IPSCO STEEL ALABAMA , INC., an Alabama Corporation v. Blaine Construction Corporation, a Tennessee Corporation. Lexington Insurance Company

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PRECEDENTIAL
UNITED STATES COURT OF
APPEALS FOR THE THIRD CIRCUIT
__________
No. 03-3109
__________
IPSCO STEEL (ALABAMA), INC., an
Alabama Corporation; IPSCO
CONSTRUCTION, INC., an Alabama
Corporation; KVAERNER U.S. INC., a
Delaware Corporation
v.
BLAINE CONSTRUCTION
CORPORATION, a Tennessee
Corporation.
*Lexington Insurance Company,
Appellant
*(Pursuant to F.R.A.P. 12(a))
(D.C. Civil Action No. 99-cv-02055)
__________
No. 03-3110
__________
BLAINE CONSTRUCTION
CORPORATION, a Tennessee
Corporation
v.
IPSCO CONSTRUCTION, INC., an
Alabama Corporation; KVAERNER
U.S. INC., a Delaware Corporation;
LIBERTY MUTUAL INSURANCE
COMPANY, a Massachusetts
Corporation; MARSH USA, INC., a
Delaware Corporation f/k/a J&H
MARSH & MCLENNAN, INC.;
LIBERTY INTERNATIONAL
CANADA, a division of LIBERTY
MUTUAL INSURANCE COMPANY, a
Massachusetts Corporation.
*Lexington Insurance Company,
Appellant
*(Pursuant to F.R.A.P. 12(a))
(D.C. Civil Action No. 01-cv-00440)
_________
On Appeal from the
United States District Court for the
Western District of Pennsylvania
District Judge: Hon. Arthur J. Schwab
__________
Argued on Tuesday, April 20, 2004
___________
Before: SCIRICA, GARTH, and
BRIGHT,* Circuit Judges
(Opinion Filed: June 10, 2004)
*Honorable Myron H. Bright,
United States Court of Appeals for the
Eighth Circuit, sitting by designation.

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DeCourcy, Dara A. (argued)
Zimmer, Harry J.
Zimmer Kunz
600 Grant Street
3300 USX Tower
Pittsburgh, PA 15219
Attorneys for Appellant Lexington
Insurance Company
Doty, Robert W.
Ejzak, Richard A. (argued)
Roman, Andrew M.
Cohen & Grigsby, P.C.
11 Stanwix Street, 15th Floor
Pittsburgh, PA 15222
Rogers, E. Mabry
Bradley, Arant, Rose & White, LLP
1819 Fifth Avenue North
Birmingham, AL 35203
Attorneys for Appellee Kvaerner U.S.
Inc.
Luciana, Joseph L. III
Lund, Kenneth J.
Paciaroni, Richard F.
Kirkpatrick & Lockhart LLP
535 Smithfield Street
Henry W. Oliver Building
Pittsburgh, PA 15222
Lucas, Kevin P.
Williams, Robert J.
Manion, McDonough & Lucas P.C.
600 Grant Street
Suite 1414
Pittsburgh, PA 15219
Harper, Steven J. (argued)
Kirkland & Ellis LLP
200 East Randolph Drive
Suite 6500
Chicago, IL 60601
Landau, Christopher
Kirkland & Ellis LLP
655 15th Street, N.W.
Suite 1200
Washington, DC 20005
Attorneys for Appellees IPSCO Steel
(Alabama) Inc. and IPSCO Construction
Inc.
Medved, George M.
Pepper Hamilton LLP
500 Grant Street
5000 One Mellon Bank Center
Pittsburgh, PA 15219
Little, J. Ford
Noell, Robert P.
Walton, Monty L.
Woolf, McClane, Bright, Allen &
Carpenter, PLLC
900 South Gay Street
Suite 900, Riverview Tower
Knoxville, TN 37902
Attorneys for Appellee Blaine
Construction Corporation
Long, Kevin M.
Van Vugt, Eric J.
Quarles & Brady LLP
411 East Wisconsin Avenue, #2500
Milwaukee, WI 53202

