Court Opinion

ID: 3181520
Source: CourtListenerOpinion
Date Created: 2016-03-01 17:04:48.842602+00
Date Added: 2024-06-11T14:28:19.307077
License: Public Domain

NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
                               File Name: 16a0118n.06

                                        Case No. 15-5690
                                                                                    FILED
                                                                                 Mar 01, 2016
                                                                             DEBORAH S. HUNT, Clerk
                          UNITED STATES COURT OF APPEALS
                               FOR THE SIXTH CIRCUIT

Konecranes, Inc.,                                    )
                                                     )
       Plaintiff-Appellee,                           )
                                                     )      ON APPEAL FROM THE UNITED
v.                                                   )      STATES DISTRICT COURT FOR
                                                     )      THE EASTERN DISTRICT OF
Central Motor Wheel of America, Inc.,                )      KENTUCKY
                                                     )
       Defendant-Appellant.                          )
                                                     )
____________________________________/                )

Before: MERRITT, GIBBONS, and McKEAGUE, Circuit Judges.

       MERRITT, Circuit Judge. This is an indemnity action relating to Vaughn v.

Konecranes, Inc., No. 15-5689 (6th Cir. March 1, 2016). In the district court, defendant/third-

party plaintiff Konecranes, the party responsible for maintaining a piece of industrial equipment

that allegedly malfunctioned and injured George Vaughn, sought common-law and contractual

indemnification from third-party defendant Central Motor Wheel of America, George Vaughn’s

employer. Both parties moved for summary judgment on the indemnification claims; the district

court granted the motion in favor of Central Motor Wheel on the common-law claim, and

Konecranes on the contractual claim. Central Motor Wheel now appeals the district court’s

order granting summary judgment to Konecranes on Konecranes’ contractual indemnity claim.

For the reasons that follow, we affirm the judgment of the district court.
Case No. 15-5690
Konecranes, Inc. v. Central Motor Wheel of America, Inc.

                                             I. Facts

       A thorough review of the facts in the underlying tort action between George Vaughn and

Konecranes is contained in our related opinion in Vaughn, No. 15-5689, slip op. at 2-6. The

factual summary here is limited to information pertaining to the indemnity action between

Konecranes and Central Motor Wheel.

       After George Vaughn was injured and brought suit against Konecranes, Konecranes

sought indemnity from Vaughn’s employer, Central Motor Wheel. Both parties agree that their

contractual indemnity agreement is embodied in the language of the following provision, a

provision that was contained in both of the contracts they agreed to:

               INDEMNIFICATION.     KONECRANES SHALL NOT BE
               LIABLE FOR AND BUYER SHALL RELEASE, INDEMNIFY,
               AND HOLD KONECRANES . . . HARMLESS FROM ANY
               CLAIMS, DEMANDS, DAMAGES, REGARDLESS OF THEIR
               TYPE INCLUDING, BUT NOT LIMITED TO, DIRECT,
               CONSEQUENTIAL, INCIDENTAL, PUNITIVE OR SPECIAL,
               ACCOUNTS, GRIEVANCES, LOSSES AND EXPENSES,
               WHETHER KNOWN OR UNKNOWN, PRESENT OR FUTURE,
               ANY AND ALL LIABILITY, OR AND FROM ANY AND ALL
               MANNER OF ACTIONS, CAUSE[S] OF ACTIONS, ALL
               SUITS IN LAW, IN EQUITY, OR UNDER STATUTE, STATE
               OR FEDERAL, OF WHATEVER KIND OR NATURE, THIRD
               PARTY ACTIONS, INCLUDING SUITS FOR CONTRIBUTION
               AND/OR INDEMNTIY ON ACCOUNT OF OR IN ANY WAY
               ARISING OUT OF ACTS OR OMISSIONS OF THE BUYER,
               ITS AGENTS OR EMPLOYEES AND RELATING IN ANY
               WAY TO THE GOODS AND/OR SERVICES PROVIDED
               UNDER THE QUOTATION OR THE EQUIPMENT RELATED
               THERETO, INCLUDING, BUT NOT LIMITED TO BUYER’S
               USE, INSTALLATION, INCORPORATION OR SELECTION
               THEREOF AND CAUSES (FOR INSPECTION SERVICES): (I)
               OUTSIDE THE SCOPE OF THE INSPECTION AS IDENTIFIED
               IN PARAGRAPH 9.B HEREOF, (II) ANY CONDITION THAT
               OCCURS FOLLOWING THE CRANE’S USE AFTER AN
               INSPECTION AS IDENTIFIED IN PARAGRAPH 9.C HEREOF,
               (III) FAILURE OF BUYER TO REPAIR OR REPLACE ANY
               DEFECTIVE CRANE OR COMPONENT AS IDENTIFIED IN
               PARAGRAPH 9.D HEREOF OR ANY OTHER CAUSE

