Northern Illinois Gas Company v. United States Infrastructure Corporation
Filing
87
OPINION AND ORDER: Accordingly, for good cause shown: IT IS HEREBY ORDERED AND ADJUDGED: 1) USIC's Motion for Summary Judgment [Doc. No. 35 ] is hereby GRANTED. 2) Nicor's Motion for Partial Summary Judgment [Doc. No. 38 ] is hereby DEN IED as moot. 3) Nicor's Motion for Hearing [Doc. No. 39 ] is hereby GRANTED nunc pro tunc. 4) Nicor's Motion for Leave to Supplement the Record for Summary Judgment with Newly Discovered Evidence [Doc. No. 46 ] is hereby GRANTED. 5) USIC& #039;s Motion for Leave to File Surreply [Doc. No. 53 ] is hereby GRANTED. 6) USIC, LLCs Motion to Certify Closure of Case and Finality of Order Granting Summary Judgment [Doc. No. 68 ] is DENIED, as the instant Opinion and Order makes the Court 39;s ruling in this case final, not the oral ruling announced at the hearing. 7) Plaintiff's Request for Oral Argument or, in the Alternative, Motion for Leave to File Sur-Reply [Doc. No. 72 ] is DENIED. The Court DIRECTS the Clerk to mark this case closed. Signed by Judge Clarence Cooper on 9/2/2021. (tmf)
Case 1:17-cv-05147-CC Document 87 Filed 09/02/21 Page 1 of 27
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF GEORGIA
ATLANTA DIVISION
NORTHERN ILLINOIS GAS
COMPANY d/b/a NICOR GAS
COMPANY,
Plaintiff,
vs.
USIC, LLC,
Defendant.
:
:
:
:
:
:
:
:
:
:
:
CIVIL ACTION NO.
1:17-CV-5147-CC
OPINION AND ORDER
On March 29, 2019, this Court heard from Plaintiff Northern Illinois Gas
Company d/b/a Nicor Gas Company (“Nicor”) and Defendant USIC, LLC (“USIC”)
regarding: (1) USIC’s Motion for Summary Judgment [Doc. No. 35]; (2) Nicor’s
Motion for Partial Summary Judgment [Doc. No. 38; (3) Nicor’s Motion for
Hearing [Doc. No. 39]; (4) Nicor’s Motion to Supplement the Record for Summary
Judgment with Newly Discovered Evidence [Doc. No. 46]; and (5) USIC’s Motion
for Leave to File Surreply to Plaintiff’s Motion to Supplement the Record for
Summary Judgment [Doc. No. 53]. Since that hearing, USIC, LLC’s Motion to
Certify Closure of Case and Finality of Order Granting Summary Judgment [Doc.
No. 68] and Plaintiff’s Request for Oral Argument or, in the Alternative, Motion
for Leave to File Sur-Reply [Doc. No. 72] have been filed.
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Having read and considered USIC, LLC’s Motion for Summary Judgment and
Plaintiff’s Motion for Partial Summary Judgment; and the Court having read and
considered all briefs and materials submitted by the parties in connection therewith,
including those that have been filed following the conclusion of the hearing; and the
Court having closely read and considered the statutory authority in cases relied
upon by the parties; and the Court having heard the parties’ oral arguments, the
Court hereby grants USIC, LLC’s Motion for Summary Judgment and denies as
moot Plaintiff’s Motion for Partial Summary Judgment. To further explain the
Court’s rulings and the reasoning underlying the Court’s rulings, the Court sets forth
the following undisputed facts and conclusions of law:
I.
Undisputed Facts
Parties, Jurisdiction, and Venue
1.
Plaintiff Northern Illinois Gas Company, d/b/a Nicor Gas Company
(“Nicor”) is an Illinois corporation that owns and operates a natural gas distribution
system. (Doc. No. 37 ¶ 2.)
2.
Defendant USIC, LLC (“USIC”) is a Delaware limited liability
company with its principal place of business in Indiana. USIC provides utility
line locating services primarily through its subsidiary USIC Locating Services,
LLC. USIC’s sole member is USIC Holdings, Inc., a Delaware corporation with
its principal place of business in Indiana. (Doc. No. 34 at ¶ 2.)
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3.
This Court has subject matter jurisdiction over this dispute pursuant to
28 U.S.C. § 1332 because Nicor and USIC are citizens of different states and the
amount in controversy exceeds $75,000, exclusive of interest and costs.
4.
Venue is proper in this Court based on the parties’ forum-selection
clause in the contract at issue. See Atlantic Marine Constr. Co. v. United States
Dist. Ct. for the W. Dist. of Tex., 571 U.S. 49, 134 S. Ct. 568, 187 L. Ed. 2d 487
(2013). Neither party has challenged the appropriateness of venue in this Court.
The Master Locating Services Agreement and USIC’s Locating Work
5.
In 2014, Nicor and USIC entered into a Master Locating Services
Agreement (“the Agreement”) for the period January 1, 2014 to January 1, 2018.
(Doc. No. 33-1.)
6.
As part of the Agreement, USIC agreed to perform locating services
on behalf of Nicor pursuant to locate requests made by excavators and received by
the One Call Center within a designated territory, including Romeoville, Illinois.
