United States District Court, N.D. Illinois, Eastern Division.

SYNY LOGISTICS, INC., Plaintiff,

v.

GREAT LAKES INSURANCE SE, Defendant.

Case No. 22-cv-764

|

Signed September 30, 2023

Attorneys and Law Firms

Tami J. Diamond, Kurt E. Vragel, Jr., Tomasz Koziol, Kurt E. Vragel, Jr., PC, Glenview, IL, for Plaintiff.

Secon Michael J. O’malley, Wilson Elser Moskowitz Edelman & Dicker LLP, Chicago, IL, John Christopher Ricci, BatesCarey LLP, Chicago, IL, Matthew L. McBride, III, McBride Law Offices PC, Chicago, IL, for Defendant.

MEMORANDUM OPINION AND ORDER

Steven C. Seeger, United States District Judge

*1 SYNY Logistics, Inc., a large interstate trucking company, bought an insurance policy from Great Lakes Insurance SE. The policy covered drivers as they hauled freight across the country. But the policy did not cover anyone and everyone who got in the cab and got behind the wheel. The policy required drivers to have one year of driving experience.

One day, Brent Granville, a driver for the company, hopped into his big rig with a set of keys. He started the engine and went trucking with 354 days of experience under his belt. That’s close to a year of experience, but it’s not a year. Unfortunately, he crashed.

The accident sparked a dispute between the trucking company and the insurance company. SYNY later filed this declaratory judgment action, seeking coverage for the accident. Great Lakes, in turn, filed a counterclaim about the lack of coverage. The insurance company then moved for summary judgment, arguing that there is no coverage because the driver did not have the experience required by the policy.

The Court grants Great Lakes’s motion. When it comes to coverage, the policy is not in for a penny, in for a pound. It’s miss by an inch, miss by a mile. Granville got 97% of the way toward satisfying the one-year requirement. So, he’s 100% short and is entitled to 0% coverage.

Background

SYNY Logistics, Inc. calls itself the “greatest logistic[s] company” in America. See Our Services, SYNY Logistics Inc., https://synylogistics.com/our-services/ (last accessed Sept. 26, 2023). It boasts more than 1,000 trucks in 120 cities. Id.

Brent Granville drove one of those trucks, a 2016 White Western Star, Model 5700 XE.¹ See Cplt., at ¶ 9 (Dckt. No. 1-1); see also Pl’s. Obj. to Def.’s Rule 56 Statement, at 2, ¶¶ 1–2 (Dckt. No. 38). After nine months on the job, he had a bad day at work. Id. at 2, 7, ¶¶ 2, 17. On January 26, 2021, Granville got into his truck, and got in an accident. Id. at 7, ¶ 17.

The Court does not know details about what happened, where it happened, or how it happened. But the accident left the truck in bad shape. A towing company dragged the truck away. The repair and towing costs exceeded $68,000. Fortunately, there is nothing in the complaint suggesting that Granville suffered a personal injury.

SYNY filed a claim with its automobile insurance company, Great Lakes Insurance SE. Id. at 7, ¶ 18. Great Lakes wanted experienced hands on the wheel. The policy expressly required drivers to have a certain level of driving experience.

Basically, drivers needed to “have” at least one year of driving experience. That experience needed to be recent, too. The driving experience needed to take place within two years. Specifically, the policy provided as follows:

*2 [T]his Insurance shall not indemnify [SYNY] for loss or damage to any Automobile … unless the Automobile is operated by … a driver who at inception of this Policy or at the date of hire, whichever is the later, provides documented evidence of an MRV no older than three months showing that they: …

2) Have experience as follows:

a) a minimum of two (2) years continuous driving experience, within thirty-six (36) months of the policy inception date or date of hire, whichever is the later, driving equipment similar to or driving trucks transporting cargo similar to that insured under this Policy; OR

b) a minimum of (1) years continuous driving experience, within twenty-four (24) months of the policy inception date or date of hire, whichever is the later, driving equipment similar to or driving trucks transporting cargo similar to that insured under this Policy providing there are no violations and no at fault accidents.

See Certificate of Insurance, Ex. A to Counterclaim (Dckt. No. 9-1, at 29 of 34) (emphasis omitted).

The second option (option b) is relevant here. See SYNY’s Resp., at 4–5 (Dckt. No. 37). The key dates are when Granville began driving, when the company hired him, and when the policy began.

Granville got his commercial license on September 5, 2019. See Pl’s. Obj. to Def.’s Rule 56 Statement, at 8, ¶ 4. (Dckt. No. 38). SYNY hired him on April 19, 2020. Id. at 2, ¶ 2. The policy started on August 24, 2020. Id. at 2, ¶ 3. He got into the accident on January 26, 2021. Id. at 2 ¶ 9. In other words, Granville got his license, and then he was hired, and then the policy started. And then he crashed.

Great Lakes denied the claim. Id. at 7, ¶ 19. Great Lakes believes that the policy does not cover Granville because he did not have one year of continuous experience on the policy’s start date. Id. at 3–4, ¶¶ 5–7.

SYNY disagrees. It thinks the policy covers Granville because he could earn his one-year experience milestone “within” 24 months of the policy’s start date. See SYNY’s Resp., at 5 (Dckt. No. 37). In other words, as the company sees it, the clock started ticking when Granville got his license on September 5, 2019, and he would hit the one-year mark “within” 24 months of August 24, 2020 (the policy’s start date). See id.

SYNY sued Great Lakes in the Circuit Court of Cook County. See Cplt. (Dckt. No. 1-1). It brought three counts. First, SYNY asked for a declaratory judgment that the policy covers Granville’s accident. Id. at ¶¶ 14–16. Next, it claimed that Great Lakes breached the policy by denying coverage. Id. at ¶¶ 17–21. Finally, SYNY claimed that Great Lakes violated section 155 of Illinois’s insurance code by denying SYNY’s claim vexatiously. Id. at ¶¶ 22–24.

Great Lakes – a societas europaea (more on that in a minute) – removed the case. See Notice of Removal (Dckt. No. 1). It also filed a counterclaim for a declaratory judgment that the policy does not cover SYNY’s claim. See Counterclaim, at 10 (Dckt. No. 9). Then Great Lakes moved for summary judgment. (Dckt. No. 33).

Legal Standard

Great Lakes is entitled to summary judgment if it shows that there is “no genuine dispute as to any material fact” and it is “entitled to judgment as a matter of law.” See Jaranowski v. Ind. Harbor Belt R.R. Co., 72 F.4th 744, 749 (7th Cir. 2023) (citation omitted). To decide the motion, this Court views the evidence and draws all reasonable inferences in SYNY’s favor as the non-moving party. Id.

Analysis

*3 This Court starts with the first step in every case: establishing jurisdiction. The Court must button down jurisdiction even if the parties do not raise it. See Great S. Fire Proof Hotel Co. v. Jones, 177 U.S. 449, 453 (1900) (“[Jurisdiction is a] question the court is bound to ask and answer for itself, even when not otherwise suggested[.]”).

I. Jurisdiction

Federal courts hear cases from a limited menu. “They possess only that power authorized by Constitution and statute.” Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994).

Diversity cases are on the menu. District courts have jurisdiction over civil actions when the amount in controversy exceeds $75,000 and the suit is between “citizens of a State” and “citizens or subjects of a foreign state.”² See 28 U.S.C. § 1332(a)(2).

The diversity statute requires complete diversity. See Page v. Democratic Nat’l Comm., 2 F.4th 630, 636 (7th Cir. 2021). A plaintiff and defendant cannot share citizenship of the same state. Id. So, this Court must determine the citizenship of SYNY and Great Lakes.

SYNY’s citizenship is straightforward. SYNY is a corporation. See Cplt., at ¶ 1 (Dckt. No. 1-1). A corporation is a citizen of its state of incorporation and its principal place of business. See West v. Louisville Gas & Elec. Co., 951 F.3d 827, 830 (7th Cir. 2020). SYNY is incorporated in Illinois, and its principal place of business is in Illinois. See Cplt., at ¶ 1. So, SYNY is an Illinois citizen.

Great Lakes’s citizenship is more complicated. Despite the Midwestern-sounding name, Great Lakes is from mid-continental Europe. Great Lakes is a foreign entity – the “SE” on the end of its name stands for societas europaea. See Notice of Removal, at ¶ 9 (Dckt. No. 1). To determine a foreign business’s citizenship, Seventh Circuit courts decide “what U.S.-recognized entity the foreign entity most resembles.” See 15A James W. Moore et al., Moore’s Federal Practice § 102.75 (3d ed. 2023); BouMatic, LLC v. Idento Operations, BV, 759 F.3d 790, 791 (7th Cir. 2014).

