Case Title: Mass Transit Admin v. CSX

Citation: 349 Md. 299

Docket Number: 121/96

State: maryland

Court: Maryland Supreme Court

Date: 1998-04-15T00:00:00Z

Document:
Mass Transit Administration v. CSX Transportation, Inc., No. 121, September Term, 1996.
[Contractual Indemnification - Indemnitee, a supplier of services to indemnitor, was
indemnified for loss "arising out of" rendering of the services.  Held:  Loss to indemnitee that
was not proximately caused by rendering of service and that was proximately caused by
negligence on the part of indemnitee nevertheless, on facts, arose out of contractual services
and was covered by indemnity.]
Circuit Court for Howard
County Case #95-CA-26990
IN THE COURT OF APPEALS OF MARYLAND
No. 121
September Term, 1996
_________________________________________
MASS TRANSIT ADMINISTRATION
v.
CSX TRANSPORTATION, INC.
_________________________________________
Bell, C.J.
Eldridge
Rodowsky
Chasanow
Raker
Wilner
Karwacki, Robert L.
 (retired, specially assigned),  
JJ. 
_________________________________________
Opinion by Rodowsky, J.
Eldridge, Chasanow & Raker, JJ., dissent
_________________________________________
Filed:   April 15, 1998
This action is one for judicial review of a decision of the Maryland State Board of
Contract Appeals (BCA).  Since 1979 the State has arranged for Maryland Rail Commuter
(MARC) service under a series of contracts with the Baltimore and Ohio Railroad Company
(B & O) and its successor.  The contract in issue here provides that the State will hold the
railroad harmless from "liability of every kind arising out of the Contract Service," a defined
term under the contract.  In the instant matter we interpret this indemnification provision and
apply it to a grade-crossing collision that occurred without any fault on the part of the crew
of the MARC train involved.  
I
On October 1, 1990, B & O's successor, CSX Transportation, Inc. (CSXT), a Virginia
corporation, and the Mass Transit Administration (MTA), a unit of the Maryland Department
of Transportation, executed the Commuter Rail Passenger Service Agreement (the Contract)
that is the subject of this action.  Article I, Section 1 of the document summarizes CSXT's
primary obligations under the Contract:
"(a)
CSXT will provide regularly scheduled daily commuter rail
service on weekdays (Monday through Friday) on its Capitol Subdivision line
between Baltimore, Maryland, and Washington, DC, and on its Metropolitan
and Cumberland Subdivision lines between Martinsburg, West Virginia, and
Washington, DC, in accordance with Section 2 of this Agreement.  This train
operation, plus the maintenance of equipment, access of and use of facilities,
ticket sales, and other activities required to support the operation of the train
service as provided in this Article I, shall be called the 'Contract Service.'
CSXT will make available its rail facilities on the above stated lines to provide
the Contract Service.  CSXT will operate the Contract Service in a safe and
efficient manner with use of appropriate facilities and staff for management,
train operations, and maintenance. ..." 
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     Subsection 9(a) contains an indemnification by CSXT of MTA for "liability of every
1
kind arising out of the injury to or death of CSXT employees while engaged in activities
directly related to the provision of the Contract Service on any railroad property."
The provision of the Contract that ultimately gave rise to this appeal is Article I,
Section 9(b), which provides:
"(b)
Indemnification by [MTA]
"(1)
[MTA] agrees to indemnify, save harmless, and defend
CSXT from any and all casualty losses, claims, suits, damages or liability of
every kind arising out of the Contract Service under this Agreement, up to a
maximum amount of One Hundred Fifty Million Dollars ($150,000,000), per
occurrence, during the term of this Agreement, as excepted or limited by the
terms of subsections (a), (c), (d), and (e), infra.   This maximum
[1]
indemnification amount shall include any expenses for outside manpower, for
legal representation and for other extraordinary expenses of handling
individual claims for [MTA]. ...
"(2)
CSXT will promptly advise [MTA] of pending claims for
which [MTA] is responsible under subsection (b)(1) with estimates of
settlement costs in each instance.  Any proposed settlement or payment in
excess of Ten Thousand Dollars ($10,000) will be submitted to [MTA] for
prior approval."  
(Emphasis added).
In subsection 9(d)(1) MTA "agrees to self-insure Five Million Dollars ($5,000,000)
per occurrence of any casualty claim or loss for which it is responsible" under the Contract.
In subsection 9(d)(2) MTA agrees, at its cost and expense, to procure and maintain "excess
liability insurance coverage commonly provided by Railroad operations liability insurance"
in the amount of $145 million in excess of the $5 million "self-insured retention."
Subsection 9(d)(2) further provides:
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     Subsection 9(c) seems intended to complement subsection 9(d) by limiting MTA's
2
indemnification to $5 million if the claim against CSXT is covered by insurance purchased
pursuant to subsection 9(d)(2).  
Subsection 9(e) expressly subjects MTA's self-insurance and insurance purchase
obligations to the availability of funding and budgetary appropriations.
     CSXT's On-Track Equipment and Work Authority Rules provide:
3
"701. On-track equipment [OTE] operators must be examined and qualified
on the Operating Rules or they must be working under the immediate (on-the-
job) supervision of a person who has been examined and qualified on these
rules.
