IPSCO STEEL ALABAMA , INC., an Alabama Corporation v. Blaine Construction Corporation, a Tennessee Corporation. Kvaerner U.S. Inc

1
PRECEDENTIAL
UNITED STATES COURT OF
APPEALS FOR THE THIRD CIRCUIT
__________
No. 03-2929
__________
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.
Kvaerner U.S. Inc., Appellant
(D.C. Civil Action No. 99-cv-02055)
__________
No. 03-2966
__________
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.
Kvaerner U.S. Inc., Appellant
(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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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 Appellant Kvaerner U.S.
Inc.
Dingess, John R.
Lund, Kenneth J.
Saulnier, Brian 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
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

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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:
The question which we must
answer on this appeal is whether the
District Court properly approved two
settlement agreements among the
litigants over the objection of one of the
parties, Kvaerner U.S. Inc. (“Kvaerner”).
Because we hold that the District Court
did not err, we affirm.
I.
A. Kvaerner
This litigation arose from a $550
million project involving the
construction of a steel plant in Alabama.
The project owner, IPSCO Steel, Inc.
(“IPSCO”) hired Kvaerner as its Project
Manager. Under the Project
Management Agreement (“PMA”),
Kvaerner was responsible for
recommending the contracts that IPSCO
awarded to various subcontractors and
suppliers. The PMA also specified that
Kvaerner was “IPSCO’s agent for the
purpose of administering Supplier
Contracts and managing and
coordinating Suppliers’ Work” and that,
in connection with liens and disputes,
Kvaerner was “to protect IPSCO’s
interests at all times.”
The PMA prescribed certain
penalties and incentives. Kvaerner
expressly warranted that the “Aggregate
Cost” of the project would not exceed a
“Guaranteed Maximum Price” of $182
million and that it would reimburse
IPSCO for any costs in excess of $182
million. If, however, the Aggregate Cost
came in below the Guaranteed Maximum
Price, IPSCO promised to share 50% of
the savings with Kvaerner.
The PMA anticipated that certain
disputes would arise with the suppliers
and it authorized Kvaerner to serve as
IPSCO’s litigation manager. The
relevant provision, which is Section
4.04(x) in the PMA, reads:
The Project Manager
[Kvaerner] shall be
primarily responsible for
the management and
resolution, either with its
own resources or through
legal counsel or other
consultants, of claims and
disputes between Suppliers
and with Suppliers within
the Guaranteed Portion of
the Project . . . provided

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that [Kvaerner] shall
promptly inform and keep
IPSCO fully informed of
such claims and disputes
and any negotiations or
legal proceedings with
such Suppliers . . . [and]
that any final resolution or
settlement of such dispute
shall be subject to IPSCO’s
approval . . . [and]
IPSCO’s interests are
otherwise at all times
protected . . . .
(Appendix at 220.)
The PMA also included an
insurance component. Specifically, the
PMA required IPSCO to procure at least
$20 million of professional liability
insurance covering Kvaerner, the sub-
consultants, and the design
professionals. To satisfy this obligation,
IPSCO hired Marsh USA, Inc.
(“Marsh”), an insurance broker, who in
turn procured a $20 million policy from
Liberty Mutual Insurance Company
(“Liberty Mutual”). The policy was a
so-called “wasting policy,” whereby
costs of defending legal actions would
be deducted from the total amount of
available coverage.
B. Blaine
On Kvaerner’s recommendation,
IPSCO awarded the contract to complete
the design and construction of the
primary buildings to Blaine Construction
Corporation (“Blaine”). Less than one
year into the project, Blaine discovered
design errors in its work and abandoned
the project, which caused significant
disruptions and delays.
In response to Blaine’s
unexpected abandonment, IPSCO and
Kvaerner entered into a written
agreement reinforcing their (IPSCO’s
and Kvaerner’s) agency relationship and
amending certain aspects of the PMA.
The “Amending Agreement,” which
estimated the losses resulting from
Blaine’s abandonment to be in the range
of $14 million to $18 million, provided
that any proceeds ultimately recovered
from Blaine or its insurers, if any, would
be paid solely to IPSCO, but that such
recovered funds would be applied as a
credit against the “Aggregate Cost”
under the PMA.
Under the terms of the Amending
Agreement, IPSCO and Kvaerner agreed
Kvaerner would pursue recovery from
Blaine, Liberty Mutual and Marsh for
damages resulting from Blaine’s
conduct. More important, IPSCO and
Kvaerner agreed their respective roles in
that dispute would be governed by
Section 4.04(x) of the PMA. See
Amending Agreement ¶ 5.01 (“The
rights and responsibilities of [Kvaerner]
and IPSCO in respect of the Blaine
Action will be governed by section
4.04(x) [of the PM A].”) (App. 278.).
C. Construction Action; Coverage
Action