At that point, courts analyze the entity under the citizenship rules that apply to its American twin. See, e.g., Fellowes, Inc. v. Changzhou Xinrui Fellowes Office Equip. Co., 759 F.3d 787, 789–90 (7th Cir. 2014) (“Having held … that an American LLC has the citizenship of every member-investor, we are not about to establish a different rule for functionally identical entities established under other nations’ laws.”); BouMatic, 759 F.3d at 791 (holding that a Netherlands entity resembled a U.S. close corporation and treating it as such).

*4 Sometimes figuring out the citizenship of an entity from the other side of an ocean is “difficult.” See Fellowes, 759 F.3d at 788. It can be hard to figure out if a pear is more like an apple or an orange. But the Seventh Circuit has laid down guideposts.

A foreign entity is the functional equivalent of an American corporation when it has “perpetual existence,” is governed by a Board of Directors, issues tradable shares, and is treated “independent of its equity investors.” See Lear Corp. v. Johnson Elec. Holdings Ltd., 353 F.3d 580, 583 (7th Cir. 2003); see also Superl Sequoia Ltd. v. Carlson Co., Inc., 615 F.3d 831, 832 (7th Cir. 2010) (citation omitted).

This Court knows of only one case directly deciding whether a societas europaea is a corporation for diversity purposes.³ See SNC-Lavalin Constructors Inc. v. Tokio Marine Kiln Ins. Ltd., 2021 WL 2550505, at *8 (D. Md. 2021). That court – although writing from Maryland – applied the Seventh Circuit’s framework. Id. (“[T]he Court will apply the Seventh and Eighth Circuits’ comparison test to decide whether Starstone Insurance SE is equivalent to a U.S. corporation for the purposes of diversity jurisdiction.”). It held that SEs are comparable to U.S. corporations for diversity purposes. Id. at *9.

This Court sees no reason to land somewhere else. Like American corporations, SEs have “transferable shares, limited liability, and a legal personality independent from its shareholders.” Id. at *8; see also Council Regulation 2157/2001 (EC), preamble, ¶ 13 (“The SE itself must take the form of a company with share capital[.]”); id. art. 1, ¶ 2 (“The capital of an SE shall be divided into shares. No shareholder shall be liable for more than the amount he has subscribed.”); id. art. 1, ¶ 3 (“An SE shall have legal personality.”); id. art. 38 (“[A]n SE shall compromise: … a general meeting of shareholders and … either a supervisory organ and a management organ … or an administrative organ[.]”); Setting up a European Company (SE), Eur. Union, https://europa.eu/youreurope/business/running-business/developing-business/setting-up-european-company/index_en.htm (last accessed Sept. 26, 2023) (“The European Company – also known as SE (Societas Europ[a]ea in Latin) – is a type of public limited-liability company[.]”⁴).

Those features are American corporation hallmarks. See Lear, 353 F.3d at 583. So a societas europaea is a corporation for diversity purposes.⁵

*5 In turn, the Court must determine Great Lakes’s place of incorporation and principal place of business. See West, 951 F.3d at 830. Great Lakes is registered in Germany and its principal place of business is in Munich. See Notice of Removal, at ¶ 9 (Dckt. No. 1). So, Great Lakes is diverse from SYNY (an Illinois citizen). This Court has jurisdiction.

II. The Merits

With jurisdiction in hand, the Court turns to the merits. The key question is whether SYNY satisfied the requirement that the driver must “have” one year of driving experience. The punchline is that Granville had 354 days of experience, so he never got there.

A. The Scope of Coverage

The motion for summary judgment turns on the meaning of the policy. The first step involves pinning down choice of law. See Jupiter Aluminum Corp. v. Home Ins. Co., 225 F.3d 868, 872 (7th Cir. 2000).

The decision is simple. The parties agree that Illinois law applies. See Def.’s Mem., at 4 (Dckt. No. 34) (citing Illinois cases); Pl.’s Resp., at 6 (Dckt. No. 37) (same). So, Illinois law it is. See Auto-Owners Ins. Co. v. Websolv Computing, Inc., 580 F.3d 543, 547 (7th Cir. 2009) (“We honor reasonable choice-of-law stipulations in contract cases[.]”).

Traditional rules of contract interpretation apply to insurance policies. Founders Ins. Co. v. Munoz, 930 N.E.2d 999, 1003 (Ill. 2010). The Court must “give effect to the intention of the parties, as expressed in the policy language.” Id.

The text of the policy defines the scope of coverage, and courts must uphold the plain meaning of the text. “If the language is unambiguous, the provision will be applied as written, unless it contravenes public policy.” Id. at 1003–04. But a policy provision is not “ambiguous simply because the parties disagree.” Id. at 1004. An ambiguity only exists if language “is susceptible to more than one reasonable interpretation.” Id.

The endorsement declared that Great Lakes would not indemnify SYNY for damage unless an “experience[d]” driver operated the vehicle. See Certificate of Insurance, Ex. A to Counterclaim (Dckt. No. 9-1, at 29 of 34) (emphasis omitted). The driver must “have” a certain level of experience. Id. Specifically, the driver must provide “documented evidence” showing that he “ha[s]” the necessary experience “at the inception of th[e] Policy or at the date of hire, whichever is the later.” Id.

The parties agree on the relevant dates. SYNY hired Granville on April 19, 2020. See Pl’s. Obj. to Def.’s Rule 56 Statement, at 2, ¶ 2 (Dckt. No. 38). The policy started on August 24, 2020. Id. at 2, ¶ 3. August 2020 came after April 2020. The policy start date is the later date.

So the question is whether Granville had “a minimum of one (1) years continuous driving experience, within twenty-four (24) months of” August 24, 2020. See Certificate of Insurance, Ex. A to Counterclaim (Dckt. No. 9-1, at 29 of 34) (emphasis omitted).

Granville did not. Granville received his commercial license on September 5, 2019. See Pl’s. Obj. to Def.’s Rule 56 Statement, at 8, ¶ 4 (Dckt. No. 38). The policy started 354 days later. Id. at 2, ¶ 2. He was only nine days away from hitting the 365-day mark. He got 354 feet toward the 365-foot finish line.

That’s close, but no cigar. Granville fell short of notching one year of driving experience under his belt. So the policy did not cover Granville. For want of 9 days, the coverage was lost.

*6 The experience requirement makes sense. After all, Great Lakes was insuring heavy equipment that could cause a lot of damage to a lot of people. So, before signing up for that potential liability, Great Lakes wanted to make sure that the people doing the driving knew what they were doing.

SYNY pushes back. It argues that the policy covers Granville because he obtained his license “within” the 24-month window. See Pl.’s Resp., at 5 (Dckt. No. 37). In other words, SYNY thinks that the policy’s reference to “within” means that Granville had a four-year span to clock one year of experience: “between August 24, 2018 and August 24, 2022.” Id. Put another way, SYNY does not think the policy requires drivers to have one year of experience before the policy starts. See id. at 6–7 (“If Great Lakes required the driver to have a year of experience prior to the inception date or the driver’s date of hire, it should have used the word “prior” and not the word “within[.]”).

SYNY’s argument falls short. It severs “within” from the sentence and yanks it from its context. But a word “in isolation” does not decide a provision’s meaning. See Italia Foods, Inc. v. Sun Tours, Inc., 986 N.E.2d 55, 59 (Ill. 2011) (citation omitted). It is a “fundamental principle” of “language itself” that a word’s meaning is drawn from “context.” Textron Lycoming Reciprocating Engine Div., Avco Corp. v. United Auto., Aerospace and Agric. Implement Workers of Am., 523 U.S. 653, 657 (1998) (Scalia, J.) (citation omitted).

The Court must read “within” alongside the policy’s other words, within its broader linguistic neighborhood. On the policy’s start – August 24, 2020 – Granville needed to “[h]ave” one year of continuous driving experience “within” 24 months of August 24, 2020. See Certificate of Insurance, Ex. A to Counterclaim (Dckt. No. 9-1, at 29 of 34) (emphasis omitted).

“Have” is the present tense. It is not “will have.” It’s “have.” The moment the clock struck midnight on August 24, 2020, Granville needed to “have” the experience. He didn’t.

Viewed in isolation, the word “within” could look forward or backward. For example, imagine if someone asked you on Sunday if you ate a pizza “within” two days of Wednesday. If you ate Giordano’s pizza on Monday, the answer would be “Yes.” If you ate a Lou Malnati’s pizza on Friday, the answer would be “Yes.”

But surrounding text can provide interpretive clues about the meaning of words. Here, the question is not whether a driver will have driving experience within two years. The question is whether the driver has driving experience. The drivers must “have” driving experience when they drive, or else there is no coverage.

A driver does not “have” one year of driving experience “within twenty-four (24) months” if the driver has no driving experience. In effect, the phrase “within twenty-four (24) months” means within the past 24 months.