"702. When other than CSX on-track equipment is being operated on CSX
track, a qualified employee must accompany and direct such equipment.  He
shall position himself to observe and give instruction to the OTE operator and
he will be responsible for obtaining authorities and complying with the
Operating Rules.
(continued...)
"This insurance shall cover liability assumed by [MTA] under this [Contract]
... and shall name the State of Maryland and [MTA] as insured.  Such
insurance policies shall name CSXT as an additional insured for CSXT's
operation of the Contract Service ...."2
On November 4, 1992, CSXT contracted with Melvin Benhoff Sons, Inc. (Benhoff)
to pave four, at-grade, public road crossings over CSXT's Baltimore-Washington tracks,
including the Hanover Road crossing in Howard County.  MTA was neither notified of the
work to be done, nor was it asked to help defray the cost of the work. 
On December 18, 1992, Benhoff commenced work on the Hanover Road crossing.
The work included a Benhoff employee's operation of a backhoe on the tracks.  A CSXT
foreman was supervising, in accordance with certain rules promulgated by CSXT.   At
3
-4-
     (...continued)
3
"703. The OTE operator must be familiar with the method of train operation
and the physical characteristics of the territory over which the on-track
equipment is being operated, or on which work is to be performed." 
Rule 704, as summarized by BCA, 
"governs on-track equipment movement and short-term track movements.  For
example, a main track, signalled track or siding must not be occupied or fouled
without written authority of the train dispatcher.  The track foreman is required
to request authority from the dispatcher to occupy the tracks, including the
specific location, the limits and time of occupancy.  After authority for
presence on the track is received, the track must be cleared within the
authorized time, and the track foreman must report that the track is clear."
approximately 9:10 a.m. that same day, MARC passenger train No. 244 was bound toward
Baltimore.  After rounding a bend just prior to the Hanover Road crossing, the MARC train
struck Benhoff's backhoe and "totalled" it.  No one was injured as a result of the collision.
The backhoe operator left the machine on the tracks as the train approached.  Whether the
CSXT foreman warned the backhoe operator of the approaching train in sufficient time to
move the machine off the tracks was disputed between CSXT and Benhoff.  BCA, however,
found that "apparently the central train dispatcher was not informed of Benhoff's presence
and work plans pursuant to Rule 704.  Thus, there was no notice to any train engineers or
any notice to the dispatcher so that he might alert any oncoming trains of the obstruction on
the track." 
Benhoff sued CSXT in the Circuit Court for Howard County seeking $40,420.25 as
the value of the backhoe.  Benhoff's complaint alleged CSXT's negligence to be the failure
of the track foreman to warn the backhoe operator of the approaching MARC train.  CSXT
-5-
     Maryland Code (1974, 1995 Repl. Vol.), § 5-305 of the Courts and Judicial Proceedings
4
Article (CJ) reads:
"A covenant, promise, agreement or understanding in, or in connection
with or collateral to, a contract or agreement relating to the construction,
alteration, repair, or maintenance of a building, structure, appurtenance or
appliance, including moving, demolition and excavating connected with it,
purporting to indemnify the promisee against liability for damages arising out
of bodily injury to any person or damage to property caused by or resulting
from the sole negligence of the promisee or indemnitee, his agents or
(continued...)
denied liability and asserted contributory negligence.  Prior to trial, CSXT settled with
Benhoff for $23,350.  In the action now before us, MTA concurred that the amount of the
Benhoff settlement was "reasonable."  
In its claim for indemnification from MTA for the amount paid to Benhoff, CSXT
asserted two grounds for indemnification.  As described by MTA:
"1.
The maintenance and repair work performed on the Hanover
Road track crossing 'was necessary to support the operation of the train
service.'
"2.
The train involved in the collision was a MARC train that was
engaged in Contract Service." 
MTA denied CSXT's claim on three grounds:  (1) the work performed by Benhoff was not
part of Contract Service; (2) although a MARC train was the instrumentality that actually
struck Benhoff's backhoe, there was no negligence in the rendering of that Contract Service;
and (3) "to interpret Contract Section 9(b)(1) to prescribe indemnification under the
circumstances presented here would be violative of a strong Maryland public policy
articulated in § 5-305, Md. Cts. & Jud. Proc. Ann. Code."  
4
-6-
     (...continued)
4
employees, is against public policy and is void and unenforceable.  This
section does not affect the validity of any insurance contract, workers'
compensation, or any other agreement issued by an insurer."
CJ § 5-305 has been renumbered CJ § 5-401 by Section 9, Chapter 14 of the Acts of
1997.  See Maryland Code (1974, 1995 Repl. Vol., 1997 Cum. Supp.).  The new CJ § 5-401
is substantially identical to its predecessor.
In accordance with Md. Regs. Code tit. 21, § 10.04.06 (1989) (COMAR), CSXT
appealed MTA's decision to BCA which ruled in favor of MTA on summary disposition.
BCA determined that, (1) the grade crossing repair undertaken by Benhoff "represented a
necessary and recurring maintenance activity required of CSXT notwithstanding the
existence of the instant commuter rail Contract," and, as such, was "outside the scope of the
Contract with the State, provided no direct benefit to the State, and was performed without
its knowledge"; and (2) "[t]he mere fact that a MARC train was innocently and fortuitously
involved in the incident does not bring the incident within the ambit of the definition of
'[C]ontract [S]ervice' under the Contract."  BCA concluded that it need not consider whether
the incident arose out of a construction contract to which CJ § 5-305 applied.
