Florida Power & Light Co. v. Mid-Valley, Inc., MID-VALLE

• Decision Date: 24 June 1985
• Docket Number: INC,No. 83-5506,MID-VALLE,83-5506
• Parties: FLORIDA POWER & LIGHT COMPANY, a Florida corporation, Plaintiff-Appellant, v., a Texas corporation, et al., Defendants, Brown & Root, Inc. and Graeme R. Poke, Defendants-Appellees.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 1316

763 F.2d 1316

FLORIDA POWER & LIGHT COMPANY, a Florida corporation, Plaintiff-Appellant, v. MID-VALLEY, INC., a Texas corporation, et al., Defendants, Brown & Root, Inc. and Graeme R. Poke, Defendants-Appellees.

No. 83-5506.

United States Court of Appeals, Eleventh Circuit.

June 24, 1985.

George Walker Wright, Jr., Steel Hector & Davis, Gerry S. Gibson, Darrey A. Davis, Miami, Fla., for plaintiff-appellant.

Warwick R. Furr, II, Vienna, Va., for Brown & Root, Mid-Valley & Graeme R. Poke.

Blackwell, Walker, Gray, Powers, Flick & Hoehl, James E. Tribble, Miami, Fla., for Underwriters at Lloyd's.

Fowler, White, Burnett, Hurley, Banick & Strickroot, P.A., Henry Burnett, Miami, Fla., for United Engineers & Continental Cas.

Kimbrell, Hamann, Jennings, Womack, Carlson & Kniskern, Roy D. Wasson, Miami, Fla., for William Conn, James Sherard and R. Linsley.

Mershon, Sawyer, Johnston, Dunwody & Cole, Aubrey V. Kendall, Miami, Fla., for Mid-Valley, Brown & Root and Graeme R. Poke.

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

Before KRAVITCH and HATCHETT, Circuit Judges, and HANCOCK ^*, District Judge.

HANCOCK, District Judge:

This is an appeal from summary judgments in favor of defendants-appellees Brown & Root, Inc. (hereinafter Brown & Root) and one of its engineers, Graeme R. Poke (hereinafter Poke). The underlying action arose out of the October 1979 sudden collapse and failure of an embankment associated with a cooling water reservoir constructed in Martin, Florida. Mid-Valley, Inc. (hereinafter "Mid-Valley"), a wholly-owned subsidiary of Brown & Root, had contracted with Florida Power & Light Company (hereinafter FPL) for engineering design work and for resident engineering services on this cooling water reservoir. Eighteen months after the collapse of the embankment, FPL brought an action against Mid-Valley, Brown & Root, Poke (who served as Project Engineer) and a variety of other defendants. A number of theories of recovery were stated in the complaint, but as to Brown & Root and Poke the claims were premised upon their alleged negligence in the design, engineering, surveying and construction surveillance work on the reservoir. After extensive discovery by the parties, Brown & Root and Poke sought summary judgment based on a limitation of liability clause in the contract documents. The district court granted summary judgment for both Brown & Root and Poke and entered final judgments in their favor under F.R.C.P. Rule 54(b). Those judgments are here on appeal. We affirm.

Issues

1. Whether under Florida law the limitation of liability clause exculpated the Engineer from damages caused by its own negligence.

2. Whether Brown & Root or Poke can claim the benefit of the limitation of liability clause.

Effect of limitation of liability clause under Florida law

FPL entered into three contracts for separate phases of work on the Martin Reservoir project. The first phase embraced initial permit and environmental impact work; the second phase embraced engineering design work; and the third phase embraced resident engineering and survey work during construction. The contracts for the second and third phases (which are the phases involved here) were with Mid-Valley and resulted from proposals submitted by Mid-Valley and accepted by FPL purchase orders. These proposals, and the resulting contracts contained the following limitation of liability clause and indemnity agreement:

Paragraph VIII

(8) Engineer shall provide the following insurance: Workmen's Compensation-Statutory; Employer's Liability--$100,000; Comprehensive General Liability-Bodily Injury: $ 100/300,000, Property Damage--$50,000; Comprehensive Automobile Liability: Bodily Injury--$ 100/300,000 and Property Damage--$50,000. Upon written request of Owner received within five days of the acceptance hereof, Engineer will provide additional insurance, if available including increased coverage and/or limits, and the Owner will pay Engineer an agreed amount for the increased coverage. Engineer's liability to Owner for any indemnity commitments or for any damages arising in any way out of the performance of this contract is limited to such insurance coverages and amounts. In no event shall Engineer be liable for any indirect, special or consequential loss or damage arising out of the performance of services hereunder including, but not limited to, loss of use, loss of profit, or business interruption whether caused by negligence of Engineer, or otherwise, and Owner shall indemnify and hold Engineer harmless from any such damages or liability. (emphasis supplied).