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At about the same time, IPSCO
and Kvaerner filed suit against Blaine in
the District Court for the Western
District of Pennsylvania, where
Kvaerner has its principal place of
business. The complaint sought to
recover the damages caused by Blaine’s
abandonment and design errors. For
ease of reference, we will refer to this
lawsuit as the “Construction Action.”
Blaine then turned to Liberty
Mutual and demanded both defense and
coverage under the $20 million wasting
policy that Liberty Mutual had issued.
When Liberty Mutual denied coverage
on the ground that it had allegedly never
received proper notice that Blaine was an
insured under the policy, Blaine filed
suit against Liberty Mutual in the
Western District of Pennsylvania seeking
a declaration from the court that it was
covered under the policy. Blaine also
asserted claims against Marsh, the
insurance broker, because Marsh had
issued an “advice of insurance” three
years earlier assuring Blaine that it was
covered by the Liberty Mutual policy.
We refer to this lawsuit as the “Coverage
Action.”
The following year, IPSCO and
Kvaerner entered into a confidential
settlement agreement with Blaine (the
“Construction Action Settlement”).
Under that agreement, the parties agreed
to submit the issue of Blaine’s liability to
an arbitration panel and, in the event the
arbitration panel found Blaine liable, the
parties agreed to enter a $26 million
stipulated judgment against Blaine in
favor of IPSCO. Blaine, however, had
“empty pockets,” so IPSCO and
Kvaerner further agreed that they would
satisfy the $26 million judgment, if any,
by looking solely to Blaine’s insurers.
To that end, the Construction
Action Settlement required Blaine to
continue prosecuting the Coverage
Action against Liberty Mutual and
against Marsh. Blaine was prohibited
from settling any of its claims without
prior written approval from IPSCO and
Kvaerner. Upon learning of the
Construction Action Settlement, the
District Court stayed both the
Construction Action and Coverage
Action, presumably because a finding of
“no liability” in the arbitration
proceeding would put an end to both
lawsuits.
D. Alabama Action Against Kvaerner
Meanwhile, IPSCO filed a lawsuit
against Kvaerner in federal court in
Alabama seeking more than $60 million
in various cost overruns on the project.
These cost overruns included damages
resulting from Blaine’s abandonment of
construction. Because Kvaerner is
insured under the $20 million policy
issued by Liberty Mutual, almost all of
the defense costs that it incurred in the
Alabama lawsuit have been paid by
Liberty Mutual. Accordingly, each
dollar spent on Kvaerner’s defense
reduced Liberty Mutual’s coverage
under its wasting policy. It was

