Kena Harris, as Administrator of the Estate of Chaungene L. Ward, Deceased; Monica Nolan, Plaintiffs – Appellants v. FedEx National LTL, Inc., Defendant – Appellee

 

No. 13-1981

 

UNITED STATES COURT OF APPEALS FOR THE EIGHTH CIRCUIT

 

2014 U.S. App. LEXIS 14064

 

March 25, 2014, Submitted

July 24, 2014, Filed

 

 

LOKEN, Circuit Judge.

On October 28, 2007, commercial truck driver Oleg Velichkov lost control and rolled his tractor-trailer,  [*2] which came to rest blocking both lanes of westbound Interstate 80 in York County, Nebraska. A vehicle driven by Chaungene L. Ward collided with the over-turned truck, killing Ward and seriously injuring his passenger, Monica Nolan. At the time of the accident, Velichkov was employed by Fresh Start, Inc. (“Fresh Start”), driving a tractor leased by Mickey’s Trucking Express, Inc. (“Mickey’s”), to Fresh Start. The tractor was pulling two trailers owned by FedEx National LTL, Inc. (“FedEx”) from FedEx’s Cincinnati, Ohio, service center to its service center in Salt Lake City, Utah. Ward’s estate and Nolan brought this diversity action against Velichkov, Fresh Start, Mickey’s, the husband and wife who owned Fresh Start and Mickey’s, and FedEx, alleging various theories of tort liability. After discovery, the district court1 granted FedEx’s motion for summary judgment. Plaintiffs eventually dismissed their remaining claims with prejudice, resulting in a final judgment, and now appeal the grant of summary judgment to FedEx.[HN1]  Reviewing the grant of summary judgment de novo and applying the governing law of Nebraska, we affirm. See Williams v. TESCO Servs., Inc., 719 F.3d 968, 970, 972 (8th Cir. 2013)  [*3] (standard of review).

 

1   The Honorable John M. Gerrard, United States District Judge for the District of Nebraska.

The ultimate issue is whether FedEx is liable for the admitted negligence of truck driver Velichkov. In opposing summary judgment, plaintiffs asserted four theories of liability under Nebraska law. The district court rejected the three theories asserted in plaintiffs’ complaint on the merits. It rejected the fourth by denying as untimely plaintiffs’ motion to amend their complaint. We construe plaintiffs’ rather ambiguous briefs as appealing all four rulings. We consider the four theories in turn, viewing the facts material to each, when disputed, in the light most favorable to plaintiffs, the non-moving parties. Id. at 970.

 

I. The Employer/Independent Contractor Issue

FedEx, in addition to employing its own drivers and vehicles to deliver goods to its shipper-customers, contracts with independent motor carriers to transport goods and trailers between FedEx service centers. At times, these carriers provide the drivers, the tractors, and the trailers for this service. At other times, FedEx retains “subhaulers” that provide drivers and tractors to pull FedEx trailers in what FedEx  [*4] refers to as a “power only” relationship. In mid-September 2007, Fresh Start and FedEx entered into a written Subhaul Agreement providing that Fresh Start would provide transportation services as an independent contractor. In an Addendum, Fresh Start agreed to comply with twelve detailed requirements when pulling FedEx-owned trailers on a “power only” basis. On October 26, Fresh Start’s owner received a power-only assignment from FedEx’s central dispatch and assigned driver Velichkov to complete the job. He drove the tractor to FedEx service centers to pick up and drop off trailers. The accident occurred during the last leg of the assignment, when Velichkov was transporting two FedEx-owned trailers from the Cincinnati service center to the Salt Lake City service center.

[HN2] Under Nebraska law, one who employs an independent contractor is generally not liable for physical harm caused to another by the acts or omissions of the contractor or its servants. Plaintiffs’ complaint alleged that FedEx was nonetheless liable for Velichkov’s negligence because he was acting as FedEx’s employee or servant at the time of the accident. [HN3] Whether a truck driver is acting as an employee or as an independent  [*5] contractor “depends on the facts underlying the relationship of the parties irrespective of the words or terminology used by the parties to characterize and describe their relationship.” Kime v. Hobbs, 252 Neb. 407, 562 N.W.2d 705, 711 (Neb. 1997). Thus, the Subhaul Agreement, which provided that Fresh Start was an independent contractor, is relevant but not controlling. Though ordinarily a question of fact, [HN4] “where the facts are not in dispute and where the inference is clear that there is, or is not, a master and servant relationship, the matter is a question of law.” Id.