The requirement of documentation sheds light on the meaning, too. The driver must “provide[ ] documented evidence of an MRV no older than three months showing” the requisite experience, and must do so “at inception of this Policy or at the date of hire, whichever is the later.” It is hard to see how a driver could provide documentation that they “have” experience when the experience is future experience.

*7 A contrary reading is hard to square with the text of the policy. And from a practical standpoint, it makes little sense. Under SYNY’s reading, the policy would cover a driver – even if that driver had no experience at all – as long as the driver gets one year of experience within 24 months. If “within” applied to future experience, the policy would cover drivers who lack experience when they get behind the wheel.

Insurance companies need to know what they’re getting. When it comes to the risks of getting behind the wheel, not all drivers are created equal. Some drivers pose greater risks than others. All else being equal, inexperienced drivers pose greater risks than experienced drivers. And the greater risks from inexperienced drivers mean that insurance coverage costs more. (As an exercise, wait for your teenager to get his or her license, and then open the bill from your insurance company.)

Great Lakes insured SYNY and priced it based on the assumption that drivers would have at least one year of experience. Insuring a fleet of experienced drivers posed a smaller risk of loss to Great Lakes than insuring a fleet of inexperienced drivers. And on the flipside, SYNY paid premiums based on the assumption that its drivers would have at least a year of experience. SYNY cannot expect to pay for a policy at a price for experienced drivers, and then hand the keys to an inexperienced driver and expect coverage.

Pivoting, SYNY argues that this Court must adopt its interpretation because the language is ambiguous and SYNY’s interpretation is “reasonable.” See Pl.’s Resp., at 6–7 (Dckt. No. 37). True, courts construe insurance policies in the face of ambiguity “liberally in favor of coverage” when there is “more than one reasonable interpretation.” See Founders, 930 N.E.2d at 1004. But there is no ambiguity here. And even if one existed, SYNY’s ask is unreasonable.

It is unreasonable to read the requirement of experience to cover future experience. By way of analogy, imagine if a French restaurant advertised that it is looking to hire a sous-chef. The job posting requires one year of experience within two years. No one would think that they can show up for the interview with zero culinary experience. And if they did, it would be a short interview.

SYNY makes one last stand.⁶ It concludes its brief with a paragraph that looks like it belongs in a fact section. See Pl.’s Resp., at 7 (Dckt. No. 37). There is not a legal argument in sight. Id.

SYNY states that “prior to the issuance of the Policy,” and during the application process, SYNY Logistics provided Great Lakes with a list of drivers. Id. The list included Granville. Id. But Great Lakes never “informed” SYNY that Granville was not qualified. Id. Instead, Great Lakes “invoiced” SYNY for premiums. Id.

Maybe SYNY is hinting at a waiver or estoppel argument. Great Lakes anticipated the argument in its opening brief. See Def.’s Mem., at 5–6 (Dckt. No. 34).

But facts dumped into a brief do not make a legal argument. An estoppel or waiver argument should – at the very least – use the words “estoppel” or “waiver.” SYNY’s brief has none. See Pl.’s Resp., at 6–7 (Dckt. No. 37).

*8 This Court will not build the argument for the parties. SYNY has waived its waiver and estoppel arguments. See Cent. States, Se. & Sw. Areas Pension Fund v. Midwest Motor Express, Inc., 181 F.3d 799, 808 (7th Cir. 1999) (“Arguments not developed in any meaningful way are waived.”); White v. United States, 8 F.4th 547, 552 (7th Cir. 2021) (“[A]rguments that are unsupported by pertinent authority[ ] are waived.”).

A factual dispute does not exist. Great Lakes is entitled to judgment as a matter of law. The policy did not cover Granville’s accident because he did not satisfy the coverage requirements.

B. The Remaining Claims

The remaining claims crumble, for the same reasons.

Consider the breach of contract claim first. For SYNY’s claim to survive, a jury must be able to find (1) the existence of a valid contract; (2) performance by SYNY; (3) breach of contract by Great Lakes; and (4) resulting injury to SYNY. See Henderson-Smith & Assocs., Inc. v. Nahamani Family Servs. Ctr., Inc., 752 N.E.2d 33, 43 (Ill. 2001). SYNY’s theory is that Great Lakes “breached the contract by denying coverage.” See Cplt., at ¶¶ 17–21 (Dckt. No. 1-1).

But a jury could not find a breach. The policy did not cover the accident. So, Great Lakes did not breach the contract by denying the claim.

SYNY’s section 155 claim fails, too. Illinois’s insurance code declares that in a case where an insurance company’s claim-denial is at issue, “and it appears to the court that” the insurance company’s position is “vexatious and unreasonable,” the court can award, among other things, $60,000. See 215 Ill. Comp. Stat. 5/155(1)(b). But for a plaintiff to recover, it must “succeed in the action on the policy.” Hoover v. Cty. Mut. Ins. Co., 975 N.E.2d 638, 647 (Ill. App. Ct. 2012). SYNY lost the policy action. It cannot win here.

Conclusion

The Court grants Great Lakes’s motion for summary judgment on all of SYNY’s claims. Great Lakes also filed a counterclaim for a declaratory judgment that “Great Lakes owes no insurance coverage” in connection with the accident. See Counterclaim, at 10 (Dckt. No. 9). It is the same issue raised in the complaint. The counterclaim is the mirror image of the complaint, pointed in the other direction. The Court sua sponte grants summary judgment in favor of Great Lakes on its counterclaim.

All Citations

Slip Copy, 2023 WL 6388233

Footnotes

1. The 5700 XE has silver screen experience. Optimus Prime disguised himself as a 5700 in Transformers: Age of Extinction (2014). See Bryan Alexander & Chris Woodyard, Big, Mean ‘Transformers’ Truck Goes Green, Lean, USA Today (June 28, 2014), https://www.usatoday.com/story/money/cars/2014/06/28/transformers-truck/11647799/ (last accessed Sept. 28, 2023).  
2. The amount in controversy requirement is satisfied. “The estimate of the dispute’s stakes advanced by the proponent of federal jurisdiction controls unless a recovery that large is legally impossible.” Carroll v. Stryker Corp., 658 F.3d 675, 680 (7th Cir. 2011) (cleaned up). Great Lakes – the federal jurisdiction proponent – said SYNY seeks about $67,000 for vehicle damages and towing costs plus $60,000 in statutory damages for the section 155 claim. See Notice of Removal, at ¶ 15 (Dckt. No. 1); see also Jump v. Schaeffer & Assocs. Ins. Brokerage, Inc., 123 F. App’x 717, 720 (7th Cir. 2005) (adding section 155 damages to an amount in controversy calculation). That’s $127,000 in total – well over the $75,000 threshold.  
3. A Westlaw search for district court references to “societas europaea” returned a whopping ten results. A search for Courts of Appeal references revealed just one. See Pioneer Trail Wind Farm, LLC v. FERC, 798 F.3d 603, 605 (7th Cir. 2015).  
4. That phrasing gave the Court a little pause. When it comes to jurisdiction, the citizenship of a limited liability company is not the same as the citizenship of a corporation. An LLC is a citizen where its members are citizens, but a corporation is a citizen where it is incorporated and where it has its principal place of business. See Belleville Catering Co. v. Champaign Mkt. Place, LLC, 350 F.3d 691, 692 (7th Cir. 2003); Martin v. Living Essentials, LLC, 653 F. App’x 482, 485 (7th Cir. 2016); Thomas v. Guardmark, LLC, 487 F.3d 531, 534 (7th Cir. 2007). Even so, this Court has found no indication that an SE is comparable to a limited liability company under American law.  
5. In the tax world, the IRS treats SEs as corporations. See 26 C.F.R. § 301.7701-2(b)(8).
6. SYNY also argues that Great Lakes’s motion for summary judgment should be denied because Great Lakes improperly cites the Great Lakes general counsel’s declaration. See Plf.’s Resp., at 2–4 (Dckt. No. 37). The Court does not need to address the argument because the Court does not rely on the declaration

© 2023 Thomson Reuters. No claim to original U.S. Government Works.  

End of Document

United States Court of Appeals, Eleventh Circuit.

CSX TRANSPORTATION, INC., Plaintiff-Appellant,

v.

GENERAL MILLS, INC., Defendant-Appellee.

No.

22

–

10922

|

Filed: 10/05/2023

Synopsis

Background: Freight railroad brought action against owner of food processing plant alleging owner was required under contract governing use of sidetrack railway line to indemnify railroad for settlement amount in underlying personal injury action by plant employee, regardless of whether railroad alone was responsible for employee’s injury while working on sidetrack or owner and railroad were jointly responsible. The United States District Court for the Northern District of Georgia, No. 1:14-cv-00201-TWT, Thomas W. Thrash, Jr., Senior District Judge, 2015 WL 468682, dismissed complaint and, 2015 WL 12856027, denied railroad’s motion for reconsideration. Railroad appealed. The Court of Appeals, 846 F.3d 1333, reversed and remanded. On remand, the District Court, Thrash, Jr., Senior District Judge, 2017 WL 4472787, dismissed one claim, and, 587 F.Supp.3d 1334, granted summary judgment in favor of owner on remaining claims. Railroad appealed.

