Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_04-cv-00619/USCOURTS-azd-2_04-cv-00619-2/pdf.json

Nature of Suit Code: 330
Nature of Suit: Federal Employers' Liability
Cause of Action: 28:1331 Fed. Question

---

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Steven Schrum, )

)

Plaintiff, ) No. CIV 04-619-PHX-RCB

)

vs. ) O R D E R

)

The Burlington Northern Santa )

Fe Railway Company, )

)

Defendant. ) )

The Burlington Northern Santa )

Fe Railway Company, )

a corporation, )

 )

Third-Party Plaintiff, )

)

vs. )

 )

Chemical Lime Company of )

Arizona, a corporation; ABC )

Corporations I-IV, fictitious )

corporations, )

)

Third-Party Defendants. )

_____________________________ )

Introduction

Currently pending before the court is a motion for 

Case 2:04-cv-00619-RCB Document 130 Filed 05/24/07 Page 1 of 24
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

1 As explained in this court's September 18, 2006, order, the court

retains jurisdiction despite the fact that plaintiff and BNSF have both timely

filed Notices of Appeal. See Doc. 125 at 2-3.

- 2 -

reconsideration by defendant/third-party plaintiff, The Burlington

Northern Santa Fa Railway Company ("BNSF"), brought pursuant to

L.R. 7.1(g) (doc. 113). In accordance with this court's order of

September 18, 2006, third-party defendant Chemical Lime Company of

Arizona ("Chemical Lime") filed a response (doc. 126) to this

motion and BNSF filed a reply (doc. 128).1

 Having found oral

argument unnecessary, the court rules as follows. 

Background

On May 18, 2006, this court granted summary judgment in favor

of BNSF, and against plaintiff Steven Schrum. Doc. 110. Chemical

Lime joined in BNSF's motion (doc. 72), and the court granted

summary judgment in favor of Chemical Lime as well. Id.

In addition to moving for summary judgment as to plaintiff's

claims, in its capacity as a third-party plaintiff BNSF filed a

separate motion seeking summary judgment "on its indemnification

claim against Chemical Lime[,]" as alleged in its third-party

complaint. See Doc. 70 at 5. Chemical Lime also sought summary

judgment on the indemnity issue, but contrary to BNSF, Chemical

Lime argued that there were "no facts triggering any indemnity

obligation" on its part. Doc. 68 at 1. This court denied as

"moot" BNSF's and Chemical Lime's motions with respect to the issue

of indemnification. Doc. 110 at 13. As directed by the court, on

May 18, 2006, judgment was entered in this case in favor of

defendant BNSF and against plaintiff Schrum. Doc. 111. 

BNSF timely filed this motion for reconsideration, wherein it

Case 2:04-cv-00619-RCB Document 130 Filed 05/24/07 Page 2 of 24
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 3 -

concedes that once the court found in BNSF's favor on the issue of

liability, whether Chemical Lime "had a duty to indemnify BNSF for

any judgment that might have been entered against it . . became a

non-issue[.]" Doc. 113 at 2. At the same time, however, BNSF is

taking the position that because the duty to defend is separate and

distinct from the duty to indemnify, the court should have

addressed the duty to defend, which it did not. BNSF is requesting

the court "reconsider" this "narrow issue." Id. at 3. More

specifically, BNSF is requesting the court to "hold that Chemical

Lime breached its duty to defend . . . when it denied BNSF's

repeated tender of defense, and grant BNSF's summary judgment

motion against Chemical Lime on th[at] duty." Id. (footnote

omitted). 

Discussion

I. Standard of Review

There is no express provision in the Federal Rules of Civil

Procedure for a motion for reconsideration. See United States v.

Comprehensive Drug Testing, Inc., 473 F.3d 915, 955 (9th Cir. 2006)

(Thomas, J., dissenting). "Rather, such motions are creatures of

local rule or practice." Id. In the present case, BNSF brought its

motion for reconsideration pursuant to L.R. 7.2(g), see doc. 113 at

1. which, "[a]bsent good cause shown," requires the filing of such

motions "no later than ten (10) days after the filing of the order

that is the subject of the motion." L.R. 7.2(g). A timely motion

such as this "is construed as a motion to alter or amend a judgment

under Rule 59(e)." See Shapiro v. Paradise Valley Unified, 374

F.3d 857, 863 (9th Cir. 2004) (citations omitted). 

"There are four grounds upon which a Rule 59(e) motion may be

Case 2:04-cv-00619-RCB Document 130 Filed 05/24/07 Page 3 of 24
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 4 -

granted: 1) the motion is necessary to correct manifest errors of

law or fact upon which the judgment is based; 2) the moving party

presents newly discovered or previously unavailable evidence; 3)

the motion is necessary to prevent manifest injustice; or 4) there

is an intervening change in controlling law." Turner v. Burlington

Northern Santa Fe R.Co., 338 F.3d 1058, 1063 (9th Cir. 2003)

(internal quotation marks, citation and emphasis omitted). 

"Whether or not to grant reconsideration is committed to the sound

discretion of the court." Navajo Nation v. Confederated Tribes of

the Yakama, 331 F.3d 1041, 1046 (9th Cir. 2003) (citation omitted).

