Royal Ins. Co. v. Whitaker Contracting Corp., 99-12095

• Decision Date: 23 February 2001
• Docket Number: Docket No. 98-01704-CV-BU-S,No. 99-12095,99-12095
• Citation: 242 F.3d 1035
• Parties: (11th Cir. 2001) ROYAL INSURANCE COMPANY OF AMERICA, a.k.a. R.E. Grills Construction Co., Inc., Plaintiff-Appellant, v. WHITAKER CONTRACTING CORP., Defendant-Appellee. D. C
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 1035

242 F.3d 1035 (11th Cir. 2001)

ROYAL INSURANCE COMPANY OF AMERICA, a.k.a. R.E. Grills Construction Co., Inc., Plaintiff-Appellant, v. WHITAKER CONTRACTING CORP., Defendant-Appellee.

No. 99-12095

D. C. Docket No. 98-01704-CV-BU-S

UNITED STATES COURT OF APPEALS ELEVENTH CIRCUIT

Feb. 23, 2001

March 9, 2001

Appeal from the United States District Court for the Northern District of Alabama

Before BIRCH, BARKETT and ALARCON^*, Circuit Judges.

BIRCH, Circuit Judge:

This appeal presents the issue of whether an indemnitor must indemnify the indemnitee when the underlying cause of action involves a nondelegable duty under state law to which the indemnitee is subject. Specifically, this case concerns whether a paving subcontractor should indemnify the insurer of the general contractor with the state for highway work when a motorist died because of obstructive barricades at the work site. The district judge granted summary judgment to the subcontractor. Because we do not consider present Alabama law to have resolved this precise issue, we certify the question to the Alabama Supreme Court.

I. BACKGROUND

In November, 1993, R.E. Grills Construction Company, Inc. ("Grills") and the State of Alabama entered into a contract for widening, including grading, draining, and paving, 6.457 miles on Alabama Highway 75 in Blount County, Alabama. This contract incorporated portions of the Alabama Highway Department Standard Specifications for Highway Construction, 1992 Edition ("Standard Specifications"), which made Grills, as general or prime contractor, responsible for placement and maintenance of construction warning signs, barricades, and traffic control devices to insure public safety. These Standard Specifications require that the general contractor, "shall assume full responsibility for the continuous and expeditious maintenance of all construction warning signs, barricades and other traffic control devices" and state that the general contractor "is not relieved of his responsibility to continuously review and maintain all traffic handling measures and insure himself that adequate provisions have been made for the safety of the public and workmen. Construction signs and other traffic control devices specified by plan details are considered the necessary requirements for satisfactory traffic control."¹ R1- 1-3 (quoting Standard Specifications at 740.03(c) and (d), which were incorporated in the contract between Grills and Alabama for the subject road work).

On July 7, 1994, Grills entered into a subcontract with defendant-appellee, Whitaker Contracting Corporation ("Whitaker") for the paving of the portion of highway under the work contract between Grills and Alabama. This Grills form subcontract contained an indemnity agreement by Whitaker regarding the work that it performed for Grills. That agreement purported "to indemnify and . . . exonerate" the contractor, Grills, "from all liability, claims and demands for bodily injury and property damage arising out of the Work undertaken by the Subcontractor . . . whether or not" such damage resulted "in whole or in part" from "conditions, acts, or omissions done or permitted by the Contractor." R1-15-Exh. E at 2 (quoting subcontract indemnity agreement between Grills and Whitaker).²

On April 11, 1996, Rhonda K. Chase was driving south on Highway 75 in Blount County on the portion of the roadway that was undergoing widening construction work pursuant to the contract between Grills and Alabama and the paving subcontract between Grills and Whitaker. At the intersection of Highway 75 and County Road 1, Vicky Hood Washburn proceeded onto the highway in Chase's path. Chase's vehicle collided into Washburn's vehicle; Chase subsequently died from the injuries that she sustained. At her deposition, Washburn testified that the barricades, barrels, and equipment on the construction site being paved obscured her ability to see north on Highway 75 and, thus, were contributing causes of the accident.³ R1-15-Exh. I at 18, 28-29, 30-31, 35.

