Illinois Cent. Gulf R. Co. v. Deaton, Inc.

• Decision Date: 30 April 1991
• Docket Number: No. 90-CA-1651,90-CA-1651
• Citation: 581 So.2d 714
• Parties: ILLINOIS CENTRAL GULF RAILROAD COMPANY v. DEATON, INC., et al. 581 So.2d 714
• Court: Court of Appeal of Louisiana — District of US

Page 714

581 So.2d 714

ILLINOIS CENTRAL GULF RAILROAD COMPANY v. DEATON, INC., et al.

No. 90-CA-1651.

581 So.2d 714

Court of Appeal of Louisiana, Fourth Circuit.

April 30, 1991.

Rehearing Denied July 17, 1991.

David S. Kelly, Bryan C. Misshore, Lemle & Kelleher, New Orleans, for plaintiff, appellee.

Francis G. Weller, Deutsch, Kerrigan & Stiles, New Orleans, for defendants, appellants.

Before GARRISON, ARMSTRONG and PLOTKIN, JJ.

PLOTKIN, Judge.

On May 22, 1986, a tractor-trailer, owned by Deaton, Inc., and driven by Deaton's employee, James McAtee, approached a railroad crossing in LaPlace, Louisiana. An Illinois Central (IC) train, consisting of two locomotives, was approaching the same crossing. The train was giving its required whistle and the crossing signal lights were flashing. The tractor-trailer attempted to cross in front of the train, and was hit by the train. The trailer was loaded with steel beams, which flew into the air, damaging the locomotives and the crossing signal system. An IC conductor, Darrell T. Prescott, was riding in the second locomotive. He jumped away from the window to avoid the steel beams, fell on a cooler bolted to the floor in the middle of the cab, and injured his knee.

Prescott was treated by Dr. Regan, who later referred him to Dr. Joe Morgan, an orthopedist in Baton Rouge. Dr. Morgan diagnosed the knee problem as chondromalacia. He performed arthroscopic surgery. Dr. Morgan stated that Prescott would not be able to return to work on the railroad. Prescott has not, in fact, worked for the railroad since the accident.

IC feared that Prescott might bring an action against them under F.E.L.A., which required proof only of the slightest negligence. 45 U.S.C.A. Sec. 51 et seq. IC settled with Prescott on December 19, 1986, for $108,944.50 in general damages. Prescott released all the claims he had against all parties, including both IC and Deaton. At the time, Prescott had not hired an attorney or filed any action.

IC then filed this action against Deaton for property damage to its locomotives ($5,948.58) and signal equipment ($17,834.02), the medical expenses of Prescott ($6,126), and the general damage settlement it had paid to Prescott ($108,944.50).

After trial on the issue of fault, judgment was rendered on March 22, 1990, finding Deaton 100% negligent, and awarding the total damages prayed to IC on the basis of the principle of negotiorum gestio. Deaton filed a motion for a new trial which was denied on May 3, 1990. This judgment found that the theory of negotiorum gestio could not be sustained, but reaffirmed the judgment on the basis of equity, unjust enrichment, and a finding that IC had intended to reserve its rights in the release, despite its "inarticulate language." Deaton does not contest the awards for property damage or medical expenses, which it has voluntarily paid. It has appealed only on the issue of the general damage award.

The issue on appeal is whether IC had any legal or equitable right to indemnity from Deaton after it paid the general damage settlement to Prescott.

Deaton contends that under the express language of the release, Prescott surrendered all claims arising out of this accident against all parties, including Deaton. The release states as follows:

[T]he undersigned DOES FURTHER HEREBY FULLY, COMPLETELY AND FOREVER RELEASE, ACQUIT, REMISE AND DISCHARGE DEATON, INC., THE INSURANCE COMPANY OF PENNSYLVANIA, JAMES W. McATEE, BAYOU STEEL, INC., AND ANY AND ALL OTHER PERSONS OR ENTITIES, WHETHER KNOWN, UNKNOWN, IDENTIFIED OR UNIDENTIFIED, FROM AND AGAINST ANY AND ALL CLAIMS, DEMANDS, ACTIONS, CAUSES OF ACTION AND DAMAGES WHATSOEVER, whether arising under any law whatsoever, statutory or jurisprudential, arising out of, on account of or in consequence of a train/truck collision that occurred on or about the 22nd day of May, 1986 ...

THIS IS NOT A PARTIAL RELEASE AND THE UNDERSIGNED UNDERSTANDS THAT NO CLAIMS ARE RESERVED AND ALL RESPONSIBLE PARTIES AND ENTITIES ARE RELEASED in consideration of the aforesaid payment by the Illinois Central Gulf Railroad Company.

. . . . .

[A]nd that such consideration was tendered by the said Railroad Company and received by the undersigned as a compromise, transaction and settlement of a disputed claim and additionally to vest in the said Railroad by conventional and legal subrogation all of the undersigned's claims, rights, actions and causes of action against all other persons or entities liable or responsible for the May 22, 1986 incident and the undersigned's consequent injuries.

