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BNSF Railway Co. v. Gilster-Mary Lee Corp.

United States District Court, S.D. Illinois

March 29, 2017

BNSF RAILWAY COMPANY, Plaintiff,
v.
GILSTER-MARY LEE CORPORATION, ACE AMERICAN INSURANCE COMPANY and ACE PROPERTY AND CASUALTY INSURANCE COMPANY, Defendants.

          MEMORANDUM AND ORDER

          J. PHIL GILBERT DISTRICT JUDGE.

         This matter comes before the Court on two motions for summary judgment, one filed by plaintiff BNSF Railway Company (“BNSF”) (Doc. 85) and the other filed by defendant Gilster-Mary Lee Corporation (“GML”) (Doc. 87). BNSF's motion seeks summary judgment only on Count II. GML has responded to that motion (Doc. 90), and BNSF has replied to that response (Doc. 92). GML seeks summary judgment on Counts I, II and III. BNSF has responded to that motion (Doc. 89), and GML has replied to that response (Doc. 91).

         I. Background

         This case arose after a BNSF employee, Cecil A. Parrish, was injured while working for BNSF at GML's rail yard. He was injured using a pry bar to align two railcars on a curved track in the rail yard. Parrish filed a lawsuit against BNSF under the Federal Employers' Liability Act (“FELA”), 45 U.S.C. § 51 et seq.: Parrish v. The Burlington Northern and Santa Fe Railway Company, No. 13-cv-1054-JPG-SCW. BNSF and Parrish settled that lawsuit.

         In the case at bar, BNSF seeks to hold GML and its insurers, defendants ACE American Insurance Company and ACE Property and Casualty Insurance Company (collectively, the “ACE defendants”), liable for the costs of the defense in Parrish and the settlement amount. It believes a written Industry Track Agreement (the “Sidetrack Agreement”) between BNSF and GML (Count I) as well as a common law duty of implied indemnity (Count III) obligate GML to indemnify it for those amounts. BNSF also believes GML breached the Sidetrack Agreement by failing to name BNSF as an additional insured on an insurance policy that covered BNSF's liability and defense in Parrish (Count II). BNSF tendered the defense of the case to GML and asked GML to initiate an insurance claim on its behalf, but GML refused.

         Following a previous round of summary judgment motions, the Court found as a matter of law that GML did not agree in the Sidetrack Agreement to indemnify BNSF for BNSF's own negligence and that neither of the insurance policies issued by the ACE defendants provided coverage for BNSF for losses from the Parrish lawsuit (Doc. 84).

         In the current round of summary judgment motions, both parties seek summary judgment on Count II, the claim for breach of the promise to obtain insurance in the Sidetrack Agreement. BNSF relies on the Court's finding in its prior summary judgment order to argue GML breached the Sidetrack Agreement by failing to provide liability insurance that would cover liability for Parrish's injury. On the other side, GML argues the Sidetrack Agreement only obligated it to name BNSF as an additional insured on an automobile insurance policy, not a general liability policy. In any case, it contends, even if it were required to obtain general liability insurance naming BNSF as an additional insured, it complied with the Sidetrack Agreement with the ACE policy it purchased. Additionally, GML argues that BNSF waived the insurance requirement.

         GML also seeks summary judgment on Count I for contractual indemnity and Count III for implied indemnity. With respect to Count I, GML argues that it was not negligent in any way with respect to Parrish's injury because it owned him no duty. As a consequence, it argues, the Sidetrack Agreement does not obligate it to indemnify BNSF for any of the costs stemming from Parrish's injury. In response, BNSF argues GML was negligent in a number of ways and that its liability stems from its contractual obligation to provide a safe workplace.

         With respect to Count III, GML argues that BNSF does not satisfy the requirements for implied indemnity, which include being completely blameless. BNSF maintains that the relative fault of the parties - and whether BNSF is blameless - is a question for the jury to decide.

         II. Summary Judgment Standard

         Summary judgment must be granted “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a); see Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986); Spath v. Hayes Wheels Int'l-Ind., Inc., 211 F.3d 392, 396 (7th Cir. 2000). The reviewing court must construe the evidence in the light most favorable to the nonmoving party and draw all reasonable inferences in favor of that party. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986); Chelios v. Heavener, 520 F.3d 678, 685 (7th Cir. 2008); Spath, 211 F.3d at 396.

