Opinion ID: 77115
Heading Depth: 3
Heading Rank: 2

Heading: Indemnification Under the Crossing Agreement

Text: KUA and FMPA also appealed the district court’s determination that, under the Crossing Agreement, they were obligated to defend and indemnify CSX and Amtrak. KUA and FMPA argued, inter alia, that state sovereign immunity principles precluded the district court’s determination as to their indemnity obligation. Specifically, they argued that sovereign immunity could only be waived by an act of the Florida legislature, and that the legislature had waived 10 sovereign immunity in the area of torts in F LA. S TAT. ch. 768.28, but only under specified circumstances and only up to $100,000 per claimant or $200,000 per accident. See Nat’l R.R. Passenger Corp., 286 F.3d at 1265. Because the Crossing Agreement purportedly required KUA and FMPA to defend and indemnify CSX above these statutorily-permitted limits, KUA and FMPA argued that the indemnification portion of the Crossing Agreement should not be given effect. Id. Because the applicability of F LA. S TAT. ch. 768.28 was unclear under Florida law, we certified three related questions to the Supreme Court of Florida: GIVEN THAT KISSIMMEE UTILITY AUTHORITY, A MUNICIPAL AGENCY UNDER FLORIDA LAW, AGREED BY CONTRACT TO INDEMNIFY A PRIVATE PARTY, IS THE AGREEMENT CONTROLLED BY THE RESTRICTIONS ON WAIVER OF SOVEREIGN IMMUNITY FOUND IN FLORIDA STATUTE § 768.28? IS THE INDEMNIFICATION AGREEMENT INSTEAD CONTROLLED BY THE RULE FOR BREACH-OF-CONTRACT ACTIONS ENUNCIATED IN PAN-AM TOBACCO CORP. V. DEPARTMENT OF CORRECTIONS, 471 So. 2d 4 (Fla. 198[4])? IF PAN-AM APPLIES, DOES A MUNICIPAL AGENCY LIKE KISSIMMEE UTILITY AUTHORITY LOSE THE PROTECTION OF SOVEREIGN IMMUNITY ONLY IF IT HAS SPECIFIC STATUTORY AUTHORIZATION TO ENTER INTO INDEMNIFICATION AGREEMENTS, OR IS IT SUFFICIENT THAT THE AGENCY MORE GENERALLY HAS STATUTORY AUTHORIZATION TO CONTRACT WITH PRIVATE PARTIES? Id. at 1269. 11 The Supreme Court of Florida answered the first of these questions in the negative. See Am. Home Assurance Co., __ So. 2d at __ (slip op. at 30). The court reasoned that, under the plain language of the statute, F LA. S TAT. ch. 768.28 applies when a plaintiff is seeking to recover damages in tort. Id. at __ (slip op. at 29). In contrast, the court found that the indemnification provision at issue in this case was “based on a contract between KUA and CSX,” namely, the Crossing Agreement. Id. (emphasis in original). Accordingly, the court found that F LA. S TAT. ch. 768.28 was inapplicable. The court answered the second of these certified questions in the negative as well. Id. at __ (slip op. at 30). Noting that Pan-Am involved the contractual liabilities of the State of Florida, the court found the case inapplicable in the instant case which involved municipal entities. See id. The court noted that “municipalities have long possessed both the power to execute contracts and the concomitant liability for their breach.” Id. The court proceeded to note that “the parties have failed to identify any law prohibiting KUA from executing the [C]rossing [A]greement and the indemnification provision it contains.” Id. at __ (slip op. at 33). As a result of the court’s conclusion that Pan-Am did not apply in the instant litigation, the court declined to answer the last certified question. Id. at __ n.6 (slip op. at 35). 12 2. Additional Arguments Against Indemnification The court’s finding that sovereign immunity does not insulate KUA and FMPA from its indemnification obligations under the Crossing Agreement, however, does not end our inquiry. In our previous opinion, we noted that KUA and FMPA made additional arguments against the district court’s grant of partial summary judgment in favor of CSX and Amtrak on the issue of the validity of the Crossing Agreement. But, because an affirmative finding of sovereign immunity from the Florida Supreme Court would have been dispositive, we reserved our determination on these arguments. See Nat’l R.R. Passenger Corp., 286 F.3d at 1264. Accordingly, we now address those additional arguments. In making our determination, we note that the district court’s grant of partial summary judgment is reviewed de novo, and its findings of fact are reviewed for clear error. Burnes v. Pemco Aeroplex, Inc., 291 F.3d 1282, 1284 (11th Cir. 2002). First, KUA and FMPA argued that the indemnification provision in the Crossing Agreement is invalid because its terms do not satisfy the requirements in F LA. S TAT. ch. 725.06. Under the statute in place at the time the Crossing Agreement was executed, a contract for construction of an appurtenance