Applying the ten factors considered by the Supreme Court of Nebraska in Kime and other cases, the district court concluded that Fresh Start, and therefore its employee, Velichkov, were independent contractors of FedEx as a matter of Nebraska law. Addressing the critical control factor, the district court acknowledged that the Addendum to the Subhaul Agreement placed conditions on the manner in which Fresh Start and its servants could transport FedEx-owned trailers but concluded that these requirements “were to assure performance of the delivery — in other words, to control ‘the final result of the work’ instead of ‘the specific  [*6] manner in which the work is performed.'” Harris v. Velichkov, 860 F. Supp. 2d 970, 983 (D. Neb. 2012), quoting Omaha World-Herald v. Dernier, 253 Neb. 215, 570 N.W.2d 508, 514 (Neb. 1997). In addition, the court reasoned, “plaintiffs’ focus on the element of control ignores the remaining nine factors listed above, several of which weigh (and weigh heavily) in favor of an independent contractor relationship.” Id.

On appeal, plaintiffs argue the district court erred in granting summary judgment on this issue because it misconstrued in FedEx’s favor the extent to which FedEx controlled how power-only drivers performed this service. We disagree. The district court applied the proper standard under Nebraska law, carefully considered the control factor, and concluded “[t]here is no evidence from which a reasonable trier of fact could conclude that Fresh Start was FedEx’s ’employee’ — much less that Velichkov was.” Id. at 983-84. The minor ways in which plaintiffs argue the district court improperly credited FedEx’s view of the facts were not material to this ruling. The use of an independent power-only contractor to pull FedEx trailers between FedEx service centers was not comparable to the agreement  [*7] in Huggins v. FedEx Ground Package System, Inc., where FedEx required an independent contractor and its drivers “to look and act like FedEx employees while they performed FedEx [package delivery] services” for FedEx customers. 592 F.3d 853, 859 (8th Cir. 2010).

 

II. The Nondelegable Duty Theory.

[HN5] The Supreme Court of Nebraska has recognized limited exceptions to the general rule that one who employs an independent contractor is not liable for harm caused by the contractor’s employees. One exception is when “the employer [here, FedEx] has a nondelegable duty to protect another from harm. Nondelegable duties include . . . a duty imposed by statute or rule of law, and . . . the duty of due care when the independent contractor’s work involves special risks or dangers.” Eastlick v. Lueder Constr. Co., 274 Neb. 467, 741 N.W.2d 628, 634-35 (Neb. 2007) (citations omitted). Plaintiffs do not argue that “special risks or dangers” created a nondelegable duty in this case, no doubt because[HN6]  the Supreme Court of Nebraska has held that “a motor vehicle is not an inherently dangerous instrumentality,” including when used in “the transportation of cattle in a tractor-trailer under normal conditions.” Kime, 562 N.W.2d at 713;  [*8] see Ek v. Herrington, 939 F.2d 839, 843-44 (9th Cir. 1991). Rather, plaintiffs argue that FedEx as a “motor carrier” subject to the Federal Motor Carrier Safety Regulations (“FMCSR”) had a nondelegable duty under Nebraska law2 to ensure that Fresh Start and its drivers, as independent contractors, adhered to those safety standards by reason of [HN7] 49 C.F.R. § 390.11, which provides:

 

Whenever . . . in this subchapter a duty is prescribed for a driver or a prohibition is imposed upon the driver, it shall be the duty of the motor carrier to require observance of such duty or prohibition. If the motor carrier is a driver, the driver shall likewise be bound.

 

 

[HN8] Whether a duty is owed under Nebraska tort law is a question of law. Parrish v. Omaha Pub. Power Dist., 242 Neb. 783, 496 N.W.2d 902, 909 (Neb. 1993). The Supreme Court of Nebraska has not addressed whether the FMCSR — or any other federal regulations — create a nondelegable duty that regulated parties are liable for the harm caused by their independent contractors’ violations. Indeed, [HN9] that Court “ha[s] never held that an administrative regulation can . . . expand the scope of tort liability beyond the general duty to exercise reasonable care.” A.W. v. Lancaster Cnty. Sch. Dist. 0001, 280 Neb. 205, 784 N.W.2d 907, 920 (Neb. 2010).