(Doc. No. 33-1 at ¶ 3.1.)
7.
The process by which excavators make requests to a One Call Center
is commonly known as “811 Call Before You Dig.” The One Call Center used in
Illinois where the subject of the underlying incident is in Romeoville, Illinois, is
called JULIE. (Doc. No. 35-1 at ¶ 12.)
8.
The Agreement defines “Excavation” as: “Any operation by which
the level or grade ofland is changed or earth, rock, or other material below existing
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grade is moved and includes, without limitation, grading, trenching, digging,
ditching, auguring, scraping, directional boring, and driving.” (Doc. No. 33-1 at ¶
2.12.)
9.
The Agreement defines “Locate Request” as: “A request to Locate
received from the states [sic] One-Call Center no later than the time that is the
required number of hours designated by the State’s Underground Utility Damage
Prevention laws before Excavation begins, but not more than the required calendar
days for which the Locate Request Ticket is valid under State law before the
commencement of Excavation.” (Doc. No. 33-1 at ¶ 2.25.)
10.
In response to an excavator’s locate request, USIC goes to the
excavation site identified by the excavator and locates and marks the approximate
location of certain Nicor facilities that may be in conflict with the excavator’s
proposed excavation.1 (Doc. No. 35-1 at ¶ 13; Doc. No. 33-1 at ¶ 3.7.2.)
11.
The Agreement requires USIC to “use best efforts to protect [Nicor’s]
assets including but not limited to: Utility Facility and such other [Nicor] property
from damage while performing the Services herein.” (Doc. No. 33-1 at ¶ 3.9.1.)
12.
The Agreement defines “Utility Facility(ies)” as: “An underground or
submerged conductor, pipe, or structure used in providing electric or
In response to this asserted fact, NICOR admitted only “that pursuant to the Agreement, USIC is
obligated to perform locate services on behalf of NICOR.” (Doc. No. 37 at ¶ 20.) However, NICOR
did not cite any evidence in its response to this fact. Therefore, pursuant to this Court’s Local Rules,
the Court deems the entire paragraph admitted. See LR 56.1(B)(2)(a)(2).
1
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communications service, or an underground or submerged pipe used in carrying,
providing, or gathering gas, oil or oil products, sewage, waste water, storm
drainage, water or other liquids, and appurtenances thereto.” (Doc. No. 33-1 at ¶
2.42.)
13.
The Agreement defines “Locate” as: “Identifying the location of and
Marking a Utility Facility with Reasonable Accuracy by using devices designed to
respond to the presence of the Utility Facility or underground plant.”
(Doc. No. 33-1 at ¶ 2.24.)
14.
The Agreement defines “Marking” as: “The use of stakes, flags, paint
stripes placed at the excavation site . . . indicating to the excavator the presence of
underground utility facilities in the proposed area of excavation.” (Doc. No.
33-1 at ¶ 2.28.)
15.
To carry out the locating process, the Agreement requires USIC
locators to “visit the Excavation Site . . . Locate Company’s Facilities using
industry standard Locate equipment . . . and other means as necessary including,
but not limited to: potholing and/or exposing Company Facility when necessary.”
(Doc. No. 33-1 at ¶ 3.7.2.)
16.
The Agreement requires Nicor to “provide updates to its mobile
mapping system and electronic Service Card Records, as available, which indicates
the approximate location of [Nicor’s] Facilities in the areas where [USIC] is
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performing the Services.”2 (Doc. No. 33-1 at ¶ 6.1.)
17.
The Agreement requires all USIC locators to “carry a measuring
wheel, shovel, post hole diggers, probe rod, curb box locator, voltage indicator,
wirebrush and file for grounding, and an industry accepted piece of locating
equipment at all times.” (Doc. No. 33-1 at ¶ 3.3.5.)
18.
USIC locators also utilize personal protective equipment including
cones, safety vests, boots, and a hard hat. (Doc. No. 35-1 at ¶ 14.)
19.
After a locate request is made, notification is given to the excavator
that certain facilities are or are not present in the area identified in the excavator’s
locate request. This notification is known as a “positive response.” (Doc. No. 351 at ¶ 16.)
20.
USIC communicates with the excavator regarding its intended
excavation to coordinate the excavation schedule, ensure the protection of Nicor’s
facilities, and to help prevent risk of injury to persons or property. (Doc. No.
35-1 at ¶ 17; Doc. No. 33-1 at ¶ 3.10.6.)
The Underlying Cases
21.
Michael J. Smith, as Temporary Guardian of Thomas Smith, filed a
negligence action in the Circuit Court of Will County, State of Illinois, against
In response to this asserted fact, NICOR stated that “NICOR does not dispute that it is supposed to
provide USIC with aforementioned updates.” (Doc. No. 37 at ¶ 22.) NICOR’s objection to the
inclusion of this fact as an undisputed fact is overruled.
2
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Metro Fibernet, LLC (“Metronet”), ACO Cable Construction, Inc. (“ACO Cable”),
and USIC Locating Services, LLC (“USIC Locating Services”), for personal
injuries suffered from a gas explosion that occurred near 91 Strawflower Court in
the Wespark subdivision of Romeoville, Illinois (“the Smith case”). That action is
styled as Michael J. Smith, et al. v. Metro Fibernet, LLC, et al., Case
No. 2017L000121. (See Doc. No. 35-2 (Smith First Amended Complaint).)
