Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-3_05-cv-04106/USCOURTS-azd-3_05-cv-04106-0/pdf.json

Nature of Suit Code: 330
Nature of Suit: Federal Employers' Liability
Cause of Action: 45:51 Railways: Fed. Employer's Liability Act

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WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Harold James, Peter Castillo, and Lee H.

Manygoats,

Plaintiffs, 

vs.

Burlington Northern Santa Fe Railway

Company; John Does I-V, husbands and

wives; Black Partnerships I-V; and White

Corporations I-V, 

Defendants. _________________________________

Burlington Northern Santa Fe Railway

Company, a Delaware Corporation, 

Third Party Plaintiff, 

v.

A-Ceco Equipment Company, Inc., an

Arizona corporation; Zurich North

America d/b/a Steadfast Insurance

Company, a Texas corporation; John Doe

VI; Black & White Corporations VI-X,

Third Party Defendants.

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No. CV05-04106-PCT-NVW

ORDER

The court has before it Third Party Plaintiff Burlington Northern Santa Fe Railway

Company’s (“BNSF’s” or “Railroad’s”) Motion for Summary Judgment (doc. # 82), and

supporting Statement of Facts (“BSOF”) (doc. # 83); Third Party Defendant A-Ceco

Equipment Company’s (“A-Ceco’s”) Response (doc. # 108) and supporting Statement of

Facts (“ASOF”) (doc. # 109); and the Reply (doc. # 119). 

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1

 The work crew used a “P8-11” machine to take out the wooden railroad ties and

replace them with concrete ties. (ASOF Ex. 7 at 13.) The crew also used a “Grove crane”

to “thread” or guide the quarter-mile sections of replacement rail into position. (Id. Ex. 7 at

15-16.) 

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The Motion will be denied because there is a disputed issue of material fact as to

whether Arizona’s anti-indemnity statute, A.R.S. § 32-1159, voids A-Ceco’s promise to

indemnify, and because BNSF’s remaining grounds for summary judgment are without

merit. 

I. Background 

Assaying the evidence in the light most favorable to A-Ceco, and drawing all

reasonable inferences in its favor, the admissible evidence shows the following.

A. The Underlying Negligence Action

Burlington Northern Santa Fe Railway employees Harold James, Peter Castillo,

and Lee H. Manygoats (“Plaintiffs”) were injured while performing track maintenance

near Flagstaff, Arizona on July 12, 2004. (Doc. # 1.) James, Castillo, and Manygoats

were part of an approximately 30-member work crew assigned to replace the north and

south rails of Main Track Two in the vicinity of Interstate-40.1

 (ASOF Ex. 7 at 13-15.) In

this section of the track, the railroad runs east to west and then curves sharply to the north

as it passes under the interstate. (See id. Ex. 12 at 6 (visual depiction of the work site).) 

The A-Ceco Equipment Company supplied the BNSF work crew with a front end

loader and a front end loader operator named David Robinson (“Robinson”). A-Ceco

employee Robinson “[took] orders” from the Railroad on the date of the accident. (Id.

Ex. 6 at 14-15.) A-Ceco has provided the Railroad with heavy equipment, operational

personnel, and other services under the Contract for Construction or Other Work (“the

Work Agreement”) since January 31, 1997. (Id. Ex. 5 § 3 (“Scope of Work,” where ACeco agreed, for adequate consideration, to provide and operate “miscellaneous

equipment” for a range of BNSF construction and maintenance projects).)

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 Pandrol Clips are used to fasten railroad rails to railroad ties. 

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BNSF Road Master Ted Kenner (“Kenner”) supervised the replacement of Main

Track Two on July 12, 2004. (Id. Ex. 7 at 12.) Kenner was assisted by BNSF Foremen

Myron Dickerson (“Dickerson”) and Jason Lacey (“Lacey”). (Id. Ex. 7 at 12.) Kenner

communicated with Dickerson, Lacey, and the other BNSF employees via Nextel radio

on channel 66. (Id. Ex. 7 at 20-21.) The Road Master gave orders to Robinson on

channel 60 because the A-Ceco employee’s radio was incapable of receiving

transmissions on channel 66. (Id. Ex. 6 at 24-25.) 

At the time of the accident, James, Castillo, and Manygoats were, among other

things, manually removing specialized track anchors called “Pandrol Clips”2

 from the

north rail of Main Track Two. (Id. Ex. 10 at 24-25.) While Plaintiffs labored in the space

between the two parallel rails of the railroad track (the “gauge”), Robinson prepared to

“pull” an approximately 1,600 foot replacement rail into position on the south side of

Main Track Two. (Id. Ex. 6 at 21, 32-33; Ex. 10 at 44.) Robinson connected the quartermile section of rail to his front end loader, and then radioed Kenner on channel 60 to

inform the Road Master that he was “[r]eady to pull” (Id. Ex. 6 at 28.) Kenner instructed

Robinson to “[h]old on” until he could “clear men and equipment” from Main Track Two. 

(Id. Ex. 6 at 29.) Robinson was positioned on a sharp curve in the railroad track, so he

was unable to look directly east toward the work site to independently confirm whether

the track was clear of men and equipment. (Id. Ex. 6 at 32.) 

Roadmaster Kenner told Foreman Dickerson, who was standing nearby, to send

out a transmission on channel 66 instructing the crew members to move out of the way of

the new rail. (Id. Ex. 7 at 18-19.) Dickerson called Plaintiff Harold James on the

designated channel and told him to “get your guys in the clear.” (Id. Ex. 7 at 19.) After

several minutes, James radioed back, “We’re in the clear. . . . You can pull.” (Id. Ex. 7 at

25.) Dickerson told the Road Master that the track was clear, though he had visual

evidence to the contrary. (Id. Ex. 7 at 26-27.) Kenner then called Robinson on channel

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3

 Under FELA’s main liability provision, “every common carrier by railroad . . . shall

be liable in damages [to employees] . . . for such injury or death resulting in whole or in part

from the negligence of any of the officers, agents, or employees of such carrier.” 45 U.S.C.

§ 51; Lewy v. Southern Pacific Transp. Co., 799 F.2d 1281, 1288 (9th Cir. 1986) (surveying

legislative history of the FELA and noting its “broad intended scope” and “open-ended

wording”); Norfolk Southern Ry. v. Sorrell, 127 S. Ct. 799, 166 L. Ed. 2d 638 (2007) (“FELA

was . . . enacted to benefit railroad employees, as the express abrogation of such commonlaw defenses as assumption of risk, the contributory negligence bar, and the fellow servant

rule make clear.”) 

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60 to say, “Okay David. Men and equipment are clear. Let’s pull the rail.” (Id. Ex. 6 at

29.) Robinson confirmed, “Proceed to pull, I’m proceeding to pull,” to which Kenner

responded, “Right on.” (Id. Ex. 6 at 28-29.) Although Robinson did not know it, James,

Castillo, and Manygoats were still positioned inside the gauge of Main Track Two at this

time. 