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estimated at oral argument that $5
million had been expended to that time.
E. Liberty Mutual Settlement
While the arbitration proceeding
was pending, IPSCO, Blaine, and
Liberty Mutual commenced settlement
discussions. Apparently, Kvaerner was
invited to participate in these
discussions, but declined to do so. In
May 2003, IPSCO, Blaine, and Liberty
Mutual reached a settlement that
resolved all of the outstanding claims in
the Construction and Coverage Actions
except those claims involving Marsh (the
“Liberty Mutual Settlement”). Under the
Liberty Mutual Settlement, (i) IPSCO
and Kvaerner agreed to release all claims
that they had asserted in the Construction
Action against Blaine, and (ii) Blaine
agreed to release all claims that it had
asserted in the Coverage Action against
Liberty, IPSCO and Kvaerner. In return,
Liberty Mutual agreed to pay $6 million
to IPSCO.
Immediately after the Liberty
Mutual Settlement was reached, IPSCO
mailed a letter to Kvaerner which read:
As you know, pursuant to
Section 4.04(x) of the
PMA, Kvaerner has been
acting as agent and
litigation manager for
IPSCO in the Pennsylvania
legal proceedings against
Blaine and related
insurance coverage
litigation against Liberty
and Marsh U.S.A., Inc.
(“Marsh”).
Blaine, IPSCO, and
Liberty have now
concluded a settlement
agreement to resolve the
Pennsylvania proceedings
as to all parties except
Marsh. A copy of the
Settlement Agreement is
enclosed.
Pursuant to the PMA,
IPSCO hereby directs
Kvaerner, as its agent, to
confirm in the space
provided below that
Kvaerner consents to the
enclosed Settlement
Agreement insofar as any
such consent might be
required from Kvaerner.
Please return a
countersigned copy of this
letter.
(App. at 334.)
Kvaerner refused to consent to the
Liberty Mutual Settlement because it felt
that the $6 million settlement was
insufficient in light of the negotiated
judgment of $26 million. When
Kvaerner made it known that it would
not consent to the Liberty Mutual
Settlement of $6 million, IPSCO filed a
motion in the District Court asking the
District Court Judge to: (i) reopen the

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Construction and Coverage Actions; (ii)
approve the Liberty Mutual Settlement
of $6 million; and (iii) dismiss all of the
claims in the Construction and Coverage
Actions except those involving Marsh.
Kvaerner opposed the motions, arguing
that IPSCO had no right to force it to
accept a settlement agreement to which it
did not agree.1
F. Marsh Settlement
Shortly before the District Court
was scheduled to hear oral argument on
IPSCO’s motions, IPSCO reached a
settlement with Marsh on the remaining
claims (the “Marsh Settlement”). In
exchange for a release of all claims in
the Coverage Action, Marsh agreed to
pay IPSCO $500,000. Two days before
oral argument, IPSCO filed a motion to
approve the Marsh Settlement in the
District Court.
G. District Court Ruling
Following oral argument, the
District Court granted both of IPSCO’s
motions in their entirety, thereby
approving the Liberty Mutual and Marsh
Settlement Agreements and dismissing
both actions. The District Court
concluded that Kvaerner could not
unilaterally veto or affect the Settlement
Agreements because, under the PMA, it
was required to “protect IPSCO’s
interests” in any litigation with project
suppliers. The District Court held that:
(i) Kvaerner had a fiduciary duty as
IPSCO’s agent to act for IPSCO’s
benefit; (ii) IPSCO had the right to
control the resolution of disputes and
litigation; and (iii) Kvaerner was
contractually obligated to follow any
instructions by IPSCO. In short, the
District Court found that the agency
relationship prohibited Kvaerner from
placing its own financial interests ahead
of IPSCO’s interests. The District Court
therefore approved the Liberty Mutual
and Marsh Settlements and dismissed the
Construction and Coverage Actions.
Kvaerner thereafter filed these
appeals. We have jurisdiction to hear the
appeals pursuant to 28 U.S.C. § 1291.
The District Court’s factual findings will
not be reversed unless the record
demonstrates that they are clearly
erroneous. See Fed. R. Civ. P. 52(a).
Conclusions drawn with respect to the
legal effect of any agreement are,
however, questions of law and therefore
subject to plenary review. See Linder v.
Inhalation Therapy Servs., Inc., 834 F.2d
306, 310 (3d Cir. 1987).
II.
1 Lexington Insurance Company
(“Lexington”), which had issued a
professional liability policy to Kvaerner,
also opposed the proposed settlement,
although it was not a party to either
action. Lexington has filed a separate
appeal, which we also decide today. See
IPSCO Steel (Alabama) Inc. v. Blaine
Constr. Corp., at Docket Nos. 03-
3109/3110, -- F.3d -- (3d Cir. 2004).

