Csx Transp., Inc. v. Professional Transp., Inc.
| Decision Date | 13 November 2006 |
| Docket Number | No. 3:05-cv-1271-J-32MCR.,3:05-cv-1271-J-32MCR. |
| Citation | 467 F.Supp.2d 1333 |
| Parties | CSX TRANSPORTATION, INC., Plaintiff, v. PROFESSIONAL TRANSPORTATION, INC., Defendant. |
| Court | U.S. District Court — Middle District of Florida |
Albert Chu Chin, Michael A. Abel, Holland & Knight LLP, Jacksonville, FL, for Plaintiff.
Paul J. Wallace, Bowers Harrison, LLP, Evansville, IN, Robert Bruce George, Rutledge Richardson Liles, Liles, Gavin, Costantino & George, Jacksonville, FL, for Defendant.
This case is before the Court on Plaintiff CSX Transportation, Inc.'s ("CSX") Motion for Summary Judgment and Memorandum of. Law in Support (Doc. 36). Defendant Professional Transportation, Inc. ("PTI") filed a response (Doc. 39); shortly thereafter, CSX filed a reply memorandum (Doc. 44). The Court heard oral argument on October 20, 2006.
This is a case concerning the construction of a contract — specifically, the CSX Transportation System Agreement (the "Agreement") — entered into by the parties and made effective as of June 1, 2002. CSX, a Class 1 railroad, provides freight rail transportation services throughout the United States and Canada. It requires the services of contracted vendors to shuttle its train crews to various locations. In early 2002, CSX issued requests for proposals to companies that provide transportation services to railroads. PTI, an Indiana based company which arranges and provides crew transportation services, submitted a proposal. After several months of negotiations, CSX and PTI entered into the Agreement.
The Agreement, which bound the parties for two years and expired on June 30, 2004, governed motor vehicle transportation services provided by PTI to CSX's train crews. After a dispute arose between PTI and CSX concerning the construction of the last sentence in section 10(D) of the Agreement, CSX filed a declaratory judgment action in this Court seeking confirmation of its duties and obligations. ' In response, PTI filed a counterclaim for breach of contract. PTI seeks damages of approximately $4 million from CSX as compensation for CSX's refusal to negotiate in good faith, as well as CSX's failure to reimburse PTI for the costs of insurance.
Sections 10 and 11 of the Agreement allocated the parties' obligations with respect to claim and insurance costs — the disputed costs central to this matter. Specifically, section 10 of the Agreement governed the allocation of liability arising out of the transportation services. PTI agreed to cover all costs and claims associated with transportation services, including the duty to indemnify and, defend CSX, hold CSX harmless from claims, and investigate and respond to claims, except to the extent such costs were the sole proximate cause of CSX's negligence1 or such costs arose from "stationary vehicle" claims2 (which the parties agreed to pay according to their own comparative fault). (Doc. 24-3, pp. 9-10).
Under Section 11 of the Agreement, PTI also agreed to procure and maintain insurance at its sole cost for the entire term of the Agreement. Id. at 11. Specifically, PTI agreed to procure and maintain policies for Business Automobile Liability insurance and Workers' Compensation insurance. Id.
In 2001, before entering into the Agreement, PTI obtained a retained risk, variable premium Business Automobile. Liability. Policy (the "Policy") which covered negligent actions of both PTI and CSX.3 The Policy required PTI to pay a sum up front for estimated costs associated with servicing the account and paying claims. PTI was not required, however, to pay a fixed insurance premium. Rather, costs under the Policy were billed by PTI's insurance broker and paid by PTI after the claims payable under the Policy were settled. Consequently, PTI was not required to pay the costs associated with the Policy until after all claims were settled, which, depending on the applicable statutes of limitations for such claims, could take up to a year or longer following the conclusion of the policy term.4
Both parties agree that during negotiations for the Agreement, PTI was concerned about the rising cost of insurance and before entering into the Agreement PTI and CSX engaged in discussions concerning such costs. These discussions led to the inclusion of a provision relating to insurance costs in section 10(D) of the Agreement.
Section 10 (D) allocated responsibility, based on comparative fault, for costs from stationary claims; however, the last sentence of 10(D) also provided for negotiations to modify the Agreement in the event either one of two events occurred. Specifically, the last sentence of section 10(D) provides:
In the event [PTI] is unable to obtain or renew the insurance required pursuant to section 11 of this Agreement without modification of this section 10(D), or in the event that the renewal premium for such insurance is at least seventeen and one-half percent (17.5%) greater than the premium for the immediately preceding policy term, [CSX] and [PTI] agree to negotiate in good faith concerning such modification.