 

2   We  [*9] doubt there is a federal private right of action for a violation of the FMCSR. See Stewart v. Mitchell Transp., 241 F. Supp. 2d 1216, 1219-21 (D. Kan. 2002). In any event, plaintiffs did not assert such a claim.

The district court assumed without deciding that 49 C.F.R. § 390.11 “would support a nondelegable duty if it applied to FedEx” but noted that plaintiffs had no supporting authority for this state law theory. The court rejected the theory because “FedEx was not acting as a motor carrier in this case.” While FedEx is a federally registered motor carrier and acts as such in delivering goods for its customers, the court explained, in this case it was a shipper of goods that hired Fresh Start, also a registered motor carrier, to provide transportation services. [HN10] “A transportation company may have authority to act as a shipper, broker, or carrier, and the Court must focus on the specific transaction at issue, not whether FedEx acts as a motor carrier in other transactions.” 860 F. Supp. 2d at 979, citing Schramm v. Foster, 341 F. Supp. 2d 536, 548 (D. Md. 2004) (“plaintiffs have failed to prove that Robinson acted as a motor carrier in the specific transaction at issue”). Section 390.11  [*10] of the regulations imposes a duty on the motor carrier to require that a driver comply with his duties. Fresh Start was the motor carrier in this transaction.

On appeal, plaintiffs argue (i) FedEx is a “for-hire motor carrier” as defined in 49 C.F.R. § 390.5 (“a person engaged in the transportation of goods or passengers for compensation”); (ii) the district court erred in applying the definition of “shipper” found in the inapplicable motor vehicle leasing regulations, 49 C.F.R. § 376.2(k) (a shipper is a “person who sends or receives property which is transported in interstate or foreign commerce”); and (iii) a motor carrier does not cease acting as a motor carrier when it contracts with a third party to assist in the transportation process. We agree with the district court and the cases it cited that the FMCSR applies to motor carriers, not to shippers who engage independent contractors to transport goods. Thus, the relevant inquiry is whether FedEx “acted as a motor carrier in the specific transaction at issue.” Schramm, 341 F. Supp. 2d at 548.3

 

3   Accord Caballero v. Archer, No. SA-04-CA-561-OG, 2007 U.S. Dist. LEXIS 12271, 2007 WL 628755, at *4 (W.D. Tex. Feb. 1, 2007); Alaubali v. Rite Aid Corp., No. C 06-5787 SBA, 2007 U.S. Dist. LEXIS 81633, 2007 WL 3035270, at *5 (N.D. Ca. Oct. 16, 2007) [*11] , aff’d, 320 F. App’x 765 (9th Cir. 2009).

In this case, FedEx retained Fresh Start to move goods from one service center to another. Fresh Start selected its drivers without FedEx oversight and operated under its own authority as a registered motor carrier, rather than under FedEx’s authority. One need not refer to the definition of shipper elsewhere in the extensive FMCSR regulations to determine that FedEx was acting as a shipper in this transaction. As the Second Circuit commented in Lyons v. Lancer Insurance Co.,[HN11]  “The shipper is the entity that purchases the transportation services of the carrier.” 681 F.3d 50, 59 (2d Cir. 2012) (emphasis added), cert. denied, 133 S. Ct. 1242, 185 L. Ed. 2d 178 (2013). Because FedEx was not acting as a motor carrier, it had no duty — nondelegable or otherwise — to require that driver Velichkov observe his FMCSR duties by reason of 49 C.F.R. § 390.11. The district court properly granted summary judgment rejecting this theory.

 

III. The Negligent Entrustment Theory.

Plaintiffs’ complaint alleged that FedEx was liable because it negligently entrusted its trailers to Velichkov. [HN12] Under Nebraska law,

 

it is negligence to  [*12] permit a third person to use a thing or to engage in an activity which is under the control of the actor, if the actor knows or should know that such person intends or is likely to use the thing or to conduct himself in a manner as to create an unreasonable risk of harm to others.

