IN THE UNITED STATES DISTRICT COURT 

FOR THE NORTHERN DISTRICT OF INDIANA

HAMMOND DIVISION

WALSH CONSTRUCTION CO., )

)

Plaintiff, )

)

vs. ) No. 2:14-CV-084

)

CHICAGO EXPLOSIVE )

SERVICES, LLC, and )

PMG INDUSTRIAL, LLC, )

)

)

Defendants. )

OPINION AND ORDER

This matter is before the Court on Defendant Chicago

Explosive Services, LLC’s Motion to Dismiss Count II and III of

Plaintiff’s Complaint, filed by Defendant, Chicago Explosive

Services, LLC, on June 11, 2014 (DE #13). For the reasons set

forth below, the motion is DENIED. 

BACKGROUND

Plaintiff, Walsh Construction Company (“Walsh”), filed its

Complaint on March 17, 2014. (DE #1.) The Complaint lists the

following claims: Count I, Breach of Contract against Chicago

Explosive Services, LLC (“CES”); Count II, Breach of Contract for

Failure to Indemnify against CES; Count III, Breach of Contract

for Failure to Properly Procure Insurance against CES; Count IV,
Negligence against CES; Count V, Negligence against PMG

Industrial, LLC (“PMG”); Count VI, Strict Liability against CES;

and Count VII, Strict Liability against PMG. (DE #1.) CES filed

a Motion for Enlargement of Time in which to Answer or Otherwise

Respond to Complaint on May 30, 2014. (DE #11.) CES then filed

its Answer to Complaint and Motion to Dismiss Count II and III of

Plaintiff’s Complaint on June 11, 2014. (DE’s #13 & #15.) Walsh

filed its response on June 25, 2014. (DE #17.) CES filed its

reply on June 30, 2014. (DE #18.) The motion is thus ripe for

adjudication. 

DISCUSSION

Facts

Walsh, an Illinois corporation, was hired by the Indiana

Department of Transportation (“INDOT”) pursuant to INDOT Contract

IB-30997-A to demolish the Cline Avenue Bridge (“Bridge”) in East

Chicago, Indiana. (Comp. ¶¶ 1, 8-9.) Walsh retained CES, an

Indiana limited liability company, pursuant to a subcontract

agreement (“Subcontract”) to perform certain “blasting” tasks

associated with the Bridge demolition. (Id. at ¶¶ 2, 8-10; see

also Subcontract, DE #1-1.) According to the Subcontract, the

scope of CES’s work was to include blasting of Spans 12 and 14 of

the Bridge, and it required that the “[b]lasting be performed

such that Span 12 falls away from the Indiana Harbor Canal on the

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landward side of Pier 13 and Span 14 falls away from the Indiana

Harbor Canal on the landward side of Pier 14.” (Comp. ¶¶ 9-10;

see also Subcontract, DE #1-1, pp. 2-3.) Several documents,

labeled as exhibits A through M, were attached to and expressly

incorporated into the Subcontract. (see list of documents at

Subcontract, DE #1-1, p. 1.) Exhibit A of the Subcontract

delineates the relevant Terms and Conditions and includes an

indemnification provision as follows:

Article 9 - Indemnification

9.1 Indemnification. To the fullest extent

permitted by law, Subcontractor shall

indemnify, defend (with counsel reasonably

satisfactory to Contractor), and save

harmless Owner, Owner’s Representative,

Architect/Engineer, Contractor, and

Contractor’s surety, as well as any

individual and/or entity that Contractor is

required by contract to indemnify, defend

and/or hold harmless, and their partners,

insurers, parents, members, subsidiaries,

related corporations officers, directors,

agents and employees, and each of them,

(hereafter collectively “Indemnified Parties”

and individually “Indemnified Party”) from

and against any and all suits, actions, legal

or administrative proceedings, claims, debts,

demands, damages, consequential damages,

liabilities, judgments, fines, penalties,

interest, actual attorney’s fees, costs and

expenses of whatever kind or nature

(hereafter “Indemnified Claims”) and whether

they may arise before, during or after

performance of Subcontractor’s Work which are

in any manner directly or indirectly caused,

occasioned or contributed to, in whole or in

part, or claimed to be caused, occasioned, or

contributed to, in whole or in part, through

any act, omission, fault or negligence

whether active or passive of Subcontractor,

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or anyone acting under its direction,

