[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT FILED
________________________ U.S. COURT OF APPEALS
ELEVENTH CIRCUIT
November 17, 2008
No. 07-15931 THOMAS K. KAHN
________________________ CLERK
D. C. Docket No. 06-00317-CV-WS-M
THE OHIO CASUALTY INSURANCE COMPANY,
Plaintiff
Counter Defendant
Appellee,
versus
HOLCIM (US), INC.,
EDWARD J. THIERRY, JR.
DENNIS R. ODOM,
Defendants
Counter Claimants
Appellants,
PATRICIA WHITE,
et al.,
Defendants,
INDUSTRIAL SERVICES OF MOBILE, INC.,
Counter Defendant
Appellee.
________________________
Appeal from the United States District Court
for the Southern District of Alabama
_________________________
(November 17, 2008)
Before BARKETT and WILSON, Circuit Judges, and POGUE,* Judge.
PER CURIAM:
Tort plaintiffs Ronald and Patricia White sued appellant Holcim (US) Inc.
(“Holcim”) in Alabama state court, exclusively alleging claims of wrongdoing on
the part of Holcim. Having settled the lawsuit, Holcim now seeks contractual
indemnification from Ronald White’s employer, Industrial Services of Mobile, Inc.
(“ISOM”). Holcim alleges breach of contract under their “Supply Agreement,” as
ISOM “fail[ed] to pay the portion of the settlement which was not paid by [ISOM’s
general liability insurance carrier].” Holcim also alleged breach of contract against
The Ohio Casualty Insurance Co. (“Ohio Casualty”), ISOM’s excess insurer, for
“failing to pay its portion of the settlement.” The district court granted summary
judgment in favor of ISOM and Ohio Casualty. Holcim appealed.
BACKGROUND
*
Honorable Donald C. Pogue, United States Court of International Trade Judge, sitting by
designation.
2
Holcim operates a cement manufacturing plant in Theodore, Alabama.
Holcim hired ISOM, a general contractor in the industrial sector, to work on
Holcim’s “Raw Silos Project” at its Theodore facility. On February 21, 2003,
Holcim and ISOM entered into a contract entitled “Supply Agreement”
(“Agreement”), which provided that ISOM would indemnify and hold harmless
Holcim:
from any and all claims, demands, actions, penalties,
fines, losses, costs or other liabilities . . . arising out of or
resulting from [ISOM’s] breach of warranty or
performance of this agreement or any act or omission of
[ISOM], whether occurring on [Holcim’s] premises or
elsewhere. However, [ISOM] shall have no obligation to
[Holcim] to the extent such losses are attributable to the
negligence or willful misconduct of [Holcim].
The Agreement further provided that ISOM promised to carry worker’s
compensation, employer’s liability, and commercial general liability insurance, and
to furnish Holcim with certificates “evidencing the existence of the aforementioned
insurance naming [Holcim] as additional insured.” Holcim’s corporate counsel
drafted the Agreement.
On February 23, 2003, ISOM employee Ronald White suffered serious
injuries when he fell through a hole from the second level of a silo while working
on the Raw Silos Project at the Holcim cement plant.1 On October 2, 2003, White
1
Throughout its brief, Holcim asserts that ISOM employees created the hole.
3
and his wife filed suit in Alabama state court against Holcim and two of its
employees (collectively, “Holcim”), alleging negligence, willfulness and
wantonness, and a loss of consortium claim (the “White action”). An amended
complaint additionally alleged that Holcim acted negligently and/or wantonly in
performing duties that it voluntarily undertook and that White was a third-party
beneficiary of ISOM’s and Holcim’s Agreement. The Whites did not name ISOM
as a defendant.2
Holcim demanded that ISOM defend and indemnify it in the White action.
ISOM’s general liability carrier, First Mercury Insurance Company, appointed
counsel to represent Holcim in the White action. ISOM’s excess insurer, Ohio
Casualty, disclaimed coverage for Holcim’s demand of indemnity. On May 24,
2006, the Whites and Holcim proceeded to court-ordered mediation. Holcim
settled with the Whites for $5 million: First Mercury contributed its policy limit of
$1 million; Holcim itself paid $1 million; and nonparty Great American Alliance
Insurance Company, one of Holcim’s excess carriers, paid $3 million. Ohio
Casualty attended the mediation but ISOM did not. Neither Ohio Casualty nor
ISOM contributed any funds to the settlement.
