither unreasonable nor unconscionable because, as between Amtech and
Continental Heller, Amtech “was in the better position to protect against loss
arising out of its performance of its contract.
This is illustrated by the fact it was Amtech, not Continental, which
selected and installed the particular valve which subsequently failed leading
to the explosion.” (Continental Heller, supra, 53 Cal.App.4th at p. 506.)

The
indemnity provision did not impose unlimited liability, however. After a footnote pointing out that the few
decisions construing similar language imposed a “cause in fact” or “but for”
test, (Continental Heller, supra,
53 Cal.App.4th at p. 506, fn. 3), the court went on to
state: “Amtech’s liability must be connected
to an ‘act’ or ‘omission’ in the performance of its subcontract, not merely to
the performance itself. Therefore, the
fact Amtech installed the refrigeration system in the plant would not make it
liable for indemnity for the loss incurred in paying damages to someone who
suffered food poisoning from eating an Oscar Meyer hot dog on the theory that
but for the refrigeration system Oscar Meyer could not have made the hot
dog. The indemnitee in this hypothetical
case would have to establish the loss was in some way connected to a specific
act or omission of Amtech. Amtech is not
liable for any act or omission
connected with the performance of work under the subcontract, but only acts or
omissions ‘on the part of [Amtech], its agents, subcontractor or
employees.’ As a further limitation on
its liability, Amtech is expressly not required to indemnify Continental for
losses arising from the sole negligence or the sole misconduct of Continental,
its officers, agents, servants, or independent contractors.” (Ibid.)href="#_ftn7" name="_ftnref7" title="">>[7]



>B.
Evidence
that the Pressure Relief Line Was Properly Constructed



>At bottom, Brinderson contends >Continental Heller is distinguishable
because in that case, the indemnitor selected and installed the valve that
actually failed, while here there was sufficient evidence that no part of the
pressure relief line it built as part of the Jumpover Line Project was
defective, and the weld failure was solely caused by the modifications to that
line that occurred during the Commingle Line Project. Equilon contends there is no substantial
evidence to support that contention and, as the trial court found, the jury
could not disregard the opinion of its expert that the weld failed from
vibrations caused by Brinderson’s failure to secure the pressure relief line as called for in the
plans, and that those vibrations were exacerbated by Brinderson’s placement of
the valves and its use of two valves instead of one. We disagree with Equilon.

William
Hudak, a Texaco asset manager who had a consulting and oversight role on the
Jumpover Line Project for Equilon, testified that he had a good recollection of
how Brinderson’s project manager performed, and could not recall any criticism
of his performance or any problems or defects in that project. Hudak testified that he inspected the
Jumpover Line Project from time to time during its construction and as far as
he could tell, it was being installed according to the plans. Hudak testified that when the Jumpover Line
Project became operational, it looked like it had been properly constructed
according to the plans, and performed well.

Randall
McFetridge was a project engineer for Brinderson on the Jumpover Line
Project. He left that position shortly
before that project was completed, but did recall that it was tested
successfully and was completed according to the plans and specifications. Manuel Ramirez worked at the Texaco refinery
for 38 years in the Operations Department.
Part of his job duties was to look for leaks or unusual pipeline
vibrations. Before 2005, his work would
bring him within 100 feet of the point where the pressure relief line was
connected to the jumpover line, in a spot where he would be able to notice any
vibrations or leaks, and he could not recall observing any. Other witnesses confirmed that the pressure
relief line worked without significant incident in the six years before the
separate Commingle Line Project was constructed in 2004. This evidence suggests the pressure relief
line was properly secured and did not contribute to the weld failure.

As for the
stanchion, Equilon contends it was poorly moored to the ground and built
without a required U-Bolt. Based on
this, Equilon contends the uncontroverted evidence shows that Brinderson’s work
was at least a concurrent cause of the accident. However, the stanchion evidence was also in
conflict. David Bieda, who led Equilon’s
investigation into the 2005 weld failure, acknowledged that the plans referred
to a “pipe support” where the allegedly defective stanchion was located and did
not use the term stanchion. According to
Bieda, the term “pipe support” meant a stanchion was required. However, these ambiguities in Bieda’s
testimony at least plant the seed of a conflict, which grew in response to
other evidence.

