Opinion
Case No. 1:00-CV-194
May 2, 2001
OPINION
Defendant and Cross-Plaintiff Grand Trunk Western Railroad, Inc. (hereafter "Grand Trunk") has moved for judgment on the pleadings and/or summary judgment as to its cross-claims against Midwest Timber, Inc. (hereafter "Midwest") for indemnity concerning Plaintiffs Charles and Carole Love's Federal Employers' Liability Act ("FELA," 45 U.S.C. § 51 et seq.) claims against Grand Trunk. Midwest has also moved for partial summary judgment and/or judgment on the pleadings.
FACTS
On August 24, 1998 , Plaintiff Charles Love was employed as a brakeman of Grand Trunk. That day, next to railroad siding owned and maintained by Midwest, Love was attempting to spot railroad cars when ground next to the railroad track gave way and he fell and hyper-extended a knee a few feet outside of the railroad track. (Dep. of Charles Love, at 42-44, 50, 169 ; Dep. Exhibits 1, 4, 12 and 13.) Love's testimony to this effect was consistent with the personal injury report he filed on the date of his injury, which stated that he injured his knee when he stepped into a "washout" after releasing the handbrake and stepping off the car. (Love Dep. Exhibit 13.) The parties have provided no other testimony of witnesses who observed the accident, such that the Court is left to infer that Plaintiff was the sole witness of this accident.
Midwest has filed the Expert Report of Guy Western of December 15, 2000, a track inspector who examined the railroad siding on November 28, 2000. The Report opines that based on his review of depositions, exhibits, interviews with officials of Midwest, and his inspection (which were not made part of the record) that the siding was "exemplary" and violated no safety standards. (Midwest Response, Attachment G.) Midwest has also filed the affidavit of Edwin Finley, the President of Midwest. Finley states in his affidavit, without explanation, "From Mr. Love's description of events, he claimed he twisted his knee after stepping off a concrete pad next to our reload building." Finley does not state in his affidavit to what description by Mr. Love he is referring. The reload building apparently referred to by Finley is depicted in a photograph marked by Plaintiff and is near the marked accident site. (See Love Dep. Exhibit 4.)
On the day of the accident, Grand Trunk and Midwest were operating under a Private Rail Siding Agreement. (Grand Trunk, Attachment 1.) Section 7 of the Agreement provides:
7. INDEMNITY. The Industry shall indemnify and hold harmless Grand Trunk for any and all liability for loss of life, or damage or injury to property or persons (including employees of either of the parties hereto), arising by reason of, or which in any way results from the erection of structures or obstructions at clearances less than standard, regardless of the negligence of the parties hereto, and regardless of approval of less than standard clearances by any public regulatory body.
It is understood that the movement of railroad locomotives involves some risk of fire, and the Industry assumes all responsibility for and agrees to indemnify Grand Trunk against loss or damage to property of the Industry or to property upon its premises, regardless of negligence of Grand Trunk, or any of its employees, arising from fire caused by locomotives operated by Grand Trunk on the Siding or in its vicinity for the purpose of serving the
Industry except to the premises of Grand Trunk and to rolling stock belonging to Grand Trunk or to others and to shipments in the course of transportation.
In any other event, Industry agrees to indemnify and hold harmless Grand Trunk for loss, damage or injury arising out of or as a result of any grading or drainage work and ownership, use and/or maintenance of the Siding regardless of the negligence of the parties hereto, except where such loss, damage or injury is caused by the sole negligence of Grand Trunk, its employees or agents.
In case claim is made or suit is instituted against Grand Trunk for any loss or damage or injury for which Industry has herein agreed to indemnify and hold harmless Grand Trunk, Industry agrees that it shall, upon notice from Grand Trunk, settle, adjust or defend the same at its sole cost and expense, and without expense to Grand Trunk and shall pay any judgment rendered therein together with any costs of court.
It is agreed that in the event of any conflict between indemnity provisions of this agreement and any lease between the parties in respect to the land on which the Siding is laid, the indemnity clause of this agreement shall take precedence.
( Id. at 3.)