2
As discussed infra, ISOM makes much of the fact that the Whites only sued Holcim for
its own negligence. The district court, however, noted that the exclusivity of Alabama worker’s
compensation law would have barred any claim(s) made by the Whites against ISOM, hence
explaining why the Whites did not name ISOM as a defendant.
4
Approximately one week before the mediation in the White action, on May
18, 2006, Ohio Casualty filed the instant declaratory judgment action in the United
States District Court for the Southern District of Alabama against Holcim. Ohio
Casualty sought a declaration that it had no duty to defend or indemnify Holcim in
the White action under a commercial umbrella policy that Ohio Casualty issued to
ISOM for the time period encompassing White’s accident. Holcim filed a
counterclaim against Ohio Casualty and joined ISOM, seeking to recover all or a
portion of the $4 million paid in the White action.3 Holcim alleged that ISOM had
breached its Agreement to indemnify and hold harmless Holcim by failing to fund
the settlement of the White action. In turn, Holcim alleged that Ohio Casualty had
breached its contractual obligation by failing to recognize Holcim as an additional
insured and by failing to contribute to the settlement.4
ISOM and Ohio Casualty moved for summary judgment on the grounds that,
as a matter of law, neither is obligated to contribute any funds to the White
settlement. The district court agreed and granted summary judgment. As to
ISOM, relying on Alabama law requiring “clear and unequivocal language” in an
indemnity agreement to require an indemnitor to indemnify an indemnitee for its
3
Holcim represented in its counterclaim that its excess insurer authorized it to seek the
recovery of the entire amount paid in the White action.
4
Holcim also alleged a common law indemnity claim against ISOM. Holcim, however,
did not pursue that claim on appeal.
5
own negligence, the district court found that the indemnification provision
“unequivocally states that ISOM [has] no obligation to indemnify Holcim against
any losses ‘to the extent such losses are attributable to the negligence or willful
misconduct of [Holcim].’” Ohio Cas. Ins. Co. v. Holcim (US) Inc., Civil Action
No. 06-0317-WS-M, 2007 WL 2807570, at *14 (S.D. Ala. Sept. 24, 2007) (order
granting summary judgment) (“Ohio Casualty”). The district court concluded that
an inspection of the complaint in the White action revealed that the Whites sued
Holcim for its negligence: “Nothing in the state-court complaint states or can
reasonably be read as suggesting that the Whites sought to hold Holcim liable
through some sort of pass-through or vicarious liability for ISOM’s negligence or
wrongdoing; rather the state court pleadings are quite clear that the Whites sought
relief from Holcim for the negligent, willful, and wanton acts and omissions of
Holcim itself.” Id. at *15. Thus, the district court held that “it would defy logic
and common sense to find that those ‘losses’ (i.e., the settlement payments) are
attributable to anything other than [Holcim’s] own wrongdoing” and granted
summary judgment in favor of ISOM. Id. at *17. As to Ohio Casualty, although
the district court opined that Holcim could be deemed an “additional insured”
under ISOM’s policy with Ohio Casualty, because it found that ISOM was not
liable to Holcim, it concluded that Ohio Casualty likewise was not liable to
6
Holcim. Id. at *22.5 Holcim now appeals the district court’s grant of summary
judgment in favor of ISOM and Ohio Casualty.
STANDARD OF REVIEW
We review a district court’s grant of summary judgment de novo. Beshers v.
Harrison, 495 F.3d 1260, 1265 (11th Cir. 2007). We resolve all genuine issues of
material fact in favor of the non-moving party. Id. We will reverse a grant of
summary judgment and remand for further proceedings if we find a genuine issue
of material fact. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986). We
review a district court’s interpretation of a contract provision de novo. LaFarge
Corp. v. Travelers Indem. Co., 118 F.3d 1511, 1515 (11th Cir. 1997). Because this
appeal arises under diversity jurisdiction, we apply Alabama law. Twin City Fire
Ins. Co. v. Ohio Cas. Ins. Co., 480 F.3d 1254, 1258 (11th Cir. 2007).