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Sommer, Robert B.
Hergenroeder, Rega & Sommer
332 Fifth Avenue
Suite 610
Pittsburgh, PA 15222
Attorney for Appellee Marsh USA, Inc.
Reed, Jonathan S.
Smith, Sean K.
Traub, Richard K.
Traub, Eglin, Lieberman & Straus
100 Metroplex Drive
Metroplex Corporate Center I, Suite 203
Edison, NJ 08817
Sherman, C. Leon
C. Leon Sherman & Associates
20 Stanwix Street
5th Floor
Pittsburgh, PA 15222
Attorneys for Appellee Liberty Mutual
Insurance Company
__________
OPINION
__________
Garth, Circuit Judge:
In a companion case decided today,
see IPSCO Steel (Alabama) Inc. v. Blaine
Constr. Corp.,Docket Nos. 03-2929/2966,
-- F.3d -- (3d Cir. 2004), we have held that
the District Court properly approved two
Settlement Agreements involving IPSCO
Steel (Alabama), Inc. and IPSCO
Construction, Inc. (collectively “IPSCO”),
Kvaerner U.S. Inc. (“Kvaerner”), Marsh
USA, Inc. (“Marsh”), and Liberty Mutual
Insurance Company (“Liberty Mutual”),
who had been embroiled in litigation
arising out of a construction project in
Alabama. The Settlement Agreements
brought to an end the two lawsuits that
had been filed in Pennsylvania involving
those parties who, among others, were the
project owner (IPSCO), the project
manager (Kvaerner), the project insurer
(Liberty Mutual), and the insurance broker
(Marsh).
The instant appeal was filed by
L e x i n g t o n I n s u r a n ce C o mp a n y
(“Lexington”), which had issued a $25
million professional liability insurance
policy to Kvaerner in 1998. Under the
terms of that policy, Kvaerner may look to
Lexington for insurance proceeds only
after any “project-specific” policies are
exhausted. Kvaerner is a named insured
under a $20 million policy issued by
Liberty Mutual specifically for the
construction project.
Because the Settlement Agreements
effectively capped Liberty Mutual’s
“project specific” policy at approximately
$11 million,1 Lexington had registered
1 As we have discussed in the
companion case, IPSCO Steel (Alabama)
Inc. v. Blaine Constr. Corp., supra,
Liberty Mutual had paid $5 million in
court expenses for Kvaerner and had
settled the Construction Action for $6

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objections in the District Court to the
Settlement Agreements approved in the
companion case, IPSCO Steel (Alabama)
Inc. v. Blaine Constr. Corp.,supra. Unlike
Kvaerner, however, Lexington was not a
named party to the proceedings and did not
move to intervene pursuant to Federal
Rule of Civil Procedure 24.2 After the
District Court approved the settlements
and dismissed the two lawsuits, Kvaerner
and Lexington filed separate notices of
appeal. We have disposed of Kvaerner’s
appeal in the companion case, leaving only
Lexington as the Appellant here.
On appeal, Lexington presents two
arguments as to why the District Court
should not have approved the Settlement
Agreements. However, IPSCO has moved
to dismiss Lexington’s appeal on grounds
of standing. Quoting from Marino v.
Ortiz, 484 U.S. 301 (1988), IPSCO argues
that “only parties to a lawsuit, or those that
properly become parties, may appeal an
adverse judgment.” Id. at 304.
Ordinarily, only parties of record
before the district court have standing to
appeal. Caplan v. Fellheimer Eichen
Braverman & Kaskey, 68 F.3d 828, 836
(3d Cir. 1995). However, our Court
carved out an exception to that principle in
1992 when it decided Binker v.
Pennsylvania, 977 F.2d 738 (3d Cir.
1992). The so-called Binker exception
provides that “a nonparty may bring an
appeal when three conditions are met: (1)
the nonparty had a stake in the outcome of
the proceedings that is discernible from
the record; (2) the nonparty has
participated in the proceedings before the
district court; and (3) the equities favor the
appeal.” Northview Motors, Inc. v.
Chrysler Motors Corp., 186 F.3d 346, 349
(3d Cir. 1999).
Lexington contends that it fits
within the Binker exception because (1) it
may potentially be liable to pay a judgment
that, in the absence of the Settlement
Agreements, Liberty Mutual, as the
“project-specific” insurer, would have had
to pay; (2) it attended a settlement
conference and mediation before the
District Court and submitted a brief in
opposition to the motion to approve the
Settlement Agreements; and (3) it seeks to
protect not only its own interests, but also
those of its insured, Kvaerner.
Even if we were satisfied that
Lexington met all three prongs of the
Binker exception, which we need not
decide, we are persuaded that it does not
have standing to pursue this appeal. To
understand why that is so, we must
consider three distinct but related
concepts: intervention pursuant to Federal
million for a total expenditure of $11
million under the $20 million policy.
2 In its Notices of Appeal,
Lexington incorrectly states that it was
an “Intervenor” in the District Court.
Although Lexington filed briefs in the
District Court opposing the proposed
settlements and participated in the
hearing, it did not move to intervene in
the District Court or in our Court.

