Case Title: Fla. Dep’t of Transp. v. Schwefringhaus

Citation: 

Docket Number: SC14-69

State: florida

Court: Florida Supreme Court

Date: 2016-04-07T00:00:00Z

Document:
Supreme Court of Florida 
 
 
____________ 
 
No. SC14-69 
____________ 
 
FLORIDA DEPARTMENT OF TRANSPORTATION, 
Petitioner, 
 
vs. 
 
DORTHY SCHWEFRINGHAUS, et al.,  
Respondents. 
 
[April 7, 2016] 
 
QUINCE, J. 
 
This case is before the Court for review of the decision of the Second 
District Court of Appeal in Department of Transportation v. CSX Transportation, 
Inc., 128 So. 3d 209 (Fla. 2d DCA 2013).  In its decision, the district court ruled 
upon the following questions, which the court certified to be of great public 
importance: 
IS DOT BOUND BY A RAILROAD CROSSING AGREEMENT 
UNDER WHICH IT RECEIVED A REVOCABLE LICENSE TO 
USE LAND AS RIGHT–OF–WAY IF THE SOLE 
CONSIDERATION FOR THE LICENSE WAS AN AGREEMENT 
TO INDEMNIFY THE RAILROAD FOR LOSSES ARISING OUT 
OF DOT’S ACTIVITY ON THE LAND? 
 
 
 
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IF SO, IS DOT’S LIABILITY UNDER THE CROSSING 
AGREEMENT LIMITED BY SECTION 768.28(5), FLORIDA 
STATUTES (2002)? 
 
Id. at 215.  We have jurisdiction.  See art. V, § 3(b)(4), Fla. Const.  For the reasons 
that follow, we approve the decision of the Second District, answer the first 
certified question in the affirmative, and answer the second in the negative. 
FACTS 
The Florida Department of Transportation (DOT) appealed a judgment 
awarding $502,462.22 to CSX Transportation, Inc. (CSX) as indemnity for the 
amount of a settlement and related attorneys’ fees paid by CSX to resolve a 
negligence action arising from an accident at a railroad crossing.  CSX Transp., 
Inc., 128 So. 3d at 210.  CSX requested indemnification under a 1936 crossing 
agreement between Seaboard Air Line Railway Company (Seaboard)—
predecessor to CSX—and the State Road Department—the DOT’s predecessor.  
Id. at 211.  The agreement allowed the State Road Department, as a licensee, to 
construct and maintain a road that crossed over railroad tracks owned at the time 
by Seaboard.  Id.  However, the agreement also contained an indemnity clause, 
which read, “The [State Road Department] will indemnify and save harmless 
[Seaboard Air Line Railway Company] from and against all loss, damage or 
expense arising or growing out of the construction, condition, maintenance, 
alteration or removal of the highway hereinabove described.”  Id. at 216-17.   
 
 
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The facts that prompted the filing of suit are as follows: 
On October, 29, 2002, [Robert and Dorthy Schwefringhaus1] 
were riding eastbound in their car on State Road 52 near Giddens 
Road.  A truck, heading westbound, went over some railroad tracks 
owned by CSX.  The crossing was allegedly in poor maintenance, and 
a trailer behind the truck disconnected.  The trailer and its load of 
lumber struck the couple’s car, killing [Mr. Schwefringhaus] and 
badly injuring [his] wife.  State Road 52 is the successor number for 
State Road 210 [the subject of the 1936 crossing agreement]. . . . By 
2002, this road was a major highway, connecting I-75 on the east to 
the newly constructed Suncoast Parkway on the west. 
[Ms. Schwefringhaus], on her own behalf and as personal 
representative of the estate of her husband, filed suit against CSX in 
2004.  The truck driver who dropped the trailer was apparently never 
identified and was not a party to the lawsuit.  CSX brought DOT into 
this action as a third-party defendant in 2008.[2]  Ultimately, following 
a settlement with the plaintiffs, the trial court entered this judgment 
requiring DOT to indemnify CSX in the amount of $125,000 for the 
settlement of this lawsuit and $377,462.22 for the expenses arising 
from its failure to defend the suit. 
 