Robinson used his front end loader to pull the 60,000 pound section of replacement

rail approximately 15 to 25 feet to the west. (Id. Ex. 6 at 29-30; doc. # 130 Ex. 2 at 50.) 

“When the order was given to pull the rail [Kenner intended] to . . . keep it outside the

gauge of the rail on the south side.” (Id. Ex. 8 at 40.) However, when Robinson pulled,

the rail unexpectedly “jumped” from outside the south side of Main Track Two inside the

gauge, striking James, Castillo, and Manygoats, and pinning them to the ground. (Id. Ex.

6 at 33-35.) Kenner radioed Robinson, “Stop. We’ve got people under the rail.” (Id. Ex.

6 at 30.) Robinson immediately ceased pulling, detached the rail puller from his front end

loader, and drove east along the railroad bed toward the work site to rescue his

colleagues. (Id. Ex. 6 at 30.) The BNSF employees sustained serious leg and foot

injuries as a result of the accident. (Doc. # 1 at 2.)

James, Castillo, and Manygoats filed suit against the Railroad under the Federal

Employers’ Liability Act, 45 U.S.C. §§ 51-60 (“FELA”), on December 14, 2005. (Doc. #

1.) Plaintiffs allege negligent failure to provide a safe working environment and they

seek relief for a variety of damages.3

 (Id.) The Complaint does not allege negligence on

the part of David Robinson or his employer, the A-Ceco Equipment Company. Rather,

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Plaintiffs fault only the Railroad, which had the “right to control [Robinson’s] work,” for

negligently “instruct[ing] [Robinson] when to move the rail involved in this incident.” 

(Id. at 3.) The court has jurisdiction over Plaintiffs’ statutory cause of action pursuant to

45 U.S.C. § 56. 

B. The Railroad’s Motion for Summary Judgment 

BNSF filed a third-party action against A-Ceco on July 25, 2006. (Doc. # 41.) 

The Railroad’s third-party claims against Zurich North America (“Zurich”), the

commercial general liability insurer designated by A-Ceco under the Work Agreement,

are discussed by separate Order. Subject matter jurisdiction over the Railroad’s thirdparty claims is conferred by 28 U.S.C. § 1367(a). 

On summary judgment, the Railroad argues that A-Ceco is required as a matter of

law to defend and indemnify BNSF in the underlying FELA action (Counts I, II, and V of

the Third Party Complaint), and that A-Ceco breached the Work Agreement by failing to

procure FELA insurance (Count III) in the required amount (Count IV). (Doc. # 82 at 1-

2.) BNSF does not move for summary judgment on its claims for common law indemnity

(Count VI) and contribution (Count VII). (Id. at 1 n.1.) 

A-Ceco rejoins that the Work Agreement does not obligate it to defend or

indemnify the Railroad because A-Ceco is not alleged to be responsible for Plaintiffs’

injuries, and the record does not show that Robinson was negligent in following BNSF’s

order to pull the rail. (Doc. # 108 at 1-2.) Summary judgment on the indemnification and

defense issues is inappropriate, the Railroad avers, because the Railroad has not

established beyond dispute that A-Ceco’s negligence contributed to Plaintiffs’ loss. (Doc.

# 133 at 6.). A-Ceco also challenges BNSF’s breach of contract claim, arguing that ACeco was not required to purchase FELA liability insurance under the Work Agreement,

and that the commercial general liability coverage it did procure was otherwise sufficient. 

(Doc. # 108 10-13.) 

Before tackling these arguments, the court will pause to retrace the familiar

contours of Fed. R. Civ. P. 56.

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II. Summary Judgment Standard 

Rule 56 of the Federal Rules of Civil Procedure provides that summary judgment

is proper when “the pleadings, depositions, answers to interrogatories, and admissions on

file, together with affidavits, if any, show that there is no genuine issue as to any material

fact and that the moving party is entitled to a judgment as a matter of law.” Fed. R. Civ.

P. 56(c). The court must evaluate a party’s motion for summary judgment construing the

alleged facts with all reasonable inferences favoring the nonmoving party. See Baldwin v.

Trailer Inns, Inc., 266 F.3d 1104, 1117 (9th Cir. 2001). The evidence presented by the

parties must be admissible. Fed. R. Civ. P. 56(e). Conclusory and speculative testimony

in affidavits and moving papers is insufficient to raise genuine issues of fact and to defeat

summary judgment. Thornhill Publ’g Co., Inc. v. GTE Corp., 594 F.2d 730, 738 (9th Cir.

1979). In the precincts patrolled by Rule 56, “Proof based on arrant speculation,

optimistic surmise or farfetched inference will not suffice.” Kelly v. United States, 924

F.2d 355, 357-58 (1st Cir. 1991).

The party seeking summary judgment bears the initial burden of informing the

court of the basis for its motion and identifying those portions of the pleadings,

depositions, answers to interrogatories, and admissions on file, together with the

affidavits, if any, which it believes demonstrate the absence of any genuine issue of

material fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Where the moving

party has met its initial burden with a properly supported motion, the party opposing the

motion “may not rest upon the mere allegations or denials of his pleading, but . . . must

set forth specific facts showing that there is a genuine issue for trial.” Anderson v. Liberty

Lobby, Inc., 477 U.S. 242, 248 (1985). Summary judgment is appropriate against a party

who “fails to make a showing sufficient to establish the existence of an element essential

to that party’s case, and on which that party will bear the burden of proof at trial.” 

Celotex Corp., 477 U.S. at 322. See also Citadel Holding Corp. v. Roven, 26 F.3d 960,

964 (9th Cir. 1994). Summary judgment is not appropriate when the nonmoving party

submits evidence from which a reasonable juror, drawing all inferences in favor of the

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nonmoving party, could return a verdict in the nonmoving party’s favor. United States v.

Shumway, 199 F.3d 1093, 1103-04 (9th Cir. 1999). Although the initial burden is on the

movant to show the absence of a genuine issue of material fact, this burden may be

discharged by indicating to the court that there is an absence of evidence to support the

nonmoving party’s claims. Nissan Fire & Marine Ins. Co. v. Fritz Cos., 210 F.3d 1099,

1105-06 (9th Cir. 2000).

III. Legal Analysis 

A. Arizona Law Applies to the Railroad’s Third-Party Claims

The Federal Employers’ Liability Act governs the relationship between the

Burlington Northern Santa Fe Railway Company and its employees James, Castillo, and

Manygoats. Because Plaintiffs’ right of action is a creature of federal law, federal

decisional law controls regardless of the law of this forum. Bailey v. Central Vermont

Ry., 319 U.S. 350, 352 (1943); but see Norfolk Southern Ry., 127 S. Ct. at 805 (“Absent

express language to the contrary, the elements of a FELA claim are determined by

reference to the common law.”) (citations and internal quotations omitted). 

