Union Pac. R.R. Co. v. Caballo Coal Co.

• Decision Date: 14 February 2011
• Docket Number: S–10–0113.,Nos. S–10–0112,s. S–10–0112
• Citation: 2011 WY 24,246 P.3d 867
• Parties: UNION PACIFIC RAILROAD COMPANY, Appellant (Plaintiff),v.CABALLO COAL COMPANY, Appellee (Defendant).Caballo Coal Company, Appellant (Defendant),v.Union Pacific Railroad Company, Appellee (Plaintiff).
• Court: Wyoming Supreme Court

246 P.3d 867

2011 WY 24

UNION PACIFIC RAILROAD COMPANY, Appellant (Plaintiff),

v.CABALLO COAL COMPANY, Appellee (Defendant).Caballo Coal Company, Appellant (Defendant),

v.Union Pacific Railroad Company, Appellee (Plaintiff).

Nos. S–10–0112

S–10–0113.

Supreme Court of Wyoming.

Feb. 14, 2011.

Representing Union Pacific Railroad Co.: Howard P. Olsen, Jr. and Steven W. Olsen of Simmons Olsen Law Firm, P.C., Scottsbluff, Nebraska. Argument by Mr. Steven W. Olsen.Representing Caballo Coal Co.: Richard A. Mincer and Billie LM Addleman of Hirst Applegate, LLP, Cheyenne, Wyoming. Argument by Mr. Addleman.Before KITE, C.J., and GOLDEN, HILL, VOIGT, and BURKE, JJ.KITE, Chief Justice.

[¶ 1] Union Pacific Railroad Company (UP) appeals from the district court's order granting summary judgment in favor of Caballo Coal Company (CCC) on UP's claim that it was entitled to be indemnified for payments it made to one of its employees who was injured on CCC property. In a cross appeal, CCC claims the district court erred by granting summary judgment in favor of UP on CCC's counterclaim for attorney fees.

[¶ 2] We conclude the district court properly granted summary judgment to CCC because UP did not make any showing that CCC's negligence caused its employee's injury. However, the district court erred by granting summary judgment in favor of UP on CCC's claim for attorney fees because no motion had been filed and CCC was not given notice or an opportunity to be heard on the matter.

[¶ 3] Affirmed in part and reversed and remanded in part.

ISSUES

[¶ 4] We restate the issues presented by UP in Case No. S–10–0112 as follows:

1. Whether the court erred in granting Caballo's motion for summary judgment on the ground that Caballo had no duty to UP's employee.

2. Whether the district court should have granted UP's motion for partial summary judgment on the reasonableness of its settlement with Mr. Riecke.

The issue presented by CCC in Case No. S–10–0013, as restated, is:

1. Whether the district court erred by granting summary judgment in favor of UP on Caballo's claim for attorney fees when UP had not filed a summary judgment motion and Caballo had no opportunity to be heard on the matter.

FACTS

[¶ 5] On November 22, 2004, UP locomotive engineer, Roy Riecke, fell while inspecting the locomotive on the train he was operating from a CCC coal mine near Gillette, Wyoming to Bill, Wyoming. Mr. Riecke stated that he lost his footing on a thick layer of coal dust covering the ballast and fell backwards. He injured his right knee and lower back.

[¶ 6] Mr. Riecke filed suit against UP in district court in Nebraska, claiming a right to compensation under the Federal Employers Liability Act. He claimed damages for his pain and suffering, loss of enjoyment of life, lost earnings and other compensatory and consequential damages. UP notified CCC of the suit and tendered the defense, claiming CCC was obligated to indemnify it pursuant to an agreement between the parties. The agreement, dated December 10, 2001, supplemented earlier agreements between the parties and their predecessors and stated in pertinent part:

Section 4. LIABILITY: INDEMNIFICATION

CCC hereby agrees to indemnify and hold harmless UP from any and all loss, damage, injury or death arising from the operation of UP delivered trains over the Industry Tracks as provided in this Agreement, to the extent that they result from any negligence or wrongful act or omission of CCC's officers, employees or agents. UP hereby agrees to indemnify and hold harmless CCC from any and all loss, damage, injury or death arising from the operation of UP delivered trains over the Industry Tracks as provided in this Agreement, to the extent that they result from any negligence or wrongful act or omission of UP's officers, employees or agents.

[¶ 7] CCC denied UP's request to take over the defense of Mr. Riecke's suit and indemnify UP for its costs. UP settled with Mr. Riecke for $400,000 on November 9, 2007. UP then filed a complaint against CCC seeking indemnification for the amount it paid to settle Mr. Riecke's suit and its attorney fees and costs. CCC generally denied liability under the agreement and counterclaimed under the indemnity provision quoted above for its costs and attorney fees associated with defending the pending suit. UP did not file a timely response to CCC's counterclaim and the district court clerk entered a default against UP. UP subsequently requested that the entry of default be set aside, and the district court granted its request. UP then answered and denied CCC's counterclaim.