DISCUSSION
This appeal presents two discrete issues: (1) whether the district court erred
in finding that the phrase “to the extent” was unambiguous and that the Agreement
only provided coverage if Holcim was not negligent; and (2) whether the district
court erred in limiting its analysis (with respect to attributable loss to the
negligence and willful misconduct of Holcim) to the plain face of the underlying
5
The district court declined to determine whether Holcim’s claims were barred by Ohio
Casualty’s “Cross Suits Exclusion” clause. Id. at 23 n. 23.
7
pleadings. Having reviewed the parties’ briefs and the record and having heard
their positions at oral argument, we find that the instant appeal requires us to delve
into areas of Alabama law that appear unsettled, and hence we certify these
questions to the Alabama Supreme Court. We will address each question in turn.
I. “[T]o the extent”
The district court held that the terms of the indemnification provision in the
Agreement were “clear and unequivocal” with respect to the contested language:
“to the extent such losses are attributable to the negligence or willful misconduct of
[Holcim].” Ohio Casualty, 2007 WL 2807570, at *14. Because it found this
language to be unambiguous, the district court proceeded to construe the contract
and grant summary judgment in favor of ISOM.
Holcim frames the “threshold issue” as “whether the indemnity language
provides indemnification for the combined negligence of Holcim and ISOM,
whereby ISOM owes Holcim indemnification for ISOM’s actions in causing the
damages suffered by White, even though Holcim may also have been negligent.”
Holcim asserts that “to the extent” is unambiguous in that it provides for an
allocation of responsibility between ISOM and Holcim where the loss resulted
from the combined negligence of the parties. ISOM disagrees, responding that the
indemnity provision does not “specifically direct the parties to undertake such an
8
allocation, nor does it provide a manner or method for doing so.” In other words,
ISOM asserts that the language is also unambiguous, but in accordance with the
district court’s finding that ISOM need only indemnify Holcim “if those settlement
proceeds are not losses attributable to Holcim’s negligence or willful misconduct . .
. .” Id. at *14.
“The issue whether a contract is ambiguous or unambiguous is a question of
law for a court to decide.” State Farm Fire & Cas. Co. v. Slade, 747 So. 2d 293,
308 (Ala. 1999). “A contractual provision is ambiguous if it is reasonably
susceptible of more than one meaning.” FabArc Steel Supply, Inc. v. Composite
Constr. Sys., Inc., 914 So. 2d 344, 357 (Ala. 2005) (citing Alfa Mut. Ins. Co. v.
Nationwide Mut. Ins. Co., 684 So. 2d 1295, 1299-1300 (Ala. 1996)).
In our view, the phrase “to the extent . . . attributable . . . to [Holcim]” as
written in this indemnification provision is ambiguous. Two circuits have reached
the same conclusion in interpreting similar albeit not identical language. See Olin
Corp. v. Yeargin Inc., 146 F.3d 398, 404 (6th Cir. 1998) (“The phrase ‘to the
extent’ could be interpreted to impose a percentage limitation on [the indemnitor’s]
duty to indemnify. Or, ‘to the extent,’ read with [other contract language], could
be construed to mean that [the indemnitor’s] duty is triggered only if it is at least
partly at fault.”); Liberty Mut. Ins. Co. v. Pine Bluff Sand & Gravel Co. Inc., 89
9
F.3d 243, 246-47 (5th Cir. 1996) (providing that two “reasonable interpretations”
of the contract language “except to the extent it is caused in part by [the
indemnitee]” exist, i.e., indemnification only if indemnitee was “not in any way
responsible for an underlying claim” or “the indemnity provision incorporates the
principles of comparative negligence”) (emphasis in original).6
In the same manner here, Holcim argues that “to the extent . . . attributable . .