 

 

DeWester v. Watkins, 275 Neb. 173, 745 N.W.2d 330, 334 (Neb. 2008), quoting Restatement (Second) of Torts § 308. In opposing summary judgment, plaintiffs argued that FedEx had control of trailers it owned; that FedEx had a duty under § 380.113(a) of the FMCSR to ensure that Velichkov was certified and properly trained to operate a double trailer; and that FedEx’s breach of this duty gave rise to a claim of negligent entrustment. The district court granted summary judgment dismissing this claim, concluding that, even if Velichkov was not properly certified (a disputed fact), FedEx had no duty to inquire into that fact because Velichkov’s employer, Fresh Start, not FedEx, was the motor carrier bound by the FMCSR regulations.

On appeal, citing § 390 of the Restatement, plaintiffs argue that FedEx may be liable even though it entrusted its trailers to Velichkov indirectly through a third party, Fresh Start. But even if the  [*13] Supreme Court of Nebraska would adopt this aspect of § 390, there was no evidence that FedEx was aware of facts permitting a reasonable jury to find that it knew or should have known Velichkov was not a properly certified driver. Thus, as the district court recognized, the negligent entrustment claim turned on whether FedEx as a “motor carrier” was duty-bound by § 380.113 of the FMCSR to ensure Velichkov’s certification. Once again, plaintiffs argue that FedEx was a “motor carrier” for purposes of § 380.113 simply because “it was engaged in the primary business of transporting goods for compensation.” As we have explained, we agree with the district court that this is an overly broad, impractical interpretation of regulations drafted for other purposes. We acknowledge there might be specific facts that would warrant imposing § 380.113 duties, as a matter of federal law, on a registered motor carrier using a power-only independent contractor to pull trailers owned by the carrier-shipper. As plaintiffs have not presented such facts and are using this federal regulation to support a claim of negligence under state law, we agree with the district court that the undisputed facts warranted  [*14] the grant of summary judgment dismissing the claim.

 

IV. The Unpleaded Claim — Negligent Hiring of Fresh Start

Count V of plaintiffs’ complaint alleged that FedEx negligently hired and trained Velichkov to operate the tractor-trailer, a claim foreclosed by the district court’s determination that Velichkov was an employee of an independent contractor, Fresh Start. The court’s scheduling order allowed the parties until April 9, 2010 to file motions to amend their pleadings. After the scheduling order was amended four times to extend the discovery deadlines, on November 30, 2011, plaintiffs moved for leave to amend their complaint to add allegations that (i) FedEx knew or should have known of Mickey’s poor safety rating and Fresh Start’s association with Mickey’s, and therefore (ii) FedEx negligently hired, trained, supervised, and entrusted its trailers to independent contractor Fresh Start. Plaintiffs argued that these amendments were meant to “clarify” that their claims of negligence extended to FedEx’s relationship with Fresh Start as well as driver Velichkov. The district court denied the motion for leave to amend for two reasons. First, the proposed amended complaint “would add an  [*15] entirely new theory of recovery.” Second, “more to the point,” [HN13] Rule 16(b)(4) of the Federal Rules of Civil Procedure requires a showing of good cause to amend outside the court’s scheduling order, and “nothing in the plaintiffs’ briefs explains, or seeks to explain, why they only sought leave to amend their complaint over 17 months after the deadline for doing so had passed.” Harris v. Velichkov, Order of Feb. 21, 2012, 2012 U.S. Dist. LEXIS 20909, *6.

On appeal, plaintiffs concede that Rule 16(b)(4) provides the governing standard and requires a showing of good cause. See Popoalii v. Corr. Med. Servs., 512 F.3d 488, 497 (8th Cir. 2008). They argue there was good cause for their tardy request for leave to amend because the evidence supporting the new theories in the amended complaint became available during a discovery process that was unusually protracted due to scheduling difficulties not attributable to the plaintiffs. [HN14] We review the district court’s denial of leave to amend for abuse of discretion. Id.

“The primary measure of good cause is the movant’s diligence in attempting to meet the [scheduling] order’s requirements. . . . Our cases reviewing Rule 16(b) rulings focus in the first instance (and usually  [*16] solely) on the diligence of the party who sought modification of the order.” Sherman v. Winco Fireworks, Inc., 532 F.3d 709, 716-17 (8th Cir. 2008) (quotation omitted). A district court acts “within its discretion” in denying a motion to amend which made no attempt to show good cause. Freeman v. Busch, 349 F.3d 582, 589 (8th Cir. 2003); see Leary v. Daeschner, 349 F.3d 888, 907-08 & n.26 (6th Cir. 2003).

