National Railroad Passenger Corp. v. Rountree Transport & Rigging, Inc.

[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FILED
FOR THE ELEVENTH CIRCUIT U.S. COURT OF APPEALS
ELEVENTH CIRCUIT
MARCH 26, 2002
THOMAS K. KAHN
CLERK
No. 00-13811
D. C. Docket Nos. 93-01090-CV-ORL-19C
and 94-0976-CV-ORL-19C
NATIONAL RAILROAD PASSENGER CORPORATION (AMTRAK),
CSX TRANSPORTATION, INC.,
Plaintiffs-Cross-Defendants-Counter-Defendants-
Cross-Appellants-Cross-Appellees,
AMERICAN HOME ASSURANCE COMPANY,
f.u.b.o. Stewart and Stevenson Services, Inc.,
Plaintiff-Appellant-Cross-Appellee,
versus
ROUNTREE TRANSPORT AND RIGGING, INC.,
Defendant-Cross-Defendant-Appellee,
KISSIMMEE UTILITY AUTHORITY,
Defendant-Cross-Claimant-Cross-Defendant-
Counter-Claimant-Counter-Defendant-
Third-Party-Plaintiff-Third-Party-Defendant-
Appellee-Cross-Appellant,
WOKO TRANSPORTATION,
BLACK AND VEATCH, et al.,
Defendants-Cross-Claimants-Cross-Defendants-
Counter-Claimants-Counter-Defendants-
Third Party Plaintiffs-Third-Party-
Defendants-Appellees,
FLORIDA MUNICIPAL POWER AGENCY,
Defendant-Cross-Claimant-Cross-Defendant-
Counter-Claimant-Counter-Defendant-
Third Party-Plaintiff-Third-Party Defendant-
Appellee-Cross-Appellant,
GENERAL ELECTRIC COMPANY, INC.,
Consolidated Defendant-Third-Party Defendant-
Appellee-Cross-Appellant,
STEWART AND STEVENSON SERVICES, INC.,
Movant-Cross-Appellant.
_____________________________________________________
AMERICAN HOME ASSURANCE COMPANY,
f.u.b.o. Stewart and Stevenson Services, Inc.,
Plaintiff-Counter-Defendant-Appellant-
Cross-Appellee,
versus
NATIONAL RAILROAD PASSENGER CORPORATION (AMTRAK),
CSX TRANSPORTATION, INC., et al.,
Defendants-Appellees-Cross-Appellants,
2
ROUNTREE TRANSPORT AND RIGGING, INC.,
Defendant-Cross-Defendant-Appellee,
KISSIMMEE UTILITY AUTHORITY,
Defendant-Appellee-Cross-Appellant,
FLORIDA MUNICIPAL POWER AGENCY,
Movant-Appellee-Cross-Appellant,
GENERAL ELECTRIC CO.,
Movant-Appellee-Cross-Appellant,
STEWART AND STEVENSON SERVICES, INC.,
Movant-Cross-Appellant.
No. 00-13986
D. C. Docket No. 93-01090-CV-ORL-19C
NATIONAL RAILROAD PASSENGER CORPORATION (AMTRAK),
CSX TRANSPORTATION, INC.,
Plaintiffs-Cross-Defendants-Counter-Defendants,
J.E. BEDGOOD, JR.,
LINDA BEDGOOD, et al.,
AMERICAN HOME ASSURANCE COMPANY,
f.u.b.o. Stewart and Stevenson Services, Inc.,
3
Plaintiffs,
versus
ROUNTREE TRANSPORT AND RIGGING, INC.,
Defendant-Cross-Defendant-Appellee,
KISSIMMEE UTILITY AUTHORITY,
Defendant-Cross-Claimant-Cross-Defendant-
Counter-Claimant-Counter-Defendant-
Third-Party-Plaintiff-Third-Party-Defendant,
WOKO TRANSPORTATION,
Defendant-Cross-Claimant-Cross-Defendant-
Counter-Claimant-Counter-Defendant-
Third-Party-Plaintiff-Third-Party-Defendant,
BLACK AND VEATCH, et al.,
Defendant-Cross-Claimant-Cross-Defendant-
Counter-Claimant-Counter-Defendant-
Third-Party-Plaintiff-Third-Party-Defendant-
Appellant,
FLORIDA MUNICIPAL POWER AGENCY,
Defendant-Cross-Claimants-Cross-Defendants-
Counter-Claimant-Counter-Defendant-
Third-Party-Plaintiff-Third-Party-Defendant,
GENERAL ELECTRIC CO.,
Third-Party-Defendant-Appellee.
___________
4
Appeals from the United States District Court
for the Middle District of Florida
(March 26, 2002)
Before TJOFLAT and BIRCH, Circuit Judges, and GOLDBERG*, Judge.
BIRCH, Circuit Judge:
These consolidated appeals arise from the district court’s final judgment
resolving a series of cases that were filed after a passenger train of the National
Railroad Passenger Corporation (“Amtrak”), as it moved on the railroad track of
CSX Transportation, Inc. (“CSX”), collided with a hauler rig owned by Rountree
Transport and Rigging, Inc. (“Rountree”). The Rountree vehicle had become
immobilized on a railroad crossing as it attempted to transport a combustion
turbine and a turbine enclosure to a power plant of the Kissimmee Utility Authority
(“KUA”) near Kissimmee, Florida. American Home Assurance Corporation
(“AHA”), subrogee of Stewart and Stevenson Services, Inc. (“S&S”), commenced
these appeals to challenge several district court rulings that affected its entitlement
to damages flowing from the collision. The issues in this aspect of the appeal
include: (1) the propriety of excluding certain evidence offered by AHA to prove
*
Honorable Richard W. Goldberg, Judge, U.S. Court of International Trade, sitting by
designation.
5
its damages; (2) whether transport of the combustion turbine properly was deemed
an inherently dangerous work activity; (3) the propriety of reducing AHA’s
damages under the Florida comparative fault statute; and (4) whether AHA should
have been denied prejudgment interest on its damages. We AFFIRM the district
court’s rulings with regard to the first, second, and fourth issues. The third issue,
however, raises unsettled questions of state law which we certify to the Florida
Supreme Court for resolution.
In addition to AHA’s appeal, KUA, Florida Municipal Power Agency
(“FMPA”), and Black & Veatch (“B&V”) have appealed the decision by the
district court that General Electric Company (“GE”) did not have to defend and
indemnify them for the collision. We AFFIRM the district court’s decision. KUA
and FMPA also have appealed the district court’s decision requiring them to
defend and indemnify CSX and Amtrak. Within this latter appeal, KUA and
FMPA have raised the issue of whether state law sovereign immunity shields them
from being required to defend and indemnify CSX and Amtrak. Because the
sovereign immunity issue involves unsettled questions of state law, we certify the
issue to the Florida Supreme Court for review. In sum, we have decided that with
respect to these consolidated appeals, we AFFIRM in part but STAY all further
proceedings, pending the Florida Supreme Court’s resolution of our certified
6
questions.
I. BACKGROUND
A. Construction of the Cane Island Power Plant
KUA is an municipal agency created by the city of Kissimmee, Florida, to
construct, operate, and manage the city’s municipal electrical utility systems. As
part of its charge, KUA oversaw the construction of the electrical facility known as
the Cane Island Power Plant (the “Plant”) near Kissimmee, Florida. To effectuate
the construction, KUA contracted with B&V, who agreed to serve as project
engineer. KUA also entered into a Participation Agreement with FMPA, a joint-
action agency organized under Florida law with authority to undertake and finance
electric projects. By entering into the Participation Agreement, FMPA acquired a
50% ownership interest in the Plant and agreed to share with KUA the production
costs of electricity.
In overseeing the construction, KUA took steps to ensure that there would be
vehicular and pedestrian access to the Plant. Accordingly, KUA entered into a
Private Road Grade Crossing Agreement (the “Crossing Agreement”) with CSX,
who granted the utility a license to construct, use, and maintain a private road
grade crossing over CSX’s railroad tracks. In return for the license, KUA was
required under the Crossing Agreement to “defend, indemnify, protect and save
7
[CSX] harmless from and against [designated losses and casualties].” R53-1172
Exh. A at 14.2. The Crossing Agreement further mandated that KUA defend and
indemnify any company whose property was “operated” by CSX at the railroad
crossing. Id. at 1.2.
In its oversight role, KUA also contracted with GE for purchase and delivery
of certain customized power generation equipment, including a combustion
turbine. KUA and GE entered into a Turbine Purchasing Agreement (the
“Purchasing Agreement”), which included an indemnification provision under
which GE promised to defend and indemnify KUA, its agents, and B&V “to the
extent of and on account of any negligent act or omission of [GE] in performing
the work under the Contract.” R104-2060 Exh. A at GC.29.
Upon entering into the Purchasing Agreement, GE contracted with S&S,
who agreed to purchase and then customize the equipment that would be delivered
to the Plant. In turn, S&S contracted with a “transportation broker,” WOKO
Transportation (“WOKO”), who arranged for transport of the customized turbine
equipment. WOKO contracted with Rountree to have certain pieces of the
customized equipment — the combustion turbine and an enclosure for housing it
— transported to the Plant on 30 November 1993. The combustion turbine and its
enclosure made up only one out of forty-five boxes of customized turbine
8
equipment transported to the Plant. Not included in the November shipment were
boxes 2-45, which contained additional equipment customized by S&S, including,
among other things, an air filter, turbine generator controls, a control house, and
lube oil cooler fans.
B. The Collision
Because the combustion turbine weighed 82 tons, Rountree transported the
turbine and its enclosure by using a road tractor that pulled a hauler rig. The height
of the hauler rig could be adjusted to deal with gradations in the terrain. The
underlying casualty occurred on 30 November 1993 as Rountree, while
transporting the combustion turbine and its enclosure to the Plant, attempted to
adjust the height of the rig at the railroad crossing licensed to KUA from CSX.
The railroad tracks at the crossing were on an elevated grade. As the hauler rig
was driven onto the crossing, the hauler crew realized that the rig would be unable
to negotiate the elevated terrain without its height first being adjusted. The crew
adjusted the height of the rig without first removing the rig from the railroad
tracks. Before the rig was removed from the tracks, an Amtrak passenger train
collided with it. The collision destroyed the rig, the combustion turbine, and the
turbine enclosure. The Amtrak train also was damaged, and some of the
passengers and train crew suffered personal injuries.
9
C. The Lawsuits
Multiple lawsuits were filed against various parties and their insurers
seeking to establish responsibility for the collision. CSX and Amtrak
(collectively, the “Rail Companies”) brought suit against, among others, B&V,
Rountree, and KUA. The Rail Companies raised several claims, including that the
crossing had been improperly designed and constructed by B&V, and that
Rountree and KUA were negligent in the transport of the combustion turbine and
its enclosure. They further claimed that, by virtue of the Crossing Agreement,
KUA was obligated to defend and indemnify them.
Additionally, numerous passengers and crew members who were aboard the
Amtrak train at the time of the collision sued for personal injuries and property
damage. Later, AHA, as subrogee of S&S, commenced suit against several
entities, including the Rail Companies, Rountree, B&V, KUA, and FMPA, after it
compensated its insured, S&S, for loss of the combustion turbine and the turbine
enclosure. AHA claimed that the negligence of the defendants collectively caused
S&S to sustain the loss which was covered by its insurance policy with AHA. In
turn, as part of the AHA litigation, KUA brought a third-party complaint against
GE claiming that the Purchasing Agreement required GE to defend and indemnify
KUA.
10
D. Procedural History
The various cases were consolidated, and the district court bifurcated the
proceedings into a liability phase and a damages phase. During the former phase,
the Rail Companies moved for summary judgment on the indemnification issue.
They asked the court to rule as a matter of law that KUA had to defend and
indemnify them as a result of the Crossing Agreement. The court granted
summary judgment in favor of CSX but denied the motion by Amtrak. The court
concluded that Amtrak’s claim for indemnity involved factual issues that had not
yet been resolved.1
A three-week jury trial subsequently was held in 1996 on the liability issue
for all claimants and all defendants in the consolidated cases. On the same day as
the jury rendered its verdict, the district court granted judgment as a matter of law
to S&S and GE, holding that they were free of direct negligence for the collision.
The jury, in turn, absolved all parties of direct negligence except for Rountree,
CSX, and Amtrak. The jury determined that Rountree was 59% at fault for the
collision, CSX was 33% at fault, and Amtrak was 8% at fault. The district court
1
After the district court issued its order, KUA filed an interlocutory appeal with our
Court. KUA argued that the district court erred in granting summary judgment to CSX because
it was entitled to sovereign immunity under Florida law. We held that we lacked jurisdiction to
resolve an appeal based on issues of state law sovereign immunity because the matter was not
final and because such issues were not entitled to interlocutory review. CSX Transp., Inc. v.
Kissimmee Util. Auth., 153 F.3d 1283, 1286 (11th Cir. 1998).
11
then issued orders that damages trials would be held for all plaintiffs, starting with
the personal injury plaintiffs, then with the Rail Companies, and finally with AHA.
Additionally, the court granted B&V’s motion for a ruling that transportation of the
combustion turbine was inherently dangerous as a matter of law. The court further
held that, as a result of the inherent dangerousness in transporting the combustion
turbine, WOKO, S&S, and GE were vicariously liable for Rountree’s negligence.
Before a jury trial on damages ensued, B&V, KUA, and FMPA moved for
summary judgment against GE. They alleged that, under the indemnification
provision contained in the Purchasing Agreement, GE had to reimburse them for
the expenses they incurred as a result of successfully defending themselves in the
turbine litigation. The district court denied the motions and ruled that the losses
suffered by the three parties were not within the scope of the indemnification
provision. Also before the damages trial, the court reconsidered the issue of
whether KUA had to defend and indemnify Amtrak under the Crossing Agreement.
