Court Opinion

ID: 9707553
Source: CourtListenerOpinion
Date Created: 2023-08-26 02:15:36.921831+00
Date Added: 2024-06-11T15:41:48.064319
License: Public Domain

*322ELDRIDGE, Judge,
dissenting:
As the opening sentence of the majority’s opinion points out, this is an action for judicial review of a decision by the Maryland State Board of Contract Appeals. Nevertheless, the majority accords no deference or respect whatsoever to the administrative agency’s interpretation of the contract. In light of the Board’s expertise in the field of public contracts, its interpretation of the contract should be accorded weight and accepted unless unreasonable. Moreover, even if the contract interpretation issue were before us entirely de novo, the majority’s interpretation is contrary to the meaning that a reasonable person would have attributed to the contract language at issue.
MTA entered into a contract with CSXT whereby CSXT would provide commuter train service which MTA otherwise would have provided itself. Under the contract, CSXT would operate MARC commuter passenger train service for MTA on CSXT-owned lines between Baltimore and Washington, D.C. and between Washington, D.C. and Martinsburg, West Virginia. The services to be provided by CSXT included the “train operation, plus the maintenance of equipment, access of and use of facilities, ticket sales, and other activities required to support the operation of the train service.” MTA, for its part, agreed to “indemnify, save harmless, and defend CSXT from any and all casualty losses, claims, suits, damages or liability of every kind arising out of the Contract Service.” The critical question in this case revolves around the proper interpretation of the phrase “arising out of’ contained in the indemnity provision. If CSXT’s liability arose out of contract services, then CSXT is entitled to indemnification. If, however, CSXT’s liability did not arise out of contract services, then CSXT is not entitled to indemnification.
As the Board read the indemnity clause, and as I believe any reasonable person would understand it in the context of this contract, MTA agreed to indemnify CSXT for any liability which would have been MTA’s had MTA been engaged in the contract services itself. That is, MTA asked CSXT to do its *323work, and agreed that any liability incurred by CSXT because of its performance of MTA’s work, would be paid for by MTA. Here, CSXT incurred liability not because of its performance of the contract services (operating the MARC train), but because of its own negligence in conducting independent and unrelated construction activities on its own tracks. The tracks were used primarily for trains other than MARC trains. No reasonable person would have thought that MTA had agreed to indemnify CSXT in such a situation. Therefore, I would reverse the judgment of the Court of Special Appeals and affirm the judgment of the Circuit Court.
The majority bases its decision on its conclusion that the phrase “arise out of’ means nothing more than simple “but for” causation. Thus, CSXT’s liability “arose out of’ contract services, according to the majority, because, but for the MARC train colliding with the backhoe, the backhoe would not have been damaged. Such a sweeping interpretation of the phrase “arise out of,” as applied to the facts of this case, is unreasonable.
There should be more of a nexus between contract services and CSXT liability than simple “but for” causation before the indemnity provision is triggered. If not, then MTA could be required to indemnify CSXT for a myriad of liabilities in no way closely related to the provision of commuter rail service by CSXT for MTA. Consider a hypothetical example. Suppose that CSXT has a limited number of engineers qualified to operate its own freight trains and/or MARC trains. In addition, suppose that, on a given day, CSXT experiences a shortage of qualified engineers available to work, so that CSXT must either cancel some of its freight trains or MARC trains, or else run them with unqualified engineers. Confronted with this dilemma, and not wanting to breach its contract to provide MARC train services, CSXT decides to take qualified engineers that were assigned to freight trains and assign them to MARC trains, so that the MARC trains are fully staffed with qualified engineers, while some of the freight trains are running with unqualified engineers. As a result of the negligent operation of one of the freight trains by an unqualified *324engineer, an accident occurs between a CSXT freight train and the backhoe. Under the majority’s analysis, MTA would be required to indemnify CSXT for the destruction of the backhoe because, “but for” the provision of contract services, CSXT would not have been running its freight train with an unqualified engineer, and the collision would not have occurred.
Of course, in the above hypothetical, one could argue that the accident was more directly caused by factors other than the provision of MTA contract services, such as the negligent operation of the freight train, CSXT’s hiring decisions, profit motivations, etc. But, under the majority’s logic, none of that matters. All that is required is that the provision of MTA contract services be one out of innumerable “but for” causes. In the above hypothetical, the provision of contract services was a “but for” cause of the accident. But for CSXT’s provision of MTA contract services, CSXT would not have removed personnel from its freight trains, the freight trains would not have been run with unqualified engineers, and the accident would not have occurred. Therefore, the contract services would be a “but for” cause of the accident and MTA would be required to indemnify CSXT for its liability in that accident. Of course, no reasonable person reading the indemnity agreement would think that it should apply under such facts, and yet that would be the result under the majority opinion. A straightforward “but for” analysis is simply too broad in this context.