State law governs a FELA defendant’s right to indemnity and contribution against

third parties, however. Shields v. Consolidated Rail Corp., 810 F.2d 397 (3d Cir. 1987)

(third-party actions arising out of FELA claims governed by state law) (collecting cases). 

In Ellison v. Shell Oil Co., 882 F.2d 349, 352 (9th Cir. 1989), the court held that “FELA

does not bar railroads from seeking indemnity where state law permits and where another

party bears some legal responsibility.” “FELA’s purpose of providing recovery for

injured workers is not defeated,” the court reasoned, “by permitting an employer to

recoup its losses in part or in full from a third party, when the circumstances and state law

permit.” Id.

The choice-of-law clause negotiated by the parties to the Contract for Construction

or Other Work provides, “All questions arising under this Agreement shall be decided

according to the laws of the state where the work is to be performed.” (ASOF Ex. 5 §

29.) The accident giving rise to the Railroad’s disputed claims for defense, indemnity,

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4 Under such “loss or damage” indemnity clauses, A-Ceco’s duty to indemnify does

not attach until the Railroad has paid the obligation for which it was found liable. INA Ins.

Co. v. Valley Forge Ins. Co., 150 Ariz. 248, 253, 722 P.2d 975, 980 (Ct. App. 1986).

Because “[t]he right [to indemnity] exists when . . . a sum is paid by [the indemnitee] for

which the indemnitor should make reimbursement,” the “obligation [to indemnify] cannot

be imposed solely by a third party’s unproven allegations against the indemnity parties, but

requires factual determinations.” Id. at 255, 722 P.2d at 982 (comparing the indemnitor’s

duty to indemnify with the insurer’s duty to defend, “which arises at the earliest stage of

litigation and generally exists regardless of whether the insured is ultimately found liable”).

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and breach of contract occurred in Arizona. Therefore, the Railroad’s third-party claims

against A-Ceco must be adjudicated under Arizona law.

B. A-Ceco’s Contractual Duty to Defend and Indemnify 

The Work Agreement between A-Ceco and BNSF contains ten separate indemnity

clauses in which A-Ceco agreed to “hold the Railroad harmless”4

 for a range of claims

arising out the contractor’s performance under the contract. (ASOF Ex. 5 §§ 3(d)

(removal of A-Ceco employees from BNSF premises); 6 (acts or omissions of

subcontractors); 8 (damage to fiber optic cable systems); 14(b) (failure to comply with

environmental laws); 14(c) (violation of any other law, ordinance, order, or regulation);

15 (patent infringement); 16(b)-(c) (broad form general indemnity including FELA

claims); 17(a) (property damage to subcontractors); 19(b) (liens); 20(b) (violation of

pension, unemployment, and tax laws).) 

The indemnity at issue in this case, which is found in Section 16, is much broader

than the other “hold harmless” clauses. In fact, this clause purports to make A-Ceco

liable for all BNSF financial obligations, including FELA liabilities, “arising in any

manner” from A-Ceco’s performance under the Work Agreement, regardless of which

party’s negligence caused the liability. The risk of loss is transferred to A-Ceco even

where the injury “was occasioned by” the Railroad without any contributory negligence

on the part of A-Ceco. (Id. Ex. 5 § 16(b). 

Section 16 of the Work Agreement provides, in relevant part: 

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Contractor [A-Ceco] shall indemnify and hold harmless Railroad for all judgments,

awards, claims, demands, and expenses (including attorneys’ fees), for injury or

death to all persons, including Railroad’s[,] arising in any manner from [A-Ceco’s]

. . . acts or omissions or failure to perform any obligation hereunder. THE

LIABILITY ASSUMED BY [A-CECO] SHALL NOT BE AFFECTED BY

THE FACT, IF IT IS A FACT, THAT THE DESTRUCTION, DAMAGE,

DEATH, OR INJURY WAS OCCASIONED BY OR CONTRIBUTED TO

BY THE NEGLIGENCE OF RAILROAD, ITS AGENTS, SERVANTS,

EMPLOYEES, OR OTHERWISE, EXCEPT TO THE EXTENT THAT

SUCH CLAIMS ARE PROXIMATELY CAUSED BY THE INTENTIONAL

MISCONDUCT OR GROSS NEGLIGENCE OF RAILROAD. 

THE INDEMNIFICATION OBLIGATION ASSUMED BY [A-CECO]

SHALL INCLUDE ANY CLAIMS, SUITS OR JUDGMENTS BROUGHT

AGAINST RAILROAD UNDER THE FEDERAL EMPLOYERS[’]

LIABILITY ACT, . . . WHENEVER SO CLAIMED. 

(Id. Ex. 5 § 16(b)-(c) (emphasis in original).) This broad indemnification obligation is

bulwarked by an additional A-Ceco covenant to “appear and defend any suits . . . brought

against [BNSF] on any claim . . arising or growing out of or in any manner connected

with any liability assumed by [A-Ceco] under this Agreement for which Railroad is liable

or is alleged to be liable.” (Id. Ex. 5 § 16(d).) 

Plaintiffs’ FELA claim falls within Section 16’s indemnification provision because

(1) the underlying negligence action “aris[es] out of an A-Ceco “act,” namely A-Ceco

employee David Robinson’s pulling of the replacement rail on July 12, 2004; and (2)

James, Castillo, and Manygoats have not alleged intentional misconduct or gross

negligence on the part of the Railroad. (Doc. # 1.) If the indemnification provision

applies as written, then A-Ceco’s assumption of the Railroad’s FELA liability is not

affected by Plaintiffs’ allegation that the Railroad is 100 percent and A-Ceco zero percent

responsible for the track replacement accident. (ASOF Ex. 5 § 16(b) (the liability

assumed by [A-Ceco] shall not be affected by the fact . . . that the . . . injury was

occasioned by . . . the negligence of Railroad) (emphasis added).) Furthermore, the plain

language of Section 16(d) obligates A-Ceco to defend the Railroad in the underlying

action so as to prevent the assumed FELA liability from accruing in the first instance. 

Whether Section 16 applies as written is the question to be decided here.

 

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C. The Enforceability of the Contractual Indemnity Provision 

1. Arizona Law 

The “[i]nterpretation of a contract is a question of law” for the court to decide.

Grubb & Ellis Mgmt. Servs., Inc. v. 407417 B.C., L.L.C., 213 Ariz. 83, 86, 138 P.3d 1210,

1213 (Ct. App. 2006) (citation omitted). Arizona law “permits a party to protect itself

contractually by shifting liability for its faults to another via the mechanism of

indemnity.” Id. (citation omitted). There are three types of indemnities: the “limited

form indemnity,” the “intermediate form indemnity,” and the “broad form indemnity.” 