Having reconsidered the issue, the district court granted Amtrak’s renewed motion
for summary judgment and ruled as a matter of law that KUA was contractually
obligated to defend and indemnify Amtrak. In addition to its other decisions, the
court granted Rountree’s motion for a ruling as a matter of law that its liability to
AHA was limited to $1,000,000.
12
Then, in December 1999, the district court oversaw a jury trial on the issue
of AHA’s damages. By the time of the damages trial, the Rail Companies had
settled their claims with all other parties. Indeed, all parties in the various
consolidated cases had settled their damages claims by that time, except for AHA
as subrogee of S&S. At the damages trial, AHA wanted to prove the amount of
damages incurred by S&S by using the formula that its personnel had employed in
adjusting the insurance claim of S&S. Under this formula, the loss to S&S was
measured by taking the total value of all the customized turbine equipment
contained in boxes 1-45 and then subtracting the value of the equipment contained
in boxes 2-45, equipment that was undamaged because boxes 2-45 were never on
the Rountree hauler. Pursuant to its valuation method, AHA tried to substantiate
the value of the customized equipment contained in boxes 2-45 through invoices
and witness testimony. AHA also sought to introduce certain documentary
evidence and witness testimony concerning both how it arrived at the monetary
figures in its insurance valuation and how much it paid out to S&S. The district
court refused to admit any of this documentary and testimonial evidence.
After AHA rested its case-in-chief, several parties orally moved for the
district court to direct a verdict as to the amount of proven damages. They
maintained that the court should enter judgment in favor of AHA and against
13
Rountree, CSX, and Amtrak in the amount of $1,851,822.40, which represented
41% of the damages they argued AHA had proven ($4,546,640). Orally granting
the motion, the court ruled that AHA, standing in the shoes of S&S, had proven
that S&S had incurred $4,546,640 in damages, only 41% of which AHA was
entitled to recover. The district court previously had ruled that S&S was
vicariously liable for Rountree’s negligence based on the inherent dangerousness
of transporting the combustion turbine. The court reasoned that, just as Rountree
could collect only 41% of its damages under Florida comparative fault principles,
the vicariously liable S&S (and hence AHA) could collect only 41% of the
damages incurred by S&S. Having reduced AHA’s damages, the court then denied
AHA’s request for prejudgment interest on its damages award. Since the district
court already had held that Rountree’s liability to AHA was limited to $1,000,000,
the court proceeded to enter final judgment against the Rail Companies jointly and
severally for the remaining $851,822.40.
Upon entry of final judgment,2 the turbine litigation, a train wreck in its own
2
The parties initially appealed from the final judgment issued by the district court on 15
June 2000. FMPA, however, moved to dismiss and remand because the district court had failed
to dispose of AHA’s post-judgment motion to alter or amend the judgment or for a new trial filed
pursuant to Federal Rule of Civil Procedure 59. As a consequence, we ordered that the appeal be
held in abeyance pending the district court’s resolution of the Rule 59 motion. Thereafter, the
district court signed a memorandum order disposing of the Rule 59 motion, and on 4 October
2000 the court issued an amended final judgment from which the parties now appeal.
14
right, came crashing into our court. AHA commenced appeal to seek review of
several rulings made by the district court during the damages trial. On appeal,
AHA argues that the district court erred in restricting the evidence it could
introduce to prove the amount of its damages. AHA also asserts that the court
erroneously concluded that transport of the combustion turbine was inherently
dangerous as a matter of Florida law,3 a ruling that led the court to impute
Rountree’s negligence to S&S (and thus to AHA) for damages purposes.
Moreover, AHA contends that even if S&S properly was imputed with Rountree’s
negligence, the district court erred in applying Florida comparative fault principles
to limit AHA, as subrogee of S&S, to recovering 41% of S&S’s proven damages.
Finally, AHA contends that the court mistakenly refused to grant prejudgment
interest on its damages award.
In addition to the appeal over AHA’s damages, KUA, FMPA, and B&V
have commenced appeals against GE on the issue of contractual indemnification.
They argue that the district court erred in holding that, under the indemnification
provision in the Purchasing Agreement, GE did not have to reimburse them for the
expenses they incurred in defending themselves. They maintain that the
3
S&S, GE, and Rountree also seek review of the district court’s ruling that transport of
the combustion turbine was inherently dangerous.
15
indemnification provision is applicable here because they had to defend themselves
against claims resulting from the turbine collision that arose out of GE’s failure to
have the turbine transported safely.
Finally, KUA and FMPA have commenced cross appeals against the Rail
Companies. They seek review of the district court’s grant of summary judgment to
CSX and Amtrak on the issue of contractual indemnification. They assert that, for
several reasons, the court erroneously concluded that KUA — and by extension,
FMPA4 — had to defend and indemnify the Rail Companies under the
indemnification provision in the Crossing Agreement. KUA and FMPA claim that
the indemnification provision is unenforceable based on Florida sovereign
4
In its first order related to the indemnity issue, the district court ruled that KUA had to
defend and indemnify CSX. In a later order, the court ruled that KUA had to defend and
indemnify Amtrak. In neither of these orders did the court refer to FMPA.
The Rail Companies originally sued only KUA for contractual indemnity. FMPA
subsequently filed a motion to be added as an additional defendent with regard to the
indemnification claim brought by the Rail Companies against KUA. FMPA requested that it be
added as a defendant because, under its Participation Agreement with KUA, FMPA was required
to pay 50% of any sums that KUA paid out as a consequence of the turbine litigation. The
district court granted FMPA’s motion, and after its joinder as a defendant, FMPA actively
litigated and opposed the indemnity claims against KUA in its own name.
In its amended final judgment, the district court stated that in its two summary judgment
orders regarding the indemnity issue, it had ruled that both KUA and FMPA had to defend and
indemnify the Rail Companies. This is technically incorrect because only KUA is mentioned in
those orders. But when the summary judgment orders are read in conjunction with the court’s
order concerning joinder of FMPA, and in conjunction with the terms of the Participation
Agreement, the amended final judgment is reflective of the net effect of all these rulings,
namely, that FMPA (along with KUA) is required to defend and indemnify the Rail Companies.
16
immunity law. They also raise several alternative arguments as to why they should
not have to defend and indemnify the Rail Companies. For instance, KUA and
FMPA argue that the indemnification provision is unenforceable because the
special requirements under Florida law for indemnification in “construction”
contracts have not been met. The provision also is unenforceable, they contend,
based on Florida law dealing with exculpatory, or adhesion, contracts. Indeed, the
indemnification provision is not applicable to the present case, KUA and FMPA
maintain, because the negligent actions of CSX occurred in a location separate and
apart from the railroad crossing. Finally, they assert that, even if the provision is
enforceable and applicable to the facts here, Amtrak was not covered by the
provision.
II. DISCUSSION
A. AHA’s Damages
In addressing the plethora of issues raised on appeal, we turn first to those
raised by AHA. AHA’s appeal focuses on several decisions made by the district
court, including: (1) the decision to exclude AHA’s damages evidence and to direct
a verdict on the amount of damages; (2) the decision that transport of the
combustion turbine was inherently dangerous as a matter of Florida law; (3) the
decision that Florida comparative fault principles limited AHA to recovering 41%
17
of its damages; and (4) the decision not to grant AHA prejudgment interest on its
damages. We will address each decision in turn.
1. Evidentiary Rulings
The evidentiary rulings at issue occurred as the district court oversaw the
damages trial at which AHA, as subrogee of S&S, sought to prove the damages
incurred by S&S as a result of the collision. Prior to the collision, S&S bought
certain turbine equipment, such as the turbine engine, which it then customized by
adding wiring assemblies, harnesses, and piping. It also built an enclosure for
housing the turbine equipment. S&S sold the customized equipment to GE, who
then resold the equipment to KUA for use at the Plant.
So that Rountree could transport the customized equipment to the Plant,
S&S sorted the items of equipment into forty-five separate boxes, which were
shipped at different times. Box 1 contained the combustion turbine and its
enclosure. Boxes 2-45 contained other equipment, including air filters, turbine
generator controls, a control house, and a ventilation module. Only box 1 was on
the Rountree hauler rig, and only box 1 was damaged in the collision. As a result
of the damage from the collision, S&S sold the turbine engine as scrap to GE for
$130,000. S&S subsequently filed an insurance claim with AHA, who paid out
$8,695,300 in proceeds to S&S.
18
At the damages trial, AHA’s theory of damages was predicated on the
formula its personnel had used to adjust the insurance claim of S&S after the
collision. Under this insurance valuation formula, AHA did not measure the loss
to S&S by taking the value of the customized turbine equipment in box 1 before
the collision and subtracting the value of what was left of the equipment after the
collision. Rather, AHA measured the loss to S&S by taking the total value of all
the customized turbine equipment contained in boxes 1-45 before the collision and
then subtracting the value of the equipment contained in boxes 2-45, equipment
that went undamaged because it was shipped separately and thus was not on the
Rountree hauler rig.
To prove its damages under this formula, AHA attempted to admit into
evidence a list of invoice prices for the equipment contained in boxes 2-45, which
it argued represented the “salvage value”5 of the turbine equipment not destroyed
by the collision. The district court refused to admit this evidence. The court,
moreover, prevented several witnesses from testifying about the way in which the
loss to S&S was calculated for the insurance valuation. The court excluded
5
Both during the damages trial and on appeal, AHA has referred to the value of the
undamaged equipment in boxes 2-45 as “salvage value.” The use of this terminology only sows
confusion. The undamaged equipment in boxes 2-45 was not salvaged from the scene of the
collision because it was never present at the collision. The only salvage in this case was the
equipment contained in box 1 that was retrieved from the accident and that retained some value
even after it was damaged.
19
testimony from Dianne Furgerson, the claims adjuster for the collision, who would
have testified about the proof of loss form submitted by S&S. She also would have
testified about the subrogation receipts that showed the amount of insurance
proceeds paid to S&S in settlement of its insurance claim. Additionally, the court
excluded testimony from Carl Shook, a project manager for S&S, and Dean
Summers, a S&S corporate risk manager. They would have testified as to how
S&S calculated its loss under the insurance policy.
The district court excluded the aforementioned evidence under Federal Rule
of Evidence 401 as irrelevant and under Rule 403 as confusing to the jury. The
court excluded AHA’s evidence because it rejected the insurer’s formula for
calculating damages. In the district court’s view, AHA was limited to proving the
loss in value of the customized turbine equipment contained in box 1 (the
combustion turbine and its enclosure), the only box involved in the collision. The
court saw no basis for permitting AHA to expand the evidence it presented to
include proof as to the value of the undamaged equipment shipped separately in
boxes 2-45.
The district court, however, did permit the introduction of evidence
concerning the value of the combustion turbine engine because it was shipped in
box 1. The court allowed into evidence the invoice for the original sale of the
20
engine to S&S for $4,646,640.6 The court also allowed in evidence that S&S sold
the damaged engine for scrap to GE for $130,000. Based on the invoice and scrap
price, the district court granted judgment as a matter of law as to the amount of
damages AHA had proven, which the court calculated as $4,546,640 ($4,646,640 -
$130,000).7
In evaluating the district court’s decisions concerning the relevancy of
certain evidence of damages, we reverse only if the court abused its discretion.
Pesaplastic, C.A. v. Cincinnati Milacron Co., 750 F.2d 1516, 1524 (11th Cir.
1985). As to the district court’s grant of judgment as a matter of law on the
amount of damages, our review is de novo, and we treat the evidence presented to
the jury in the light most favorable to the nonmoving party. Willingham v.
Loughnan, 261 F.3d 1178, 1180 (11th Cir. 2001). We turn now to the Florida law
that will guide us in assessing the aforementioned rulings by the district court.
In Florida, “[t]he objective in calculating the proper measure of damages is
to place the plaintiff in the same financial position as that occupied before the
property was damaged.” Ocean Elec. Co. v. Hughes Labs., Inc., 636 So. 2d 112,
6
AHA never introduced invoices or other documentation showing the costs it incurred in
obtaining and customizing the other equipment in box 1.
7
Having ruled that AHA had proven damages in the amount of $4,546,640, the court
reduced the proven damages by 41% to $1,851,822.40. This reduction in damages is discussed
infra at sections II.A.2 & 3.
21
114 (Fla. Dist. Ct. App. 1994). A party whose chattel is harmed “is entitled to the
difference between the value before and after the damage.” Hillside Van Lines,
Inc. v. Matalon, 297 So. 2d 848, 848 (Fla. Dist. Ct. App. 1974) (per curiam); see
also American Equity Ins. Co. v. Van Ginhoven, 788 So. 2d 388, 391 (Fla. Dist.
Ct. App. 2001). Courts, however, must be careful to ensure that the party who
incurred the loss is not unjustly enriched by the damages award. Ocean Elec., 636
So. 2d at 114.
Applying these principles to this case, we rule that the district court was
correct in its exclusion of AHA’s damages evidence. The evidence that AHA
sought to introduce was meant to substantiate the damages figure arrived at by
AHA in adjusting the insurance claim of S&S. It follows that, if the formula used
by AHA to adjust the claim was an improper measure of damages under Florida
law, the admission of evidence offered to substantiate the damages figure
calculated under that formula would similarly be improper. Because we conclude
that AHA’s insurance valuation formula constitutes an improper measure of
damages, we likewise conclude that the district court correctly excluded evidence
offered to substantiate that valuation.
As we have explained, AHA’s insurance valuation formula was based on the
value before the collision of all the customized turbine equipment contained in
22
boxes 1-45, minus the value after the collision of the equipment contained in boxes
2-45, equipment that was shipped separately, was not on the Rountree hauler, and
was not involved in the collision. There is no authority under Florida law for
calculating damages in this manner. Rather, Florida law indicates that the basic
measure of damages for loss to chattels is the difference between the value of the
damaged property before and after the casualty. American Equity Ins. Co. v. Van
Ginhoven, 788 So. 2d at 391; Hillside, 297 So. 2d at 848. The focus thus is on the
property actually involved in the casualty and the resulting loss in its value caused
by any damage it sustained.