Furthermore, section 3 of the Agreement required Midwest to "maintain" the majority of the length of the siding and specifically the portion of the siding near the reload building. ( Id. At 2.) Maintenance by Midwest was required to be done "in a manner that would permit safe operation" of the siding. ( Id.)
In light of such provisions, Grand Trunk tendered the defense of the instant suit to Midwest, but Midwest refused to defend and indemnify Grand Trunk. Accordingly, Grand Trunk brought Cross-Claims against Midwest for contractual indemnity (Count II) and for common law indemnity (Count IV). By their motions, Grand Trunk and Midwest now contend that they are entitled to judgment on the pleadings and/ or summary judgment on these counts.
Grand Trunk's motion also originally sought summary judgment on Count III (failure to purchase insurance). However, Grand Trunk has since asserted that resolution of Count III is premature because it is attempting to resolve this issue with a possible insurer (Cincinnati Insurance Company). (Grand Trunk Reply, at 9.) As such, this aspect of Grand Trunk's motion will be denied without prejudice.
STANDARD FOR SUMMARY JUDGMENT
Grand Trunk and Midwest's competing motions both ask for judgment on the pleadings or, in the alternative, summary judgment. Nevertheless, since the motions raise matters outside the pleadings, they must both be construed as motions for summary judgment. See Federal Rule of Civil Procedure 12(c).Under the language of Rule 56(c), summary judgment is proper if the pleadings, depositions, answers to interrogatories and admissions on file, together with affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. The initial burden is on the movant to specify the basis upon which summary judgment should be granted and to identify portions of the record which demonstrate the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). The burden then shifts to the non-movant to come forward with specific facts, supported by the evidence in the record, upon which a reasonable jury could find there to be a genuine fact issue for trial. Anderson v. Liberty Lobby, 477 U.S. 242, 248 (1986). If, after adequate time for discovery on material matters at issue, the non-movant fails to make a showing sufficient to establish the existence of a material disputed fact, summary judgment is appropriate. Celotax Corp., 477 U.S. at 323.
Credibility determinations, the weighing of the evidence, and the drawing of legitimate inferences are jury functions. Adams v. Metiva, 31 F.3d 375, 382 (6`'' Cir. 1994). The evidence of the non-movant is to be believed, and all justifiable inferences are to be drawn in the non-movant's favor. Celotex Corp., 477 U.S. at 323 (quoting Anderson, 477 U.S. at 255). The factual record presented must be interpreted in a light most favorable to the non-movant. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986).
LEGAL ANALYSIS
While a party's rights under FELA are determined under federal law, the right of indemnity as to FELA liability is determined under state law. See, e.g., Eades v. Union Railway Co., 396 F.2d 798 (6th Cir. 1968). Michigan courts have recognized three possible sources of a right to indemnity: the common law, an implied contract, and an express contract. Langley v. Harris Corp., 321 N.W.2d 662, 665-66 (Mich. 1982); Skinner v. D-M-E Corp., 335 N.W.2d 90, 92 (Mich.Ct.App. 1983); Chrysler Corp. v. Brencal Contractors, Inc., 381 N.W.2d 814, 816 (Mich.Ct.App. 1985).
Common law indemnity, under Michigan law, is a limited doctrine and is only available to parties who are free of personal fault, meaning free from active or causal negligence. Langley, 321 N.W.2d at 596-97. Furthermore, in determining whether the primary liability is due solely to passive negligence, Michigan courts simply examine the allegations of the primary complaint. Hill v. Sullivan Equipment Co., 273 N.W.2d 527, 528 (Mich.Ct.App. 1979); Peeples v. Detroit, 297 N.W.2d 839, 843 (Mich.Ct.App. 1980). Swindlehurst v. Resistance Welder Corp., 313 N.W.2d 191, 193 (Mich.Ct.App. 1981); Cutter v. Massey-Ferguson, Inc., 318 N.W.2d 554, 556 (Mich.Ct.App. 1982); Johnson v. Bundy, 342 N.W.2d 567, 570 (Mich.Ct.App. 1983); Feaster v. Hous, 359 N.W.2d 219, 222 (Mich.Ct.App. 1984); Isabella County v. Michigan, 449 N.W.2d 111,114 (Mich.Ct.App. 1989). If an allegation of active negligence is made, regardless of whether it is eventually proven, then common law indemnity is not available. Johnson v. Bundy, 342 N.W.2d at 570. While some Michigan cases, such as Grayson v. Chambersburg Eng., 362 N.W.2d 751 (Mich.Ct.App. 1984), have said that the indemnity issue depends on proofs and not just the allegations of the complaint, this is not the majority view. The Sixth Circuit in 1999, in an unpublished opinion, determined that the "primary complaint rule" is applied by the majority of decisions of Michigan courts and would be applied to preclude indemnification in a case where the complaint alleged both active and passive negligence. Girard v. Great American Lines, Inc., 1999 WL 283924, at 4 (6th Cir. April 30, 1999) (unpublished decision). In the absence of any resolution of the split in authority by the Michigan Supreme Court, this Court believes that the Michigan Supreme Court would adopt the rule applied by the Sixth Circuit Court of Appeals in Girard.