The administratrix of Chase's estate sued Whitaker, Washburn, and State Farm Mutual Automobile Insurance Company, Washburn's insurance carrier, in state court. The amended complaint added a negligence claim against Grills and alleged that Grills breached its duty of ordinary care in repairing and paving the intersection of Highway 75 and County Road 1 by failing to provide adequate barricades, signs, and safety devices to protect the public. The ensuing discovery revealed that the barricades that obstructed Washburn's view were traffic control devices placed and maintained by Grills under the supervision of the Alabama Department of Transportation. After initial placement on October 16, 1995, the barricades were maintained at least thirteen feet from the traveled lanes of Highway 75 until the date of the accident, when they were moved within three to five feet of the traveled lanes of Highway 75. Whitaker performed paving work at the subject intersection on the same day following the accident, and state inspectors moved the barricades away from the involved traveled lanes of Highway 75 immediately after arriving at the accident scene. There is no direct evidence in the record that Whitaker personnel moved the barricades.⁴

Prior to trial, the administratrix settled her claim against Whitaker for $250,000 and her claim against Grills for $400,000, an amount paid by plaintiff-appellant Royal Insurance Company of America ("Royal") under the terms of its general liability insurance policy with Grills. Relying on Whitaker's indemnity agreement in its subcontract with Grills, Royal then filed the underlying indemnity case in federal court under 28 U.S.C. 1332, diversity jurisdiction. In the course of that litigation, David B. Nooney, Vice President of Grills with twenty-five years of experience with road construction contracts, testified at his deposition that Grills would be responsible under its contract with Alabama, even if an accident or injury were caused by a subcontractor.⁵ Similarly, George S. Mahon, Jr., the Royal agent who handled the state litigation and settlement in this case and who had twenty years of experience in handling insurance claims, testified at his deposition that the ultimate liability that Grills had under its contract with Alabama was the reason for settlement with Chase's estate.⁶

Whitaker moved for summary judgment and argued that Grills was ultimately liable under its contract with Alabama for the roadwork. Finding no material facts at issue, the district judge granted Whitaker summary judgment as to its liability under the indemnity agreement. In this appeal, Royal argues that the district judge failed to apply state indemnity law.

II. DISCUSSION

We review a district court's granting summary judgment de novo and apply the same legal standards used by the district court. Hilburn v. Murata Elecs. N. Am., Inc., 181 F.3d 1220, 1225 (11th Cir. 1999). Summary judgment is appropriate when "there is no genuine issue as to any material fact and the moving party is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(c). While factual issues and reasonable inferences therefrom are considered in favor of the non-moving party, the district court's legal determinations are reviewed de novo. Hilburn, 181 F.3d at 1225. "The interpretation of an insurance contract is a question of law subject to de novo review." Galindo v. ARI Mut. Ins. Co., 203 F.3d 771, 774 (11th Cir. 2000). A federal court sitting in diversity must apply state substantive law. Allison v. Vintage Sports Plaques, 136 F.3d 1443, 1445 (11th Cir. 1998) (citing Erie R.R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817 (1938)). Thus, "we are bound to decide the case the way it appears the state's highest court would." Towne Realty, Inc. v. Safeco Ins. Co., 854 F.2d 1264, 1269 n.5 (11th Cir. 1988).

A. Nondelegable Duty of a General Contractor

While Alabama law generally does not hold a prime or general contractor liable for independent acts of a subcontractor, the general contractor remains liable to third parties under two exceptions: (1) the type of work performed, regardless of the care and skill used, probably will cause damage, "'or is necessarily and intrinsically dangerous'" or (2) "[t]he general contractor 'is responsible for the manner of the performance of his nondelegable duties, though done by an independent contractor.'"⁷.( Clark v. Jackson, 549 So.2d 85, 86 (Ala. 1989) (citations omitted). With respect to road construction involving excavations, the Alabama Supreme Court stated that "our cases have long recognized that one causing or initiating excavations on or about the public thoroughfares of this state owes to the public a nondelegable duty to protect travelers from an unreasonable risk of harm caused by the excavations." Sims v. Star-Mindingall Water Sys., 619 So.2d 1368, 1369 (Ala. 1993). In reversing a directed verdict for the general contractor, the court confirmed the application of the nondelegable-duty exception for safety of the roadway, although the plumbing subcontractor placed the dirt pile into which the motorist collided in the roadway lane of travel. See id. Application of Sims in this case shows that Grills cannot escape its nondelegable duty to insure a safe roadway for the traveling public by arguing that the cause of Chase's accident and death was Whitaker's placement of the barricades and barrels because provision and maintenance of these warning objects was a necessary and integral part of the road construction that Grills contracted to perform for Alabama. See id.

Furthermore, Alabama's contract with Grills specifically created a nondelegable duty in Grills, the general contractor, to maintain a safe roadway for the traveling public during the road construction work. In addition to requiring Grills to provide and maintain safe intersections, to insure the least obstruction to traffic, to place materials and...