Court Opinion

ID: 9486151
Source: CourtListenerOpinion
Date Created: 2023-08-05 11:39:25.270643+00
Date Added: 2024-06-11T17:51:33.223080
License: Public Domain

K.K. HALL, Circuit Judge,
dissenting:
Because I believe that the Florida courts would apply the discovery rule to. the notice provision of this contract, I must dissent. However, I would remand this case to the district court for a recalculation of damages on the existing record, or alternatively a new trial limited to that issue.
Florida has long held that the discovery rule tolls a statute of limitations that would otherwise bar a claim. See, e.g., Celotex Corp. v. Meehan, 523 So.2d 141 (Fla.1988) (products liability); Creviston v. General Motors Corp., 225 So.2d 331 (Fla.1969) (breach of warranty); City of Miami v. Brooks, 70 So.2d 306 (Fla.1954) (negligence); Senfeld v. Bank of Nova Scotia Trust Co., 450 So.2d 1157 (Fla.Dist.Ct.App.1984) (conversion). The Florida courts have ruled that the cause of action is immaterial to the application of the discovery rule. “[R]egardless of the underlying nature of the cause of action, the accrual of the same must coincide with the aggrieved party’s discovery or duty to discover the act constituting an invasion of his legal rights.” Creviston, 225 So.2d at 334.
This general rule has also been applied to indemnity provisions in insurance contracts. See, e.g., Ideal Mut. Ins. Co. v. Waldrep, 400 So.2d 782 (Fla.Dist.Ct.App.1981); Continental Cas. Co. v. Shoffstall, 198 So.2d 654 (Fla.Dist.Ct.App.1967), cert. denied, 204 So.2d 327 (Fla.1967). We face an indemnity provision here. The majority errs in refusing to recognize, without explanation, the authoritative weight of these cases, as if there is something magic about insurance contracts.
Although USX is not an insurance company, it undertook to insure against the risk that Burris might later be held liable for environmental damage caused by the underground storage tanks. There is no logical distinction between what USX did and what insurance companies normally do, and, for purposes of the discovery rule, I cannot perceive any meaningful distinction between in*248demnity provisions in insurance contracts and indemnity provisions in, as the majority characterizes them, “negotiated contracts between two business corporations.”
Of the insurance contract cases, Waldrep is the most illuminative. In that case, a Florida intermediate appellate court construed an indemnity provision under which the insured sought recovery for loss of his airplane. The insurer denied the claim because the insured had allegedly failed to give timely notice of the loss. The court held that the insured was required to give notice only “when there has been an occurrence that would lead a reasonable and prudent man to believe that a claim for damages would arise.” Waldrep, 400 So.2d at 783.
The district court put precisely the same question before the jury in this case. The court asked the jury to decide whether Burris had notified USX within sixty days of the first occurrence that would have led Burris to believe, acting as a reasonable and prudent indemnitee, that DERM had made a claim for which USX could be liable; the jury decided that it had.
The Erie doctrine requires us, in diversity cases, to apply substantive state law as it has been applied by the state’s highest court. Commissioner of Internal Revenue v. Estate of Bosch, 387 U.S. 456, 465, 87 S.Ct. 1776, 1782, 18 L.Ed.2d 886 (1967). If there is no decision by that court which is directly on point, as here, then we must give “proper regard” to relevant rulings of other courts of the state in order to predict how the high court would rule. Id. The Supreme Court has held that “an intermediate appellate state court ... is a datum for ascertaining state law which is not to be disregarded by a federal court unless it is convinced by other persuasive data that the highest court of the state would decide otherwise.” Id., citing West v. American Tel. & Tel. Co., 311 U.S. 223, 237, 61 S.Ct. 179, 183, 85 L.Ed. 139 (1940).
We have a duty to affirmatively seek out, and not ignore, as I feel the majority has, all relevant information that might enable us to make the correct prediction. In applying that sound practice to this case, we must consider the implications of Creviston and the other statute of limitations cases, and give proper regard to the clear holdings of Waldrep and cases like it that have been decided by the Florida intermediate appellate courts. Together, these cases provide clues so plain that even Doyle’s Dr. Watson could not fail to discern them.
A holding by this court that Florida would apply the discovery rule to the indemnity provision of the sales contract between Burris and USX would neither “change” nor “expand” the common law of Florida, as the majority asserts; it would simply be an accurate assessment of that law as it currently exists.
I respectfully dissent.*

 Although USX was bound to honor the indemnity provision, I am not convinced that Burris was entitled to be reimbursed for the cost of removing the structurally sound tanks as well as the defective ones, or even that tank removal was the most cost-effective response to DERM’s concerns. I am also unpersuaded that USX should be liable to Burris for the cost of constructing new storage tanks.
Under Section 5.4 of the Agreement of Sale, USX was to indemnify Burris and hold it harmless from all '’claims” connected with ownership of the storage tanks. DERM’s insistence that the groundwater contamination be corrected consti-luted a claim within the meaning of the agreement. I think that USX was liable to indemnify Burris for the amount necessary to stop the pollution, but I find it hard to believe that Burris’s decision to build new tanks was part of DERM’s claim.
I would remand this case to the district court to see whether it could recalculate the cost, based upon the existing record, that Burris should have incurred in cleaning up the contamination. If the existing record proved to be inadequate, a new trial would be necessary on the issue of damages.