The Ohio Cas. Ins. Co. v. Holcim (us) Inc.

• Court: U.S. District Court — Southern District of Alabama
• Writing for the Court: ORDER
• Citation: The Ohio Cas. Ins. Co. v. Holcim (us) Inc., 744 F.Supp.2d 1251 (S.D. Ala. 2010)
• Decision Date: 13 October 2010
• Docket Number: Civil Action No. 06–0317–WS–M.
• Parties: The OHIO CASUALTY INSURANCE COMPANY, Plaintiff,v.HOLCIM (US), INC., et al., Defendants,v.The Ohio Casualty Insurance Company and Industrial Services of Mobile, Inc., Counterclaim Defendants.

744 F.Supp.2d 1251

The OHIO CASUALTY INSURANCE COMPANY, Plaintiff,

v.HOLCIM (US), INC., et al., Defendants,

v.The Ohio Casualty Insurance Company and Industrial Services of Mobile, Inc., Counterclaim Defendants.

Civil Action No. 06–0317–WS–M.

United States District Court, S.D. Alabama, Southern Division.

Oct. 13, 2010.

James A. Kee, Jr., Jon Melvin Hughes, Kee & Selby, L.L.P., Birmingham, AL, for Plaintiff/Counterclaim Defendants.J. Marshall Gardner, Roy Wallace Harrell, III, Vickers, Riis, Murray & Curran, L.L.C., Mobile, AL, Charles Minor McDaniel, Jr., Atlanta, GA, James Theodore Sasser, Columbus, GA, for Defendants.

ORDER

WILLIAM H. STEELE, Chief Judge.

This matter comes before the Court on counterclaim defendant Industrial Services of Mobile, Inc.'s Second Motion for Summary Judgment (doc. 124) and on plaintiff/counterclaim defendant Ohio Casualty Insurance Company's Second Motion for Summary Judgment (doc. 128). These overlapping Motions have been briefed and are now ripe for disposition.¹

I. Nature of the Case and Relevant Facts.²

More than seven years ago, nonparty Ronald White sustained severe injuries in a workplace accident, pursuant to his employment for Industrial Services of Mobile, Inc. (“ISOM”), a general contractor. In particular, White was assigned to a cement manufacturing plant operated by Holcim (US), Inc. (“Holcim”) in Theodore, Alabama, when he stepped into a hole and fell more than 20 feet. (Thierry Dep. (12/15/2004), at 123–24.) ³ White sued Holcim (but not his employer, ISOM, as to which any tort claim would have been barred by Alabama workers' compensation law) in state court. In May 2006, various interested parties (but not Ohio Casualty and not ISOM) reached a settlement of the state court action whereby Holcim and two insurance companies (including one of Holcim's excess carriers and ISOM's primary insurer) paid White and White's wife the sum of $5 million in exchange for a release of their claims against Holcim. (ISOM Exhs. N & O.)

Unfortunately, the state court litigation served as prelude to what has become a protracted, multiyear legal battle in federal court over who is ultimately responsible for financing that settlement. One of ISOM's insurers, Ohio Casualty Insurance Company (“Ohio Casualty”), wants a declaration that Holcim and two of its employees (Edward Thierry, Jr. and Dennis Odom) (collectively “the Holcim Litigants”) are not entitled to coverage for White's accident under ISOM's commercial umbrella policy issued by Ohio Casualty. For its part, Holcim seeks reimbursement of the funds (some $4 million) that it and its insurer paid in the White settlement. In furtherance of that objective, Holcim (but not Odom or Thierry) has brought counterclaims against Ohio Casualty for breach of contract and against ISOM for breaching its purported duty to indemnify Holcim for the White litigation.

The parties' respective positions in this litigation turn in large measure on an indemnity clause (the “Indemnity Provision”) included in a form document (the “Supply Agreement”) prepared by Holcim's counsel sometime prior to February 2003. (Earle Dep., at 26, 28.) ⁴ Holcim and ISOM entered into the Supply Agreement on or about February 21, 2003, just before White's accident. (ISOM Exh. C; Holsonback Decl., ¶ 3.) The Holcim-drafted Indemnity Provision stated that ISOM would indemnify Holcim and hold it harmless “from any and all claims, demands, actions ... or other liabilities ... arising out of or resulting from [ISOM]'s breach of warranty or performance of this agreement or any act or omission of [ISOM], whether occurring on [Holcim]'s premises or elsewhere. However, [ISOM] shall have no obligation to [Holcim] to the extent such losses are attributable to the negligence or willful misconduct of [Holcim].” (ISOM Exh. C, at Exh. A ¶ 9 (emphasis added).) ⁵ The Indemnity Provision and Supply Agreement neither amplified nor explained the “to the extent” limitation on ISOM's duty to indemnify. Holcim witnesses acknowledge that, in drafting the Indemnity Provision, Holcim could have used language that expressly prescribed a comparative-fault scheme by referencing the apportionment or allocation of liability between Holcim and ISOM for a loss based on their relative fault. (Smith Dep., at 59–60.) Nonetheless, the fact remains that Holcim did not utilize any such clarifying language or exposition in the subject agreement.