Id. at 211-12 (footnotes added).  On appeal to the Second District, the DOT argued 
the indemnity clause was invalid because the State Road Department had no legal 
authority to enter into the agreement.  Id. at 210-11.  In the alternative, the DOT 
argued that pursuant to section 768.28(5), Florida Statutes (2002), its liability for 
                                          
 
 
1.  There is some confusion in the record as to the proper spelling of Ms. 
Schwefringhaus’ first name.  Her deposition reveals that the correct spelling is 
“Dorthy.” 
 
2.  The trial court granted CSX’s motion to bifurcate the liability and 
damages phases of the third-party suit and granted, in part, CSX’s Motion for 
Partial Summary Judgment against the DOT. 
 
 
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breach of the crossing agreement must be limited to $200,000, with CSX seeking 
payment of any additional amount from the Florida Legislature.  Id. at 211. 
The Second District rejected the DOT’s argument that the State Road 
Department had no authority to agree to indemnification, finding this case similar 
enough to two cases3 in which this Court enforced the indemnity agreements to 
warrant the same result.  Id. at 212.  The district court also found that the 
indemnity clause was the only consideration the State provided to CSX for the 
agreement.  Id.  Accordingly, the court observed that finding the indemnity 
agreement unenforceable would void the entire crossing agreement, entitling CSX 
“to prevent any vehicles from crossing its tracks, effectively closing State Road 
52” and potentially many other roads where similar, standardized crossing 
agreements containing this same language were used.  Id. at 212-13. 
The Second District also relied on estoppel principles to find the indemnity 
clause enforceable, id. at 214 n.5, and suggested that because CSX did not require 
a lump sum payment at the inception of the contract or annual payments during its 
term, the indemnity payment was simply the DOT’s payment for a license “that 
                                          
 
 
3.  Am. Home Assurance Co. v. Nat’l R.R. Passenger Corp., 908 So. 2d 459, 
463, 473-74 (Fla. 2005) (enforcing crossing agreement between railroad company 
and a municipal agency, although emphasizing that this Court was not resolving 
the issue as to a state subdivision or agency); Russell v. Martin, 88 So. 2d 315 (Fla. 
1956) (enforcing private crossing agreement between railroad company and a 
private property owner). 
 
 
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apparently was free of charge for its first sixty-five years.”  Id. at 213.  While the 
Second District recognized “that Florida’s Constitution states that ‘[n]o money 
shall be drawn from the treasury except in pursuance of appropriation made by 
law,’ ” it did not read this provision as prohibiting the trial court from entering a 
monetary judgment requiring the DOT to indemnify CSX.  Id. at 214. 
Regarding the DOT’s argument that the judgment must be limited to 
$200,000, the district court found that statutes, such as section 768.28, that limit 
liability as part of the Legislature’s partial waiver of sovereign immunity apply 
“only to judgments recovering damages for tort, not to judgments recovering 
damages under legal theories that may be analogous to torts.”  Id.  This case 
involved the latter because the district court found the DOT liable based on an 
express written contract.  Id.  Recognizing that its decision could broadly impact 
similar long-standing agreements throughout the state and affect commerce, the 
Second District certified the following two questions of great public importance: 
IS DOT BOUND BY A RAILROAD CROSSING AGREEMENT 
UNDER WHICH IT RECEIVED A REVOCABLE LICENSE TO 
USE LAND AS RIGHT–OF–WAY IF THE SOLE 
CONSIDERATION FOR THE LICENSE WAS AN AGREEMENT 
TO INDEMNIFY THE RAILROAD FOR LOSSES ARISING OUT 
OF DOT’S ACTIVITY ON THE LAND? 
 
IF SO, IS DOT’S LIABILITY UNDER THE CROSSING 
AGREEMENT LIMITED BY SECTION 768.28(5), FLORIDA 
STATUTES (2002)? 
 