University Plaza Shopping Center, Inc. v. Stewart, 272 So.2d 507 (Fla.1973), discussed the enforceability of a contract clause for indemnification under Florida law where the effect of the clause was to exculpate the indemnitee for its own negligence. ¹ A review by that court of case law from other jurisdictions revealed that in order for the indemnity contract to be construed as allowing indemnification for the indemnitee's own negligence, that intention must be expressed in clear and unequivocal terms. Id. at 509. Three variant views as to what constitutes clear and unequivocal language were found by the Florida Supreme Court. In the strictest approach, an indemnity clause indemnifying against "any and all claims" without express reference to negligent conduct is considered insufficiently "clear and unequivocal" and thus does not operate to indemnify the indemnitee against its own negligence. In the more liberal approach, the language "any and all claims" clearly covers all type claims, including negligent claims, and thus operates to indemnify the indemnitee against its own negligence. Finally, one line of cases is pragmatic and considers the language of the contract along with any other indications of the parties' intentions in determining whether the intention to indemnify the indemnitee against its own negligence was the intention of the parties. All three approaches have a common foundation, to insure that the contracting parties are alerted to the meaning of the indemnification clause. In an opinion expressly limited to injury caused by the sole negligence of the indemnitee, the Florida Supreme Court adopted the strict view, requiring an express reference to negligent conduct of the indemnitee.

FPL is familiar with this strict approach. In both Florida Power & Light Co. v. Elmore, 189 So.2d 522 (Fla.Dist.Ct.App.1966), and Nat Harrison Associates, Inc. v. Florida Power & Light Co., 162 So.2d 298 (Fla.Dist.Ct.App.), cert. denied, 166 So.2d 754 (Fla.1964) ², courts rejected FPL's attempts to enforce a contractual indemnity provision in situations where the indemnitee's negligence was the sole cause of the harm. Both courts found that the provision was not sufficiently clear and unequivocal. See also Gulf Oil Corp. v. Atlantic Coast Line Railroad Co., 196 So.2d 456 (Fla.Dist.Ct.App.1967). Where language specifically alerts the indemnitor that the indemnitee's own negligence is part of the agreement, Florida law will allow the agreement to be enforced. Thus, in Middleton v. Lomaskin, 266 So.2d 678 (Fla.Dist.Ct.App.1972), the court granted summary judgment for a landlord in a tenant's suit for personal injuries where the contractual exculpatory provision stated that the landlord shall not be liable for "any and all claims for loss, damage or injury of any nature whatsoever to person or property ... whether caused by negligent acts of the LANDLORD, its agents or servants or otherwise." Id. at 679.

In L. Luria & Sons, Inc. v. Alarmtech International Corp., 384 So.2d 947 (Fla.Dist.Ct.App.1980), the court applied a limitation of liability provision remarkably similar to that at bar. L. Luria & Sons, Inc. contracted with Alarmtech for the installation and servicing of a burglar alarm system. The contract provided an exculpatory clause.

It is agreed that Company is not an insurer and that the payments hereinbefore named are based solely upon the value of the services herein described and it is not the intention of the parties that Company assume responsibility for any loss occasioned by malfeasance or misfeasance in the performance of the services under this contract or for any loss or damage sustained through burglary, theft, robbery, fire or other cause or any liability on the part of Company by virtue of this Agreement or because of the relation hereby established. If there shall, notwithstanding the above provisions, at any time be or arise any liability on the part of Company by virtue of this Agreement or because of the relation hereby established, whether due to the negligence of Company or otherwise, such liability is and shall be limited to a sum equal to the rental service charge hereunder for a period of service not to exceed six months, which sum shall be paid and received as liquidated damages. Such liability as herein set forth is fixed as liquidated damages and not as a penalty and this liability shall be complete and exclusive. That in the event Subscriber desires Company to assume greater liability for the performance of its services hereunder, a choice is hereby given of obtaining full or limited liability by paying an additional amount under a graduated scale of rates proportioned to the responsibility, and an additional rider shall be attached to this Agreement setting forth the additional liability of Company and additional charge. That the rider and additional obligation shall in no way be interpreted to hold Company as an insurer.

Id. at 945 (emphasis supplied).

The court held that this clause totally excluded liability on the part of the burglar alarm company for damages caused by its own negligence. Id. at 948.

The contract at bar satisfies Florida's strict test applicable to cases where the...