City of Jackson, Miss. v. Filtrol Corp.

• Decision Date: 29 August 1980
• Docket Number: No. 78-3006,78-3006
• Citation: 624 F.2d 1384
• Parties: CITY OF JACKSON, MISSISSIPPI, a Municipal Corporation, Plaintiff-Appellant, United States of America, Plaintiff-Intervenor-Appellant, v. FILTROL CORPORATION, a Delaware Corporation, Defendant-Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 1384

624 F.2d 1384

CITY OF JACKSON, MISSISSIPPI, a Municipal Corporation, Plaintiff-Appellant, United States of America, Plaintiff-Intervenor-Appellant, v. FILTROL CORPORATION, a Delaware Corporation, Defendant-Appellee.

No. 78-3006.

United States Court of Appeals, Fifth Circuit.

Aug. 29, 1980.

Brunini, Grantham, Grower & Hewes, Newt P. Harrison, Lawrence E. Allison, Jr., Howard C. Ross, Jr., City Atty., Jackson, Miss., for plaintiff-appellant.

Robert E. Hauberg, U. S. Atty., L. K. Travis, Asst. U. S. Atty., Jackson, Miss., Joshua I. Schwartz, Carl Strass, Atty., James W. Moorman, U. S. Dept. of Justice, Land & Natural Resources Div., Washington, D.C., for plaintiff-intervenor-appellant.

Watkins & Eager, William E. Suddath, Jr., John L. Low, IV, Jackson, Miss., for defendant-appellee.

Appeals from the United States District Court for the Southern District of Mississippi.

Before BROWN, HENDERSON and SAM D. JOHNSON, Circuit Judges.

SAM D. JOHNSON, Circuit Judge:

This is an appeal from a diversity case, Mississippi law controlling, brought by the City of Jackson, Mississippi (the City) against Filtrol Corp. for additional costs that the City incurred in constructing a sewer line on its right-of-way over Filtrol's property and some property adjacent to Filtrol's. ¹ The City alleged that it incurred these additional costs because Filtrol had contaminated its property and the adjacent property with a concentration of sulfuric acid high enough to corrode ordinary cement sewer pipes. At the close of the City's evidence, the district court directed a verdict for Filtrol on a variety of grounds.

I. The Facts

In 1936 Filtrol began operations at its Jackson plant to process bentonite clay into a powder that it used to purify petroleum and vegetable oils. As a part of the process, the clay is washed in a sulfuric acid bath. After the sulfuric acid bath, a water bath removes the acid from the clay. The water bath produces an effluent that is ninety-five percent water, four percent electrolytes, and one percent sulfuric acid.

In 1943 Filtrol built several concrete ponds on property that it owned outside the Jackson City Limits. Filtrol used these ponds to hold the effluent from the water bath when the water level of the nearby Pearl River was low. Filtrol would discharge the effluent from the Ponds when the river's level rose high enough that the discharge of effluent would not significantly lower the river's pH. ² The City produced evidence at trial that one of the Filtrol ponds, Pond No. 4, began to leak on the first day in 1943 that Filtrol channeled effluent into it. The pond leaked at a very slow rate, but for a long period of time. Sometime around 1954 or 1955, the area where the City eventually laid its sewer pipe became so contaminated with acid that its pH was only 2.5.

In 1960, the City began an area wide sewage treatment project that required the construction of a 96 inch diameter concrete collector pipeline. This pipeline is called an interceptor line because it was designed to travel along the Pearl River and intercept all the other lines that had dumped raw sewage into the river. The interceptor line was designed to be gravity fed so it had to follow the downhill contours of the area topography. These downhill contours dictated that the pipe go through Filtrol's property and some adjacent property belonging to the Ridgeway family.

In 1971, twenty-eight years after Filtrol's Pond No. 4 began to leak and seventeen years after the subsoil in the area had already become contaminated with sulfuric acid, the City approached Filtrol to acquire an easement for its sewer line. Filtrol voluntarily agreed to grant a sewer easement to the City for the same amount that all the other landowners received, $1.00 per lineal foot. In addition to paying $2,518 for the easement over Filtrol's property, the City agreed to indemnify Filtrol from all losses arising out of the presence of the interceptor line on Filtrol's property. At around the same time the City acquired the easement from Filtrol, it also acquired an easement to construct the interceptor line over the Ridgeway property adjacent to Filtrol's property. At the time these easements were executed, no one knew, at least as far as the facts in the record show, that the soil in the easements had been contaminated with acid.