CSXT petitioned the Circuit Court for Howard County for judicial review.  That court
affirmed, concluding that the reasons given by BCA were supported by substantial evidence.
CSXT appealed to the Court of Special Appeals, which reversed and directed the
circuit court to instruct BCA to order MTA to pay $23,350 to CSXT.  CSX Transp., Inc. v.
Mass Transit Admin., 111 Md. App. 634, 647-48, 683 A.2d 1127, 1133 (1996).  The court
agreed with CSXT's contention that, notwithstanding the absence of negligence in the
-7-
     In the Court of Special Appeals, CSXT also argued that the claim for indemnification
5
"arose out of Contract Service because the rehabilitation work being done to the crossing,
and the flagging activity at the site, were in support of the track and facilities used for the
MARC trains."  No. 179, September Term, 1995, Appellant's Brief at 16.  In view of its
holding, the Court of Special Appeals found it unnecessary to address the alternative
contention of CSXT.  CSX Transp., 111 Md. App. at 644 n.4, 683 A.2d at 1131 n.4.
operation of the MARC train, "the December 18, 1992, collision arose out of 'Contract
Service' because the collision involved a MARC train and 'Contract Service' specifically
includes 'train operations.'"  Id. at 640, 683 A.2d at 1129.  The court also held that CJ § 5-
305 was no bar because the indemnification agreement is "neither 'in, or in connection with,
or collateral to, a contract or agreement relating to' construction."  Id. at 645, 683 A.2d at
1132.5
This Court granted MTA's petition for certiorari.  The petition presents the following
questions:
"1.
Does contractual indemnity for liability 'arising out of' work
under a contract extend to liability caused solely by the negligence of the
indemnitee (or its contractor) in work that is not work under the contract?
"2.
Is an indemnitor's promise to indemnify for liability that was
caused only by the indemnitee or its agent rendered unenforceable by [CJ]
§ 5-305, which voids a promise in, in connection with, or collateral to a
construction agreement that purports to indemnify the promisee for its own
negligence or the negligence of its agents?"
II
On the first issue MTA's premise is that the Hanover Road work is not Contract
Service, in whole or in part, and that the only Contract Service involved in the collision was
the operation of the MARC train.  MTA argues that the Court of Special Appeals erred in
-8-
holding that the mere fact that the MARC train collided with the backhoe satisfies the
"arising out of" requirement.  MTA submits that more than mere "but for" causation is
required to create "arising out of" indemnification liability.  What that extra quantum must
be is not made clear by MTA, other than that it is more than "but for" causation and that it
need not reach the level of proximate causation.  (Borrowing a term from the equal
protection field, we shall call this notion "intermediate causation.").  The operation of the
MARC train did not constitute a cause of the injury, in MTA's view, because the operation
of the train was not negligent; only the track maintenance was negligent.  Furthermore,
argues MTA, absent commercial insurance or an agreement to the contrary, Maryland law
precludes indemnification for the indemnitee's own negligence.
CSXT contends that, inasmuch as operating the MARC train clearly constitutes
Contract Service, Benhoff's claim "arose out of" Contract Service because the MARC train
was the direct and immediate physical cause of the damage to Benhoff's backhoe.  CSXT
submits that an instrumentality need not be the "proximate" cause of damage, nor need there
be any fault or negligence in the operation of the instrumentality to give rise to "arising out
of" indemnification liability.  In short, concludes CSXT, "[u]nlike a tort claim, where
'proximate cause' is the issue, in contract indemnity claims the language 'arising out of'
triggers a 'causation in fact' analysis."  Appellee's Brief at 21.  CSXT also asserts that "there
is no way to interpret the MTA's agreement to indemnify CSXT against claims arising out
of Contract Service, other than as including an agreement to indemnify it for claims asserting
negligence on the part of CSXT or its employees."  Appellee's Brief at 30-31.
-9-
III
Although MTA suggests to the contrary, the indemnification provision in the instant
matter applies to CSXT's liability based solely on its own negligence.  MTA places
considerable reliance on Heat & Power Corp. v. Air Prods. & Chems., Inc., 320 Md. 584,
578 A.2d 1202 (1990), and Farrell Lines, Inc. v. Devlin, 211 Md. 404, 127 A.2d 640 (1956).
In Heat & Power a contractor agreed to construct a building to house the assembly
used to produce certain gases.  Heat & Power, 320 Md. at 587, 578 A.2d at 1204.  During
construction an employee of the contractor was injured when the building exploded, due
solely to the fault of the building's owner.  Id. at 587-88, 578 A.2d at 1204.  The construction
contract provided that the contractor would hold the owner harmless "from any and all loss
[or] liability ... resulting from or arising out of or in connection with the performance of this
Contract by Contractor."  Id. at 588, 578 A.2d at 1204 (emphasis omitted).  
After holding that the indemnity provision was void under CJ § 5-305, we
alternatively held as follows:
"Even if [CJ § 5-305] was not applicable, [the indemnification
provision] of the contract is not sufficiently clear and unequivocal to
indemnify Owner against its own negligence.  In Crockett v. Crothers, 264
Md. 222, 227, 285 A.2d 612, 615 (1971), this Court held that 'contracts will
not be construed to indemnify a person against his own negligence unless an
intention to do so is expressed in those very words or in other unequivocal
terms.'  Since the contract did not expressly or unequivocally indemnify
Owner against its own negligence, the circuit court judge was correct in ruling
as a matter of law that Contractor had no contractual duty to indemnify
Owner."