AHA did not properly constrain its focus. Instead of focusing narrowly on
the loss in value to the combustion turbine and its enclosure in box 1, AHA chose
to measure its damages by incorporating the value of equipment contained in boxes
2-45. There could be no “difference between the value before and after the
damage” with regard to such equipment, however, because it was not involved in
the underlying casualty in the first place. Hillside, 297 So. 2d at 848.
Consequently, AHA’s damages formula, and the evidence it tried to introduce in
support thereof, are inconsistent with Florida law.
AHA argues in rebuttal that the equipment contained in the forty-five boxes
constituted one item of merchandise that had been disassembled into separate
23
boxes for transport to the Plant. AHA points out that all of the customized
equipment was sold to GE by S&S as part of one sales contract. Moreover, AHA
claims that the two contracting parties, in the purchase invoice and otherwise,
treated the equipment as one LM 6000 turbine unit. In this manner, AHA argues
that the proper measure of damages is the value before the collision of the LM
6000 turbine unit (boxes 1-45) minus its value after the collision (boxes 2-45).
We disagree. This is not a contracts action, and the terminology of the sales
contract between S&S and GE is not determinative with regard to third party
tortfeasors like the Rail Companies or Rountree. AHA, moreover, cannot avoid the
fact that separate items of turbine equipment were contained in boxes 1-45, and
that only a distinct set of those items was involved in the underlying casualty. The
distinct set of items in box 1 had an independent market value that readily could be
ascertained, and so there was no good reason to complicate and confuse matters by
including boxes 2-45 in the damages calculation.
AHA’s argument would carry more weight if the separate items of turbine
equipment were so interdependent that the value of any one item could not be
ascertained without reference to the others. That is, AHA’s position would have
merit if the value of the combustion turbine and the enclosure in box 1 was so
intertwined with the value of the other equipment in boxes 2-45 that it could not be
24
separately adduced. But that is not the case here. The record, for example,
demonstrates that the value of the combustion turbine engine in box 1 could be
ascertained both before and after the accident through a purchase invoice and
through testimony regarding the scrap sale of the damaged engine. As a result, we
reject AHA’s attempt to treat boxes 1-45 as a single item of merchandise for
damages purposes.
We also note that, even if we agreed with AHA’s treatment of all forty-five
boxes as a single item of merchandise, its theory of damages still would be
fundamentally flawed. In calculating the market value of the turbine equipment in
boxes 1-45 before the collision, AHA relied on the “declared value” of that
equipment under its insurance policy with S&S. The declared value of the forty-
five boxes of equipment was $12,513,270, and this figure, in turn, was calculated
in part by factoring in the price at which S&S sold the customized equipment to
GE, $12,219,213.
The proper measure of market value “is dependent upon the choice of the
appropriate economic market which will achieve the objective of making the
injured party whole, while avoiding any unjust enrichment.” Ocean Elec., 636 So.
2d at 114. Because AHA’s insurance valuation relied in part on the price GE paid
S&S for the customized turbine equipment, AHA’s damages figure contained a
25
profit component.8 Inclusion of this component, however, would unjustly enrich
S&S, and hence AHA. After the collision, S&S customized a new combustion
turbine and turbine enclosure for the Plant and sold these replacement items to GE.
S&S thus was able to obtain its profit on the sale of the turbine and its enclosure.
To allow AHA to predicate its damages on a figure that includes such profits
8
We recognize that AHA’s insurance valuation purported to subtract out S&S’s profit
component for the equipment in boxes 2-45. But AHA has not explained how the profit figure
was generated. Even Dean Summers, the S&S corporate risk manager, indicated in his proffered
deposition that he was unsure about the figure:
Q. In your letter here you say, “I am still visiting with various individuals who may be
able to shed more light on how profits are figured.” Who were you visiting in that
regard?
A. [Dean Summers:] Probably Carl [Shook], probably Rick Stewart, other people at
Jacinto Port.
Q. And what did they tell you in terms of how much profit is in the main unit as opposed
to the auxiliary units?
A. I’m not sure they really told me anything as far as profit. I don’t have a recollection
of knowing what the profit was on the unit, whether it be as a whole or whether it be
salvage value, except what was stated here. And I couldn’t tell you how that number was
arrived at. That number was acceptable to us, [as] it was acceptable to . . . American
Home.
Q. Well, I understand it may be acceptable to both of you, but my question is what is the
basis for arriving at it?
A. I couldn’t tell you.
Mr. Karcher: Objection. Which number are you talking about now?
Mr. Roper: I was referring, and I think the witness was referring to the
profit figure on the undamaged items.
Mr. Karcher: Oh, okay.
Q. (By Mr. Roper): Is that correct?
A. Yes, sir.
Summers Dep. at 53-54 (November 5, 1999) (proffered at R138-34). It is therefore unclear
whether AHA employed a valuation methodology that reliably extricated all of S&S’s profits
with regard to boxes 2-45. In addition, and more importantly, there is no evidence that AHA
attempted to subtract out the profit component from its insurance valuation for the equipment
contained in box 1, the box most central to this case.
26
would permit the insurer “to recover lost profits that were never lost in the first
place.” Ocean Elec., 636 So. 2d at 115 (quotations omitted).9
Furthermore, AHA would be unjustly enriched even more than our analysis
at first suggests because, even if the profit component were extracted from the
declared value, the declared value still would not reflect the actual loss incurred by
S&S. Indeed, Dianne Furgerson, the claims adjuster, stated in her proffered
deposition testimony that the AHA insurance policy was not geared towards
compensating S&S for the actual cash value of the equipment that was damaged,
but was instead predicated on the invoice sales price, plus a 5% markup.10 Thus,
9
AHA seeks to justify its damages calculation, which includes a profit component, by
relying on the actual loss rule under 49 U.S.C. § 11707. Section 11707, however, is applicable
only to common carriers under the Interstate Commerce Act. AHA has presented no evidence
that any of the parties are subject to the Act. Even if AHA was correct and § 11707 applies, an
exception to the actual loss rule exists where the shipper or manufacturer can replace a shipment
at cost and suffers no loss of profit. Philips Consumer Elecs. Co. v. Arrow Carrier Corp., 785 F.
Supp. 436, 441 (S.D. N.Y. 1992). Because S&S eventually fulfilled its contract with a
replacement combustion turbine and turbine enclosure and thus did not lose its profit on the
contract, the actual loss rule does not apply, and the proper measure of damages under the
Interstate Commerce Act would be the replacement cost of the damaged goods. Oak Hall Cap &
Gown Co. v. Old Dominion Freight Line, Inc., 899 F.2d 291, 296 (4th Cir. 1990).
10
Q. So your policy is not geared at all to compensating the insured for the actual cash
value of the loss, is that what you’re saying?
A. [Dianne Furgerson:] Correct. We pay [an] insured amount.
Furgerson Dep. at 32 (November 5, 1999) (proffered and read into record at R138-18-19).
Furgerson later indicated that the insured amount, or the declared value, was premised on the
invoice sales price plus the 5% markup:
Q. That declared value, as I understand it, is a function of the invoice price plus a 5
percent add-on or markup, correct?
A. Correct.
Id. at 34 (proffered at R138-18).
27
the insurance policy calculated the amount paid to S&S in insurance proceeds not
only by factoring in the purported value of the equipment based on the invoice
sales price, which included a profit component, but also by including a 5% increase
to that amount.
The 5% markup was not based on any actual costs substantiated by S&S.
The increase, in fact, was a generic, fixed percentage that AHA had agreed to as
part of the insurance coverage.11 The inflated value attributed to the equipment as
a result of the 5% increase would lead, in turn, to the insurance formula overstating
the losses incurred by S&S when the equipment was damaged. As we have noted,
Florida law requires that courts ensure that the damages awarded for loss to chattel
do not unjustly enrich the injured party. Ocean Elec., 636 So. 2d at 114.
Accordingly, we rule that an insured party whose property has been damaged
cannot force a third-party tortfeasor to pay out in damages a negotiated figure
between insurer and insured that reflects contract terms that inflate the value of the
11
In her proffered deposition testimony, Furgerson stated that the 5% markup was
“standard” in such insurance policies and that the percentage increase was factored in regardless
of whether the insured “had any additional charges or not.” Furgerson Dep. at 35 (proffered at
R138-18). She also noted that S&S never demonstrated that it had incurred any additional costs
that would justify the 5% increase:
Q. Did Stewart & Stevenson ever provide you with any documentation that they had, in
fact, incurred a 5 percent additional cost as a result of this accident?
A. No. They are not required to.
Id. at 35.
28
property. In sum, the contractual 5% markup that was factored into the declared
value of the equipment in the insurance policy skews AHA’s damages theory,
because, like the inclusion of the profit component, it raises the specter of unjust
enrichment.
Based on the foregoing analysis, we hold that the district court did not abuse
its discretion in excluding AHA’s damages evidence. AHA’s evidence concerning
the insurance valuation of the turbine equipment contained in boxes 2-45 was
irrelevant to a proper determination of S&S’s actual damages, given that only the
equipment in box 1 was involved in the collision. Such evidence would have
confused the jury, who likely would have lost focus as to which equipment was
actually on the Rountree hauler. AHA’s evidence regarding the insurance
valuation of the damaged turbine equipment in box 1 also was irrelevant because,
by including a profit component and a generic 5% markup, it did not reflect the
loss that S&S actually sustained.
It follows that the district court did not err in granting judgment as a matter
of law in the amount of $4,546,640. The only relevant evidence concerning the
value before and after the collision of the equipment in box 1 was the invoice
representing the price of the turbine engine sold to S&S for $4,646,640, and the
evidence concerning the scrap price of the damaged turbine sold to GE by S&S for
29
$130,000. AHA failed to introduce any other witnesses or documentary evidence
that demonstrated the costs incurred by S&S in obtaining and customizing the
other equipment in box 1. AHA could have gathered this information and
presented it at trial had it chosen to do so.12 Accordingly, the district court was
correct to hold as a matter of law that AHA had proven damages totaling
$4,546,640.
2. The Inherently Dangerous Work Doctrine
a. The Inherent Dangerousness Issue
Having held as a matter of law that AHA had proven damages totaling
$4,546,640, the district court limited AHA to recovering 41% of its damages
award. The court reduced AHA’s damages based on its earlier ruling that transport
of the combustion turbine was inherently dangerous as a matter of Florida law.
Based on its ruling that transport of the combustion turbine was inherently
12
For example, with regard to the turbine enclosure in box 1, Shook, the S&S project
manager, testified to the following:
Q. AND AS YOU TOLD THE JURY YESTERDAY, YOU DO NOT KNOW AND
CANNOT TELL US HOW MUCH IT COST STEWART & STEVENSON TO
MANUFACTURE THE TURBINE ENCLOSURE, IS THAT CORRECT, SIR?
A. [Carl Shook:] I DID NOT PUT ANY COST TOGETHER TO REPRESENT WHAT
THE BALANCE OF THAT PACKAGE WOULD BE, THAT’S CORRECT.
Q. AND BACK IN 1994, IF YOU HAD BEEN ASKED TO PUT TOGETHER THE
COST OF WHAT IT WAS IN THE BOX ENCLOSURE, YOU COULD HAVE DONE
THAT?
A. YES, WE COULD.
R138-45.
30
dangerous, the court had held that S&S, GE, and WOKO were vicariously liable
for Rountree’s negligent transport of the turbine. Had S&S not been held
vicariously liable, Rountree’s negligence (59%) would not have been imputed to
S&S, and hence to AHA as subrogee of S&S.13 The imputation of Rountree’s
negligence to S&S, and thus to AHA, led the court to limit AHA’s recovery to
41% of the proven damages based on comparative fault principles.
On appeal, AHA, as well as S&S, GE, and Rountree (collectively, the “I.D.
Appellants”),14 challenge the district court’s decision that transport of the
combustion turbine constituted inherently dangerous work as a matter of Florida
law. We review de novo a ruling on a matter of law by the district court.
Willingham, 261 F.3d at 1180. We take the evidence presented in the light most
favorable to the nonmoving party. Id.
Under Florida law, an owner, contractor, or employer is not liable for injury
caused by an independent contractor’s negligence, unless the owner, contractor, or
employer’s own active negligence caused or contributed to the injury. Baxley v.
13
AHA does not dispute that, as subrogee of S&S, it steps in the shoes of S&S, the
subrogor. See Underwriters at Lloyds v. Lauderdale Lakes, 382 So. 2d 702, 704 (Fla. 1980).
14
It is true that the Florida Supreme Court’s answer to our certified question in section
II.A.3 may be dispositive of whether AHA’s damages properly were reduced by 41%.
Nevertheless, we proceed to address the inherent dangerousness issue because several parties
have challenged the ruling of the district court. It follows that our decision on the issue will not
become moot, regardless of how the Florida Supreme Court answers the certified question.
31
Dixie Land & Timber Co., 521 So. 2d 170, 172 (Fla. Dist. Ct. App. 1988). An
exception to this rule is the inherently dangerous work doctrine, which applies
when the work to be performed by the independent contractor “is inherently or
intrinsically dangerous.” Florida Power & Light Co. v. Price, 170 So. 2d 293, 295
(Fla. 1964) (per curiam). An activity is inherently dangerous if the “danger inheres
in the performance of the work,” and “it is sufficient if there is a recognizable and
substantial danger inherent in the work, even though a major hazard is not
involved.” Id. The activity, moreover, must be such that “in the ordinary course of
events its performance would probably, and not merely possibly, cause injury if
proper precautions were not taken.” Id. If the activity is found to be inherently
dangerous, then the “one engaged in or responsible for the performance of [the]
work . . . is said to be under a nondelegable duty to perform, or have others
perform, the work in a reasonably safe and careful manner.” Baxley, 170 So. 2d at
172.
Generally, it is a fact question for the jury whether a particular activity is
inherently dangerous. Doak v. Green, 677 So. 2d 301, 302 (Fla. Dist. Ct. App.