Holdings: The Court of Appeals, Jill Pryor, Circuit Judge, held that:

^[1] under Georgia law, section of contract giving owner option to conduct its own railcar switching operations on sidetrack did not require owner to indemnify railroad, and

^[2] under Georgia law, as predicted by the Court of Appeals, vouchment does not preclude the voucher from litigating issues with the vouchee that may have been decided in earlier litigation between the injured party and the voucher.

Affirmed in part, reversed in part, and remanded.

West Headnotes (19)

Federal Courts Pleading  

Court of Appeals reviews de novo an order granting a motion to dismiss for failure to state a claim.  

Federal Courts Summary judgment  

Court of Appeals reviews de novo a district court’s grant of summary judgment.    

Federal Courts Statutes, regulations, and ordinances, questions concerning in general  

Interpretation of a contract or statute is a question of law that Court of Appeals reviews de novo.    

Indemnity Railroads  

Under Georgia law, section of contract governing use of sidetrack railway line giving owner of food processing facility option to conduct its own railcar switching operations on sidetrack did not require owner to indemnify railroad for settlement amount railroad paid in underlying personal injury action by plant employee who was injured while working on sidetrack if railroad was solely at fault, even though section stated owner would assume all risk of loss, damage, cost, liability, judgment, and expense in connection with any personal injury arising from owner’s switching operations; nothing in subject provision explicitly, expressly, and unequivocally stated that indemnification was required if owner was not at least partially liable for employee’s accident. 1 Case that cites this headnote  

Indemnity Requisites and Validity of Contracts  

Under Georgia law, a contract requires indemnification for an indemnitee’s sole negligence only when it explicitly says that the indemnitor must pay even if he is not negligent. 1 Case that cites this headnote  

Contracts Construction as a whole  

Under Georgia’s rules of contract construction, a court must interpret a contractual provision in the context of the entire agreement.    

Res Judicata Notice of prior litigation and opportunity to participate  

Georgia’s vouchment doctrine addresses when nonparty may be bound by judgment in lawsuit. Ga. Code Ann. § 9-10-13.    

Res Judicata Notice of prior litigation and opportunity to participate  

Under Georgia’s vouchment doctrine, the term “vouch” means to call into court to warrant and defend. Ga. Code Ann. § 9-10-13.    

Res Judicata Notice of prior litigation and opportunity to participate  

To use vouchment under Georgia law when a defendant believes that a nonparty is liable for the plaintiff’s injury, the defendant merely needs to notify the nonparty about the action against the defendant. Ga. Code Ann. § 9-10-13.  

Res Judicata Notice of prior litigation and opportunity to participate  

Under Georgia law, vouchment occurs outside of court and is subject to few procedural rules; it requires nothing more of the voucher than giving notice of the lawsuit to the vouchee, which can be done in a letter or even orally. Ga. Code Ann. § 9-10-13.

Res Judicata Notice of prior litigation and opportunity to participate  

The primary purpose of the vouchment doctrine under Georgia law is judicial efficiency. Ga. Code Ann. § 9-10-13.    

Res Judicata Notice of prior litigation and opportunity to participate  

Under Georgia’s vouchment doctrine, the vouchee is not obligated to participate in the voucher’s defense. Ga. Code Ann. § 9-10-13.    

Federal Courts Substance or procedure;  determinativeness  

When jurisdiction in a case rests on diversity of citizenship, the federal court applies the substantive law of the forum state. 28 U.S.C.A. § 1332.  

Federal Courts Highest court

In a diversity jurisdiction case, when a state’s highest appellate court has addressed an issue of state law, the federal court simply applies its holding. 28 U.S.C.A. § 1332.    

Federal Courts Anticipating or predicting state decision  

When Court of Appeals is confronted with a state-law issue of first impression in a diversity jurisdiction case, it must attempt to predict how the state’s highest court would decide the issue.  

Federal Courts Inferior courts  

When Court of Appeals is confronted with a state-law issue of first impression in a diversity jurisdiction case, absent certainty from the state’s highest court, Court of Appeals applies the decisions of the state’s intermediate court unless there is persuasive indication that the state’s highest court would rule otherwise.

Statutes Plain language;  plain, ordinary, common, or literal meaning  

Under Georgia law, if the statutory text is clear and unambiguous, the Court of Appeals attributes to the statute its plain meaning, and its search for statutory meaning is at an end.  

Res Judicata Notice of prior litigation and opportunity to participate  

Under Georgia law, as predicted by the Court of Appeals, vouchment does not preclude the voucher from litigating issues with the vouchee that may have been decided in earlier litigation between the injured party and the voucher. Ga. Code Ann. § 9-10-13.    

Res Judicata Notice of prior litigation and opportunity to participate  

Under Georgia law, “vouchment” is a right granted to the voucher under the statute, as is the binding effect of the judgment against the vouchee. Ga. Code Ann. § 9-10-13.  

*1317 Appeal from the United States District Court for the Northern District of Georgia, D.C. Docket No. 1:14-cv-00201-TWT

Attorneys and Law Firms

Evan Mark Tager, Mayer Brown, LLP, Washington, DC, R. Stan Baker, Karen Jenkins Young, The Jordan Firm, St Simons Is, GA, Grant Cox Buckley, Randall A. Jordan, Jordan & Moses, St Simons Is, GA, Daryl Glenn Clarida, Eileen Margaret Crowley, Hall Bloch Garland & Meyer, LLP, Atlanta, GA, Ana Davis Johnson, Lauren Vickroy Purdy, David M. Wells, Gunster Yoakley & Stewart, PA, Jacksonville, FL, Christopher R. Jordan, Hunter, Maclean, Exley & Dunn, PC, St Simons Island, GA, Douglas Allen Smith, Mayer Brown, LLP, Los Angeles, CA, for Plaintiff-Appellant.

Emily A. Ambrose, Benjamin W. Hulse, Mary S. Young, Norton Rose Fulbright US LLP, Minneapolis, MN, Jerry W. Blackwell, Corey L. Gordon, Ted David Hartman, Blackwell Burke, PA, Minneapolis, MN, Catherine Ann McCormack, Hawkins Parnell & Young, LLP, Atlanta, GA, for Defendant-Appellee.

Before William Pryor, Chief Judge, Jill Pryor, Circuit Judge, and Proctor,^* District Judge.

Opinion

Jill Pryor, Circuit Judge:

CSX Transportation, Inc. is a freight railroad company that provides rail transportation services. General Mills, Inc., a food company, operates a cereal processing plant in Georgia near one of CSX’s rail lines. A small connecting railroad known as a “sidetrack” connects CSX’s main rail line to General Mills’s plant, allowing General Mills to receive materials, ingredients, and equipment at its plant and to send its cereal away for distribution. A contract between CSX and General Mills governs the use of the sidetrack.

To make a very long story short, a General Mills employee suffered severe injuries while working on the sidetrack and then sued CSX for negligence. After a jury found CSX liable, the employee recovered a large settlement from CSX. CSX then sought to recover the settlement amount, as well as the expenses it incurred in defending the negligence suit, from General Mills. In this lawsuit, CSX sued General Mills for breach of contract, claiming that *1318 under the parties’ agreement, General Mills was required to indemnify CSX—regardless of whether CSX alone was responsible for the employee’s injury or CSX and General Mills were jointly responsible. The district court dismissed one of CSX’s breach-of-contract claims and granted General Mills summary judgment on the other.

On appeal, CSX challenges both the district court’s rulings. We agree with the district court that under the parties’ agreement, General Mills was not required to indemnify CSX if CSX was solely negligent. But we disagree with the district court that the Georgia-law doctrine of vouchment barred CSX from litigating the issue of General Mills’s negligence. If it turns out that General Mills was at least partially at fault for the injury, then under the contract General Mills must indemnify CSX for at least a portion of the settlement and related expenses. We thus affirm in part, reverse in part, and remand.

I. BACKGROUND

We begin by reviewing the provisions in the contract between CSX and General Mills governing the sidetrack that connects the CSX rail line with the General Mills cereal plant. We then describe how a General Mills employee was injured on the sidetrack, sued CSX, and secured a substantial settlement. We then turn to CSX’s efforts to hold General Mills liable for the settlement and expenses CSX incurred in the underlying litigation.