Id. at 593, 578 A.2d at 1206-07.
-10-
     The relevant portion of the contract in Farrell Lines read as follows:
6
"7.  INSURANCE:  The Contractor agrees to carry and include in the rates
herein specified, Workmen's Compensation Insurance for the unlimited
protection of its employees under State and Federal laws, also Comprehensive
General Liability Insurance in the amount of $100,000.00 for death or injury
of one person and $1,000,000.00 for death or injury of more than one person
in a single accident.  Such Comprehensive General Liability Insurance to
contain a provision or endorsement to indemnify Farrell Lines Incorporated
against loss for damages due to or arising out of such operations on account
of bodily injuries or death sustained by any person or persons as in the policy
defined and further as respects such injuries sustained by employees of the
Contractor, anything in the policy to the contrary notwithstanding."
Farrell Lines, Inc. v. Devlin, 211 Md. 407, 127 A.2d 640 (1956), Record Extract at 306.
We qualified that holding by saying:
"The rule of construction that a 'contract will not be construed to indemnify a
person against his own negligence unless an intention to do so is expressed in
those very words or in other unequivocal terms,' Crockett, supra, does not
apply to an insurance contract.  The policy consideration against implying
agreements to indemnify one for one's own negligence are inapplicable to
liability insurance contracts which generally have as their primary purpose
indemnification against one's own negligence.  Also, one of the reasons why
contracts to indemnify must be expressed in unequivocal terms is to protect the
unwary or uninformed promisor.  A liability insurer is rarely an unwary or
uninformed promisor."
Id. at 596, 578 A.2d at 1208.
In Farrell Lines there was no express agreement of indemnity in the contract between
the parties, a shipowner and a stevedoring company.  Farrell Lines, 211 Md. at 421, 127
A.2d at 648.6
Heat & Power involved a promise by one who was hired to perform a service to
indemnify the person for whom the service was to be performed.  Heat & Power, 320 Md.
-11-
     In both cases the relevant provision in substance read:
7
(continued...)
at 587-89, 578 A.2d at 1204-05.  In that relationship the person for whom the service is to
be performed incurs a risk that the conduct of the person providing the service will create
vicarious liability on the part of the hirer, or that the conduct may involve a non-delegable
duty.  Consequently, we require that there be no ambiguity and that the indemnification, if
intended to embrace the sole negligence of the indemnitee, be unequivocal.  See id. at 593,
578 A.2d at 1206-07.  The indemnification provision in the instant matter, however, reverses
the direction of the indemnification from that more commonly encountered.  Here, the hirer
of the service gives the indemnity, and the party performing the service is indemnified.  It
appears that the railroad industry historically has sought and obtained indemnifications.  In
E.R. Tan, Annotation, Validity, Construction, and Effect of Agreement, in Connection with
Real-Estate Lease or License by Railroad, for Exemption from Liability or for
Indemnification by Lessee or Licensee, for Consequences of Railroad's Own Negligence, 14
A.L.R.3d 446 (1967), the author summarizes:  "The validity of an exculpatory or indemnity
clause discussed in this annotation has been recognized in numerous cases."  Id. at 453.
Indeed, this Court, relying on exculpatory agreements, has sustained injunctions against the
prosecution of actions at law against railroads for damages caused by the railroad's
negligence.  See, e.g., Danzer & Co. v. Western Md. Ry. Co., 164 Md. 448, 165 A. 463
(1933); Adamstown Canning & Supply Co. v. Baltimore & Ohio R.R. Co., 137 Md. 199, 112
A. 286 (1920).   In a more contemporary context, indemnifications of established railroads
7
-12-
     (...continued)
7
"'And the said second party releases said first party from all claims of
whatsoever character for damages resulting to the property of said second
party by reason of fire originating from the engines and locomotives of the
first party and resulting in the burning or destruction of or injury to the
property of the second party.'"
Danzer, 164 Md. at 452, 165 A. at 465; see also Adamstown Canning, 137 Md. at 201, 112
A. at 286-87.
are found in agreements between the railroads and governmental entities whose light rail
service shares the existing railroad right of way.  See B.D. Morant, Contracts Limiting
Liability:  A Paradox with Tacit Solutions, 69 Tul. L. Rev. 715, 726 nn.45 & 46 (1995). 
In "unequivocal terms," the indemnification in the instant matter includes the liability
of CSXT for its own acts or omissions.  As the party rendering the commuter rail service,
CSXT does not have any exposure to vicarious liability for the negligence of MTA arising
out of the Contract Service; the exposure to any vicarious liability in that circumstance runs
in the other direction.  Under the Contract MTA indemnifies the first $5 million of CSXT's
liability, arising out of Contract Service, and MTA either provides public liability insurance
at its expense for CSXT's exposure from $5 million to $150 million, or MTA indemnifies
CSXT for any uninsured balance of that exposure.  In addition to the very words used in
expressing the indemnification, the fact that it extends to $150 million clearly indicates that
the parties were contemplating a possible disaster, such as a wreck of a train filled with
commuters, due to CSXT's negligence.