BNSF "urge[s]" reconsideration to "prevent an injustice" to

it. Doc. 113 at 3. BNSF does not explicitly define this claimed

"injustice." Evidently this "injustice" results from the fact that

the court did not address the duty to defend in its decision

granting summary judgment in favor of BNSF on the issue of

liability. As the court noted in its September 18, 2006, Order,

"'[t]he duty to defend . . . is not the same as the duty to

indemnify[.]" Doc. 125 at 3 (quoting INA Ins. Co. v. North American

v. Valley Forge Ins. Co., 722 P.2d 975, 982 (Ariz. Ct. App. 1986)

(emphasis added)). Furthermore, the duty to defend "generally

exists regardless of whether the insured is ultimately found

liable." Id. (quoting INA Ins., 722 P.2d at 982 (emphasis added)). 

Thus it follows that "[t]he accrual of the obligation to provide a

defense does not control the accrual of the obligation to

indemnify." INA Ins., 722 P.2d at 982. Based upon these well

settled principles, the court finds that to prevent manifest

injustice, it is necessary to address the issue of whether Chemical

Lime had a contractual duty to defend BNSF in this action brought

Case 2:04-cv-00619-RCB Document 130 Filed 05/24/07 Page 4 of 24
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

2 At one point, BNSF was relying upon an ITA executed on June 12, 2002.

See DSOF (doc. 127), exhs. C and D thereto. On this motion, however, BNSF is

relying strictly upon the 1991 ITA, which stands to reason because plaintiff "was

first diagnosed or treated for his claims on" February 2, 2002 claims, when the

1991 ITA still was in effect. See Doc. 69 at ¶ 15; and Doc. 101 at ¶ 15. 

3 In response to BNSF's motion for summary judgment on the

indemnification issue, in a footnote Chemical Lime correctly pointed out that

neither it nor BNSF are named parties to the 1991 ITA. See Doc. 79 at 2, ¶ 1.

Chemical Lime further noted that "[t]here is no evidence there is an assignment by

Chemstar Lime Company to Chemical Lime Company, nor is there evidence of written

consent by Santa Fe to an assignment," which that contract requires, "if any [such

assignment] exists." Id. Despite those observations, Chemical Lime did not argue

that the 1991 ITA does not govern here because neither it nor BNSF are named

parties to that Agreement. Instead, Chemical Lime devoted the bulk of its response

to arguing that the 1991 ITA's indemnity provision was not triggered because BNSF

could not prove that Chemical Lime was negligent and that its negligence caused

- 5 -

pursuant to the Federal Employers' Liability Act ("FELA"), 45

U.S.C. § 51 et seq. This issue must be addressed because, as the

foregoing shows, although granting summary judgment in BNSF's favor

on the underlying merits rendered the indemnity issue moot, the

same is not true of the duty to defend. What is more, Chemical Lime

agrees that the court's prior order granting summary judgment in

BSNF's favor did "not, in and of itself, dispose of BNSF's separate

'duty to defend' claim." Doc. 126 at 2. Thus, reconsideration is

appropriate here. 

II. Duty to Defend

On October 15, 1991, The Atchison, Topeka and Santa Fe Railway

Company entered into a "Contract for Industry Track" ("the 1991

ITA" or "the ITA") with Chemstar Lime Company. Doc. 128-2, exh. 1

thereto. Plainly neither BNSF nor Chemical Lime are named parties

to that ITA. Yet, the crux of the present motion is whether

Chemical Line has a duty to defend BNSF under that particular

Agreement.2

 Thus, the court assumes, as do the parties on this

motion, that the rights and obligations of the 1991 ITA have been

properly assigned and/or consented to thereunder.3 

Case 2:04-cv-00619-RCB Document 130 Filed 05/24/07 Page 5 of 24
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

BNSF's liability to plaintiff under FELA. See Doc. 2-5.

What is more, in its motion for summary judgment Chemical Lime never asserted

that the 1991 ITA did not apply because neither it nor BNSF are named parties

thereto. Again, Chemical Lime focused on whether under the particular facts of

this case the indemnity provision therein was triggered. See Doc. 68 at 5-7.

Likewise, nowhere in its response to BNSF's motion for reconsideration does it

raise the issue of whether the 1991 ITA applies to these particular parties. In

fact, as Chemical Lines frames it, "[t]he question presented is whether the parties

expressed an intention in [the ITA] that Chemical Lime owed BNSF a duty to defend

claims even where the only alleged negligence was attributable to BNSF, Chemical

Lime was not alleged to be negligent, and Chemical Lime's actions never caused any

injury to the claimant." Resp. (doc. 126) at 4 (emphasis added). Thus, to the

extent that at one point in this litigation Chemical Lime was suggesting that the

1991 ITA does not apply because neither it nor BNSF are named as parties thereto,

evidently it has abandoned that position. 

- 6 -

Pursuant to the 1991 ITA, BNSF operated a railroad track which

served Chemical Lime's Nelson, Arizona plant. See Doc. 71, exh. 1

thereto at 1. BNSF claims that "[i]n return, Chemical Lime was

required to defend and indemnify BNSF for any and all FELA claims

arising out of conditions at the Plant or service under the [1991

ITA]." Doc. 113 at 3 (citations omitted). After being advised

that plaintiff alleged that he had been injured while working at

Chemical Lime's Nelson plant, on September 24, 2003, BNSF notified

Chemical Lime of that claim. See Doc. 128-2, exh. 4 thereto at 34-

35. Apparently because no response was forthcoming from Chemical

Lime, on November 9, 2004, BNSF filed an amended answer and thirdparty complaint, seeking "indemnification for all losses, damage or

expense suffered by [it] as a result of [Chemical Lime's] operation

of the Nelson lime plant." Doc. 24, at 4 ¶ A. BNSF also sought to

recover its "attorneys' fees incurred in defending the underlying

action[.]" Id. at 4, ¶ B.