Trisha Strode, Comment: From the Bottom Of the Food Chain Looking Up:

Subcontractors Are Finding That Additional Insured Endorsements Are Giving Them

More Than They Bargained For, 23 St. Louis U. Pub. L. Rev. 697, 700 (2004). The

limited form indemnity requires the indemnitor to save and hold harmless the indemnitee

only for the indemnitor’s own negligence. Id. The intermediate form indemnity requires

the indemnitor to indemnify for all liability excluding that which arises out of the

indemnitee’s sole negligence. Id. Finally, the broad form indemnity obligates the

indemnitor to save and hold harmless the indemnitee from all liability arising from the

project, “regardless of which party’s negligence caused the liability.” Id. 

Courts and commentators have advanced a number of policy rationales to support 

enforcement of limited and intermediate form indemnity clauses in construction-related

contracts. “Indemnity agreements are a common device for shifting the burden of

liability from a tort-feasor to someone better able to bear the burden. The someone may

be an insurance company that is able to spread the risk better than the tort-feasor or it may

be another tort-feasor, who could have prevented the accident at lower cost than the

indemnitee. . . . Thus the agreement may well concentrate the costs of the accident on the

party that could have avoided them at lowest cost.” McMunn v. Hertz Equipment Rental

Corp., 791 F.2d 88, 91 (7th Cir. 1986). Judicial enforcement of such cost-shifting

arrangements can reduce overall transaction costs for handling and resolving bodily

injury claims, encourage risk management strategies based on commercial general

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liability insurance, and protect party autonomy. 3 Philip L. Bruner and Patrick J.

O’Connor, Jr, Bruner & O’Connor on Constr. Law § 10:9 (2002) (hereinafter Constr.

Law). 

In Washington Elementary Sch. Dist. No. 6 v. Baglino Corp., 169 Ariz. 58, 61, 817

P.2d 3, 6 (1991), for example, the Arizona Supreme Court enforced an intermediate form

indemnity clause in a construction contract that protected the indemnitee against “any

type of damage caused by the negligent behavior of the indemnitor, even though also

caused in part by the active negligence of the party indemnified,” upon determining that

this was the “clear and unequivocal” intent of the parties. (Emphasis in original.) 

While limited and intermediate form indemnity clauses in construction contracts

may be used in Arizona to shift the risk of loss to an indemnitor even as to claims caused

in part by the active negligence of the indemnitee, id, broad form indemnity clauses that

purport to shift the entire risk of loss to an indemnitor, even as to liabilities caused by the

sole negligence of the indemnitee, are “against the public policy of this state” and “void”

under Arizona’s anti-indemnity statute, A.R.S. § 32-1159. Under the heading,

“Indemnity agreements in construction contracts . . . void,” the Arizona statute provides:

A covenant, clause or understanding in, collateral to or affecting a construction

contract . . . that purports to indemnify, to hold harmless or to defend the promisee

from or against liability for loss or damage resulting from the sole negligence of

the promisee or the promisee’s agents, employees or indemnitee is against the

public policy of this state and is void. 

A.R.S. § 32-1159(A). The anti-indemnity statute applies broadly to “all [construction]

contracts entered into between private parties.” A.R.S. § 32-1159(C). The Arizona

legislature defined the term, “construction contract,” to mean “a written or oral agreement

relating to the construction, alteration, repair, maintenance, moving, demolition or

excavation or other development or improvement to land.” A.R.S. § 32-1159(D)(2). 

The Arizona courts have yet to comment on Arizona’s anti-indemnity statute, or

the slightly different provision found at A.R.S. § 34-226. Nor have the parties identified

any legislative history that might assist the court in this case. However, the courts of the

17 other states that have enacted similar “sole-negligence” anti-indemnification statutes

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Anti-indemnity statutes are also thought to increase the availability and affordability

of commercial general liability insurance. 3 Constr. Law §§ 10:90. “The majority of ‘sole

negligence’ prohibitions by their terms do not affect the validity of an insurance product.

Thus, if an indemnitor procured an insurance policy that provided protection for an

indemnitee’s sole negligence, then the indemnitee should be protected, notwithstanding the

statutory bar.” Id. 

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are in broad agreement as to the purpose and effect of such prohibitions. Aetna Cas. &

Sur. Co. v. Marion Equip. Co., 894 P.2d 664, 666 n.1 (Alaska 1995) (listing statutes). As

summarized by one commentator, such statutes “achieve a more equitable distribution of

costs and risk of injury” in the construction industry, where disparities in bargaining

power are common, and misfortune is rarely the fault of one party alone.5

 3 Constr. Law

§§ 10:71, 90. 

The major public policy argument for prohibiting broad form indemnity clauses in

the construction industry was articulated by the Utah Supreme Court as follows: 

“Undoubtedly, contracts exempting persons from liability for negligence induce a want of

care, for the highest incentive to the exercise of due care rests in a consciousness that a

failure in this respect will fix liability to make full compensation for any injury resulting

from the cause.” Jankele v. Texas Co., 88 Utah 325, 329-30, 54 P.2d 425, 427 (1936). 

Thus, to increase workplace safety, and to protect contractors from overreaching by

stronger counterparties, state legislatures have made it unlawful to agree, in a

construction-related contract, to impose costs on an inferior risk bearer through the

mechanism of a broad form indemnity. See Samir B. Mehta, Additional Insured Status in

Construction Contacts and Moral Hazard, 3 Conn. Ins. L. J. 169, 181 (1996) (discussing

the issue in terms of “moral hazard”). 

Indiana’s anti-indemnity statute provides a relevant example. The Indiana

legislature concluded that it could increase safety at construction sites by prohibiting

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The Indiana statue provides, “All provisions, clauses, covenants, or agreements

contained in, collateral to, or affecting any construction or design contract except those

pertaining to highway contracts, which purport to indemnify the promisee against liability

for: (1) death or bodily injury to persons; (2) injury to property; (3) design defects; or (4) any

other loss, damage or expense arising under either (1), (2) or (3); from the sole negligence

or willful misconduct of the promisee or the promisee's agents, servants or independent

contractors who are directly responsible to the promisee, are against public policy and are

void and unenforceable.”

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broad form indemnification provisions as set forth in Ind. Code § 26-2-5-1,6

 a provision

similar to the Arizona statute. As the Court of Appeals for the Seventh Circuit explained:

Before [the anti-indemnification statute] was passed general contractors would

negotiate with their subcontractors for a promise to indemnify the general

contractor if he was sued for a personal injury to a worker employed by a

subcontractor at the construction site. The legislature believed that this type of

agreement resulted in more accidents on the job. . . . If the general contractor can

shift the financial burden of liability he may have less incentive to take measures

to make the construction site safe. . . . So, in sum, it is possible to understand how

the Indiana legislature might have believed that banning indemnity agreements

might make construction workers safer. 