-13-
IV
Inasmuch as the indemnification was intended, at a minimum, to serve as liability
insurance for CSXT for the first $5 million of CSXT's liability, it is appropriate to interpret
and apply the indemnification in the same manner as liability insurance policies are
interpreted and applied.  That is what the Court of Special Appeals did when it relied on
liability insurance cases in holding that the operation of the MARC train was a cause of the
damage to the backhoe but that that operation need not be a proximate cause.  CSX Transp.,
111 Md. App. at 643-44, 683 A.2d at 1131-32.
In public liability insurance policies, "arising out of" may introduce either coverage
or exclusion provisions.  Northern Assurance Co. of America v. EDP Floors, Inc., 311 Md.
217, 533 A.2d 682 (1987), cited by both parties, concerned an exclusion in a commercial
general liability policy for bodily injury or property damage "'arising out of the ownership,
maintenance, operation, use, loading or unloading of ... any automobile.'"  Id. at 225, 533
A.2d at 686.  The underlying claim was asserted by an employee of a customer of the
insured.   Id. at 220, 533 A.2d at 683-84.  The claimant was injured while assisting the
insured's driver in unloading a delivery from the insured's truck--assistance that was required
because the driver's helper, although present, was either inebriated or hung over.  Id.  When
the helper threw a lever that caused the hydraulic lift at the rear of the truck to move, part of
the load fell on the claimant.  Id. at 220, 533 A.2d at 684.  In his suit the claimant alleged,
in addition to vicarious liability of the insured, that the insured negligently hired, supervised,
and retained the helper.  Id.  We held that there was no coverage on the following rationale:
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"The words 'arising out of' must be afforded their common understanding,
namely, to mean originating from, growing out of, flowing from, or the like.
While these words plainly import a causal relation of some kind, read in
context, they do not require that the unloading of the truck be the sole 'arising
out of' cause of the injury; they require only that the injury arise out of the
unloading of the vehicle.  Therefore, if [claimant's] bodily injury arose out of
EDP's employee's unloading of the truck, then that injury is excluded from
coverage.  This is so regardless of whether the injury may also be said to have
arisen out of other causes further back in the sequence of events, such as the
employee's consumption of alcohol, or the employer's negligent failure to
supervise the employee.  The exclusion also applies irrespective of the theory
of liability by which [claimant] seeks redress for his injury, as the policy
exclusion is not concerned with theories of liability.  Rather, the policy insures
against certain types of damages or injuries, specifically excluding injuries
arising out of the operation, use or unloading of EDP's vehicle.
"As we see it, the language in the exclusionary clause clearly focuses
the 'arising out of' inquiry on the instrumentality of the injury, i.e., upon the
truck and its unloading.  When, as here, there is no ambiguity in the policy
exclusion, the first principle of construction of insurance policies in Maryland
requires that we apply the terms of the contract as written.  To apply either a
proximate or concurrent cause analysis in the interpretation of the policy
exclusion, as EDP urges, would severely strain its plain import and would
result in coverage being provided, contrary to the intention of the parties, for
acts inseparably associated with the operation, use or unloading of the truck."
Id. at 230-31, 533 A.2d at 688-89 (citations omitted).  
Here MTA argues that negligence on the part of CSXT, further back in the chain of
causation, caused the accident, either by failure to warn the backhoe operator, failure to warn
the oncoming MARC train, or failure to alert the dispatcher that the work on the crossing
was being done.  Those omissions do not diminish the fact that the damage to the backhoe
arose out of the collision with the MARC train, just as the insured's negligence in EDP
Floors in allowing the helper to go out on the delivery truck did not diminish the fact that the
personal injuries in that case arose out of unloading the truck. 
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EDP Floors has been favorably cited in other "arising out of" automobile use
exclusion cases where the claimant alleged that the insured negligently supervised or trained
the auto-using tortfeasor.  See, e.g., Scarfi v. Aetna Cas. & Sur. Co., 233 N.J. Super. 509,
515, 559 A.2d 459, 463 (1989) ("[T]he underlying action for negligent hiring or training was
triggered only when [the claimant] was injured as a result of the [automobile accident].");
McPherson v. Michigan Mut. Ins. Co., 310 S.C. 316, 320, 426 S.E.2d 770, 772 (1993)
("[W]ithout the [operator's] allegedly negligent operation of the [automobile], there is no link
by which [the owner's] negligence can be independently connected to [the claimant's]
injuries."); Taylor v. American Fire & Cas. Co., 925 P.2d 1279, 1283 (Utah Ct. App. 1996)
("[T]he acts complained of could not have resulted in injury but for the use of the
automobile."), cert. denied, 936 P.2d 407 (Utah 1997).
An argument analogous to that of MTA in the instant matter was rejected by Judge
Kaufman in Chesapeake & Potomac Tel. Co. v. Allegheny Constr. Co., 340 F. Supp. 734 (D.
Md. 1972).  In that case, the telephone company's insurer under a manufacturer's and
contractor's liability policy denied coverage for a personal injury damage suit brought by the
employee of a contractor engaged by the telephone company to replace old telephone poles.
Id. at 736-38.   After the claimant had climbed a pole and attached himself to it, the pole
broke beneath the surface of the earth and toppled the claimant to the ground.  Id. at 737.
