Opinion ID: 794672
Heading Depth: 2
Heading Rank: 7

Heading: Riverboat's Counterclaim

Text: 148 On November 16, 2000, the district court granted summary judgment in favor of Showboat on Riverboat's counterclaim. See R.99. It held that the Agreement between Showboat and Riverboat does not obligate Showboat to obtain a general acts and omissions policy. 43 Id. at 7. [W]hereas section 5.01.1 spells out Showboat's duty to obtain insurance policies for `acts, omissions and injuries,' the court explained, subsection 5.01.01 (a subsection of 5.01.1) articulates the types of coverages to be included within those policies. Id. at 6. Therefore, according to the district court, Showboat is not required to insure against Riverboat's violation of federal employment laws, including 46 U.S.C. § 2114, and accordingly, is not required to indemnify Riverboat against losses stemming from Showboat's failure to provide this insurance coverage. 149 Riverboat appeals this decision. It argues that the district court erred in finding that the Agreement unambiguously requires Riverboat to bear its own expenses in this context, given various inconsistencies among the Agreement's provisions. For example, insurance for liabilities arising under the Jones Act—which the district court held was one of the six required areas of coverage—is listed in the general, introductory paragraph in section 5.01.1, rather than in section 5.01.01.1, the subsection that allegedly enumerates and thereby limits Showboat's obligations. See R.37, Ex.A. Second, section 5.01.1 requires a policy with a $5,000,000 minimum; however, the minimum policy limits for the five types of coverages listed in section 5.01.01.1 range from $2,000,000 to $5,000,000 and total $14,000,000. 44 Third, section 5.01.1, in mandating that Riverboat be named as the insured party, uses the phrase the foregoing policies. Id. § 5.01.1. In so doing, the Agreement's language clearly indicates that the immediately proceeding provision requiring insurance for acts, omissions and injuries is intended as a free-standing insurance and indemnification clause. Id. In light of these inconsistencies, according to Riverboat, the only logical interpretation of section 5 of the Agreement is that the parties intended Showboat to obtain a separate, independent insurance policy for general acts and omissions, with a minimum policy coverage of $5,000,000. 150 Showboat responds that the Agreement unambiguously limits its insurance obligation to the six types of coverage enumerated in sections 5.01.1 and 5.01.01.1. While section 5.01.1 does mention insurance for Riverboat's acts, omissions and injuries, it also qualifies this broad language by limiting Showboat's employment-related liabilities to violation of the Jones Act. By contrast, all policies listed in section 5.01.01.1 pertain to property damage and third party liabilities, and logically cannot be read to include insurance for violation of 46 U.S.C. § 2114. Moreover, Showboat maintains that requiring it to insure Riverboat against a retaliatory discharge claim would contravene the underlying purpose of the Agreement: The Agreement obligates Riverboat to operate the vessel, including the hiring, firing and management of its crew, in compliance with applicable federal law and Coast Guard regulations. To indemnify Riverboat for flouting its obligations under the Agreement by firing the plaintiffs in violation of 46 U.S.C. § 2114 would thwart the Agreement's fundamental goal. 151 Indemnity agreements are contracts subject to the rules and principles of contract construction. TLB Plastics Corp. v. Procter & Gamble Paper Prods. Co., 542 N.E.2d 1373, 1377 (Ind.App.1989). Therefore, whether Showboat is required to insure against, and now must indemnify, retaliatory discharge claims under 46 U.S.C. § 2114 is governed by state law principles of contract formation and interpretation. The parties appear to agree that Indiana law applies in this case. Our review of the district court's interpretation of this law is plenary. See Salve Regina Coll. v. Russell, 499 U.S. 225, 239, 111 S.Ct. 1217, 113 L.Ed.2d 190 (1991) ([C]ourts of appeals review the state-law determinations of district courts de novo. ). 