McMunn, 791 F.2d at 92. The Arizona courts are likely to adopt this reasoning to aid

their construction of A.R.S. § 32-1159. While a promisor may not save and hold

harmless the promisee for liabilities caused by the promisee’s “sole negligence,” the

promisor may agree to indemnify for a lesser quantum of liability pursuant to a limited or

intermediate form indemnity consistent with the anti-indemnity statute. 

2. The Indemnity Agreement is Facially Invalid 

The indemnity clause in Section 16 of the Work Agreement demonstrates that the

parties intended for BNSF to be indemnified by A-Ceco for all liabilities “arising in any

manner” from A-Ceco’s “acts, or omissions, or failures to perform,” regardless of the

Railroad’s causal, active, sole negligence. (ASOF Ex. 5 § 16(b) (the liability assumed by

[A-Ceco] shall not be affected by the fact . . . that the . . . injury was occasioned by . . .

the negligence of Railroad) (emphasis added).) This covenant is in direct conflict with

Arizona’s anti-indemnity statute because it purports to shift the burden of FELA liability

from BNSF, the “promisee”, to A-Ceco, the “promisor,” even when the underlying claim

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The New Mexico statute, which allows only limited form indemnity, provides in

relevant part, “A provision in a construction contract that requires one party to the contract

to indemnify, hold harmless, insure or defend the other party to the contract, including the

other party's employees or agents, against liability, claims, damages, losses or expenses,

including attorney fees, arising out of bodily injury to persons or damage to property caused

by or resulting from, in whole or in part, the negligence, act or omission of the indemnitee,

its officers, employees or agents, is void, unenforceable and against the public policy of the

state.” N.M. Stat. Ann. § 56-7-1.

The Washington statute similarly provides, “A covenant, promise, agreement or

understanding in, or in connection with or collateral to, a contract or agreement relative to

the construction, alteration, repair, addition to, subtraction from, improvement to, or

maintenance of, any building, highway, road, railroad, excavation, or other structure, project,

development, or improvement attached to real estate, including moving and demolition in

connection therewith, purporting to indemnify against liability for damages arising out of

bodily injury to persons or damage to property: (1) Caused by or resulting from the sole

negligence of the indemnitee, his agents or employees is against public policy and is void and

unenforceable; (2) Caused by or resulting from the concurrent negligence of (a) the

indemnitee or the indemnitee's agents or employees, and (b) the indemnitor or the

indemnitor's agents or employees, is valid and enforceable only to the extent of the

indemnitor's negligence and only if the agreement specifically and expressly provides

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“result[ed] from” the “sole negligence” of the promisee. A.R.S. § 32-1159(A); (ASOF 

Ex. 5 § 16(b)-(c)). Thus, If BNSF were found solely responsible for the FELA liability,

as Plaintiffs themselves allege, then the Arizona statute would apply to void A-Ceco’s

indemnification obligation in toto. 

i. The Anti-Indemnity Statute Applies

To avoid this result, BNSF argues that the Arizona anti-indemnity statute does not

apply to the broad form indemnity contained in Section 16 of the Work Agreement for a

variety of textual reasons. (Doc. ## 82 at 8; 119 at 2, 4-5; 129 at 2.) As an initial matter,

the Railroad’s argument is severely weakened by the fact that BNSF has already admitted

that the Work Agreement is subject to the indemnity proscriptions governing construction

contracts in New Mexico and Washington. BNSF and A-Ceco modified the

indemnification section of the Work Agreement to comply with New Mexico’s N.M. Stat.

Ann. § 56-7-1, and Washington’s RCW § 4.24.115, which are similar though not identical

to the Arizona statute.7

 (ASOF Ex. 5 § 16(e)-(f).) It is likely that the parties simply failed

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therefor.” RCW § 4.24.115. 

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to account for Arizona’s statutory prohibition, which was enacted in 1993, when

negotiating the Work Agreement in January 1997. 

The Railroad nevertheless offers a variety of creative, but ultimately unavailing,

arguments as to why Section 32-1159 should not apply to void the “sole negligence”

indemnity at issue here. First, BNSF argues that the statutory prohibition on solenegligence indemnity found in Chapter 10 of the Arizona Revised Statutes applies only to

“contractors,” not “equipment rental companies” like A-Ceco. (Doc. ## 119 at 7; 129 at

3); A.R.S. § 32-1101(D) (“Only contractors as defined in this section are licensed and

regulated by” Chapter 10 of the Arizona Revised Statutes.). Assuming A-Ceco satisfies

the definition of a “contractor,” the Railroad next attempts to salvage the sole-negligence

covenant running in its favor by arguing that the anti-indemnity statute may be invoked

only by “contractors” who are “licensed by the state.” (Doc. # 119 at 7); A.R.S. § 32-

1151 (making it “unlawful” for a “contractor” to bid on a contract or otherwise “act in the

capacity of” a contractor in Arizona without a license). Finally, the Railroad contends

that the Contract for Construction or Other Work is not a “construction contract” subject

to the statutory prohibition on broad indemnity at Section 32-1159. (Doc. # 119 at 8-9.) 

All of these arguments are foreclosed by the text of A.R.S. § 32-1159 itself. The

anti-indemnity statute applies broadly to “all contracts entered into between private

parties,” subject to certain exceptions not relevant here. A.R.S. § 32-1159(C). There is

nothing in the text of Section 32-1159 itself to suggest that the Arizona legislature

intended to limit its proscription to “contractors,” licensed or otherwise. The limiting

principle of the statute is found elsewhere. As stated in Section 32-1159(A), the statute

applies only to “architect-engineer professional service contracts” and “construction

contracts.” All agreements, whether written or oral, that are “furnished in connection

with” or “relating to” actual or proposed construction, alteration, repair, maintenance,

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moving, demolition, excavation, or other development or improvement to land, come

within the ambit of Arizona’s prescription. A.R.S. § 32-1159(D). 

 In this case, the Contract for Construction or Other Work expressly contemplates

construction activities. The “Scope of Work” section commits A-Ceco to “expeditiously

perform and complete” a variety of tasks for BNSF, including “construction and

maintenance of bridges, culverts, tracks, switches, and railroad right-of-way.” (ASOF

Ex. 5 § 3(a) (emphasis removed).) The facts of this case demonstrate that A-Ceco

engaged in such activities on at least one occasion for the Railroad’s benefit. BNSF

nevertheless avers that A-Ceco primarily “assisted BNSF with train derailment clean-up,

hazardous waste removal, track maintenance and repair,” and provided equipment such as

“portable toilets, chairs, and tools.” (Doc. # 129 at 2.) However, the aptness of the title,

“Contract for Construction or Other Work,” is underscored by A-Ceco employee David

Robinson’s use of A-Ceco’s front end loader to pull a quarter-mile section of replacement

rail on July 12, 2004. (Doc. ## 119 at 7, 129 at 3, 133 at 4-6.) 

