Burlington Northern & Santa Fe Railway Co. v. Interdom Partners, Ltd.

United States Court of Appeals
Fifth Circuit
F I L E D
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT December 10, 2004
_______________________
Charles R. Fulbruge III
No. 04-10095 Clerk
_______________________
THE BURLINGTON NORTHERN AND SANTA FE RAILWAY COMPANY,
Plaintiff - Appellee,
v.
INTERDOM PARTNERS, LTD., ET AL,
Defendants,
INTERDOM PARTNERS, LTD., INTERDOM INC.,
Defendants - Appellants,
_______________________
Appeal from the United States District Court
for the Northern District of Texas
_______________________
Before WIENER and PRADO, Circuit Judges, and LITTLE, District
Judge.*
PER CURIAM:**
Appellant Interdom Partners Ltd. (“Interdom”) appeals from
the district court’s grant of summary judgment, in which the
district court determined that Interdom must indemnify Appellee
The Burlington Northern and Santa Fe Railway Company (“BNSF”) for
*
District Judge of the Western District of Louisiana,
sitting by designation.
**
Pursuant to 5TH CIRCUIT RULE 47.5, the court has determined
that this opinion should not be published and is not precedent
except under the limited circumstances set forth in 5TH CIRCUIT
RULE 47.5.4.
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damages from a train derailment. Because fact questions
concerning the cause of the derailment prevent summary judgment,
we reverse and remand.
Background Facts and Procedural History
Interdom serves as a sort of shipping intermediary. In this
role, Interdom arranges for the transportation (including by
rail) of commodities for clients, who include various carriers
and direct shippers. As part of that process, Interdom entered
into a series of agreements with BNSF. This case involves the
provision in those agreements where Interdom agreed to indemnify
BNSF for damage “proximately caused by or resulting from” failure
to comply with BNSF’s requirements or from failure to load and
brace the cargo properly, unless caused by BNSF’s sole
negligence.
On January 17, 2001, a BNSF train carrying a load of steel
coils, among other items, derailed near Loder, Oklahoma.
Interdom had arranged for the transportation of this load. The
parties appear to agree that, because of an improper description
from another company, Interdom was not aware that the containers
it was transporting contained steel coils. The parties also
agree that, under their contracts, steel coils required different
handling from other kinds of cargo and that special bracing
procedures for steel coils were not used in this case. In fact,
the insufficiency of the framework that supported the coils has
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been cited, particularly by BNSF, as one possible cause of the
derailment.
Following the derailment and repair, BNSF sued Interdom in
the Northern District of Texas. In the suit, BNSF claimed that
the indemnification provisions in the agreements required
Interdom to pay for all the damage from the derailment. BNSF’s
complaint also included claims for breach of contract,
negligence, and negligent misrepresentation. Interdom filed
third-party claims against Columbus Line, Inc., the company that
provided the incorrect description, which in turn filed third-
party claims against four other companies. On November 6, 2003,
BNSF moved for summary judgment on its indemnity claims against
Interdom.
The district court granted BNSF’s motion for summary
judgment, finding that Interdom’s liability was established
because the parties’ experts “do not rule out the improper
loading of the coils and the mislabeling of the shipment as
proximate causes of the derailment.” The district court also
concluded that BNSF had established the amount of its damages.
After reaching these conclusions, the court entered a final
judgment on these claims in the amount of $3,230,100.30 plus
post-judgment interest and costs. Interdom filed a notice of
appeal, and the district court stayed the remaining proceedings.
Standard of Review
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We review the district court’s grant of summary judgment de
novo. Moore v. Willis Indep. Sch. Dist., 233 F.3d 871, 874 (5th
Cir. 2000). Summary judgment is appropriate when there are no
genuine issues of material fact and the movant is entitled to
judgment as a matter of law. FED. R. CIV. P. 56(c). When faced
with a summary judgment motion,
[T]he court must review all of the evidence in the
record, but make no credibility determinations or weigh
any evidence. In reviewing all the evidence, the court
must disregard all evidence favorable to the moving party
that the jury is not required to believe, and should give
credence to the evidence favoring the nonmoving party as
well as to the evidence supporting the moving party that
is uncontradicted and unimpeached.
Moore, 233 F.3d at 874 (citations omitted).
Discussion
Each party cites different provisions of their agreements
when arguing whether summary judgment was appropriate. Interdom
emphasizes the existence of a dispute about the proximate cause
requirement, whereas BNSF contends that Interdom has not
presented any evidence supporting the sole negligence exception
to the indemnity agreement.
The relevant parts of the agreement read:
The shipper will be liable to BNSF or any third party for
property damage, personal injury or death proximately
caused by or resulting from (1) failure to comply with
any requirement set forth in this BNSF Intermodal Rules
and Policies Guide, including, but not limited to,
equipment specifications and standards, (2) a defect in
a vehicle supplied by shipper, or (3) failure of the
shipper to load and brace the lading properly and in
accordance with the requirements set forth in this BNSF
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Intermodal Rules and Policies Guide, unless caused by the
proven sole negligence of BNSF.