Furthermore, I do not believe that the cases relied upon by the majority for its conclusion that “arise out of’ means “but for” causation compel the use of a simple “but for” analysis in this ease. The majority relies on three decisions of this Court to support its conclusion that MTA must indemnify CSXT: Northern Assurance Co. v. EDP Floors, Inc., 311 Md. 217, 533 A.2d 682 (1987); Frazier v. Unsat. C & J Fund Bd., 262 Md. 115, 277 A.2d 57 (1971); National Indemnity v. Ewing, 235 Md. 145, 200 A.2d 680 (1964). None of these cases supports the result reached by the majority today.
*325EDP Floors involved an exclusion from general business liability insurance which excluded from coverage, inter alia, bodily injury arising out of the loading or unloading of any motor vehicle. The policy defined loading or unloading to mean the handling of property: (1) after it is moved from the place where it is accepted for movement into or onto a motor vehicle; (2) while it is in or on a motor vehicle; (3) while it is being moved from a motor vehicle to the place where it is finally delivered. Two EDP employees, a driver and a helper, were delivering a load of floor tile to a jobsite. Unfortunately, the helper was apparently inebriated and unable to assist the driver in the delivery. Therefore, the driver obtained assistance from some employees of the customer. While they were unloading the tile from the truck, the intoxicated helper apparently activated the lift at the rear of the truck, causing floor tile to fall onto one of the customer’s employees assisting in the unloading. The injured employee later sued EDP, asserting vicarious liability for the helper’s negligence and direct liability for negligent hiring, retention and supervision. EDP sought coverage for the incident under its general business liability insurance. Its insurer denied coverage, however, based on the exclusion for bodily injury arising out of loading/unloading motor vehicles. EDP asserted that the exclusion did not apply to the complaints of negligent hiring, retention and supervision because the separate negligence of EDP itself should be viewed as the proximate cause of the injuries. Alternatively, it argued that EDP’s own negligence and the negligence of its employee should be viewed as concurrent causes of the injuries, and the exclusion would only apply if the employee’s negligence in unloading was the sole cause. This Court rejected both of EDP’s arguments and held that the exclusion did apply because the injuries arose out of the unloading of the vehicle.
Contrary to the conclusion reached by the majority today, however, in EDP Floors the Court did not find that the injury arose out of the unloading of the truck based on a “but for” analysis. In fact, the Court specifically rejected using any type of causation analysis to determine whether the parties *326intended a particular type of incident to be covered or not. Instead, the Court in EDP Floors relied upon an earlier case, Aragona v. St. Paul Fire & Mar. Ins., 281 Md. 371, 378 A.2d 1346 (1977), which also involved a question of insurance policy interpretation. There, a lawyer was sued by former clients whose funds had been misappropriated by the lawyer’s partner. The lawyer was found negligent for failing to discover his partner’s activities. The lawyer’s malpractice insurance excluded from coverage “ ‘any dishonest, fraudulent, criminal or malicious act or omission of the Insured, any partner or employee....’” 281 Md. at 372, 378 A.2d at 1347. The EDP Floors opinion discussed the Aragona case as follows (311 Md. at 228-229, 533 A.2d at 688):
“We concluded [in Aragona] that this insurance policy did not cover Myers’ negligent failure to discover his partner’s misappropriations. Finding no ambiguity in the policy language, we defined the issue as “whether, in view of the plain language of the policy, the exclusionary clause applies where, as here, one of several causes contributing to the loss was not within the exclusion.’ ... After reviewing several cases from other jurisdictions, we noted that many courts expressed the grounds of their decisions in terms of proximate, efficient, dominant, or direct causation; if such causes were within the exclusion, these courts held, the policy did not cover the loss.... We noted further that, employing the language of proximate causation, the dishonest act of Myers’ partner could be characterized as the direct and precipitating cause of the loss and Myers’ negligence as merely a remote and indirect cause____ We made clear, however, that our decision holding the policy exclusion applicable rested finally, not on a proximate cause analysis, but rather on our judgment that, construing the language in the insurance contract as a whole, the parties intended any loss resulting from any dishonest or criminal act of the insured’s partner to be excluded from coverage____ In fact, we stated a caveat concerning the indiscriminate use of principles of causation:
*327‘[T]he terms of the policy determine the reach and extent of its coverage. In this connection, principles of causation will not be applied to defeat the intent of the parties, as manifested in the insurance contract;
“We thus cautioned in Aragona against the inappropriate use of principles of causation____” (Emphasis added).