Here, plaintiffs seek to survive their lack of a good cause showing in the district court with a due-diligence argument not made to the district court — that they learned the necessary facts in discovery after the scheduling order’s deadline had passed. It would be extraordinary to allow a party to establish on appeal an abuse of discretion by the district court based on an argument not timely made to that court in exercising its discretion. But assuming such a showing is theoretically possible, plaintiffs do not come close to making it here — they provide no specific citations to the summary judgment record that would permit us to conclude, in the first instance, that they acted promptly when they first learned of newly discovered evidence that warranted the tardy assertion of new  [*17] theories of FedEx liability that would undoubtedly have required further extensions of the discovery period to fully explore. Thus, the district court did not abuse its discretion in denying plaintiffs’ untimely motion for leave to amend their complaint.

The judgment of the district court is affirmed.

United States Court of Appeals,

Eleventh Circuit.

SNYDER’S–LANCE INC., Plaintiff–Appellant,

v.

COWEN TRUCK LINE, INC., Defendant–Appellee.

 

No. 13–15945

Non–Argument Calendar.

July 21, 2014.

 

Jack J. Aiello, Gerard J. Curley, Keith E. Sonderling, Gunster Yoakley & Stewart, PA, West Palm Beach, FL, for Plaintiff–Appellant.

 

Esteban F. Scornik, Wayne J. Tosko, Vasquez & Tosko, LLP, Orlando, FL, for Defendant–Appellee.

 

Appeal from the United States District Court for the Northern District of Florida. D.C. Docket No. 4:12–cv–00598–RH–CAS.

 

Before HULL, MARCUS and ROSENBAUM, Circuit Judges.

 

PER CURIAM:

*1 In this diversity action, Snyder’s–Lance Inc. (“SLI”), appeals the district court’s grant of summary judgment in favor of Cowen Truck Line, Inc. (“Cowen”), on SLI’s complaint seeking to recover from Cowen, pursuant to a contractual indemnity provision, expenses incurred in defending and settling a wrongful-death lawsuit. After a review of the record and the parties’ briefs, we affirm.FN1

 

I.

SLI is a snack-food manufacturer. Through a transportation consultant—Transportation Insight, LLC—SLI hired Cowen, a freight carrier, to haul goods from an SLI plant in Ohio to an SLI plant in Florida. Pursuant to the agreement, a Cowen driver, Charles Taft, delivered a load of SLI goods to the Florida plant. After Mr. Taft backed his truck into the loading dock, he exited the truck on foot, crossed a concrete barrier, and entered an adjoining loading dock, where, apparently, Mr. Taft attempted to retrieve chrome lug nuts that had come off his truck. While Mr. Taft was in the adjacent dock, he was run over and killed by an SLI truck, which an SLI employee was backing into the dock at the time.

 

Mr. Taft’s estate brought a wrongful-death action in Florida state court against SLI and the SLI employee based solely on the negligence of SLI’s employee. Faced with the lawsuit, SLI demanded that Cowen defend SLI pursuant to an indemnity provision in the governing contract. Cowen denied that the provision applied and refused to provide a defense. Later, SLI settled the negligence action for $750,000.00, without admitting fault, and incurred $473,064.95 in attorney’s fees and costs. SLI brought this action to recover these amounts from Cowen under the indemnity provision.

 

The contract at issue in this dispute is between Transportation Insight and Cowen. Transportation Insight is a third-party freight provider who contracts with various carriers, including Cowen, to provide freight services for its clients, including SLI. No dispute exists over whether SLI may bring an action based on the contract; it can.

 

Therefore, we review two provisions of the contract relevant to this appeal. First, the contract provides that North Carolina law governs. Second, the contract contains an indemnity provision, which provides as follows:

 

“CARRIER [Cowen] agrees to indemnify, defend and hold TRANSPORTATION INSIGHT and CLIENTS [SLI] their agents, employees, and principals harmless from and against any and all direct and indirect claims arising out of or resulting from transportation provided pursuant to this Agreement, including, but not limited to, claims for bodily injury, death, property damage, attorney fees, loss, damage or delay. CARRIER’S Liability under this indemnity and hold harmless provision shall be reduced in proportion to the degree of negligence, if any, of TRANSPORTATION INSIGHT or CLIENTS.”