22.
The Smith First Amended Complaint alleges that sometime prior to
October 11, 2016, Metronet contracted with ACO Cable to perform directional
boring to install fiber optic cable in the Wespark subdivision.
(Smith First
Amended Complaint at ¶ 4.)
23.
As further alleged in the Smith First Amended Complaint, in the
course of its directional boring on October 11, ACO Cable struck a Nicor gas line,
causing an explosion from which Thomas Smith, an employee of Nicor at the time,
alleges that he suffered catastrophic injuries. (Smith First Amended Complaint at
¶ 9.)
24.
A different explosion had occurred in the same location in 1999. Nicor
was sued in the DuPage County Circuit Court, along with other defendants, for
injuries alleged to have been caused by the explosion in 1999. ( See Randich
v. N. Ill. Gas Co., No. 01 L 332, 2001 WL 36216007 (Ill. Cir. Ct. Oct. 16, 2001),
aff’d Randich v. Pirtano Constr. Co., 804 N.E.2d 581 (Ill. App. Ct. 2003).)
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25.
In the Smith case, Metronet, ACO Cable, and USIC Locating Services
each filed third-party complaints against Nicor, seeking contribution from Nicor in
the event either party is found to be liable for Smith’s injuries. (See Doc. Nos.
35-3, 35-4, 35-5; Order, No. 17L121, dated 10/30/18 (granting USIC Locating
Services’ Motion for Leave to File Third-Party Complaint against Nicor).)3
26.
According to pleadings in the Smith case, the plaintiff Smith is an
employee of Nicor and has pursued a worker’s compensation claim against Nicor
for his injuries. (See No. 17L121, Nicor’s Affirmative Defenses to Third Party
Complaint, filed 10/6/17.)
27.
On April 2, 2018, the Wespark Condominium Association,
Nationwide Mutual Insurance Company, Allstate Insurance Company, and State
Farm Fire & Casualty Insurance Company filed a lawsuit that is pending in the Will
County Circuit Court of Illinois, styled as Wespark Condo. Ass’n a/k/a Wespark
Freedom Condos., et al. v. Metro Fibernet, LLC, Case No. 18L302 (the “Wespark
case”). (See Doc. No. 35-6 (Wespark Complaint).)
28.
The Plaintiffs in the Wespark case seek recovery in tort for property
damage allegedly caused by the negligent acts and/or omissions of Metronet, ACO
Cable, USIC Locating Services, and Nicor. (Wesparl Complaint at ¶ 36.)
3
This Court may take judicial notice of state-court records, including records in theCircuit Court
of Will County, Illinois. See, e.g., Wells Fargo Bank, NA v. Dabney, No. 1:15-cv-3714-WSD,
1:15-CV-3714-WSD, 2016 WL 1601206, at *1 n.3 (N.D.Ga. Apr. 20, 2016).
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29.
Nicor is a named defendant in the Wespark case, and USIC Locating
Services has filed a crossclaim against Nicor in the Wespark case. (See Doc. No.
35-7; Order, No. 18L302, dated 10/30/18 (Order granting USIC Locating
Services’Motion for Leave to File Crossclaim).)
This Lawsuit
30.
Nicor filed this lawsuit against USIC and asserted three claims: (1)
breach of contract; (2) declaratory judgment, and (3) attorneys’ fees and costs under
O.C.G.A. § 13-6-11; Doc. No. 33 at ¶¶ 35–45.)
31.
Each of Nicor’s claims against USIC relates to the question whether,
in Declining to indemnify and defend Nicor against the claims asserted against it in the
Smith Case and the Wespark case (collectively referred to herein as “the underlying
cases”), USIC violated its contractual duties as set forth in Paragraph 9.1 of the
Agreement. (Id.)
32.
Paragraph 9.1 of the Agreement states:
To the fullest extent permitted by law, the Contractor [USIC] shall defend,
indemnify, and hold harmless the Company [Nicor], its affiliates, successors and
assigns, and its employees, against any and all manner of losses, costs, expenses,
damages, and fines or penalties, including, without limitation, reasonable
attorneys' fees, which the Company, its affiliates, successors and assigns, and its
employees, suffer or incur as a result of any claim, demand, suit, action, cause of
action, investigation, levy, fine, penalty or judgment made or obtained by any
individual, person, firm, corporation, Contractor employee, contractor,
governmental agency, or other person or entity in connection with, arising from,
or in any manner related to any actual or alleged act or omission of any one or
more of the following:
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(a) Contractor and any subcontractor of Contractor, and any officers,
directors, agents, representatives or employees of Contractor or of any
such subcontractor in any manner arising from, connected with, or
related to any Services performed or contracted to be performed
pursuant to this Agreement; and
(b) The Company, its successors and assigns, and its officers, directors, agents,
are liable for any reason because of any such act or omission ofthe Contractor
or any subcontractor of the Contractor, or any officers, directors, agents,
representatives or employees of any of them, whether or not such officers,
directors, agents, representatives or employees are claimed to be agents or
employees of the Company.
