Kemira, Inc. v. AC Compressor Corp.

• Decision Date: 18 January 1991
• Docket Number: Civ. A. No. 490-016.
• Citation: 755 F. Supp. 1059
• Parties: KEMIRA, INC. and California Union Insurance Company, Plaintiffs, v. A-C COMPRESSOR CORPORATION, Defendant.
• Court: U.S. District Court — Southern District of Georgia

755 F. Supp. 1059

KEMIRA, INC. and California Union Insurance Company, Plaintiffs, v. A-C COMPRESSOR CORPORATION, Defendant.

Civ. A. No. 490-016.

United States District Court, S.D. Georgia, Savannah Division.

January 18, 1991.

Fred S. Clark, Savannah, Ga., for plaintiffs.

R. Nathaniel Rackett, III, and Martin Kent, Savannah, Ga., for defendant.

ORDER

ALAIMO, District Judge.

In this diversity action, plaintiffs seek to recover indemnification for payments it made in a prior suit for injuries to defendant's employee. The alleged indemnification arises pursuant to a contract wherein Kemira, Inc. ("Kemira"), purchased the services of defendant's employee.

The case is presently before the Court on defendant's motion and plaintiffs' cross-motion for summary judgment on the issue of indemnification. For reasons discussed below, both motions will be DENIED.

FACTS

This case is a prime example of one calling for interpretation of the language of a contract. The facts, as follows, are relatively undisputed.

Kemira is a sulfuric acid plant located in Savannah, Georgia. On February 6, 1986, Kemira placed a purchase order with A-C Compressor Corporation, a Delaware corporation, for an "Allis Chalmers compressor field representative to assist the rebuild of acid plant blower." Apparently, the representative was to supervise the rebuilding of an acid plant compressor during a period when the plant was shut down for maintenance. The purchase order expressly requested defendant to respond to the order subject to the terms and conditions stated on the reverse side of the order.

On the reverse side of the purchase order under the heading "Terms and Conditions" is a common finalization clause. It is at the top of the page and in bold print. It states:

This document contains all terms of the parties' agreement concerning the materials or services described on the face hereof. It may not be added to, modified, or superseded except by a written instrument signed by an authorized representative of buyer Kemira. Different or additional terms or conditions in seller's A-C Compressor responses are hereby objected to and no subsequent conduct by buyer shall be deemed an acceptance hereof.

Paragraph 12 on that same page dictates the indemnification agreement, which allegedly governs this dispute. It states:

Seller A-C Compressor agrees to protect, defend, indemnify and save Buyer Kemira harmless from and against any and all expenses, claims, demands or causes of action of every kind and character arising in favor of any person, including employees of both Buyer and Seller, on account of personal injuries or death, or damages to property, arising out of, incident to, or resulting directly or indirectly from the performance by Seller hereunder.

(Emphasis added.) In addition to Paragraph 12, the agreement also provides that, if defendant's employees, subcontractors or others under its control perform services on Kemira's premises, defendant will maintain and require any subcontractors to maintain insurance for workmen's compensation, employer's liability, contractor's comprehensive general liability and automobile public liability, with minimum limits as specified. The agreement further provides that, when those persons perform services on Kemira's premises, they abide by the rules and regulations of the premises and defendant keeps the materials and premises on which the work is done free and clear of all liens for material and labor incident to the performance of defendant's services.

Responding to the purchase order, defendant provided Kemira with a field representative, James H. Garrett, who was sent to Savannah to assist in the rebuilding operation.

On February 19, 1986, while supervising the work on an acid plant compressor located in Kemira's plant, James Garrett was injured. A Kemira employee opened a manhole cover above James Garrett which caused sulfuric acid to escape and spray on him. Although a warning was shouted for everyone to run, Garrett did not begin to run until after he was doused with the acid.

On March 6, 1986, defendant sent an invoice to Kemira for the services of Garrett. The reverse side of the invoice contains a general disclaimer provision. It states:

Neither company nor its suppliers shall be liable, whether in contract or tort or under any other legal theory, for loss of use, revenue or profit, or for cost of capital or of substitute use or performance, or for incidental, indirect, or special or consequential damages, or for any other loss or cost of similar type, or for claims by Buyer for damages of Buyer's customers. Likewise, Seller shall not, under any circumstances, be liable for the fault, negligence, or wrongful acts of Buyer or Buyer's employees, or Buyer's other contractors or suppliers.

