McDaniel v. Anheuser-Busch, Inc.

• Decision Date: 01 April 1993
• Docket Number: ANHEUSER-BUSC,No. 91-6313,INC,91-6313
• Citation: 987 F.2d 298
• Parties: Harold S. McDANIEL, Plaintiff, v., Defendant, Third Party Appellant, v. FORCE CORPORATION, Defendant, Third Party Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 298

987 F.2d 298

25 Fed.R.Serv.3d 1025

Harold S. McDANIEL, Plaintiff, v. ANHEUSER-BUSCH, INC., Defendant, Third Party Appellant, v. FORCE CORPORATION, Defendant, Third Party Appellee.

No. 91-6313.

United States Court of Appeals Fifth Circuit.

April 1, 1993.

Michael C. Falick, William J. Collins, III, Houston, TX, for defendant, third party appellant.

James L. Gascoyne, Houston, TX, for defendant, third party appellee.

Appeal from the United States District Court for the Southern District of Texas.

Before JONES and WIENER, Circuit Judges, and WALTER, ^* District Judge.

WIENER, Circuit Judge:

This Texas diversity case involves the interpretation of a unique indemnification provision and the application of the deemed finding and waiver provisions of Rules 49 and 51 in the context of separate trials granted under Rule 42(b). ¹ The district court granted summary judgment for Defendant-Appellee Force Corporation (Force), holding that, under the terms of the indemnity clause, Force could only be required to indemnify Plaintiff-Appellant Anheuser-Busch, Inc. (Anheuser) for claims and suits for death, bodily injury, or property damage caused by Force's acts or omissions; and that as there had been a finding that the injured claimant here was the 100% cause of his own injuries there could be no finding of causation against Force. Perceiving no reversible error by the district court, we affirm.

I FACTS

Harold McDaniel was injured while attempting to operate railroad track switch # 23 in a Houston, Texas railyard owned by Anheuser. At the time of his injury, he was employed by Missouri Pacific Railroad d/b/a Union Pacific Railroad Company (the Railroad). In a single district court action, McDaniel sued the Railroad in strict liability under FELA, and sued Anheuser in diversity for negligence. Anheuser subsequently brought a third party action against Force seeking commonlaw contribution and indemnity as well as contractual indemnity. ² McDaniel never amended his complaint to implead Force as a co-defendant to his tort claim.

Apparently Force had performed services for Anheuser relating to the design, construction, and maintenance of the railyard where McDaniel was injured, including switch # 23. Anheuser's contractual indemnity claim against Force was based on an indemnification provision in a contract covering railyard services provided by Force. ³

Prior to trial, Force moved for severance or separate trial of the contractual indemnity issue. This motion did not address the common law indemnity or contribution issues. Anheuser agreed to this motion and it was granted, with Force remaining a party in the trial of McDaniel's claim, on the issue of contribution. ⁴

McDaniel's suit was submitted to the jury on interrogatories using a special verdict form, pursuant to Rule 49(a). The jury found that Anheuser's alleged negligence did not proximately cause McDaniel's injuries. The jury further found that McDaniel's injuries were caused 100% by his own negligence, and that neither Anheuser nor the Railroad contributed any percentage to the causation of McDaniel's injuries. The After its total victory against McDaniel, Anheuser pursued its third party contractual claim for indemnification against Force under the disputed indemnity clause, seeking to recover all costs of defending McDaniel's suit, the majority of which comprised attorney's fees. On motion by Force, the district court granted summary judgment for Force, dismissing Anheuser's indemnity claims. The court held that Anheuser was not entitled to indemnification because the disputed clause required Force to indemnify Anheuser only for claims or suits seeking recovery for injuries caused by an act or omission of Force, a possibility precluded when the McDaniel jury found that McDaniel was the sole cause of his injuries. ⁵

                special verdict was structured so that the jury would only be allowed to consider Force as a cause of the injury if it first found that Anheuser was at least a partial cause of the injury.   As the jury attributed 100% of the causation to McDaniel vis a vis Anheuser and the Railroad, it never reached the questions relating to Force.   The district court entered a take-nothing judgment against McDaniel.   As a result, Anheuser's commonlaw contribution claim against Force evaporated.   Neither the court nor any of the parties ever mentioned commonlaw indemnity again so we assume that it too evaporated with the take-nothing judgment
                