1996) (per curiam). The trial court nonetheless may rule that an activity is
inherently dangerous as a matter of law if there is “some statute or case law
designating the activity as inherently dangerous,” or if there is a “sufficient record
32
of undisputed facts” upon which the decision can be based. Id. Indeed, Florida
courts often have held that particular activities are inherently dangerous as a matter
of law. See, e.g., Midyette v. Madison, 559 So. 2d 1126, 1128 (Fla. 1990) (holding
that clearing of land by fire is inherently dangerous as a matter of law); Bialkowicz
v. Pan Am Condominium No. 3, Inc., 215 So. 2d 767, 772 (Fla. Dist. Ct. App.
1968) (holding that installation of support pilings is inherently dangerous as a
matter of law).
Applying these standards to the present case, we conclude that the district
court had a sufficient basis for concluding that transport of the combustion turbine
was inherently dangerous as a matter of law. The court’s extensive analysis points
to several undisputed facts that warrant this conclusion. The district court noted
that the combustion turbine itself was tremendous in size, constituting an 82-ton,
14-foot high, 14-foot wide, and 57-foot long piece of machinery. The vehicle used
to transport the 82-ton turbine itself weighed over 290,000 pounds. The transport
vehicle, in fact, was an 184-foot, specially-equipped hauler consisting of a road
tractor and a hauler rig that contained three separate cargo decks. The vehicle was
over three times the length of an ordinary 18 wheeler. As further evidence of the
oversized nature of the turbine and the transport vehicle, the hauler rig had to be
equipped with special hydraulic equipment to adjust to gradations in the road.
33
In addition to the unique dimensions and weight of the combustion turbine
and the transport vehicle, the district court pointed to the quantum of regulations
dealing with the transport of oversized items like the turbine as indicative of the
inherent dangerousness involved. The court noted that Florida strictly regulates
the transportation of oversized items like the turbine, see Florida Statute § 316.550,
and that state law specifically addresses the moving of heavy equipment across
railroad crossings. See § 316.170. The court also pointed out that the Florida
Department of Transportation, the City of Tampa, and Polk County all required
special permits before the turbine could be transported.
As further evidence of inherent dangerousness, the district court focused on
the unique preparation and the special precautions that were taken in transporting
the combustion turbine. For instance, GE and S&S used a special “transportation
broker” to arrange for the transport of the turbine on a specially-equipped vehicle.
Unique measures then had to be taken by Rountree before it could transport the
turbine; for instance, it had to coordinate and use special signs, lights, and escort
vehicles, all of which the permitting authorities mandated. A separate utility
vehicle, moreover, had to clear signs, traffic lights, overhead wires, and other
obstacles as the transport of the turbine took place. Two off-duty Florida Highway
Patrol officers in marked vehicles also were present to facilitate the transport.
34
All of these factors, when taken together, provide ample justification for the
district court’s conclusion on the inherent dangerousness issue. It is true that
Florida precedent shows that towing of a piece of equipment is not in itself
inherently dangerous. See E.J. Strickland Constr., Inc. v. Department of Agric. &
Consumer Servs. of Florida, 515 So. 2d 1331, 1335 (Fla. Dist. Ct. App. 1987)
(towing of tractor not inherently dangerous); American Auto. Assoc., Inc. v.
Tehrani, 508 So. 2d 365, 371 (Fla. Dist. Ct. App. 1987) (operation of wrecker truck
not inherently dangerous). But the situation in the present case was drastically
different from the average towing scenario, as evidenced by the extraordinary
dimensions and weight of the combustion turbine and the transport vehicle.
Furthermore, as the district court explained, transportation of an oversized
item like the turbine is strictly regulated by Florida law, and such regulation was
one of the primary reasons the Florida Supreme Court held that the clearing of land
by fire is inherently dangerous. See Midyette, 559 So. 2d at 1128. Finally, we
point out that the use of special hydraulics on the hauler rig to raise or lower its
height makes this case similar to the operation of a crane, which Florida courts, on
numerous occasions, have held is an inherently dangerous activity. See Scott &
Jobalia Constr. Co. v. Halifax Paving, Inc., 538 So. 2d 76, 79-80 (Fla. Dist. Ct.
App. 1989); Atlantic Coast Dev. Corp. v. Napoleon Steel Contractors, Inc., 385 So.
35
2d 676, 679 (Fla. Dist. Ct. App. 1980).
b. The Collateral Negligence Issue
Even if the district court properly concluded that transport of the turbine was
inherently dangerous, the I.D. Appellants argue that the court nevertheless erred in
its vicarious liability determination because the damage in this case resulted from
Rountree’s “collateral” negligence. The I.D. Appellants claim that, even when an
owner, contractor, or employer has a nondelegable duty, such a party “is not
vicariously responsible for all torts committed by the independent contractor.”
U.S. Security Servs. Corp. v. Ramada Inn, Inc., 665 So. 2d 268, 271 (Fla. Dist. Ct.
App. 1996) (per curiam). They further contend that, based on the Restatement
(Second) of Torts § 416, an owner, contractor, or employer can be held vicariously
liable only if the independent contractor fails to take the special precautions that
need to be taken as a result of the inherent dangerousness of the activity involved.15
Conversely, the I.D. Appellants maintain that such parties cannot be held
vicariously liable for the independent contractor’s negligence that is collateral to
15
The section states in full:
One who employs an independent contractor to do work which the employer should
recognize as likely to create during its progress a peculiar risk of physical harm to others
unless special precautions are taken, is subject to liability for physical harm caused to
them by the failure of the contractor to exercise reasonable care to take such precautions,
even though the employer has provided for such precautions in the contract or otherwise.
Restatement (Second) of Torts § 416 (1965).
36
the risks inherent in the activity, such as “abnormal or unusual kinds of negligence
on the part of the contractor, or negligence in the performance of operative details
of the work which ordinarily may be expected to be carried out with proper care.”
Restatement (Second) of Torts § 426 cmt. b (1965);16 see also Security Servs., 665
So. 2d at 271.
Based on these principles, the I.D. Appellants’ position is that, even if
transport of the turbine constituted inherently dangerous work, evidence presented
at the liability trial17 shows that Rountree was collaterally negligent because its
crew failed to take routine, common-sense precautions in attempting to transport
the combustion turbine across the railroad crossing. They assert that the Rountree
crew committed ordinary negligence by choosing to disable the transport vehicle
16
The comment states in full:
The employer is required to contemplate, and to be responsible for, the negligence of the
contractor with respect to all risks which are inherent in the normal and usual manner of
doing the work under the particular circumstances. He is not required to contemplate or
anticipate abnormal or unusual kinds of negligence on the part of the contractor, or
negligence in the performance of operative details of the work which ordinarily may be
expected to be carried out with proper care, unless the circumstances under which the
work is done give him warning of some special reason to take precautions, or some
special risk of harm to others inherent in the work.
Restatement (Second) § 426 cmt. b (1965).
17
At oral argument, there was some confusion over whether the transcripts of the liability
trial had been filed with our court and whether any of the parties had been denied access to the
transcripts in composing their appellate briefs. In a joint letter from counsel dated 14 December
2001, the parties explained that the liability trial transcripts had been filed. We therefore have a
complete record before us in deciding the inherent dangerousness issue. The parties also stated
in their joint brief that no counsel of any party was claiming that he or she was denied use of the
transcripts in preparing their appellate briefs.
37
on the train tracks at the railroad crossing instead of moving the vehicle off the
tracks first, even though the crew knew that an Amtrak train was due to pass. The
Rountree crew did not fail to take special precautions related to transport of the
oversized combustion turbine and transport vehicle, in the I.D. Appellants’ view.
Rather, from their viewpoint, the crew acted with extreme recklessness, failing to
take the precautions that any ordinary driver would take at a railroad crossing.
Under these circumstances, the I.D. Appellants maintain, they should not be held
vicariously liable for Rountree’s negligent acts or omissions.18
We reject the position of the I.D. Appellants because, as the district court
properly held, Rountree’s failure to move the transport vehicle from the railroad
crossing was a function of the unique dangers that arose in transporting an
oversized piece of machinery like the combustion turbine. The basic
characteristics of the massive transport vehicle are not in dispute. The vehicle had
13 axles and 8 articulations, or pivot points. It required two drivers, one at the
18
The collateral negligence issue was raised in the appellate briefs of GE and Rountree,
but not in AHA’s brief. As a result, the Rail Companies argue that, even if we were to determine
that Rountree acted with collateral negligence, they should not be bound by this determination
on waiver grounds. The Rail Companies are appellees with respect to the appeal by AHA over
its damages award. They are not involved in the separate cross appeal over the indemnification
agreement between KUA and GE, the context within which the collateral negligence issue was
raised. Since AHA, within the context of its own appeal, did not raise the collateral negligence
issue, the Rail Companies contend that AHA should be deemed to have waived that defense with
regard to them. Because we conclude that the district court acted correctly in holding that
Rountree was not collaterally negligent, we need not resolve the waiver issue.
38
front of the vehicle, and one at the back. The vehicle, moreover, was equipped
with a special hydraulic system that could raise or lower the cargo beds to adjust to
gradations in road terrain. If gradations in the terrain were too great, the cargo
beds could then be raised further through “shimming,” the insertion of metal pieces
into certain crevices in the vehicle. R124-814. Before the crew could shim the
load, the vehicle had to be set down on pine blocks, resulting in only a few inches
of clearance between the vehicle and the road surface.
The basic facts leading up to the collision also are not in dispute.19 On the
collision date, the transport vehicle arrived at the private road grade crossing in the
late morning. The Rountree crew first attempted to turn the transport vehicle left
19
The district court’s order and memorandum on the inherently dangerous work issue, as
well as the appellate briefs filed in this case, did not make clear precisely how the transport
vehicle became immobilized on the tracks. Indeed, the appellate briefs did not reference any
specific testimony during the fourteen-day liability trial concerning whether the transport vehicle
became stuck on the tracks, or whether the vehicle instead was disabled on the tracks by the
Rountree crew. Furthermore, if the Rountree crew had disabled the vehicle on the tracks, the
appellate briefs did not make clear the crew’s rationale (or lack thereof) for doing so. Since
resolution of this question would aid us in resolving the collateral negligence issue, we asked the
parties to address the following questions in letter brief form:
Where in the transcript of the two-week liability trial (cite to volume, page, and line) is
there testimony concerning whether the hauler rig was stuck on the railroad grade
crossing when the collision occurred, or whether the crew had purposefully disabled it
there after determining that the rig could not clear the crest in the road? If the latter
occurred, was there any testimony that addressed whether the crew, having determined
that the rig could not clear the crest, had sufficient time to remove the rig from the
crossing prior to the collision?
Order to File Supplement Briefs (January 17, 2002).
The letter briefs filed in response enabled us to obtain a better picture of how the
collision occurred and of what issues were in dispute. We have incorporated this information
into the description of events leading up to the collision.
39
onto the crossing, but a utility pole prevented this maneuver. The Rountree crew
then turned the vehicle around and approached the railroad crossing from the
opposite direction in order to make a right-handed turn. Before proceeding
forward over the railroad crossing, James Garren, the project supervisor, and Ralph
Shook, the rear driver of the transport vehicle, inspected the elevation of the
crossing. To do so, Garren and Shook stood on opposite ends of the track. Garren
kneeled and “eye-balled” how far the crest of the crossing extended up Shook’s
leg. R122-1779. Garren and Shook then used a tape measure to determine the
distance from the ground to the point on Shook’s leg to which the crest extended.
They concluded that the vehicle would clear the crest of the crossing, if the vehicle
was elevated to its maximum height using the hydraulic system.
After raising the height, the Rountree crew attempted to maneuver the
transport vehicle over the railroad crossing. The crew shortly realized, however,
that even with the height of the vehicle fully extended by the hydraulic system, the
cargo beds would not clear the crest of the crossing. Consequently, the crew
stopped the vehicle on the tracks, even though members of the crew had heard that
an Amtrak train was due to pass the railroad crossing by 1:00 p.m. Instead of
backing the transport vehicle completely off the crossing, the crew disabled the
vehicle on the tracks in order to implement the shimming procedure, which would
40
raise the height of the vehicle enough to clear the crossing. The crew did so at the
direction of Garren, who believed that the vehicle could be removed from the
tracks more quickly if the crew set down the vehicle on the tracks to shim the load
than if they first attempted to maneuver it backwards off the crossing. Garren
feared that if the crew tried to back the vehicle completely off the crossing, it
would jack knife and would get stuck there. The crew proceeded to shim the load
with the transport vehicle on the tracks. After completing the shimming procedure,
but before the vehicle had time to proceed forward over the crossing, an Amtrak
train arrived and the collision occurred.
At the liability trial, the dispute over whether Rountree was negligent
focused primarily on the decision to shim the load with the transport vehicle still
on the tracks. The parties presented conflicting accounts of whether the transport
vehicle could have been backed off the crossing in a quick and safe manner.
Additionally, the parties disputed whether the Rountree crew followed a reasonable
procedure in measuring the crest of the crossing before trying to proceed with the
vehicle over the tracks. That is, they argued over whether the Garren and Shook
acted unreasonably by eye-balling the railroad crossing elevation instead of using a
more scientific, precise method of measurement.