                                               -2-
Case No. 15-5690
Konecranes, Inc. v. Central Motor Wheel of America, Inc.

               IDENTIFIED HEREIN OR THAT MAY BE REASONABLY
               INFERRED HEREFROM EXCEPT TO THE EXTENT CAUSED
               BY THE SOLE NEGLIGENCE OF KONECRANES.

The district court agreed with Konecranes that this language absolved Central Motor Wheel of its

indemnity obligation only if Konecranes was “‘100% responsible for the plaintiff’s injuries.’”

Vaughn v. Konecranes, Inc., 2015 WL 3453457, at *3 (E.D. Ky. May 29, 2015) (quoting

Thompson v. The Budd Co., 199 F.3d 799, 811 (6th Cir. 1999)). Having already held that there

was “no genuine issue of material fact regarding Konecranes’ negligence,” the district court thus

granted summary judgement to Konecranes on the contractual indemnity claim. Id. at *4.

Central Motor Wheel filed this appeal, raising a variety of arguments challenging the district

court’s interpretation of the indemnity clause and the clause’s enforceability, and ultimately

claiming that it is not bound to indemnify any negligence on the part of Konecranes.

                                         II. Discussion

       Because this case comes to our court on the basis of diversity jurisdiction, the substantive

law of the forum state, Kentucky, governs. Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78 (1938).

However, federal procedural law — including the standard for summary judgement — also

governs. See Shropshire v. Laidlaw Transit, Inc., 550 F.3d 570, 573 (6th Cir. 2008). Where the

highest court of the forum state has not resolved an issue of substantive law, a federal court

sitting in diversity must attempt to anticipate how the state high court would rule when deciding

an issue. Filley v. Kickoff Pub. Co., 454 F.2d 1288, 1291 (6th Cir. 1972).

       We review the district court’s grant of summary judgment de novo. Miller v. Sanilac

Cnty., 606 F.3d 240, 246 (6th Cir. 2010). Summary judgment is proper when there is no genuine

issue as to any material fact and the moving party is entitled to judgment as a matter of law.

Id. (citing Fed. R. Civ. P. 56(c)). We make all reasonable factual inferences in favor of the

                                               -3-
Case No. 15-5690
Konecranes, Inc. v. Central Motor Wheel of America, Inc.

nonmoving party and uphold a grant of summary judgment only where the record as a whole

could not lead a rational trier of fact to find for the non-moving party. Id. at 247.

       Under Kentucky law, the meaning of contractual language is a matter of law to be

determined by courts, Cumberland Valley Contractors, Inc. v. Bell Cty. Coal Corp., 238 S.W.3d
644, 647 (Ky. 2007), and the “nature of an indemnitor’s liability under an indemnity contract

shall be determined by the provisions of the indemnity agreement itself,” U. S. Fid. & Guar. Co.

v. Napier Elec. & Const. Co., 571 S.W.2d 644, 646 (Ky. Ct. App. 1978). However, it appears

the Kentucky Supreme Court has never interpreted the meaning of a “sole negligence” indemnity

exclusion clause, Thompson, 199 F.3d at 811; Br. of Appellant 14; Br. of Appellee 13, so it is our

responsibility to interpret the clause as we expect the Kentucky Supreme Court would.

       Although a “sole negligence” indemnity exclusion clause has managed to evade the

Kentucky Supreme Court, our Court has already interpreted such a clause under Kentucky

contract law. In Thompson, our Court interpreted a clause very similar to the one at issue here.
199 F.3d at 810-11. That clause read, in relevant part:

               With regard to the work to be performed hereunder by the
               contractor on the owner’s premises, contractor agrees to and will
               indemnify and hold harmless owner from and against any claims,
               losses, or damages due to the death of or injury to the person or the
               property of any person, or persons . . . arising out of, or in
               connection with, contractor’s performance hereunder, except as to
               any such loss or damage which is caused by the sole negligence,
               or wanton and willful misconduct of owner or owner’s agents,
               servants or employees.