Provided, however, that the Contractor shall not be responsible to indemnify or
hold harmless the Company for losses or damages caused by the sole negligence
of the Company, its agents or employees.
(Doc. No. 33-1 ¶ 9.1.)
33.
The Agreement is governed by Georgia law. (Doc. No. 33-1 at ¶ 19.)
34.
Paragraph 8.1 of the Agreement states:
Unless otherwise agreed to in writing, [USIC] will, at its own expense, carry and
maintain during this Agreement the insurance coverage (with companies
satisfactory to [Nicor]) in amounts no less than what is specified on Exhibit C
attached hereto and incorporated herein. All insurance policies or bonds required
by this Agreement will be issued by insurance companies licensed to do business
within the State of Georgia and any other state in which the Services are to be
performed with an A.M. Best Rating of not less than “A-VII.” [USIC] will also
be responsible for ensuring that its subcontractors comply with the insurance
requirements of this Section.
(Doc. No. 33-1 at ¶ 8.1.)
35.
In 2016, the relevant time period for purposes of the explosion at issue,
USIC held a General Liability commercial insurance policy through Zurich
American Insurance Company, Policy Number GLO 9441413-01. (See Doc. No.
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42-3.)
That policy names Locate Holdings, Inc. (USIC’s indirect parent
company) as the named insured, while the Certificate of Insurance confirms that
USIC itself is included as a policyholder. (Doc. No. 42-3at 14; Doc. No. 42-4
(Nicor Certificate of Insurance dated12/14/2015).)
36.
The General Liability policy includes as an additional insured “any
person or organization whom you are required to add as an additional insured on
this policy under a written contract or written agreement.” (Doc. No. 42-3 at 14.)
The policy goes on to explain that an additional insured entity is covered “only
with respect to liability for [covered types of damage] caused in whole or in part,
by: 1. Your acts or omissions; or 2. The acts or omissions of those acting on your
behalf.” (Doc. No. 42-3 at 14.) Finally, the policy explicitly defines the words
“you” and “your” as being limited to the named insured. (Doc. No. 42-3 at 21)
(“Throughout this policy, the words ‘you’ and ‘your’ refer to the Named Insured
shown in the Declarations.”).
37.
The policy also provides that USIC has a $2 million “self-insured
retention” or deductible for each occurrence covered by the policy. (Doc. No.
42-4; Doc. No. 33-6; Doc. No. 53-1.)
38.
Nicor’s coverage limit under the policy is $1 million. (Doc. No. 42-3
at 16; Doc. No. 33-1 at ¶ 8.1, Exhibit C; Doc. No. 53-1.)
39.
The Agreement provides that USIC’s insurance policy must be “with
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companies satisfactory to [Nicor].” (Doc. No. 33-1 at ¶ 8-1.)
40.
After the explosion in Romeoville, Nicor issued a tender letter to USIC
and Zurich American Insurance Company, seeking indemnification and defense of
Nicor related to the claims in the underlying cases. (Doc. No. 33-5.)
41.
USIC
declined
to
accept
Nicor’s tender
of
defense
and
indemnification. (Doc. No. 33-6.)
42.
Zurich American Insurance Company, in a separate response,
acknowledged that Nicor is an additional insured under the policy but explicitly
reserved its rights “with respect to coverage for Nicor to the extent that any bodily
injury or property damage was not caused, in whole or in part, by the acts or
omissions of USIC or the acts or omissions of those acting on behalf of USIC in
the performance of their work under the Master Locating Services Agreement
between AGL Services Company and USIC.” (Doc. No. 53-1.)
II.
Conclusions of Law
Legal Standard
“Rule 56 of the Federal Rules of Civil Procedure mandates the entry of
summary judgment against a party who fails to make a showing sufficient to
establish the existence of every element essential to that party’s case on which that
party will bear the burden of proof at trial.” Taylor v. Texaco, Inc., 510 F. Supp.
2d1255, 1260 (N.D. Ga. 2007) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 322,
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106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986)) (emphasis in original). In such a case,
“there can be no genuine issue as to any material fact, as a complete failure of
proof concerning an essential element of the nonmoving party’s case necessarily
renders all other facts immaterial.” Id.
The moving party bears the initial burden to “demonstrate that there is no
genuine issue as to any material fact and that summary judgment is appropriate.”
Philadelphia Indem Ins. Co. v. Manitou Constr., Inc., 115 F. Supp. 3d 1378, 1382
(N.D. Ga. 2015). Once the movant’s burden has been met, the burden shifts to the
non-movant to demonstrate that there is a genuine issue of material fact that
precludes summary judgment. Id. “An issue is not genuine if it is unsupported by
evidence, or if it is created by evidence that is ‘merely colorable’ or is not
significantly probative.’” Taylor, 510 F. Supp. 2d at 1261 (citing Anderson v.
Liberty Lobby, 477 U.S. 242, 249-50, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986)).
To survive a motion for summary judgment, a non-movant “must come forward
with specific evidence for every element material to that party’s case.”
Id.
(emphasis in original).