For instance,
Bieda could not recall when the stanchion was installed, and could not rule out
that another contractor had built it. He
said he believed the stanchion was put in place in 1998 – the year the Jumpover
Line Project was completed – because he had no information to the contrary, and
because it would have been a typical place to put one. Based on Bieda’s uncertainty, the jury could
have found his claim that Brinderson built the stanchion was speculative. Texaco’s Ramirez gave differing accounts of
when the stanchion was installed, at first stating it was built in 1998, while
later admitting that it could have been there as much as three years >before the Jumpover Line Project
started. Texaco’s Hudak also could not
recall whether the stanchion was installed in 1998 as part of the Jumpover Line
Project. Finally, Equilon’s own
postincident investigation report stated that the U-Bolt was missing from the
stanchion either because of an “installation oversight” or because “>it was not a design requirement.” Based on this evidence, the jury could find
that Brinderson had not built the stanchion and that no U-Bolt was called for
at that location.

Even
if Brinderson built the stanchion, and did so improperly, its expert witness
testified that the pipeline was adequately supported in the same area because
it was braced alongside another larger pipeline. Neither the trial court’s statement of
decision nor Equilon has explained why that expert opinion should, as a matter
of law, be disregarded. The Brinderson
expert also testified that the absence of any vibrational bracing at or near
the stanchion’s location played no part in the weld failure because that
bracing had been absent all along and the vibrational problems with the
pressure relief line did not begin until after that line was modified as part
of the Commingle Line Project.

Taken
together, this evidence supports an inference that the pressure relief system
was properly built and according to plan, with the line properly secured, and
worked without incident for six years. It
therefore supports the testimony of Brinderson’s expert witness to that
effect. Because this shows that the
facts underlying the opinion of Equilon’s expert witness were in conflict on
these points, the jury was free to disregard his testimony and find that
Brinderson’s work played no part in the weld failure. (Lauerdale
Associates v. Dept. of Health Services (1998) 67 Cal.App.4th 117,
126.)



>C.
Effect
of the Commingle Line Modifications



As for whether the
Commingle Line Project modification to the pressure relief system was the sole
cause of the vibrations that led to the weld failure, evidence in the record
would also support that implied finding by the jury.

We begin with
evidence that the pressure relief system worked without incident until after
the Commingle Line Project was built in 2004.
Within six months of that point, however, two minor leaks occurred. Equilon’s investigation report included a
sequence of events table covering the life of the pressure relief system from
its completion in 1998 as part of the Jumpover Line Project to the weld failure
in February 2005. From August 1998, when
the Jumpover Line Project began operation, the table reflects no problems with
the operation of the pressure relief system.
Most notably, inspections revealed leak rates of only 1 to 3 parts
per million up to March 17, 2004, before the Commingle Line Project
modified the pressure relief line. The
next entry listed is the changeover from the 10-inch slops line to the 6-inch
line as part of the Commingle Line Project on April 2, 2004. The very next inspection on June 10, 2004,
showed a leak rate of 42 parts per million.
A 6 parts per million leak rate was noted on September 2, 2004, followed
by the minor October 2004 diesel spill.
Leak rates of 42 parts per million were again noted from
November 13, 2004, until December 1, 2004. The very next set of entries concern the
major spill that occurred in February 2005 that led to the present lawsuit. This evidence supports a finding that the
Commingle Line Project’s modifications to the pressure relief line were
adversely affecting the performance of that line.

We next consider
the testimony of Brinderson expert witness Rondinone, who said that the
Commingle Line Project’s switch over to the 6-inch slops line increased back
pressure on the pressure relief valves due to the smaller capacity of that
line. Equilon attacks the sufficiency of
this testimony because Rondinone did not conduct any tests on the actual system
and because he testified speculatively that the smaller outlet pipe “could”
have caused back pressure problems.
However, Rondinone’s testimony was supported by Equilon expert Freeny in
two regards. First, Freeny testified
that smaller diameter pipe is more subject to flexing than is larger pipe, from
which the jury could conclude that the smaller 6-inch slops line that modified
the pressure relief system would flex more than did the original 10-inch slops
line, and that it in fact did so in response to vibrational impulses. Second, Freeny acknowledged that back
pressure generally could exist, but testified that the system was designed to
handle that pressure. He did not testify
that the system was modified in any way to handle increased back pressure from
the new, smaller slops line, however.
From that, the jury could reasonably find that the smaller line
installed as part of the Commingle Line Project did increase the amount of back
pressure in the pressure relief line, causing the more flexible 6-inch slops
line to vibrate enough to cause the weld failures on the pressure relief
valves.