IT IS EXPRESSLY INTENDED THAT THE SHIPPER IS TO INDEMNIFY
BNSF PURSUANT TO THE FOREGOING; SUCH INDEMNITY SHALL
INCLUDE (1) INDEMNITY FOR THE NEGLIGENCE OR ALLEGED
NEGLIGENCE OF BNSF, WHETHER ACTIVE OR PASSIVE, WHERE SUCH
BNSF NEGLIGENCE IS A CAUSE (BUT NOT THE SOLE CAUSE) OF
THE LOSS OR DAMAGE; (2) INDEMNITY FOR STRICT LIABILITY
RESULTING FROM VIOLATION OR ALLEGED VIOLATION OF ANY
FEDERAL, STATE OR LOCAL LAW OR REGULATION BY BNSF,
INCLUDING, BUT NOT LIMITED TO, THE FEDERAL EMPLOYERS
LIABILITY ACT, AND THE OCCUPATIONAL HEALTH AND SAFETY
ACT.
The Shipper will defend and indemnify BNSF from and
against the loss and damage described above and for the
cost of defending claims filed against BNSF for such
damage, including, but not limited to, reasonable
attorney’s fees necessary to defend against claims or
suit. Upon tender of the defense for any claim or action
against BNSF, shipper shall, at its expense, defend BNSF
in such claim or action.
Acceptance by BNSF of a shipment not in compliance with
this BNSF Intermodal Rules and Policies Guide will not
serve to release the shipper from its obligations,
including the obligation to defend and indemnify BNSF
. . . .
Emphasizing the requirement that the damage be “proximately
caused by or resulting from” any of the listed things, Interdom
argues that the experts disagree about what caused the derailment
and that they therefore disagree about whether Interdom’s actions
proximately caused the accident. In contrast, BNSF contends that
none of the experts suggest that BNSF’s negligence was the sole
cause of the derailment and that it was therefore entitled to
summary judgment. In making this argument, BNSF invokes the sole
negligence exception and skips over the “proximately caused by or
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resulting from” language. The issue thus becomes whether cause
is a prerequisite for indemnity under the agreement.
We conclude that it is––the proximate cause requirement must
be met before the indemnity clause applies. This reading is
clear from the language introducing the provision: “The shipper
will be liable to BNSF or any third party for property damage,
personal injury or death proximately caused by or resulting from
....” (Emphasis added). The sole negligence provision is an
exception, as evidenced by its “unless” language. Without
showing that one of the listed items caused the damage, BNSF is
not entitled to idemnity.
Thus, to analyze whether summary judgment was proper, we
must first address whether BNSF’s evidence established that this
initial requirement was met. This requirement can be met in two
ways––damage can be either proximately caused or “resulting from”
the action. Under Texas law, proximate cause has two parts:
foreseeability and cause in fact. Southwest Key Program, Inc. v.
Gil-Perez, 81 S.W.3d 269, 274 (Tex. 2002). The parties,
particularly Interdom, emphasize the cause-in-fact element. For
cause in fact, a party must show that an action was “a
substantial factor in bringing about [the] injury and without
which no harm would have been incurred.” Id. “Resulting from,”
too, requires causation.
Interdom bases its challenge on this point and argues that
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BNSF failed to conclusively show that Interdom’s actions caused
the derailment.1 Thus, according to Interdom, a fact question
remains. In making this argument, Interdom emphasizes that, in
reviewing summary judgment, all factual inferences from the
evidence are to be drawn in favor of it as the nonmovant. See
Moore, 233 F.3d at 874.
As part of this evidence, Interdom cites the affidavit of
its expert Gregg Perkin, who concluded that “too many facts
remain for anyone to precisely determine the proximate cause(s)
of this derailment. The possibility remains that BNSF directly
contributed to the events leading up to this derailment.” While
not ruling out improper loading of steel coils as a cause, Perkin
provided other possible causes of the derailment: structural
deficiencies with the railcar, defects along the railway,
slipping by another car, and the train’s speed. With all of
these unknown factors, Interdom contends that a fact question
exists regarding proximate cause.
We agree with BNSF, however, that Perkin’s affidavit is
insufficient by itself to defeat summary judgment because it
merely indicates, without elaboration or support, that several
1
According to the district court, the plaintiff’s experts
“do not rule out the improper loading of the coils and the
mislabeling of the shipment as proximate causes of the
derailment.” Interdom contends that this kind of analysis places
an improper burden on it when it was BNSF’s burden to establish
proximate cause.
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causes might be possible.2 It does not provide its own view of
causation; because it is so vague, it also does not impeach
BNSF’s expert opinion. Nevertheless, Interdom has provided
further evidence beyond Perkin’s affidavit. Interdom also
provided the reports of two other experts, Colin Fulk and Roger
Iversen.3 Both reports were based on examination of the site and
cars, and both reports provide specifics of other possible
causes. In particular, Fulk contends that defects in the rail
car, combined with train speed and track conditions, caused the
derailment. The second expert report, by Iversen, concluded that
the train derailed because of BNSF’s excessive rough handling.
These experts’ opinions contradict the opinion of BNSF’s expert,
who contended that derailment was caused by the steel coils
exceeding the maximum weight for the container. In other words,
these reports show the existence of a fact question concerning
causation and, more importantly, concerning whether any of the
actions listed in the agreement caused the derailment. This
dispute among the experts cannot be resolved at summary judgment.
Because of this dispute, summary judgment on BNSF’s indemnity
claim was improper.
Conclusion
Because a fact question concerning proximate cause remains,
2
We also note that Perkin never physically examined the rail
car or the site.
3
These experts were retained by other parties.
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the district court’s grant of summary judgment was incorrect. We
reverse and remand for further proceedings in the district court.
REVERSED AND REMANDED.
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