Department of Transportation v. CSX Transportation, Inc., ___So. 3d ___, 38 Fla. L. Weekly D2616 (Fla. 2d DCA December 11, 2013)
In 1936, the State Road Department, which was the predecessor of the Department of Transportation, entered into a road crossing agreement with the railroad. Under the agreement, the railroad provided the department with a license to build a road across the railroad’s track. The sole consideration for the license was the department’s agreement to indemnify the railroad for liability arising from the department’s “activities at the crossing.” Sixty-five years after the parties entered into the agreement, a tragic motor vehicle accident occurred at the crossing because of the department of transportation’s (DOT) failure to maintain the road in a safe condition. The railroad settled the case, which involved the death of a husband and severe injuries to his wife, and then sought and obtained indemnity from the department. On appeal, the court rejected the department’s argument that the agreement was invalid because its predecessor lacked the authority to enter into it. The court was influenced by the fact that invalidating the agreement could have broad financial implications for the state, which entered into many similar agreements and could lose access to rights of way throughout the state. The department’s position was also incredibly unfair because the state took advantage of the agreement for over sixty-five years, and the railroad, in contrast to the state, “has no claim to any immunity or to any cap upon its liability,” and “knows, as this case demonstrates, that it will be the defendant of first choice when the other option is a governmental entity.” As a result, “In the absence of an indemnity clause as the consideration for the crossing agreement, the railroad would have [had] little choice but to charge a state agency an annual fee sufficient to insure the risk fully.” [Based on these considerations, this reader found it surprising that the court never mentioned the doctrine of estoppel.] The court “conclude[d] that the crossing agreement [was] enforceable in this context and that the DOT [was] bound by this agreement.” The court reasoned that the “DOT and it predecessor had the authority to enter into contracts necessary to build and maintain the road, and the use of a limited indemnity agreement as the sole consideration for the contract to obtain right-of-way did not render it unenforceable when a condition requiring indemnity finally occurred.” Moreover, Article VII, § 1(c) of the Florida Constitution, which prohibits the expenditure of state funds without legislative appropriation, did not preclude the trial court from entering judgment for indemnity, but the court was unable to “issue an execution to permit state property to be seized to pay such a judgment. At most, by writ of mandamus, a court might require an agency to take the steps necessary to pay the judgment in an orderly fashion.” Furthermore, Section 768.28(5), Florida Statutes, did not impose a cap on the state’s indemnity obligation under the agreement because the statutory limit on “sovereign immunity appl[ies] only to judgments recovering damages for tort, not to judgments recovering damages under legal theories that may be analogous to torts.” The court certified to the Florida Supreme Court as questions of great public importance whether the indemnity agreement was enforceable and the cap on sovereign immunity for liability in tort applied.