CSX Transp., Inc. v. Gen. Mills, Inc.
| Decision Date | 03 February 2015 |
| Docket Number | CIVIL ACTION FILE NO. 1:14-CV-201-TWT |
| Court | U.S. District Court — Northern District of Georgia |
| Parties | CSX TRANSPORTATION, INC., Plaintiff, v. GENERAL MILLS, INC., Defendant. |
This is a breach of contract action. The Plaintiff CSX Transportation, Inc. is claiming that the Defendant General Mills, Inc. is contractually obligated to indemnify the Plaintiff for a judgment entered against the Plaintiff in a personal injury action. It is before the Court on the Defendant General Mills, Inc.'s Motion to Dismiss [Doc. 23]. For the reasons set forth below, the Defendant's Motion to Dismiss [Doc. 23] is GRANTED.
This case arises out of a workplace accident in which Douglas Burchfield - a General Mills employee - sustained personal injuries. The relevant facts are as follows. The Plaintiff CSX Transportation, Inc. provides rail transportation servicesin multiple areas, including Covington, Georgia.1 The Plaintiff entered into a contract (the "Agreement") with the Defendant, General Mills, Inc., where the former agreed to construct a private sidetrack - a railroad track connected to a main track - for rail freight traffic to and from the Defendant's Covington, Georgia cereal processing plant.2
The Agreement also grants the Defendant the right to conduct "switching" - the process of moving and assembling railcars so that they can be coupled to a locomotive and shipped away - on a portion of the sidetrack.3 Because the Plaintiff was not conducting all of the switching operations, the parties included a specific liability provision concerning switching ("Section 15"):
[General Mills] shall have the right to switch with its own trackmobile . . . over [General Mills'] Segment of the Sidetrack. . . . [I]n consideration therefor, [General Mills] assumes all risk of loss, damage, cost, liability, judgment and expense (including attorneys' fees) in connection with any personal injury to . . . any persons . . . that may be sustained or incurred in connection with, or arising from or growing out of, the operation of [General Mills'] trackmobile . . . upon said Sidetrack.4
This case concerns a switching operation performed on an AEX 7136 railcar. The Star of the West Milling ("Star") Co. - an agricultural company based in Frankenmuth, Michigan - shipped grain to the Defendant's Covington facility using an AEX 7136 railcar, which it leased from The Andersons, Inc.5 On the day of the incident, Burchfield and a fellow employee, Rodney Turk, were using a trackmobile - a railcar mover - to "switch" certain railcars, including Star's AEX 7136.6 Turk, in particular, was operating the trackmobile.7 After Turk and Burchfield moved the AEX 7136 onto a holding track, they uncoupled it from the trackmobile and then proceeded to move another railcar located on a part of the sidetrack farther downhill.8 Then, after Burchfield had exited the trackmobile, the AEX 7136 rolled down the track and collided with the trackmobile.9 As a result, both railcars and the trackmobile struck Burchfield, causing significant personal injuries.10
On June 1, 2007, Burchfield brought suit against the Plaintiff, asserting a negligence claim.11 Ultimately, Burchfield secured a jury verdict in his favor for $20,559,004.12 The jury found that Burchfield was "0% negligent as compared to the 100% negligence of [CSX]."13 Both parties appealed the final judgment entered pursuant to the jury award,14 and then participated in court-mandated mediation where they finally agreed to a settlement amount of $16,000,000.15 The Plaintiff paid this amount in full.16 The Plaintiff then demanded indemnification from the Defendant under the Agreement, and the latter refused.17 Consequently, the Plaintiff filed suit against the Defendant, asserting a claim for breach of contract. The Defendant now moves to dismiss.
A plaintiff may survive a motion to dismiss under Fed. R. Civ. P. 12(b)(6) if the factual allegations in the Complaint give rise to a plausible claim for relief.18 For a claim to be plausible, the supporting factual matter must establish more than a mere possibility that the plaintiff is entitled to relief.19 In determining whether a plaintiff has met this burden, the Court must assume all of the factual allegations in the Complaint to be true. The Court, however, need not accept as true any legal conclusions found in the Complaint.20
In moving to dismiss, the Defendant makes two arguments: (1) the Agreement does not require the Defendant to indemnify the Plaintiff for the damages the latter paid to Burchfield, and (2) if the Agreement does require such indemnity, it isinconsistent with Georgia public policy, and thus void. The Court's analysis begins - and ends - with the first argument.