Chemical Lime agrees that on three separate occasions "BNSF

tendered defense of this matter" to it. See DSOF (doc. 127) at 7,

¶ 7 (citations omitted). This was done in a series of letters from

BNSF's counsel to Chemical Lime's counsel. In a March 15, 2005,

Case 2:04-cv-00619-RCB Document 130 Filed 05/24/07 Page 6 of 24
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 7 -

letter, BNSF advised Chemical Lime that more than a year before, on

September 24, 2003, "BNSF [had] provided notice of Plaintiff's

claim to Chemical Line[.]" Id., exh. E thereto. Among other

things, at that time BNSF "placed Chemical Lime on notice that it

may be liable to indemnify BNSF for Plaintiff's claim." Id. In

that March 15, 2005, letter, BNSF expressly "renew[ed] its tender

of defense to Chemical Lime and request[ed] that Chemical Lime

indemnify [BNSF] for plaintiff's claims[]" herein. Id. BNSF

continued, "Chemical Lime's failure to accept this tender may

result in further obligation to pay," inter alia, "all costs of

litigation[.]" Id.

BNSF followed up with a letter dated April 14, 2005, which

included a copy of the 2002 ITA. See id., exhs. C and D thereto.

BNSF advised Chemical Line that in its view under the terms of that

Agreement, Chemical Lime had a duty to defend and indemnify BNSF in

connection with this FELA action. Again, BNSF requested written

notice of acceptance of that "tender" from Chemical Lime by "no

later than April 19, 2005." Id., exh. C thereto. 

Shortly thereafter, on April 28, 2005, responding to a request

from Chemical Lime, BNSF sent Chemical Lime a copy of the 1991 ITA. 

See id., exh. B thereto. In that letter, BNSF stated its view that

under Article 1, paragraphs 4, 7 and 8, Chemical Lime had a duty to

defend and indemnify BNSF in connection with this FELA action. 

Id. To date, Chemical Lime has not accepted these purported

tenders of defense by BNSF. In fact, in a letter dated July 19,

2005, BNSF "confirm[ed] that Chemical Lime . . . denied BNSF's

tender of defense at th[at] time." Doc. 128-2, exh 4 thereto at

20. BNSF stated its "understand[ing] that Chemical Lime may

Case 2:04-cv-00619-RCB Document 130 Filed 05/24/07 Page 7 of 24
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

4 Hereinafter all references to paragraph 8 shall be read as referring

to paragraph 8 of Article I.

- 8 -

revisit th[at] issue following plaintiff's deposition[.]" Id.

Regardless, BNSF closed that letter by "not[ing] that [it] w[ould]

continue to look to Chemical Lime to recover its continuing fees

and costs incurred in the defense of this case." Id.

A. 1991 ITA

1. Governing Law

At the outset it should be noted that the 1991 ITA expressly

provides that "[a]ll questions arising" thereunder "shall be

decided according to the laws of the State in which The Track is

located." See Doc. 128-2, exh. 1 thereto at 7, art. III, ¶ 7. 

Because the subject track is located in Nelson, Arizona, Arizona

law governs this dispute.

2. Contract Language

Chemical Lime's duty to defend arises from two particular

provisions of the 1991 ITA, according to BNSF. First, BNSF is

relying upon paragraph 4(b) which essentially requires Chemical

Lime to "indemnify and hold harmless [BNSF] from any . . . claimed

liability arising under" FELA, "[r]egardless of any . . . alleged

negligence of [BNSF][.]" Id., exh. 1 thereto at 2, ¶ 4(b) (emphasis

added). BNSF also is relying upon paragraph eight of Article I4

which broadly stated requires Chemical Lime "to assume the defense

of any lawsuit, . . . brought against [BNSF] by any . . .

individual, . . . , relating to any matter covered by this

Agreement for which [Chemical Lime] has an obligation to assume

liability for and/or save and hold harmless [BNSF]." Id., exh. 1

thereto at 5, ¶ 8 (emphasis added). Especially in light of the

Case 2:04-cv-00619-RCB Document 130 Filed 05/24/07 Page 8 of 24
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 9 -

phrases "alleged negligence" and "claimed liability" in paragraph

4(b), BNSF asserts that "Chemical Lime clearly owed [it] a duty to

defend . . . from the inception of this lawsuit." Mot. (doc. 113)

at 4. Emphasizing that the duty to defend is separate and apart

from the duty to indemnify, BNSF further asserts that Chemical Lime

was required to defend it throughout this litigation, even though

ultimately the court granted summary judgment in favor of BNSF and

Chemical Lime on the issue of liability. 

Chemical Lime offers five different arguments as to why it

does not have a duty to defend BNSF under the 1991 ITA. The court

will address each in turn; but, as will be seen, in the end none of

these arguments are availing.

a. Lack of Specificity

First, Chemical Lime responds that the only contractual

indemnification provision directly pertaining to FELA claims,

paragraph 4(b) does not specifically mention a duty to defend. 

Likewise, Chemical Lime points out that that paragraph does not

"otherwise refer to payment of attorneys' fees and costs[.]" Resp.

(doc. 126) at 5. In the absence of such explicit language,

Chemical Lime maintains that it had no duty to defend this FELA

action. 