. to [Holcim]” incorporates the principles of comparative negligence while ISOM
(in line with the district court’s reading) argues that it need not indemnify if
Holcim was negligent. We find that each party’s interpretation of the
indemnification provision is reasonably plausible in that the phrase “to the extent .
. . attributable . . . to [Holcim]” is susceptible to more than one meaning, which
gives rise to an ambiguity.
When resolving the found ambiguity, Alabama law directs us to employ
established rules of contract construction. See Extermitech, Inc. v. Glasscock, Inc.,
951 So. 2d 689, 694 (Ala. 2006) (providing that “as articulated in Alfa Life
Insurance Corp. v. Johnson, 822 So. 2d 400, 404-05 (Ala. 2001), the court, as a
matter of law, should apply rules of construction and attempt to resolve any
6
See also Braegelmann v. Horizon Dev. Co., 371 N.W. 2d 644, 646 (Minn. Ct. App.
1985) (providing that the phrase “indemnify and hold harmless” along with “to the extent
caused” “suggests a ‘comparative negligence’ construction under which each party is
accountable ‘to the extent’ their negligence contributes to the injury”).
10
ambiguity in the contract before looking to factual issues to resolve the
ambiguity”); FabArc Steel Supply, 914 So. 2d at 357-62. In doing so, however,
another problem arises: if we construe the ambiguity in favor of Holcim’s reading,
it is unclear whether Alabama law allows recovery under a comparative fault or
negligence theory within a contractual indemnity provision. Compare Sherman
Concrete Pipe Mach., Inc. v. Gadsen Concrete & Metal Pipe Co., 335 So. 2d 125,
127 (Ala. 1976) (distinguishing between contribution and indemnity and providing
that “indemnity seeks to transfer the entire loss of one tortfeasor to another who, in
equity and justice should bear it. . . . And, in the case of indemnity, where joint
tortfeasors are equally at fault, i.e. where each is chargeable with active or
affirmative negligence contributing to the injury, for which recovery was had,
neither is entitled to indemnity from the other, although he may be entitled to
contribution.”) with Humana Med. Corp. v. Bagby Elevator Co., Inc., 653 So. 2d
972, 974 (Ala. 1995) (providing that “when one joint tort-feasor has agreed in
writing to indemnify the other joint tort-feasor, even for claims based on the
other’s own negligence, the agreement, if otherwise valid, can be upheld and
enforced”) and United States v. Seckinger, 397 U.S. 203, 216 (1970) (applying
federal law and stating that “[i]n short, [indemnitor] will be responsible for the
damages caused by its negligence; similarly, responsibility will fall upon
11
[indemnitee] to the extent that it was negligent.”).7 Because we find no controlling
precedent on point under Alabama law and because the resolution of this appeal
hinges on this unsettled aspect of Alabama law, we certify this issue to the
Alabama Supreme Court.
II. Looking behind the Complaint in the White action
Part and parcel to its finding that ISOM need only indemnify Holcim if
Holcim were not negligent, the district court concluded that because the pleadings
in the White action only alleged negligence against Holcim and not ISOM, Holcim
was not entitled to indemnification under the Agreement.
Holcim argues that the district court should consider the underlying facts of
the White action as opposed to only the allegations in the complaint. ISOM
responds that the district court correctly limited its analysis to the plain face of the
complaint in the White action, which only alleged negligence against Holcim.
7
At least two states allow recovery under a concurrent negligence or fault theory within a
contractual indemnity claim. See, e.g., Delle Donne & Assoc., LLP v. Millar Elevator Serv. Co.,
840 A.2d 1244, 1253-54 (Del. 2004) (providing that “existing Delaware law gives a party the
right to contractual indemnity where there is concurrent negligence between the indemnitor and
the indemnitee. Existing Delaware law also permits an indemnitee to recover partial contractual
indemnity for losses caused by the indemnitor’s negligence, and it permits that partial
contractual indemnity to be measured by the percentages of liability determined by a jury.”)