The Contract for Construction or Other Work is subject to the anti-indemnity

statute because it is a “construction contract” between “private parties” and is not

otherwise exempted from the prohibition on broad form indemnity. A.R.S. § 32-1159. 

The court will not add its own limiting principle when the statute so clearly provides its

own. It would be strange to restrict the operation of a self-contained statute such as

Section 32-1159 simply because of its proximity to other regulations governing Arizona’s

construction industry. What is more, applying the statute to this case would further the

purpose of the statute. Invalidating the broad form indemnity running in the Railroad’s

favor would concentrate the costs of the accident on the party that could have avoided

them at lowest cost, BNSF, while aligning the safety incentives of the parties to avoid

future misfortune. The anti-indemnity statute looks to the subject matter of the agreement

rather than the legal status of the contracting party to achieve this result.

 

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8

Section 45.45.900, Alaska Statutes, provides in relevant part, “A provision, clause,

covenant, or agreement contained in, collateral to, or affecting a construction contract that

purports to indemnify the promisee against liability for damages for (1) death or bodily injury

to persons, (2) injury to property, (3) design defects, or (4) other loss, damage or expense

arising under (1), (2), or (3) of this section from the sole negligence or wilful misconduct of

the promisee or the promisee's agents, servants, or independent contractors who are directly

responsible to the promisee, is against public policy and is void and unenforceable.” 

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3. Intermediate Form Indemnity Remains 

Arizona’s “sole negligence” anti-indemnity statute applies to Section 16 of the

Work Agreement for the reasons set forth above. The court must now determine whether

Section 16’s indemnity obligation is “void” in its entirety under Section 32-1159, or

whether the offending sole-negligence language may simply be excised, leaving the

balance of the provision, and a residue of indemnity, in effect. The court has not been

favored with any controlling authority as to the effect of Arizona’s anti-indemnity statute

upon a duly negotiated contractual indemnity clause. In the absence of any contrary

Arizona authority or legislative history, the court will adopt the majority rule articulated

by the courts of Alaska, Michigan, and Rhode Island, whereby an otherwise

unenforceable indemnity agreement is permitted to remain in effect unless and until it is

shown to violate the statutory proscription on the facts of each particular case. Under this

rule of construction, the court will interpret Sections 16(b) and (c) of the Work

Agreement so as to exclude FELA indemnity for the Railroad’s “sole negligence,” A.R.S.

§ 32-1159(A), but permit indemnity where BNSF and A-Ceco are shown to be jointly

responsible for Plaintiffs’ injuries. In so holding, the court honors A-Ceco’s promise to

indemnify the Railroad to the “maximum extent possible” under Arizona law. (ASOF Ex.

5 § 32 (“Severability Clause”).) 

i. The Alaska Rule

Alaska’s anti-indemnity statute is similar that of Arizona.8

 Like A.R.S. § 32-1159,

the Alaska statute prohibits broad form indemnity, but allows cost-shifting in a

construction contract on all liabilities excluding those arising out of the indemnitee’s sole

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negligence. In Rogers & Babler v. State of Alaska, 713 P.2d 795 (Alaska 1986), the

indemnitee sought to recover settlement and defense costs from a general contractor

indemnitor on a theory of contractual indemnity. The indemnification provision in the

construction contract provided, “Contractor shall indemnify and save harmless [the

indemnitee] . . . from all suits, actions, or claims of any character brought because of any

injuries or damage received or sustained by any person . . . on account of the operations

of said Contractor; . . . or because of any act or omission, neglect, or misconduct of said

Contractor.” Id. at 797. The indemnitor urged the court to invalidate this provision under

A.S. § 45.45.900 because, though it did not expressly indemnify for the indemnitee’s sole

negligence, it was broad enough to encompass that obligation. The Alaska Supreme

Court rejected the “per se” rule of invalidity advanced by the indemnitor as follows:

We are not inclined to accept a reading of the statute that would invalidate the

indemnity provisions in every contract entered into between the [indemnitee] and

construction contractors. We think A.S. 45.45.900 should come into effect only

when it is determined, as between the [indemnitee] and the contractors, that the

[indemnitee] is solely negligent. This court has held that an ambiguous statute

should be construed in the most beneficial way the language will permit to avoid

hardship, forfeiture or injustice. The indemnity provision involved here is not

against public policy as a general proposition, but is only against public policy in

those instances that it purports to indemnify the [indemnitee] for its negligence in

the absence of contractor negligence.

Id. at 798 (citation and internal quotations omitted). 

Summary judgment for the indemnitee was inappropriate in Rogers & Babler

because the applicability of the statute was subject to evidentiary dispute. “The

indemnity clause may govern in the present case if the accident occurred ‘on account of

the operations of the contractor’ and if it was not caused by the sole negligence of the

state,” the court observed. Id. at 798. However, the indemnitee had “not established an

absence of genuine issues of material fact concerning these points.” Id. at 798. A trial

was necessary to resolve the dispositive issues of fact.

Unlike the clause at issue in Rogers & Babler, the indemnification clause in this

case expressly provides for cost-shifting even as to liabilities occasioned by the sole

negligence of the indemnitee. (ASOF Ex. 5 § 16(b) (“The liability assumed by [A-Ceco]

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shall not be affected by the fact, if it is a fact, that the destruction, damage, death, or

injury was occasioned by . . . the negligence of Railroad.”) (emphasis added).) But this

distinction is of no moment in light of the Work Agreement’s severability clause. Section

32 provides, “To the maximum extent possible, each provision of this Agreement shall be

interpreted in such a manner as to be effective and valid under applicable law, but if any

provision of this Agreement shall be prohibited by, or held to be invalid under, applicable

law, such provision shall be ineffective solely to the extent of such prohibition or

invalidity, and this shall not invalidate the remainder of such provision or any other

provision of this Agreement.” (ASOF Ex. 5 § 32 (emphasis added).) “If it is clear from

its terms that a contract was intended to be severable, the court can enforce the lawful part

and ignore the unlawful part.” Olliver/Pilcher Ins. v. Daniels, 148 Ariz. 530, 533, 715

P.2d 1218, 1221 (1986). Section 32 evinces the requisite intent. (See also doc. # 133 at 7

(further evidence of A-Ceco’s intent to indemnify).) Therefore, upon a finding of

concurrent negligence, the court will excise only that portion of the covenant that purports

to indemnify the Railroad even as to liabilities “occasioned by” its sole negligence, and

maintain the intermediate form indemnity in full force and effect. See Hart v. Bell, 222

Minn 69, 76, 23 N.W.2d 375, 379 (1946) (“It is not the province of courts to emasculate

the liberty of contract by enabling parties to escape their contractual obligations on the

pretext of public policy unless the preservation of the public welfare imperatively so

demands. [T]he power of courts to declare a contract void for being in contravention of

sound public policy is a very delicate and undefined power, and, like the power to declare

a statute unconstitutional, should be exercised only in cases free from doubt.”) (citations

and internal quotations omitted). 