[¶ 8] CCC filed a motion for summary judgment on UP's indemnification claim, arguing that, in order to establish liability under the indemnification provision, UP was required to demonstrate that CCC was negligent, and CCC did not owe a duty to Mr. Riecke so it could not be found to be negligent. UP also filed a motion for partial summary judgment, requesting an order that it had made a reasonable, good faith settlement of Mr. Riecke's suit.

[¶ 9] After a hearing, the district court granted CCC's motion for summary judgment and denied UP's motion as moot. UP filed a notice of appeal, but we dismissed the appeal because all outstanding issues had not been resolved by the district court's summary judgment order. In particular there had been no ruling on CCC's counterclaim, and there was no “indication that the district court intended to direct the entry of a final judgment pursuant to W.R.C.P. 54(b).” ¹

[¶ 10] Back in the district court, the court, apparently acting sua sponte, ruled that there were no material issues of fact and judgment as a matter of law should be granted in UP's favor on CCC's counterclaim. The district court stated that the indemnification language of the contract did not allow CCC to recover its attorney fees and costs because those expenses did not arise out of any negligence, wrongful act or omission on the part of UP. UP and CCC both appealed the respective judgments against them. UP's appeal was docketed as No. S–10–0112, and CCC's appeal was docketed as No. S–10–0113.

STANDARD OF REVIEW

[¶ 11] Summary judgments are governed by W.R.C.P. 56(c):

The judgment sought shall be rendered forthwith 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.

[¶ 12] A district court's summary judgment ruling is reviewed de novo, using the same materials and following the same standards as the district court. The facts are considered from the vantage point most favorable to the party opposing the motion, and we give that party the benefit of all favorable inferences that may fairly be drawn from the record. Metz v. Laramie County School Dist. No. 1, 2007 WY 166, ¶ 17, 173 P.3d 334, 339 (Wyo.2007); Cook v. Shoshone First Bank, 2006 WY 13, ¶ 11, 126 P.3d 886, 889 (Wyo.2006).

[¶ 13] In cases involving questions of contract interpretation, the following standard of review applies:

The initial question of whether the contract is capable of being understood in only one way is a question of law for the court. If the court determines that the contract is capable of being understood in only one way, then the language used in the contract expresses and controls the intent of the parties. In such case, the next question, what is that understanding or meaning, is also a question of law. When we review the district court's summary judgment decisions that a contract is capable of being understood in only one way and what that understanding is, we accord no deference to those decisions.

M & M Auto Outlet v. Hill Inv. Corp., 2010 WY 56, ¶ 12, 230 P.3d 1099, 1104 (Wyo.2010), quoting Examination Mgmt. Servs., Inc. v. Kirschbaum, 927 P.2d 686, 689 (Wyo.1996) (internal citations omitted).

[¶ 14] Interpretation of procedural rules, including those governing summary judgments, is a question of law we review de novo. Kruckenberg v. Ding Masters, Inc., 2008 WY 40, ¶ 14, 180 P.3d 895, 899 (Wyo.2008).

DISCUSSION

1. Case No. S–10–0012—CCC's Obligation to Indemnify UP

[¶ 15] General contract interpretation principles apply to indemnity agreements. See, e.g., Jacobs Ranch Coal Co. v. Thunder Basin Coal Co., 2008 WY 101, ¶ 24, 191 P.3d 125, 133 (Wyo.2008); National Union Fire Insurance Co. v. Studer Tractor and Equip. Co., 527 P.2d 820, 828 (Wyo.1974). Our goal in interpreting contracts is to discern the parties' intent. Ultra Resources, Inc. v. Hartman, 2010 WY 36, ¶ 22, 226 P.3d 889, 905 (Wyo.2010); Carlson v. Flocchini Invs., 2005 WY 19, ¶ 15, 106 P.3d 847, 854 (Wyo.2005). The “language of the parties expressed in their contract must be given effect in accordance with the meaning which the language would convey to reasonable persons at the time and place of its use.” Moncrief v. Louisiana Land and Exploration Co., 861 P.2d 516, 524 (Wyo.1993). “Where there is an express indemnity provision, its parameters are derived from the specific language of [the] contract.” Diamond Surface, Inc. v. Cleveland, 963 P.2d 996, 1002 (Wyo.1998).

[¶ 16] The district court determined that CCC did not owe a duty to Mr. Riecke and, therefore, could not be liable under the contract. UP argues, first, that CCC's duty to Mr. Riecke is irrelevant because CCC had a duty to it under the indemnity agreement. It is true that CCC owed a contractual duty to indemnify UP. However, the express terms of the contract control whether indemnification is required or not. Diamond Surface, 963 P.2d at 1002.

[¶ 17] Under the terms of their agreement, CCC was obligated to indemnify UP for any loss, damages, etc. arising from the operation of the trains over the tracks “to the extent that they result from any negligence or wrongful act or omission of CCC's officers, employees or agents.” (Emphasis added). This type of provision, which grounds the right to...