 

The district court granted summary judgment in favor of Cowen on two alternative grounds. First, the court concluded that the indemnity provision did not apply because the accident did not arise out of or result from transportation provided pursuant to the contract. At the time of the incident, “Mr. Taft was not transporting goods or otherwise performing any duty under the contract.” Rather, he had completed the transportation of the goods and was simply a pedestrian on the premises when he was killed. Furthermore, the SLI truck and employee were not engaged in transportation provided pursuant to the contract. The court found that, “[o]n any proper reading of the indemnity clause,” Cowen did not agree to indemnify SLI in these circumstances.

 

*2 Second, the district court determined that the indemnity provision did not apply to a claim, like the wrongful-death action at issue, alleging only that the indemnitee itself was negligent. Relying on Hill v. Carolina Freight Carriers Corp., 235 N.C. 705, 71 S.E.2d 133 (1952), the court stated that an indemnity provision does not apply to such a claim unless the provision explicitly shows that the parties intended to indemnify the indemnitee’s own negligence. The court found that allowing SLI to recover in these circumstances was inconsistent with the purpose of the provision:

 

The clause’s primary purpose was to ensure that if Cowen’s acts caused an injury—if, for example, a Cowen driver caused a wreck while transporting goods under the contract—and if, as a result, the injured party sued not only Cowen but also Transportation Insight or [SLI], perhaps on the theory that Cowen was acting as their agent, then responsibility for defending the lawsuit and paying any loss would fall on Cowen, not on Transportation Insight or [SLI]. The clause plainly was not intended to allow [SLI] to escape responsibility for its own driver’s negligence in causing an accident. In short, Cowen undertook responsibility for its own trucking operation, but not for the operation by [SLI] of its own trucks.

 

Furthermore, the district court found that the second sentence of the provision, which limited Cowen’s liability in proportion to the negligence of Transportation Insight or its clients, underscored that the purpose of the provision was to relieve Transportation Insight and SLI from responsibility for damages caused by Cowen but not to relieve them of responsibility for their own negligence.

 

SLI moved for reconsideration of the judgment under Rule 59(e), Fed.R.Civ.P., arguing, among other things, that the district court failed to distinguish between an allegation of negligence and a finding of negligence. Instead, the court simply relied on the allegations that SLI was negligent to determine SLI’s rights under the indemnity provision. The district court denied the Rule 59(e) motion, stating that the allegations themselves were not covered by the indemnity provision, so Cowen had no duty to defend or to indemnify. SLI timely brought this appeal.

 

SLI argues that the district court erred in granting summary judgment in favor of Cowen for two primary reasons. First, the court relied solely upon the allegations of wrongdoing, rather than an actual finding of wrongdoing, to determine SLI’s rights. Second, the court erred in narrowly interpreting the “arising out of or resulting from” clause in the contract, particularly when the court made no findings of fact with respect to Mr. Taft’s actions at the time of the incident. Finally, SLI argues that the court should have granted summary judgment in its favor based on the plain language of the indemnity provision.

 

II.

We review a district court’s grant of summary judgment de novo. Holloman v. Mail–Well Corp., 443 F.3d 832, 836 (11th Cir.2006). Summary judgment is appropriate when, viewing the evidence in the light most favorable to the nonmoving party, “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, 322–23, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986); Holloman, 443 F.3d at 836–37. Interpretation of a contract is a question of law reviewed de novo. Tobin v. Mich. Mut. Ins. Co., 398 F.3d 1267, 1274 (11th Cir.2005).

 

*3 Initially, we consider whether the wrongful-death action was a claim “arising out of or resulting from transportation provided pursuant to [the] Agreement.” Mr. Taft may have completed the transportation of SLI’s goods and simply may have been on the premises as a pedestrian at the time that the accident occurred. But the district court did not make any detailed factual findings with respect to Mr. Taft’s actions at the time of the incident, so we instead resolve this appeal on the district court’s alternative and sufficient ground for granting summary judgment: that the indemnity provision did not cover a claim alleging only SLI’s negligence.

 

A court’s “primary purpose in construing a contract of indemnity is to ascertain and give effect to the intention of the parties, and the ordinary rules of construction apply.” Schenkel & Shultz, Inc. v. Hermon F. Fox & Assocs., P.C., 362 N.C. 269, 658 S.E.2d 918, 921 (2008) (quotation omitted). An indemnity provision must be appraised in relation to the contract as a whole.   Id.

