Opinion ID: 768108
Heading Depth: 2
Heading Rank: 1

Heading: BN's Right to Indemnification

Text: 9 A lessee's obligation to indemnify a railroad under a track lease agreement is a contractual duty and not a duty arising under the common law of tort. Burlington Northern, Inc. v. Bellaire Corp., 921 F.2d 760, 763 (8th Cir. 1990) (quoting Burlington Northern, Inc. v. Hughes Brothers, Inc., 671 F.2d 279, 284 (8th Cir. 1982)). Thus, to recover under the indemnity agreement, BN need not prove that Farmers Union was negligent. See Bellaire, 921 F.2d at 763. Rather, BN must establish, in accordance with the terms of the agreement, that an act or omission by Farmers Union caused or contributed to cause the accident in which Cahill was injured. See id. (interpreting a similar indemnity agreement); Missouri Pac. R. Co. v. International Paper Co., 618 F.2d 492, 496 (8th Cir. 1980). 10 The district court found that the FLIX car was one of the two cars that had been delivered to Farmers Union a few days prior to the accident. The court also found that Farmers Union's failure to notify BN of this car's defective brakes constituted an act or omission that contributed to Cahill's injury, thereby triggering the indemnity clause. We review the district court's factual findings for clear error, see Consol. Elec. & Mech., Inc. v. Biggs Gen. Contracting, Inc., 167 F.3d 432, 434 (8th Cir. 1999), and its interpretation of the indemnity clause, which is governed by North Dakota law, de novo, see Burlington Northern I, 114 F.3d at 707. 11 Farmers Union first argues that the district court erred in finding that the FLIX car was one of the cars that Farmers Union had handled prior to the accident. Although there exists conflicting evidence regarding the origin of the FLIX car, we cannot say that the court's conclusion is clearly erroneous, as it is supported by the testimony of the three individuals most knowledgeable of the Cahill accident. Most notably, Roy, the only person who saw both the defective car received by Farmers Union and the car involved in the Cahill accident, testified that he was certain that the troublesome car on both occasions was the FLIX car. In addition, Cahill stated that the FLIX car was already loaded when he and Roy came to work on April 13 and thus that the FLIX car must have been one of the cars that they had received from Farmers Union. Finally, Roy's and Cahill's supervisor, Mike Guderjahn, testified that, based on the amount of time that it takes to load a car and how long Cahill and Roy had been at work on April 13, the FLIX car had to have been loaded prior to that day. 12 Farmers Union asserts that these individuals' testimony is rendered incredible by certain business records of Farmland Industries, an unrelated third party, that suggest that the FLIX car may have been one of the cars delivered directly to Rolla Grain. We conclude, however, that although they are not insignificant, these records do not so compellingly cast into doubt the unequivocal testimony of Roy, Cahill, and Guderjahn as to render clearly erroneous the district court's findings regarding the FLIX car. See First Nat'l Bank, Sioux Falls v. First Nat'l Bank, South Dakota, 153 F.3d 885, 890 (8th Cir. 1998) (Where there are two permissible views of the evidence, the factfinder's choice between them cannot be clearly erroneous.) (quoting Anderson v. City of Bessemer City, 470 U.S. 564, 574 (1985)). 13 Farmers Union next argues that, even if the FLIX car had passed through its control, it had no duty under the terms of the lease agreement to notify BN of the defective brake and therefore its failure to do so did not constitute an act or omission under the indemnity clause. We disagree. The primary purpose of an indemnity clause such as is at issue here is to indemnify a railroad when its lessee's act or omission causes the railroad to violate its non-delegable duty to furnish a safe workplace under the Federal Employers' Liability Act (FELA), 45 U.S.C. §§ 51 et seq. See Bellaire, 921 F.2d at 763; Hughes Brothers, 671 F.2d at 284. Accordingly, the inquiry into whether an act or omission has occurred does not focus primarily on the lessee's duties to the railroad, but rather on the railroad's duty to provide a safe workplace. See Bellaire, 921 F.2d at 763 (The phrase 'act or omission' includes any act or omission which constitutes a violation of the railroad's duty to provide a safe workplace, and thus, subjects it to liability under FELA.) (quoting Hughes Brothers, 671 F.2d at 284). Farmers Union is therefore chargeable with an act or omission under the indemnity agreement if through its action or inaction it jeopardizes the safety of the work environment for which BN is responsible and, in so doing, exposes BN to potential liability under FELA. See Bellaire, 921 F.2d at 763. 14 BN has a duty under the Federal Safety Appliance Act (FSAA) to ensure that the cars used on its tracks are equipped with properly functioning brakes, see 45 U.S.C. § 11, and its failure to do so creates an unsafe workplace in violation of FELA, see Grogg v. Missouri Pac. R. Co., 841 F.2d 210, 212 (8th Cir. 1988). Farmers Union, accordingly, has a duty under the indemnity clause to assist BN in ensuring that all cars on its tracks are equipped with effective brakes. By failing to notify BN of the FLIX car's defective brake, Farmers Union breached this duty and exposed BN to possible liability under FELA. Thus, an act or omission has occurred. 3 See Bellaire, 921 F.2d at 764 (finding that lessee had duty under indemnity clause to tighten car's brakes or determine why it rolled while its brake was set, and that its failure to do so was an act or omission). 15 Farmers Union also contends that even if its failure to notify BN of the defective brake constituted an act or omission, this act or omission did not cause Cahill's injury and thus did not trigger the indemnity clause. We again disagree. Because causation under an indemnity agreement such as this is not based on principles of negligence, BN is not required to show that Farmers Union's failure to notify BN of the FLIX car's faulty brake was the proximate cause of Cahill's accident, but only that it caused or contributed to cause the accident. See Bellaire, 921 F.2d at 763. In Bellaire, we held that a lessee who knew that a car's brake was either not set or not functioning properly but who failed to take any action to remedy the situation was the cause of a fatal accident that occurred the following day. See id. at 764. The same can be said of this case: Farmers Union knew that the FLIX car's brake was defective but yet took no action to rectify the problem, even though a simple notification to BN could have led to the repairing of the brake, the decommissioning of the car, or the taking of other corrective action, the default of which resulted in Cahill's injuries. We therefore conclude that the district court properly found that Farmers Union's failure to notify BN of the FLIX car's defective brake caused or contributed to cause the Cahill accident and that Farmers Union is thus required to indemnify BN under the terms of the indemnity clause.