American Home Assur. v. NAT. RR CORP.

• Decision Date: 07 July 2005
• Docket Number: No. SC02-709.,SC02-709.
• Parties: AMERICAN HOME ASSURANCE COMPANY, et al., Appellants/Cross-Appellees, v. NATIONAL RAILROAD PASSENGER CORPORATION, etc., et al., Appellees/Cross-Appellants.
• Court: Florida Supreme Court

908 So.2d 459

AMERICAN HOME ASSURANCE COMPANY, et al., Appellants/Cross-Appellees, v. NATIONAL RAILROAD PASSENGER CORPORATION, etc., et al., Appellees/Cross-Appellants.

No. SC02-709.

Supreme Court of Florida.

July 7, 2005.

Michael R. Karcher of Underwood, Karcher and Karcher, P.A., Miami, FL, for Appellant.

Michael J. Roper and Ernest H. Kohlmyer, III of Bell, Leeper and Roper, P.A., Orlando, FL and Alton G. Pitts, Orlando, FL, for Appellants/Cross-Appellees.

William G. Ballaine of Landman, Corsi, Ballaine, and Ford, P.C., New York, NY, for Appellees/Cross-Appellants.

Christopher Michael Kise, Solicitor General, Louis F. Hubener, and Matthew J. Conigliaro, Deputy Solicitor Generals, Tallahassee, FL, on behalf of Charles J. Crist, Jr., Attorney General, and the State of Florida, as Amicus Curiae.

PER CURIAM.

We have for review a question of Florida law certified by the United States Court of Appeals for the Eleventh Circuit that is determinative of a cause pending in that court and for which there appears to be no controlling precedent. See Nat'l R.R. Passenger Corp. v. Rountree Transp. & Rigging, Inc., 286 F.3d 1233, 1258, 1269 (11th Cir.2002). We have jurisdiction. See art. V, § 3(b)(6), Fla. Const.

This case involves a series of cases originating in the United States District Court for the Middle District of Florida. The cases involve an 82-ton combustion turbine engine which was damaged in a train collision after the hauler rig carrying the turbine became immobilized on a railroad crossing. The parties to the underlying cases included the passenger train company (National Railroad Passenger Corp., "Amtrak"), the railroad track company (CSX Transportation, Inc.), the owner of the hauler rig (Rountree Transport and Rigging, Inc.), a municipal utility authority (Kissimmee Utility Authority), a state municipal power agency (Florida Municipal Power Agency), the insurer (American Home Assurance Company, subrogee of Stewart & Stevenson Services, Inc.), and others. The parties appealed the district court's final judgments to the Eleventh Circuit Court of Appeals.

The Eleventh Circuit consolidated the various appeals and certified four questions of Florida law to this Court for resolution. The first question relates to the application of Florida's comparative fault statute to a vicariously liable party. It asks whether a vicariously liable party should have the negligence of the active tortfeasor apportioned to it under section 768.81, Florida Statutes (1997), such that recovery of its own damages is correspondingly reduced. We answer "yes" to this question.

The remaining three questions relate to sovereign immunity. The second question asks whether, given that the Kissimmee Utility Authority, a municipal agency, contractually agreed to indemnify a private party, the agreement is controlled by the restrictions on waiver of sovereign immunity found in section 768.28, Florida Statutes (1997). We answer "no" to this question. The third question asks whether the agreement is instead controlled by the rule for breach-of-contract actions enunciated in Pan-Am Tobacco Corp. v. Department. of Corrections, 471 So.2d 4 (Fla.1984). Because this case involves a municipality, and even before Pan-Am Tobacco municipalities had both the authority to contract and liability for breaching them, we answer "no" to this question but hold that the Kissimmee Utility Authority is bound by its contractual agreement to indemnify private parties. Finally, the fourth certified question asks whether, if Pan-Am does apply, a municipal agency loses the protection of sovereign immunity only if it has specific authority to execute indemnification agreements, or whether it is sufficient that the agency more generally has statutory authority to contract with private parties. Our answer to the third question, explained in detail below, renders moot the fourth.

Before dealing with these legal questions, we find it helpful to explain the involved factual and procedural history of this case.