A. The Sidetrack Agreement

CSX and General Mills signed a contract to build the sidetrack in 1989 (the “Sidetrack Agreement”). They agreed that a physical railroad would be constructed and that General Mills would have the option to conduct its own “switching” on that sidetrack—that is, “moving railcars that have been previously delivered by a train or assembling railcars in the proper order so that they can be coupled to a locomotive and pulled out of [the General Mills] facility.” Doc. 63 at 3–4.¹ To switch railcars, an operator uses a “trackmobile,” a type of mobile railcar mover used to move railcars across short distances.

Relevant to this appeal, two contractual provisions addressed indemnification between the parties for losses related to use of the sidetrack. First, in Section 11 the parties agreed that “[e]xcept as otherwise provided” in the contract, for claims arising out of “use … of the Sidetrack,” the parties would “jointly defend and bear equally” losses due to “joint or concurring negligence,” but each party would “hold the other party harmless” for any losses due to “the indemnifying party’s … sole negligence.” Doc. 63-1 at 5–6. Section 11 carved out circumstances in which the default rule—that the parties would jointly defend and bear equally any losses—would not apply. The carved-out circumstances do not exist here.²

*1319 Second, Section 15 gave General Mills the option to conduct its own switching operations on the sidetrack. Section 15 provided that if General Mills exercised the option to perform its own switching, it would “assume[ ] all risk of loss, damage, cost, liability, judgment[,] and expense, (including attorneys’ fees) in connection with any personal injury” sustained or incurred by “employees of either [General Mills] or [CSX] or third persons … in connection with, or arising from or growing out of, the operation of” General Mills’s switching operations. Id. at 7 (emphasis in original).

For over a decade, General Mills chose not to conduct its own switching operations. Later, however, General Mills exercised its contractual option to conduct its own switching. It bought a trackmobile from a company that also provided training to General Mills’s employees on how to use the trackmobile to conduct switching operations. As part of the training, employees were taught to use “chocks”—wedges placed on either side of a railcar’s wheels to inhibit movement—and to employ the handbrakes on railcars when operating the trackmobile.

B. The Negligence Lawsuit

A couple of years later, Doug Burchfield and Rodney Turk, two General Mills employees, were using the trackmobile to move AEX 7136, a railcar stocked with wheat that CSX had delivered to the juncture between the main rail line and General Mills’s sidetrack. After uncoupling AEX 7136 from the trackmobile and parking it, Turk thought he saw the railcar move. He asked Burchfield if he had set the handbrake. Burchfield assured Turk that he had set it. The pair left the railcar sitting on the track and moved away to switch an empty railcar that was located just downhill from AEX 7136. While Burchfield stood near the trackmobile, AEX 7136 sprung loose, rolled down the slope, and crashed into the trackmobile, which in turn ran into the empty railcar. All three vehicles derailed and ran over Burchfield. He suffered extensive injuries leading to the amputation of both his lower legs.

Burchfield filed a personal injury suit in the Northern District of Georgia against CSX and the company that owned AEX 7136.³ In his complaint, Burchfield alleged that CSX negligently delivered AEX 7136 to General Mills with a faulty handbrake, which caused the accident.

CSX sent General Mills a letter notifying it of Burchfield’s lawsuit. CSX demanded that General Mills provide a defense. General Mills refused to defend CSX.

In the Burchfield litigation, CSX sought to attribute fault to General Mills for Burchfield’s injury. CSX argued that General Mills failed to train and supervise Burchfield and Turk and that because of General Mills’s negligence AEX 7136 was left without chocks blocking the wheels or handbraking before the accident. CSX requested that the district court use a verdict form that would allow the jury to allocate fault to non-party General Mills.

*1320 Burchfield moved for summary judgment on the issue of General Mills’s liability. The district court granted the summary judgment motion, concluding that CSX failed to raise the affirmative defense of General Mills’s fault in a timely manner and also failed to introduce expert testimony regarding the standard of care. See Burchfield v. CSX Transp. Inc, No. 1:07-cv-1263, 2009 WL 1405144, at *9–11 (N.D. Ga. May 15, 2009).

Burchfield’s negligence claim against CSX went to trial. The jury found in CSX’s favor, and Burchfield appealed. Burchfield v. CSX Transp. Inc., 636 F.3d 1330, 1333 (11th Cir. 2011). We reversed the judgment and remanded for a new trial on the ground that the district court erred in admitting certain evidence. Id. at 1338.

The case proceeded to a second trial. This time, the jury found CSX liable and awarded Burchfield more than $20 million. Asked to allocate fault between Burchfield and CSX, the jury found that Burchfield was zero percent negligent and CSX was 100 percent negligent. The jury was not asked about General Mills. CSX appealed. While CSX’s appeal was pending, CSX and Burchfield settled for $16 million.

Following the settlement, CSX demanded indemnification from General Mills. CSX asserted that under the Sidetrack Agreement General Mills owed it the full amount of the settlement payment, as well as the attorney’s fees and costs CSX incurred in defending the case. According to CSX, General Mills was required to indemnify it under both Section 11 and Section 15 of the Sidetrack Agreement.

General Mills again refused CSX’s demand, contending that there was “no basis—contractual or otherwise—for the demand that General Mills indemnify CSX for its own negligence and resulting damages.” Doc. 63-8 at 2. Addressing Section 11, General Mills maintained that it was required to indemnify CSX only if General Mills was also negligent. In General Mills’s view, because the jury in the Burchfield litigation concluded that CSX was 100 percent at fault, “meaning 100% individually at fault as compared to anyone else in the world who could have been potentially at fault for Mr. Burchfield’s injuries,” Section 11 did not support CSX’s request. Id. at 3.

As to Section 15, General Mills contended that it owed no duty to indemnify CSX for the same reason: CSX’s negligence was the sole cause of Burchfield’s injury. General Mills asserted that Section 15 did not require it to indemnify CSX for losses that arose solely from CSX’s own negligence.

C. CSX’s Breach-of-Contract Lawsuit

CSX sued General Mills for breach of contract, seeking indemnification for the settlement with Burchfield. As relevant on appeal, CSX alleged that under Section 15 of the Sidetrack Agreement General Mills was required to assume all costs for injuries arising from General Mills’s switching operations “without regard to who ultimately was determined to be at fault.” Doc. 1 at 18.

General Mills moved to dismiss the complaint for failure to state a claim, and the district court granted the motion. The court explained that under Georgia law, a party is contractually obligated to indemnify another party for losses when the first party is not negligent only if the parties’ contract meets the “heightened specificity requirement” of “expressly, plainly, clearly, and unequivocally” providing for indemnification under such circumstances. Doc. 36 at 8 (emphasis omitted). The court determined that Section 15 did not meet that standard and thus General Mills was not required to indemnify CSX when CSX alone was negligent. The district court thus concluded that the Sidetrack Agreement *1321 did not require General Mills to indemnify CSX for the Burchfield settlement or its litigation costs.

CSX moved for reconsideration of the district court’s order dismissing the complaint. It argued that the dismissal relied on the “unspoken premise” that CSX could not litigate General Mills’s fault because federal collateral estoppel principles precluded it from doing so. Doc. 38 at 5. In CSX’s view, the district court committed legal error by applying federal collateral estoppel law when it should have applied Georgia law. Georgia’s collateral estoppel rule would have allowed CSX to litigate General Mills’s negligence.⁴ The district court denied the motion, stating that CSX “failed to show that the Court committed a clear error of law.” Doc. 41 at 3.

CSX appealed the district court’s dismissal of its complaint, and we reversed. CSX Transp., Inc. v. General Mills, Inc., 846 F.3d 1333 (11th Cir. 2017). We focused on the district court’s conclusion that federal collateral-estoppel principles precluded CSX from litigating General Mills’s fault in the indemnification action. Id. at 1335. We agreed with CSX that the district court should have applied Georgia’s collateral estoppel rule. Id. at 1340. But we remanded for the district court to determine whether, under that rule, General Mills and Burchfield were “identical parties” so that the Burchfield judgment was binding on CSX in the indemnity suit. Id. (internal quotation marks omitted). We expressly declined to decide “whether the Sidetrack Agreement requires indemnification assuming CSX was solely at fault.” Id.

On remand, CSX filed an amended complaint alleging three counts. Count One again alleged that Section 15 of the Sidetrack Agreement required General Mills to indemnify CSX “without regard to who ultimately might be determined to be at fault.” Doc. 63 at 16 (emphasis omitted). Count Two alleged, in the alternative, that Section 15 required General Mills to indemnify CSX because General Mills bore “at least some fault in causing Mr. Burchfield’s injuries.” Id. at 19 (emphasis omitted). Count Three alleged, also in the alternative, that if “Burchfield’s injuries did not arise from or grow out of use of the trackmobile” and CSX and General Mills were jointly or concurrently negligent, Section 11 required General Mills to indemnify CSX for 50 percent of CSX’s loss. Id. at 21.