Chemical Lime makes a related textual argument. It points out

that other provisions of the ITA expressly require it to "assume

the defense of all . . . claims" set forth in those paragraphs,

i.e. ¶¶ 6(a) and 6(b). See Doc. 128-2, exh. 1 thereto at 4, ¶¶

6(a) and 6(b). Similarly, other provisions of the ITA expressly

provide that Chemical Lime will reimburse BNSF "for all costs[]

including . . . legal costs[.]" See id. at 4, ¶6. Without

Case 2:04-cv-00619-RCB Document 130 Filed 05/24/07 Page 9 of 24
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 10 -

elaborating, Chemical Lime asserts that the omission of similar

language from paragraph 4(b) "has legal significance." Resp. (doc.

126) at 6. In essence, then, it is Chemical Lime's position that

paragraph 4(b) is limited to the duty to indemnify. 

BNSF counters that Chemical Lime is ignoring the "plain terms"

of the 1991 ITA, particularly paragraph 8. Reply (doc. 128) at 2. 

In arguing the Chemical Line has a duty to defend it under the ITA,

BNSF engages in a two-step analysis. First, BNSF contends that

Chemical Lime had a duty to indemnify it under paragraph 4(b)

because plaintiff commenced this action against BNSF, and this

action involves "claimed liability arising under" FELA for

"condition[s] belonging to or under the control of [Chemical

Lime][,]" i.e. plaintiff's inhalation of lime dust while servicing

Chemical Lime's Nelson plant. See Doc. 128-2, exh. 1 thereto at 2,

¶ 4(b). And, according to BNSF, based upon the plain language of

paragraph 4(b), that duty to indemnify existed "[r]egardless of any

negligence of alleged negligence by [BNSF][.]" Id. 

Second, as BNSF reads the ITA, that duty to indemnify in turn

gave rise to a duty to defend. More specifically, because

paragraph eight provides in relevant part that Chemical Lime

"agrees to assume the defense of any lawsuit, . . . relating to any

matter covered by this Agreement for which [Chemical Lime] has an

obligation to assume liability for and/or save and hold harmless

[BNSF][,]" and because BNSF believes Chemical Lime had such an

obligation under paragraph 4(b), that triggers Chemical Lime's duty

to defend under paragraph 8. Id. at 5, ¶ 8. Stated somewhat

differently, when there is a duty to indemnify for "claimed [FELA]

liability" under paragraph 4(b), BNSF asserts that a concomitant

Case 2:04-cv-00619-RCB Document 130 Filed 05/24/07 Page 10 of 24
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 11 -

duty to defend attaches pursuant to paragraph 8. That duty

includes payment by Chemical Lime of "all the costs incident to

such defense including, but not limited to, attorneys' fees, [and]

. . . litigation expenses[.]" See id.

BNSF has the stronger argument here. "[I]n construing a

provision of a document, that provision must be read in connection

with all other provisions of the instrument." Hiett v. Howard, 494

P.2d 1347, 1352 (Ct. App. 1972) (citations omitted) (emphasis

added). Chemical Lime's construction of the ITA would require the

court to ignore this basic tenet of contract construction by

reading paragraph 4(b) in isolation. To be sure, when that

paragraph is read alone, it does not mention a duty to defend; nor

does it mention the payment of attorneys' fees or litigation

expenses. Paragraph 4(b) must be read in conjunction with

paragraph 8, however. When that is done, as previously explained,

clearly Chemical Lime had a duty to defend BNSF in this action. 

The fact, which Chemical Lime points out, that there are other

provisions in the ITA which, unlike paragraph 4(b), expressly

require it to assume BNSF's defense or pay for its "legal costs,"

does not change the court's view that Chemical Lime has a duty to

defend here when paragraphs 4(b) and 8 are read together. Chemical

Lime's position is not well-taken in this regard because like

paragraph 4(b) there are other paragraphs, such as 2(b), 4(a) and

5(e), which do not specifically mention a duty to defend. As with

4(b), however, those paragraphs must be read in conjunction with

the broad duty to defend found in paragraph 8. Such a reading is

consistent with the preference for construing contracts so as to

"give[]effect to all portions" thereof, as opposed to "an

Case 2:04-cv-00619-RCB Document 130 Filed 05/24/07 Page 11 of 24
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 12 -

interpretation which leaves one or some parts without effect." See

Tenet Healthsystem TGH, Inc. v. Silver, 52 P.2d 786, 790 (Ariz. Ct.

App. 2003) (internal quotation marks and citation omitted); see

also Johnson v. Pointe Community Ass'n, Inc.,73 P.3d 616, 622

(Ariz. Ct. App. 2003) (internal quotation marks and citation

omitted) (Courts "will, if possible, interpret a contract in such a

way as to reconcile and give meaning to all of its terms, if

reconciliation can be accomplished by any reasonable

interpretation.") Reading paragraph 4(b) as well as other similar

paragraphs alone would violate this preference by rendering

paragraph 8 superfluous. For all of theses reasons, the court does

not find persuasive Chemical Lime's argument that because there is

no explicit mention in paragraph 4(b) of a duty to defend, it did

not have a duty to defend BNSF in this FELA action.

b. Paragraph 8

Despite the foregoing, Chemical Lime challenges BNSF's

reliance upon paragraph 8 as a basis for finding a duty to defend. 

According to Chemical Lime, that paragraph does not apply here

because the more specific terms of paragraph 4(b), which govern

FELA claims, control over the more general terms of paragraph 8. 