Analysis
This case arises out of Nicor’s request for indemnification and defense from
USIC in relation to two lawsuits in Illinois stemming from a gas explosion
that caused personal injury and property damage. The parties disagree about the
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precise circumstances leading up to the striking of
Nicor’s
gas
line
and
who bears responsibility for the resulting damages, but those facts are not
relevant to the resolution of USIC’s Motion.
In its Motion for Summary Judgment, USIC seeks dismissal of all Nicor’s
claims on the ground that Georgia law renders Paragraph 9.1 of the Agreement
unenforceable. See O.C.G.A. § 13-8-2(b); Doc. No. 35-8 at 1. As amended in
2011, O.C.G.A. § 13-8-2(b) provides, in relevant part, the following:
A covenant, promise, agreement, or understanding in or in connection
with or collateral to a contract or agreement relative to the construction,
alteration, repair, or maintenance of a building structure, appurtenances,
and appliances, including moving, demolition, and excavating
connected therewith, purporting to require that one party tosuch contract
or agreement shall indemnify, hold harmless, insure, or defend the other
party to the contract or other named indemnitee, including its, his, or her
officers, agents, or employees, against liability or claims for damages,
losses, or expenses, including attorney fees, arising out of bodily injury
to persons, death, or damage to property caused by or resulting from the
sole negligence of the indemnitee, or its, his, or her officers, agents, or
employees, is against public policy and void and unenforceable.
O.C.G.A. § 13-8-2(b).4
“[T]o fall within the ambit of the statute, an indemnification provision must (1)
relate in some way to a contract for ‘construction, alteration, repair, or maintenance’
of certain property and (2) promise to indemnify [or defend] a party for damages
arising from that own party’s sole negligence.” Kennedy Dev. Co. v. Camp, 290
The 2011 version of § 13-8-2(b) applies to this lawsuit because it was the version in effect when the
parties entered into the Agreement in 2014. See Milliken & Co. v. Georgia Power Co., 344 Ga. App.
560, 563, 811 S.E.2d 58, 61 n.1 (2018) (“Contracts are construed under the law in effect at the time the
contract was made.”). Nonetheless, the current version of the statute, as amended in 2016, does not
differ in any material way from the 2011 version as regards to subsection (b).
4
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Ga. 257, 259, 719 S.E.2d 442 (2011).5 The Court concludes that Paragraph 9.1 of
the Agreement meets both threshold conditions of O.C.G.A. § 13-8-2(b), and
therefore it is void and unenforceable for being contrary to public policy as
established by the Georgia General Assembly. Accordingly, USIC has no duty to
defend or indemnify Nicor under this Agreement and this Court hereby grants
summary judgment in favor of USIC on all counts.
The Agreement is sufficiently related to “construction, alteration, repair, or
maintenance of a building structure, appurtenances, or appliances, . . . including . . .
excavating connected therewith” to satisfy the first threshold condition. Regarding
this condition, “Georgia courts have consistently construed this statute more
broadly than courts in other jurisdictions have construed analogous statutes.”
Kennedy Dev. Co., 290 Ga. at 259. Here, several indications in the language of the
Agreement itself as well as the context in which the Agreement arises establish this
connection.
The work that USIC performs under the Agreement is inextricably intertwined
with excavation. It begins with a locate request from an excavator and requires
USIC to visit the site of the excavation, locate and mark any Nicor underground
facilities, and communicate with the excavator about the presence or absence of a
facility in the area. Supra, Findings of Fact (“FOF”) ¶¶ 10-15, 19. Furthermore, the
The version of the statute applied in Kennedy predates the addition of the words “or defend” in § 138-2(b), which were added in 2007. See Kennedy, 290 Ga. at 260 n.2.
5
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utility locating services provided by USIC are not only related to the excavation
process but legally mandated whenever excavation is about to occur. Georgia, like
all states, requires any person to submit a locate request to the Utilities Protection
Center (“UPC”) prior to commencing excavation. O.C.G.A. § 25-9-6. After a
locate request is received, the facility owner or operator, which in this case is Nicor,
is required to designate “through stakes, flags, permanent markers, or other marks .
. . the location of utility facilities” within the area on which the excavation is to
occur. O.C.G.A. § 25-9-7(a)(1). In this case, Nicor contracted with USIC to
provide the requisite locating services set forth in O.C.G.A. § 25-9-7(a)(1).6 In
sum, because the line locating and marking services provided by USIC are a
prerequisite to a person commencing exaction and an inextricable part of the
excavation process itself, the Agreement that governs such services is “relative to”
“excavating” and therefore falls within the scope of O.C.G.A. § 13-8-2(b).
In addition to the Agreement’s essential connection with excavation, the Court
concludes that the Agreement relates in other ways to the “repair or maintenance of
a building structure, appurtenances, [or] appliances.” While “Georgia courts have
not defined precisely the terms ‘building structures, appurtenances or appliances,’
the courts have applied the definition liberally.”
Fed. Paper Bd. Co., Inc. v.
Harbert-Yeargin, Inc., 53 F. Supp. 2d 1361, 1370 (N.D. Ga. 1999). In Federal
Illinois has virtually identical legal requirements for excavation, as stated in the Illinois Underground
Utility Facilities Damage Prevention Act, 220 ILCS 50/1 et seq.