That the dispute concerned these particular acts or omissions of the Rountree
41
crew shows that, contrary to the I.D. Appellants’ position, the present case is not
about collateral negligence. This conclusion follows from the fact that the risk that
the Rountree crew would err over whether and how to maneuver backwards the
enormous transport vehicle — with its 13 axles and 8 pivot points — is exactly the
type of dangerous risk inherent to the moving of oversized machinery in a low-
clearance, specialized transport vehicle. That a supervisor like Garren might
miscalculate whether the specialized vehicle would jack knife and get stuck is one
of the dangers inherent to the operation of a 184-foot vehicle hauling an 82-ton
piece of machinery. Moreover, that Garren and Shook would measure the height
of the crest improperly is one of the dangers that flows directly from utilization of
a low-clearance vehicle with a specially-equipped hydraulic unit for raising or
lowering cargo beds in response to terrain elevation. We therefore agree with the
district court that Rountree’s negligence resulted from its failure to take the special
precautions required for transporting an oversized combustion turbine in a
complex, specially-equipped vehicle that was sensitive to changes in terrain
gradation levels. The factual disputes in this case only reinforce this conclusion.
c. The Vicariously Liable Parties
The I.D. Appellants raise one final argument. They contend that even if
transport of the turbine was inherently dangerous, and even if Rountree did not
42
commit collateral negligence, S&S should not be held vicariously liable for
Rountree’s negligent acts or omissions.20 The I.D. Appellants contend that
Rountree’s employer, WOKO, can be held vicariously liable for Rountree’s
negligence, but not S&S, who hired WOKO but had no direct employment or
contractual relationship with Rountree. The issue here is whether a principal
(S&S) can be liable for the conduct of its contractor’s (WOKO’s) subcontractor
(Rountree). We agree with the district court on this issue and conclude that, under
the facts of this case, S&S can be held vicariously liable for Rountree’s negligence.
The parties do not dispute that S&S, through its contract with GE, was
responsible for transporting the combustion turbine to the Plant. By contracting
with GE, S&S assumed the duty of providing for the safe transport of the turbine.
As part of its contractual duties, S&S arranged for the inherently dangerous
activity of having the turbine transported in a specially-equipped vehicle. Because
transport of the turbine constituted inherently dangerous work, the duty of S&S to
provide for the safe transport of the turbine was nondelegable. See Baxley, 521
20
The I.D. Appellants apparently have decided not to challenge the district court’s
decision that GE was vicariously liable for Rountree’s negligence. The I.D. Appellants therefore
have waived their right to appeal the district court’s vicarious liability determination as regards
GE. In any event, the same rationale we apply to uphold the court’s decision as to the vicarious
liability of S&S would apply equally to its decision with regard to GE, who had a nondelegable
duty to transport the turbine safely to the Plant as a result of its Purchasing Agreement with
KUA.
43
So. 2d at 172 (stating that anyone “engaged in or responsible for” the inherently
dangerous activity has a nondelegable duty). When a duty is nondelegable,
“responsibility, i.e., ultimate liability, for the proper performance of that
undertaking may not be delegated.” Atlantic Coast, 385 So. 2d at 679. Thus, as
the district court concluded, S&S remained ultimately liable for the transport of the
turbine, even though it had contracted with WOKO to arrange for the
transportation.
3. Comparative Fault
Even if transport of the combustion turbine was inherently dangerous as a
matter of law, AHA argues that the district court nevertheless should not have
limited its recovery to 41% of its damages. As subrogee of S&S, AHA claims that,
because S&S was only vicariously liable for the collision, the district court erred in
applying Florida comparative fault principles, as enunciated in Florida Statute §
768.81, to reduce the proven damages. AHA contends that § 768.81 applies solely
to parties who are directly negligent, and that a party who is only vicariously liable
cannot have fault apportioned to him under § 768.81. This issue has not been
directly addressed by the Supreme Court of Florida. Because this issue involves
unsettled questions of state law that raise important public policy concerns, we
44
have decided to certify the issue to Florida’s highest court for resolution.
As previously noted, at the conclusion of AHA’s presentation of evidence in
the damages trial, KUA and FMPA,21 among others (collectively, the “C.F.
Appellees”), orally moved for the court to enter judgment as a matter of law in
favor of AHA and against Rountree and the Rail Companies in the amount of
$1,851,822.40, which represented 41% of $4,546,640. The district court granted
the motion. The court ruled that the subrogee AHA could recover only 41% of the
damages that it had proven were incurred by S&S because Rountree’s fault (59%)
was to be apportioned to S&S, and hence to AHA, under Florida Statute § 768.81.
Rountree’s fault was apportioned to the subrogee AHA under § 768.81 because
S&S had been held vicariously liable for, and thus had been imputed with,
Rountree’s negligence under the inherently dangerous work doctrine. Not only
was S&S legally obligated to pay damages owed by Rountree to the collision
victims, but also, through AHA, it was to have its own damages for loss of the
combustion turbine and of the enclosure reduced under § 768.81 in proportion to
Rountree’s negligence. Upon reaching this conclusion regarding the application of
§ 768.81, the district court, having ruled already that Rountree’s liability to AHA
21
KUA and FMPA enjoyed an identity of interest with the Rail Companies over the
damages awarded to AHA because the district court previously had held that KUA and FMPA
had to indemnify the Rail Companies. We discuss in detail the indemnification agreement
between KUA and CSX in section II.C.
45
was limited to $1,000,000,22 entered judgment against the Rail Companies jointly
and severally for the remaining $851,822.40.
In discussing the district court’s conclusion, we turn first to Florida Statute §
768.81, entitled “Comparative Fault.” The section states that “any contributory
fault chargeable to the claimant diminishes proportionally the amount awarded as
economic . . . damages for an injury attributable to the claimant’s contributory
fault.” Fla. Stat. Ann. § 768.81(2) (West 1997).23 The section further provides that
“[t]he court shall enter judgment against each party liable on the basis of such
party’s percentage of fault and not on the basis of the doctrine of joint and several
liability.” § 768.81(3).
AHA’s primary assertion is that the district court improperly treated
vicarious liability as synonymous with the word “fault” in § 768.81, given that
“fault,” in AHA’s view, means direct negligence. To substantiate its position,
AHA points to Florida cases that treat vicarious liability as a matter of status or
relationship, not of fault. See Nash v. Wells Fargo Guard Servs., Inc., 678 So. 2d
22
AHA does not challenge the district court’s determination that it could recover no more
than $1,000,000 from Rountree.
23
In its appellate brief, AHA references Florida Statutes Annotated § 768.81 (West 1997)
as the version of the section applicable to this case. This version was last amended in 1992,
before the turbine collision occurred. The Florida legislature amended § 768.81 in 1999, before
the damages trial over AHA’s damages took place. See Fla. Stat. Ann. § 768.81 (West Supp.
2002). FMPA argues that the 1999 version of the section should apply. The 1999 amendments,
however, did not change the substantive language quoted in the paragraph above.
46
1262, 1264 (Fla. 1996) (“We . . . hold that the named defendant cannot rely on the
vicarious liability of a nonparty to establish the nonparty’s fault.”); Mercury
Motors Express, Inc. v. Smith, 393 So. 2d 545, 549 (Fla. 1981) (“An employer is
vicariously liable . . . [for] the negligent acts of employees committed within the
scope of their employment even if the employer is without fault. This is based
upon the long-recognized public policy that victims . . . should be compensated
even though it means placing vicarious liability on an innocent employer.”)
(emphasis added); Crowell v. Clay Hyder Trucking Lines, Inc., 700 So. 2d 120,
125 (Fla. Dist. Ct. App. 1997) (“Vicarious liability awards compensate for injuries
without regard to fault.”). AHA also notes that in this case, the district court
specifically stated that S&S is an “innocent part[y] who [i]s vicariously liable for
damages which are wholly the fault of Rountree.” R100-1979-22 n.17.
As a consequence of such case law, AHA concludes that when Florida
Statute § 768.81(3) states that damages are to be apportioned based on a party’s
“percentage of fault,” it means based on a party’s direct negligence, not on a
party’s status or relationship with another party. Fla. Stat. Ann. § 768.81(3); see
also Fabre v. Marin, 623 So. 2d 1182, 1185 (Fla. 1993), overruled in part on other
grounds, Wells v. Tallahassee Mem’l Reg’l Med. Ctr., Inc., 659 So. 2d 249 (Fla.
1995) (“We conclude that [§ 768.81] is unambiguous. By its clear terms, judgment
47
should be entered against each party liable on the basis of that party’s percentage
of fault.”) (emphasis added). Indeed, AHA indicates that at least one Florida
appellate panel has interpreted Fabre as equating fault under Florida Statute §
768.81 with direct negligence. See Wal-Mart Stores, Inc. v. McDonald, 676 So. 2d
12, 20 (Fla. Dist. Ct. App. 1996), aff’d sub nom., Merrill Crossing Assocs. v.
McDonald, 705 So. 2d 560 (Fla. 1997) (stating that, in addressing § 768.81, the
Fabre court “equated a defendant’s fault with the amount of its negligence”)
(quotations omitted). The essence of AHA’s contention, therefore, is both that
Florida law consistently has drawn a sharp distinction between vicarious liability
and fault, and that this same distinction should be recognized in the application of
Florida Statute § 768.81, which refers only to fault and never specifically mentions
vicarious liability.
Additional arguments can be made in favor of AHA’s position. AHA claims
that a vicariously liable party cannot be said to have contributed to, or to have
participated in, the accident at issue in a given torts case. But the Fabre court
stated that apportionment of damages under § 768.81 is between “participants to
the accident.” Fabre, 623 So. 2d at 1185 (emphasis added). Furthermore, one can
argue that a vicariously liable party is not a joint or concurrent tortfeasor, given
that such a party is being held liable solely for the conduct of another. Some
48
Florida cases, however, have indicated that § 768.81 only applies to joint or
concurrent tortfeasors. See D’Amario v. Ford Motor Co., __ So. 2d __ (Fla.
November 21, 2001) (No. SC95881, SC96139) (per curiam) (holding that, in a
crashworthiness case between a car accident victim and an automobile
manufacturer, the third-party driver responsible for the initial collision cannot have
fault apportioned to him under § 768.81 because the third-party driver and
manufacturer are not joint or concurrent tortfeasors ); Association for Retarded
Citizens-Volusia, Inc. v. Fletcher, 741 So. 2d 520, 524-25 (Fla. Dist. Ct. App.
1999) (stating that, in an action between an injured party and an initial tortfeasor, a
health care provider who aggravates the initial injury cannot have fault apportioned
to him under § 768.81 because the physician and initial tortfeasor are successive,
rather than joint, tortfeasors).
In sum, AHA’s assertion is that a party who is only vicariously liable cannot
have another’s fault apportioned to him under § 768.81, which AHA argues only
applies to parties who are directly negligent, who actively participate in the
accident at issue, or who constitute joint or concurrent tortfeasors. The subrogee
AHA therefore contends that it should be able to recover all of the damages that it
had proven were incurred by S&S without having Rountree’s negligence
apportioned to it under § 768.81. This interpretation of § 768.81 would not harm
49
the C.F. Appellees, AHA maintains, because they still could recover their damages
from S&S as a result of S&S’s vicarious liability for Rountree’s negligence.
Moreover, irrespective of the outcome here, AHA points out that, should Rountree
seek to recover its own damages from the C.F. Appellees, Rountree still would be
required to have its damages reduced under § 768.81 as a result of its direct
negligence in causing the turbine collision.
The C.F. Appellees raise several rebuttal arguments. They too focus on the
precise wording of § 768.81. The C.F. Appellees note that under § 768.81(2), any
contributory fault that is “chargeable to the claimant” has the effect of diminishing
his or her damages “for an injury attributable to the claimant’s contributory fault.”
Fla. Stat. Ann. § 768.81(2) (emphasis added); see also Cody v. Kernaghan, 682 So.
2d 1147, 1149 (Fla. Dist. Ct. App. 1996) (noting that the doctrine of contributory
fault applies “ to reduce . . . economic . . . damages by the percentage of fault
which can be attributed to the plaintiff”). Terms like “chargeable” and
“attributable,” in the view of the C.F. Appellees, indicate that the meaning of
“fault” for purposes of § 768.81 goes beyond direct negligence. Furthermore, §
768.81(4)(b) lists several situations where comparative fault does not apply, such
as where liability is “based upon an intentional tort,” but the list does not include
situations where liability is based upon vicarious liability. Fla. Stat. Ann. §
50
768.81(4)(b). Based on this statutory language, the C.F. Appellees have a basis for
arguing that the district court did not overreach by treating S&S’s vicarious
liability as within the ambit of the term “fault” found in § 768.81.
In addition to arguing that their position synchronizes with the statutory
language of § 768.81, the C.F. Appellees claim that their position, unlike that of
AHA, accords with baseline tort principles, as pronounced in Restatement (Third)
of Torts: Apportionment of Liability § 5. Section 5 states that “[t]he negligence of
another person is imputed to a plaintiff whenever the negligence of the other
person would have been imputed had the plaintiff been a defendant.” Restatement
(Third) of Torts: Apportionment of Liability § 5 (1999). In turn, comment b of the
Restatement section states that “[w]hen a party would be responsible as a
defendant for the negligence of a third person, the negligence of the third person is
imputed to the party as a plaintiff.” Id. § 5 cmt. b. The C.F. Appellees argue that,
since the vicariously liable S&S would be charged with Rountree’s negligence if
S&S were the defendant, thus causing S&S to bear legal responsibility for any
damages owed by Rountree to collision victims, it follows that Rountree’s
negligence should be charged to S&S in this action where S&S, through AHA, is
the plaintiff.
Finally, the C.F. Appellees turn to distinguishing the cases relied on by
51
AHA, including Fabre, Nash, and Walmart. They contend that Fabre only held
that in enacting § 768.81, the Florida legislature intended for all joint or concurrent
tortfeasors who cause an accident to be included in the apportionment of fault for
that accident, even those tortfeasors who are non-parties to the suit. Fabre, 623 So.
2d at 1185. Fabre never indicated that fault under § 768.81 can only mean direct
negligence, the C.F. Appellees assert. Similarly, they maintain that Nash stands for
the proposition that it is inappropriate for a named defendant to include a non-party
on the verdict form for apportionment of damages, if the non-party is only
vicariously liable for the named defendant’s negligence. Nash, 678 So. 2d at
1264-65. Otherwise, the C.F. Appellees note, the plaintiff’s recovery against the
named defendant would be unfairly split between two parties — the named active
tortfeasor and the vicariously liable non-party — even though the liability of the
two should be coextensive under basis principles of joint and several liability. The
C.F. Appellees’ argument is that the Nash holding has nothing to do with whether a
party to an action, vicariously liable for another’s negligence, can be imputed with
the active tortfeasor’s negligence for purposes of reducing its own damages
recovery. Finally, the C.F. Appellees point out that Walmart held that a non-party
intentional tortfeasor should not be included on the verdict form for purposes of
apportioning fault under § 768.81. Walmart, 676 So. 2d at 16-23. They claim that
52
Walmart is not relevant to the vicarious liability context because the case focuses
exclusively on the interaction between intentional torts and comparative fault.