Factual Background

Kissimmee Utility Authority (KUA) is a municipal agency created by the City of Kissimmee to construct, operate, and manage the municipal electrical systems. As part of its duty, KUA was overseeing the construction of the Cane Island Power Plant, an electrical facility near Kissimmee. KUA contracted with Black & Veatch (B & V) as the project engineers. KUA also entered into a participation agreement with Florida Municipal Power Agency (FMPA), a joint-action agency organized under Florida law with authority to undertake and finance electric projects.¹ Under the participation agreement, FMPA acquired 50% ownership interest in the new plant and agreed to share the production costs of electricity with KUA. KUA also entered into a Private Road Grade Crossing Agreement (crossing agreement) with CSX Transportation (CSX), which permitted KUA to construct, use, and maintain a private road grade crossing over CSX's railroad tracks in order to ensure vehicular and pedestrian access to the plant. The crossing agreement required KUA to "defend, indemnify, protect, and save [CSX] harmless from and against" certain designated losses and casualties. The crossing agreement also required KUA to indemnify any company whose property was operated by CSX at the railroad crossing.

KUA contracted with General Electric (GE) for the purchase and delivery of customized power generation equipment, including a combustion turbine. The purchasing agreement included an indemnification provision whereby GE promised to defend and indemnify KUA, its agents, and B & V due to any negligent act or omission of GE in performing work under the contract. GE contracted with Stewart & Stevenson Services, Inc. (S & S) to purchase and customize the equipment for the plant. S & S contracted with transportation broker WOKO for the transport of the customized turbine equipment. WOKO in turn contracted with Rountree Transport and Rigging, Inc. (Rountree) to have the combustion turbine and its housing transported to the plant on November 30, 1993. This shipment only included one of forty-five boxes of the customized turbine equipment that was being transported to the plant.

Rountree transported the 82-ton combustion turbine by using a road tractor that pulled a hauler rig. The height of the hauler rig had to be adjusted to negotiate gradations in the terrain. Without removing the rig from the railroad tracks, the hauler crew adjusted the height of the hauler rig at the railroad crossing licensed to KUA from CSX. While this adjustment was taking place, an Amtrak passenger train collided with the rig. The collision destroyed the rig, the turbine, and its enclosure. The Amtrak train was damaged and some of the train crew and passengers suffered personal injuries.

Procedural History

Multiple lawsuits were filed by the various parties and their insurers in federal district court. CSX and Amtrak brought suit against B & V, Rountree, and KUA, claiming that the crossing was improperly designed and constructed by B & V, that Rountree and KUA were negligent in the transport of the turbine, and that KUA was obligated to defend and indemnify them based on the crossing agreement. The passengers and crew on the Amtrak train at the time of the collision sued for personal injuries and property damage. American Home Assurance Company (AHA), as subrogee of S & S, brought suit against CSX, Amtrak, Rountree, B & V, KUA, and FMPA, after compensating its insured S & S for loss of the turbine and its enclosure. AHA claimed that the collective negligence of the defendants caused S & S to sustain the loss covered by the AHA insurance policy. In turn, KUA brought a third-party complaint against GE, arguing that the purchase agreement required GE to defend and indemnify KUA.

The cases were consolidated and the district court bifurcated the proceedings into a liability phase and a damages phase. CSX and Amtrak moved for summary judgment on the indemnification by KUA under the crossing agreement; the district court granted summary judgment in favor of CSX, but denied Amtrak's motion because of unresolved factual issues. After a three-week trial in 1996 on the liability issue, the jury rendered its verdict. The district court granted judgment as a matter of law to S & S and GE, holding them free of direct negligence for the collision. The jury absolved all but three parties of direct negligence, finding Rountree 59% at fault, CSX 33% at fault, and Amtrak 8% at fault. The district court also granted B & V's motion and ruled that transportation of a combustion turbine was inherently dangerous as a matter of law and thus WOKO, S & S, and GE were vicariously liable for Rountree's negligence. The district court denied B & V, KUA, and FMPA's motion for summary judgment against GE. The district court ruled that these parties' losses in successfully defending themselves in the turbine litigation were not within the scope of the indemnification provision of the purchasing agreement with GE. The district court also granted Amtrak's renewed motion for summary judgment, ruling that as a matter of law KUA was contractually obligated by the crossing agreement to defend and indemnify Amtrak. The district court further ruled that as a matter of law Rountree's liability to AHA was limited to $1 million.

By the time the damages trial commenced in December 1999, all parties in the consolidated cases had settled their claims with all other parties, except for AHA as subrogee of S & S. AHA attempted to prove the amount of damages incurred by S & S by using the formula that its personnel had used in adjusting the insurance claim.² The district court refused to admit the documentary and testimonial evidence in support of this valuation. The district court looked at the value of the turbine before the collision ($4,646,640) and subtracted the amount for which the damaged turbine was sold as scrap ($130,000) to arrive at the...