6
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Paper Board Co., for example, the court applied the statute to a contract to repair
paper machines in an existing paper mill, ruling that the paper machines counted as
either appurtenances or appliances. In Milliken & Co. v. Georgia Power Co., 306
Ga. 6, 9, 829 S.E.2d 111 (2019), the Supreme Court found that an easement
provision between a landowner and a power company that permitted the power
company to construct a transmission pole and other related structures to provide
electricity to a plan operating on the landowner’s property “relate[d] ‘to the
construction, alteration, repair, or maintenance of a building structure,
appurtenances, and appliances, including moving, demolition, and excavating
connected therewith.’”
Id. at 9-10 (citations omitted).
The Supreme Court
reiterated that “Georgia courts have ‘consistently construed’ O.C.G.A. § 13-8-2(b)
‘broadly’.” Id. at 10.
Nicor’s gas lines, which connect to and provide gas transmission between
buildings, qualify as either “appurtenances” or “appliances” under O.C.G.A. § 13-82(b). Even the Agreement’s definition of “Utility Facilities” establishes them as
appurtenances or as “structures” that have their own appurtenances. Either way, it
lends further support for bringing Nicor’s gas facilities within one of the categories
described in O.C.G.A. § 13-8-2(b). Cf. Fed. Paper Bd. Co., 53 F. Supp. 2d at 1370
(declaring paper machines at a paper mill to be either appurtenances or appliances
under § 13-8-2(b)).
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Moreover, USIC’s locating work satisfies the statutory category of
“maintenance” because its purpose is to protect the integrity of Nicor’s gas facilities
and prevent the structural damage and disruption of service.
The Agreement
requires USIC to “use best efforts to protect [Nicor’s] assets including but not
limited to: Utility Facility and such other [Nicor] property from damage while
performing the Services herein.” FOF ¶ 11. See Black’s Law Dictionary (10th ed.
2014) at 1097 (defining “maintenance” to include “[t]he care and work put into
property to keep it operating and productive”). By comparison, the Georgia Court
of Appeals found that a commercial lease agreement satisfied O.C.G.A. § 13-82(b)’s category of “maintenance” because it required the leaseholder to “take good
care of the Premises and fixtures.” See Borg-Warner Ins. Fin. Corp. v. Exec. Park
Ventures, 198 Ga. App. 70, 71, 400 S.E.2d 340 (1991). In addition, the services
under the Agreement also relate to construction and repair of appurtenances. USIC
was at the site of excavation in Romeoville originally to assist the excavator in
installing fiber optic cable to the homes in the subdivision.
FOF ¶ 22.
Additionally, because the Agreement requires USIC to respond to “each Locate
Request received,” USIC’s work includes locates performed in conjunction with the
repair of any damaged underground appurtenances. (Doc. No. 33-1 ¶ 3.7.)
In its briefing, Nicor argued that the Agreement does not fall within § 13-82(b) because the statute covers only contracts related to “maintenance or
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construction of a building.” The Court agrees with USIC that this overly restrictive
interpretation is contradicted by both the language of the statute itself and the cases
applying it.
Nicor does not account for the fact that the statute refers to
“construction, alteration, repair, or maintenance of a building structure,
appurtenances, or appliances.” Nicor’s argument also conflicts with the Georgia
Supreme Court’s statement that “Georgia courts have consistently construed this
statute more broadly than courts in other jurisdictions have construed analogous
statutes,” Kennedy Dev. Co., 290 Ga. at 259, including applying it “to commercial
and residential lease agreements bearing little or no relationship to any ostensible
building construction.” Id. at 444-45; see also Fed. Paper Bd. Co., 53 F. Supp. 2d at
1370 (applying statute to contract for maintenance of paper machines not classified
as buildings); Watson v. Union Camp Corp., 861 F. Supp. 1086, 1091 (ruling that
contract for installation of vent collection system “clearly pertains to appurtenances
and appliances connected with a building, if not to a building itself”). These other
cases applied § 13-8-2(b) in circumstances far more tenuous than the Agreement
here, which falls squarely within the language of the statute.
While the statute is not limited to contacts governing the construction of
buildings, one Georgia court has explained that “it would seem that construction
contracts were singled out [by the legislature] because of the possibility of hidden,
or latent, defects of an extremely dangerous nature and not ordinarily detectable by
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a lay person.” See Federated Dep’t Stores, 264 Ga. App. at 861 n.7 (internal
quotation omitted). The circumstances presented in this case fit well within the
purpose of the statute, given that underground gas lines present hidden dangers of
an extremely hazardous nature.
For this very reason, the Georgia General
Assembly (as well as the Illinois legislature) requires excavators to submit locate
requests before performing excavation and requires utility owners to locate and
mark their lines. The Court is persuaded by USIC’s argument that preventing a gas
company from shifting liability to a contractor for a latent danger for which the gas
company was solely responsible and having the potential to cause catastrophic
damage to persons and property would fall within the precise situation the
legislature intended to cover under the statute.
Having satisfied the first threshold condition set forth in § 13-8-2(b), the
question turns to whether the Agreement requires USIC to indemnify or defend
Nicor for liability arising out of Nicor’s sole negligence.7 Paragraph 9.1 requires
USIC to indemnify, hold harmless, and defend Nicor “against any and all manner of
losses, costs, expenses, damages, and fines or penalties . . . as a result of any claim,
demand, suit, action, cause of action . . . in connection with, arising from, or in any
manner related to any actual or alleged act or omission” of USIC or of Nicor to the
extent it is claimed to be liable because of the acts or omissions of USIC. (Doc. No.