Contractual indemnity is not subject to the active negligence limitation. Under Michigan law, "[i]ndemnity contracts, like other contracts, are to be enforced so as to effectuate the intentions of the parties." Gartside v. Young Men's Christian Assn, 274 N.W.2d 58, 60 (Mich.Ct.App. 1978). To determine the intention of the parties, one must consider not only the language used in the contract, but also the situation of the parties and the circumstances surrounding the contract. Id. Indemnity contracts are to be strictly construed against the drafter and the indemnitee. Id.; Peeples, 297 N.W.2d at 843; Fireman's Fund American Ins. Cos. v. General Electric Co., 253 N.W.2d 748, 751 (Mich.Ct.App. 1977); Hayes v. General Motors Corp., 308 N.W.2d 452, 455 (Mich.Ct.App. 1981). The indemnitor's obligation to indemnify the indemnitee must be described clearly and unambiguously to be enforceable. Fireman's Fund, 253 N.W.2d at 751; Reed v. St. Clair Rubber Co., 324 N.W.2d 512, 515 (Mich.Ct.App. 1982). When it is clearly and unambiguously expressed, however, indemnity is to determined by the courts as a matter of law. Hayes, 308 N.W.2d at 456; Oberle v. Hawthorne Metal Products Co., 480 N.W.2d 330, 334 (Mich.Ct.App. 1991).
As to common law indemnity, Love's complaint alleges "active negligence" by Grand Trunk relating to its "failure to warn," "failure to inspect," and "failing to secure remedial measures" which allegedly caused the accident. (Complaint at 1 9.) These kinds of failures have been deemed "active negligence" by the Michigan courts. See, e.g., Johnson v. Bundy, 342 N.W.2d 567; Cutter, 318 N.W.2d 554. As such, under the rule recognized in Girard, Midwest is entitled to summary judgment on Grand Trunk's common law indemnity claim since the primary complaint alleges active negligence on the part of Grand Trunk.
Grand Trunk has also argued that its liability under FELA must necessarily be considered passive, citing Penn Central v. Checker Cab Co., 488 F. Supp. 1225 (E.D.Mich. 1980). That decision is clearly distinguishable in that the railroad workers injured in that case were injured in a taxi cab-a place over which the railroad had no right of control and no potential liability for active negligence. In this case, the injury occurred in a place where both Grand Trunk and Midwest exercised some degree of control sufficient to give rise to active negligence.
As to contractual indemnity, the Court determines that the Siding Agreement is unambiguous. Its express purpose was to provide rail service to Midwest over Midwest's track while making logical and commonsense arrangements for track maintenance, indemnity, delivery of cars, and the like (including, requiring the owner of the track to maintain the track and indemnify Grand Trunk for damages caused by its use of the track.) Section 7 explicitly relates to indemnity; paragraph 3 of the section explicitly provides an obligation on the part of Midwest to indemnify Grand Trunk for any injuries arising out of the grading, drainage, use and maintenance of the siding except when injury is caused "by the sole negligence of Grand Trunk, its employees or agents." Paragraph 4 of the section also states that if suit is brought for any injury which Midwest has agreed to indemnify (in the preceding three paragraphs) that Midwest will pay the costs of said suit, including settlement, and will defend Grand Trunk.
