Opinion ID: 173055
Heading Depth: 2
Heading Rank: 2

Heading: The Negligent-Maintenance Claim

Text: There remains Union Pacific's claim for negligent inspection and maintenance. The government argues that the claim is barred by the Contract's Exculpatory Clause. The clause provides that the railroad release[s] and agree[s] to save and hold the Government harmless from any and all causes of action, suits at law or equity, or claims or demands, or from any liability of any nature whatsoever for and on account of any damages to the lands conveyed and utilities relocated hereunder, or in any way growing out of the construction, operation and maintenance of the Project. Aplt. App. at A116. This language unambiguously encompasses claims ... growing out of the ... maintenance of the Project. We agree with the government that the clause bars Union Pacific's claim. The district court did not question the scope of the clause's language. Its reason for refusing to enforce the clause was that it believed the clause to be contrary to Oklahoma public policy. On appeal the government argues that Oklahoma public policy is irrelevant because federal law governs the interpretation and validity of the clause. But it failed to preserve this argument for appellate review. Not only did the government not raise this issue in the district court, but it argued in its trial brief that Oklahoma law applied to the FTCA claim, without noting any limitations on that application. We therefore decline to address the government's argument that federal law governs. See Ecclesiastes 9:10-11-12, Inc. v. LMC Holding Co., 497 F.3d 1135, 1141 (10th Cir.2007) (This Court will not consider a new theory advanced for the first time as an appellate issue, even a theory that is related to one that was presented to the district court.). Nevertheless, we hold that the clause is enforceable in this case even under Oklahoma law. Whether the district court correctly interpreted the law and public policy of Oklahoma ... is a matter that we review de novo. Horace Mann Ins. Co. v. Johnson, 953 F.2d 575, 576 (10th Cir.1991). The Supreme Court of Oklahoma has counseled that courts should void contract clauses on public-policy grounds rarely, with great caution and in cases that are free from doubt. Shepard v. Farmers Ins. Co., 678 P.2d 250, 251 (Okla.1984). Generally, exculpatory clauses will be enforced if the following conditions are met: (1) the clause clear[ly] and unambiguous[ly] exonerates the defendant with respect to the claim; (2) there was no vast difference in the bargaining power of the parties when they entered into the contract; and (3) enforcement of the clause will not violate public policy. Schmidt v. United States, 912 P.2d 871, 874 (Okla.1996) (emphases omitted). Union Pacific does not dispute that the first two conditions were satisfied. It argues only that enforcement of the clause would violate public policy. Under Oklahoma law, enforcement of an exculpatory clause would violate public policy if the clause patently would tend to injure public morals, public health or confidence in the administration of the law[,] ... [or] destroy the security of individuals' rights to personal safety or private property. Id. at 875. Union Pacific advances two arguments why this test is met. First, it argues that because the culverts helped prevent flooding in the City of Eufaula, enforcing the clause would let the government avoid liability to members of the public for any potential flooding damages resulting from its negligence, thereby injuring public health. We disagree. Although the Exculpatory Clause states that Union Pacific release[s], Aplt.App. at A116, certain claims against the government (and therefore cannot sue the government on such a claim), it does not bar members of the public from suing the federal government. It provides only that Union Pacific would have to hold the government harmless if such a suit were brought. Union Pacific has not attacked the hold-harmless clause or argued that the indemnification provision encourages the government to act without due care. Cf. Elsken v. Network Multi-Family Sec. Corp., 838 P.2d 1007, 1011 (Okla.1992) (upholding a hold-harmless clause as consistent with Oklahoma public policy); Fed. Rural Elec. Ins. Corp. v. Williams, Nos. 97,043 & 97,051, 2002 WL 31041863 at  (Okla.Civ.App.2002) (same). In any event, enforcing the Exculpatory Clause with respect to a claim by the railroad itselfthe contracting partyhardly upsets any public policy. Union Pacific's second argument is that two Oklahoma state statutesthe Oklahoma Floodplain Management Act, Okla. Stat. tit. 82, § 1602 (2008), and the Oklahoma Dam Safety Act, Okla. Stat. tit. 82, § 110.2 (2008)have expressed a strong public policy favoring flood prevention. But Union Pacific fails to identify any reason why enforcing the Exculpatory Clause in this case would run counter to the policies expressed in either of these statutes, and we cannot discern any. The Floodplain Management Act, which recognizes the personal hardships and economic distress caused by flood disasters, Okla. Stat. tit. 82, § 1602, was adopted in order to mitigate against the hazards caused by flooding and to qualify citizens for coverage under the Federal flood insurance program. Wilkerson v. City of Pauls Valley, 24 P.3d 872, 875 (Okla.Civ. App.2001). And the Dam Safety Act, which recognizes that reasonable regulation of such construction, operation and maintenance [of dams] is beneficial and necessary for the public health and welfare and to protect lives and property, was intended to reaffirm and clarify ... the dam safety program of the Oklahoma Water Resources Board. Okla. Stat. tit. 82, § 110.2. Given that the Exculpatory Clause does not affect the public at large, Union Pacific has failed to convince us that this is a case where it is free from doubt that we should invalidate the clause. Shepard, 678 P.2d at 251. The clause therefore bars relief on Union Pacific's negligent-inspection-and-maintenance claim.