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The crux of the issues on appeal
is whether the District Court erred when
it approved the two Settlement
Agreements, notwithstanding Kvaerner’s
objection. The answer turns primarily
on the question of whether Kvaerner was
IPSCO’s agent for purposes of the
lawsuits and whether Kvaerner
contracted to protect IPSCO’s interests.
Under Alabama law, “[a]gency is
generally a question of fact to be
determined by the trier of fact.”2 Thrash
v. Credit Acceptance Corp., 821 So. 2d
968, 972 (Ala. 2001). The existence of a
principal-agent relationship normally
turns on whether the alleged principal
reserved a right of control over the
manner of the alleged agent’s
performance. Id. “The right-of-control
test requires that the right be reserved,
not that the right be actually exercised.”
Id. “How the parties characterize the
relationship is of no consequence; it is
the facts of the relationship that control.”
Id.
The District Court found that
Kvaerner was contractually obligated to
act as IPSCO’s agent and litigation
manager for purposes of disputes arising
between IPSCO and IPSCO’s suppliers
and subcontractors on the project.
The District Court’s finding is
supported by the PMA. The PMA gives
Kvaerner “primary responsibility” for
disputes between IPSCO and its
Suppliers, but requires Kvaerner to
protect IPSCO’s interests “at all times”
and reserves final settlement approval to
IPSCO.3 Thus, IPSCO assigned certain
authority to Kvaerner, but it retained the
right to control the manner in which
Kvaerner managed disputes and it
[IPSCO] retained the right to control
settlements of disputes.
Kvaerner contends that it is not
the agent of IPSCO for purposes of the
contested settlements. First, Kvaerner
argues that, “[t]he fact that IPSCO (and
Blaine and Liberty Mutual) conditioned
the effectiveness of the [Liberty Mutual
Settlement] on Kvaerner’s consent
demonstrates that those parties
themselves view the rights subject to
dismissal as belonging, at least in part, to
Kvaerner in its own right.” Under
Alabama law, however, the right-of-
control need only be reserved, not
exercised. See Thrash, 821 So. 2d at
972.
2 The PMA has a choice-of-law
clause stating that the “Agreement shall
be interpreted and construed in
accordance with the laws of the State of
Alabama.” (App. at 207.)
3 Kvaerner reaffirmed its duty to
protect IPSCO’s interests when it
entered into the Amending Agreement
with IPSCO, which provided that IPSCO
and Kvaerner’s respective roles in the
litigation against Blaine, Liberty Mutual,
and Marsh would be governed by
Section 4.04(x) of the PMA.

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Thus, it is of no consequence that
IPSCO instructed Kvaerner to give its
consent to the settlements. Kvaerner, as
IPSCO’s agent and pursuant to its
agreement to protect IPSCO’s interests,
was required to do IPSCO’s bidding,
which included Kvaerner’s consenting to
the two settlements. Moreover, it was
understood that IPSCO conditioned the
effectiveness of the settlements on
obtaining Kvaerner’s consent because
Kvaerner was a named party in the
Construction and Coverage Actions.
Second, Kvaerner contends that
the District Court grossly exaggerated
Kvaerner’s agency role because the
PMA assigned to Kvaerner “the primary
responsibility for the management and
resolution of claims and disputes
between Suppliers and with Suppliers.”
Yet that statement serves only to confirm
Kvaerner’s agency status in the
Construction and Coverage Actions
because Blaine clearly falls within the
definition of Supplier.4
As IPSCO’s agent, Kvaerner
owed IPSCO a duty of loyalty. See
Miller v. Jackson Hosp. & Clinic, 776
So. 2d 122, 124 (Ala. 2000) (“The
principal-agency relationship is fiduciary
in nature and imposes upon the agent a
duty of loyalty, good faith, and fair
dealing.”). That duty of loyalty required
Kvaerner to protect IPSCO’s best
interests. Once IPSCO made it known
that it had reached a settlement with
Liberty Mutual and Marsh, Kvaerner
was under a duty to effectuate IPSCO’s
wishes and consent to the settlements.
See Am. Armed Servs. Underwriters, Inc.
v. Atlas Ins. Co., 108 So. 2d 687, 694-95
(Ala. 1958) (“An agent sustains a
position of trust toward his principal and
in all transactions affecting the subject of
his agency, the law dictates that he must
act in the utmost good faith . . . .”).
Kvaerner’s duty of loyalty
surmounted what could be considered as
a conflict of interest. The “conflict”
arose because Liberty Mutual had issued
a wasting policy. At the time that
IPSCO entered into the proposed
settlements with Marsh and Liberty
Mutual, Liberty Mutual had already paid
out approximately $5 million under the
policy to Kvaerner to reimburse it for
defense costs that Kvaerner had incurred
in the Alabama litigation. Because the
Alabama litigation had not yet ended,
Kvaerner had a self-interest in ensuring
that funds remained available under the
policy to continue paying for Kvaerner’s
future defense costs. Because it was a
“wasting” policy, however, each dollar
spent on Kvaerner’s defense costs
reduced the $20 million policy dollar-
for-dollar. At the same time, IPSCO was
fully aware that the amount available
under the policy to pay for any judgment
that might be rendered in the Coverage
4 The PMA defines “Suppliers”
as persons, firms or corporations
performing, providing or delivering
services, supplies, or labor on the
project. (App. at 206.)

