Peoples Gas System v. Posen Construction, Inc. , 931 F.3d 1337 ( 2019 )

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[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 18-13291
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D.C. Docket No. 2:18-cv-00240-SPC-CM
PEOPLES GAS SYSTEM,
a division of Tampa Electric Company, a Florida corporation,
Plaintiff - Appellant,
versus
POSEN CONSTRUCTION, INC.,
a Michigan corporation,
Defendant - Appellee.
________________________
Appeal from the United States District Court
for the Middle District of Florida
________________________
(August 1, 2019)
Before JORDAN, GRANT, and DUBINA, Circuit Judges.
DUBINA, Circuit Judge:
CERTIFICATION FROM THE UNITED STATES COURT OF
APPEALS FOR THE ELEVENTH CIRCUIT TO THE SUPREME COURT
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OF FLORIDA, PURSUANT TO FLA. R. APP. P. 9.150(a). TO THE
SUPREME COURT OF FLORIDA AND ITS HONORABLE JUSTICES:
This appeal requires us to determine whether a Florida law regulating
underground utility infrastructure recognizes a standalone cause of action for
reimbursement of damages paid to third parties and/or a statutory right of
indemnification. The plaintiff, Peoples Gas System (“PGS”), sues the defendant
construction company, Posen Construction, Inc. (“Posen”), for damages under the
Florida Underground Facility Damage Prevention and Safety Act (“the Act”).
Fla. Stat. § 556.101–106. The Act permits utilities to recover damages when
construction workers negligently damage utility lines. In this case, however, PGS
seeks indemnification from Posen, claiming that PGS has paid out damages to
other plaintiffs in prior litigation for damages that Posen caused. The Act does
not expressly speak to the possibility of indemnification, and Florida courts have
not directly addressed whether the Act creates a cause of action to recover damages
such as these. Therefore, we deem it important to certify the question of Florida
substantive law presented in this case to the Supreme Court of Florida.
I. BACKGROUND
PGS is a Florida natural gas distributor that maintains underground
pipelines, and Posen is a road construction company. During one of Posen’s road
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construction projects near Ft. Myers, Florida, Posen learned that it would need to
have PGS remove a section of gas pipeline ahead of Posen’s work. In October
2010, Posen submitted a request to obtain the location of PGS’s pipeline. The Act
mandates specific procedures and notifications when, in a situation like this, a
construction company requires the assistance of an underground utility company.
PGS alleges the request was unlawful because Posen’s request failed to
describe the excavation area with the specificity the Act requires. In November
2010, Posen’s superintendent, Greg Menuez (“Menuez”), directed his subordinate,
Mark Santos (“Santos”), to dig and till the ground around the excavation area with
heavy machinery. Importantly, PGS alleges that Menuez knew that a gas pipeline
in the area was not properly marked. Santos ruptured the gas pipeline, caused a
fire, and was severely injured. Unsurprisingly, years of litigation followed.
The litigation began in 2011 in Florida state court, when Santos sued PGS
and Posen. At some point between the 2011 commencement of the litigation and
2017, Santos dismissed Posen and settled with PGS. Concurrent with the
commencement of the Santos litigation, PGS also sued Posen in federal court,
seeking damages for the repair costs under a negligence claim. Posen
counterclaimed, and the parties ultimately settled. The present litigation
commenced in January 2018, when PGS sued Posen under the Act, claiming either
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damages or an alternative claim for indemnity for the money it paid Santos in the
earlier settlement.
The Act creates a rebuttable presumption of negligence against the excavator
if an excavator “performs an excavation or demolition that damages an
underground facility of a member operator.” Fla. Stat. § 556.106(2)(a). Under
the Act, the excavator is liable “for the total sum of the losses to all parties
involved as those costs are normally computed.” Id. at § 556.106(2)(b). Posen
moved to dismiss, claiming that PGS’s damages do not qualify as a “loss” under
the statute, and because the Act does not provide a statutory right to
indemnification. The district court agreed, and on June 26, 2018, it dismissed the
complaint. This appeal followed.
II. DISCUSSION
A. Does the Act provide a cause of action to recover damages paid to a
third party?
PGS first argues that the district court wrongfully dismissed the action
because, in its two-count complaint, only the second count sought indemnity as an
alternative claim, while the first count sought direct damages under the Act.
Under PGS’s theory, the first claim should have survived because the broad
language of the Act provides that the negligent party, “if found liable, is liable for
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the total sum of the losses to all parties involved as those costs are normally
computed.” Fla. Stat. § 556.106(2)(b). Under that reading, “all losses” is the
covered category of liability, with no restrictions on types of losses. In addition,
the only statutory limitations on these losses are found in the next sentence that
sets caps on damages in dollar amounts, which does not speak to categories of
losses. Id. Posen counters that, first, both claims turn on whether the Act
permits indemnification, PGS’s arguments notwithstanding, and second, that the
Act is not designed to create a new cause of action for utilities that was not already
found in Florida common law.