 
 
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Id. at 215.  The DOT appealed, and the Florida Association of County Attorneys 
filed an amicus brief in support of the DOT’s position.  The Association of 
American Railroads filed an amicus brief in support of Respondent CSX, and the 
Florida Justice Reform Institute, the Florida Chamber of Commerce, Inc., and 
Associated Industries of Florida, Inc. jointly filed an amicus brief, also supporting 
Respondent CSX. 
ANALYSIS 
We have previously held that the defense of sovereign immunity will not 
protect the State from a cause of action arising from its breach of an express, 
written contract into which it had statutory authority to enter.  Pan-Am Tobacco 
Corp. v. Dep’t of Corr., 471 So. 2d 4, 5-6 (Fla. 1984).  Both parties agree that this 
principle applies here, but they disagree as to how it applies.  Respondent CSX 
argues that because the State Road Department had statutory authority to enter into 
the crossing agreement, Pan-Am prohibits the DOT from relying on sovereign 
immunity to bar suit for its breach of the indemnity provision within that 
agreement.  The DOT asserts that Pan-Am’s requirement of statutory authority is 
not met in this case because although the State Road Department had authority to 
enter into the crossing agreement, it did not have authority to agree to the 
indemnity clause.  Therefore, according to the DOT, the indemnity provision is 
unenforceable, and Pan-Am’s waiver of sovereign immunity does not apply.  We 
 
 
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agree with Respondent CSX and find that under Pan-Am, the DOT cannot use 
sovereign immunity where the DOT breached a provision of a statutorily 
authorized crossing agreement.4 
In Pan-Am, the Florida Department of Corrections breached its contract with 
Pan-Am Tobacco Corporation by terminating the agreement early and without 
using the required termination procedures within the contract.  Id. at 4-5.  We 
noted that the Legislature, in section 768.28, Florida Statutes, waived sovereign 
immunity in tort law, but not in contracts.  Id. at 5.  However, we found that the 
Legislature’s grant of power to the State to enter into contracts indicates the 
Legislature’s intent that those contracts be binding and mutually enforceable.  Id.  
Thus, we held that “where the state has entered into a contract fairly authorized by 
the powers granted by general law, the defense of sovereign immunity will not 
protect the state from action arising from the state’s breach of that contract.”  Id.  
The question here is whether Pan-Am requires the State Road Department to have 
had statutory authority to enter into the indemnity clause itself or whether statutory 
authority to enter into the crossing agreement is sufficient. 
                                          
 
 
4.  This case involves a pure question of law and a trial court’s ruling on a 
motion for summary judgment—both of which are subject to de novo review.  
Maronda Homes, Inc. of Fla. v. Lakeview Reserve Homeowners Ass’n, Inc., 127 
So. 3d 1258, 1268 (Fla. 2013). 
 
 
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The DOT argues that the indemnity clause requires separate statutory 
authorization because it is essentially a waiver of sovereign immunity, which only 
the Legislature has the power to waive.  See Am. Home Assurance Co. v. Nat’l 
R.R. Passenger Corp., 908 So. 2d 459, 471-72 (Fla. 2005) (“Only the Legislature 
has authority to enact a general law that waives the state’s sovereign immunity.”); 
Art. X, § 13, Fla. Const. (“Provision may be made by general law for bringing suit 
against the state as to all liabilities now existing or hereafter originating.”).  
However, we addressed this argument in Pan-Am, wherein we found an implied 
waiver of sovereign immunity for contract claims, despite the nonexistence of an 
express legislative waiver in that context.  See Cty. of Brevard v. Miorelli Eng’g, 
Inc., 703 So. 2d 1049, 1050 (Fla. 1997); State v. Family Bank of Hallandale, 623 
So. 2d 474, 479 (Fla. 1993).  We stated, “Where the legislature has, by general 
law, authorized entities of the state to enter into contract or to undertake those 
activities which, as a matter of practicality, require entering into contract, the 
legislature has clearly intended that such contracts be valid and binding on both 
parties.”  Pan-Am, 471 So. 2d at 5.  Otherwise, the legislative authorization to 
undertake such activities would be void and meaningless.  Id.  Thus, when the 
State is statutorily authorized to enter into a contract, that authority includes the 
obligations necessary to fulfill the terms of that contract.  
 