152 As a general matter, parties are free under Indiana law to enter into an indemnification clause and may obligate one party to insure against and/or to indemnify certain acts or omissions of the other party. Moore Heating & Plumbing, Inc. v. Huber, Hunt & Nichols, 583 N.E.2d 142, 145 (Ind.App.1991). However, it must be clear from the contract or surrounding circumstances that the burdened party agreed knowingly and willingly to insure against or indemnify the acts or omissions in question. Id.; see also Weaver v. American Oil Co., 257 Ind. 458, 276 N.E.2d 144, 148 (1971) (We do not mean to say or infer that parties may not make contracts. . . providing for indemnification, but it must be done knowingly and willingly as in insurance contracts made for that very purpose.). To ensure that a party is not saddled with an unintended burden to insure or indemnify, such provisions are strictly construed . . . and will not be held to provide indemnity unless so expressed in clear and unequivocal terms. Moore Heating, 583 N.E.2d at 145 (Courts disfavor such indemnification clauses because to obligate one party to pay for the negligence of the other party is a harsh burden which a party would not lightly accept.); see also Exide Corp. v. Millwright Riggers, Inc., 727 N.E.2d 473, 480 (Ind.App.2000) (holding that, because the indemnification clause contain[ed] no clear statement that would give the contractors notice of the harsh burden that complete indemnification imposes, indemnification was inappropriate); Ogilvie v. Steele by Steele, 452 N.E.2d 167, 170 (Ind. App.1983) (holding that [an indemnification] clause must expressly state, in clear and unequivocal terms, that the indemnitor agrees to indemnify the indemnitee against the indemnitee's own negligence (internal quotation marks omitted)). 153 The Agreement in this case does not clear[ly] and unequivocal[ly], Ogilvie, 452 N.E.2d at 170, require Show-boat to obtain an insurance policy that covers the intentional violation of retaliatory discharge laws. To be sure, section 5.01.1 does speak generally of insurance coverage for acts, omissions and injuries to persons or property caused by Riverboat. R.37, Ex.A § 5.01.1. However, in light of the strict construction given indemnification agreements under Indiana law, we cannot conclude that the Agreement mandates insurance coverage or indemnification in this case. The Agreement does not require, much less mention, insurance for retaliatory discharge claims, or even the general violation of state or federal employment laws. It is true that the term including in section 5.01.1 may suggest a broad reading of Showboat's insurance obligations—one that may encompass, but is not limited to, Jones Act coverage. But that interpretation is by no means compelled by the contractual language. 45 Another reasonable interpretation is the one adopted by the district court: that section 5.01.1 serves as an introductory paragraph, which sets forth Showboat's general obligation to obtain insurance coverage, and that its subsection, section 5.01.01.1, limits this obligation by specifying the scope of the requisite coverage. In light of these two conflicting but equally plausible interpretations, we cannot say that the Agreement, in clear and unequivocal terms, Moore Heating, 583 N.E.2d at 145, provided Showboat notice of the harsh burden that complete indemnification imposes, Exide, 727 N.E.2d at 480. 154 Two other reasons compel us to uphold the district court's grant of summary judgment in favor of Showboat. First, under Riverboat's interpretation, Showboat would be saddled with a practically limitless obligation to insure Riverboat against liability for all conceivable legal wrongs, up to a $5,000,000 policy limit. Yet, Riverboat has offered no evidence that the parties intended this result when contracting for insurance coverage. Second, even if the Agreement were unambiguously to mandate that Showboat obtain insurance coverage above and beyond the six categories of insurance enumerated in sections 5.01.1 and 5.01.01.1, the Agreement nevertheless cannot be read to require insurance coverage or indemnification in this case. The Riverboat defendants acted willfully and wantonly in terminating the plaintiffs, in violation of the plaintiffs' rights under § 2114. Indiana courts have clearly and repeatedly affirmed the general proposition that public policy prohibits the use of insurance to provide indemnification for civil tort liability that results from an insured's intentional wrongdoing. Sans v. Monticello Ins. Co., 676 N.E.2d 1099, 1102 (Ind.App.1997) (quoting R.E. Keeton & A.I. Widiss, Insurance Law 518-19 (1988)). Indeed, to require Showboat to indemnify Riverboat in these circumstances would be contrary to the purpose of the Agreement's other provisions, which place on Riverboat an obligation to ensure the vessel's compliance with state and federal law and regulations. See also Riffle v. Knecht Excavating, Inc., 647 N.E.2d 334, 339 (Ind.App.1995) (noting the obligation to read the contract as a whole, so as to give meaning to all of its provisions). Therefore, we affirm the district court's order granting summary judgment to Showboat on Riverboat's counterclaim.