462 F.2d 412 (5th Cir. 1972), 71-1881, Mississippi Power Co. v. Roubicek

Docket Nº:71-1881.
Citation:462 F.2d 412
Party Name:MISSISSIPPI POWER COMPANY, Plaintiff-Appellant, v. Joseph ROUBICEK and Mallory Pierce, d/b/a Associated Engineers, Defendants-Appellees.
Case Date:June 08, 1972
Court:United States Courts of Appeals, Court of Appeals for the Fifth Circuit
 
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462 F.2d 412 (5th Cir. 1972)

MISSISSIPPI POWER COMPANY, Plaintiff-Appellant,

v.

Joseph ROUBICEK and Mallory Pierce, d/b/a Associated Engineers, Defendants-Appellees.

No. 71-1881.

United States Court of Appeals, Fifth Circuit.

June 8, 1972

Rehearing Denied July 3, 1972.

Ben H. Stone, Eaton A. Lang, Jr., Gulfport, Miss., Eaton, Cottrell, Galloway & Lang, Gulfport, Miss., for plaintiff-appellant.

Arlo Temple, Meridian, Miss., George E. Morse, Gulfport, Miss., Snow, Covington, Temple & Watts, Meridian, Miss., for defendants-appellees.

Before JOHN R. BROWN, Chief Judge, and INGRAHAM and RONEY, Circuit Judges.

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JOHN R. BROWN, Chief Judge:

The question presented in this Erie 1 controlled diversity case is whether under applicable Mississippi law, a party can be successfully indemnified against loss occasioned by his own negligence under a contract of indemnity which contains no express language to that effect. The District Court, interpreting and applying Mississippi State law within the Erie-imposed confines of its Erie-created role as merely another Mississippi State Court, 2 holding that since the indemnity provision here in issue did not contain such express language-no specific mention of negligence-indemnification could not be granted, rendered summary judgment in favor of indemnitor, defendant, appellee, Associated Engineers. We reverse.

The facts surrounding the controversy are undisputed and may here be severely capsulated. On September 18, 1967, Associated Engineers and Mississippi Power executed a contract by which Associated agreed to install a carbon dioxide fire extinguishing system in a newly constructed generating unit at the Jack Watson Plant of Mississippi Power in Harrison County, Mississippi. The indemnity provision of the contract-the provision here in issue-in part provided that Associated would indemnify and hold Mississippi Power harmless from "any and all claims of any character * * *" for personal injury or death, "arising out of, related to, or in any way associated or connected with the performance of any work covered by the contract * * *." 3

On March 12, 1968, an employee of Associated was severely injured by an electrical shock while engaged in the work of installing the extinguishing system in the power generating unit. It is uncontroverted that this work was covered by the installation contract. The employee brought suit against Mississippi Power Company alone, alleging that his injuries were the result of its negligence in failing to provide a safe place for him to work. After a full trial on the merits, the employee was awarded a $250,000 judgment. This judgment, however, was appealed and while pending final disposition before the Mississippi Supreme Court, the case was settled by agreement of the parties for $125,000. 4

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Mississippi Power made repeated demands upon Associated to defend the suit and also repeatedly notified Associated that it would seek full indemnification under the indemnity clause of the contract for any losses it sustained as a result of the claim. Associated repeatedly refused to defend, or in any way participate in the suit or settlement negotiations, taking the position it so stringently asserts here, that the indemnity clause required neither the defense of, nor indemnification from, any claim arising from Mississippi Power's negligence. Mississippi Power instituted this action to recover the amount it paid in settlement of the employee's claim and the amount it expended in its defense of the action.

The District Court, concluding that there was no controlling Mississippi pronouncement on this particular issue, determined that in the absence of express, specific language in the indemnity agreement calling for indemnification for the indemnitee's own negligence, such indemnification could not be granted and rendered summary judgment in favor of Associated.

Blain v. Finley-Our Erie-Bacon

In granting summary judgment in favor of Associated, the Trial Court, in its Erie-reading of State law, rejected as dicta and unsound law the Mississippi Supreme Court's recent statement in Blain v. Finley, 1969, 226 So.2d 742. 5 The Mississippi Court there stated:

"The determinative issue in the case at bar revolves around the interpretation and effect to be given to the indemnity provisions of the subcontract

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between Blain and Finley * * *. [S]ome courts have held that in order for an indemnitee to be indemnified against his own negligence, the indemnity contract must contain express language to that effect. However, the better rule and that which is followed by a majority of the courts is that the indemnitee will be indemnified against his own negligence when the contract shows by clear and unequivocal language that this is the intention of the contracting parties * * *.

"By construing all of sections 8 and 12 together, the intention of the contracting parties to indemnify the contractor, Blain, against his own negligent acts is clearly and unequivocally shown." 226 So.2d at 746.

The Court's statement in Blain clearly aligns Mississippi with the majority rule and does so in language strikingly similar to that used so recently by the Supreme Court in United States v. Seckinger, 1970, 397 U.S. 203, 90 S.Ct. 880, 25 L.Ed.2d 224. After recognizing the well settled, almost universally favored rule that such contractual provisions "should not be construed to permit an indemnitee to recover for his own negligence unless the court is firmly convinced that such an interpretation reflects the intention of the parties," 397 U.S. at 211, 90 S.Ct. at 885, 25 L.Ed.2d at 233, the Court went on to state:

"We specifically decline to hold that a clause that is intended to encompass indemnification for the indemnitee's negligence must include an 'indemnify and hold harmless' clause or that it must explicitly state that indemnification extends to injuries occasioned by the indemnitee's negligence. * * * Contract interpretation is largely an individualized process, with the conclusion in a particular case turning on the particular language used against the background of other indicia of the parties' intention." 397 U.S. at 212, 90 S.Ct. at 886, 25 L.Ed. 2d at 234, n. 17. (Emphasis added). 6

Of course Seckinger has no force of its own in this Erie problem. But it, as did our opinion in it, United States v. Seckinger, 5 Cir., 1969, 408 F.2d 146, 150-151, notes 9 and 10, describes effectively the cleavage in the majority/minority view and the contemporary tendency among the majority courts to read the indemnity language broadly.

The choice between majority/minority is also, of course, one wholly for Mississippi. The choice by a State is one of basic policy, so much so that the imaginary boundary line between contiguous states may mark the selection of one rather than the other. American Agric. Chem. Co., supra, 315 F.2d at 862 (concurring opinion). It follows also that what may be ordained as the policy may be altered. 7

So the problem comes down to determining what is the Mississippi rule today. In the role as just another State court, "we must do the best we can utilizing

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all the currents which indicate the way the Erie wind blows." Delduca v. United States Fidelity & Guaranty Co., 5 Cir., 1966, 357 F.2d 204, 206. In Blain the wind blows briskly with the weather vane pointing clearly.

We decline to credit Associated's argument that the Court's statement in Blain should be rejected as dicta. In that case, contractor-indemnitee (Blain) brought suit against subcontractor-indemnitor (Finley) seeking indemnification for expenses, costs and attorneys' fees incurred in his successful defense of a death action brought against both Blain and Finley. The plaintiff in that action alleged that the death had resulted from the negligence of both parties.

The Mississippi Supreme Court, recognizing the general rule that "an indemnitee is entitled to recover, as a part of the damages, reasonable attorneys' fees and reasonable and proper legal costs and expenses which he is compelled to pay as a result of suits by or against him in reference to the matter against which he is indemnified * * *", 226 So.2d at 745 and finding that "the determinative issue in the case" concerned the interpretation of the...

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