 
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Our decision in American Home also reinforces this conclusion.  908 So. 2d 
at 463.  In that case, a municipal agency (KUA) entered into a crossing agreement 
with CSX, in which KUA agreed to indemnify CSX and others against certain 
losses.  Id. at 462-63.  We found that the indemnification provision was not 
controlled by the breach-of-contract principles in Pan-Am “because that case 
addressed the contractual liabilities of the state, while municipalities historically 
have possessed liability for their contracts.”  Id. at 474.5  We determined that KUA 
had authority to enter into contracts for municipal services—including the crossing 
agreement—and that as consideration for the license to use CSX’s property and in 
recognition of the increased risks associated with such use, KUA agreed to 
indemnify CSX against any loss.  Id. at 476.  Because the indemnification clause 
was part and parcel of the “fairly authorized” crossing agreement in that case, we 
found the clause to be binding and enforceable.  Id.  Accordingly, we concluded 
that a municipal agency like KUA has inherent authority to “enter into an 
indemnification agreement as part of a contract with a private party and may not 
invoke sovereign immunity to defeat its obligations under the contract.”  Id. 
                                          
 
 
5.  The DOT argues that American Home is distinguishable from the instant 
case because that case involved a municipality, not a state agency.  However, that 
distinction was only relevant to determine whether Pan-Am applied, not the issue 
here—which is whether the application of Pan-Am requires the crossing 
agreement, generally, or the indemnity clause, specifically, to be statutorily 
authorized. 
 
 
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Although we determined that Pan-Am did not apply, our decision in 
American Home still required that we discuss KUA’s “statutory authority”—the 
same element under Pan-Am that is relevant to the instant case.  Our finding that 
KUA had authority to enter into the indemnity clause was based on that clause 
being “part and parcel” of the “fairly authorized” crossing agreement, not based on 
the clause itself being fairly authorized.  Just as in American Home, the crossing 
agreement here was statutorily authorized, and the indemnity provision therein was 
“part and parcel” of that statutorily authorized crossing agreement.  As such, under 
Pan-Am, the DOT may not invoke sovereign immunity to defeat its performance 
obligations under the crossing agreement. 
The DOT also asserts that the indemnity provision is unenforceable because 
it improperly authorizes expenditures from the state treasury, which only the 
Legislature can do.  Am. Home, 908 So. 2d at 474 (“The state may not employ 
state funds unless such use of funds is made pursuant to an appropriation by the 
Legislature.”); Art. VII, § 1(c), Fla. Const. (“No money shall be drawn from the 
treasury except in pursuance of appropriation made by law.”).  However, our 
holding in Pan-Am addresses this argument as well because the State is authorized 
to expend funds necessary to perform its obligations under the contract.  See Pan-
Am, 471 So. 2d at 5.  In this case, the crossing agreement necessitated the 
expenditure of funds for the DOT to construct and maintain the road it was 
 
 
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licensed to build.  The indemnity provision was merely an additional performance 
obligation that required the DOT to expend funds.  The authorization to fulfill 
one’s performance under a contract does not disappear merely because the 
performance obligation happens to implicate tort law.  Accordingly, we find that 
the DOT is bound by the crossing agreement—including the indemnity clause—
and answer the first certified question in the affirmative.6 
The second certified question asks if the DOT’s liability under the crossing 
agreement is limited by section 768.28(5), Florida Statutes (2002).  CSX Transp., 
Inc., 128 So. 3d at 215.  However, we have previously held that the liability limits 
of section 768.28 do not apply to non-tort claims.  See Am. Home, 908 So. 2d at 
474 (concluding that section 768.28 was not applicable where the indemnity 
provision was based on a contract); Provident Mgmt. Corp. v. City of Treasure 
Island, 796 So. 2d 481, 486 (Fla. 2001) (refusing to apply section 768.28 to restrict 
the award of damages against the State for the erroneous issuance of a temporary 
injunction because “that statute applies only when the governmental entity is being 
sued in tort”).  This holding is supported by the principle that “statutes purporting 
                                          
