Helm v. Western Maryland Ry. Co.

Decision Date03 February 1988
Docket NumberNo. 87-1088,87-1088
PartiesRoy W. HELM, III, Plaintiff, v. WESTERN MARYLAND RAILWAY COMPANY, a body corporate, Defendant-Appellant, v. The COUNTY COMMISSIONERS OF CARROLL COUNTY, Third Party Defendant-Appellee.
CourtU.S. Court of Appeals — Fourth Circuit

Ransom J. Davis (H. Russell Smouse, Kenneth D. Pack; Melnicove, Kaufman, Weiner, Smouse & Garbis, P.A., John P. Higinbothom, Baltimore, Md., on brief), for defendant-appellant.

Lee Baylin (George A. Nilson, Piper & Marbury, Baltimore, Md., Charles W. Thompson, Jr., Westminster, Md., on brief), for third party defendant-appellee.

Before MURNAGHAN and ERVIN, Circuit Judges, and BUTZNER, Senior circuit judge.

MURNAGHAN, Circuit Judge:

Having settled the claim of its injured employee, and upon losing in the district court on summary judgment, the Western Maryland Railway Company ("Railroad") comes to this Court seeking reimbursement through the enforcement of the indemnity clause in a contract granting Carroll County, Maryland the privilege of constructing a box culvert on part of the Railroad's right of way. The district court found the indemnity agreement void under a Maryland statute barring the enforcement of agreements in or relating to construction contracts that purport to indemnify a promisee for injuries resulting from the promisee's sole negligence. See Md.Cts. & Jud.Proc. Code Ann. Sec. 5-305 (1984). The question on appeal is whether the district court correctly found that Sec. 5-305 applies to the licensing agreement between the Railroad and the County, and if so whether the district court correctly found that there was no genuine issue of material fact and that the Railroad was solely negligent.

In 1980, there was severe flooding outside Westminster, Maryland, where Hahn Road crosses a right-of-way owned by the Railroad. Hurricane Agnes had previously washed out the tracks; the Railroad had abandoned that section of tract instead of repairing it. In 1980, the Mayor of Westminster began to negotiate with the Railroad to obtain rights to enter the Railroad's right-of-way in order to improve drainage in the area; because the site was outside the city, Carroll County took over the negotiations. Carroll County wanted to put a box culvert under Hahn Road, and needed to have some railroad track and line poles removed.

On August 1, 1982, Carroll County executed the Railroad's standard license agreement; the agreement was sent to the Railroad, with the required $400 payment to defray the Railroad's costs, on October 5, 1982. The Railroad refused to waive the fee because it found it would receive "little, if any, benefit" from the project. Under the agreement, the County also agreed to reimburse the Railroad for any expenses incurred in performing any work related to the County's project, including labor, materials, supervision, and employee-related taxes.

The license agreement contained an indemnity clause under which the Licensee (Carroll County) agreed to indemnify the Licensor (Railroad) against all loss and damage to any property and "on account of injury to or death of any person whomsoever (including employees and patrons of the parties hereto and all other persons whomsoever)," and

all claims and liability for such loss and damage and cost and expenses thereof, caused by or growing out of the operation of this agreement or the presence, construction, maintenance, use, repair, change or relocation and subsequent removal of said facilities, or any part thereof, whether caused by the fault, failure or negligence of Licensor or otherwise.

The agreement also provided that the Railroad's approval or supervision of work or its failure to object to any work done was not to be construed as an admission of responsibility or a waiver of the County's obligations.

In early October, 1982, construction of the box culvert began pursuant to an agreement between Carroll County and the Hanover Construction Company ("Hanover"). That agreement included provisos that the Railroad (which was not a party) was to remove tracks and ties, and remove or relocate signal poles and other items "within the project limits as shown on the plans, or as directed by the engineer, at no cost to the contractor." The agreement also specified, "the railroad requires at least ten (10) days notice prior to beginning their work on this project. It will be the Contractor's responsibility to notify the railroad and coordinate his work with that of the railroad."

On October 25, 1982, Hanover's project engineer discussed the need to remove tracks, ties and signal poles from the work area with a Railroad official. The conversation was followed up by two letters asking the Railroad to do its work, on November 24 and December 13. In the first letter, Hanover asked to be called to coordinate the work. In the second letter, Hanover notified the Railroad that it had temporarily stopped work on the project because the Railroad's equipment had not yet been removed, again asking to be notified when the Railroad intended to start work.