control, or on its behalf or for which it is

legally responsible, in connection with or

incident to the Subcontractor’s Work or

arising out of any failure of Subcontractor

to perform any of the terms and conditions of

this Subcontract: without limiting the

generality of the foregoing, the same shall

include injury or death to any person or

persons (including Subcontractor’s employees)

and damage to any property, regardless of

where located, including the property of

Owner and Contractor. Subcontractor’s

obligation to provide a defense for an

Indemnified Party shall arise regardless of

the merits of the matter and shall continue

until a final determination of fault is made. 

Subcontractor’s obligation to Indemnify,

defend and hold harmless an Indemnified Party

shall apply regardless of any allegations of

active and/or passive negligent acts or

omissions of an Indemnified Party. 

Subcontractor, however, shall be relieved of

and shall have no further obligation to

Indemnify an Indemnified Party under the

Subcontract Documents upon a final

determination, to the extent that an

Indemnified Claim is due to the negligence or

willful misconduct of that Indemnified Party

or such Party’s agents or employees. 

Contractor shall be entitled to recover

actual attorney fees and court costs and all

other costs, expenses and liabilities

incurred by Contractor in an action brought

to enforce all or any part of this Article 9. 

Subcontractor’s obligations described in this

paragraph shall not be construed to negate,

abridge, or reduce other rights or

obligations of indemnity which would

otherwise exist as to a party or person

described in this paragraph. 

(Subcontract, DE #1-1, pp. 10-11.) Exhibit B of the Subcontract

describes the “Scope, Clarification, Alternates, and Unit Prices”

of the agreement. (Id. at pp. 2-3.) As part of those terms, CES

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agreed to obtain $2,000,000 in insurance coverage naming Walsh as

an insured and consisting of a combination of Commercial General

Liability (“CGL”) and Excess coverage, plus CES agreed to

purchase an additional $5,000,000 blasting insurance policy for

its work related to the Subcontract. (Comp. ¶¶ 12-13;

Subcontract, DE #1-1, pp. 2-3 & 15-16.) In Inclusion 18, the

parties agreed that:

 Chicago Explosive Services will provide a $5

million blasting insurance policy, in

addition to the requirements listed in

Exhibit D of this agreement. A claim will be

made against this blasting insurance policy

for any costs Walsh Construction incurs that

results from Chicago Explosives Service's

non-conformance to the scope of work as

outline in inclusions 24 and 25.

(Subcontract, DE #1-1, pp. 2.) The language of Inclusion 24

states that “[CES] will provide a skyjack forklift capable of

reach (sic) 45 ft.” (Id.) The language of Inclusion 25 states

the scope of work as follows:

Segment 1 Scope of Work includes:

a. Blasting of Segment 1 Including Spans 2-6

b. Drilling and Blasting of Piers 3-7

c. Blasting of Pier 7 Additional Structural 

Steel Support

d. Blasting method must prevent damage

to Pier 2 substructure and footing. 

(Id.) The language of Inclusion 26 also describes the scope of

work and provides: 

Segment 3 Scope of Work Includes:

a. Blasting of Spans 12 & 14

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b. Blasting of Span 12 will include

Pier 12, Pier 13 and shoring tower

in Span 12.

c. Blasting of Span 14 will include

Pier 14, Pier 15 and shoring tower

in Span 14.

d. Blasting to be performed such that

Span 12 falls away from the Indiana

Harbor Canal on the landward side

of Pier 13 and Span 14 falls away

form the Indiana Harbor Canal on

the landward side of Pier 14. 

e. Blasting will include H-Piles set

in Pier 13 and Pier 14 columns. 

f. Blasting method must prevent damage

to Pier 13 and Pier 14 crash-walls.

(Id. at pp. 2-3.) 