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Rule of Civil Procedure 24; Article III
standing to pursue the original
controversy; and standing to appeal a
district court ruling. Although the Binker
Court couched its three-part test in terms
of “standing to appeal,” see Binker, 977
F.2d at 745, the first prong of the Binker
test focused on Article III standing to
pursue the original controversy because it
required that the non-party had a stake in
the proceedings before the District Court,
thereby satisfying Article III’s “case-or-
controversy” requirement.
Statutory standing to appeal, by
contrast, need not meet the case-or-
controversy standard, but must meet the
test of a party that is aggrieved. “In order
to have standing to appeal a party must be
aggrieved by the order of the district court
from which it seeks to appeal.”
McLaughlin v. Pernsley, 876 F.2d 308,
313 (3d Cir. 1989) (citing Watson v.
Newark, 746 F.2d 1008 (3d Cir. 1984).
“The rule is one of federal appellate
practice, however, derived from the
statutes granting appellate jurisdiction and
the historic practices of the appellate
courts; it does not have its source in the
jurisdictional limitations of Art. III.”
Deposit Guar. Nat’l Bank v. Roper, 445
U.S. 326, 333 (1980). Thus, a party who
does not intervene in the district court (or
did not have Article III standing to pursue
the original action) may nevertheless have
standing to pursue an appeal if it can show
that it was adversely affected by the
judgment. See e.g., Binker, 977 F.2d at
745; see also 15A Wright, Miller &
Cooper, Federal Practice and Procedure:
Jurisdiction 2d § 3902.
The issue here is whether
Lexington was sufficiently aggrieved by
the District Court’s order such that it has
standing to appeal. Our decision in
Travelers Insurance Company v. H.K.
Porter Co., 45 F.3d 737 (3d Cir. 1995) is
particularly instructive. There, the
plaintiff-insurer (Travelers) appealed a
bankruptcy court order granting a motion
to vacate the withdrawal of certain
creditors who had asbestos-related claims
against the bankrupt defendant-insured.
We held that Travelers lacked standing to
appeal because it was not a “person
aggrieved” by the order since its “potential
exposure [was] doubly removed, turning
both on the success of the Claimants in
their prosecution of claims against [the
insured party], and on a judicial
determination that the policy issued by
Travelers cover[ed] the claims, a
construction which Travelers strenuously
reject[ed].” Id. at 742.
The same considerations that drove
our decision in Travelers are present here.
Under the two Settlement Agreements
approved by the District Court, Liberty
Mutual and Marsh had agreed to pay a
total of $6.5 million to settle various
claims brought against them in the
Pennsylvania lawsuits.3 The Settlement
Agreements do not require Lexington to
3 Liberty Mutual paid $6 million
in settlement; Marsh paid $500,000 in
settlement.

