Mobil Chemical Co. v. Blount Brothers Corp.

Mobil Chemical Company (plaintiff) contracted with Blount Brothers Corporation (defendant) for the construction of a chemical plant. Mobil and Blount agreed that Blount’s subcontractors would complete the construction by January 1983. The contract contained an insurance section that required Blount to maintain liability and workers’ compensation insurance. The insurance section also included an indemnity clause, which provided that Blount would indemnify Mobil for all losses, claims, and demands based on death, personal injury, property damage, or “any other liability” arising out of or connected to the work, unless the loss resulted from Mobil’s sole negligence. Another contractual provision stated that Mobil and Blount would not be liable to each other for any indirect or consequential damages. The project began in 1981, but work fell behind schedule due to Mobil’s delays and Blount’s incompetent scheduling. In late 1982, Mobil and Blount decided to push Blount’s subcontractors to meet the January 1983 deadline by increasing staffing and accelerating the work. After the project was completed, Blount submitted claims to Mobil for extra payments to Blount and the subcontractors. Mobil brought an action in federal district court seeking a declaratory judgment that Mobil owed nothing. In the alternative, Mobil sought indemnification from Blount for any amounts Mobil owed. The district court found that Mobil’s and Blount’s breaches of contract and their joint negligent decision to speed up the work caused the subcontractors to incur acceleration costs. The court ordered Mobil and Blount to pay the subcontractors’ damages in equal shares. Mobil and Blount appealed to the United States Court of Appeals for the Fifth Circuit. One of Mobil’s arguments on appeal was that the “any other liability” language in the indemnity clause required Blount to indemnify Mobil for any breach of the contract by Mobil.