HOLCIM INC. v. The Ohio Cas. Ins. Co.

• Citation: 38 So.3d 722
• Decision Date: 13 November 2009
• Docket Number: 1080223.
• Parties: HOLCIM (US), INC., Edward J. Thierry, Jr., and Dennis R. Odom v. The OHIO CASUALTY INSURANCE COMPANY and Industrial Services of Mobile, Inc.
• Court: Supreme Court of Alabama

38 So.3d 722

HOLCIM (US), INC., Edward J. Thierry, Jr., and Dennis R. Odom

v.The OHIO CASUALTY INSURANCE COMPANY and Industrial Services of Mobile, Inc.

1080223.

Supreme Court of Alabama.

Nov. 13, 2009.

Charles M. McDaniel, Jr., and James T. Sasser of Carlock, Copeland & Stair, LLP, Atlanta, Georgia; and J. Marshall Gardner of Vickers, Riis, Murray & Curran, L.L.C., Mobile, for appellant Holcim (US), Inc.

James A. Kee, Jr., and Jon M. Hughes of Kee & Selby, LLP, Birmingham, for appellee.

SHAW, Justice.

The United States Court of Appeals for the Eleventh Circuit has certified to this Court, pursuant to Rule 18, Ala. R.App. P., two questions:

“1. Whether, under Alabama law, an indemnitee may enforce an indemnification provision and recover damages from an indemnitor resulting from the combined or concurrent fault or negligence of the indemnitee and indemnitor?

“2. Whether, under Alabama law, a court may look behind (or beyond) the pleadings (in particular, the complaint) of an underlying tort action in determining the application of an indemnification provision between an indemnitor and indemnitee?”

Facts and Procedural History

In its certification to this Court, the Eleventh Circuit Court of Appeals provided the following background information:

“[Holcim (US), Inc. (‘Holcim’),] operates a cement manufacturing plant in Theodore, Alabama. Holcim hired [Industrial Services of Mobile, Inc. (‘ISOM’) ], a general contractor in the industrial sector, to work on Holcim's ‘Raw Silos Project’ at its Theodore facility. On February 21, 2003, Holcim and ISOM entered into a contract entitled ‘Supply Agreement’ (‘Agreement’), which provided that ISOM would indemnify and hold harmless Holcim:

“ ‘from any and all claims, demands, actions, penalties, fines, losses, costs or other liabilities ... arising out of or resulting from [ISOM's] breach of warranty or performance of this agreement or any act or omission of [ISOM], whether occurring on [Holcim's] premises or elsewhere. However, [ISOM] shall have no obligation to [Holcim] to the extent such losses are attributable to the negligence or willful misconduct of [Holcim].’

“The Agreement further provided that ISOM promised to carry worker's compensation, employer's liability, and commercial general liability insurance, and to furnish Holcim with certificates ‘evidencing the existence of the aforementioned insurance naming [Holcim] as additional insured.’ Holcim's corporate counsel drafted the Agreement.

“On February 23, 2003, ISOM employee Ronald White suffered serious injuries when he fell through a hole from the second level of a silo while working on the Raw Silos Project at the Holcim cement plant.¹ On October 2, 2003, White and his wife filed suit in Alabama state court against Holcim and two of its employees [Edward J. Thierry, Jr., and Dennis R. Odom] (collectively, ‘Holcim’), alleging negligence, willfulness and wantonness, and a loss of consortium claim (the ‘ White action’). An amended complaint additionally alleged that Holcim acted negligently and/or wantonly in performing duties that it voluntarily undertook and that White was a third-party beneficiary of ISOM's and Holcim's Agreement. The Whites did not name ISOM as a defendant.²

“Holcim demanded that ISOM defend and indemnify it in the White action. ISOM's general liability carrier, First Mercury Insurance Company, appointed counsel to represent Holcim in the White action. ISOM's excess insurer, Ohio Casualty, disclaimed coverage for Holcim's demand of indemnity. On May 24, 2006, the Whites and Holcim proceeded to court-ordered mediation.

Holcim settled with the Whites for $5 million: First Mercury contributed its policy limit of $1 million; Holcim itself paid $1 million; and nonparty Great American Alliance Insurance Company, one of Holcim's excess carriers, paid $3 million. Ohio Casualty attended the mediation but ISOM did not. Neither Ohio Casualty nor ISOM contributed any funds to the settlement.