Judge Kaufman interpreted the policy to insure against liability for injury "arising out of"
operations performed by the contractor.  Id. at 741.  Rejecting the insurer's argument that the
pre-contract negligence of the telephone company was alleged to be the cause of the accident
-16-
so that the injury could not arise out of contract operations, Judge Kaufman held that "'but
for' the operations having been conducted, [the claimant] would not have been injured during
the course of them."  Id. at 742; see also Township of Springfield v. Ersek, 660 A.2d 672 (Pa.
Commw. Ct. 1995), appeal denied, 544 Pa. 640, 675 A.2d 1254 (1996).
National Indemnity Co. v. Ewing, 235 Md. 145, 200 A.2d 680 (1964), involved a
coverage provision for bodily injury caused by accident and arising out of the ownership,
maintenance, or use of an automobile.  There we concluded that "it has generally been held
that, while the words import and require a showing of causal relationship, recovery is not
limited by the strict rules developed in relation to direct and proximate cause."  Id. at 149,
200 A.2d at 682.  In that case the driver of the insured vehicle and his passenger, both of
whom were inebriated, were traveling late at night on a rural road during a snowstorm.   Id.
at 147-48, 200 A.2d at 681.  When the vehicle went off the road, skidded along the shoulder,
and ultimately struck a utility pole, the passenger was thrown from the car, but was not
injured.  Id.  A passing motorist stopped and rendered assistance, including locating the
passenger sitting on a snowbank.  Id. at 148, 200 A.2d at 681.  While the host driver was
assisting his passenger in walking down the highway to re-enter the insured vehicle, the
passenger was struck and injured by a third car that was traversing the highway some twenty-
five minutes after the first accident.  Id.  We affirmed a declaratory judgment, entered after
a jury trial, that the injuries to the claimant passenger arose out of the host driver's use of the
insured automobile.  Id. at 147, 200 A.2d at 680-81.  Although bound by the jury's finding
that the injuries to the claimant in the second accident were proximately caused by
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concurrent negligence on the part of the host driver and the third motorist, the Court found
that there was a sufficient nexus of cause and effect between the use of the insured
automobile in the first accident and the injuries to the claimant in the second accident.  Id.
at 150-51, 200 A.2d at 682-83.  The connection was that "the negligent use of the [insured]
car created a situation where [the claimant] was subjected to the risk of injury."  Id. at 150-
51, 200 A.2d at 683.
Ewing relied, inter alia, upon Schmidt v. Utilities Ins. Co., 353 Mo. 213, 182 S.W.2d
181 (1944), involving coverage under an automobile liability policy for a pedestrian fall-
down accident.  Schmidt, 182 S.W.2d at 181-82.  The claimant had tripped over triangular
wooden blocks that a coal company's employees had left on the sidewalk when they had
completed deliveries of coal.  Id. at 182.  The blocks had been used as a ramp, rising from
street level to the top of the curb, to allow the insured delivery trucks to back up on the
sidewalk to the customer's coal chute.  Id.  Although the negligent disposition of the blocks
could be viewed as the proximate cause of the claimant's injuries, "the acts of disposition
grew out of or arose from the use of the trucks, as trucks."  Id. at 184.  
The insurance treatises support the view articulated in EDP Floors and in Ewing that
the words "arising out of" mean "originating from, growing out of, flowing from, or the like."
See, e.g., 6B J.A. Appleman & J. Appleman, Insurance Law and Practice § 4317, at 360-63
(R.B. Buckley ed., 1979) (in the context of automobile insurance, the words "arising out of"
have "broader significance than the words 'caused by', and are ordinarily understood to mean
originating from, incident to, or having connection with the use of the vehicle"); 12 G.J.
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Couch, Couch Cyclopedia of Insurance Law § 45:61, at 294 (2d ed. 1981) ("[T]he words
'arising out of' ... generally mean 'originating from,' 'growing out of,' or 'flowing from.'"); 1
R.H. Long, The Law of Liability Insurance § 1.22, at 1-57 (1972) ("The phrase 'arising out
of' is not to be construed to mean 'proximately caused by.'  ... The words 'arising out of' mean
causally connected with, not 'proximately caused by' use.").
In its opinion in this case the Court of Special Appeals also relied upon Faber v.
Roelofs, 311 Minn. 428, 250 N.W.2d 817 (1977) (en banc), where coverage turned on
whether the bodily injury was one "arising out of" the ownership, maintenance, or use of the
insured school bus.  Faber, 250 N.W.2d at 819-20.  The school bus was owned by a private
contractor whose liability policy named the school district as an additional insured.  Id. at
819.  An elementary school pupil had been killed when he ran into the street alongside the
bus, slipped, and fell under the wheels.  Id.  There was no negligence on the part of the bus
driver or owner, but the school district had been found to be concurrently negligent in
establishing the bus route and the boarding and embarking procedures.  Id. at 819-20.  The
court rejected the argument that, because of the absence of negligence on the part of the bus
operator or owner, the accident was not one "arising out of" the use of the school bus.   Id.
at 822-23.  Rather, because the pupil "was run over by the insured vehicle [t]he causal
relation [was] present."  Id. at 823.
See also American Family Mut. Ins. Co. v. Shelter Mut. Ins. Co., 747 S.W.2d 174
(Mo. Ct. App. 1988) (where claimant tripped in ruts in driveway of business premises while
assisting the driver of the business's insured truck to carry an automobile transmission that
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had been unloaded from the truck twenty to thirty-five feet away, claimant's injury arose out
of the use of the insured vehicle).