Other evidence
supports a finding that work on the Commingle Line Project affected the
stability of the pressure relief line.
Equilon’s report on the 2005 weld failure noted marks on the pressure
relief line about 100 feet away from the pressure relief valves that indicated
the pressure relief line had moved vertically – vibrating – up to
six inches at that point.href="#_ftn8"
name="_ftnref8" title="">[8] Brinderson’s expert testified that such
movement was possible only if some of the U-Bolts securing the pressure relief
line had been loosened, which he believed occurred when the 10-inch slops line
was removed and the smaller 6-inch slops line was attached as part of the
Commingle Line Project. Without those
bolts, Rondinone testified, the flexible pressure relief line would whip
around, sending vibrations back up along the line that would cause the pressure
relief valves to crack. Rondinone said
it was reasonable to expect that workers from the Commingle Line Project loosened
the existing U-Bolts on the pressure relief line in order to align and attach
the new 6-inch slops line.

The Commingle Line
project was built by a company called Worley Parsons. Ron Myles was Worley Parsons’s project
engineer on the Commingle Line, and he inspected the pipeline after the
February 2005 weld failure. Myles
testified at trial that the U-Bolts that had been put in place on the pressure
relief line as part of the Jumpover Line Project were not touched during the
Commingle Line construction. Equilon’s
Bieda testified that those bolts were tight and in their original condition
when he inspected the pressure relief line after the incident. Equilon expert Freeny testified that he never
saw the markings showing six inches of vertical movement that were noted in
Equilon’s inspection report. However,
Myles testified at his deposition that during his inspection, he discovered
that one bolt was missing and another was loose about 100 feet downstream of
the pressure relief valves. From this,
the jury could conclude that the report accurately noted the existence of the
markings, confirming Rondinone’s testimony that the bolts had been loosened
during the construction of the Commingle Line Project.

In
short, there was evidence that the pressure relief line was built according to
specifications and worked properly until after the Commingle Line Project took
away the 10-inch slops line and replaced it with a 6-inch line. This included evidence that Brinderson either
did not build the stanchion because it was not called for in the plans, or, in
the alternative, that even a defectively constructed stanchion had no role in
the weld failures. There was also
evidence that the pressure relief line experienced six inches of vertical
movement, which formed the basis for the testimony by Brinderson’s expert that
the U-Bolts had been loosened. This was
supported by the deposition testimony of Myles that some of the bolts were
either loose or missing. According to
Brinderson’s expert, the unsecured pressure relief line, perhaps subjected to
increased back pressure due to the smaller slops line, might have whipped back
and forth, causing vibrations that were transmitted back up the pressure relief
line, causing the valve welds to fail.

We see no reason
why the jury could not believe the facts underlying Rondinone’s opinion and
therefore accept his expert testimony.
Because we must presume that the jury made such findings, we must
determine whether under those facts, the diesel fuel discharge and concomitant
injuries to Vigil arose from or were incidental to the performance of
Brinderson’s work on the Jumpover Line Project.

Because
Equilon’s appellate brief does not accept the possibility that the jury could
have made the findings described above, it does not argue that even with such a
finding, the weld failure nevertheless arose from or was incidental to
Brinderson’s work on the Jumpover Line Project.
We therefore deem the issue waived.
(Bode v. Los Angeles Metropolitan
Medical Center (2009) 174 Cal.App.4th 1224, 1239.)

We
alternatively hold that when the evidence is viewed in the light most favorable
to the judgment, the weld failure did not trigger Brinderson’s contractual
indemnity obligations. Although the
causal link is broad, it is not unlimited.
Given their commonsense meaning, the terms “arising out of” or
“incidental to” mean originating from, having their origin in, growing out of,
flowing from, or having connection with something. (Vitton
Construction Co. Inc. v. Pacific Ins. Co., supra, 110 Cal.App.4th at
pp. 766-767.)

Viewing
the evidence and the inferences most favorably to Brinderson, the pressure
relief line was properly built according to plans. The vibrations that caused the weld to fail
were transmitted up that line, but were solely caused by loose restraints due
to work by others on the Commingle Line Project, which attached a smaller slops
line to the pressure relief line six years after the Jumpover Line Project had
been built and had performed without improper vibrations. Brinderson had nothing to do with building
the Commingle Line Project. Instead, its
properly constructed pressure relief line merely served as the conduit by which
vibrations were transmitted from alterations to that line that were constructed
as part of the Commingle Line Project.