II ANALYSIS

A. Standard of Review

The grant of a motion for summary judgment is reviewed de novo, using the same criteria employed by the district court. ⁶ This court must "review the evidence and inferences to be drawn therefrom in the light most favorable to the nonmoving party." ⁷ A motion for summary judgment shall be granted "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." ⁸ Summary judgment is appropriate when there is no genuine issue of material fact and only a question of law is presented. ⁹

B. The Indemnity Clause Language

Anheuser alleges that its relationship with Force is governed at least in part by the disputed indemnity clause. Force counters that even if the clause in issue were part of a contract between Force and Anheuser (which Force vigorously denies), and even if that clause were effective here, it would not require Force to reimburse Anheuser for its costs and legal fees incurred in defending McDaniel's suit. Assuming without so deciding that this indemnity provision did govern the relationship between Anheuser and Force, we begin our analysis by examining the language of that clause:

The contractor hereby agrees to indemnify and hold harmless Anheuser-Busch Companies, Inc. its subsidiaries and affiliated companies (hereinafter referred to as "ABC") from all claims and suits by the parties and third parties for damages The determination of whether a contract is ambiguous is one of law. ¹¹ This is not a standard indemnity clause by any means; it is unique and was tailor-made by Anheuser for its own use. Still it is not ambiguous. In the lexicon of indemnification, the instant provision is properly classified as a limited indemnity clause in that it does not require Force to defend Anheuser against claims and suits; neither does it require Force to indemnify Anheuser for the costs it incurs in defense of baseless claims. "Cause" is an operative, limiting term in this indemnity provision; it requires Force to pay all costs and expenses incurred by Anheuser in defending claims and suits for injuries if--but only if--such injuries are actually caused by an act or omission of Force.

to property and injuries, including death to persons, including but not limited to, Contractor or any subcontractor and their respective agents, servants and employees, if any such event of damage or injury shall occur during or incident to the performance of work required under the terms of this Contract, and from all judgments recovered therefor, and from all expenses in defending said claims and suits, including court costs, attorneys' fees and other expenses, caused by the act or omission of the Contractor or any subcontractor or their respective servants, agents and employees, and not by the sole fault or negligence of ABC, its servants, agents or employees. ¹⁰

A careful parsing of the subject clause confirms that conclusion. Such an examination begins with the indemnity clause's general identification of that for which Anheuser is to be indemnified: claims and suits by the parties and third parties. Next, the clause limits the claims and suits covered to those for damages to property and injuries to persons. Skipping over the language that limits the claims to those, such as here, with a nexus to the work covered by the contract of which the clause ia a part, we encounter a list of the elements of the claims and suits for which Anheuser is to be indemnified: judgments recovered therefor, and all expenses of defending the claims and suits.

At this point in our dissection of the clause, we encounter--albeit somewhat attenuated due to the archaic, run-on drafting techniques employed--the words "caused by the act or omission of [Force]." Force's causation applies to that for which it must indemnify Anheuser: claims and suits, all judgments recovered on such claims and suits, and all costs and expenses of defending such claims and suits. ¹² But which claims and suits? Those for personal injury and property damage. Beyond peradventure, then, that which must be "caused by" the act or omission of Force are those very same injuries and damages.

Conversely, as the suits and claims are first defined as those "by the parties and third parties," "caused by" could never be read to modify "claims and suits." The assertion of a claim or suit "by" Anheuser or a third party could not be "caused by" In effect, Anheuser itself recognized the causality requirement in its pleadings. In its First Amended Third Party Action Against Force Corporation, Anheuser describes the indemnity clause as "an indemnification agreement whereby FORCE agrees to indemnify and hold harmless BUSCH from all claims and suits and from all judgments recovered therefore, and from all expenses (including court costs and attorney's fees) caused by the act or omission of Force." More obtusely, but no less certainly, this allegation confirms that indemnity lies only if it relates to injuries and damages caused by Force. Clearly, a baseless claim (as McDaniel's turned out to be) alleging fault regarding Switch # 23 cannot be said to have been caused by Force or anyone else but McDaniel. It is the injury, not the claim or suit, which must be caused by Force to trigger indemnification under this unique, limited clause.

an act or omission of Force...