Unfortunately, there is no easy method for resolving the conflicting
interpretations of § 768.81 and of Florida precedent provided by AHA and the C.F.
Appellees. In our effort to resolve this conflict, we did locate two additional
Florida appellate decisions that deal with vicarious liability and comparative fault,
but on close analysis, neither resolves the issue raised here. In J.R. Brooks & Son,
Inc. v. Quiroz, the Florida appellate court stated that when the named defendant’s
“liability for the accident was purely vicarious in nature . . . it is obvious, contrary
to the ruling below, that the comparative fault statute, section 768.81 . . . do[es] not
apply.” 707 So. 2d 861, 863 (Fla. Dist. Ct. App. 1998). Brooks, however, held
only that a vicariously liable party is entitled to a complete set off as to settlement
amounts paid to the plaintiff by the active tortfeasor. Id. The case was about the
interaction between Florida set-off statutes and § 768.81, a different subject than
the one addressed in the present litigation. We therefore are hesitant to interpret
broadly the language of the opinion concerning the interaction between vicarious
liability and § 768.81.
Similarly, in Suarez v. Gonzalez, a case where the defendant was vicariously
liable for another’s negligence, the Florida appellate court stated that “[t]his is not
53
a situation where there were joint tortfeasors, so the comparative fault statute and
Fabre do not apply.” __ So. 2d __, __ (Fla. Dist. Ct. App. January 2, 2002) (No.
4D01-671). The case, however, was the flip-side of Nash. The appellate court
held that a non-party active tortfeasor should not be included on the verdict form
when a party defendant, who was vicariously liable for the non-party’s negligence,
already was included on that form. Id. Otherwise, like in Nash, the plaintiff’s
recovery against the named defendant would be unfairly split between two parties
even though the liability of the two should be coextensive. As with Brooks, we
refrain from broadly analogizing Suarez to the present case. It therefore is clear
that existing Florida case law does not resolve the question of how § 768.81 is to
be interpreted with regard to vicarious liability. Both sides in the present case have
good arguments for their respective interpretations of § 768.81, and the issue is one
upon which reasonable persons can disagree.
Having concluded that the comparative fault issue raised here involves an
unanswered question of Florida law that is not specifically addressed by
controlling state precedent, we certify the following question of law to the
Supreme Court of Florida for instructions:
SHOULD A VICARIOUSLY LIABLE PARTY HAVE THE
NEGLIGENCE OF THE ACTIVE TORTFEASOR APPORTIONED TO IT
UNDER FLORIDA STATUTE § 768.81 SUCH THAT RECOVERY OF
ITS OWN DAMAGES IS REDUCED CONCOMITANTLY?
54
If the Florida Supreme Court decides to accept this certification, we note that the
phrasing of the question is not meant to limit, in any way, how the court responds
to the question or analyzes the state law issues involved therein.24
4. Prejudgment Interest
After ruling that AHA could recover 41% of its proven damages, the district
court denied AHA’s request for prejudgment interest on its damages award. AHA
argues that the court erred in this regard. We review the district court’s decision on
whether to award prejudgment interest for abuse of discretion. Insurance Co. of
24
As we already noted, the parties dispute which version of Florida Statute § 768.81
applies to this case. If the Florida Supreme Court decides that a vicariously liable party should
have the active tortfeasor’s fault apportioned to it under § 768.81, then it is clear under both
versions of the section that the Rail Companies cannot be held jointly and severally liable for
AHA’s damages. See Fla. Stat. Ann. § 768.81(3) (West 1997); § 768.81(3)(c) (West Supp.
2002). That is, the fault of S&S (59%), and hence of AHA, would be greater than that of either
CSX (33%) or Amtrak (8%), in which case the Rail Companies cannot be held jointly and
severally liable for AHA’s damages
Yet, if the Florida Supreme Court decides that the active tortfeasor’s fault should not be
apportioned to the vicariously liable party, the outcome differs under the two versions of the
section. Under the earlier version cited by AHA, “with respect to any party whose percentage of
fault equals or exceeds that of a particular claimant, the court shall enter judgment with respect
to economic damages against that party on the basis of the doctrine of joint and several liability.”
Fla. Stat. Ann. § 768.81(3) (West 1997). Under this version, both of the Rail Companies would
be jointly and severally liable for AHA’s damages because the direct negligence of CSX (33%)
and Amtrak (8%) would exceed the direct negligence of S&S (0%), and therefore of AHA. Yet,
under the later version of § 768.81 that FMPA argues should apply, “[a]ny defendant found 10
percent or less at fault shall not be subject to joint and several liability.” § 768.81(3)(b)(1) (West
Supp. 2002). Amtrak thus would not be jointly and severally liable for CSX’s damages under
this later version of the section. We refrain from resolving which version of the section should
apply, however, until the Florida Supreme Court has addressed our certified question.
Otherwise, we would run the risk that our decision on the issue would become moot, in the event
that the Florida Supreme Court decides that a vicariously liable party should be apportioned the
active tortfeasor’s negligence under § 768.81.
55
North America v. M/V Ocean Lynx, 901 F.2d 934, 942 (11th Cir. 1990).
Under Florida law,25 “tort claims are generally excepted from the rule
allowing prejudgment interest, primarily because tort damages are generally too
speculative to liquidate before final judgment.” Lumbermens Mut. Cas. Co. v.
Percefull, 653 So. 2d 389, 390 (Fla. 1995). Florida law, moreover, does not
permit a prejudgment interest award unless there is “an ascertainable out-of-pocket
loss occurring at a specific time prior to the entry of the judgment.” Underhill
Fancy Veal, Inc. v. Padot, 677 So. 2d 1378, 1380 (Fla. Dist. Ct. App. 1996).
Applying these principles to the present case, we hold that the district court
acted within its discretion in not awarding prejudgment interest. As section II.A.1
of our opinion indicates, the amount of loss incurred by S&S was unclear and was
a matter of bitter dispute during the damages trial. There was no easily
ascertainable, out-of-pocket amount that AHA could point to as a dispositive
25
FMPA argues that federal law should apply on the issue of prejudgment interest
because federal question jurisdiction is proper in this case. It is true that, because Amtrak is a
federally chartered corporation that meets the requirements of 28 U.S.C. § 1349, federal question
jurisdiction is proper. See The Pacific Railroad Removal Cases, 115 U.S. 1, 11, 5 S. Ct. 1113,
1118 (1885); Osborn v. Bank of the United States, 22 U.S. (9 Wheat.) 738, 817-28 (1824). If
the federal law at issue provides no substantive standards for the allowance of prejudgment
interest, however, we can use state law as a reference point for purposes “of convenience and
practicality.” United States ex rel. Georgia Elec. Supply Co. v. United States Fidelity & Guar.
Co., 656 F.2d 993, 997 (5th Cir. Unit B Sept. 1981). This is especially true here, where Florida
law has been applied throughout this litigation and where the statute at issue, 28 U.S.C. § 1349,
does not contain any substantive legal content.
56
measure of S&S’s loss. It follows the district court did not err in treating the
damages incurred by S&S as unascertainable and speculative before the time of
final judgment, and thus in refusing to grant prejudgment interest to AHA.
B. Indemnification Agreement between KUA and GE
We turn next to the appeal by KUA, FMPA, and B&V (collectively, the
“Indemnitee Appellants”) of the district court’s denial of their motions for
summary judgment on the issue of whether, under the indemnification provision in
the Purchasing Agreement, GE had to reimburse the Indemnitee Appellants for the
expenses they suffered in defending themselves. In denying their motions, the
district court ruled that, as a matter of law, the attorney’s fees and costs the
Indemnitee Appellants incurred were not within the scope of the indemnification
agreement between KUA and GE.
As we have noted, KUA contracted with GE for purchase and delivery of the
customized turbine equipment. The Purchasing Agreement between KUA and GE
included the following provision entitled “Indemnification”:
[T]he Contractor [GE] shall defend, indemnify, and hold
harmless the Owner [KUA] and its officers, directors, commissioners, agents
and employees, and the Engineer [B&V] and its partners from and against
all liability, claims, damages, losses and expenses, including reasonable
attorney[’s] fee[s], resulting from . . . injury to or death of persons (including
employees of Owner, Engineer and Contractor) or physical damage to or
physical loss of property of third parties to the extent of and on account of
any negligent act or omission of Contractor in performing the work under
57
the Contract. . . .
R104-2060 Exh. A at GC.29 (emphasis added).26 Based on this language, the
Indemnitee Appellants moved for summary judgment, arguing that GE had to
reimburse them for attorney’s fees and costs incurred in successfully defending
themselves against liability.
In rejecting their motion, the district court relied primarily on two Florida
cases, Houdaille Industries, Inc. v. Edwards, 374 So. 2d 490 (Fla. 1979), and SEFC
Building Corp. v. McCloskey Window Cleaning, Inc., 645 So. 2d 1116 (Fla. Dist.
Ct. App. 1994). The court found the present case factually indistinguishable from
Houdaille and SEFC Building, both of which state that the indemnitor does not
have to indemnify the indemnitee unless the indemnitee is found to be without
fault. See Houdaille, 374 So. 2d at 492-93; SEFC Bldg., 645 So. 2d at 1117. That
is, both cases provide that, under Florida law, one party has to indemnify another
only if the latter’s liability is founded on the former’s wrongdoing, not on its own.
Id.; SEFC Bldg., 645 So. 2d at 1117. The only time a party can be indemnified for
its own wrongful acts is if the indemnity contract “express[es] such an intent in
clear and unequivocal terms.” SEFC Bldg., 645 So. 2d at 1117.
26
The indemnification provision does not specifically mention FMPA. Because the
district court ruled that the expenses incurred by the Indemnitee Appellants did not fall within
the contours of the provision, the court did not reach the question of whether FMPA was covered
by the indemnification agreement between KUA and GE.
58
Based primarily on these cases, the district court denied the summary
judgment motions and held as a matter of law that the Indemnitee Appellants could
not obtain attorney’s fees and costs under the indemnification provision. The court
noted that, if the Indemnitee Appellants had been held liable at trial, it would have
been due to their own negligence, not that of GE. This is because, the district court
maintained, it had been established that the Indemnitee Appellants could not be
held vicariously liable for GE’s acts or omissions. Based on Houidaille and SEFC
Building, the court concluded that none of the Indemnitee Appellants would have
been entitled to indemnification had they been held liable for the claims brought
against them.27 Since the Indemnitee Appellants would not have been entitled to
indemnification from GE had they been held liable, the court decided that the
Indemnitee Appellants were not entitled to recover attorney’s fees and costs in
defending themselves against such liability.
We review de novo the district court’s decision concerning a motion for
summary judgment, applying the same standard as the district court. Mitchell v.
USBI Co., 186 F.3d 1352, 1354 (11th Cir. 1999). A district court may grant
summary judgment “if the pleadings, depositions, answers to interrogatories, and
27
At the liability trial, the jury had determined that Rountree was 59% at fault for the
collision, CSX was 33% at fault, and Amtrak was 8% at fault. The Indemnitee Appellants had
been cleared of any liability for the turbine collision.
59
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.” Fed. R. Civ. P. 56(c) (2001).
The Indemnitee Appellants raise several arguments as to why the district
court erred by failing to grant them reimbursement for attorney’s fees and costs.
Their best argument, however, is that the district court failed to consider Florida
cases like Florida Department of Transportation v. Southern Bell Telephone &
Telegraph Co., 635 So. 2d 74, 78 (Fla. Dist. Ct. App. 1994), and J.A. Jones
Construction Co. v. Zack Co., 232 So. 2d 447, 450 (Fla. Dist. Ct. App. 1970),
which address indemnification agreements that specifically state that the
indemnitor has to “defend” the indemnitee. The Indemnitee Appellants point out
that the indemnification provision in the Purchasing Agreement states not only that
GE shall “indemnify[] and hold harmless” KUA and others, but also that GE shall
“defend” these parties. R104-2060 Exh. A at GC.29. The Indemnitee Appellants
assert that the district court failed to consider the duty to defend created by the
contractual language and the case law associated therewith. Instead, the court
primarily relied on Houidaille and SEFC Building, cases that do not involve
indemnity provisions containing a duty to defend.
Florida precedent distinguishes between two duties in the contractual
60
indemnification context: (1) the duty to indemnify and hold harmless the
indemnitee, and (2) the duty to defend the indemnitee. See Southern Bell, 635 So.
2d at 78 (noting that the “duty to defend is entirely separate from [the] right to
indemnification”); J.A. Jones, 232 So. 2d at 450 (same). The duty to defend is
triggered based on “the nature of the claim” alleged against the indemnitee,
“regardless of whether the party asserting the claim should win or lose upon a final
determination of the suit.” J.A. Jones, 232 So. 2d at 450; see also Southern Bell,
635 So. 2d at 78. The indemnitor must defend the indemnitee if the underlying
facts contained in the complaint can be fairly read to support a claim covered by
the indemnification provision. Metropolitan Dade County v. CBM Indus. of
Minnesota, Inc., 776 So. 2d 937, 938 (Fla. Dist. Ct. App. 2001). If the lawsuit
involves “a covered claim and a claim which is not covered by the indemnity
agreement, then the duty to defend extends to the entire lawsuit.” Metropolitan
Dade County v. Florida Aviation Fueling Co., 578 So. 2d 296, 298 (Fla. Dist. Ct.
App. 1991) (per curiam).