Chemical Lime is correct that in contract interpretation "specific

terms control the general." Gfeller v. Scottsdale Vista North

Townhomes Ass'n., 969 P.2d 658, 660 (Ariz. Ct. App. 1998) (citation

omitted). What Chemical Lime fails to take into account, however,

is that that rule only comes into play when there is an

inconsistency. See id.; and Pecarovich v. Allstate Ins. Co., 309

F.3d 652, 658 n.10 (9th Cir. 2002) (internal quotation marks and

citation omitted) ("It is well settled that [w]here there is an

Case 2:04-cv-00619-RCB Document 130 Filed 05/24/07 Page 12 of 24
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 13 -

inconsistency between general provisions and specific provisions,

the specific provisions ordinarily qualify the meaning of the

general provisions.") As previously alluded to, there is no

consistency between paragraphs 4(b) and 8. They can easily be read

together to give effect to both provisions. Thus, there is no need

to resort to this rule of construction. See Gfeller, 969 P.2d at

660 (rejecting argument that the more specific provision of CC & Rs

governed over a general provision where there was "no

inconsistency" between the two). 

Next, Chemical Lime asserts that paragraph 8 is not

"triggered" because the duty to defend thereunder is limited to

claims "'for which [it] has an obligation to assume liability[]'"

pursuant to paragraph 4(b). Resp. (doc. 126) at 7 (quoting doc.

128-2, exh. 1 thereto at 5, ¶8). Chemical Lime continues; it had

no liability under paragraph 4(b) because that paragraph "applies

only where Chemical Lime 'caused' the liability in some fashion." 

Id. Indeed, Chemical Lime goes so far as to assert that paragraph

4(b) "requires proof that there was a cause and effect between the

claim and the damages." Id. (emphasis in original). Further,

Chemical Lime reasons that given, inter alia, the court's grant of

summary judgment in its favor because plaintiff could not "satisfy

the causation element" of a FELA claim, Chemical Lime cannot be

held liable under paragraph 4(b). See Doc. 110 at 12. Hence, in

turn, there was no event triggering paragraph 8's duty to defend. 

The weakness in this argument is that, once again, it would

render certain language in the ITA "mere surplusage[.]" See

Gfeller, 969 P.2d at 660. In particular, if paragraph 4(b)

requires proof of causation to invoke the duty to defend, use of

Case 2:04-cv-00619-RCB Document 130 Filed 05/24/07 Page 13 of 24
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 14 -

the qualifiers "alleged" and "claimed" in that paragraph would be

meaningless. Further, because the duty to defend is broader than

the duty to indemnify in that the former "generally exists

regardless of whether the insured is ultimately found liable," it

stands to reason that proof of causation is not necessarily

required to establish a duty to defend. See Hauskins v.

McGillicuddy, 852 P.2d 1226, 1234 (Ariz. Ct. App. 1992) (citation

omitted).

Moreover, construing the ITA to require causation as a

predicate to the duty to defend also would render meaningless

paragraph 8's broad language:

Upon written notice from [BNSF], [Chemical Lime] 

agrees to assume the defense of any lawsuit, . . . 

brought against [BNSF] by any . . . , individual, 

. . . , relating to any matter covered by this 

Agreement for which [Chemical Lime] has an obligation 

to assume liability for and/or save and hold harmless 

[BNSF]. [Chemical Lime] shall pay all the costs 

incident to such defense including, but not limited 

to, attorneys' fees, investigators' fees, litigation 

expenses, settlement payments, and amounts paid in 

 satisfaction of judgments. Any and all lawsuits . . . brought or threatened on any theory of relief available 

 at law, in equity or under the rules of any 

 administrative agency shall be covered by this Section 

 including, but not limited to, the theories of 

 intentional misconduct, negligence, breach of statute or 

 ordinance, or upon any theory created by any statute or 

 ordinance, state or federal.

Doc. 128-2, exh. 1 thereto at 5, ¶ 8 (emphasis added). This FELA

"lawsuit" was "brought" against BNSF by an "individual" under a

"theory created by [federal] statute[.]" See id. Thus, assuming

for the moment that BNSF provided "written notice" of this lawsuit,

Chemical Lime's duty to defend under paragraph 8 was triggered even

without a finding of causation. 

Additionally, Chemical Lime contends that paragraph 4(b) is

Case 2:04-cv-00619-RCB Document 130 Filed 05/24/07 Page 14 of 24
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

5 What is more, although in his complaint, which named only BNSF as a

defendant, plaintiff did not allege that Chemical Lime was negligent, during his

deposition he testified that he "believe[d] that the lime dust exposure and the

coal and coke dust exposure from [C]hemical [L]ime is what . . . hurt [him] more

than anything else." doc. 128-2, exh. 2 thereto at 64, l. 11-13. And when asked

if all of "those claims ar[os]e out of the exposures that occurred at the Chemical

Lime plant[,]" plaintiff responded, "Yes." Id., exh. 2 thereto at 64: 4-17. In

a similar vein, when asked whether he "believe[d] Chemical Lime [bore] any

responsibility for [his] alleged injuries[,]" plaintiff replied, "Yes. I believe

so." Id., exh. 2 thereto at 163: 1-3. Thus, plaintiff's theory of liability

encompasses negligence by Chemical Lime.