Given these provisions and the factual record developed, it is clear that Grand Trunk is entitled to contractual indemnity. The only account of the accident in this record is Plaintiff Charles Love's account-which attributes the accident solely to the maintenance of the track and drainage (which was the contractual obligation of Midwest) and not at all to his own fault. While Midwest questions whether it was really at fault (based only on an expert report), it has offered no contradictory testimony (such as the testimony of persons who observed the track near the date of the accident nor any other eye witnesses) sufficient to create a genuine issue of fact. As such, on this record, the Court must conclude as a matter of law that the accident was not due solely to the fault of Charles Love and/or Grand Trunk.
Midwest has contended that the obligation of indemnification is limited to the "siding" itself, meaning the rails and the land inside the rails, and does not extend to areas outside of the siding. This conclusion is absurd and is readily contradicted by the language of the Siding Agreement. The Siding Agreement requires indemnity for injuries arising out of the "use," "maintenance," "grading" and "drainage" of the siding. The Agreement also requires the maintenance of the siding in a manner sufficient to permit the siding's safe use. It was well understood by the parties to the Agreement that railway workers do not walk like tight-rope walkers on the rails nor do they hover around rail cars on fairies' wings. The process of braking, switching and spotting cars-which is the standard "use" of the siding contemplated by the Agreement-requires that workers walk adjacent the rails. Accordingly, the Agreement contemplated that Plaintiff Charles Love would have used the siding in a manner consistent with his testimony and that Midwest would indemnify Grand Trunk for his injuries arising from such use. Accordingly, Grand Trunk is entitled to partial summary judgment as to its claim of contractual indemnity (Count II) against Midwest.
Midwest also argues that this construction renders paragraphs one and two of section 7 as superfluous. This is untrue. The third paragraph excepts the first two paragraphs from its description of "use" such that it can be properly understood as the final "catch-all" category for indemnity which is separate and apart from the obligations of the first two paragraphs (i.e., indemnity for locomotive fires, for obstructions of clearances, et cetera).
CONCLUSION
Partial judgment shall enter in this matter disposing of the parties' motions for judgment on the pleadings and/or summary judgment as stated above. Said judgment shall award the following relief to Grand Trunk: a declaration that Midwest has breached the Siding Agreement by failing to indemnify and defend Grand Trunk in this suit; and an injunction requiring Midwest to indemnify and defend Grand Trunk in this suit. The partial judgment shall also dismiss Count IV of the Cross-Claim with prejudice. It will also deny Grand Trunk's motion as to Count III without prejudice (that request having been withdrawn pending further review).
Although it is not contested, the Court notes that such relief is appropriate in cases involving express contracts of indemnity. See Stein v. Continental Casualty Co., 313 N.W.2d 299, 306 (Mich.Ct.App. 1981).
PARTIAL JUDGMENT
In accordance with the Opinion of this date;
IT IS HEREBY ORDERED that Cross-Plaintiff Grand Trunk Western Railroad, Inc.'s Motion for Judgment on the Pleadings and/or Summary Judgment on Cross-Claims (Dkt. No. 47) is GRANTED IN PART AND DENIED IN PART as stated in the Opinion.
IT IS FURTHER ORDERED that Cross-Defendant Midwest Timber, Inc.'s Motion for Judgment on the Pleadings and/or Summary Judgment (Dkt. No. 56) is GRANTED IN PART AND DENIED IN PART as stated in the Opinion.
IT IS FURTHER ORDERED that summary judgment is entered in favor of Cross-Plaintiff and against Cross-Defendant on Count II of the Cross-Claims.
IT IS FURTHER ORDERED that the Court declares as its judgment that Cross-Defendant has breached its Siding Agreement with Cross-Plaintiff by refusing to indemnify and defend Cross-Plaintiff in this suit.
IT IS FURTHER ORDERED that Cross-Defendant is hereby enjoined to indemnify, hold harmless and defend Cross-Plaintiff as to Plaintiffs' claims in this suit.
IT IS FURTHER ORDERED that summary judgment is granted in favor of Cross-Defendant and against Cross-Plaintiff as to Count IV of the Cross-Claims and Count IV is hereby DISMISSED WITH PREJUDICE.