 

A standard contract of indemnity “will be construed to cover all losses, damages, and liabilities which reasonably appear to have been within the contemplation of the parties.” Id. at 922 (quotation marks and citation omitted). But exculpatory provisions, “whereby a party seeks to protect itself from liability arising from its own negligence,” are strictly construed:

 

Contracts which seek to exculpate one of the parties from liability for his own negligence are not favored by the law. Hence it is a universal rule that such exculpatory clause is strictly construed against the party asserting it. It will never be so construed as to exempt the indemnitee from liability for his own negligence or the negligence of his employees in the absence of explicit language clearly indicating that such was the intent of the parties.

 

Id. (quoting Hill, 71 S.E.2d at 137 (citations omitted)).

 

SLI argues that Cowen is liable under the indemnity provision because Cowen “unambiguously” agreed to defend SLI and its employees against “any and all direct or indirect claims,” Cowen failed to provide such a defense and thereby caused SLI to incur the costs of defense and settlement, and SLI was not found to be negligent. According to SLI, this Court need not determine whether the indemnity provision should be interpreted to provide indemnity for SLI against its own negligence because the second sentence limiting Cowen’s liability resolves the issue. Based on that sentence, SLI argues that Cowen “must defend SLI with respect to the claim and then, if SLI is found to be at least partially negligent, [Cowen’s] liability would be reduced proportionally.” The parties would “settle up” after a determination of liability is made.

 

We conclude that SLI is not entitled to recover under the indemnity provision because its losses do not “reasonably appear to have been within the contemplation of the parties.” Schenkel & Shultz, 658 S.E.2d at 922.

 

*4 In determining whether a party is obligated under a contract to tender a defense to another party, “the facts as alleged in the complaint are to be taken as true and compared to the language” of the contract. See Harleysville Mut. Ins. Co. v. Buzz Off Insect Shield, L.L.C., 364 N.C. 1, 692 S.E.2d 605, 610–11 (2010) (concerning an insurer’s duties to defend and to indemnify); Waste Mgmt. of Carolinas, Inc. v. Peerless Ins. Co., 315 N.C. 688, 340 S.E.2d 374, 377 (1986) (concerning an insurer’s duty to defend). FN2 If the contract provides coverage for the facts as alleged, the indemnitor has an obligation to defend. See Harleysville, 692 S.E.2d at 611. By contrast, the duty to indemnify “is measured by the facts ultimately determined at trial.” Id. at 610. In that sense, the duty to defend is broader than the duty to indemnify. Id. at 610–11.

 

The underlying wrongful-death claim for which SLI seeks reimbursement was premised solely on the negligence of SLI and its employee. Therefore, in order to determine whether Cowen had a duty to defend—in essence, whether the claim on its face was covered by the indemnity provision—we must address whether the indemnity provision can be construed so “as to exempt the indemnitee from liability for his own negligence or the negligence of his employees.” See Schenkel & Shultz, 658 S.E.2d at 922. Here, neither the indemnity provision nor the contract as a whole explicitly indicates that the parties intended to indemnify Transportation Insight or its clients from their own negligence, and SLI does not contend that they do.

 

Rather, if any explicit intent is found in the contract, it is that Cowen would not be responsible for the indemnitees’ negligence, which the second sentence of the indemnity provision makes clear. SLI reads this second sentence as somehow expanding Cowen’s duty to defend until a determination of liability is made, but that is not a reasonable construction of the agreement, particularly in light of established North Carolina law concerning strict construction of exculpatory provisions. Accordingly, we cannot construe the indemnity provision to cover a claim based on the negligence of SLI or its employees because there is no “explicit language clearly indicating that such was the intent of the parties.” Id.

 

Therefore, Cowen did not have an obligation to defend SLI against the wrongful-death complaint because the claim, taken as true, was not covered by the indemnity provision. See Harleysville, 692 S.E.2d at 611. Because no duty to defend arose, no duty to indemnify exists, even if SLI ultimately settled without admitting fault.FN3 See, e.g., Trailer Bridge, Inc. v. Illinois Nat’l Ins. Co., 657 F.3d 1135, 1146 (11th Cir.2011) (citing a case for the proposition that a “court’s determination that the insurer has no duty to defend requires a finding that there is no duty to indemnify”); Nat’l Cas. Co. v. McFatridge, 604 F.3d 335, 338 (7th Cir.2010) (“If an insurer has no duty to defend, it has no duty to indemnify.”); Penn–America Ins. Co. v. Coffey, 368 F.3d 409, 413 (4th Cir.2004) (“Although an insurer’s duty to indemnify will depend on resolution of facts alleged in the complaint, no such factfinding is necessary if there is no duty to defend because the allegations, even when taken as proved, would fall outside the policy’s coverage.”). Thus, the district court did not err in relying on allegations of negligence rather than actual findings of negligence, because that was the appropriate way to determine whether the underlying claim, on its face, was within the scope of the indemnity provision.