To reiterate, this question is independent of whether Nicor ultimately is deemed solely negligent in
the underlying cases at issue, and therefore the Court expresses no opinion on Nicor’s potential
liability in the Illinois court proceedings.
7
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33-1 at ¶ 9.1.) The paragraph also contains an exculpatory clause stating that USIC
“shall not be responsible to indemnify or hold harmless [Nicor] for losses or
damages caused by the sole negligence of [Nicor], its agents or employees.” Id.
At the outset of this litigation, before briefing on the cross-motions for
summary judgment began, USIC argued that the exculpatory clause covered both
the duty to defend and the duty to indemnify and that, similar to the duty to
indemnify, the Court could not resolve whether USIC owes a duty to defend Nicor
without resolving the question whether Nicor could be held solely negligent for the
damages in the underlying case. (See Doc. No. 9-1 (USIC Suggestions in Support
of Motion to Stay).) In opposition to the Motion to Stay, Nicor disputed USIC’s
interpretation of the Agreement by arguing that USIC’s duty to defend Nicor in
Paragraph 9.1 “is not subject to any exception.” (See Doc. No. 14 at 2, 3, 6.) Nicor
successfully avoided a stay of all proceedings, as the Court denied USIC’s Motion
to Stay without prejudice and set a schedule for further briefing concerning
application of § 13-8-2(b). (Doc. No. 32 at 2.)
Following Nicor’s briefing on the Motion to Stay, USIC argued that Nicor’s
own clearly stated position on the scope of the duty to defend in Paragraph 9.1
brought it within § 13-8-2(b)’s reach and thus rendered it void. (Doc. No. 35-8 at
20-21.) In response, Nicor attempted to shift its position away from its earlier
broad interpretation of the duty to defend, claiming that USIC would not be
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responsible for indemnifying or defending Nicor’s sole negligence. (See, e.g., Doc.
No. 38-3 at 13-14.)
For two reasons, the Court declines to accept Nicor’s shift in position. First, in
opposing the Motion to Stay, Nicor explicitly stated that the duty to defend was not
subject to any exception, including a sole negligence exception. Second, even if the
Court were to allow Nicor to rely on a different interpretation of the duty to defend
at the summary judgment stage, the Court rejects Nicor’s reasoning for its latter
position. Nothing in the language of Paragraph 9.1 limits the scope of the duty to
defend (or the duty to indemnify) to the acts or omissions of USIC alone. See Doc.
No. 33-1 at ¶ 9.1 (extending the duty to defend and indemnify to all claims “in
connection with, arising from, or in any manner related to any actual or alleged act
or omission” of USIC) (emphasis added).
Furthermore, if Nicor’s latter
interpretation were correct, the exculpatory clause at the end of Paragraph 9.1
would be superfluous because there would be no need to state that USIC is not
responsible to “indemnify or hold harmless” Nicor for damages caused by Nicor’s
sole negligence. Such a result is heavily disfavored in Georgia law. “A contract
must be considered as a whole with its provisions to be given effect and interpreted
so as to harmonize with each other, and any construction that renders portions of the
contract language meaningless is to be avoided. Archer W. Contractors, Ltd. v.
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Estate of Pitts, 292 Ga. 219, 233, 735 S.E.2d 772 (2012).8
Moreover, from a practical perspective, even the recent interpretation by Nicor
renders the duty to defend broad enough to cover Nicor’s sole negligence because
Nicor still seeks (through its Motion for Partial Summary Judgment) an order
declaring that USIC’s duty to defend is effective immediately, regardless of the
outcome of the underlying cases. (See Doc. No. 43 at 1-4.) The Agreement has no
provision relating to refund of defense costs back to USIC in the event Nicor were
to be found solely negligent, nor has Nicor advocated such an interpretation.
Furthermore, Nicor argued that USIC would have to pay Nicor to defend
against allegations relating to Nicor’s own conduct because Nicor’s own conduct
was “at least related” to “an actual or alleged act or omission of USIC.” (See Doc.
No. 51 at 6 n.3 (emphasis in original).) Thus, regardless of the variety of Nicor’s
proposed interpretations, they each bring the Agreement within the second
threshold condition because they would require USIC to defend Nicor for liability
arising from Nicor’s sole negligence.
Nicor’s only remaining argument against application of § 13-8-2(b) is that the
“insurance exception” applies because Paragraph 8 of the Agreement requires USIC
Even while attempting to narrow its interpretation of the duty to defend at summary judgment, Nicor
continued to assert that the explicit carve-out for sole negligence in the exculpatory clause applies only
to the duty to indemnify, not the duty to defend. (Doc. No. 38-3 at 14 n.6.) Therefore, Nicor cannot
rely on the exculpatory clause as a basis to avoid application of § 13-8-2(b). “The construction placed
upon a contract by the parties thereto . . . is entitled to much weight and may be conclusive upon
them.” Head v. Scanlin, 258 Ga. 212, 213, 367 S.E.2d 546 (1988) (quotation marks omitted).