MTA alternatively contends that, even if proximate causation is not required for
"arising out of" coverage, something more than "but for" causation is required.  From among
the decisions of this Court MTA selects two as illustrations of "intermediate causation,"
Ewing, supra, and Frazier v. Unsatisfied Claim & Judgment Fund Bd., 262 Md. 115, 277
A.2d 57 (1971).  MTA's argument attempts to read into these cases a meaning that is not
there.  In Ewing this Court simply rejected proximate cause as a predicate for "arising out of"
coverage, without mentioning any need for some lesser fault.  Ewing, 235 Md. at 149, 200
A.2d at 682.
The flaw in MTA's argument is clearly exposed in Frazier.  There the claimants
against the former Unsatisfied Claim and Judgment Fund (the Fund) were a mother and her
child, age five at the time of the accident.  Frazier, 262 Md. at 116, 277 A.2d at 58.  Under
the Fund law one basis for recovery against the Fund was a personal injury that "arises out
of" the use of an unidentified motor vehicle.  Id. at 117, 277 A.2d at 58.  While the mother
had been driving an open convertible with her child in the back seat, an unidentified
motorist, driving in the opposite direction, threw a lighted cherry bomb or firecracker into
the back seat of the convertible.  Id. at 116, 277 A.2d at 58.  The projectile exploded, the
child cried, the mother lost control of the car, and the car hit a tree.  Id.  This Court, drawing
on automobile liability coverage cases, held that the Fund was answerable because "the
injuries under the facts of this case did arise out of the ... use of an unidentified motor
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vehicle."  Id. at 119, 277 A.2d at 59.  There was no fault in the driving, per se, of the
unidentified motor vehicle--only in what the unidentified motorist did while driving.  We fail
to see how Frazier supports the need for "intermediate causation" in the operation of the
MARC train before the collision can be said to "arise out of" the train's operation.
Contracts made by promisors, other than commercial insurers, to indemnify for loss
"arising out of" certain activity of the indemnitor are interpreted and applied in the same
manner as contracts made by commercial insurers.  Here, Contract Service is an activity of
MTA, and we have demonstrated (see Part III, supra) that the promise to indemnify includes
liability for the sole negligence of CSXT.  Consequently, so long as the liability of CSXT
arises out of Contract Service, it matters not that MTA is without fault. 
The indemnification agreement at issue in O'Connor v. Serge Elevator Co., 58 N.Y.2d
655, 458 N.Y.S.2d 518, 444 N.E.2d 982 (1982) (per curiam), amended on other grounds by
58 N.Y.2d 799, 459 N.Y.S.2d 266, 445 N.E.2d 649, and reargument denied, 58 N.Y.2d 824,
459 N.Y.S.2d 1030, 445 N.E.2d 657 (1983), involved the construction of a thirty-two-story
building.  O'Connor, 444 N.E.2d at 983.  The drywall subcontractor, in its subcontract,
agreed to indemnify the general contractor against liability "includ[ing] personal injuries
'arising out of the work which is the subject of this contract,' regardless of whether caused
by [the subcontractor, the general contractor], or others."  Id.  An employee of the
subcontractor, while leaving his workplace for lunch, had been injured by an elevator then
being installed by the elevator subcontractor.  Id.  Reversing a judgment for the drywall
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subcontractor on the general contractor's claim against it for indemnification, the Court of
Appeals of New York said:
"The [sub]contract could not be performed, of course, unless [the drywall
subcontractor's] employees could reach and leave their workplaces on the job
site.  The instant injuries, occurring during such a movement, must be deemed
as a matter of law to have arisen out of the work.  Thus, [the general
contractor] was entitled to indemnity from [the drywall subcontractor]."
Id.  Similarly, the damage to the backhoe arose out of CSXT's Contract Service.
The following cases are to the same effect:  Indemnity Ins. Co. of N. Am. v. Koontz-
Wagner Elec. Co., 233 F.2d 380 (7th Cir. 1956) (applying Indiana law) (under contract for
removal of light fixtures in owner's manufacturing plant, providing that contractor indemnify
owner for liability "growing out of the performance of this order," contractor must indemnify
owner for injuries to contractor's employees incurred when owner's employee drove a lift
truck into scaffolding on which contractor's employees were standing while removing
fixtures); Myers v. Burger King Corp., 618 So. 2d 1123 (La. Ct. App.) (under contract for
renovation of owner's fast food restaurant, providing that contractor promised to maintain
liability insurance to protect owner from any claims which "arise from" the contractor's
operations, contractor breached promise by failing to obtain insurance, and contractor is
liable for damages payable to contractor's employee for injuries suffered due to owner's
negligent installation of a menu board that struck contractor's employee while employee was
working on it), writ denied, 629 So. 2d 348 (1993); Vitty v. D.C.P. Corp., 268 N.J. Super.