The court is persuaded to adopt the “wait and see” approach adopted by the Alaska

Supreme Court in Rogers & Babler, which promotes party autonomy while remaining

faithful to the purpose of the prohibition on “sole negligence” indemnity. Under this rule

of decision, Arizona’s anti-indemnity statute, A.R.S. § 32-1159, invalidates broad form

indemnity clauses only if the provision is actually applied, as between the parties, to

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indemnify an indemnitee for the indemnitee’s own sole negligence. If the statute does not

apply, then the Railroad may maintain an action on the contract to enforce the residuum

of indemnity that remains after judicial construction of the clause. Accord Ford v. Clark

Equip. Co., 274 N.W.2d 33, 36, 87 Mich. App. 270, 276 (Ct. App. 1978) (When

confronted with Michigan’s “sole-negligence” anti-indemnity statute on similar facts, the

court opted to bifurcate an otherwise invalid broad form indemnification clause into two

promises: one to indemnify the indemnitee for its sole negligence, which was

unenforceable, and the other to indemnify if the injury was caused in part by the

indemnitee’s negligence, which was not subject to the statute and could therefore be

enforced. The court said, “It does no violence to either the contracting party’s intent or

the statute to sever this independent, unenforceable promise from the rest of the

indemnity clause on the facts of this case.”) disapproved on other grounds by Grand

Trunk W. R.R., Inc. v. Auto Warehousing Co., 262 Mich App. 345, 686 N.W.2d 756 (Ct.

App. 2004).

To this same effect is Cosimini v. Atkinson-Kiewit Joint Venture, 877 F. Supp. 68,

71 (D.R.I. 1995). Rhode Island law permits only limited form indemnity: an indemnitor

in a construction contract can indemnify for its own negligence, but it cannot assume

liabilities caused by or resulting from the negligence of the indemnitee. R.I. Gen. Laws §

6-34-1. The contractual provision at issue in Cosimini was facially invalid because it

purported to hold a subcontractor fully responsible for indemnification even when the

negligence of both the general contractor, the indemnitee, and the subcontractor, the

indemnitor, contributed to the plaintiff’s injuries. “In the event that the contract calls for

a subcontractor to indemnify the general contractor for its own negligence and for that of

the general contractor, the former obligation is enforceable, while the latter obligation is

unenforceable,” the court found. Id. After concluding that “the parties intended to create

a duty to indemnify broader than but including the subcontractor’s obligation to

indemnify the general contractor in proportion to the subcontractor’s negligence,” the

court modified the otherwise unenforceable clause (1) to void any portion of the clause

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purporting to obligate the subcontractor to pay for the general contractor’s negligence,

and (2) to preserve that portion of the clause requiring the promisor to indemnify the

promisee attributable to the promisor’s percentage of negligence. Id.

The court is not persuaded by the contrary authorities identified by A-Ceco, the

majority of which do not discuss anti-indemnity statutes at all. (Doc. # 152.) The only

case A-Ceco cites that does address the effect of an anti-indemnity statute upon a facially

invalid indemnity clause, Jackson v. Associated Scaffolders & Equip. Co., 152 N.C. App.

687, 568 S.E.2d 666 (Ct. App. 2002), does not discuss the line of cases set forth above,

and has limited precedential value because of its dissent. While the majority in Jackson

concluded without textual analysis that the indemnity covenant was void per se under

N.C. Gen. Stat. § 22B-1, id., the dissent more convincingly determined that the facially

invalid paragraph could be stricken from the contract without doing violence to the

overall purpose of the agreement. Id. at 693, 568 S.E.2d at 669-70 (quoting Int’l Paper

Co. v. Corporex Corp., 96 N.C. App. 312, 315-16, 385 S.E.2d 553, 555 (Ct. App. 1989)

(a facially invalid indemnity provision may be severed from an otherwise enforceable

construction contract under North Carolina law provided that it is not a “central feature”

of the agreement)).

4. Application of the Alaska Rule to This Case

On this Motion, as in Rogers & Babler, the Railroad has not established beyond

dispute that A-Ceco contributed to the loss. Indeed, BNSF acknowledged at oral

argument that it has not moved for a determination on summary judgment that A-Ceco

employee David Robinson acted negligently when he followed BNSF Roadmaster

Kenner’s instruction to “pull the rail.” (ASOF Ex. 6 at 29.) Even if it had so moved, the

only probative evidence on this record is that the Railroad was solely responsible for

Plaintiffs’ injuries, as James, Castillo, and Manygoats themselves allege. Compare (doc.

## 129 at 4-5; 130 (summarizing BNSF’s allegations of A-Ceco negligence)) with (doc. #

133 at 8-11 (noting the Railroad’s selective quotation of deposition testimony)). 

Therefore, summary judgment on the enforceability of Section 16’s indemnification

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The wording of the Work Agreement’s defense obligation disposes of the Railroad’s

related contention that, even if Section 32-1159 did obviate A-Ceco’s duty to indemnify, the

statute does not relieve A-Ceco of its duty to defend BNSF against Plaintiffs’ FELA claim.

(Doc. # 119 at 9.) 

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provision is inappropriate because the record does not show, as a matter of law, that

Plaintiffs’ injuries were caused by the negligence of anyone other than BNSF.

If the trier of fact determines that Plaintiffs’ injuries “result[ed] from the sole

negligence” of the Railroad, then a claim of indemnity under the Work Agreement will

not lie. A.R.S. § 32-1159(A). If, in contrast, the trier of fact concludes that A-Ceco was

to any extent responsible for the FELA liability, then the statute would not bar a claim for

contractual indemnity under the Work Agreement. Thus, A-Ceco would be obligated by

contract, as narrowed by the statute, to indemnify BNSF.

Assuming once again for the sake of argument that A-Ceco is at least in partially

responsible for Plaintiffs’ injuries, then A-Ceco would be required under the modified

indemnification clause not only to assume the Railroad’s FELA liability, but also to

defend the Railroad in this action. By its own terms, Section 16(d) requires A-Ceco to

come to the Railroad’s defense on “any claim or cause of action arising or growing out of

or in any manner connected with any liability assumed by [A-Ceco] under this

Agreement.” (ASOF Ex. 5 § 16(d) (emphasis added).) The triggering liability in this

case is A-Ceco’s promise to indemnify.9

 If the statute voids that obligation, then A-Ceco

is not required to “appear and defend” under Section 16(d) because it has not “assumed” a

liability under the Work Agreement. If the statute does not apply, then A-Ceco is

required to defend against the negligence action on the Railroad’s behalf. .