On January 13, 1983, the Railroad sent a signal and maintenance crew (including Roy Helm, whose suit for injuries sustained was a prelude to the present litigation) to remove poles carrying signal lines from the worksite. The Railroad did not inform Hanover. No Hanover employee was present, but the County's project engineer was there and encountered two Railroad employees at 8:45 a.m. The County engineer offered to show them plans of the work and discuss the project, but his offer was refused. The County engineer also testified that he informed the employees they were working on a pole outside the work area. The workers did not have plans of the project, but there was a stake in the ground marking the boundary of the project site.

Roy Helm was severely injured when the utility pole he was working on (tying off wires) broke and fell on top of him. The pole he was on was outside the designated work area. The Railroad argued below that Helm's presence on that pole was necessary to do the County's work because the lines had to be tied off once the poles were removed from the work area.

Roy Helm filed suit in federal district court against the Railroad under the Federal Employers' Liability Act ("FELA"), 45 U.S.C. Secs. 51-60. Helm later settled his claim with the Railroad, and thus is not now a party to the appeal. The Railroad joined the County as a third-party defendant on the strength of the indemnity clause in the license agreement. The district court granted the County's motion for summary judgment on the third party claim, finding that the indemnity agreement was void and unenforceable under Maryland law. The district judge ruled that Sec. 5-305 of the Courts and Judicial Proceedings portion of the Maryland Code, barring certain indemnity agreements associated with construction, applied to the indemnity provision at issue; he then found there was no genuine issue of material fact regarding negligence, and that the Railroad was solely negligent, so the indemnity agreement was rendered void by Sec. 5-305. 1 The Railroad has appealed the grant of summary judgment.

I.

On appeal, the Railroad argues that Sec. 5-305 does not apply to railroad licenses, relying on a recent decision of this Circuit that was handed down after the district court's decision. See Brown v. Baltimore & Ohio Railroad, 805 F.2d 1133 (4th Cir.1986). While the Fourth Circuit panel found that Sec. 5-305 did not apply to the railroad license agreement in Brown, we do not find Brown controlling here.

Section 5-305 prohibits agreements "in, or in connection with or collateral to, a contract or agreement relating to the construction, alteration, repair, or maintenance of a building, structure, appurtenance or appliance, including moving, demolition and excavating connected with it" that indemnify the promisee for damages resulting from the promisee's sole negligence. Md.Cts. & Jud.Proc. Code Ann. Sec. 5-305 (1984). The statute specifies that such an agreement "is against public policy and is void and unenforceable." Id. On the strength of that phrase, the Maryland Court of Appeals has applied the statute to bar enforcement of an indemnity clause contained in a construction contract executed in Pennsylvania. Bethlehem Steel Corp. v. G.C. Zarnas & Co., 304 Md. 183, 498 A.2d 605 (1985).

The key issue is whether the railroad licensing agreement here constitutes a construction agreement covered by Sec. 5-305. In Brown v. Baltimore & Ohio Railroad, 805 F.2d 1133 (4th Cir.1986), this Court found that the statute did not apply to the railroad licensing agreement at issue. The facts in Brown are initially similar to those in the instant case. In Brown, the railroad agreed to allow Baltimore County to install a sewer line beneath its railroad tracks, and executed an agreement permitting the county to install, operate and maintain sewer pipe in a particular area. The county paid $500 for the agreement, which provided that the county would indemnify the railroad against any loss or liability arising out of or connected with the sewer crossing project, regardless of whether the loss was caused by the railroad's negligence. Id. at 1135-36. Baltimore County contracted with a construction firm to do the work. A big earthmover owned by that construction firm was put on the tracks by unknown third persons, and a railroad employee was injured when the train he was riding hit the earthmover. The injured employee sued the railroad under the FELA, and the railroad asserted a third-party claim against the county based on the indemnity clause in the license agreement. Considering the applicability of Sec. 5-305, the Fourth Circuit panel held that "the statute was not intended to apply to licensors or easement grantors such as the B & O who enter into railroad crossing indemnity agreements of this type." Id. at 1141. Instead, the Court found, "[t]he obvious...

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