Summary 2011 WY 24

Summary of Decision February 14, 2011

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Case Name: Union Pacific Railroad Company v. Caballo Coal Company

Citation: 2011 WY 24

Docket Numbers: S-10-0112, S-10-0113

URL: http://tinyurl.com/6kfzlx8

Appeal from the District Court of Campbell County, Honorable Dan R. Price II, Judge

Representing Union Pacific Railroad Co.: Howard P. Olsen, Jr. and Steven W. Olsen of Simmons Olsen Law Firm, P.C., Scottsbluff, Nebraska.

Representing Caballo Coal Co.: Richard A. Mincer and Billie LM Addleman of Hirst Applegate, LLP, Cheyenne, Wyoming.

Date of Decision: February 14, 2011

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

Issues: Whether the court erred in granting Caballo’s motion for summary judgment on the ground that Caballo had no duty to UP’s employee. Whether the district court should have granted UP’s motion for partial summary judgment on the reasonableness of its settlement with Mr. Riecke.

Holdings: General contract interpretation principles apply to indemnity agreements. The language of the parties expressed in their contract must be given effect in accordance with the meaning which the language would convey to reasonable persons at the time and place of its use. Where there is an express indemnity provision, its parameters are derived from the specific language of [the] contract. Under the terms of their agreement, CCC was obligated to indemnify UP for any loss, damages, etc. arising from the operation of the trains over the tracks to the extent that they result from any negligence or wrongful act or omission of CCC’s officers, employees or agents. This type of provision, which grounds the right to indemnification upon the indemnitor’s negligence, is common. By contrast, there are indemnification agreements where the indemnitor agrees to indemnify the indemnitee for all losses, regardless of fault. Provisions of this sort that exculpate the indemnitee from the consequences of his own negligence are disfavored by the courts and strictly construed. UP’s and CCC’s agreement did not include an all-inclusive right to indemnification and allowed for indemnification only when the indemnitor’s negligence, wrongful act or omission resulted in the indemnitee’s loss. It is not, therefore, the sort of indemnification provision to which the rule of strict construction applies. Under the plain language of the indemnification provision, UP had to establish that CCC’s negligence, wrongful act or omission resulted in that loss. In that respect, an allegation of CCC’s negligence was a condition precedent to its liability under the indemnification agreement.

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

Chief Justice Kite delivered the opinion for the court.