Bryant v. BNSF Railway Company

Filing 43

MEMORANDUM Opinion and Order Signed by the Honorable John Robert Blakey on 3/5/2015. Mailed notice(gel, )

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
J.T. BRYANT,

)
)
Plaintiff,
)
)
v.
)
)
BNSF RAILWAY COMPANY,
)
)
Defendant.
)
__________________________________________)
BNSF RAILWAY COMPANY,
)
)
Third-Party Plaintiff,
)
)
v.
)
)
KINLEY CONSTRUCTION COMPANY,
)
)
Third-Party Defendant. )

Case No. 14 C 2305

Honorable John Robert Blakey

MEMORANDUM OPINION AND ORDER
Plaintiff, J.T. Bryant, worked as a machinist for BNSF Railway Company
(“BNSF”). On October 23, 2012, he was injured on the job when he fell into a hole
while walking around a train; he alleged that the hole “had been dug for concrete
post barriers” and had been “left open and uncovered . . . .” Complaint [1], ¶4. He
sued BNSF under the Federal Employers Liability Act, seeking damages for his
injuries. On December 9, 2014, BNSF filed a three-count third party complaint
against Kinley Construction Company (“Kinley”), which BNSF alleges was
performing construction services onsite at the time of Bryant’s fall. BNSF’s third
party complaint alleges that it had a construction services agreement with Kinley at

the time of the incident, and that Kinley breached that agreement by failing to
defend and indemnify BNSF in connection with Bryant’s claims (count I) and by
failing to obtain all insurance required under the parties’ agreement (count II).
BNSF also alleges that Kinley was negligent in failing to perform services under its
contract with BNSF in a manner that provided BNSF’s employees with a
reasonably safe place to work and walk during the project (count III).

Kinley

answered counts II and III, but it has moved to dismiss count I, the indemnification
count, pursuant to Federal Rule of Civil Procedure 12(b)(6).
Discussion
When analyzing a motion under Rule 12(b)(6), the Court must construe the
allegations of the operative complaint in the light most favorable to BNSF,
accepting as true all well-pleaded facts and drawing all reasonable inferences in its
favor. E.g., Yeftich v. Navistar, Inc., 722 F.3d 911, 915 (7th Cir. 2013)(citing Fed. R.
Civ. P. 12(b)(6); Tamayo v. Blagojevich, 526 F.3d 1074, 1081 (7th Cir. 2008)).
Additionally, Rule 12(b)(6) limits this Court’s consideration to “allegations set forth
in the complaint itself, documents that are attached to the complaint, documents
that are central to the complaint and are referred to in it, and information that is
properly subject to judicial notice.” Williamson v. Curran, 714 F.3d 432, 436 (7th
Cir. 2013).
According to BNSF’s third party complaint, BNSF and Kinley executed a
Construction Services Agreement, which was “in full force and effect on October 23,
2012, . . . the date of the alleged underlying incident.” Third Party Complaint [22],

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¶9. And that agreement, BNSF alleges, required Kinley to indemnify BNSF and to
appear and defend lawsuits and claims such as Bryant’s. Id., ¶¶11-13. In count I,
BNSF alleges that Kinley failed to indemnify and defend, in breach of the
agreement. Id.
In its motion to dismiss, Kinley argues that the contract provision requiring
indemnification violates Illinois law – namely, the Illinois Construction Contract
Indemnification for Negligence Act, 740 ILCS 35/1 – and is, therefore, void. BNSF
disagrees, arguing that Illinois law does not even apply to this case. To resolve the
dispute, the Court looks to the agreement itself, which was attached as an exhibit to
BNSF’s complaint.
The Construction Services Agreement provided that Kinley was to perform
“railroad facility mechanical work including fuel, air, water, sand, IW, and lube oil
systems, minor concrete work, pipeline investigation work, and minor grading
work” during the period beginning October 8, 2010 through October 8, 2013. See
Construction Services Agreement [22-3], pp. 1, 34.

The agreement includes a

provision entitled “Release of Liability and Indemnity,” which provides as follows:
b)
Provider shall indemnify and hold harmless BNSF for all
judgments, awards, claims, demands, and expenses (including
attorneys’ fees), for injury or death to all persons, including BNSF’s
and Provider’s officers and employees, and for loss and damage to
property belonging to any person, arising in any manner from
Provider’s or any of Provider’s subcontractors’ acts or omissions or
failure to perform any obligation hereunder.
THE LIABILITY
ASSUMED BY PROVIDER SHALL NOT BE AFFECTED BY THE
FACT, IF IT IS A FACT, THAT THE DESTRUCTION, DAMAGE,
DEATH, OR INJURY WAS OCCASIONED BY OR CONTRIBUTED
TO BY THE NEGLIGENCE OF BNSF, ITS AGENTS, SERVANTS,
EMPLOYEES OR OTHERWISE, EXCEPT TO THE EXTENT THAT
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SUCH CLAIMS ARE PROXIMATELY CAUSED BY THE
INTENTIONAL MISCONDIUCT OR GROSS NEGLIGENCE OF
BNSF.
c) THE INDEMNIFICATION OBLIGATION ASSUMED BY
PROVIDER SHALL INCLUDE ANY CLAIMS, SUITS OR
JUDGMENTS BROUGHT AGAINST BNSF UNDER THE FEDERAL
EMPLOYER’S LIABILITY ACT . . . .
d)
Provider further agrees, at its expense, in the name and on
behalf of BNSF, that it shall adjust and settle all claims made against
BNSF, and shall, at BNSF’s discretion, appear and defend any suits or
actions at law or in equity brought against BNSF on any claim or
cause of action arising or growing out of or in any manner connected
with any liability assumed by Provider under this Agreement for which
BNSF is liable or is alleged to be liable.
Construction Services Agreement [22-3], ¶4, p. 4 (emphasis in original).