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Action was decreasing on a daily basis.
Indeed, as we have noted, Liberty
Mutual’s policy was already depleted by
$5 million and only $15 million
remained. Thus, it was in IPSCO’s
interests to reach a settlement with
Liberty Mutual sooner rather than later.
Even though such a settlement was
adverse to Kvaerner’s interests,
Kvaerner was required, as the protector
of IPSCO’s interests, to resolve any such
conflicts in IPSCO’s favor.
Kvaerner contends, however, that,
even apart from the defense costs, it had
an independent financial interest in the
outcome of the Construction and
Coverage Actions and therefore could
not be forced to consent to the
settlements. Kvaerner emphasizes that
any funds recovered by IPSCO in a
settlement or a court judgment would be
applied, under the Construction Action
Settlement, as a credit against the
“Aggregate Cost.” Because the
Aggregate Cost of the project will
ultimately determine whether Kvaerner
must pay IPSCO a penalty for exceeding
the $182 million Guaranteed Maximum
Price, Kvaerner contends that the size of
the settlement with Liberty Mutual and
Marsh will ultimately have a financial
effect on Kvaerner: it will either
decrease the penalty Kvaerner must pay
to IPSCO or it will increase the bonus
IPSCO must pay to Kvaerner.
We acknowledge that the size of
the settlement will have an indirect effect
on Kvaerner, but it does not follow that
Kvaerner is permitted to place its own
interests ahead of IPSCO’s interests,
even if Kvaerner believed that IPSCO
was settling for too little.5
Courts have, in somewhat
analogous situations, approved
settlements over the objections of named
parties. Of course, motions to approve
settlements most often arise in the class
5 Kvaerner believes that IPSCO
settled with Liberty Mutual for an
inadequate amount ($6 million) because
the Construction Action Settlement had
provided that IPSCO and Kvaerner
could enter a $26 million judgment
against Blaine if the arbitration panel
ruled that Blaine was liable. Blaine was
judgment proof and therefore any funds
to pay for the $26 million judgment
would have to come from Blaine’s
insurers (i.e., Liberty Mutual).
At the time of the settlements, the
maximum possible recovery against
Liberty Mutual was already limited to
$15 million ($20 million policy limit
minus $5 million spent on Kvaerner’s
defense costs). But in order for IPSCO
to recover from Liberty Mutual, two
things had to happen. First, the
arbitration panel had to find that Blaine
was liable and, second, Blaine had to
succeed in its lawsuit against Liberty
Mutual. Given the risks inherent in
those two events and the $15 million
cap, a $6 million settlement does not
strike us as unreasonably small.