 However, in this case Plaintiffs’ Complaint does not allege any negligence on the

part of A-Ceco, as Plaintiffs’ counsel confirmed at oral argument. A-Ceco’s duty to

defend cannot be enforced on summary judgment unless contributing negligence on the

part of A-Ceco is established as a matter of law. As noted above, BNSF has neither

proved nor attempted to prove that. Therefore, the Railroad’s Motion for Summary

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Judgment on A-Ceco’s duty to defend (Count I), failure to defend (Count II), and failure

to indemnify (Count V) must be denied pending resolution of the above mentioned issues

of material fact regarding the applicability of A.R.S. § 32-1159. 

D. Duty to Obtain FELA Insurance and Procure Sufficient Insurance 

The Railroad’s final grounds for summary judgment also fail. (Doc. # 119 at 10-

11.) First, BNSF contends that A-Ceco breached the Work Agreement by failing to

procure commercial general liability coverage for FELA claims. There is nothing in the

Contract for Construction or Other Work, however, to support the Railroad’s claim. Next,

the Railroad contends that A-Ceco breached the Work Agreement by failing to procure

commercial general liability insurance in the amount of $2,000,000 per occurrence, and,

and $6,000,000 in the aggregate, as required by Section 18(a)(2). This, too, is unavailing,

as the $1,000,000 per occurrence policy purchased by A-Ceco was buttressed by an

additional $1,000,000 of per occurrence coverage under an “umbrella policy,” and the

$6,000,000 aggregate requirement is not relevant to this dispute. 

1. FELA Insurance Not Required under the Work Agreement 

 The “Insurance” section of the Work Agreement provides, “Before commencing

any work under this Agreement, [A-Ceco] must provide and maintain in effect insurance,

at [A-Ceco’s] expense, covering all of the work and services to be provided hereunder . . .

as described below[.]” (ASOF Ex. 5 § 18.) A-Ceco agreed to procure, among other types

of insurance, (1) “Commercial General Liability insurance covering liability, including

but not limited to . . . Personal Injury and Property Damage, with coverage of at least

$2,000,000 per occurrence and $6,000,000 in the aggregate”; (2) “Contractual Liability

insurance covering all of the liability assumed by the Contract under the provisions of this

Agreement, with coverage of a least $2,000,000 combined single limit or the equivalent;”

and (3) “Railroad Protective Liability insurance stating [BNSF] is the Named Insured

covering all of the liability assumed by [A-Ceco] under the provisions of this Agreement

with coverage of at least $2,000,000 per occurrence and $6,000,000 in the aggregate.” 

(Id. Ex. 5 § 18(a)(2), (4), (5).) 

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A-Ceco did not expressly covenant, whether under the rubric of “Insurance” or

under any other section of the Work Agreement, to purchase insurance for Federal

Employers’ Liability Act claims alleged against the Railroad. As discussed at oral

argument, A-Ceco’s obligation to procure “Railroad Protective Liability insurance,” does

not encompass a duty to provide insurance for FELA claims. A-Ceco did agree, in

Section 16 of the Work Agreement, to indemnify the Railroad for FELA liabilities, as

discussed above. (Id. Ex. 5 § 16(b),(c).) However, the court cannot say, as a matter of

law, whether A-Ceco’s duty to obtain “Contractual Liability insurance” against “any

liability assumed by the Contractor under the provisions of [the Work Agreement]”

encompassed an obligation to provide insurance for FELA liabilities assumed by A-Ceco

under the indemnification clause. The somewhat enigmatic phrase, “Contractual Liability

insurance” is not defined by contract, and the Railroad’s papers shed no light upon its

meaning. Even if the contractual liability insurance clause did obligate A-Ceco to

procure insurance to cover the FELA indemnity, which it likely does not, the court cannot

determine whether that insurance policy would even be available to the Railroad in this

case. For if Section 32-1159 applies to invalidate the indemnification obligation, then ACeco has not “assumed” any liability under Section 16 of the Work Agreement to which

the “contractual liability insurance” could potentially apply. Summary judgment would

not be appropriate on so contingent an argument. 

2. The Commercial General Liability Policy Was Sufficient 

A-Ceco purchased and maintained commercial general liability (“CGL” coverage

in accordance with Section 18(a)(2) from Zurich North America (“Zurich”). Zurich

provided CGL coverage to A-Ceco and BNSF through its subsidiary, Steadfast Insurance

Company, from September 13, 2002, through September 13, 2003. (BSOF Ex. 4.) ACeco renewed that Policy for an additional one-year period beginning September 13,

2003. (Id. Ex. 4.) A-Ceco caused a Certificate of Liability Insurance to be sent to BNSF

naming the Burlington Northern and Santa Fe Railway Company as an “additional

insured.” (Id. Ex. 4.) 

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The Policy in effect at the time of the railroad accident provided commercial

general liability insurance to the “insureds” in the amount of $1,000,000 per occurrence,

and $3,000,000 aggregate. (BSOF Ex. 4.) When viewed in isolation, these policy limits

appear to place A-Ceco in breach of its duty to provide general liability insurance “with

coverage of at least $2,000,000 per occurrence and $6,000,000 in the aggregate,” as the

Railroad contends. (ASOF Ex. 5 § 18(a)(2).) However, the Railroad fails to account for

the fact, disclosed in the Certificate of Insurance, that A-Ceco maintained an

“Excess/Umbrella Policy” for the Railroad’s benefit in the amount of $1,000,000 per

occurrence. (BSOF Ex. 4.) This umbrella policy satisfies A-Ceco’s $2,000,000 per

occurrence obligation to the Railroad when viewed in combination with the liability

coverage provided by Zurich. Section 18(a)(2) does not require A-Ceco to maintain the

$2,000,000 of CGL insurance with only one carrier, as BNSF appears to contend. 

Furthermore, the fact that A-Ceco maintained $3,000,000, rather than $6,000,000

in “aggregate” CGL coverage is of no moment here, because Zurich’s “aggregate”

coverage limit is not implicated by Plaintiffs’ FELA claim. The “aggregate” limit is the

total amount for which the insurer will indemnify the insured for any one or several

occurrences during the entire policy period. (Id. Ex. 4 § V(11) (In the Zurich Policy,

“occurrence,” means “an accident, including continuous or repeated exposures to

substantially the same general harmful conditions.”).) In this case, there was only one

“occurrence,” or “accident,” for which liability coverage is claimed. 12 Steven Plitt et al.,

Couch on Insurance § 172:12 (3d ed. 1995) (if all the injuries stem from one, continuous

cause, then there is only one occurrence, whereas if injuries stem from multiple causes,

then there are multiple occurrences). A-Ceco has supplied the $2,000,000 “per

occurrence” CGL coverage mandated by the Work Agreement. Therefore, even if ACeco did breach its obligation to obtain $6,000,000 of aggregate CGL coverage, that

breach is not relevant here.

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IT IS THEREFORE ORDERED that Third Party Plaintiff Burlington Northern

Santa Fe Railway Company’s Motion for Summary Judgment (doc. # 82) is denied. 

DATED this 27th day of August 2007.

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