In EDP Floors, then, far from adopting a “but for” approach to the interpretation of the phrase “arise out of’ in a contract, we specifically rejected relying on a causation-based analysis which would defeat the intent of the parties. Rather, we stated the test in terms of inseparable association (EDP Floors, supra, 311 Md. at 231, 533 A.2d at 689) (emphasis added):
“To apply either a proximate or concurrent cause analysis in the interpretation of the policy exclusion, as EDP urges, would severely strain its plain import and would result in coverage being provided, contrary to the intention of the parties, for acts inseparably associated with the operation, use or unloading of the truck.”
Thus, the exclusion applied because the injury to the customer’s employee arose out of acts inseparably associated with the unloading of the truck.
The activity in the present case, which is analogous to the unloading of the truck in EDP Floors, is CSXT’s construction work on its tracks at a grade crossing. The negligent act was “inseparably associated with” the construction work on CSXT’s tracks. It was not, in the language of the EDP Floors opinion, “inseparably associated with” the MARC train operations. It was in the course of CSXT’s construction work on the tracks that a CSXT employee, not involved in operating a MARC train, committed the negligent act. This was far removed from the MARC train operations. It was simply fortuitous that the MARC train happened to arrive on the scene of the construction work. The same injury, resulting from the same negligent act, would have taken place whether *328it was a MARC train, a CSXT freight train, or an AMTRAK passenger train coming around the bend.
The next opinion of this Court invoked by the majority to support its reliance on a “but for” analysis is National Indemnity v. Ewing, supra, 235 Md. 145, 200 A.2d 680. In that case, a passenger was thrown from an automobile, but was not injured, when the vehicle skidded off the road as a result of the negligence of the driver who was intoxicated. About twenty-five minutes later, the passenger was injured when he was struck by a passing motorist as the driver was assisting him to walk down the road to the driver’s vehicle. The question presented was whether the injuries to the passenger arose out of the use of the driver’s automobile. The Court concluded that the injuries did arise out of the use of the driver’s automobile because “the negligent use of the car created a situation where [the passenger] was subjected to the risk of injury----” 235 Md. at 150-151, 200 A.2d at 683 (emphasis added).
While Ewing would support a holding that the destruction of the backhoe in the instant case arose out of CSXT’s construction activities, it does not support the proposition that it arose out of the operation of the MARC train. It was the negligence of CSXT in carrying out the construction activities that, in the words of Ewing, “created a situation where [the backhoe] was subjected to the risk of injury.” The operation of the MARC train did not create this “situation.” As found below, and as conceded by CSXT, there was no negligence at all in the operation of the MARC train. The operation of the MARC train did not create the situation subjecting the backhoe to the risk of injury, and the injury to the backhoe did not arise out of CSXT’s operation of the MARC train.
The majority opinion misconstrues Ewing when it states that, “[i]n Ewing this Court simply rejected proximate cause as a predicate for ‘arising out of coverage, without mentioning any need for some lesser fault.” (Majority opinion at 19). First, like the opinion in EDP Floors, this Court in Ewing did not “simply” reject a proximate causation analysis, but the *329Court rejected placing reliance on any form of strict causation analysis, saying (235 Md. at 149, 200 A.2d at 682, emphasis added):
“[Wjhile the words [‘arise out of] import and require a showing of causal relationship, recovery is not limited by the strict rules developed in relation to direct and proximate cause.”
Second, contrary to the majority’s characterization of the holding in Ewing, this Court did base its conclusion that the injuries arose out of the use of the automobile on a finding of fault in the operation of that automobile. In Ewing the Court determined that the injuries arose out of the use of the automobile because “the negligent use of the car created a situation where [the passenger] was subjected to the risk of injury,” 235 at 150-151, 200 A.2d at 683, emphasis added. Therefore, Ewing does not support the majority’s conclusion that a simple “but for” causation analysis is appropriate in the present case.