Under Georgia law, when interpreting a contract the Court must first "decide whether the language is clear and unambiguous."21 If it is, then that concludes the matter.22 However, "if the contract is ambiguous in some respect, the court must apply the rules of contract construction to resolve the ambiguity."23 If "the ambiguity remains after applying the rules of construction, the issue of what the ambiguous language means and what the parties intended must be resolved by a jury."24 The "construction of a contract is a question of law for the courts . . . as is the existence or nonexistence of an ambiguity in a contract."25 Additionally, in the context of an indemnity contract, the Court must construe "the words . . . strictly against the indemnitee."26
Here, two provisions of the Agreement are relevant to the Court's analysis. Section 11 - the Agreement's general indemnity provision - states:
Thus, Section 11 generally defines each party's liability, but clarifies that other provisions in the Agreement may provide for different obligations in different circumstances. As noted above, Section 15 - which addresses "switching" - includes a separate, independent liability provision:
[General Mills] shall have the right to switch with its own trackmobile . . . over [General Mills'] Segment of the Sidetrack. . . . [I]n consideration therefor, [General Mills] assumes all risk of loss, damage, cost, liability, judgment and expense . . . in connection with any personal injury . . . that may be sustained or incurred in connection with, or arising from or growing out of, the operation of [General Mills'] trackmobile . . . upon said Sidetrack.28
The Plaintiff argues that, under Section 15, the Defendant must indemnify the Plaintiff for any judgment entered against the Plaintiff based on an injury arising out of the Defendant's switching operations - even if the Plaintiff's negligence caused the injury. In response, the Defendant points out that - under Georgia law - for a contract to provide for indemnification for losses stemming from the indemnitee's negligence, the contract must meet a heightened specificity requirement. The Defendant argues that, despite its broad terms, Section 15 does not meet this requirement. The Court agrees with the Defendant, and concludes that Section 15 of the Agreement does not require the Defendant to indemnify the Plaintiff for a judgment where the latter, but not the former, was found negligent.
Georgia courts have made clear that "[u]nless a contract for indemnification explicitly and expressly states that the negligence of the indemnitee is covered, courts [may] not interpret such an agreement as a promise to save the indemnitee from his own negligence."29 Thus, the Plaintiff's reading is correct only if the Agreement "expressly, plainly, clearly, and unequivocally state[s] that [the Defendant must]indemnify the [Plaintiff] from the [Plaintiff's] own negligence."30 Thus, generally, "where the parties fail to refer expressly to negligence in their contract such failure evidences the parties' intention not to provide for indemnity for the indemnitee's negligent acts."31 According to Georgia courts, the policy behind this interpretive rule "is to assure that people exercise due care in their activities for fear of liability, rather than act carelessly in the knowledge that indemnity insurance will relieve them."32 In addition, "[p]ublic policy is reluctant to cast the burden of negligent actions upon those who are not actually at fault."33
Here, Section 15 does not "expressly, plainly, clearly, and unequivocally" state that the Defendant must indemnify the Plaintiff for a judgment stemming from the latter's negligence. Although Section 15 uses broad terms to describe the risk assumedby the Defendant34 - e.g., "[General Mills] assumes all risk of loss . . . in connection with any personal injury"35 - Georgia courts have routinely found that such broad terms are not, in themselves, sufficient. For example, in Southern Railway Company v. Union Camp Corporation,36 an employee of Southern was injured while placing a cart onto railroad tracks located on Southern's property. The cart was supposed to be sent to Union's property for use in performing maintenance on Union's tracks. An agreement between Southern and Union stated: "[Union] . . . agrees to indemnify [Southern] against all loss, damage, liability or expense which it may incur or for which it...
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