The parties both agree that there is sparse case law addressing the issue,
much less binding precedent from the Florida Supreme Court. When we lack
guidance from the Florida Supreme Court, we must adhere to the decisions of
Florida’s intermediate appellate courts “absent some persuasive indication that the
state’s highest court would decide the issue otherwise.” Ernie Haire Ford, Inc. v.
Ford Motor Co., 260 F.3d 1285, 1290 (11th Cir. 2001) (quoting Ins. Co. of N. Am.
v. Lexow, 937 F.2d 569, 571 (11th Cir. 1991)). And as the district court observed,
Florida’s intermediate appellate courts are far from unified in their holdings
interpreting the Act.
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The district court, synthesizing applicable rules from sparse caselaw, found
that none of the cases addressing the Act had permitted recovery for a cost as
remote as this one, e.g., reimbursement for a settlement agreement between a
utility and a third party arising from previous litigation. In the district court’s
view, even the most generous precedent seemed limited to recovering costs
relating to equipment damage or personal injury, which dovetailed with the
codified legislative intent that the statute’s purpose was more preventative than
remedial in nature. Fla. Stat. § 556.101. PGS, however, responds that the
statutory text – with nothing more – is perhaps equally susceptible to both possible
readings.
Florida appellate courts and federal district courts have split on this question.
See, e.g., A & L Underground, Inc. v. City of Port Richey, 732 So. 2d 480, 481
(Fla. Dist. Ct. App. 1999) (permitting recovery under the Act in favor of plaintiff-
excavator for purely economic losses in the form of delay and repair costs after
rupturing lines that defendant-municipality failed to mark); But see Southland
Constr., Inc. v. Greater Orlando Aviation, 860 So. 2d 1031, 1038 (Fla. Dist. Ct.
App. 2003) (expressing doubt about A & L Underground’s holding: “Even if the
statute were intended to be as broad as the A & L court suggests, however, [the
Act] still would not reach a remote and indirect insurance premium increase claim
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or attorney’s fees incurred to defend an OSHA claim.”); James D. Hinson Elec.
Contracting Co., Inc. v. Bellsouth Telecomms., Inc., 642 F. Supp. 2d 1318, 1324
(M.D. Fla. 2009) (holding that Bellsouth’s routine repair cost markup designed to
cover indirect expenses associated with repairs was not covered under the Act;
“Bellsouth’s contention that the use of the term ‘costs’ somehow enlarges the
scope of recovery available to member operators finds no support in the statute.”).
Furthermore, the courts are not in uniform agreement as to whether the Act
provides a standalone cause of action, or whether it simply clarifies the legal
analysis in a negligence claim. Compare A& L Underground, Inc. at 481
(permitting a claim under the Act to proceed) and Southland Construction at 1037
(“[the Act] could be the source of a statutorily-created duty owed by [defendant to
plaintiff] to correctly mark the location of its underground facilities and it could be
the basis for Southland to recover its own damages if the facilities are not correctly
marked.”) with James D. Hinson at 1328 ( “[the Act] does not provide BellSouth
with any additional remedies or damages other than those available at Florida
common law.”). See also MCI Worldcom Network Servs., Inc. v. Mastec, Inc.,
2003 WL 25729927 (S.D. Fla. 2003) (applying the standards provided in the Act to
a routine common law negligence claim, ultimately finding disputes over the
standard of care that precluded summary judgment); James D. Hinson at 1328 n. 7
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(“Of course, the Act does benefit BellSouth in this situation by creating a
rebuttable presumption of negligence due to Hinson’s apparent failure to follow the
Act’s notification procedures.”).
In our view, Florida case law does not conclusively establish the purpose of
the Act, including whether it creates a cause of action to recover damages paid to
third parties or simply clarifies a common law negligence claim, and whether it
authorizes damages incurred under circumstances as remote as these. Under this
circuit’s precedents, we should certify questions to the state supreme court when
we have “substantial doubt” regarding the status of state law. Fla. VirtualSchool
[sic] v. K12, Inc., 735 F.3d 1271, 1274–75 (11th Cir. 2013) (“This case, in our
view, presents a state law issue of first impression with reasonable arguments on
both sides. . . . When substantial doubt exists about the answer to a material state
law question upon which the case turns, [we] should certify the question to the
state supreme court in order to avoid making unnecessary state law guesses and to
offer the state court the opportunity to explicate state law.”) (internal citations
omitted).
B. Does the Act permit statutory indemnity?
PGS’s second argument on appeal is that the district court erroneously
dismissed its second count because Florida law does not require a specific statutory
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right to indemnification when the law otherwise allocates the losses to a tortfeasor.
We seek clarification from the Florida Supreme Court because the caselaw is not
conclusive and the statute is subject to multiple plausible interpretations, including
the one PGS embraces, which caselaw still does not foreclose.