“Approximately one week before the mediation in the White action, on May 18, 2006, Ohio Casualty filed the instant declaratory judgment action in the United States District Court for the Southern District of Alabama against Holcim. Ohio Casualty sought a declaration that it had no duty to defend or indemnify Holcim in the White action under a commercial umbrella policy that Ohio Casualty issued to ISOM for the time period encompassing White's accident. Holcim filed a counterclaim against Ohio Casualty and joined ISOM, seeking to recover all or a portion of the $4 million paid in the White action.³ Holcim alleged that ISOM had breached its Agreement to indemnify and hold harmless Holcim by failing to fund the settlement of the White action. In turn, Holcim alleged that Ohio Casualty had breached its contractual obligation by failing to recognize Holcim as an additional insured and by failing to contribute to the settlement.⁴

“ISOM and Ohio Casualty moved for summary judgment on the grounds that, as a matter of law, neither is obligated to contribute any funds to the White settlement. The district court agreed and granted summary judgment. As to ISOM, relying on Alabama law requiring ‘clear and unequivocal language’ in an indemnity agreement to require an indemnitor to indemnify an indemnitee for its own negligence, the district court found that the indemnification provision ‘unequivocally states that ISOM [has] no obligation to indemnify Holcim against any losses “to the extent such losses are attributable to the negligence or willful misconduct of [Holcim].” ’ Ohio Cas. Ins. Co. v. Holcim (US) Inc., Civil Action No. 06-0317-WS-M (S.D.Ala. Sept. 24, 2007) (order granting summary judgment) (‘ Ohio Casualty ’) [not reported in F.Supp.2d]. The district court concluded that an inspection of the complaint in the White action revealed that the Whites sued Holcim for its negligence: ‘Nothing in the state-court complaint states or can reasonably be read as suggesting that the Whites sought to hold Holcim liable through some sort of pass-through or vicarious liability for ISOM's negligence or wrongdoing; rather the state court pleadings are quite clear that the Whites sought relief from Holcim for the negligent, willful, and wanton acts and omissions of Holcim itself.’ Id. Thus, the district court held that ‘it would defy logic and common sense to find that those “losses” ( i.e., the settlement payments) are attributable to anything other than [Holcim's] own wrongdoing’ and granted summary judgment in favor of ISOM. Id. As to Ohio Casualty, although the district court opined that Holcim could be deemed an ‘additional insured’ under ISOM's policy with Ohio Casualty, because it found that ISOM was not liable to Holcim, it concluded that Ohio Casualty likewise was not liable to Holcim. Id.⁵ Holcim now appeals the district court's grant of summary judgment in favor of ISOM and Ohio Casualty.

_______________

“ ¹ Throughout its brief, Holcim asserts that ISOM employees created the hole.

“ ² As discussed infra, ISOM makes much of the fact that the Whites only sued Holcim for its own negligence. The district court, however, noted that the exclusivity of Alabama worker's compensation law would have barred any claim(s) made by the Whites against ISOM, hence explaining why the Whites did not name ISOM as a defendant.

“ ³ Holcim represented in its counterclaim that its excess insurer authorized it to seek the recovery of the entire amount paid in the White action.

“ ⁴ Holcim also alleged a common law indemnity claim against ISOM. Holcim, however, did not pursue that claim on appeal.

“ ⁵ The district court declined to determine whether Holcim's claims were barred by Ohio Casualty's ‘Cross Suits Exclusion’ clause. Id. at n. 23.”

Ohio Cas. Ins. Co. v. Holcim (US), Inc., 548 F.3d 1352, 1353-56 (11th Cir.2008).

Discussion

I. Indemnification

Holcim and ISOM argued before the Eleventh Circuit Court of Appeals different meanings for the language of the underlying indemnity provision in the supply agreement between ISOM and Holcim: “Holcim frames the ‘threshold issue’ as ‘whether the indemnity language provides indemnification for the combined negligence of Holcim and ISOM, whereby ISOM owes Holcim indemnification for ISOM's actions in causing the damages suffered by White, even though Holcim may also have been negligent.’ ” 548 F.3d at 1356. The court further noted that Holcim argued “that ‘to the extent’ is unambiguous in that it provides for an allocation of responsibility between ISOM and Holcim where the loss resulted from the combined negligence of the parties.” Id. The court noted that “ISOM disagrees, responding that the indemnity provision does not ‘specifically direct the parties to undertake such an allocation, nor does it provide a manner or method for doing so.’ ” Id. The court then stated that “each party's interpretation of the indemnification provision is reasonably plausible” and, thus, held that the indemnity provision was ambiguous, but it also stated:

“[I]f we construe the ambiguity in favor of Holcim's reading, it is unclear whether Alabama law allows recovery under a comparative fault or negligence theory within a contractual indemnity provision.... Because we find no controlling precedent on point under Alabama law and because the resolution of this appeal hinges on this unsettled aspect of Alabama law, we certify this issue to the Alabama Supreme Court.”

548 F.3d at 1357-58. The Eleventh Circuit Court of Appeals thus certified its first question: “Whether, under Alabama law, an indemnitee may enforce an indemnification provision and recover damages from an indemnitor resulting from the combined or concurrent fault or negligence of the indemnitee and indemnitor?”

The certification order appears to contemplate broader issues than the issue stated in the certified question as necessary for the Eleventh Circuit's resolution of this case. The Eleventh Circuit has previously noted that the “ ...