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action context, but they occasionally
come up in “ordinary” lawsuits as well.
For example, in Liberate Technologies
LLC v. Worldgate Communications, Inc.,
133 F. Supp. 2d 357 (D. Del. 2001), a
company by the name of SMI Holdings,
Inc. filed a patent infringement suit
against Worldgate Communications, Inc.
in the District of Delaware. Id. at 358.
While the lawsuit was pending, SMI
Holdings sold the patents to Liberate
Technologies LLC and asked the District
Court to substitute Liberate
Technologies as the plaintiff. Id. at 359.
SMI Holdings remained a party to the
action, however, because of certain
counterclaims that had been filed against
it by Worldgate Communications. Id. at
358 n.1.
Some time later, Worldgate
Communications and Liberate
Technologies settled the patent
infringement claims, but SMI Holdings
refused to allow the lawsuit to be
dismissed because it objected to the
settlement agreement. Even though it no
longer held title to the patents, SMI
Holdings argued, among other things,
that it was not adequately represented in
the settlement negotiations. The District
Court found this argument unpersuasive,
noting that there was “strong evidence”
that SMI Holdings had given Liberate
the sole right “‘to not only try and settle
out the patent claims but to settle out the
counterclaims that were brought.’” Id. at
359. Consequently, the district court
granted the motion to approve the
settlement. Id. at 360.
Kvaerner contends that the
Liberate decision is “readily
distinguishable” on the ground that,
unlike the original patent holder in
Liberate, Kvaerner “never relinquished
its claims against Blaine.” We cannot
agree. First, not only had Kvaerner
agreed in the PMA that it would place
IPSCO’s interests ahead of its own with
respect to managing litigation with
suppliers, but it had unequivocally
agreed that it would protect IPSCO’s
interests as it concerned liens and
disputes. Second, both the Amending
Agreement and the Construction Action
Settlement specifically state that any
funds recovered against Blaine or its
insurers would be paid directly and only
to IPSCO.
Thus, notwithstanding Kvaerner’s
inclusion in the caption of the
Construction Action Complaint as a co-
plaintiff, the real, and indeed the only,
party-in-interest in the Construction and
Coverage Actions was IPSCO and
Kvaerner could not veto or affect the
Settlement Agreements.
III.
Kvaerner complains that the
District Court approved IPSCO’s motion
to approve the Marsh Settlement without
giving Kvaerner a reasonable
opportunity to respond. As we
previously mentioned, IPSCO filed the
motion to approve the Marsh Settlement
two days before oral argument was to be
held on IPSCO’s previously-filed motion

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to approve the Liberty Mutual
Settlement.
District courts must give a party
notice and an opportunity to respond
before disposing of a case. See
Neiderhiser v. Borough of Berwick, 840
F.2d 213, 216 n.6 (3d Cir. 1988)
(criticizing district court for not giving
parties opportunity to respond before
dismissing lawsuit for lack of subject
matter jurisdiction); Anthuis v. Colt
Industries Operating Corp., 789 F.2d
207, 211 (3d Cir. 1986) (criticizing
district court for granting summary
judgment without giving certain parties
opportunity to respond).
In this case, we believe the
District Court should have given
Kvaerner an opportunity to file a brief in
response to IPSCO’s motion to approve
the Marsh Settlement. It does not
necessarily follow, however, that the
District Court’s chosen course of action
constitutes reversible error. Kvaerner
had an opportunity to respond to the
Marsh motion, albeit a limited one, at the
previously scheduled oral argument on
the Liberty Mutual Settlement.
Moreover, IPSCO’s motion to approve
the Marsh [Coverage] Settlement raised
essentially all the same issues that were
raised by IPSCO’s motion to approve the
Liberty Mutual [Construction and
Coverage] Settlement. Hence, by
presenting arguments as to why the
Liberty Mutual Settlement should not be
approved, Kvaerner’s attorney was also
presenting arguments as to why the
Marsh Settlement should not be
approved. As a consequence, the
District Court’s failure to give Kvaerner
more time to respond to IPSCO’s motion
to approve the Marsh [Coverage]
Settlement constitutes harmless error.
IV.
For the foregoing reasons, we will
affirm the District Court’s two orders
dated June 6, 2003, which approved the
Liberty Mutual [Construction and
Coverage] Settlement and Marsh
[Coverage] Settlement and which
dismissed the Construction and
Coverage Actions.

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