in which one party agrees to indemnify and hold harmless an owner of the real property on which the appurtenance is constructed must contain: (1) a monetary limitation on 13 the extent of the indemnification; or (2) specific consideration given by the indemnified party to the indemnitor. See F LA. S TAT. ch. 725.06 (1993). Assuming without deciding that the statute applied to the Crossing Agreement, we note the Supreme Court of Florida stated in its opinion that KUA’s agreement to indemnify was given “[i]n recognition of the increased risks associated with the use of CSX’s property, tracks, and right-of-way and as part of the ‘consideration’ for receiving this license.” Am. Home Assurance Co., __ So. 2d at __ (slip op. at 34). In addition, the court stated, “the indemnification agreement is binding and enforceable.” Id. In this circuit, a state supreme court’s answer to certified questions is “conclusive” on the issue certified. Nat’l Educ. Ass’n v. Lee County Bd. of Pub. Instruction, 467 F.2d 447, 450 (5th Cir. 1972). Moreover, upon receiving an answer to a certified question, our “court does not second-guess a State’s application of its own law.” Id. at 450 n.6. Thus, although we did not certify to the Florida Supreme Court a question about the validity of the Crossing Agreement’s indemnity provision vis-a-vis F LA. S TAT. ch. 725.06, we decline to second-guess the court’s determination that KUA received consideration for its agreement to indemnify CSX and that the Crossing Agreement is enforceable. See id.; see also Redgrave v. Boston Symphony Orchestra, Inc., 855 F.2d 888, 903 (1st Cir. 1988) (en banc) (noting that determinations made by a state court other than 14 those in direct response to certified questions should be carefully considered by certifying court). Moreover, this conclusion coincides with our own review of Florida state law. As one Florida court noted, “[t]he ‘specific consideration’ required by section 725.06(2) need not be a dollar amount.” Peoples Gas System, Inc. v. RSH Constructors, Inc., 563 So. 2d 107, 109 (Fla. Dist. Ct. App. 1990); see Westinghouse Elec. Corp. v. Turnberry Corp., 423 So. 2d 407, 409 (Fla. Dist. Ct. App. 1982) (finding agreement to deliver elevators ahead of schedule constituted “specific consideration” within the meaning of the statute). Accordingly, although the Crossing Agreement did not specify a dollar amount as consideration, CSX’s grant of a license to use the crossing to access the Plant and the allowance of increased risk attendant to such use constituted consideration necessary to satisfy F LA. S TAT. ch. 725.06. Accordingly, we reject the argument of KUA and FMPA that the statute rendered the indemnity provision in the Crossing Agreement void. Second, KUA and FMPA argued that the district court erred in granting summary judgment on the indemnification issue because a genuine issue of material fact existed as to whether the indemnity provision constituted an exculpatory clause unenforceable under Florida law. Particularly, they argued that a fact question existed as to whether CSX held a superior bargaining position in negotiating the Crossing Agreement. As we noted previously, the Florida Supreme 15 Court in its answer to our certification stated that “the indemnification agreement is binding and enforceable.” Am. Home Assurance Co., __ So. 2d at __ (slip op. at 34). Also as we noted previously, we are disinclined to second-guess the determination of the Florida Supreme Court in light of this clear language in its opinion. See Nat’l Educ. Ass’n, 467 F.2d at 450 n.6. Moreover, the Florida Supreme Court has previously determined that a railroad’s receipt of an indemnification agreement as consideration for granting a license to use a crossing over its tracks did not demonstrate the use of superior bargaining power such that the indemnification agreement was rendered unenforceable. See Russell v. Martin, 88 So. 2d 315, 317-18 (Fla. 1956); see also Jacksonville Terminal Co. v. Ry. Express Agency, Inc., 296 F.2d 256, 262-63 (5th Cir. 1961) (citing Russell and concluding that an indemnification agreement offered by a Florida terminal company which owned railroad tracks to a shipping company as part of a lease to use the tracks did “not violate public policy”). Accordingly, we reject the argument of KUA and FMPA that a fact question existed as to whether CSX exercised a superior bargaining position in negotiating for the indemnity provision which therefore rendered the Crossing Agreement invalid. Third, KUA and FMPA argued that the indemnity provision in the Crossing Agreement was inapplicable to the facts of this case because