General Mills again moved to dismiss CSX’s claims. The district court dismissed Count One for the same reason it had dismissed the Section 15 claim in its earlier order: Section 15’s language was too broad and vague to require General Mills to indemnify CSX without regard to fault. But the court did not dismiss Counts Two or Three. Applying Georgia’s collateral estoppel rule, the court concluded that CSX was not barred from arguing that General Mills was partially at fault for Burchfield’s injuries. Therefore, the claims in Counts Two and Three, which required CSX to *1322 show General Mills was at least partially at fault, survived.

After discovery, the parties filed cross-motions for summary judgment. In its summary judgment motion, General Mills explained that for CSX to prevail on Counts Two or Three, it had to show that General Mills’s negligence caused or contributed to Burchfield’s injuries. Again, General Mills maintained that CSX was precluded from litigating General Mills’s negligence. This time, it argued that because CSX had vouched General Mills into the Burchfield litigation, CSX was bound by the Burchfield judgment, which General Mills said determined that “CSX was 100% at fault … Burchfield was 0% at fault … and General Mills was not negligent.” Doc. 188 at 17. The district court agreed, remarking that “in the vouchment doctrine, [General Mills] appears to have finally hit on a viable preclusion argument.” Doc. 258 at 7. The district court entered judgment against CSX.

CSX now appeals the district court’s orders granting General Mills’s motion to dismiss Count One and its motion for summary judgment on Counts Two and Three.

II. STANDARD OF REVIEW

^{[1] [2] [3]}We review de novo an order granting a motion to dismiss for failure to state a claim. See Hoever v. Marks, 993 F.3d 1353, 1357 (11th Cir. 2021) (en banc). We also review de novo a district court’s grant of summary judgment. See State Farm Mut. Auto. Ins. Co. v. Spangler, 64 F.4th 1173, 1178 (11th Cir. 2023). In addition, the interpretation of a contract or statute is a question of law that we review de novo. See Hoever, 993 F.3d at 1357 (statute); Southland Distribs. Mktg. Co. v. S&P Co., 296 F.3d 1050, 1053 (11th Cir. 2002) (contract).

III. DISCUSSION

CSX raises two theories on appeal for why General Mills is required to indemnify it. First, CSX argues that even if it was solely at fault for Burchfield’s injuries, Section 15 of the Sidetrack Agreement required General Mills to indemnify it. Second, it argues that that General Mills owed it a duty to defend because a reasonable jury could find that General Mills was at least partially at fault in causing Burchfield’s injuries. As to this second theory, CSX argues that the district court erred in concluding that Georgia’s vouchment statute precluded it from establishing that General Mills was at least partially at fault for Burchfield’s injuries. We address the two theories in turn.

A. The Sidetrack Agreement does not require General Mills to indemnify CSX when CSX is solely at fault.

^[4]CSX argues the district court erred in dismissing Count One, its indemnification claim under Section 15. It reasons that the Sidetrack Agreement unambiguously required General Mills to indemnify CSX, even for CSX’s sole negligence, so the district court erred in refusing to enforce the provision. We disagree.

^[5]Under Georgia law,⁵ a contract requires indemnification for an indemnitee’s sole negligence only when it explicitly says that the indemnitor must pay even if he is not negligent. See Park Pride Atlanta, Inc. v. City of Atlanta, 246 Ga.App. 689, 541 S.E.2d 687, 689 (2000). In Park Pride, a non-profit organization agreed to hold a city harmless “from any and all claims … of any kind … or nature … for any activity sponsored by” the organization. Id. (internal quotation marks omitted) At a park clean-up event sponsored by the organization, *1323 a city dump truck rolled backward crushing a woman, who died from her injuries, and injuring her husband. Id. at 688. The husband sued the city, bringing claims arising out of his wife’s death and his injuries. Id. After the city settled the tort litigation, it sued the organization seeking indemnification. Id.

The Georgia Court of Appeals considered whether the indemnification agreement required the organization to indemnify the city for the city’s own negligence. Id. at 689. The court began with the principle that “[p]ublic policy is reluctant to cast the burden for negligent actions upon those who are not actually at fault” because “[p]ublic policy seeks to encourage people to exercise due care in their activities for fear of liability, rather than to act carelessly cloaked with the knowledge that an indemnity contract will relieve such indifference.” Id. Based on this public policy concern, it explained that a party who was not negligent generally would not be required to indemnify a party who was negligent unless a contract “explicitly and expressly” required indemnification. Id. The court emphasized that “[t]he words of a contract of indemnification … must be construed strictly against the indemnitee” with “every presumption” against indemnification. Id. (internal quotation marks omitted).

Relying on this standard, the Georgia Court of Appeals concluded that the parties’ agreement did not require the organization to indemnify the city. Although the indemnification provision at first blush “appear[ed] to indemnify the [c]ity ‘against any and all claims,’ ” the provision was “bereft of any express or explicit statement about coverage for the [c]ity’s own negligent acts.” Id. Because the indemnity provision “failed to expressly, plainly, clearly, and unequivocally state that [the organization] would indemnify the [c]ity from the [c]ity’s own negligence,” the organization had no obligation to indemnify the city for the settlement in the underlying litigation. Id.; see also Viad Corp. v. U.S. Steel Corp., 343 Ga.App. 609, 808 S.E.2d 58, 60, 63 (2017) (holding that an agreement to indemnify for “[a]ll debts, liabilities, and obligations” was not “sufficient” to require indemnification for a party’s sole negligence because the agreement did not explicitly mention the “negligence” of the party seeking indemnification (internal quotation marks omitted)); S. Ry. Co. v. Union Camp Corp., 181 Ga.App. 691, 353 S.E.2d 519, 520–21 (1987) (reaching same conclusion for agreement to indemnify for “all loss, damage, liability or expense” (internal quotation marks omitted)).

With this guidance, we return to the Sidetrack Agreement. Section 15 set forth General Mills’s option to conduct its own switching operations and the risk of liability it accepted in exchange. If General Mills chose to perform its own switching, it “assume[d] all risk of loss, damage, cost, liability, judgment[,] and expense … in connection with any personal injury… arising from … the operation of [General Mills’s] trackmobile or locomotive power upon [the] Sidetrack.” Doc. 63-1 at 7 (emphasis in original).

Applying Georgia law, we conclude that this provision did not require General Mills to indemnify CSX for CSX’s sole negligence. Nothing in Section 15 “explicitly and expressly” stated that indemnification was required if General Mills was not at fault. Park Pride, 541 S.E.2d at 689. To be sure, under Section 15’s broad terms, General Mills “assume[d] all risk of loss.” Doc. 63-1 at 7 (emphasis omitted). But as Park Pride made clear, such language does not “expressly, plainly, clearly, and unequivocally” state that an indemnitor must cover *1324 losses that result from the indemnitee’s own negligence. Id. at 689.

CSX’s counterarguments are unavailing. It contends that Section 15 makes sense only if General Mills was required to indemnify it regardless of fault. In its view, the Sidetrack Agreement allowed General Mills to take over its switching operations—meaning that CSX would give up “both control over the risk and the revenue from performing the switching function for General Mills”—in exchange for General Mills’s agreement to “assume all risk of liability for any personal injury to any person.” Appellant’s Br. at 25 (alterations adopted). At first blush, CSX’s quid pro quo argument is compelling: CSX gave up control over—including the potential ability to prevent accidents—and revenue from switching activity on the sidetrack, and in return General Mills accepted all liability regardless of who was at fault. But the Georgia Court of Appeals concluded that a similar indemnification provision—in which the indemnitor agreed to assume liability for “all loss” that the indemnitee incurred “because of any injury to or death of any person or loss of or injury or damage to any property”—did not “expressly state[ ] that the negligence of the indemnitee is covered” and thus did not require indemnification for the indemnitee’s own negligence. See S. Ry. Co., 353 S.E.2d at 520–21. Section 15’s language is simply not explicit enough to require General Mills to indemnify CSX for CSX’s own negligence, particularly given that we must construe the contract “strictly against” CSX as the indemnitee. Park Pride, 541 S.E.2d at 689. Here, construing the contract strictly against CSX means that General Mills does not have to indemnify unless it was at least partially liable for Burchfield’s accident.

^[6]Georgia’s rules of contract construction require that we interpret Section 15 in the context of the entire agreement. See Peachtree on Peachtree Invs., Ltd. v. Reed Drug Co., 251 Ga. 692, 308 S.E.2d 825, 828 (1983). But our reading does not conflict with the rest of the contract. Section 11(A) generally provided that each party would “hold the other party harmless” for losses arising from “the indemnifying party’s … sole negligence.” Doc. 63-1 at 6. Section 11(C) carved out five specific exceptions in which General Mills agreed to indemnify CSX “irrespective of the sole … negligence of [CSX].” Id. These carveouts described the only circumstances in which General Mills was required to indemnify CSX if CSX was solely negligent. And none of the carveouts included incidents arising out of General Mills’ switching operations discussed in Section 15.