CES was assisted by PMG in completion of the blasting work

on Spans 12 and 14. (Comp. ¶ 15.) When Span 12 was improperly

and negligently blasted by CES and PMG, the Bridge did not fall

away from the Indiana Harbor canal onto the landward side;

instead, it fell into the canal and severely damaged the crash

wall and sheet pile wall of Pier 13. (Id. at ¶¶ 16-17, Count II,

¶ 25.) Likewise, when Span 14 was improperly and negligently

blasted by CES and PMG, the Bridge did not fall away from the

Indiana Harbor Canal onto the landward side; instead it fell down

into the canal and damaged the crash wall and sheet pile wall of

Pier 14. (Id. at ¶ 18, Count II, ¶ 25.) Walsh, as the General

Contractor for INDOT Contract IB-30997-A, was contractually

obligated to repair the damage to the crash walls and sheet pile

walls caused by the negligent actions of CES and PMG. (Id. at ¶

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19, Count II ¶¶ 25-26.) Walsh completed such repairs and

incurred expenses for labor, equipment, materials, and overhead

totaling approximately $2,059,504.68. (Id. at ¶¶ 20-21.) 

Furthermore, as a result of the Bridge falling into the Indiana

Harbor Canal, debris fell into the channel, which required the

channel to be closed. (Id. at ¶ 22.) This closure affected the

work schedule of other construction companies working in the

area. (Id.) One such company, Kokosing Construction Company

(“Kokosing”), filed a claim for $67,745.51 against Walsh for

costs it incurred as a result of CES’s negligent actions. (Id.

at ¶¶ 22-23, Count II, ¶ 27.) Walsh tendered these claims to

CES, but CES denied Walsh’s tender. (Id. at Count II, ¶ 28.) 

Walsh ultimately incurred damages of approximately $2,127,250.19

in total and responded by filing the instant Complaint against

CES and PMG on March 17, 2014, to recover these damages. (Id. at

Count II, ¶ 30.) 

Analysis

In evaluating a motion to dismiss under Federal Rule of

Civil Procedure 12(b)(6), a court must accept all facts alleged

in the complaint as true and draw all reasonable inferences in

the light most favorable to the plaintiff. Johnson v. Rivera,

272 F.3d 519, 520 (7th Cir. 2001). A complaint is not required

to contain detailed factual allegations; however, the plaintiff

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must allege facts that state a claim to relief that is plausible

on its face. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). It is

not enough that there might be some conceivable set of facts that

entitle the plaintiff to relief. Bell Atlantic Corp. v. Twombly,

550 U.S. 544, 553-56 (2007). The plaintiff’s obligation

“requires more than labels and conclusions. . . .” Id. at 555. 

The Supreme Court has provided that “[t]hreadbare recitals of the

elements of a cause of action, supported by mere conclusory

statements, do not suffice.” Iqbal, 556 U.S. at 678.

When reviewing a motion to dismiss, a court generally

considers only the factual allegations of the complaint and any

reasonable inferences that can be drawn from those allegations;

however, a court may also examine information from documents “if

they are referred to in the plaintiff’s complaint and are central

to his claim.” Adams v. City of Indianapolis, 742 F.3d 720, 729

(7th Cir. 2014); see Williamson v. Curran, 714 F.3d 432, 443 (7th

Cir. 2013) (noting the Seventh Circuit has taken “a relatively

expansive view of the documents that a district court properly

may consider in disposing of a motion to dismiss.”). Such

exception is applicable in cases concerning contract

interpretation. Levenstein v. Salafsky, 164 F.3d 345, 347 (7th

Cir. 1998). In those cases the contract itself is “considered

part of the pleadings” as it is “central to [the plaintiff’s]

claim.” Wright v. Assoc. Ins. Cos. Inc., 29 F.3d 1244, 1248 (7th

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Cir. 1994). Here, Walsh’s Complaint refers directly to the

Subcontract, and that Subcontract expressly incorporates various

exhibits, all of which may be considered by this Court in ruling

on the motion to dismiss without converting it into a motion for

summary judgment. 

Count II - Breach of Contract for Failure to Indemnify

In Indiana, the essential elements of breach of contract are

“the existence of a contract, the defendant’s breach of that

contract, and damages resulting from the breach.” Haegert v.