To construct the interceptor line, the City began excavating dirt so it could lay the sewer pipe twenty-five to thirty feet below the surface. Large quantities of subsurface water complicated the excavation. To prevent the collapse of the walls of the ditch it was digging for the sewer pipe, the City had to dewater the ditch by pumping out the subsurface water. The dewatering pumps failed repeatedly. The City investigated and determined that sulfuric acid in the subsurface waters had corroded its pumps and caused them to fail. The City's investigation revealed that Filtrol's Pond No. 4 was the source of the acid in the subsurface soil.

Concrete pipe, according to the evidence at trial, will corrode in a pH of less than 5.5. The City could not reroute its interceptor line to avoid the contaminated soil, so it had to protect the concrete pipe from the acid with an asphalt coating. The City coated 1,158 feet of pipe that lay in the easement on Filtrol's property and 373 feet of pipe on the Ridgeway property. Further downstream where the soil was not as contaminated, the City packed 302 feet of pipe on the Ridgeway easement with a compacted clay backfill.

The City claimed it spent almost one-half million dollars to protect its sewer pipe from the acid. It sued Filtrol in state court on a variety of grounds. Filtrol removed to federal court on the grounds of diversity, and the federal district court ordered a bifurcated trial on damages and liability. At the close of the City's evidence in the liability phase of trial, the district court granted Filtrol's motion for directed verdict. It relied heavily on an indemnity agreement between Filtrol and the City. On appeal, the City claims it made a showing of Filtrol's liability sufficient to withstand a directed verdict on four separate bases of recovery in tort: nuisance, strict liability, negligence and trespass. The City also claims that the district court erred in entering judgment against it because of the indemnity agreement between it and Filtrol.

II. The Indemnity Agreement

The easement that Filtrol granted to the City provides in part as follows:

The grantee City of Jackson shall indemnify and save harmless the Filtrol corporation from any and all loss resulting from any damage to person or property arising out of or resulting from or in any manner caused by the location, construction, operation and maintenance and presence of said City of Jackson, Sanitary Sewer Main, upon and across . . . the Filtrol Corporation's easement . . . .

The district court held that this provision barred the City's recovery against Filtrol. On appeal, Filtrol makes a refreshingly candid concession. The indemnity provision can only hold Filtrol harmless from the damages incurred by the City in constructing the interceptor line on the easement granted by Filtrol. Filtrol concedes that the indemnity provision cannot apply to the additional costs the City incurred to protect the interceptor line from corrosion in its easement over the Ridgeway land.

The City contends that the indemnity provision does not apply to the facts of this case, even on the Filtrol property. Even a cursory reading of the provision indicates that the contrary is true. The City agreed to hold Filtrol harmless from "any and all loss . . . arising out of . . . the location . . . (of the) sewer main upon . . . the Filtrol Corporation's easement . . . ." The City brought suit for damages it incurred because it had to locate the sewer line in contaminated soil on the Filtrol Corporation's easement. This is a loss arising out of the location of the sewer main on the easement. The indemnity provision clearly applies. The City cannot profit from the fact that Filtrol, when it drafted the indemnity provision, did not specifically foresee that the provision would apply to the facts of this case. Filtrol drafted, we can assume, a broad indemnity provision so that it would be protected from liability even in difficult to foresee circumstances.

The City next contends that the indemnity provision is not clear and unequivocal enough to protect Filtrol against the consequences of its own negligence. ³ At least at one time, the majority of jurisdictions strictly construed indemnity contracts so that broad, all-encompassing language of indemnification did not indemnify an indemnitee against loss caused solely by the indemnitee's own negligence. See United States Fidelity & Guaranty Co. v. Mason and Dulion Co., 274 Ala. 202, 145 So.2d 711, 713 (Ala.1962); United Gas Pipeline Co. v. Gulf Power Co., 334 So.2d 310 (Fla.App.1976); H. McNeal, Indemnity A General Review 21 (1963). Instead, the courts frequently would require the indemnity provision to expressly provide that it applied to losses caused solely by the indemnitee's own negligence.

This, however, is not the law in Mississippi. In Blain v. Sam Finley, Inc., 226 So.2d 742 (Miss.1969), the subcontractor, Finley, agreed to fully indemnify and "save harmless (the) contractor (Blain) from all such claims for damages and from all expenses and attorney's fees incident thereto, arising out of or in anywise connected with the subcontract work." An employee of Blain was killed when his automobile struck a parked asphalt spreader that was under the exclusive control of the subcontractor, Finley. The employee's representative sued Blain and Finley, and lost. Blain then sued Finley to recover the attorney's fees and costs it had incurred in defending the employee's suit. The Court first noted that indemnification for attorney's fees follows the same rules as indemnification for other damages. It...