 

*5 More generally, we conclude that SLI’s interpretation of the indemnity provision is unreasonable in light of the contract as a whole. See Schenkel & Shultz, 658 S.E.2d at 921–22. The contract generally provides that Cowen would operate as a carrier on behalf of SLI, among others, for goods and services that SLI needed transported, and SLI would have little to no control over events while the goods were in Cowen’s trucks during transportation. Accordingly, we agree with the district court that the “clause’s primary purpose was to ensure that if Cowen’s acts caused an injury,” and as a result, the injured party sued not only Cowen but SLI, “responsibility for defending the lawsuit and paying any loss would fall on Cowen.” In a similar vein, we think that Cowen is correct when it states that the provision was intended “to provide a defense/indemnity to SLI in those situations in which SLI may have some joint and several liability or some technical or derivative/vicarious liability.” The claim for which SLI seeks to recover does not implicate these purposes.

 

For instance, SLI did not contend in the district court, and does not argue on appeal, that Cowen is liable for the wrongful-death action due to any negligence on Cowen’s part, or that SLI’s alleged fault is somehow derivative of Cowen’s fault. For these reasons, the case of Bridgestone/Firestone, Inc. v. Ogden Plant Maintenance Co. of North Carolina, 144 N.C.App. 503, 548 S.E.2d 807 (2001), does not support SLI’s position. In Bridgestone, wrongful-death suits based on negligence were brought against the plaintiff-indemnitee and the defendants-indemnitors after an industrial accident resulting in two deaths.   Id. at 809. The plaintiff settled the claims of direct and active negligence against it during trial and then sought indemnification from the defendants for the costs of settling the claims, pursuant to contractual indemnity provisions. Id. at 809–10. The plaintiff alleged that it could only have been liable based on some passive or derivative fault. Id. at 811. The court found that the plaintiff could proceed with its action because it was seeking indemnification for sums paid as a result of the defendant’s negligence, so it was not attempting to hold the defendants liable for the plaintiff’s own negligence. See id. at 810–12. Here, SLI is not seeking to hold Cowen liable for any negligence on Cowen’s part, so Bridgestone does not support SLI’s position in this case.

 

III.

In short, we hold that SLI is not entitled to recover from Cowen the costs of defending and settling the wrongful-death claim because the indemnity provision did not expressly indicate the parties’ intent to indemnify the negligence of SLI or its employees. Accordingly, we affirm the judgment of the district court.

 

AFFIRMED.

 

FN1. A motions panel of this Court granted SLI’s motion to amend the deficient allegations of diversity of citizenship, and we have subject-matter jurisdiction to decide this appeal. See 28 U.S.C. §§ 1332, 1653.

 

FN2. SLI asserts that case law concerning an insurer’s duty to defend or to indemnify pursuant to an insurance contract is somehow inapposite to the instant situation, which also involves a contractual obligation to defend and to indemnify. But SLI has offered no valid reason for this distinction—and we find none apparent—particularly when the indemnity provision at issue provides for both obligations.

 

FN3. We do not find the case of Stephens v. Chevron Oil Co., 517 F.2d 1123 (5th Cir.1975), to be controlling. First, Stephens was decided under Louisiana law, which is not at issue here. Second, the Fifth Circuit later acknowledged that “the Stephens court overlooked controlling Louisiana precedent” and that “post- Stephens decisions of the Louisiana courts” had reached contrary results. Sullen v. Mo. Pac. R. Co., 750 F.2d 428, 433 (5th Cir.1985). The Fifth Circuit’s decision in Sullen supports the result we reach in this case. See Sullen, 750 F.2d at 433–34 (holding that, since the underlying pleadings alleged only the negligence of the indemnitee, the indemnitor had no duty to defend).