Univ. of Evansville, 977 N.E.2d 924, 937 (Ind. 2012). Indiana

courts recognize and respect the freedom of parties to enter into

contracts, and there is a presumption that those contracts are

representative of the freely bargained for agreements of the

parties. SAMS Hotel Group, LLC. V. Environs, Inc., 716 F.3d 432,

435 (7th Cir. 2013). Parties are free to negotiate an

indemnification clause that “may obligate one party to insure

against and/or to indemnify certain acts or omissions of the

other party.” Gaffney v. Riverboat Servs. Of Ind., Inc., 451

F.3d 424, 469 (7th Cir. 2006). The duty to indemnify, however,

does not usually arise until the party seeking indemnity “suffers

loss or incurs damage.” Essex Group, Inc. v. Nill, 594 N.E.2d

503, 507 (Ind. Ct. App. 1992). This may occur when the party

seeking indemnity pays an underlying claim, pays judgment on an

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underlying claim, or tenders payment in settlement of an

underlying claim. Id.

Here, CES argues that Walsh’s Breach of Contract for Failure

to Indemnify claim must fail because CES is not obligated to

indemnify Walsh for Walsh’s own negligence. CES states that the

Complaint is unclear as to the nature of any alleged “claims”

made against it by third parties such as INDOT and/or Kokosing,

which leaves speculation as to whether Walsh is seeking

indemnification for its own negligence or for that of CES. CES

also argues that Walsh’s “failure to elaborate” creates an issue

as to whether CES’s duty to indemnify Walsh has been triggered

because Walsh has presented no facts showing that it has paid any

underlying claim via judgment or settlement or that its liability

based on the negligence of CES has become fixed. In response,

Walsh states that the Complaint clearly alleges that CES must

indemnify Walsh for CES’s negligence (rather than for Walsh’s own

negligence) and that the damages at issue are identifiable as

being caused by CES.

The Court finds that Count II of the Complaint adequately

states a claim. Specifically, Walsh alleges the following: (1)

that Walsh and CES entered into a Subcontract which included an

indemnification provision; (2) that the indemnification provision

provides that CES will indemnify Walsh for damages, claims,

debts, and demands made against Walsh as a result of CES’s

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negligent acts or omissions; (3) that the Subcontract sets forth

specific requirements related to the blasting actions performed

by CES; (4) that CES and PMG improperly and negligently blasted

certain Bridge spans defined in the Subcontract; (5) that, as a

result of CES and PMG’s improper and negligent blasting, crash

walls and sheet pile walls were damaged; (6) that Walsh was

contractually obligated to INDOT to repair the damage caused by

the negligent actions of CES and PMG; (7) that INDOT demanded

that the repairs be completed by Walsh; (8) that Kokosing also

made a claim and demand on Walsh for damages sustained as a

result of CES’s negligence; (9) that Walsh tendered such claims

to CES; (10) that CES denied Walsh’s tender; and (11) that Walsh

completed the required repairs and, in doing so, incurred

expenses for labor, equipment, materials, and overhead totaling

approximately $2,127,250.19. Taking these allegations as true

and drawing all reasonable inferences in Walsh’s favor as must be

done at this point, the Complaint adequately alleges that CES

breached the Subcontract by failing to indemnify Walsh for CES’s

negligence. To the extent that CES argues that no underlying

claim has triggered operation of the indemnification clause

because there are no facts in the Complaint showing that Walsh

has paid any underlying claim, this argument is without merit. 

Again, giving Walsh the benefit of all reasonable inferences to

which it is entitled at this stage, Walsh has adequately alleged

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that damages occurred because of CES’s negligence, that it was

required by INDOT to repair the damage caused by CES, and that it

did repair those damages, incurring significant costs for labor,

equipment, materials, and overhead in the process. Walsh’s

allegations are sufficient to withstand Rule 12(b)(6) scrutiny. 

Thus, the motion to dismiss Count II is DENIED. 

Count III - Breach of Contract for Failure to Properly

Procure Insurance

“Under Indiana law, the primary goal of contract

interpretation is to give effect to the parties’ intent.” Matter

of Forum Grp., Inc., 82 F.3d 159, 163 (7th Cir. 1996). Terms of

an agreement will usually be given their “plain and ordinary

meaning” as written. Bailey v. Mann, 895 N.E.2d 1215, 1217 (Ind.