The Indemnitee Appellants contend that the district court should have
followed the methodology of duty-to-defend cases like CBM Industries and hence
should have focused solely on whether any of the claims brought against the
Indemnitee Appellants were covered by the indemnification provision. They argue
61
that, under cases such as Florida Aviation, so long as one of the claims alleged was
that the Indemnitee Appellants were vicariously liable for GE’s negligence, this
was enough to trigger GE’s duty to defend them against all claims raised in the
litigation. The district court, however, did not focus on whether such claims had
been raised against the Indemnitee Appellants; instead, the court focused on
whether such claims would be successful, concluding that “none of [the three]
parties can be held vicariously or constructively liable for GE’s negligence.”
R104-2086-8.
Had the indemnification provision in the Purchasing Agreement stated that
GE had to defend the Indemnitee Appellants and went no further, we would agree
with the Indemnitee Appellants’ argument. It is clear that the district court did not
follow the methodology commonly employed by Florida courts in the duty-to-
defend context, where the focus is on the claims raised against the indemnitee, not
on the ultimate success of such claims. See CBM Indus., 776 So. 2d at 938; J.A.
Jones, 232 So. 2d at 450. Nevertheless, we agree with the result reached by the
district court because the plain language of the indemnification provision in the
Purchasing Agreement trumps the rules that would otherwise apply in the duty-to-
defend context.
Contract interpretation normally raises questions of law for the court to
62
resolve. DEC Elec., Inc. v. Raphael Constr. Corp., 558 So. 2d 427, 428 (Fla.
1990). In interpreting an indemnity agreement, courts are to look to “the logical
meaning and intent of the contract.” Misener Marine Constr. Co. v. Southport
Marine, Inc., 377 So. 2d 757, 758 (Fla. Dist. Ct. App. 1979). In so doing, courts
are to remember that “[w]ords in an instrument should be given their natural or
most commonly understood meaning.” Tropabest Foods, Inc. v. Florida Dep’t of
Gen. Servs., 493 So. 2d 50, 51-52 (Fla. Dist. Ct. App. 1986).
The indemnification provision here states that GE has to pay the damages,
losses, and expenses (including attorney’s fees) of the Indemnitee Appellants only
“to the extent of and on account of any negligent act or omission of Contractor
[GE] in performing the work under the Contract.” R104-2060 Exh. A at GC.29
(emphasis added). It does not provide, in a manner similar to some indemnity
agreements, that GE must make such payments for damages, losses, or expenses
that may arise out of a negligent act or omission of GE. Cf. CBM Indus., 776 So.
2d at 938. Rather, the wording here is much closer to the indemnity agreement at
issue in Westinghouse Electric Corp. v. Prudential Insurance Co. of America, the
language of which limited the indemnitor’s payment of claims and expenses to
situations where “liability [was] imposed by law.” 547 So. 2d 721, 721 (Fla. Dist.
Ct. App. 1989). Consequently, we conclude that the “to the extent of and on
63
account of” language indicates that any payment of attorney’s fees or other
expenses is limited to situations where GE itself has been found negligent.
Because the district court held as a matter of law that GE was free of direct
negligence for the collision, GE is not required to reimburse the Indemnitee
Appellants for their attorney’s fees or other expenses incurred in defending
themselves.
In response to this interpretation of the indemnification provision, the
Indemnitee Appellants argue that the phrase “negligent act or omission” in the
provision means either direct negligent or vicarious liability. Since GE was held
vicariously liable for Rountree’s transport of the turbine, the Indemnitee
Appellants contend that any contractual condition placed on the payment of
attorney’s fees or expenses has been met. We disagree with the Indemnitee
Appellants’ argument because the word “negligent” contained in the
indemnification provision cannot be read to encompass vicarious liability without
unnaturally expanding its meaning.
Florida law provides that negligence occurs when a person, by some act or
omission, “fail[s] to use reasonable care.” Moransais v. Heathman, 744 So. 2d
973, 976 n.4 (Fla. 1999). In contrast, vicarious liability involves “[t]he imposition
of liability on one person for the actionable conduct of another, based solely on a
64
relationship between the two persons.” Blacks Law Dictionary 1566 (6th ed.
1990). In other words, a person is held negligent based on his or her own failure to
exercise reasonable care, but a person is held vicariously liable based on another’s
failure to exercise reasonable care. It follows that the words “negligent” and
“vicarious liability” are not interchangeable because, in terms of liability, the latter
is a more expansive concept than the former. Had the parties instead meant for
both terms to apply to the provision, they could have chosen a word like “liability”
instead of “negligent.” Furthermore, even if the word “negligent” was ambiguous
as to whether it included vicarious liability, “[i]n construing an indemnity
provision not given by one in the insurance business but given as an incident to a
contract . . . the indemnity provision must be construed strictly in favor of the
indemnitor.” Westinghouse Elec., 547 So. 2d at 722. Any ambiguity in the word
“negligent” thus should be construed in favor of GE to exclude vicarious liability
from its scope.
In sum, the indemnification provision in the Purchasing Agreement placed
upon GE both a duty to indemnify and hold harmless and a duty to defend. The
district court failed to consider Florida precedent that addresses the duty to defend,
instead focusing solely on precedent that addresses the contractual duty to
indemnify and hold harmless. The district court, however, reached the correct
65
result because the plain language of the indemnification provision trumped the
rules that otherwise would apply in the duty-to-defend context. More specifically,
the provision required that GE be held directly negligent for the collision before it
could be required to reimburse the other parties for their attorney’s fees or other
legal expenses incurred in defending themselves. Because the district court
concluded that, as a matter of law, GE was not negligent, the Indemnitee
Appellants are not entitled to reimbursement for their attorney’s fees and costs.
Accordingly, we affirm on the indemnification issue because we can do so “as long
as the judgment entered is correct on any legal ground regardless of the grounds
addressed, adopted, or rejected by the district court.” Ochran v. United States, 273
F.3d 1315, 1318 (11th Cir. 2001) (quotations omitted).
C. Indemnification Agreement between KUA and CSX
As previously mentioned, KUA entered into the Crossing Agreement with
CSX to ensure that there would be vehicular and pedestrian access to the Plant.
Under the Crossing Agreement, CSX granted KUA a license to construct, use, and
maintain a private road grade crossing across CSX’s railroad tracks. Section 14 of
the Crossing Agreement, entitled “RISK, LIABILITY, INDEMNITY,” addresses
KUA’s duty to defend and indemnify CSX in return for receiving the license.
Section 14.1 states:
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Licensee [KUA], recognizing that Railroad’s [CSX’s] operations and any
use of Railroad property, tracks and right-of-way involves increased risks,
expressly assumes all risk of loss and damage to, and waives any right to ask
or demand for, Property of Licensee, or any part thereof, at the Crossing
including loss of or interference with the use of service thereof, regardless of
cause. . . .
R53-1172 Exh. A at 14.1. Section 14.2 further provides that KUA “assumes all
liability for, and releases and agrees to defend, indemnify, protect and save
Railroad harmless from and against [designated losses and casualties] regardless of
cause, even if occurring or resulting from the sole or joint fault, failure or
negligence of Railroad.” Id. at 14.2. In addition, the Crossing Agreement requires
that KUA not only defend and indemnify CSX, but also “any other company . . .
whose property at [the crossing] may be leased or operated by the undersigned
Railroad,” as well as “any parent, subsidiary or affiliated system companies of
Railroad.” Id. at 1.2.
Based on the indemnification provision found in the Crossing Agreement,
the Rail Companies moved for summary judgment and asked the district court to
rule as a matter of law that KUA had to indemnify them against all property loss or
damage they incurred as a result of the collision. They also asked the court to rule
that KUA had to defend them against all claims for property damage or personal
injury in the turbine litigation, and to rule that KUA had to indemnify them against
any liability incurred as a result of such claims. The court granted summary
67
judgment in favor of CSX but denied Amtrak’s motion because material issues of
fact remained in dispute. Later, after the liability trial, the district court granted
Amtrak’s renewed motion for summary judgment, holding that KUA had to defend
and indemnify Amtrak to the same extent that it had to defend and indemnify CSX
because the Amtrak train constituted property that was “operated by” CSX at the
time of the collision. See id. at 1.2.
On appeal, KUA and FMPA28 (collectively, the “Utility Appellants”) present
several arguments as to why we should reverse the district court’s grant of
summary judgment to the Rail Companies. The Utility Appellants’ first assertion
is that the indemnity provision is void and unenforceable because, absent specific
legislative authority, KUA could not waive its sovereign immunity beyond what
was authorized by Florida Statute § 768.28.29 They also contend that the
indemnity provision is void and unenforceable under Florida Statute § 725.06
because its terms failed to meet the requirements for such provisions when
contained in “construction” contracts. Additionally, the Utility Appellants
maintain that due to the indemnity provision, the Crossing Agreement constituted
28
For an explanation as to why FMPA is required to defend and indemnify the Rail
Companies if KUA is required to do so, see supra note 4.
29
The State of Florida filed an amicus curiae brief in support of the Utility Appellants on
the sovereign immunity issue.
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an exculpatory, or adhesion, contract and that, for this reason, there was a question
of fact for the jury as to whether CSX possessed a superior bargaining position in
the execution of the Crossing Agreement. They argue, moreover, that the
indemnity provision is inapplicable under the facts of this case because the
negligent actions of CSX occurred in a location separate and apart from the
railroad crossing. Finally, the Utility Appellants contend that the district court
erred in ruling that Amtrak was a beneficiary of the indemnity agreement between
KUA and CSX.
We need not address all of the Utility Appellants’ arguments at this time. As
we shall explain, the state sovereign immunity issue raised by the Utility
Appellants has not been directly resolved by the Supreme Court of Florida. The
issue involves unsettled questions of state law that raise important public policy
concerns, and so we have decided that, like the comparative fault issue raised in
this case, it should be certified to Florida’s highest court for resolution. Since the
Florida Supreme Court’s decision on the state sovereign immunity issue might be
dispositive of the Crossing Agreement dispute, we refrain from addressing the
Utility Appellants’ other arguments challenging the indemnity provision until the
Florida Supreme Court has spoken.
Under Florida law, the baseline norm is that sovereign immunity applies to
69
actions where the state is a party, but “[p]rovision may be made by general law for
bringing suit against the state as to all liabilities now existing or hereafter
originating.” Florida Const. art. X, § 13. Only the Florida Legislature has
authority to enact a general law that waives the state’s immunity. Manatee County
v. Longboat Key, 365 So. 2d 143, 147 (Fla. 1978). In the torts context, the Florida
Legislature has authorized a limited waiver of state sovereign immunity through
the enactment of Florida Statute § 768.28, which provides in part that:
Actions at law against the state or any of its agencies or subdivisions to
recover damages in tort for money damages against the state or its agencies
or subdivisions for injury or loss of property, personal injury, or death
caused by the negligent or wrongful act or omission of any employee of the
agency or subdivision while acting within the scope of his office or
employment under circumstances in which the state or such agency or
subdivision, if a private person, would be liable to the claimant, in
accordance with the general laws of this state, may be prosecuted subject to
the limitations specified in this act. . . .
Fla. Stat. Ann. § 768.28(1) (West 1997).30 Section 768.28(5) further provides that
state liability is limited to $100,000 per claimant and $200,000 per accident, unless
the Florida Legislature enacts legislation to pay a particular claim in whole or in
part. In contrast, the Supreme Court of Florida has held the limitations imposed by
§ 768.29 do not apply in actions brought against the state for breach of contract.
30
Section 768.28 subsequently has been amended. See Fla. Stat. Ann. § 768.28 (West
Supp. 2002). The substantive language of the section that is important in this case, however,
has not been changed.
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Pan-Am Tobacco Corp. v. Department of Corrections, 471 So. 2d 4, 5 (Fla. 1984).
Based on these sovereign immunity principles, the Utility Appellants argue
that the indemnification agreement between KUA and CSX waived state sovereign
immunity in tort beyond the limits imposed by § 768.28.31 The indemnification
provision does not limit the amount KUA has to pay out per claimant and per
accident, as specified in § 768.28(5). Nor does the provision limit payment by
KUA to situations where the property loss or personal injury is caused by a
negligent act or omission committed by one of its employees. See § 768.28(1).
In contrast, the indemnity provision does require KUA to defend and
indemnify CSX against all claims and liability for property damage or personal
injury “connected in any manner with the construction, reconstruction,
maintenance, existence, use, condition, repair, change, relocation or subsequent
removal of [the] Crossing.” R53-1172 Exh. A at 14.2(C). Indeed, in the present
case, the Rail Companies seek reimbursement even though KUA was cleared of all
negligence for the collision, and even though the Rail Companies never had to
defend against a claim that they were vicariously liable for negligent misconduct
by KUA. Thus, the Utility Appellants contend, the terms of the indemnification
provision go far beyond what is authorized by Florida Statute § 768.28. They
31
The parties do not dispute that the Utility Appellants are agencies of the state for
sovereign immunity purposes.
71
maintain that, as a result, we should not give effect to the terms of the
indemnification provision. See Evanston Ins. Co. v. Homestead, 563 So. 2d 755,
758. (Fla. Dist. Ct. App. 1990) (per curiam) (“A contract may not give validity to
an illegal act, notwithstanding upon whom the hardship should fall”).
There is case law that appears to support the Utility Appellants’ position.
For instance, in Evanston, a Florida city bought an excess professional liability
insurance policy that provided coverage to the city for tort claims that exceeded
$500,000. If the insurance company settled a claim, the policy required the city to
reimburse the company for the retained limit, $500,000. The insurance company
settled a medical malpractice claim against the city for $2,700,000 and sought
reimbursement of $500,000. The city refused, instead agreeing to reimburse the
company only for $200,000, the maximum waiver of sovereign immunity allowed
under § 768.28. The insurance company brought suit, alleging that § 768.28 did
not apply because the suit was for breach of contract. The Florida court disagreed,
holding that the insurance contract could not be used to circumvent the limits of §
768.28. Evanston, 563 So. 2d at 757-58. Similarly, in Seaboard Air Line Railroad
Co. v. Sarasota-Fruitville Drainage District, the Fifth Circuit held that an unlimited
indemnity agreement between a Florida drainage district and a railroad was void as
against public policy because the district could not be compelled to do through an
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indemnification contract what it could not be compelled to do in a torts damages
suit. 255 F.2d 622, 623-24 (5th Cir. 1958).