Release, at 1-2, and 5 (emphasis in original).

IC can only subrogate itself to rights which exist in the party plaintiff. According to the language of the release, Prescott gave up all rights, including those against Deaton, in consideration for the payment by IC. Therefore, Prescott no longer had any rights to which IC could subrogate itself. Absent a contractual basis, IC has no right in law to indemnification by Deaton. Smith v. USAA Cas. Ins. Co., 563 So.2d 572, 574 (La.App. 4 Cir.), writ denied, 568 So.2d 1077 (1990).

IC contends that it and Deaton were solidary obligors. IC rendered the entire performance and is subrogated to the rights of the obligee. Therefore, IC claims that it may seek contribution from Deaton for its virile share of the obligation. Since the trial court found Deaton 100% at fault, that share would be the entire damage award. LSA-C.C. art. 1804.

On the contrary, "the release of one solidary obligor without an express reservation of the right to proceed against other solidary obligors releases all other obligors. La.C.C. art. 2203." The attempted subrogation "was without legal effect because the rights acquired by a subrogee and/or assignee can be no more (and no less) than the rights of the original parties." U.S. Fidelity & Guar. Co. v. Safeco Ins. Co., 420 So.2d 484, 487 (La.App. 1 Cir.1982). In this case, the original party, Prescott, no longer had any rights.

The original petition of IC alleges that Deaton was completely at fault and asks for indemnity. If IC never had any fault, and Deaton was totally at fault, then IC and Deaton were not solidary obligors. LSA-C.C. arts. 1791 and 1794. Indemnity is to be distinguished from contribution. Contribution applies to joint tortfeasors who are solidarily obligated for the same obligation. IC was found not to be a joint tortfeasor and therefore has no right to contribution.

The jurisprudence shows that the source of contribution is subrogation. Perkins v. Scaffolding Rental and Erection Service, Inc., 568 So.2d 549, 551 (La.1990); LeBleu v. So. Silica of Louisiana, 554 So.2d 852, 857 (La.App. 3 Cir.1989), writ denied, 559 So.2d 489-91 (1990). When a plaintiff has released a party, that party is no longer an obligor to the plaintiff. Thus neither the plaintiff nor anyone seeking to stand in the shoes of the plaintiff through subrogation can have a cause of action against the released party. Perkins, 568 So.2d at 551. In Louisiana law, subrogation takes place by operation of law in favor of an obligor who pays a debt owed to another and who has recourse against the other as a result of that payment. LeBleu, 554 So.2d at 857. In this case, IC did not actually owe any debt to Prescott. Therefore it had no right to legal subrogation. Deaton was not an obligor after Prescott released it from all claims. Thus IC has no right of subrogation against Deaton.

"Indemnity shifts the entire loss from a tortfeasor only technically or constructively at fault to one primarily responsible for the act that caused the damage." Casson v. Hartford Fire Ins., 548 So.2d 66, 70 (La.App. 3 Cir.1989), quoting Green v. Taca International Airlines, 304 So.2d 357 (La.1974).

Indemnity, unlike contribution, is not dependent upon subrogation to the right of the creditor, but finds its basis in the concept of unjust enrichment, i.e. the party primarily at fault is unjustly enriched when one held liable vicariouly or by reason of technical fault discharges the indebtedness.

Casson, 548 So.2d at 70.

"The root principle of an unjustified enrichment is that the plaintiff suffers an economic detriment for which he should not be responsible, while the defendant receives an economic benefit for which he has not paid." Albert Tate, Jr., The Louisiana Action for Unjustified Enrichment: A Study in Judicial Process, 51 Tul.L.Rev. 446, 459 (1977).

Indemnity is due when fairness requires that one person bear the total responsibility for an injury. The basis for indemnity in the civil law, as in the common law, is restitution, the indemnitor having been unjustly enriched when the person seeking indemnity has discharged liability that was his responsibility.

Diggs v. Hood, 772 F.2d 190, 193 (5th Cir.1985).

The civil law has employed the actio de in rem verso to grant relief for unjust enrichment. Minyard v. Curtis Products, Inc., 251 La. 624, 205 So.2d 422, 427 (1967). The actio de in rem verso originated in the Roman law concept of condictio indebiti, an action which lay for the recovery of payments of non-existent debts. Barry Nicholas, Unjustified Enrichment in the Civil Law and Louisiana Law, 36 Tul.L.Rev. 604, 613 (1962).

The concept is developed in Louisiana law in the section of the Civil Code on quasi contracts. LSA-C.C. arts. 2292-2314. The principles of quasi contract may be applicable when two parties are liable for an injury, one because of fault or negligence, the other merely because of statutory requirements or duty, but without actual fault. When the latter pays compensation for the injury, it may sue the actual tortfeasor for indemnity on the theory of quasi contract. Minyard, 205 So.2d at 430.

The two primary sources of quasi contractual obligations are (1) the transaction of another's business (negotiorum gestio ) and (2) the payment of a thing not due (actio de in rem verso ). LSA-C.C. art. 2294.

IC contends that it should receive indemnity under the...