As we reported on September 18, 2007, a federal court granted summary judgment to Airport Industrial Park, doing business as P.E.C. Contracting Engineers (“PEC”), as against Swiss Reinsurance America Corp. (“Swiss Re”), the reinsurer of a party with whom PEC contracted on a government construction project, which contracting included a general indemnity agreement (“GIA”). Swiss Re appealed, and the Third Circuit Court of Appeals held in its favor, reversing the trial court and remanding for further proceedings. First, the Circuit Court held that Swiss Re was unambiguously an intended beneficiary of the GIA, as “reinsurers” were explicitly mentioned therein, along with other “affiliates” of the reinsured. Second, the Court held that, even if the GIA was unambiguous, Pennsylvania law nonetheless allows a court to look to the parties’ custom and usage in interpreting a contract’s terms. It then cited material disputes of fact (and a less-than-complete factual record) with regard to the parties’ competing interpretations of the contract vis-à-vis the underlying parties’ custom and usage. Swiss Reinsurance America Corp. v. Airport Industrial Park, Inc., d/b/a P.E.C. Contracting Engineers, No. 07-3749 (3d Cir. May 5, 2009).
This post written by John Pitblado.