Based on cases like Sarasota-Fruitville, the argument goes, an
indemnification agreement between a state agency and a private company, like the
one between KUA and CSX, cannot be used to circumvent the dictates of § 768.28.
That is, KUA should not be compelled, based on an indemnification agreement, to
pay out funds that it could not be compelled to pay out in a torts damages suit.
This assertion is buttressed by another case, Donisi v. Trout, 415 So. 2d 730 (Fla.
Dist. Ct. App. 1981). In Donisis, the state appellate court held that an
indemnification agreement between a city and its employee was void in so far as it
required the city to reimburse the employee in an amount that exceeded the limits
imposed by § 768.28. 415 So. 2d at 730-31.
The Utility Appellants also point to several opinions by the Attorney
General of the State of Florida to solidify their position.32 They argue that these
opinions demonstrate that a state agency is prohibited from entering into an
indemnity agreement if it fails to comply with the limits imposed by § 768.28 —
like the agreement entered into between KUA and CSX — unless the agency is
32
“Although an opinion of the [Florida] Attorney General is not binding on a court, it is
entitled to careful consideration and generally should be regarded as highly persuasive” on
matters of Florida law. Florida v. Family Bank of Hallandale, 623 So. 2d 474, 478 (Fla. 1993).
73
otherwise authorized to do so by the Florida Legislature. For instance, in Opinion
2000-22, the Florida Attorney General concluded that no state law authorized a
county to enter into an indemnification agreement that increased the limits of
liability beyond what § 768.28 allows. Fla. Op. Att’y Gen. 2000-22 (April 4,
2000). Similarly, in Opinion 90-21, the Attorney General concluded that the
Department of Corrections did not have statutory authority to enter into an
indemnity agreement with a private company that circumvented the limitations
imposed by § 768.28. Fla. Op. Att’y Gen. 90-21 (March 20, 1990); see also Fla.
Op. Att’y Gen. 95-12 (February 9, 1995) (stating that no statute authorized the
Department of Health and Rehabilitative Services to agree by contract to indemnify
another governmental entity in a manner that altered the state’s immunity under §
768.28).
In rebuttal to these arguments, the Rail Companies assert that the Utility
Appellants cannot rely on § 768.28 because it only governs torts actions. In
Provident Management Corp. v. Treasure Island, the Florida Supreme Court stated
that § 768.28 “applies only when the government entity is being sued in tort” and
when the “damages . . . flow from . . . tortious conduct.” 796 So. 2d 481, 486 (Fla.
2001). In contrast, the Rail Companies contend, the present case involves a suit for
breach of contract, namely, the failure by KUA to fulfill its contractual obligation
74
to defend and hold harmless the Rail Companies. Breach of contract claims, the
Rail Companies claim, are governed by the rule enunciated in Pan-Am. In Pan-
Am, the Florida Supreme Court stated that “[i]n section 768.28 . . . the legislature
has explicitly waived sovereign immunity in tort. There is no analogous waiver in
contract. Nonetheless, the legislature has, by general law, explicitly empowered
various state agencies to enter into contracts.” 471 So. 2d at 5. The court then
went on to hold that “where the state has entered into a contract fairly authorized
by the powers granted by general law,” sovereign immunity does not apply to the
breach of contract action. Id.
According to the Rail Companies, Pan-Am indicates that, as long as KUA
was fairly authorized by general law to enter into contracts like the Crossing
Agreement, sovereign immunity does not protect KUA from the breach of its
contractual duty to defend and indemnify the Rail Companies. To show that KUA
was fairly authorized to enter into the Crossing Agreement, the Rail Companies
point to several provisions of Florida law: (1) the powers given municipalities
under article VIII, § 2(b) of the Florida Constitution; (2) the Municipal Home Rule
Powers Act, Florida Statute § 166.021; (3) the Florida Interlocal Cooperation Act,
Florida Statute § 163.01; and (4) the Joint Power Act, Florida Statute §§ 361.10-
361.18.
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The Rail Companies’ argument is buttressed by the fact that the cases that
appear to support the Utility Appellants’ position can be distinguished. Evanston,
for instance, failed to address Pan-Am and failed to discuss how the latter decision
might affect the sovereign immunity analysis contained therein. Moreover, Donisi
was decided prior to Pan-Am, as was Sarasota-Fruitville. Furthermore, in contrast
to such cases, the Rail Companies point to a Florida case, Jacksonville v. Franco,
where the court upheld an indemnification agreement between a city and a private
railroad because the “clear and unequivocal language” of the contract put the city
on notice of its contractual obligations. 361 So. 2d 209, 211 (Fla. Dist. Ct. App.
1978) (quotations omitted).
The Rail Companies also contrast the Fifth Circuit decision in Sarasota-
Fruitville with Seaboard Air Line Railroad Co. v. Crisp, where the Fifth Circuit
held that a Georgia county could not assert a sovereign immunity defense when it
had entered into a license with a private railroad under which the county assumed
liability for damage occasioned to a railroad embankment. 280 F.2d 873, 877 (5th
Cir. 1960). The county had entered into the license as part of its efforts to build a
hydroelectric dam. The Fifth Circuit distinguished the case from Sarasota-
Fruitville and concluded that, because operation of the dam was a business
operation, the county should be treated like any other business that breaches a
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contract, thus rendering sovereign immunity inapplicable. Id. Similarly, the Rail
Companies argue that operation of the Plant by the Utility Appellants is itself a
business operation, and so the Utility Appellants should be treated like any other
business that breaches a contract.
In addition, the Rail Companies respond to the Utility Appellants’ citation
to opinions of the Florida Attorney General. The Rail Companies argue that these
opinions are misleading because the Attorney General, in issuing his opinions, has
applied a stricter standard than that provided for in Pan-Am. They maintain that
the Attorney General has erroneously failed to apply Pan-Am and has instead
concluded that state agencies have no authority to enter into indemnification
agreements that exceed the dictates of § 768.28, unless a Florida statute
specifically indicates otherwise. In contrast, the Rail Companies contend that Pan-
Am makes clear that an indemnification agreement between a state agency and
private party is binding and enforceable as long as it is part and parcel of a contract
that itself was “fairly authorized” by Florida law. 471 So. 2d at 5.
Finally, the Rail Companies argue that, even if Pan-Am does not apply and
§768.28 controls, the Utility Appellants did not violate § 768.28 by entering into
the indemnification agreement.33 The Rail Companies note that § 768.28(18)
33
The Rail Companies also contend that, even if the indemnification provision in the
Crossing Agreement is invalid, the Utility Appellants should not be heard to so complain
77
specifically provides that when state agencies contract with one another, “[s]uch a
contract must not contain any provision that requires one party to indemnify or
insure the other party for the other party’s negligence or to assume any liability for
the other party’s negligence.” Fla. Stat. Ann. § 768.28(18). By negative
implication, they assert, § 768.28 authorizes state agencies to agree by contract to
defend and indemnify private parties as they so choose. In any event, the Rail
Companies contend that the Florida Interlocal Cooperation Act, Florida Statute §
163.01(15)(k),34 exempts the Utility Appellants from the limitations of § 768.28.
In reply to the arguments of the Rail Companies, the Utility Appellants
because the doctrine of estoppel applies in this case. We will address this argument, if need be,
after the Florida Supreme Court speaks to the sovereign immunity issue raised in this case.
34
The provision states in part:
The limitations on waiver in the provisions of s. 768.28 or any other law to the contrary
notwithstanding, the Legislature, in accordance with s. 13, Art. X of the State
Constitution, hereby declares that any such legal entity or any public agency of this state
that participates in any electric project waives its sovereign immunity to:
....
2. Any person in any manner contracting with a legal entity of which any such
public agency is a member, with relation to:
a. Ownership, operation, or any other activity set forth in sub-subparagraph
(b)2.d. with relation to any electric project; or
b. The supplying or puchasing of services, output, capacity, energy, or any
combination thereof.
Fla. Stat. Ann. § 163.01(15)(k) (West 1997). The Florida Interlocal Cooperation Act
subsequently has been amended. See Fla. Stat. Ann. § 163.01 (West Supp. 2002). The
substantive language at issue here, however, has not been changed.
KUA and FMPA entered into a Participation Agreement to facilitate construction of the
Plant. As KUA acknowledges in its Motion to Correct Misstatement of Fact Contained in the
Reply Brief, this agreement was entered into pursuant to the authority granted by § 163.01. The
Florida Interlocal Cooperation Act therefore is relevant to this case. The Utility Appellants,
however, dispute the meaning attached to § 163.01(15)(k) by the Rail Companies.
78
argue that Pan-Am is irrelevant to the present case and that § 768.28 applies. They
claim that there is a distinction between contracts in which a state agency offers to
pay for goods or services, and indemnification contracts, where the agency agrees
to assume the tort liability of a private party. Pan-Am, the Utility Appellants
maintain, was limited to situations where a state agency breaches a contract to pay
for goods or services from a private party. Furthermore, they assert that, even if
Pan-Am does apply, KUA was not “fairly authorized” under any Florida statute to
enter into the species of contract at issue here, namely, an indemnification contract
in which it assumed the tort liability of a private party. 471 So. 2d at 5. In
contrast, other state agencies explicitly have been given the authority to enter into
indemnification agreements. See Florida Statute § 161.101(4) (authorizing the
Department of Environmental Protection to enter into indemnification agreements
to effectuate beach erosion control); § 255.559(1) (authorizing state agencies to
enter into indemnification agreements with asbestos consultants).
Upon reviewing all of these arguments, we have concluded that there is no
clear answer, based on Florida precedent, for resolving this sovereign immunity
dispute and the important public policy concerns associated therewith. It is an
unsettled question whether the indemnification agreement entered into between
KUA and CSX is controlled by § 768.28. It also is unsettled whether the
79
agreement should be governed by the sovereign immunity rule for breach-of-
contract actions, as laid down in Pan-Am. Indemnification agreements appear to
occupy a grey area between two lines of Florida precedent that address state
sovereign immunity, one of which deals with torts actions, the other with breach-
of-contract actions. Moreover, even if Pan-Am applies, it is unclear, under existing
Florida precedent, if KUA loses its sovereign immunity protection only if it had
statutory authority to enter into the particular species of contract at issue here, an
indemnification contract, or if KUA loses such protection as long as it had general
statutory authority to contract with private parties.
Concluding that the sovereign immunity issues raised in this case involve
unanswered questions of Florida law that are not specifically addressed by
controlling state precedent, we certify the following three questions of law to the
Supreme Court of Florida for review:
GIVEN THAT KISSIMMEE UTILITY AUTHORITY, A MUNICIPAL
AGENCY UNDER FLORIDA LAW, AGREED BY CONTRACT TO
INDEMNIFY A PRIVATE PARTY, IS THE AGREEMENT
CONTROLLED BY THE RESTRICTIONS ON WAIVER OF
SOVEREIGN IMMUNITY FOUND IN FLORIDA STATUTE § 768.28?
IS THE INDEMNIFICATION AGREEMENT INSTEAD CONTROLLED
BY THE RULE FOR BREACH-OF-CONTRACT ACTIONS
ENUNCIATED IN PAN-AM TOBACCO CORP. V. DEPARTMENT OF
CORRECTIONS, 471 So. 2d 4 (Fla. 1985)?
IF PAN-AM APPLIES, DOES A MUNICIPAL AGENCY LIKE
80
KISSIMMEE UTILITY AUTHORITY LOSE THE PROTECTION OF
SOVEREIGN IMMUNITY ONLY IF IT HAS SPECIFIC STATUTORY
AUTHORIZATION TO ENTER INTO INDEMNIFICATION
AGREEMENTS, OR IS IT SUFFICIENT THAT THE AGENCY MORE
GENERALLY HAS STATUTORY AUTHORIZATION TO CONTRACT
WITH PRIVATE PARTIES?
Our phrasing of the certified questions is not meant to limit, in any way, how the
Florida Supreme Court responds to the questions or analyzes the state law issues
involved therein, should the court decide to accept this certification.
III. CONCLUSION
These consolidated appeals ensued after the district court issued its final
judgment respecting a 1993 incident in which an Amtrak passenger train collided
with a hauler rig that was transporting a combustion turbine and turbine enclosure.
On appeal, AHA challenged several district court’s rulings that affected its
damages award. With respect to AHA’s arguments, we have ruled that the district
court correctly restricted the evidence AHA, as subrogee of S&S, could introduce
to prove the damages incurred by S&S, and we have ruled that the court correctly
directed a verdict as to the amount of damages AHA had proven. We also have
determined that the court properly held that transport of the combustion turbine
was inherently dangerous as a matter of Florida law, and that AHA was not entitled
to prejudgment interest. We have decided, however, to certify one of the issues
raised by AHA to the Florida Supreme Court for review. The issue concerns the
81
interrelationship between vicarious liability and comparative fault under Florida
Statute § 768.81. Additionally, we have heard the appeals filed by KUA, FMPA,
and B&V concerning the district court’s ruling that GE did not have to defend and
indemnify them, and we have affirmed that ruling. Finally, we have considered the
appeals of KUA and FMPA challenging the district court’s holding that they had to
defend and indemnify CSX and Amtrak. Because of the important issues of state
law sovereign immunity raised by KUA and FMPA, we have certified three
questions to the Florida Supreme Court for resolution. To assist in the
consideration of all four questions that have been certified herein, we direct the
Clerk of the Court to transmit this certificate, as well as the entire record and the
briefs of the parties, to the Florida Supreme Court. Until such time as the Florida
Supreme Court responds to our certified questions, all further proceedings in these
consolidated appeals are STAYED.
AFFIRMED IN PART AND QUESTIONS CERTIFIED.
82