8
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to purchase insurance naming Nicor as an additional insured.
See Lanier at
McEver, L.P. v. Planners & Eng’rs Collaborative, Inc., 284 Ga. 204, 207 n.2, 663
S.E.2d 240 (2008) (“Parties may avoid violating O.C.G.A. § 13-8-2(b) if their
agreement also includes an insurance clause which shifts the risk of loss to an
insurer, no matter who is at fault.”); Federated Dep’t Stores v. Superior Drywall &
Acoustical, Inc., 264 Ga. App. 857, 861, 592 S.E.2d 485 (2003) (holding that § 138-2(b) does not apply “when the terms of the contract at issue unequivocally
express the intent of the parties to shift the risk of loss and look solely to an
insurance policy obtained in order to cover loss or damages incurred by both
parties”) (emphasis in original).
The Agreement does not “unequivocally” shift the risk of loss incurred by both
parties to an insurer. The USIC insurance policy during the relevant time period
names USIC as the “named insured” and Nicor as the “additional insured.” FOF ¶¶
35-36. The policy goes on to explain that an additional insured entity is covered
“only with respect to liability for [covered types of damage] caused in whole or in
part, by: 1. Your acts or omissions; or 2. The acts or omissions of those acting on
your behalf.” Id. Additionally, the policy explicitly limits the definition of “you”
and “your” to refer to USIC only: “Throughout this policy, the words ‘you’ and
‘your’ refer to the Named Insured shown in the Declarations.” Id. Taking these
provisions together, Nicor’s status as an “additional insured” covers it only to the
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extent that it is deemed liable on the basis of USIC’s own acts or omissions, not
those of Nicor. Cf. Emp’rs Mut. Cas. Co. v. Shivam Trading, Inc., No. 5:16-CV58, 2017 WL 2126911, at *2–3 (S.D. Ga. May 16, 2017) (ruling that insurance
policy could not be interpreted to cover actions of additional insured where policy
defined “you” and “your” to cover only named insured and stated that additional
insured was covered only for “your acts or omissions or the acts or omissions of
those acting on your behalf ”).
Furthermore, as in Federated Dep’t Stores, the Agreement provided that
USIC’s insurance must be with companies “satisfactory” to Nicor. FOF ¶¶ 34, 39.
Given that Nicor never objected to USIC’s insurance and allowed USIC to proceed
under the Agreement, the Court infers that Nicor approved the insurance policy at
issue. See Federated Dep’t Stores, 264 Ga. App. at 862 (“We infer from the record
that such act [of procuring satisfactory insurance] occurred and that the purchased
insurance was satisfactory to Federated
since
Superior was permitted to
‘commenc[e] the Work.’”). And finally, because USIC’s insurance policy contains
a very large, self-insured retention of $2 million, USIC’s potential out-of-pocket
liability under the policy is actually larger than Nicor’s total coverage as an
additional insured.
FOF ¶¶ 37–38.
The Court finds no evidence that USIC
intended to become, in effect, an insurer for $2 million of liability based on
Nicor’s sole negligence. Given that USIC receives only a relatively small sum per
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locate, it is not even plausible that USIC would agree to provide such blanket
coverage.
Thus, Nicor has failed to show that the insurance provision of the Agreement
somehow expressed a clear, “unequivocal[ ]” intent to shift all risk of loss by both
parties to an insurer. Because the “insurance exception” does not apply and both
threshold conditions outlined by Kennedy Dev. Co. are met here, Paragraph 9.1 is
unenforceable and void as against public policy.
Having determined that the Agreement’s Paragraph 9.1 is void, the Court does
not need to address Nicor’s Motion for Partial Summary Judgment, which seeks a
determination that USIC owes a duty to defend Nicor in the underlying cases
immediately, without regard to the outcome of those suits.
III.
Conclusion
Accordingly, for good cause shown:
IT IS HEREBY ORDERED AND ADJUDGED:
1) USIC’s Motion for Summary Judgment [Doc. No. 35] is hereby GRANTED.
2) Nicor’s Motion for Partial Summary Judgment [Doc. No. 38] is hereby
DENIED as moot.
3) Nicor’s Motion for Hearing [Doc. No. 39] is hereby GRANTED nunc pro tunc.
4) Nicor’s Motion for Leave to Supplement the Record for Summary
Judgment with Newly Discovered Evidence [Doc. No. 46] is hereby
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GRANTED.
5) USIC’s Motion for Leave to File Surreply [Doc. No. 53] is hereby
GRANTED.
6) USIC, LLC’s Motion to Certify Closure of Case and Finality of Order
Granting Summary Judgment [Doc. No. 68] is DENIED, as the instant
Opinion and Order makes the Court’s ruling in this case final, not the oralruling
announced at the hearing.
7) Plaintiff’s Request for Oral Argument or, in the Alternative, Motion for Leave
to File Sur-Reply [Doc. No. 72] is DENIED.
The Court DIRECTS the Clerk to mark this case closed.
SO ORDERED this 2nd day of September, 2021.
s/ CLARENCE COOPER
CLARENCE COOPER
SENIOR UNITED STATES DISTRICT JUDGE
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