Because Section 15 did not expressly, explicitly, and unequivocally require General Mills to indemnify CSX for CSX’s sole negligence, the district court did not err in dismissing CSX’s claim that General Mills was liable under Section 15 even if CSX alone was negligent. We thus affirm the district court’s dismissal of Count One.

B. The vouchment doctrine does not bar CSX from establishing that General Mills was at least partially at fault and thus liable under the Sidetrack Agreement.

CSX’s other argument on appeal arises from its alternative theory that the Sidetrack Agreement required General Mills to indemnify CSX because General Mills’s negligence contributed to Burchfield’s injuries. CSX argues that the district court erred in granting General Mills’s motion for summary judgment because the court misapplied Georgia’s vouchment law when it found that CSX was bound by the Burchfield jury’s verdict and thus could *1325 not prove that General Mills was partially at fault.

We begin by introducing Georgia’s vouchment statute. We then explain why we agree with CSX that the vouchment statute binds only General Mills to the Burchfield judgment.

1. Vouchment under Georgia law

^{[7] [8]}Georgia’s vouchment doctrine addresses when a non-party may be bound by the judgment in a lawsuit. The term “vouch” means “to call into court to warrant and defend.” Loeb v. May, 186 Ga. 742, 198 S.E. 785, 786 (1938) (internal quotation marks omitted). A rudimentary hypothetical demonstrates how vouchment works: A plaintiff sues a defendant for an injury. But the defendant believes that a non-party is liable for the plaintiff’s injury instead. Vouchment empowers the defendant as a “voucher” to bind the non-party as the “vouchee” to the judgment in the first lawsuit about the plaintiff’s right to recover.

^{[9] [10]}To use this tool, the defendant merely needs to notify the non-party about the action against the defendant. See, e.g., Chicago v. Robbins, 67 U.S. (2 Black) 418, 423, 17 L.Ed. 298 (1862); W. & Atl. R.R. Co. v. City of Atlanta, 74 Ga. 774, 777 (1885). Importantly, vouchment does not make the non-party a party to the lawsuit. See 13 Ga. Jurisprudence § 10:27 (Sept. 2023 update). Instead, vouchment occurs outside of court and is subject to few procedural rules. It requires nothing more of the voucher than giving notice of the lawsuit to the vouchee, which can be done in a letter or even orally. Id.

^{[11] [12]}In 1895, Georgia enacted a statute codifying the common-law doctrine of vouchment. The statute provides:

Where a defendant may have a remedy over against another person and vouches him into court by giving notice of the pendency of the action, the judgment rendered therein shall be conclusive upon the person vouched, as to the amount and right of the plaintiff to recover.

O.C.G.A. § 9-10-13. The doctrine’s primary purpose is judicial efficiency:

[I]f the act of the vouchee is the real thing complained of, so that, if there is a recovery by the injured party against the voucher, he can turn right around and claim indemnity from the vouchee, then it is to the interest of the state that a multiplicity of suits should be avoided by requiring the vouchee to appear in the original suit and set up any defense which he has.

Raleigh & G.R. Co. v. W. & A.R. Co., 6 Ga.App. 616, 65 S.E. 586, 588 (1909). The idea is that the first lawsuit will conclusively determine the injured party’s right to recover, limiting the scope of a later indemnification lawsuit to the sole question of “the relationships and liabilities between the party vouching and the person vouched.” McArthor v. Ogletree, 4 Ga.App. 429, 61 S.E. 859, 860 (1908). In this way, vouchment incentivizes the vouchee to support the voucher’s defense against the plaintiff by raising affirmative defenses or introducing any relevant evidence in the first lawsuit. See S. Ry. Co. v. Acme Fast Freight, 193 Ga. 598, 19 S.E.2d 286, 287–88 (1942). That said, the vouchee is not obligated to participate in the voucher’s defense. Id. It may, as General Mills did, decline to defend. But it will be bound by the judgment in the underlying lawsuit. See id. With this background, we turn to the vouchment issue before us.

2. Application of Vouchment to the Burchfield Judgment

^{[13] [14] [15] [16]}The parties agree that CSX vouched General Mills into the Burchfield *1326 case and that General Mills refused to participate. In a traditional vouchment scenario, CSX would then be able to invoke the vouchment doctrine to bar General Mills from relitigating issues related to Burchfield’s right to recover or the amount of his damages because those issues were already decided in the Burchfield case. But in this lawsuit, it is General Mills—the vouchee—who seeks to use vouchment to bar CSX from litigating issues that General Mills insists were decided against CSX in the Burchfield litigation. As a federal court addressing an issue of Georgia state law in this diversity action, we must defer to the Georgia courts’ appellate decisions on that issue.⁶ But here, no Georgia court has ever considered whether an earlier judgment has preclusive effect on a voucher in an action against his vouchee. In the prior vouchment cases, the vouchee, not the voucher, sought to relitigate the earlier liability finding, so this question has not been decided. See, e.g., W. & Atl. R.R., 74 Ga. at 777. Thus, the question whether vouchment binds both parties or only the vouchee is one of first impression on which we have no state court guidance.

The district court determined that the Burchfield judgment decided the question of whether General Mills was liable for Burchfield’s accident and that CSX was precluded from pursing indemnification based on General Mills’s partial or complete fault for Burchfield’s accident. CSX’s claims for recovery under Counts Two and Three both depend on General Mills being at least partially at fault. So, by precluding CSX from attempting to show that General Mills was negligent to support its claims, the district court eviscerated CSX’s theory of recovery and inevitably concluded that CSX’s alternative claims failed.

CSX argues that the district court misinterpreted the vouchment statute because vouchment binds only the vouchee (General Mills), not the voucher (CSX), to a judgment. We agree with CSX’s reading of the vouchment statute.

^[17]In interpreting Georgia’s vouchment statute, we look to Georgia’s rules of statutory construction. See Grange Mut. Cas. Co. v. Woodard, 826 F.3d 1289, 1300 (11th Cir. 2016) (explaining that we “examine Georgia’s canons of statutory construction to attempt to determine how Georgia courts would interpret a statute”). Under Georgia law, “if the statutory text is clear and unambiguous, we attribute to the statute its plain meaning, and our search for statutory meaning is at an end.” Deal v. Coleman, 294 Ga. 170, 751 S.E.2d 337, 341 (2013) (internal quotation marks omitted).

As a reminder, the vouchment statute provides that when a defendant in a lawsuit gives notice to another person and vouches her into the lawsuit, “the judgment rendered therein shall be conclusive upon the person vouched, as to the amount and right of the plaintiff to recover.” O.C.G.A. § 9-10-13 (emphasis added). By *1327 its plain language, the statute addresses the preclusive effect of a judgment in an underlying action on the vouchee, not the voucher. And the title of the statute, “Effect of judgment on party vouched into court,” is consistent with that language. Id. (emphasis added); see Antonin Scalia & Bryan A. Garner, Reading Law: The Interpretation of Legal Texts § 35, at 221 (2012) (recognizing that “title and headings are permissible indicators of meaning”); Ne. Atlanta Bonding Co. v. State, 308 Ga.App. 573, 707 S.E.2d 921, 926 n.5 (2011) (explaining that statute’s title may be considered when “ascertaining legislative intent”). As to the preclusive effect of the judgment on the vouching party, the statute is silent. See O.C.G.A. § 9-10-13.

This interpretation is also consistent with the canon of construction that “[a] statute will be construed to alter the common law only when that disposition is clear.” Scalia & Garner, § 52, at 318; see Boca Petroco, Inc. v. Petroleum Realty II, LLC, 285 Ga. 487, 678 S.E.2d 330, 332–33 (2009) (recognizing that a “common law rule survives [a] statute regarding same area of concern when [the] statute does not directly address certain elements of [the] common law rule”). Here, there are no clear signs that the statute altered the common law. Instead, the Georgia Supreme Court has repeatedly stated that the vouchment statute codified—and did not alter—the common-law doctrine of vouchment. See, e.g., Loeb, 198 S.E. at 786; McArthor, 61 S.E. at 860. Therefore, we must interpret the statute in the light of its common-law history.

^[18]And we see nothing in the common law to suggest that vouchment precludes the voucher from litigating issues that may have been decided in earlier litigation between the injured party and the voucher. At the time Georgia enacted the vouchment statute, the key Georgia common-law decisions on vouchment were Western & Atlantic Railroad, 74 Ga. at 777, and Faith v. City of Atlanta, 78 Ga. 779, 4 S.E. 3 (1887). See Loeb, 198 S.E. at 786 (explaining that Georgia’s vouchment statute adopted the reasoning from these decisions). Neither case holds that vouchment precludes the voucher from relitigating issues that were decided in the underlying litigation.