         The initial summary judgment burden of production is on the moving party to show the Court that there is no reason to have a trial. Celotex, 477 U.S. at 323; Modrowski v. Pigatto, 712 F.3d 1166, 1168 (7th Cir. 2013). Where the non-moving party carries the burden of proof at trial, the moving party may satisfy its burden of production in one of two ways. It may present evidence that affirmatively negates an essential element of the non-moving party's case, see Fed. R. Civ. P. 56(c)(1)(A), or it may point to an absence of evidence to support an essential element of the non-moving party's case without actually submitting any evidence, see Fed. R. Civ. P. 56(c)(1)(B). Celotex, 477 U.S. at 322-25; Modrowski, 712 F.3d at 1169. Where the moving party fails to meet its strict burden, a court cannot enter summary judgment for the moving party even if the opposing party fails to present relevant evidence in response to the motion. Cooper v. Lane, 969 F.2d 368, 371 (7th Cir. 1992).

         In responding to a summary judgment motion, the nonmoving party may not simply rest upon the allegations contained in the pleadings but must present specific facts to show that a genuine issue of material fact exists. Celotex, 477 U.S. at 322-26; Anderson, 477 U.S. at 256-57; Modrowski, 712 F.3d at 1168. A genuine issue of material fact is not demonstrated by the mere existence of “some alleged factual dispute between the parties, ” Anderson, 477 U.S. at 247, or by “some metaphysical doubt as to the material facts, ” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). Rather, a genuine issue of material fact exists only if “a fair-minded jury could return a verdict for the [nonmoving party] on the evidence presented.” Anderson, 477 U.S. at 252.

         III. Discussion

         Because the two general issues in the pending motions - indemnity and insurance coverage - turn on facts about different aspects of this case, the Court sets forth the facts separately, followed by analysis of each issue.

         A. Counts I and III: Indemnity Issues

         1. Facts

         Viewed in the light most favorable to BNSF, the evidence establishes the following relevant facts.

         Cecil Parrish was an employee of BNSF. When he first began working for BNSF, BNSF trained him to do his job. It provided him a training booklet, the train yard and engine safety rules (“Safety Rules”), which included instructions about how to couple and uncouple railcars and locomotives. Coupling involves aligning a drawbar on the railcar coupler and a drawbar on the locomotive coupler so that when they impact each other, the knuckles of the couplers automatically attach to allow the locomotive to pull the railcar. When couplers are not aligned - or mismatched, in the language of the Safety Rules - they must be adjusted into alignment either by hand or using a device such as, for example, various types of bars listed in the Safety Rules. The Safety Rules describe the adjustment procedure, but no BNSF employee ever actually demonstrated to Parrish use of the specific devices mentioned in the Safety Rules.

         On April 12, 2013, Parrish was working for BNSF at GML's Centralia, Illinois, rail yard within fifty feet of track owned and maintained by GML. BNSF would run railcars full of sugar into GML's Centralia plant, which GML would use to manufacture cake mixes, and would remove empty railcars from the yard. GML employees would instruct BNSF employees which railcars to move where and would observe the railcar movement, but they would not participate in the actual movement. The Sidetrack Agreement, a standard agreement BNSF drafted and executed with the owners of industrial facilities on which BNSF provided rail service by a track other than the main track, governed the arrangement between BNSF and GML regarding BNSF's rail service to the GML plant. In the Sidetrack Agreement, GML agreed, among other things, “to provide a safe workplace for [BNSF] employees.” Sidetrack Agmt. § 2(a) (Doc. 1-1 at 1). Further, as explained in the Court's June 30, 2016, order, in § 8(a) of the Sidetrack Agreement, GML agreed to indemnify BNSF for losses BNSF incurs as a result of GML's fault or negligence in proportion to GML's comparative degree of fault or negligence.[1]

         On that day, Paul Spieth, a GML yard operator, instructed Parrish where to put the loaded railcars being delivered and which empty railcars to pull out of the yard, and then GML's yard manager Elmer Patten observed the operation. Spieth's instruction did not include any direction about how to accomplish the mechanics of the movement such as, for example, how to couple or uncouple railcars. When Parrish tried to couple an empty railcar with a locomotive in preparation for moving the railcar out, he was faced with mismatched couplers that he was unable to move by hand.

         As he had once or twice a week on numerous other occasions when adjusting couplers in the GML yard, Parrish retrieved a pry bar that was kept near where he was working. The pry bar had been kept there for about three years. Parrish thought the bar was of a type mentioned in the Safety Rules as appropriate for adjusting couplers, and he had been taught to use the pry bar for that purpose by other BNSF employees. It was actually a pry bar GML provided for its employees to use to open outlet valves of full railcars. BNSF had not provided Parrish with any other device to assist in adjusting mismatched couplers, had not observed Parrish using the pry bar[2], but had also not instructed Parrish not to use GML's pry bar. At least ...


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