Penn Central Corp. v. Checker Cab Co.

• Decision Date: 14 May 1980
• Docket Number: Civ. A. No. 79-70344.
• Citation: 488 F. Supp. 1225
• Parties: PENN CENTRAL CORPORATION, a Pennsylvania Corporation, Plaintiff, v. CHECKER CAB COMPANY, a Michigan Corporation; Charles P. Lightfoot and Lawrence Whitlock, jointly and severally, Defendants.
• Court: U.S. District Court — Western District of Michigan

488 F. Supp. 1225

PENN CENTRAL CORPORATION, a Pennsylvania Corporation, Plaintiff, v. CHECKER CAB COMPANY, a Michigan Corporation; Charles P. Lightfoot and Lawrence Whitlock, jointly and severally, Defendants.

Civ. A. No. 79-70344.

United States District Court, E. D. Michigan, S. D.

May 14, 1980.

T. Patrick Durkin, Detroit, Mich., for plaintiff.

Richard L. Braun, II, Detroit, Mich., John J. Schrot, Jr., Birmingham, Mich., for defendants.

MEMORANDUM OPINION AND ORDER

JOINER, District Judge.

This case is before the court on defendants' motion for summary judgment. On May 2, 1980, this court heard oral arguments on this motion and made an oral ruling denying defendants' motion. This memorandum opinion sets forth the reasoning of that ruling.

FACTS

On January 30, 1976, three employees of plaintiff Penn Central Corporation were passengers of a cab operated as a Checker Cab, driven by defendant Lawrence Whitlock, and owned by defendant Charles Lightfoot. According to plaintiff, cab transportation was arranged for the employees so that they could get from a railroad yard in Detroit to one in Monroe. During the course of the trip, the cab collided with a tractor-trailer and all three employees sustained injuries.

The injured employees made claims against plaintiff for compensation for their injuries. Plaintiff settled these claims on September 26, 1977, and on April 17, 1978. In consideration for settlement amounts paid, the employees executed general releases of all claims arising out of the accident. Specifically named in the releases were plaintiff, defendants Checker Cab and Lawrence Whitlock, and all other parties in interest.

On February 7, 1979, plaintiff instituted this action against defendants seeking indemnification for amounts paid in settlement and for the expenses incurred in defending its employees' claims. Plaintiff alleges that defendant Whitlock breached certain duties owed to it and its employees by causing or allowing the cab to collide with the tractor-trailer. The liability of defendant Checker Cab is predicated on the breach of its duties to hire competent drivers, inspect mechanical parts of the cab, and to instruct its drivers as to highway regulations and statutes. Plaintiff alleges that as a result of these two defendants' negligence its employees were injured. The liability of defendant Lightfoot is predicated solely on M.C.L.A. § 257.401, the civil liability statute making owners of cars liable for injuries sustained due to the negligent operation of the car by a third party with the owner's consent.

Plaintiff's theory of recovery in this case is based on two assertions. First, plaintiff claims that it was legally liable for its employees' injuries under the Federal Employers Liability Act, 45 U.S.C. § 51 et seq., and the cases construing that Act. Second, plaintiff asserts that it is entitled to indemnification from defendants because as between the plaintiff and the defendants, defendants were "actively" negligent in causing the injury to the plaintiff's employees, while plaintiff was liable to the employees merely as a "passive" wrongdoer. Plaintiff's claim for indemnity rests on Michigan law.

Defendants' motion for summary judgment asserts three general and independent grounds for a ruling that they are not liable to plaintiff. First, defendants assert that plaintiff is not entitled to indemnification under Michigan law because (a) there was no contract of indemnity between plaintiff and defendants; (b) defendants are independent contractors and not agents of plaintiff; and (c) plaintiff, by breaching its nondelegable duty to its employees to provide a safe place to work, is not entitled to indemnity under Michigan law. Second, defendants assert that plaintiff's suit is barred by the statute of limitations. Finally, defendants assert that any recovery granted to plaintiff must be limited by the provisions of Michigan's No-Fault Act.

Defendant does not appear to contest plaintiff's assertion that plaintiff was liable to its employees for the injuries sustained in the cab accident. For the purposes of this motion, therefore, the court will assume that plaintiff was so liable. It is useful, however, to examine the legal basis for this liability, as it aids in putting the issues presented by defendants' motion in perspective.