447, 633 A.2d 1040 (App. Div. 1993) (under contract to provide towing and wrecking
services on the Garden State Parkway, providing that contractor indemnify state highway
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authority for liability "arising out of this License," contractor must indemnify state highway
authority for death of contractor's employee who, while on duty in tow truck standing at
crossover, was killed when struck by a drunk driver whose car allegedly became airborne as
a result of defective design of highway median); Wallace v. Sherwood Constr. Co., 877 P.2d
632 (Okla. Ct. App. 1994) (mem.) (under subcontract for hauling dirt during construction of
turnpike, providing that hauling subcontractor indemnify general contractor for all damages
"arising out of or resulting from subcontractor's performance of the work required by the
subcontract," subcontractor must indemnify general contractor for injuries to subcontractor's
sub-subcontractor caused fifty percent by general contractor's negligence and fifty percent
by claimant's contributory negligence).
In the instant matter, were we to interpret the contractual indemnification by MTA of
CSXT more narrowly than a liability insurance policy, then CSXT would have less
protection against the risk of liability up to $5 million than it would have under a liability
policy in the exposure range of $5 million to $150 million.  That was not the intention of the
parties to the Contract.
V
MTA argues that, if the indemnification provision in the Contract applies to the facts
of the matter at hand, then the indemnification is void under CJ § 5-305, set forth in full in
note 4, supra.  The obvious obstacle that the argument faces is that the Contract relates to
commuter rail service and not to construction work.  MTA's response to that obstacle is that
the promise to indemnify is also unenforceable if the promise is "in connection with or
collateral to, a contract or agreement relating to the construction ... of a ... structure."  MTA
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submits that when the indemnification promise in the Contract is applied to a loss that is
caused by the negligence of the CSXT foreman who was overseeing work under the CSXT-
Benhoff contract, then the indemnification is "in connection with" a construction contract.
The Court of Special Appeals refused to give the statute so expansive a reading, agreeing
with the observation of the United States Court of Appeals for the Fourth Circuit in Brown
v. Baltimore & Ohio R.R. Co., 805 F.2d 1133 (1986), that the General Assembly did not
intend a reading so expansive as to reach, as presented in Brown, hold harmless provisions
in license and easement agreements given by railroads for access over and under their rights
of way.  Id. at 1142.
We agree with the Court of Special Appeals that CJ § 5-305 is not to be given so
expansive a reading that it is applicable to the facts of the instant matter.  In doing so we
shall assume, arguendo, that the CSXT-Benhoff contract is a contract "relating to the
construction, alteration, repair, or maintenance of a building, structure, appurtenance or
appliance."  Nevertheless, the plain or ordinary meaning of "in connection with or collateral
to" in the context of CJ § 5-305 would embrace supplemental, amendatory, or side
agreements relating to the construction contract and made between the parties to the
construction contract.  Further, CJ § 5-305 possibly could embrace contracts between third
parties and one or the other of the parties to the construction contract where such a third-
party contract is necessary to the performance by a party to the construction contract of that
party's obligations under the construction contract. 
The Contract was executed October 1, 1990, succeeding agreements between the
railroad and the State for commuter rail service dating back to 1979.  CSXT's "construction"
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contract with Benhoff was not made until November 1992.  Inasmuch as a railroad is an
operating unit, see Maryland Code (1986, 1994 Repl. Vol.), § 8-108 of the Tax-Property
Article, some connection can be found between almost any two contracts of a railroad that
are to be performed during the same period of time.  We do not believe, however, that the
General Assembly intended so attenuated a connection.  
A decent respect for the freedom of sophisticated parties contractually to establish the
rules governing their business relationship compels the conclusion that the General Assembly
intended contracting parties to be able to determine, when they contract, whether CJ § 5-305
applies to their agreement.  On October 1, 1990, the Contract was not one for construction,
and we hold that it did not become a construction contract because of the collision between
a MARC train and the backhoe.  Construing CJ § 5-305 as MTA proposes would
retroactively void the indemnification of the State by CSXT, as to claims of CSXT's
employees against MTA, and retroactively void the indemnification of CSXT by the State.
Were the General Assembly to enact a statute that expressly and retroactively voided pre-
existing contracts of indemnity, weighty constitutional issues would be raised.  We do not
interpret CJ § 5-305 to operate in the same fashion based on a temporary interface of forces.
MTA asserts that there is a contradiction in the analysis by the Court of Special
Appeals when it said:  "Although the collision may have arisen out of the construction
contract between CSXT and Benhoff, CSXT's right to indemnification does not arise out of
a construction contract."  CSX Transp., 111 Md. App. at 645, 683 A.2d at 1132.  As the
Court of Special Appeals made plain, and as we attempted to make plain in Part IV, supra,
the chain of causation "arising out of" the Benhoff contract, i.e., omission by the CSXT
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foreman at the Hanover Road crossing, is a proximate cause of the backhoe's destruction,
while the chain of causation "arising out of" Contract Service under the Contract is physical
causation or causation in fact.  The latter satisfies contractual indemnity while the former is
required for tort liability.
VI
For the reasons above set forth the Circuit Court for Howard County erred in its
judicial review of the BCA determination.  That court considered that BCA applied correct
legal principles to facts supported by substantial evidence.  BCA, however, used an incorrect
legal standard.  It applied the indemnification provision based on the proximate cause of the
collision with the backhoe, without recognizing that the "arising out of" promise in the
Contract's indemnification of CSXT was a broader concept.
JUDGMENT OF THE COURT OF SPECIAL
APPEALS AFFIRMED.  COSTS TO BE PAID
BY THE PETITIONER, MASS TRANSIT
ADMINISTRATION.