- 15 -

not triggered here "because Plaintiff never alleged that Chemical

Lime was negligent." Resp. (doc. 126) at 7. The plain language of

the 1991 ITA demonstrates the flaw in this argument. There is

nothing in that Agreement requiring plaintiff to allege that

Chemical Lime was negligent as a precursor to its duty to indemnify

and/or defend.5

Chemical Lime further maintains that because its obligations

arise, if at all, under a contract, as opposed to an insurance

policy, it has no duty to defend unless it has a duty to indemnify. 

 As a matter of policy, Chemical Lime maintains that a finding that

it has a duty to defend here would improperly place its

"obligations on par with that of an insurance company." Resp.

(doc. 26) at 8. Chemical Lime selectively quotes from Regan

Roofing Co. v. Superior Court, 29 Cal.Rptr.2d 413 (Ct. App. 1994)

to support this argument. This argument is misplaced for several

reasons. First, the Regan Roofing court was applying California

law, not Arizona law. Not only that, the court in Regan Roofing

was, in part, interpreting a California statute governing

interpretation of indemnity agreements. No similar statute is at

issue in the present case. 

Second, a careful reading of Regan Roofing shows that the

court there actually held that under California's unique statutory

Case 2:04-cv-00619-RCB Document 130 Filed 05/24/07 Page 15 of 24
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 16 -

scheme for summary adjudication, it was "premature" for the lower

court to decide whether the general contractor had a contractual

duty to indemnify subcontractors where no determination had been

made as to whether the latter were negligent. Id. at 419. The

court there did not, despite Chemical Lime's assertion to the

contrary, hold that a duty to defend is predicated upon a duty to

indemnify. 

Third, more recently the same court that decided Regan Roofing

held, in essence, "that it is quite proper for an indemnity clause

to put the indemnitor in the position of an insurer: liable without

fault." Cal. Constr. L. Manual § 5:156 (6th ed.) (citing Centex

Golden Const. Co. v. Dale Tile Co., 93 Cal.Rptr.2d 259 (Ct. App.

2000)). Therefore, the fact that Chemical Lime's obligations under

the ITA potentially are comparable to those of an insurer is not a

valid reason for disregarding the plain language of that Agreement. 

 c. Sole Negligence

"Under Arizona law, the general rule is that an indemnitee is

not entitled to indemnification resulting from its active

negligence." Market Finders Insurance Corp. v. Scottsdale

Insurance Co., 2005 WL 2897527, at *2 (W.D. Ky. Nov. 1, 2005)

(citation omitted). Thus, as Chemical Lime accurately states, "the

intention to compensate the indemnitee for [its] own negligence

must be expressed in clear and unequivocal terms." Weatherguard

Roofing Co., Inc. v. D.R. Ward Construction Co., Inc., 152 P.3d

1227, 1231 (Ariz. Ct. App. 2007) (internal quotation marks and

citation omitted). Chemical Lime is taking the position that

paragraph 8 does not express the requisite "clear and unequivocal"

intent that BNSF can be indemnified for its "sole negligence." 

Case 2:04-cv-00619-RCB Document 130 Filed 05/24/07 Page 16 of 24
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 17 -

Reply (doc. 126) at 9. In the absence of such intent, Chemical

Lime further asserts that it has no duty to defend BNSF. 

This argument, too, is misplaced. "In determining whether the

general rule applies, the court must examine the all encompassing

language of the agreement[,]" not just one paragraph, as Chemical

Lime urges. See Market Finders, 2005 WL 2897527, at *2 (internal

quotation marks and citation omitted). "If the language clearly

and unequivocally indicates that one party is to be indemnified

regardless of whether or not that injury was caused in part by that

party, indemnification is required notwithstanding the indemnitee's

active negligence." Market Finders, 2005 WL 2897527, at *2

(internal quotation marks and citation omitted). Examination of

the entire agreement is necessary, and "mechanical application of

[the general rule] should be avoided in determining the parties'

intent because [r]elying exclusively on the active/passive

distinction . . . may prevent an agreement from being enforced as

the parties intended." Cunningham v. Goettl Air Conditioning,

Inc., 980 P.2d 489, 493 (Ariz. Sup. Ct. 1999) (en banc) (internal

quotation marks and citation omitted). Thus, "there is no

requirement that the term negligence actually be used, or that

specific reference be made to liability arising out of the

indemnitee's negligence." Weatherguard, 152 P.3d at 1231 (internal

quotation marks and citation omitted). Rather, the Arizona Supreme

Court "require[s] clarity, not [that] any particular word or

phrase[]" be used "to protect an indemnitee against his own

negligence." Id. (citation omitted). 

Applying the foregoing standards to the 1991 ITA shows that

the parties did "clear[ly] and unequivocal[ly]" express their

Case 2:04-cv-00619-RCB Document 130 Filed 05/24/07 Page 17 of 24
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 18 -

intent that Chemical Lime had an obligation to indenmnify BNSF,

notwithstanding BNSF's sole negligence. Paragraph 4(b)

unambiguously states that "[r]egardless of any negligence or

alleged negligence of [BNSF], [Chemical Lime] shall indemnify and

hold harmless [BNSF] from any liability or claimed liability

arising under [FELA][.]" Doc. 128-2, at 2, ¶ 4(b). Moreover,

paragraph 7 could not be more clear in providing that "[i]t is the

intention of the parties that [BNSF's] right to indemnity contained

in Section[] 4(b), . . . shall be valid and enforceable against

[Chemical Lime] regardless of negligence (whether active, passive,

derivative, joint, concurring or comparative) on the part of

[BNSF], its officers, agents and employes [sic]." Id., at 5, ¶ 7

(emphasis added). The broad and unambiguous language of the 1991

ITA leaves no doubt: Chemical Lime had an obligation to defend BNSF

regardless of whether BNSF was solely negligent. 

