Starr v. Union Pacific Ry. Co., 89,597

• Decision Date: 29 August 2003
• Docket Number: No. 89,597,89,597
• Parties: JAMES E. STARR, Plaintiff, v. UNION PACIFIC RAILROAD COMPANY, Appellee/Cross-appellant, and ARCHER DANIELS MIDLAND CORPORATION, Appellant/Cross-appellee.
• Court: Kansas Court of Appeals

31 Kan.App.2d 906

75 P.3d 266

JAMES E. STARR, Plaintiff, v. UNION PACIFIC RAILROAD COMPANY, Appellee/Cross-appellant, and ARCHER DANIELS MIDLAND CORPORATION, Appellant/Cross-appellee.

No. 89,597

Court of Appeals of Kansas

Opinion filed August 29, 2003.

Stanley N. Wilkins, and David D. Burkhead, of Slagle, Bernard & Gorman, P.C., of Kansas City, Missouri, for appellant/cross-appellee.

James M. Yeretsky, Gregory F. Maher, and Michael A. Preston, of Yeretsky & Maher, L.L.C., of Overland Park, for appellee/cross-appellant.

Before JOHNSON, P.J., GREENE, J., and DAVID W. KENNEDY, District Judge, assigned.

GREENE, J.:

Archer Daniels Midland Corporation (ADM) appeals the district court's grant of summary judgment in favor of Union Pacific Railroad Company (UP) on its claims that ADM should indemnify UP pursuant to contract for one half of the cost of a personal injury settlement with a railroad employee, James Starr, who was injured on ADM property. ADM also appeals the district court's award of one half of ADM's attorney fees and costs incurred in defending Starr's claims. UP cross-appeals, claiming indemnity for all amounts paid as well as all attorney fees and costs. We affirm in part, reverse in part, and remand for trial of disputed factual issues.

Factual Overview

In July 1962, the predecessors of UP and ADM executed a sidetrack agreement (Agreement) generally governing the rights and obligations of the parties in providing rail services to an elevator facility in Wolcott, Kansas. The Agreement contained indemnity provisions that are the basis for the contract claims herein.

Starr, a conductor employed by UP, was working between the tracks on ADM property on August 27, 1998. In order to avoid a pool of rainwater that had collected during rainstorms that night, Starr stepped onto a ballast (the gravel walkway between tracks), slipped and fell, and injured his knee. Starr filed a claim pursuant to the Federal Employer's Liability Act (FELA), see 45 U.S.C. § 51 et seq. (2000), against UP for his injury. He later joined ADM as a defendant.

Starr settled with UP for $425,000 on March 1, 2001, and dismissed his claims against UP and ADM with prejudice. Remaining were cross-claims of both UP and ADM based on the Agreement. Both UP and ADM filed motions for summary judgment. The district court construed the Agreement and determined that UP was entitled to indemnity from ADM for one half of the settlement amount and one half of the attorney fees and costs incurred in defending Starr's claim, for a total judgment of $230,400.

ADM and UP appeal the district court's decision.

Standard of Review

On appeal of summary judgment, we apply the same rules applicable in the district court, and where we find reasonable minds could differ as to the conclusions drawn from the evidence, summary judgment must be reversed. Mitchell v. City of Wichita, 270 Kan. 56, 59, 12 P.3d 402 (2000). To the extent that this appeal frames issues of contract interpretation, our review is unlimited. Regardless of the construction given a written contract by the district court, an appellate court may construe a written contract and determine its legal effect. Alexander v. Everhart, 27 Kan. App. 2d 897, 901, 7 P.3d 1282, rev. denied 270 Kan. 897 (2000). The issue of whether a contract is ambiguous is also a matter of law, and our review is unlimited. Investcorp, L.P. v. Simpson Investment Co., L.C., 267 Kan. 840, 847, 983 P.2d 265 (1999).

Did the District Court Err in Concluding that the Agreement was not Ambiguous as to "the Switch" and that the Plaintiff was Injured Within the Area Described by the Agreement?

ADM initially claims that the Agreement was ambiguous in describing the area where indemnification is triggered for injuries to railroad employees and that UP's inability to show that the incident occurred within the contemplated area was fatal to its claim for indemnity. The issue is whether the incident occurred on or about "the Switch" as defined by the Agreement. Paragraph 1 of the Agreement states:

"1. Shipper shall be served by two certain proposed tracks, Track `A' and Track `B', 2330 feet long and 1945 feet long, more or less, respectively, and appurtenances, including roadway, herein called `Switch.' Switch is located near Wolcott, Leavenworth County, Kansas, approximately where shown by green lines on the undersigned Carrier's white print, map number D-3022, dated at Kansas City, Missouri, June 4, 1962, marked Exhibit `A', attached hereto as part hereof. Switch also means, except as respects cost, ownership and maintenance, any addition to or extension of Switch."