Also of interest for purposes of the pending Motions for Summary Judgment are certain insurance policy provisions. In particular, Ohio Casualty's summary judgment theory rests in part on the policy's Cross Suits Exclusion, which provides that the insurance coverage provided to ISOM “does not apply to ... [a]ny liability of any ‘Insured’ covered under this policy to any other ‘Insured’ covered under this policy. This endorsement does not change any other provision of the policy.” (Ohio Cas. Exh. A, at 7, 20.) The Ohio Casualty policy also includes a Separation of Insureds Clause, which generally provides that “this insurance applies ... separately to each ‘Insured’ against whom ‘claim’ is made or ‘suit’ brought.” ( Id. at 17.)

II. Procedural History.

On September 24, 2007, 2007 WL 2807570, the undersigned entered an Order (doc. 99) and Judgment (doc. 100) granting motions for summary judgment by Ohio Casualty and ISOM, dismissing Holcim's counterclaims, and finding that Ohio Casualty was not required to indemnify the Holcim Litigants for the White settlement. This determination hinged on the Court's application of the Indemnity Provision in the Supply Agreement executed by Holcim and ISOM.

In a pair of rulings, sandwiched around a certified question to the Alabama Supreme Court, the Eleventh Circuit reversed. The specifics of the Eleventh Circuit and Alabama Supreme Court rulings are critical to the parties' latest round of summary judgment briefing. In its first opinion, the Eleventh Circuit found that the “to the extent” language in the Indemnity Provision was ambiguous. Noting that Holcim contended that this language “incorporates the principles of comparative negligence,” ⁶ while ISOM construed it as meaning “that it need not indemnify if Holcim was negligent,” the Eleventh Circuit concluded “that each party's interpretation of the indemnification provision is reasonably plausible” and that the “to the extent” language “is susceptible to more than one meaning, which gives rise to an ambiguity.” Ohio Cas. Ins. Co. v. Holcim (US), Inc., 548 F.3d 1352, 1357 (11th Cir.2008) (“ Holcim I ”). The appeals court then certified a question to the Alabama Supreme Court as to “whether Alabama law allows recovery under a comparative fault or negligence theory within a contractual indemnity provision.” Id.

The Alabama Supreme Court answered a variant of this question in the affirmative, explaining that “if two parties knowingly, clearly, and unequivocally enter into an agreement whereby they agree that the respective liability of the parties will be determined by some type of agreed-upon formula, then Alabama law will permit the enforcement of that agreement as written.” Holcim (US), Inc. v. Ohio Cas. Ins. Co., 38 So.3d 722, 729 (Ala.2009) (“ Holcim II ”).⁷ Armed with the benefit of the Alabama Supreme Court's answer, the Eleventh Circuit completed its analysis of the Indemnity Provision in the following terms: “Now we know that both those interpretations are cognizable under Alabama law. Therefore the ambiguity that we found earlier remains. Our conclusion that the contested language is ambiguous as a matter of law means that the facts now come into play.” Ohio Cas. Ins. Co. v. Holcim (US), Inc., 589 F.3d 1361, 1363 (11th Cir.2009) ( “ Holcim III ”) (footnote omitted). With that observation, the Eleventh Circuit remanded this action to this District Court. Holcim III also pointed out the Alabama Supreme Court's determination “that a court may look beyond the pleadings of the underlying tort when determining an indemnification agreement,” id., such that any allocation of liability between ISOM and Holcim would depend on the actual circumstances of White's accident, and not the well-pleaded factual allegations of White's long-settled state court lawsuit.

Following remand, the parties engaged in supplemental discovery, after which both ISOM and Ohio Casualty filed second motions for summary judgment contending that they are entitled to judgment in their favor as a matter of law even under the parameters established by the Eleventh Circuit.

III. Summary Judgment Standard.

Summary judgment should be granted only if “there is no genuine issue as to any material fact and ... the movant is entitled to judgment as a matter of law.” Rule 56(c), Fed.R.Civ.P. The party seeking summary judgment bears “the initial burden to show the district court, by reference to materials on file, that there are no genuine issues of material fact that should be decided at trial.” Clark v. Coats & Clark, Inc., 929 F.2d 604, 608 (11th Cir.1991). Once the moving party has satisfied its responsibility, the burden shifts to the nonmovant to show the existence of a genuine issue of material fact. Id. “If the nonmoving party fails to make ‘a sufficient showing on an essential element of her case with respect to which she has the burden of proof,’ the moving party is entitled to summary judgment.” Id. (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986)) (footnote omitted). “In reviewing whether the nonmoving party has met its burden, the court must stop short of weighing the evidence and making credibility determinations of the truth of the matter. Instead, the evidence of the non-movant is to be believed, and all justifiable inferences are to be drawn in his favor.” Tipton v. Bergrohr GMBH–Siegen, 965 F.2d 994, 999 (11th Cir.1992) (internal citations and quotations omitted). “Summary judgment is justified only for those cases devoid of any need for factual...