Id. (emphasis added). Our Court reasoned that, under Kentucky contract law, “such language

bars indemnity only where the bodily injury as a whole[] results from the sole negligence of the

indemnitee.” Id. at 811 (citations and internal quotation marks omitted). Here, the district court

correctly held that Thompson controlled this case and required Central Motor Wheel to

                                                -4-
Case No. 15-5690
Konecranes, Inc. v. Central Motor Wheel of America, Inc.

indemnify Konecranes unless Konecranes was adjudged 100 percent responsible for George

Vaughn’s injuries. Vaughn v. Konecranes, Inc., 2015 WL 3453457, at *3 (citing Thompson,
199 F.3d at 811).

       Although Central Motor Wheel argues otherwise, Thompson is a binding published

decision of this court unless it is overruled en banc or until Kentucky courts show us the state’s

law is otherwise. Rutherford v. Columbia Gas, 575 F.3d 616, 619 (6th Cir. 2009). Thus, we are

bound by its holding that such “sole negligence” indemnity exclusion clauses are unambiguous

and enforceable under Kentucky law, and allow an indemnitor to escape its indemnification

obligation only if it is deemed exclusively responsible for an accident or injury. Thompson,
199 F.3d at 810-11; see also Enerfab, Inc. v. Kentucky Power Co., 433 S.W.3d 363, 366-67

(Ky. Ct. App. 2014) (holding the same).

       Central Motor Wheel attempts to argue that Thompson can be distinguished from this

case because the clause in Thompson indemnified the recipient of services under the contract,

whereas here the clause indemnifies Konecranes, the provider of services. But Central Motor

Wheel altogether fails to explain why this distinction is of any significance, and Thompson gave

no indication that its contractual interpretation was at all colored by the respective contractual

roles of the indemnitor and indemnitee. 199 F.3d at 810-11.

       Central Motor Wheel also suggests that it should not be required to indemnify

Konecranes’ negligence because the indemnity clause was “agreed to by a party [Central Motor

Wheel] in a clearly inferior bargaining position.” But it offers only conclusory statements of this

sort, never explaining how it was in an inferior bargaining position to Konecranes. It makes out

no colorable argument for duress or adhesion that would call into question the enforceability of

its contracts with Konecranes.

                                               -5-
Case No. 15-5690
Konecranes, Inc. v. Central Motor Wheel of America, Inc.

       Finally, Central Motor Wheel argues that, because it has already paid workers’

compensation to George Vaughn, Kentucky statutes — Ky. Rev. Stat. §§ 342.690, 342.700 —

limit its further liability and prevent it from indemnifying Konecranes. This argument borders

on frivolous. Kentucky courts have clearly held that § 342.690 does not prohibit a third-party

plaintiff from seeking indemnification from a third-party defendant that has already paid

workers’ compensation to the plaintiff in a matter. Labor Ready, Inc. v. Johnston, 289 S.W.3d
200, 207-08 (Ky. 2009); Union Carbide Corp. v. Sweco, Inc., 610 S.W.2d 932, 934 (Ky. Ct.

App. 1980). Labor Ready likewise treated § 342.700 as no obstacle to an indemnity claim. See
289 S.W.3d at 208.

       Thus, we agree with the district court’s legal conclusion that the contracts between

Central Motor Wheel and Konecranes allow Konecranes to seek indemnity from Central Motor

Wheel unless Konecranes is determined to be 100 percent at fault for George Vaughn’s injuries.

Because we also affirm the district court’s grant of summary judgement to Konecranes regarding

its alleged negligence, see Vaughn, No. 15-5689, slip op. at 16, we now affirm the district court’s

grant of summary judgment on Konecranes’ contractual indemnity claim. Because Konecranes

cannot be found negligent at all, it cannot be found 100 percent negligent such that Central

Motor Wheel could invoke the sole negligence indemnity exclusion in the contracts.

                                         III. Conclusion

       For the foregoing reasons, the decision of the district court granting summary judgment

to Konecranes on its contractual indemnity claim against Central Motor Wheel is hereby

AFFIRMED.

                                               -6-