Since the map attached to the Agreement reflected no green lines, and since no such "green-lined" map was produced during discovery, ADM claims that this contract error is fatal to UP's claim for indemnity.

The district court ruled against ADM on this issue, concluding:

"The 1962 agreement, and specifically paragraphs 4 and 11 of the 1962 agreement, is not ambiguous.

"The 1962 agreement describes the area of the Switch depicted in an attached exhibit marked by green lines. Neither the UP nor ADM have provided that exhibit with the green lines. The court finds the 1962 agreement does identify Track A and Track B and that Starr fell between those two (2) tracks, which is within the Switch as described by the language in the 1962 agreement."

The parties conceded in oral argument that there were no facts known that might assist the court in construing the contract if it were found to be ambiguous, so this issue is one of pure contract construction.

The cardinal rule of contract construction requires courts to determine the parties' intent from the four corners of an instrument by construing all provisions together and in harmony with each other rather than by critical analysis of a single or isolated provision, and reasonable rather than unreasonable interpretations are favored. Lauck Oil Co. v. Breitenbach, 20 Kan. App. 2d 877, Syl. ¶ 2, 893 P.2d 286 (1995). Errors in contracts, which do not create such inconsistency that the overall intent of the parties cannot be determined from the four corners of the instrument, do not result in an ambiguous contract but merely create an inconsistency subject to interpretation by the court considering the contract as a whole. See Brown v. Lang, 234 Kan. 610, 614-15, 675 P.2d 842 (1984). Where an extraneous writing is incorporated by reference, it becomes a part of the contract only so far as to effectuate the specific purpose intended. Cuthbert v. Richey, 119 Kan. 233, 235, 237 Pac. 883 (1925); see Caldwell-Baker Co. v. Southern Illinois Railcar, 225 F. Supp. 2d 1243, 1251 (D. Kan. 2002).

Scrutinizing the language of the Agreement, we agree with the district court that there is no ambiguity in the specification of the Switch, despite the absence of a green-lined map. In fact, we believe that the Switch is adequately defined within paragraph 1 of the Agreement and that the parties intended only to embellish or illustrate this definition by the map, which would "approximately" display the area already carefully described by the language of paragraph 1. We are satisfied that the contract language alone clearly reflects an intention of the parties to consider as within the Switch: (i) Tracks A and B; (ii) all "appurtenances" to said Tracks; (iii) the "roadway"; and (iv) any "addition to or extension" of same. Inasmuch as the plaintiff was injured in the area between Tracks A and B, we do not believe that any reasonable interpretation of the Agreement could consider the place of injury as somehow beyond the Switch. Moreover, any lack of precision in the definition of the Switch becomes particularly immaterial to the claims herein because the operative indemnity provision is expressly triggered by "loss, damage or injury ... while on or about the Switch." We affirm the district court on this issue.

Did the District Court Err in Concluding that No Genuine Issue of Material Fact Precluded the Legal Conclusion that Starr's Injuries Resulted from an "Act or Omission" of ADM, as that Phrase is Employed in Paragraph 11 of the Agreement?

Paragraph 11 of the Agreement provides, inter alia:

"Shipper also agrees to indemnify and hold harmless Carrier for loss, damage or injury from any act or omission of Shipper, Shipper's employees or agents, to the person or property of the parties hereto and their employees and to the person or property of any other person or corporation, while on or about Switch; and, except as otherwise provided in this agreement, if any claim or liability shall arise from joint or concurring negligence of both parties hereto, it shall be borne by them equally."

UP claims that since Starr brought his suit pursuant to FELA, ADM's liability for indemnification should not be based upon the laws of torts requiring common-law negligence but rather should be based upon the liability provisions of FELA, requiring only that an act or omission of ADM contributed to providing an unsafe work place for Starr. ADM disputes this assertion, claiming that it should not be liable absent negligent acts causing injury to plaintiff. The district court apparently embraced UP's position, holding that "as an owner of the premises where Starr fell, ADM had a like duty to be aware of and control any kind of action that could cause injury to Starr." We must resolve this threshold question of contract construction prior to any analysis of the uncontroverted facts.

In support of its argument, UP cites federal case law including Chicago, R.I. & P.R. Co. v. Dobry Flour Mills, 211 F. 2d 785 (10th Cir. 1954), where the court construed a similar indemnity provision, holding that in a railroad sidetrack agreement with indemnity provisions, absent specific language to the contrary, the "acts or omissions" triggering indemnification are not the common-law duties of the property owner to the injured employee but rather the acts of the...