 
 
6.  In the Second District’s opinion below, the majority and the dissent 
phrase this certified question differently based on characterizing the indemnity 
provision as either the sole consideration or instead as partial consideration for the 
crossing agreement.  We note that neither characterization affects our holding as to 
this certified question. 
 
 
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to waive sovereign immunity must be clear and unequivocal.”  Spangler v. Fla. 
State Tpk. Auth., 106 So. 2d 421, 424 (Fla. 1958).  Waiver cannot be found by 
inference or implication, and statutes waiving sovereign immunity must be strictly 
construed.  Id.  Here, the plain language of this subsection indicates that it applies 
only to tort claims.  § 768.28(5), Fla. Stat. (explaining that state agencies and 
subdivisions “shall be liable for tort claims in the same manner and to the same 
extent as a private individual,” but placing limits on that liability) (emphasis 
added).  Even section 768.28(1), which establishes the limited waiver of sovereign 
immunity, states that it only applies to causes of action seeking “to recover 
damages in tort.”  Am. Home, 908 So. 2d at 474.  We hereby reaffirm that section 
768.28(5) applies only to tort actions, and we answer the second certified question 
in the negative. 
CONCLUSION 
Based on the foregoing, we find that the breach-of-contract principles in 
Pan-Am prohibit the DOT from using sovereign immunity to avoid suit for its 
breach of the crossing agreement.  We also find that DOT is bound by the 
indemnity provision as a part of the statutorily authorized crossing agreement, and 
that the limits of liability in section 768.28(5) do not apply.  We affirm the Second 
District’s opinion in Department of Transportation v. CSX Transportation, Inc., 
 
 
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128 So. 3d 209 (Fla. 2d DCA 2013), and remand for disposition in accordance with 
this opinion. 
It is so ordered. 
LABARGA, C.J., and PARIENTE, LEWIS, CANADY, POLSTON, and PERRY, 
JJ., concur. 
 
NOT FINAL UNTIL TIME EXPIRES TO FILE REHEARING MOTION, AND 
IF FILED, DETERMINED. 
 
Application for Review of the Decision of the District Court of Appeal - Certified 
Great Public Importance  
 
 
Second District - Case No. 2D12-1097 
 
 
(Pasco County) 
 
Gerald B. Curington, General Counsel, and Marc Allen Peoples, Assistant General 
Counsel, Florida Department of Transportation, Tallahassee, Florida, 
 
 
for Petitioner 
 
Daniel John Fleming of Melkus, Fleming & Gutierrez, P.L., Tampa, Florida; and 
Dan Himmelfarb of Mayer Brown LLP, Washington, District of Columbia, 
 
 
for Respondent CSX Transportation, Inc. 
 
Stephen Michael Durden, Jacksonville, Florida, 
 
 
for Amicus Curiae Florida Association of County Attorneys 
 
Peter D. Webster of Carlton Fields Jorden Burt, P.A., Tallahassee, Florida; Wendy 
Frank Lumish of Carlton Fields Jorden Burt, P.A., Miami, Florida; and Daniel 
Saphire, Assistant General Counsel, Association of American Railroads, 
Washington, District of Columbia, 
 
 
for Amicus Curiae Association of American Railroads 
 
 
 
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Stephen H. Grimes and Matthew Harrison Mears of Holland & Knight LLP, 
Tallahassee, Florida; and William Wells Large, Florida Justice Reform Institute, 
Tallahassee, Florida, 
 
for Amici Curiae Florida Justice Reform Institute, Florida Chamber of 
Commerce, and Associated Industries of Florida