the negligent actions 16 of CSX occurred in a location separate and removed from the railroad crossing where the accident occurred. Particularly, they argued that because the negligence apportioned to CSX stemmed from the omissions of its personnel in Jacksonville, Florida, the liability of CSX was not sufficiently connected to the crossing to trigger the indemnity provision. The Crossing Agreement provided that KUA agreed to indemnify CSX for “all claims and liability . . . arising out of, resulting from, or connected in any manner with the . . . use . . . of said [c]rossing . . . regardless of cause.” See R1-187, Ex. A at ¶ 14.2. Here, CSX’s liability stemmed from claims which arose from the 1993 collision at the crossing. Thus, because we conclude such claims were covered by the all-encompassing language in the indemnity provision, we reject as meritless the argument of KUA and FMPA that the indemnity provision was inapplicable. Fourth, KUA and FMPA argued that the district court improperly granted partial summary judgment in favor of Amtrak by finding that Amtrak was a beneficiary of the indemnity agreement between KUA and CSX. Under the terms of the indemnity provision, KUA agreed not only to indemnify CSX, but also “‘any other company . . . whose property at [the crossing] may be leased or operated by the undersigned [CSX],’ as well as ‘any parent, subsidiary or affiliated system companies of [CSX].’” Nat’l R.R. Passenger Corp., 286 F.3d at 1263 17 (quoting the Crossing Agreement). Citing the undisputed fact that “[w]hen an Amtrak train was moving on CSX track it was subject to CSX rules and regulations and its movement was controlled by CSX dispatchers,” R109-2183 at 7, the district court concluded as a matter of law that the Amtrak train was “operated” by CSX at the time of the collision as defined in the Crossing Agreement. KUA and FMPA have not disputed the district court’s factual finding as to CSX’s control over Amtrak trains. See Burnes, 291 F.3d at 1284; see also United Transp. Union v. CSX Transp., Inc., 902 F.2d 36 (6th Cir. 1990) (unpublished table decision) (describing how CSX was able to “control rail traffic” using its tracks through “train orders” and “proceed signals”). Moreover, we agree with the district court that this finding was sufficient to support the conclusion that, as a matter of law, CSX was “operating” the Amtrak train as defined in the Crossing Agreement at the time of the collision. Under Florida contract law, where the contract terms are clear and unambiguous, a court must give effect to the plain meaning of the terms. See Burns v. Barfield, 732 So. 2d 1202, 1205 (Fla. Dist. Ct. App. 1999). Courts may resort to reference materials to determine the accepted plain meaning of a particular term. See id. (relying on dictionary definition of “third party”). Such inquiry reveals that “operate” is defined as “to cause to occur”; “to cause to function”; “to manage and put or keep in operation.” W EBSTER’S T HIRD N EW 18 INTERNATIONAL D ICTIONARY 1580-81 (1993). Based on this definition, coupled with the district court’s undisputed factual finding that CSX dictated how Amtrak trains functioned and managed the trains’ operations, we conclude as a matter of law that CSX “operated” the Amtrak trains as defined in the Crossing Agreement. Moreover, we note that the Crossing Agreement provided indemnity for claims arising from the “use” of the crossing by “any other company” whose property was operated by CSX. See R1-187, Ex. A at ¶¶ 1.2, 14.2. Because it is undisputed that Amtrak trains were at all times before and after the execution of the Crossing Agreement regularly using the CSX tracks, we find that the construction of the indemnity agreement offered by KUA and FMPA would effectively render these provisions mere surplusage. See Hargrave v. Hargrave, 728 So. 2d 366, 367 (Fla. Dist. Ct. App. 1999) (noting that “[e]very provision in a contract should be given meaning and effect” to avoid rendering any provision “mere surplusage”). Accordingly, we conclude the district court properly concluded that CSX “operated” the Amtrak train involved in the collision as defined in the Crossing Agreement, thereby triggering the duty of KUA and FMPA to indemnify Amtrak. In sum, then, based on the Supreme Court of Florida’s opinion and our determinations in this opinion, we conclude that the district court did not err in finding that the indemnity provision in the Crossing Agreement obligated KUA 19 and FMPA to indemnify both CSX and Amtrak. Accordingly, the district court’s grant of partial summary judgment on this issue in favor of CSX and Amtrak is affirmed.