Peoples Gas System v. Posen Construction, Inc.

Case: 18-13291 Date Filed: 08/01/2019 Page: 1 of 12

[PUBLISH]

IN THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT

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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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