(Doc. 24-3, pp. 10-11) (emphasis added).5
As previously mentioned, PTI had already procured the Policy before entering into the Agreement with CSX. During the term of the Agreement, PTI renewed this Policy twice before this dispute arose; once effective as of April 1, 2003 and again effective as of April 1, 2004. In early February 2004, PTI received a letter from its insurance broker, Acordia/CNA, notifying PTI of its total outstanding insurance costs for the Policy terms from April 1, 2001 through April 1, 2002 and April 1, 2002 through April 1, 2003. According to Acordia/CNA, the amounts owed by PTI were as follows:
• April 1, 2001 — April 1, 2002 =
$3,004,593
• April 1, 2002 — April 1, 2003 =
$4,115,976
(Doc. 36-3, p. 3). Notably, the amounts owed were costs for policy terms which began either two or three years earlier6 These amounts owed included the total aggregated costs PTI incurred over these two policy years.7
Only several days after receiving notice of the amounts due from its insurance broker, PTI notified CSX that its insurance premiums had increased by more than 17.5%. (Doc. 36-3, p. 2). Accordingly, invoking section 10(D) of the Agreement, PTI sought "good faith negotiations" with CSX concerning the increase in premiums.8 Although CSX gathered information and inquired into the claim, the parties disputed whether the last sentence of section 10(D) of the Agreement was triggered and if so, what they were required to do. After an unsuccessful attempt at voluntary mediation, this litigation ensued.
As PTI correctly states, there are two critical questions at issue in this case: (1) was the 17.5% trigger set forth in section 10(D) of the Agreement met, and (2) if so, what were the parties obligated to do next? (Doc. 39, p. 6). PTI alleges the 17.5% trigger was met and CSX failed to negotiate in good faith as required by section 10(D) of the Agreement. (Doc. 24, pp. 13-14). PTI contends because CSX failed to negotiate in good faith, CSX should be liable for the total increases in PTI's insurance costs — an amount of at least 83,723,360. Id; (Doc. 39, p. 11)9
CSX argues that PTI fails to offer any evidence that its renewal premiums during the term of the Agreement were 17.5% greater than the premium for the immediately preceding policy term. (Doc. 36, pp. 13-15). In fact, CSX argues the Coverage Form for the relevant policies demonstrates PTI's renewal premiums for the policy term beginning in April 2003 actually decreased from the April 2002 policy term. Id. at 14, n. 8. Consequently, CSX argues the 17.5% trigger was not met and as such, CSX was not required to enter into any negotiations. Id. at 15.
CSX also asserts the contested provision in section 10(D) is nothing more than "an agreement to agree" for which there is no specific remedy and thus, PTI's requested damages are not substantiated by the Agreement. Id. at 17-20. CSX has moved for summary judgment on both its Complaint for Declaratory Judgment and PTI's Counterclaim
Summary judgment is proper where "there is no genuine issue as to any material fact" and "the moving party is entitled to judgment as a matter of law." Fed. R.Civ.P. 56(c). "The burden of demonstrating the satisfaction of this standard lies with the movant, who must present pleadings, depositions, answers to interrogatories, and admissions on Me, together with the affidavits, if any, that establish the absence of any genuine material, factual dispute." Branche v. Airtran Airways, Inc., 342 F.3d 1248, 1252-53 (11th Cir. 2003) (internal quotations omitted). An issue is genuine when the evidence is such that a reasonable jury could return a verdict for the nonmovant. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249-250, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). In determining whether summary judgment is appropriate, a court must draw inferences from the evidence in the light most favorable to the nonmovant and resolve all reasonable doubts in that party's favor. Centurion Air Cargo, Inc. v. United Parcel Serv. Co., 420 F.3d 1146, 1149 (11th Cir.2005).
Ordinary principles of contract interpretation dictate that a court must consider the natural and plain meaning of a contract. Key v. Allstate Ins. Co., 90 F.3d 1546, 1548-49 (11th Cir.1996). When a contract is clear and unambiguous, the Court should interpret its meaning as a matter of law and should not look to outside evidence to construe the contract. Id. at 1549; Siedle v. National Assn. of Sec. Dealers, Inc., 248 F.Supp.2d 1140, 1144 (M.D.Fla.2002). The unambiguous terms of a contract provide the best evidence of the parties' intent. Key, 90 F.3d at 1549. In fact, when a court determines a contract is complete and...
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