(footnotes omitted); Kroger Co. v. Giem, 387 S.W.2d 620, 626 (Tenn. 1964) (providing that “it
is nearly a universal rule that there can be no recovery where there was concurrent negligence of
both indemnitor and indemnitee unless the indemnity contract provides for indemnification in
such case by clear and unequivocal terms; and general words will not be read as expressing such
an intent”) (citations and internal quotation omitted).
12
Neither of the parties have presented a case directly on point: whether a
court may look behind (or beyond) a complaint from an underlying action to
determine coverage of an indemnity provision in the subsequent indemnification
action between the indemnitor and indemnitee. While the Alabama Supreme Court
has appeared to allow a court to look behind the pleadings in interpreting a similar
(but not identical) provision,8 see FabArc, 914 So. 2d at 361 (rejecting the
indemnitor’s “argument that the allegation provision could be triggered only by the
filing o[f] an action naming it as a defendant; all the provision requires is that there
be a charge or allegation of fault on the part of [indemnitor]”), the district court
relied on persuasive authority from other jurisdictions establishing to the contrary,
see Ohio Casualty, 2007 WL 2807570, at *9-10.9 Because we find no clear,
controlling precedent on point under Alabama law, we certify this issue to the
Alabama Supreme Court as well.
CERTIFICATION
8
We also note that, in the related context of insurance, Alabama law allows a court to
look behind a complaint. See Tanner v. State Farm Fire & Cas. Co., 874 So. 2d 1058, 1066
(Ala. 2003) (“The insured’s conduct rather than the allegedly injured person’s allegations
determine whether the insurer has a duty to indemnify.”) (citations omitted).
9
See e.g., McNally & Nimergood v. Neumann-Kiewit Constructors, Inc., 648 N.W.2d
564, 578 (Iowa 2002) (“[A]n indemnitee cannot transform the underlying claim by the injured
party into a different lawsuit by making allegations of negligence against the indemnitor in a
subsequent action for indemnity.”). But see, e.g., Williams v. Midland Constructors, 221 F.
Supp. 400, 403 (E.D. Ark. 1963) (providing that while the original complaint between injured
employee and indemnitee only alleged indemnitee’s negligence, that “does not change the fact
that the actual breach of duty was committed by [indemnitor]”).
13
“When substantial doubt exists about the answer to a material state law
question upon which the case turns, a federal court should certify that question to
the state supreme court in order to avoid making unnecessary state law guesses and
to offer the state court the opportunity to explicate state law.” Forgione v. Dennis
Pirtle Agency, Inc., 93 F.3d 758, 761 (11th Cir.1996) (per curiam) (citation
omitted). “Only through certification can federal courts get definitive answers to
unsettled state law questions. Only a state supreme court can provide what we can
be assured are ‘correct’ answers to state law questions, because a state’s highest
court is the one true and final arbiter of state law.” Id. In this case, we find
sufficient cause to certify two questions to the Alabama Supreme Court with
respect to the interpretation of an indemnification agreement.10
CERTIFICATION FROM THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT TO THE SUPREME COURT OF ALABAMA
PURSUANT TO RULE 18 OF THE ALABAMA RULES OF APPELLATE
PROCEDURE. We respectfully certify the following questions TO THE
SUPREME COURT OF ALABAMA AND THE HONORABLE JUSTICES
10
As to Ohio Casualty, the district court found that Holcim did not qualify as an
additional insured by virtue of an insured contract because the insured contract here (i.e., the
Agreement) excluded the type of loss for which Holcim demanded coverage. As such, our
review of the district court’s ruling as to Ohio Casualty hinges on the Alabama Supreme Court’s
answers to the certified questions with respect to ISOM.
14
THEREOF:
1. Whether, under Alabama law, an indemnitee may enforce an
indemnification provision and recover damages from an indemnitor resulting from
the combined or concurrent fault or negligence of the indemnitee and indemnitor?
2. Whether, under Alabama law, a court may look behind (or beyond) the
pleadings (in particular, the complaint) of an underlying tort action in determining
the application of an indemnification provision between an indemnitor and
indemnitee?
The entire record in this case, together with copies of the briefs of the
parties, is transmitted herewith.
QUESTIONS CERTIFIED.
15