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make any payments, inasmuch as the
“project-specific” insurer is Liberty
Mutual. Hence, Lexington was not
directly aggrieved by either the Settlement
Agreements or the District Court’s orders
approving them.
The only other lawsuit that has
been brought to our attention which
potentially implicates the policy issued by
Lexington is an action filed in Alabama by
IPSCO, the project owner, against
Kvaerner for alleged cost overruns. That
lawsuit, which is ongoing and was not
affected by the two Settlement
Agreements approved by the District
Court, has resulted in substantial defense
costs for Kvaerner. But almost all of those
defense costs have been paid and are
continuing to be paid by Liberty Mutual.4
Therefore, any real exposure to which
Lexington is subject is contingent on a
judgment being entered in the Alabama
lawsuit against Kvaerner and in favor of
IPSCO, an event that has not yet occurred.
As in Travelers, Lexington is at least two
steps removed from any real effect to its
policy because IPSCO must first succeed
on its claims against Kvaerner and, even if
it is successful, Kvaerner must prove that
the policy covers the damages awarded in
the Alabama action.5
Lexington has tried to distinguish
our holding in Travelers on the ground
that it involved an appeal from a
bankruptcy court, which triggers its own
unique set of standing principles. It is true
that “the standing requirement in
bankruptcy appeals is more restrictive than
4 In a separate agreement, which
has been sealed by both the District
Court and by us, Liberty Mutual agreed
to pay 89% of Kvaerner’s defense costs
in the Alabama action, with Kvaerner
paying the remaining 11%. If Kvaerner
prevailed on its counterclaims against
IPSCO, Liberty Mutual could recover its
costs. Although this agreement is sealed,
at least this provision was discussed at
oral argument. The record does not
disclose whether the obligation
undertaken by Liberty Mutual is
exclusive of the $11 million that
remained under the Liberty Mutual
policy.
5 We recognize two other factors
that further attenuate Lexington’s
standing to appeal. First, Lexington
might well resist paying any judgment
rendered against Kvaerner unless the
judgment exceeds $6.5 million because
IPSCO has already been reimbursed for
damages in that amount through the
Settlement Agreements with Liberty
Mutual and Marsh. Second, Kvaerner
has informed us in the companion case
of IPSCO Steel (Alabama) Inc. v. Blaine
Constr. Corp., supra, that even if IPSCO
was to obtain a judgment against
Kvaerner in the Alabama lawsuit,
Lexington may argue that it has no
obligation to indemnify or reimburse
Kvaerner because the Liberty Mutual
policy was not fully exhausted as a result
of the Settlement Agreements.

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the ‘case or controversy’ standing
requirement of Article III, which ‘need not
be financial and need only be ‘fairly
traceable’ to the alleged illegal action.”
Travelers, 45 F.3d at 741 (quoting Kane v.
Johns-Manville Corp., 843 F.2d 636, 642
n.2 (2d Cir. 1988)). Yet in a non-
bankruptcy context the Supreme Court has
stated that “[o]rdinarily, only a party
aggrieved by a judgment or order of a
district court may exercise the statutory
right to appeal therefrom.” Deposit Guar.,
445 U.S. at 333 (emphasis added). Thus,
it does not follow that we would have
reached a different outcome in Travelers
under Article III’s slightly more relaxed
standing requirement. Even under the
“fairly traceable” standard, we hold that
Lexington does not have standing to
appeal because its injury, if any, is far too
speculative and far too attenuated for
Lexington to be aggrieved.
Moreover, even if Lexington had
standing to appeal, we would not be
persuaded by the arguments that it has
raised in its appellate briefs. Lexington’s
primary argument is that the District Court
abused its discretion because it did not
determine whether the proposed
Settlement Agreements were fair and
reasonable before approving them. The
“fair and reasonableness” analysis is,
however, generally reserved for
settlements in class action lawsuits (or
derivative shareholder lawsuits), where the
district court must be vigilant in protecting
the due process rights belonging to the
class members. See Fed. R. Civ. P.
23(e)(1)(C) (“The court may approve a
[class action] settlement . . . that would
bind class members only after a hearing
and on finding that the settlement . . . is
fair, reasonable, and adequate.”). Because
the lawsuits before the District Court here
were not class actions, the District Court
was under no duty to review the proposed
Settlement Agreements for fairness or
reasonableness. The parties’ relationships
were defined entirely by fully-integrated
contracts and there was no reason for the
District Court to examine the fairness or
reasonableness of the two Settlement
Agreements, which were negotiated by
sophisticated parties and their counsel.
For the foregoing reasons, we will
dismiss the two appeals6 taken by
Lexington from the District Court’s orders
entered on June 6, 2003.
6 Lexington appealed from
IPSCO Steel (Alabama) Inc. v. Blaine
Constr. Corp., Civil Action Nos. 99-CV-
2055 and 01-CV-440, without having
intervened in either.

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