We start with Western & Atlantic Railroad. In that case, a pedestrian who was injured at a railroad crossing sued a city for negligent maintenance of the crossing. 74 Ga. at 776. Although the city notified the railroad of the case and claimed that the railroad was liable, the railroad did not participate in the pedestrian’s negligence action. Id. at 776–77. After the city was held liable in the negligence action, it sued the railroad. Id. at 776.

In the indemnification action, the railroad (which was the vouchee) sought to introduce evidence that the pedestrian was at fault. Id. at 777. The trial court excluded the evidence. The Georgia Supreme Court affirmed, explaining that “both the city and the railroad company were concluded” by the verdict in the negligence case “and should not be heard to say that [the pedestrian] … could have avoided the injuries which he received.” Id. at 778. Although the Court’s broad language, read in isolation, could suggest that both the city and railroad were bound by the judgment, the decision was addressing the effect that the judgment in the underlying negligence action had on the vouchee (the railroad), not the voucher (the city). The Georgia Supreme Court made no ruling about the vouchment’s preclusive effect on the city because that issue was not before it. Id.

A few years later, the Georgia Supreme Court again addressed vouchment in Faith. In that case, a person injured on a city street sued a city for negligence. *1328 4 S.E. at 3. The city believed that the plaintiff’s injuries were caused by a property owner who had dug holes in the street and left the holes uncovered. Id. The city asked the property owner to appear and defend the suit. Id. The property owner refused. Id. After the plaintiff recovered against the city in the negligence action, the city sued the property owner seeking indemnification. Id. The city prevailed in the indemnification action, and the property owner appealed. Id.

On appeal, the Georgia Supreme Court addressed the issues the property owner (the vouchee) could raise in defending the indemnification action brought by the city (the voucher). Because “the judgment of the injured party against the city” was “conclusive” as to the right of the injured party to recover and the amount of his damages, the property owner could not raise these issues. Id. at 4. But he could raise other defenses including that “he was under no obligation to keep that portion of the streets in safe condition;” that “it was not through his [fault] that the injury happened;” and that if he and the city were both responsible, the city could not recover against him. Id. Although the Georgia Supreme Court stated broadly that the judgment was “conclusive between the city and [the property owner],” it did not address the vouchment’s preclusive effect on the voucher because that question was not at issue. Id.

In these two foundational common-law vouchment cases, the Georgia Supreme Court held that the earlier judgment bound the vouchee. No more, no less. We agree with CSX that we are not bound by any “loose language,” Appellant’s Br. at 46, in which the Georgia Supreme Court commented on issues not before it in each case. See Edwards v. Prime, Inc., 602 F.3d 1276, 1298 (11th Cir. 2010) (“We have pointed out many times that regardless of what a court says in its opinion, the decision can hold nothing beyond the facts of that case.”); State v. Dorsey, 364 Ga.App. 731, 875 S.E.2d 900, 907 n.5 (2022) (“Language that sounds like a holding—but actually exceeds the scope of the case’s factual context—is not a holding no matter how much it sounds like one.” (internal quotation marks omitted)). We thus conclude that the vouchment statute, consistent with Georgia common law, provides that the vouchee alone is bound from relitigating issues decided in the earlier litigation.

General Mills nevertheless argues that we should reject this interpretation of the vouchment statute because it allows a voucher to “unilaterally bind a vouchee to favorable findings and contest unfavorable ones,” which provides an impermissible windfall to the voucher. Appellee’s Br. at 24 (internal quotation marks omitted). This argument misunderstands vouchment’s purpose.

^[19]“Vouchment is a right granted to the voucher under the statute, as is the binding effect of the judgment against the vouchee.” Hardee v. Allied Steel Bldgs., Inc., 182 Ga.App. 587, 356 S.E.2d 682, 684 (1987) (emphasis added). In other words, by design, vouchment empowers the voucher, not the vouchee. Vouchment exists to incentivize the vouchee to participate in the earlier action, defend his interests there, and reduce the burden of duplicative litigation on the judicial system. To accomplish this purpose, vouchment creates carrots and sticks for the vouchee. One stick is that a vouchee who is invited to participate in the earlier action and chooses not to do so is more likely to find herself bound to determinations she does not like precisely because she chose not to participate when invited to do so. General Mills’s concern that vouchment, if it only binds the vouchee, *1329 tends to work against vouchees is simply a feature of the doctrine.⁷

Because the doctrine of vouchment does not preclude CSX from introducing evidence of General Mills’s fault, CSX may be able to establish that General Mills was at least partially at fault for Burchfield’s injuries and thus required under the Sidetrack Agreement to indemnify CSX for at least a portion of the settlement and expenses incurred in the Burchfield litigation. Accordingly, we reverse the district court’s order granting summary judgment on Counts Two and Three.

IV. CONCLUSION

For the reasons set forth above, we AFFIRM the district court’s dismissal of Count One, REVERSE the district court’s entry of summary judgment on Counts Two and Three, and REMAND for further proceedings.

AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.

All Citations

82 F.4th 1315

Footnotes

*Honorable R. David Proctor, United States District Judge for the Northern District of Alabama, sitting by

1. “Doc.” numbers refer to the district court’s docket entries.  designation.  
2. Under the carveout, General Mills is “solely responsible” for the following losses: (1) “the failure of [General Mills] to properly maintain its segment of the Sidetrack”; (2) “the construction, alteration[,] or removal of the Sidetrack by [General Mills]”; (3) “the presence of a restricted clearance on [General Mills’s] Segment”; (4) “any personal injuries (including death) or property damage (real or personal) sustained … as the result of any road crossing collision on [General Mills’s] Segment”; and (5) “the explosion, spillage[,] and/or presence of Hazardous Materials on [General Mills’s] properties, facility or on [General Mills’s] Segment … when such Losses would not have occurred but for the dangerous nature of the Hazardous Materials.” Doc. 63-1 at 6.  
3. Because Burchfield received workers’ compensation for his injuries, Georgia law precluded him from suing General Mills, his employer, for damages. See O.C.G.A. § 34-9-11(a) (“The rights and the remedies granted to an employee by this chapter shall exclude and be in the place of all other rights and remedies of such employee … on account of such injury ….”); see also Brooks-Powers v. Metro. Atlanta Rapid Transit Auth., 260 Ga.App. 390, 579 S.E.2d 802, 804 (2003) (stating that “[w]here the [Georgia Workers’ Compensation] Act is applicable, its provisions are the exclusive remedy for the employee against the employer” (internal quotation marks omitted)). And the company that owned the railcar settled with Burchfield, leaving CSX as the sole defendant.
4. Under Georgia’s collateral estoppel rule, CSX would be precluded from raising arguments about General Mills’s negligence in the indemnity suit only if the Burchfield lawsuit involved “the same parties or their privies.” Cmty. State Bank v. Strong, 651 F.3d 1241, 1264 (11th Cir. 2011) (internal quotation marks omitted); see Camden Cnty. v. Sweatt, 315 Ga. 498, 883 S.E.2d 827, 833 (2023) (explaining that collateral estoppel precludes “re-adjudication of an issue that has previously been litigated … in another action between the same parties or their privies” (emphasis omitted) (internal quotation marks omitted)). By contrast, under the federal rule, a non-party to a previous action (General Mills) may assert collateral estoppel offensively to preclude a party to the previous action (CSX) from litigating issues decided in the previous action. See Parklane Hosiery Co. v. Shore, 439 U.S. 322, 331, 99 S.Ct. 645, 58 L.Ed.2d 552 (1979).  
5. The parties agree that Georgia law governs CSX’s claims.  
6. Because our jurisdiction in this case rests on diversity of citizenship, see 28 U.S.C. § 1332, we apply the substantive law of Georgia—the forum state, see Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78, 58 S.Ct. 817, 82 L.Ed. 1188 (1938). When a state’s highest appellate court (in this case the Georgia Supreme Court) has addressed an issue of state law, we simply apply its holding. See Winn-Dixie Stores, Inc. v. Dolgencorp, LLC, 746 F.3d 1008, 1021 (11th Cir. 2014). But when we are confronted with a state-law issue of first impression, we must attempt to predict how the state’s highest court would decide the issue. See Turner v. Wells, 879 F.3d 1254, 1262 (11th Cir. 2018). Absent certainty from the state’s highest court, we apply the decisions of the state’s intermediate court—here, the Georgia Court of Appeals—unless there is “persuasive indication that the [Georgia Supreme Court] would rule otherwise.” CSX Transp., Inc. v. Trism Specialized Carriers, Inc., 182 F.3d 788, 791 (11th Cir. 1999).  
7. CSX argues in the alternative that the vouchment statute does not bar it from raising an issue about General Mills’s fault because no issue regarding General Mills’s negligence was decided in the Burfield litigation. Because we conclude that the vouchment statute does not preclude CSX (as voucher) from relitigating any issues against General Mills, we need not address this alternative argument.  

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