Applicable
here is the analogy in Continental
Heller, supra, 53 Cal.App.4th at page 507, where the refrigerator
installer would not be obligated to indemnify for food poisoning caused by an
Oscar Meyer hot dog on the theory that the hot dog could not have been made
without the refrigerator. Although the
Commingle Line Project “hot dog” could not have been made without attaching a
modification to the already existing Jumpover Line Project’s pressure relief
line “refrigerator,” the defects caused by the Commingle Line Project did not
have their origin in or grow out of Brinderson’s work. We therefore hold that the trial court erred
by granting JNOV.href="#_ftn9" name="_ftnref9"
title="">[9]



2.
The Trial
Court’s New Trial Order Was Proper



Brinderson
contends the trial court abused its discretion by granting Equilon’s new trial
motion. Brinderson does not challenge
the trial court’s evaluation of the evidence, however. Instead, relying on Fountain Valley Chateau Blanc Homeowner’s Assn. v. Dept. of Veterans
Affairs (1998) 67 Cal.App.4th 743 (Fountain
Valley), Brinderson contends the trial court’s new trial order did not
provide a proper specification of facts and reasons, but was in effect a
backdoor JNOV order based on the trial court’s belief that Equilon should
prevail as a matter of law.

The
petitioner in Fountain Valley
prevailed in a jury trial in an action against his homeowner’s association for
invasion of privacy and other claims.
The trial court granted the association’s new trial motion, stating that
it believed the association had acted reasonably and that it would continue to
grant new trial motions so long as juries continued to find for the
petitioner. On appeal, the >Fountain Valley court held that the
trial court misused a new trial motion – which determines only that the party
who lost at trial could win at a retrial – by effectively treating it as a
dispositive JNOV motion based on its statements that it would continue to grant
such motions should the association lose at a retrial. (Fountain
Valley, supra, 67 Cal.App.4th at pp. 751-753.) Because the trial court pointed to no
problems in the trial process that warranted a new trial, its order really
found that the association acted reasonably as a matter of law and was entitled
to judgment. (Id. at pp. 752-753.)

That
is not what happened here. Instead, the
trial court set forth clear reasons why it believed the jury reached the wrong
verdict, listing what it saw as numerous evidentiary deficiencies in
Brinderson’s case. We therefore hold
that the trial court’s new trial order was proper.



3.
Mitigation
of Damages Issue



Brinderson
contends the trial court erred by: (1)
excluding evidence concerning Equilon’s knowledge of defects in the pressure
relief line that caused excessive vibrations; and (2) by refusing to instruct the jury that
Equilon’s failure to act in the face of this knowledge called into play the
doctrine of mitigation of damages. The
trial court rejected this theory because even if the jury found that Equilon
knew of the defects and failed to act, it necessarily showed nothing more than Equilon’s
concurrent negligence, for which Brinderson was still liable under the
indemnification provisions. We agree.

The
parties frame the issue as whether the doctrine of mitigation of damages has
any application to claims for breach of an indemnification agreement,
contending that no reported California decisions have addressed the issue.href="#_ftn10" name="_ftnref10" title="">>[10] Statutory and case authority suggest the
doctrine may apply, but not in a context applicable here.

Civil
Code section 2778 sets forth the rules of interpretation applicable to
indemnity contracts unless a contrary intention is expressed. Subdivision (3) of that section states that
“[a]n indemnity against claims, or demands, or liability, expressly, or in
other equivalent terms, embraces the costs of defense against such claims,
demands, or liability incurred in good
faith, and in the exercise of a reasonable
discretion . . . .”
(Italics added.) We take this to
mean that an indemnitee who acted unreasonably in defending itself cannot
recover such costs from the indemnitor.

The
court in Massachusetts Bonding & Ins.
Co. v. Osborne (1965) 233 Cal.App.2d 648, held there was no evidence
to support a trial court’s finding that an indemnitee failed to mitigate his
damages by allowing the foreclosure of real property, based at least in part on
evidence that the indemnitee received an appraisal showing the property was
worth less than the cost of redeeming the property from foreclosure. (Id.
at pp. 658-659.) Although the court
did not cite Civil Code section 2778, subdivision (3), its holding is in accord
with that provision.

Brinderson
does not claim that Equilon acted unreasonably in defending and settling
Vigil’s injury claim. Instead, it
contends that Equilon was negligent for failing to discover the negligence of
others in the construction and operation of the Jumpover Line Project, thus
contributing to the weld failure that gave rise to the injuries upon which
Equilon’s indemnification claim was based.
At bottom, we are guided by the terms of the parties’ indemnity
provisions, which expressly obligated Brinderson even if Equilon was
concurrently negligent. Because that is
the essence of Brinderson’s mitigation of damages theory, we conclude the trial
court did not err.href="#_ftn11"
name="_ftnref11" title="">>[11]



>DISPOSITION



The judgment notwithstanding the
verdict in favor of Equilon is reversed.
The order granting Equilon a new trial is affirmed, and the matter is
remanded for further proceedings. Each
side to bear its own costs.









RUBIN,
ACTING P. J.

WE CONCUR:









GRIMES,
J.









SORTINO, J.href="#_ftn12" name="_ftnref12" title="">*