Chemical Lime tries to avoid this result by pointing out that

paragraphs 4(a) and 6(b) of the ITA specifically state that it does

not have a duty to indemnify thereunder where BNSF is solely

negligent. See id., at 2, ¶ 4(a) and at 4, ¶ 6(b). Contrasting

those paragraphs with paragraph 8, which admittedly does not

contain similar language, Chemical Lime argues in the alternative

that the ITA is ambiguous and "presents a fact question as to what

the parties truly intended." Resp. (doc. 126) at 9. This

reasoning is specious. 

The fact that paragraphs 4(a) and 6(b) clearly provide that

Chemical Lime does not have a duty to indemnify for "claim[s]

result[ing] from the sole negligence of [BNSF][,]" actually

supports the contrary view. That is, that the parties knew how to

Case 2:04-cv-00619-RCB Document 130 Filed 05/24/07 Page 18 of 24
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 19 -

express their intent to exclude claims arising from BNSF's sole

negligence, and they did so in paragraphs 4(a) and 6(b), but not

elsewhere. If the parties had intended a similar exclusion for

claims coming within the purview of paragraph 4(b), they could just

have easily used similar language, but they did not. Instead, as

set forth above, the parties used contrary language, expressly

stating their "intent[]" that Chemical Lime indemnify BNSF

regardless of any type of negligence on the part of BNSF. See Doc.

128-2, at 5, ¶ 7. In light of the foregoing, the court finds no

merit to Chemical Lime's argument that it has no duty to defend

here because BNSF allegedly was solely negligent. 

d. Conflict of Interest

Chemical Lime further posits that it has no duty to defend

because there is "[a] clear divergence of interests" between it and

BNSF; and under Arizona law a "duty to defend cannot exist in the

face of such a conflict[]" between an indemnitee and an indemnitor. 

See Resp. (doc. 126) at 10 (emphasis in original) (citation

omitted). From Chemical Lime's perspective, this claimed

divergence arises because it was in its interest to argue that BNSF

was negligent, whereas it was in BNSF's interest to argue the

opposite – that Chemical Lime was negligent. 

Chemical Lime fares no better with this conflict of interest

argument. First of all, it ignores the fact that under FELA, BNSF,

as plaintiff's employer, had a non-delegable duty to provide him

with a safe place to work. See Haugen v. The Burlington Northern

and Santa Fe Railway Co., 2001 WL 1852331, at *2 (W.D. Wash. Nov.

27, 2001) (citing, inter alia, Shenker v. Baltimore & O.R. Co., 374

U.S. 1, 7-11 (1963)). Given that non-delegable duty, even if BNSF

Case 2:04-cv-00619-RCB Document 130 Filed 05/24/07 Page 19 of 24
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 20 -

had established negligence on the part of Chemical Lime, BNSF could

not have circumvented its liability to plaintiff under FELA. 

Indeed, given that non-delegable duty, it is easy to see why BNSF

would seek to have Chemical Lime indemnify and defend it as part of

the 1991 ITA. 

What is more, BNSF and Chemical Lime did not have an actual

conflict of interest. In fact, as BNSF accurately describes it,

their interests were "unified[.]" Reply (doc. 128) at 8. Both

Chemical Lime and BNSF had an interest "in proving that (a) BNSF

did not cause plaintiff's injuries; (b) there were no problems at

Chemical Lime's Plant; and (c) plaintiff's claims failed as a

matter of law." Id. Indeed, so closely aligned were the interests

of BNSF and Chemical Lime that the latter joined in BNSF's summary

judgment motion, where BNSF (and hence Chemical Lime) ultimately

prevailed. See Doc. 128-2, exh. 4 thereto. This joinder renders

disingenuous Chemical Lime's assertion that it had a conflict of

interest with BNSF.

Finally, Chemical Lime's primary authority,

Bridgestone/Firestone North America Tire, L.L.C. v. A.P.S. Rent-ACar & Leasing, Inc., 88 P.3d 572 (Ariz. Ct. App. 2004), to the

extent it is relevant at all, actually supports BNSF's position. 

In the first place Bridgestone is factually distinguishable in that

the court was construing an Arizona statute governing

indemnification rights of sellers and manufacturers in a product

liability action. See A.R.S. § 12-684 (2003). The tire

manufacturer in Bridgestone brought a declaratory judgment action

against a rental car company. The manufacturer sought a ruling

that it did not have duty to indemnify the car company under that

Case 2:04-cv-00619-RCB Document 130 Filed 05/24/07 Page 20 of 24
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 21 -

statute for damages which had been awarded to the company's

customers in a product liability action. The court recognized

that under the common law and the Restatement (Second) of Judgments

"a conflict of interest between an indmenitor and indemnitee might

justify a properly notified indmenitor's refusal to assume the

indemnitee's defense in the underlying action." Id. at 579. 

Nonetheless, because section 12-684 did "not include a conflict of

interest exception or defense[,]" the court held "the conflict

d[id] not render [the] tender of defense 'improper' or otherwise

negate [the indemnitee's] right to [statutory] indemnity[.]" Id.

at 580 (emphasis added). 