The invoice also contains a finalization clause similar to that in Kemira's purchase order.

As a result of his injuries, Garrett filed suit against Kemira on November 26, 1986, alleging that Kemira's negligence was the sole and proximate cause of his injuries. On May 19, 1989, after a trial by jury, a verdict was entered against Kemira and in favor of Garrett. The jury, in special interrogatories, attributed Kemira with 75% of the responsibility for the injuries and Garrett with 25% of the responsibility. Therefore, although final judgment was entered in the amount of $1,125,000 against Kemira, it was reduced by 25% for Garrett's negligence. The result was a final amount due of $843,750, plus court costs and with an interest rate of 9.5% per annum from May 19, 1989. Pursuant to a settlement release from all judgments, Kemira and its insurer, California Union Insurance Company, also a plaintiff in this action, made a total payment of $840,000 on June 15, 1989. Plaintiffs allegedly incurred expenses of $146,791.17 in defending the action.

Plaintiffs seek indemnification for the above costs in addition to all costs and reasonable attorney fees expended in this action. Defendant responds in its summary judgment motion with a number of contentions. First, it argues that it is not bound by the indemnity provision of the purchase order but is instead under the influence of the terms and conditions of its own March 6, 1986, invoice. Even if it is bound by the purchase order's clause, defendant continues with the argument that the clause did not explicitly indemnify Kemira for acts caused by its sole negligence. Defendant further argues that, if the provision is found to indemnify Kemira for its sole negligence, the clause is void as against public policy.

Plaintiffs counter with the allegation that the clause in the purchase order does control and does indemnify Kemira for injuries caused by its sole negligence. They further argue at this time that defendant was also negligent, because it sent Garrett to Kemira when it knew or should have known that Garrett had a prior history of respiratory ailments and that a place as dangerous as Kemira would put Garrett at an additional risk. Defendant responds that the affidavit submitted in support of this argument is technically invalid because it was based on hearsay rather than personal knowledge. Defendant adds that the allegations in the affidavit do not support a claim for defendant's negligence.

DISCUSSION

In order to succeed on a motion for summary judgment, the movant must prove that there is no genuine issue of material fact, so that a judgment can be rendered in his favor as a matter of law. Fed.R.Civ.P. 56(e); Adickes v. S.H. Kress & Co., 398 U.S. 144, 157, 90 S.Ct. 1598, 1608, 26 L.Ed.2d 142 (1970). Because the movant bears the burden of proof, the evidence and any inferences which may be drawn from it should be viewed in the light most favorable to the non-movant. Thrasher v. State Farm Fire & Casualty Co., 734 F.2d 637 (11th Cir.1984).

Pursuant to the principles of Erie, Georgia law governs this suit. Erie Railroad Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1939). Under Georgia law, the scope of a written indemnity agreement, like any other contract, is a question of law for the Court. O.C.G.A. 13-2-1; Molly Pitcher Canniger Co. v. Central of Georgia Railway Co., 149 Ga. App. 5, 253 S.E.2d 392 (1979). Under the facts of this case, it is evident that Kemira's purchase order governs the dispute. Kemira sent the purchase order to defendant, expressly stating that it represents the complete agreement of the parties. By sending Garrett to perform services under the purchase order, defendant fully accepted the order, including all of its terms and obligations. Defendant did not send the invoice for those services until after performance of the purchase order was completed. Thus, defendant's invoice cannot be controlling.

Following the above premise that Kemira's purchase order controls this dispute, two issues are presented to the Court. The first is whether the purchase order provides for indemnification for Kemira's sole negligence. If it does, then the inquiry ends there. If not, the second issue must be addressed. That issue is whether defendant was negligent in sending Garrett to Kemira to supervise the rebuilding of certain operations there. If defendant is found even partially negligent, it is required to indemnify Kemira under the terms of the purchase order.

Because the Court finds that there are issues of fact regarding the first issue— that is, whether the indemnity agreement provides solace for the indemnitee's sole negligence—the second issue will not be addressed.¹

In order for an indemnitee to be indemnified for its sole negligence under Georgia law, two requirements must be met. First, the intent to indemnify the indemnitee against its sole negligence must be expressed in plain, clear and unequivocal terms. Brown v. Seaboard Coast Line Railroad, 554 F.2d 1299 (5th Cir.1977). If it is not explicitly stated in the agreement, the indemnitor will not be held responsible for acts attributable to the indemnitee's own...