Nor does Frazier v. Unsat. C & J Fund Bd., supra, 262 Md. 115, 277 A.2d 57, the only other decision of this Court relied on by the majority, support the majority’s position in this case. In Frazier, a mother was driving an open convertible with a child in the back seat. An unidentified motorist, driving in the opposite direction, threw a firecracker into the back seat of the convertible, causing the baby to cry and the mother to lose control of the convertible, resulting in a wreck. The mother brought a claim against the Unsatisfied Claim and Judgment Fund because the driver of the other car was unknown, and resolution of the claim turned on whether the injuries sustained in the accident arose out of the use of the unidentified motor vehicle. The majority opinion today, referring to Frazier, states that “[t]his Court, drawing on automobile liability coverage cases, held that the Fund was answerable because ‘the injuries under the facts of this case did arise out of the ... use of an unidentified motor vehicle.’ ... There was no fault in the driving, per se, of the unidentified motor vehicle— only in what the unidentified motorist did while driving.” (Majority opinion at 316-317, 708 A.2d at 307).
*330The majority’s analysis of Frazier is contrary to this Court’s actual reasoning in that case. In Frazier, this Court did not “draw[] upon automobile liability coverage cases.” On the contrary, the automobile liability coverage cases cited by the Court in Frazier actually suggested a holding that the injuries did not arise out of the use of an unidentified motor vehicle. See McDonald v. Great American Insurance Company, 224 F.Supp. 369 (D.R.I.1963) (no coverage afforded by automobile insurance policy for injuries sustained when firecracker thrown from automobile); Speziale v. Kohnke, 194 So.2d 485 (La.App.), writ refused, 250 La. 469, 196 So.2d 534 (1967) (same); and other cases cited in Frazier. Instead of drawing upon these automobile liability coverage cases, this Court specifically rested its decision in Frazier on the remedial nature of the Fund and the interest of protecting innocent victims. Frazier, supra, 262 Md. at 118, 277 A.2d at 59. Thus, this Court concluded that, “for [the] purposes of determining whether leave to sue the Board should have been granted,” 262 Md. at 119, 277 A.2d at 59, the injuries arose out of the use of an unidentified motor vehicle. This Court’s holding in that limited context should not influence our decision in the case sub judice. Furthermore, nothing in the Frazier opinion supports the majority’s contention that a simple “but for” test is all that is required.
The cases cited by the majority demonstrate that, in interpreting indemnity language and exclusions, this Court has rejected the use of simple causation analysis. As we stated in EDP Floors, supra, 311 Md. at 229, 533 A.2d at 688, quoting Aragona v. St. Paul Fire & Mar. Ins., supra, 281 Md. at 379, 378 A.2d at 1351, “ ‘principles of causation will not be applied to defeat the intent of the parties, as manifested in the insurance contract----’” The majority today is improperly using principles of “but for” causation to defeat the intent of the parties as manifested in the indemnity provision.
In the contract, MTA agreed to indemnify CSXT for all “casualty losses, claims, suits, damages or liability of every kind arising out of the Contract Service.” The majority states that this promise includes liability for the sole negligence of *331CSXT. With this I agree. Nevertheless, I do not believe that MTA agreed to indemnify CSXT for any and all of CSXT’s negligent acts regardless of whether that negligence was in relation to the Contract Service. That is, MTA agreed to indemnify CSXT for CSXT’s own negligence in the provision of Contract Service, not in conducting unrelated construction activities on CSXT’s tracks. That is what an objective, reasonable person would understand the parties’ intent underlying the indemnification agreement to be, and that is what the Board of Contract Appeals found to be the intent of the parties. I agree with the Board’s interpretation.
Furthermore, even if we might be inclined to reach a different interpretation than the Board’s, we should give deference to the interpretation reached by the Board. The Court of Special Appeals stated that “[t]he Board’s decision was a purely legal determination of the meaning of the contractual term ‘arising out of,’ ” and that therefore the court would “accord no deference to the Board’s findings.” Ill Md.App. 634, 640, 683 A.2d 1127, 1129 (1996). The majority of this Court similarly accords no deference to the Board’s interpretation of the contract.
Simply because courts usually characterize contract interpretation issues as “questions of law” is no reason for refusing to give some deference to the expertise of an administrative agency which was created by the Legislature specifically for the purpose of interpreting and applying public contracts.
