101 F.4th 458
6th Cir.2024Background
- Diamond Transportation Logistics agreed to transport goods for Kroger under contracts from 2010 and 2016, including an indemnification provision requiring Diamond to cover certain liabilities.
- In December 2015, a Diamond subcontractor caused a fatal accident while transporting Kroger's goods; relatives of the decedents sued and later added Kroger as a defendant for alleged negligent selection, hiring, and retention of Diamond.
- Kroger demanded indemnification from Diamond per their contract, but Diamond did not reimburse legal fees or settlement costs promptly.
- Kroger withheld about $1.8 million in shipping payments to set off its claimed indemnity and continued to press Diamond for reimbursement.
- After Kroger settled the wrongful death suit for over $2 million, Diamond sued to recover the withheld funds; Kroger counterclaimed for breach of the indemnity provision, seeking the settlement shortfall (~$600,000).
- The district court ruled in favor of Kroger, awarding it damages plus interest, and Diamond appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does the contract require Diamond to indemnify Kroger for a negligent hiring, selection, and retention claim stemming from a Diamond subcontractor's accident? | Kroger: Indemnity applies under contract; Kroger not solely negligent. | Diamond: Exception applies if Kroger is even partly negligent; clause should cover this scenario. | Yes, Diamond must indemnify; exception only applies if Kroger was solely negligent, which was not the case. |
| Is the indemnity exception for "sole negligence" of Kroger triggered in this case? | Kroger: Not triggered unless Kroger is the only negligent party. | Diamond: Exception should apply even if Kroger is partially at fault. | Exception not triggered; requires Kroger to be 100% responsible, which wasn't true here. |
Key Cases Cited
- Kendall v. U.S. Dismantling Co., 485 N.E.2d 1047 (Ohio 1985) (interprets indemnity exceptions for “sole negligence” as applying only if the indemnitee is the exclusive negligent party)
- Hamilton Ins. Serv., Inc. v. Nationwide Ins. Cos., 714 N.E.2d 898 (Ohio 1999) (contract interpretation guided by parties’ intent, expressed in plain text)
- Graham v. Drydock Coal Co., 667 N.E.2d 949 (Ohio 1996) (plain and ordinary meaning governs where contract language is unambiguous)