The

agreement includes additional indemnification language:
In addition to any other provision of this Agreement, in the event that
all or any portion of this Article shall be deemed to be inapplicable for
any reason, including without limitation as a result of a decision of an
applicable court, legislative enactment or regulatory order, the parties
agree that this Article shall be interpreted as requiring Provider to
indemnify BNSF to the fullest extent permitted by applicable law.
THROUGH THIS AGREEMENT THE PARTIES EXPRESSLY
INTEND FOR PROVIDER TO INDEMNIFY BNSF FOR BNSF'S
ACTS OF NEGLIGENCE.
Construction Services Agreement [22-3], ¶4(g), p. 5 (emphasis in original).

Kinley

does not presently dispute that these indemnification clauses apply to the
underlying claims. It does, however, argue that the indemnification provisions are
void under Illinois law.

Thus, as a preliminary matter, the Court must decide

whether Illinois law, in fact, governs.
The parties’ agreement includes a Texas choice of law provision:

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This Agreement shall be governed by and interpreted under the laws of
the State of Texas without regard to the principles of conflicts of law of
such state, and any actions, proceedings or counterclaims brought by
either of the parties hereto against the other on any matters
whatsoever arising out of or in any way connected with this Agreement
must be brought in a federal or state court in the State of Texas.
Construction Services Agreement [22-3], ¶35(g), p. 29. Kinley does not address the
application of this provision.
Under Illinois law, choice of law clauses are generally enforceable. “the law
applicable to a contract is the law intended by the parties.” Smurfit Newsprint
Corp. v. Southeast Paper Mfg., 368 F.3d 944, 949 (7th Cir. 2004). “When the parties
express that intent (such as through a governing law provision), that express intent
is generally recognized.” Id. (citing Hofeld v. Nationwide Life Ins. Co., 322 N.E.2d
454, 458 (Ill. 1975)). To get around the parties’ contractual choice of law, Kinley
would have to show both that applying Texas law “would . . . violate fundamental
Illinois public policy” and that “Illinois has a materially greater interest in the
litigation than the chosen State.” Id. (quoting English Co. v. Northwest Envirocon,
Inc., 663 N.E.2d 448, 452 (Ill. Ct. App. 1996)).
Texas law gives effect to indemnification clauses – even those that would
allow a party to be indemnified from the consequences of its own negligence – as
long as the parties specifically express that intent in their agreement. E.g., Martin
K. Eby Construction Company, Inc. v. OneBeacon Insurance Co., No. 13-3076, --F.3d ---, 2015 WL 437749, at *3 (10th Cir. Feb. 3, 2015). The parties here did just
that. But it would be an exaggeration to suggest that it is fundamental public
policy in Illinois to void all indemnification clauses in construction contracts.
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Indeed, “[n]ot every indemnification or hold-harmless agreement in a construction
contract is unenforceable”; “[r]ather, the Act voids only those agreements that
reduce the incentive to avoid construction-related injuries.” Illinois Power Company
v. Duke Engineering & Services, Inc., No. 99 C 5384, 2002 WL 35232810, at *3-4
(N.D. Ill. March 29, 2002).

In Halloran & Yauch, Inc. v. Roughneck Concrete

Drilling & Sawing Co., the Illinois Appellate Court noted that “contracts that could
conceivably indemnify a party against its own negligence do not implicate the
Indemnification Act when they ‘do not involve injury suffered by a construction
worker or a member of the general public but instead, damage suffered by one of the
contracting parties due to the alleged negligence of another.’” No. 1-13-1059, 2013
WL 5226268, at *15 (Ill. Ct. App. Sept. 13, 2013)(quoting Ralph Korte Construction
Co. v. Springfield Mechanical Co., 369 N.E.2d 561, 562 (1977)). Thus we cannot say
that application of the parties’ choice of law provision -- and the related application
of the indemnification clause – would violate a fundamental Illinois public policy.
Nor has Kinley demonstrated that Illinois has a materially greater interest in
this litigation. Illinois’ interest is greater in the sense that the underlying suit is
brought by one of its citizens. But Bryant is seeking to enforce his rights under a
federal statute, not an Illinois statute.

The Court cannot say that Illinois law

should govern the parties’ agreement – or even that, if Illinois law were to apply,
the indemnification clause would necessarily be void. Accordingly, the Court denies
Kinley’s motion to dismiss BNSF’s claim for breach of contract based upon Kinley’s
alleged failure to indemnify.

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CONCLUSION
For the reasons explained above, Kinley’s motion to dismiss count I of BNSF’s
Third Party Complaint [36] is denied. Kinley is given leave to file an amended
answer to BNSF’s complaint by March 11, 2015. The status hearing set for March
9, 2015 will still go forward; as previously indicated, the parties should be prepared
at that time to set a discovery schedule.
Dated: March 5, 2015

Entered:

___________________________________
John Robert Blakey
United States District Judge

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