Like section 12-684, the ITA does not include a conflict

exception. Therefore, under the Bridgestone court's reasoning the

purported existence of a conflict here does not obviate Chemical

Lime's duty to defend under the ITA. In short, there is no merit

to Chemical Lime's argument that it has no duty to defend BNSF

because it supposedly has a conflict of interest with BNSF.

e. Tender

Chemical Lime's final attempt to avoid a duty to defend in

this action is grounded in its belief that "BNSF never made an

unequivocal offer to relinquish complete control of the defense." 

Resp. (doc. 126) at 12 (citation omitted). As Chemical Lime

interprets the correspondence from BNSF, "[t]he most [BNSF] states

was that it was looking to be 'indemnified' and that it was

'tendering' the case." Id. From Chemical Lime's perspective, this

was not a "proper tender," and hence it had no duty to defend. See

id. 

BNSF retorts that it provided what was required under

Case 2:04-cv-00619-RCB Document 130 Filed 05/24/07 Page 21 of 24
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 22 -

paragraph 8 of the ITA, which was "written notice[.]" See Doc. 128-

2, exh. 1 thereto at 5, ¶ 8. That "written notice" took the form

of four letters from BNSF's counsel to Chemical Lime's counsel

detailed earlier in this Order. See id., exh. 4 thereto. When

Chemical Lime refused to defend and indemnify BNSF, despite those

requests to do so, BNSF filed a third-party complaint against

Chemical Lime. See Doc. 24 at 4-5. Thereafter, counsel for both

BNSF and Chemical Lime participated in this litigation, with

"Chemical Lime's attorneys attend[ing] plaintiff's deposition and

the depositions of [his] liability expert and treating physician." 

Reply (doc. 128) at 9. Consequently, BNSF is taking the position

that "Chemical Lime has participated fully in this case and BNSF

did all it was required to do to have Chemical Lime accept BNSF's

tender of defense." Id. Lastly, BNSF notes that until now

"Chemical Lime never objected to the form of BNSF's tender of

defense." Id.

As with Chemical Lime's other arguments attempting to avoid

its duty to defend under the 1991 ITA, this one fails too. As set

forth above, the 1991 ITA required only "written notice." That

Agreement did not specify what form the notice should take. Thus,

to the extent Chemical Lime is asserting that the ITA requires

something more than "written notice," it is wrong. 

Nor does the case law to which Chemical Lime cites support its

contention that something beyond the letter requests by BNSF,

tendering a defense, was required here. The issue in the three

cases upon which Chemical Lime is relying was the timeliness of the

tenders of defense, not the sufficiency thereof. See Bloch v.

Arrowhead-Puritas Waters, Inc., 798 F.2d 1238, 1240 (9th Cir. 1986)

Case 2:04-cv-00619-RCB Document 130 Filed 05/24/07 Page 22 of 24
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 23 -

(internal quotation marks and citation omitted) (tender of defense

"insufficient as a matter of law" where it was given "almost 20

months after the filing of [plaintiff's] action and after

substantial discovery had been completed[,]" and thus "did not

constitute notice as soon after the institution of the suit as to

permit complete control of pretrial proceedings by" manufacturer of

allegedly defective product); Litton Systems, Inc. v. Shaw's Sales

and Service, Ltd., 579 P.2d 48, 52 (Ariz. Ct. App. 1978) (tender of

defense sufficient where "notice . . . given as soon after the

institution of suit as to permit complete control of pretrial

proceeding by . . . indmenitor[,]" as was evidenced by the fact

that indemnitor's local counsel attended depositions); and U.S.

Wire & Cable Corp. v. Ascher Corp., 167 A.2d 633, 637 (N.J. Sup.

Ct. 1961) (letter to indmenitor "mak[ing] sufficient demand and at

least impliedly . . . offer[ing] to surrender control of any

portion of" the underlying action did not give "timely notice"

where "it was given 17 days before actual trial and . . . when all

[preliminary] proceedings . . . had been accomplished"). Thus,

none of the three cases are instructive in terms of what,

substantively, constitutes a proper tender of defense.

Moreover, as the record shows, on three separate occasions

Chemical Lime did receive "written notice" from BNSF specifically

stating that BNSF was tendering its defense of this action to

Chemical Lime. See Doc. 128-2, exh. 4 at 21, 32 and 33. Thus,

BNSF complied with the 1991 ITA in terms of providing written

notice to Chemical Lime that BNSF wanted Chemical Lime to indemnify

and defend it herein. For the reasons set forth herein, 

It Is ORDERED that the motion for reconsideration by

Case 2:04-cv-00619-RCB Document 130 Filed 05/24/07 Page 23 of 24
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 24 -

defendant/third-party plaintiff, The Burlington Northern Santa Fe

Railway Company (doc. 113), is GRANTED; and 

It is further ORDERED that the motion for summary judgment by

defendant/third-party plaintiff, The Burlington Northern Santa Fe

Railway Company with respect to its Third-Party Complaint (doc. 24)

as against third-party defendant Chemical Lime Company of Arizona

on the issue of the duty to defend is GRANTED and the Clerk shall

enter judgment accordingly.

 It is FURTHER ORDERED that within 30 days of the date of this

Order BNSF shall file and serve a motion for attorneys' fees and

costs, etc., consistent with this Order and with the 1991 ITA. 

Chemical Lime shall have 20 days from the date of service in which

to file and serve its Response. BNSF shall then have ten days from

the date of service of Chemical Lime's Response in which to file

and serve a Reply, if any. 

DATED this 23rd day of May, 2007.

Copies to counsel of record

Case 2:04-cv-00619-RCB Document 130 Filed 05/24/07 Page 24 of 24