As an example of this implied right of statutory indemnification, PGS points
to a different part of the Florida code that allocates liability for sheriffs’ deputies
and a federal district court case finding that the statutory language is broad enough
to provide an indemnification obligation even when the statute does not use that
word. Martinez v. Miami-Dade Cty., 975 F. Supp. 2d 1293, 1297 (S.D. Fla.
2013) (finding that Fla. Stat. § 30.2905(2)(a), providing that any “public or private
employer of a deputy sheriff shall be responsible for the acts or omissions of the
deputy sheriff while performing services for that employer while off duty,” is
broad enough to create an indemnification obligation).
Likewise, PGS argues that the Act uses equally broad language to allocate
liability to negligent excavators, even without using the word “indemnify”
verbatim. The district court summarily dismissed this argument, finding that the
statute at issue in Martinez created an indirect right to statutory indemnification
that the Act did not. The Martinez court was seemingly bothered by the fact that
the statutory language – “shall be responsible for the acts or omissions” – was not
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susceptible to any alternative meaning. The distinction between the instant case
and Martinez should be obvious: The language of the Act is clearly ambiguous
with multiple reasonable interpretations. “Losses” may or may not include
relatively remote indemnity payments to third parties in separate litigation
proceedings.
PGS’s next argument is that it is entitled to statutory indemnity regardless of
whether common law indemnity is available. PGS’s primary case, this time
coming from the Florida Supreme Court, addressed a corporate dispute between a
corporation and its directors. Wendt v. La Costa Beach Resort Condo. Ass’n, Inc.,
64 So. 3d 1228, 1230–31 (Fla. 2011). There, a corporation sued its directors for
breach of fiduciary duty. The directors brought their own indemnification action
pursuant to statute seeking expenses incurred in defending the first suit. This
case, however, has little bearing on ours: Wendt centered on a statute explicitly
giving corporations power to indemnify, and the court ruled that, because the
statute listed specific circumstances where indemnification was barred, none of
which covered the situation at hand, the directors’ suit should survive dismissal.
Although PGS correctly cites Wendt for the proposition that statutes can give rise
to indemnity obligations, we otherwise find little illumination from the statute in
that case.
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PGS next looks to two similar statutes in Arizona, dealing with underground
and overhead utility lines, for the prospect of courts recognizing indemnification
even absent the word “indemnification” in the statute. This, too, is unpersuasive
because the statutes cited impose broad liability on the violator, including
“expenses and damages to third parties incurred by the owner of the facility as a
result of the [violator’s] contact.” Ariz. Rev. Stat. § 40-360.28(B) (1999)
(amended 2007). See also Ariz. Rev. Stat. § 40-360.44(B) (“including damages
to third persons, incurred by the public utility as a result of the contact.”). An
Idaho statute and attendant case law PGS cites also tracks the same statutory
language and legal reasoning. At first glance, this statutory scheme would seem
most comparable to Florida’s sheriff’s deputy statute that the district judge in the
present case recognized as providing indirect indemnification language.
However, PGS ultimately appeals to the plain language of the statute.
Although Posen, and several court cases, have heavily relied on the fact that the
statute does not explicitly give rise to an indemnity action, PGS again notes the
relevant language of the statute – “[the negligent party] is liable for the total sum of
the losses to all parties involved as those costs are normally computed.” Fla.
Stat. § 556.106(b). PGS contends that “all parties” means that a negligent
excavator is liable for losses of anyone involved, and “total sum” includes any
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conceivable loss. The district court summarily dismissed this argument in its
order, saying: “Notably, PGS has provided no authority to support its
interpretation.” Peoples Gas Sys. v. Posen Constr, Inc., 323 F. Supp. 3d 1362,
1366 (M.D. Fla. 2018). While true, this particular set of circumstances leads us to
believe that certification is the most prudent course of action in deciding a
potentially novel application of Florida state law.
III. CERTIFIED QUESTION
We therefore certify the following question to the Supreme Court of Florida:
Whether a member-operator has a cause of action under Fla. Stat. §
566.106(2)(a)–(c) to recover damages (or obtain indemnification) from an
excavator for payments to a third party for personal injuries related to the
excavator’s alleged violation of the statute?
In certifying this question, we do not intend to restrict the issues considered
by the Supreme Court of Florida. See Miller v. Scottsdale Ins. Co., 410 F.3d 678,
682 (11th Cir. 2005) (AOur phrasing of the certified question is merely suggestive
and does not in any way restrict the scope of the inquiry by the Supreme Court of
Florida.@). We note that the Supreme Court of Florida retains the discretion to
restate the issue and to answer this question in the manner it chooses. See Nunez
v. Geico General Ins. Co., 685 F.3d 1205, 1211 (11th Cir. 2012).
QUESTION CERTIFIED.
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