Liability of a railroad to its employees extends to injuries sustained in the course of the employer's operational activities. It has been held that an employer may be liable under the provisions of the Federal Employer's Liability Act for torts committed by an independent contractor, so long as the contractor is performing work which constitutes an operational activity of the employer. Such a contractor is, in the words of the Supreme Court, an "agent" of the employer within the meaning of 45 U.S.C. § 51. Sinkler v. Missouri Pacific R. Co., 356 U.S. 326, 78 S.Ct. 758, 2 L.Ed.2d 799 (1958). The concept of "operational activity" was again applied in Hopson v. Texaco, Inc., 383 U.S. 262, 86 S.Ct. 765, 15 L.Ed.2d 740 (1962). There it was held that the employer's use of cab transportation for its employees constituted part of its operational activity, rendering the employer liable for injuries sustained by the employees in an accident involving the cab in which they were passengers. Leek v. Baltimore & Ohio R. Co., 200 F.Supp. 368 (N.D.W.Va.1962).

Thus, it is clear that where a railroad utilizes cab services to transport its employees, these services can constitute an operational activity of the railroad, thus rendering the railroad liable for injuries sustained by the employees in the course of the cab transportation.

While the railroad's liability to its employees is governed by F.E.L.A., its ability to recover its losses by way of indemnification is governed by state law. Eades v. Union Railway Co., 396 F.2d 798 (6th Cir. 1968), cert. denied 393 U.S. 1020, 89 S.Ct. 262, 21 L.Ed.2d 564 (1969), Am. Employers' Ins. Co. v. Yellow Cab Co., 49 Ill.App.3d 275, 7 Ill.Dec. 657, 364 N.E.2d 948 (1977). Thus the merits of defendants' contentions regarding the availability of indemnification, the statute of limitations, and the effect of the No-Fault Act must all be tested under Michigan law.

INDEMNIFICATION

Defendants argue that plaintiff is not entitled to indemnity under Michigan law because they were independent contractors and not agents of plaintiff, and because no contract of indemnity, express or implied, was entered into between the parties. The law in Michigan is clear, however, that neither agency nor contract is required to be established in order to state a viable claim for indemnification. Dale v. Whiteman, 388 Mich. 698, 202 N.W.2d 797 (1972).

In Dale, the Michigan Supreme Court expressly recognized a cause of action for indemnification in the absence of a contract of indemnity. The court noted that indemnity has, in the past, been granted due to a special relationship between the indemnitee and indemnitor, such as a bailment. Such a relationship is not required, however, as Dale makes clear.

There are a number of cases in which the right to be indemnified is based upon the theory that the party entitled to indemnification was a "passive" tort feasor as opposed to the "active" tort of some other party. Id. at 705, 202 N.W.2d at 800.

Under Michigan law, the party seeking indemnity must prove freedom from personal fault, and this has been interpreted to mean that the person seeking indemnity must be free of active or causal negligence. Provencal v. Parker, 66 Mich.App. 431, 436, 239 N.E.2d 623 (1976), and the cases cited therein. Thus, where liability arises solely by operation of law, such as in Dale, the liable party may seek indemnification from the party whose wrongdoing caused the primary injury.

Defendants argue that plaintiff is not entitled to indemnification because plaintiff breached its nondelegable duty to its employees to provide a safe place to work. Defendants refer to the provisions of 45 U.S.C. § 51, and state that plaintiff could not possibly have been liable to its employees unless it was negligent:

Every common carrier by railroad . . shall be liable in damages . . . for such injury or death resulting in whole or in part from the negligence of any of the officers, agents, or employees of such carrier . . ..

Defendants then argue that because negligence is a prerequisite to F.E.L.A. liability, and because a negligent plaintiff is not entitled to indemnity under Michigan law, defendants are entitled to summary judgment as a matter of law.

This "Catch-22" into which defendants attempt to insert plaintiff's legal theory of recovery lacks a logical basis. As noted above, a railroad's liability under F.E. L.A. is governed by federal law, while the right to indemnification is governed by state law. While the presence or absence of negligence on the part of the railroad is essential to various aspects of plaintiff's legal theory, the concept of negligence is not one which has identical meaning in both federal and state law. In other words, plaintiff may be negligent under federal law, but this "negligence" may not be of such a dimension as to bar indemnity under state law.

Plaintiff asserts that the nature of the negligent conduct which rendered it liable to its employees was its breach of its nondelegable duty to provide a safe place to work.

A railroad has the nondelegable duty to provide an employee with a safe place to work. This is so despite the fact that it may not own, control or be under a primary obligation to maintain the premises on which the employee is injured. A railroad is not relieved from liability because such premises are unsafe or because of the existence of an unsafe condition brought about through the act of another and without fault, on the railroad's part.

* * * * * *

If a railroad does delegate and relies upon the services of its agent to carry out its duty, it may not shift its liability from itself

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