The characterization of contract interpretation issues as “legal questions” is, analytically, inaccurate. The characterization is basically for the purpose of distinguishing the role of a judge from that of a jury in contract suits brought initially in court. This has long been pointed out by the highest authorities in the field of contract law. Thus, Professor Samuel Williston has stated (4 Williston On Contracts, § 616 at 648-649 (3d ed.1961), footnotes omitted):
“It is obvious that the meaning of language is a question of fact. The code or standard by which it is sought to test the meaning must be discovered frequently by evidence of the *332facts and circumstances concerning the making of the contract. Even though the question concerns merely the normal meaning of a word as found in dictionaries, it is still a question of fact, if the word ‘fact’ is used in a truly literal sense.
“Despite the rule repeatedly enunciated that questions of fact are the province of the jury, while questions of law are to be resolved by the court, the ‘judges have always answered a multitude of questions of ultimate fact, of fact which forms part of the issue. It is true that this is often disguised by calling them questions of law.’ The reason for this seems to have been a distrust of the jury’s ability to answer questions of fact that call for nice discrimination and an educated mind. The interpretation of written documents has largely been withdrawn from the jury in this way. The general rule is that interpretation of a writing is for the court.”
Professor Corbin has made the same point (3 Corbin On Contracts, § 554, at 219-222 (1960 ed.), footnotes omitted):
“The question of interpretation of language and conduct— the question of what is the meaning that should be given by a court to the words of a contract, is a question of fact, not a question of law. This is true whether the court is searching for the meaning of the two contracting parties, or for the meaning given to words by the one person who used them, or for the meaning that was given to words by another person who heard or read them and acted in reliance on them, or for the meaning that a reasonable man or an intelligent user of English or an average resident of the community would have given to them. There is no ‘legal’ meaning, separate and distinct from some person’s meaning in fact.
“We must bear in mind, however, that this question of fact is like other questions of fact in this: it may be a question that should be answered by the judge rather than by the jury. In cases in which it is so answered, it is probable that the interpreting judge may say that interpretation of language is a ‘question of law for the court.’ So *333often has this been said throughout our legal history that we might be justified in defining ‘question of law’ as any question that is answered by the court rather than by the jury. That is to say, we might have justification in judicial usage of the term. The adoption of this usage, however, would make the term useless except as a term that is descriptive of results—a basket into which to throw court decisions after they have been made; it would be of no service in classifying questions so as to help the court to determine whether the question before it ought to be answered by the judge or should be submitted to a jury. Of course, in cases in which no jury is impaneled, the distinction between fact and law loses a part of its significance.”
See also 3 Lawrence A. Cunningham and Arthur J. Jacobson, Corbin On Contracts, § 554 (1960 ed., 1998 Supp.).
A board of contract appeals, created to deal with public contracts of the type here involved, and having developed expertise in the field, should not be treated like a jury with respect to contract interpretation. Included in the expertise of the administrative agency is its knowledge of the jargon and technical language used in the relevant field. The relationship between a judge and a jury, and a reviewing court and an adjudicatory administrative agency, is quite different. Consequently, courts regularly accord some deference to contract interpretations by boards of contract appeals. See, e.g., ICSD Corp. v. U.S., 934 F.2d 313, 315 (Fed.Cir.1991) (“The Board’s interpretation of a contract, while freely reviewable as a question of law, is afforded careful consideration and great respect”); Wright Const. Co. Through Rembrant, Inc. v. U.S., 919 F.2d 1569, 1571 (Fed.Cir.1990) (“Since contract interpretation is a question of law, the Board’s interpretation is not binding upon us____ But because of the Board’s expertise on questions of government contracts, we give some weight to the Board’s interpretation of particular contractual language”); Fruin-Colnon Corp. v. U.S., 912 F.2d 1426, 1429 (Fed.Cir. 1990) (“a board’s interpretation of a contract is not binding upon this court.... Nonetheless, we give careful consideration and great respect to a board’s interpretation because *334legal interpretations by tribunals having expertise are helpful even if not compelling”); George Hyman Const. Co. v. U.S., 215 Ct.Cl. 70, 564 F.2d 939, 944 (1977) (“The interpretation of a contract is a question of law for the court to decide and an administrative interpretation of a contract is not binding on the court---- However, a Board’s interpretation of a contract will be given careful consideration and accorded great respect”).
In this case, neither the majority of this Court nor the Court of Special Appeals has given any consideration to the Board’s interpretation of the contract. In my view, this approach is incorrect. Moreover, even approaching the contract interpretation issue de novo, I agree with the Board that MTA was not required to indemnify CSXT. I would reverse the Court of Special Appeals and affirm the Circuit Court.
Judges CHASANOW and RAKER have authorized me to state that they concur with the views expressed herein and join this opinion.