2008). However, “[r]ules of contract construction and extrinsic

evidence may be employed in giving effect to the parties’

reasonable expectations” when a contract’s terms are ambiguous or

uncertain. Johnson v. Johnson, 920 N.E.2d 253, 256 (Ind. 2010).

Here, CES argues that Count III of the Complaint fails to

state a claim because the clear language of the Subcontract did

not require CES to obtain an additional $5,000,000 blasting

insurance policy for the specific work that is the subject of

this dispute. CES points out that Inclusion 18 states that CES

was to provide the additional blasting insurance policy “for any

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costs Walsh . . . incurs that results from [CES’s] nonconformance to the scope of work as outlined in inclusions 24 and

25.” Inclusion 24 states that CES was to provide “a skyjack

forklift capable of reaching 45 ft,” and Inclusion 25 describes

the scope of work related to blasting Spans 2-6 and Piers 3-7. 

Thus, according to CES, because the subject of the dispute

relates to Piers 13 and 14 only, a claim by Walsh for breach of

contract for CES’s failure to obtain an additional blasting

insurance policy fails on its face. CES states that Walsh

specifically identified the piers requiring additional blasting

insurance, which did not include Piers 13 and 14. In response,

Walsh argues that, when reading the Subcontract as a whole, it is

clear that the intent of the parties was to require an additional

blasting insurance policy for the two inclusions related to

blasting (Inclusions 25 and 26) and that the reference to the

line item requiring CES to provide a forklift (Inclusion 24) was

simply a typographical error. Walsh points out that there is no

reasonable basis to assume the Subcontract would require a

blasting policy for a provision related to a forklift rather than

the blasting work CES was to perform, as such blasting work was

central to the entire agreement. 

After review of the Subcontract and relevant

attached/incorporated exhibits, the Court finds that the

contractual language is not as “clear and unambiguous” as CES

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maintains. Inclusion 18 states that CES was to provide an

additional “$5 million blasting insurance policy” for its “nonconformance to the scope of work as outlined in inclusions 24 and

25” (emphasis added). Inclusion 24 simply refers to forklift

specifications, and it does not reference “scope of work” or

blasting requirements at all. Inclusions 25 and 26, however, are

entitled “scope of work” and outline CES’s obligations as related

to their blasting work on the Bridge. Giving Walsh the benefits

to which it is entitled at this stage, it is reasonable to infer

that a typographical error was made and that the intent of the

parties was to reference Inclusions 25 and 26 in Inclusion 18 of

Exhibit B of the Subcontract. Inclusions 25 and 26 both refer to

the “scope of work” for blasting, while no other numbered

inclusions specifically use that phrase. Inclusion 26 references

Spans 12 and 14 (which were allegedly negligently blasted by CES)

and Piers 13 and 14 (which were allegedly damaged by CES’s

negligent blasting), all of which relate to the subject of

Walsh’s Complaint. Thus, the Court does not agree that Walsh has

pled itself out of Court as CES argues, and CES’s motion to

dismiss Count III is DENIED.1

 

1

 In its reply, CES also belatedly argues that Walsh has not stated a claim

for breach of contract in Count III because Walsh’s Complaint does not allege

that CES failed to secure and/or maintain the required $2,000,000 in CGL and

Excess insurance coverage described in Exhibit D of the Subcontract. This

argument is without merit. As Walsh points out, the Complaint states that the

parties agreed CES would provide $2,000,000 in CGL and Excess coverage, that

it would name Walsh as an additional insured under the policies, that Walsh

tendered the claims to the insurers who failed to respond or provide Walsh

with coverage, and that the Subcontract was thus breached as a result of CES’s

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CONCLUSION

For the aforementioned reasons, Defendant Chicago Explosive

Services, LLC’s Motion to Dismiss Count II and III of Plaintiff’s

Complaint, filed by Defendant, Chicago Explosive Services, LLC,

on June 11, 2014 (DE #13), is DENIED.

DATED: October 20, 2014 /s/ RUDY LOZANO, Judge

United States District Court

failure to procure the required insurance. (See Comp., Count III, ¶¶ 25-28.) 

 

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