                NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
                           File Name: 11a0543n.06

                                            No. 09-1877                                     FILED
                           UNITED STATES COURT OF APPEALS                              Aug 08, 2011
                                FOR THE SIXTH CIRCUIT
                                                                                 LEONARD GREEN, Clerk
HONEYWELL INTERNATIONAL, )
INCORPORATED,             )
                          )
     Plaintiff-Appellee,  )
                          )                           ON APPEAL FROM THE UNITED
                    v.    )                           STATES DISTRICT COURT FOR THE
                          )                           EASTERN DISTRICT OF MICHIGAN
LUTZ ROOFING COMPANY, )
INCORPORATED,             )
                          )
     Defendant-Appellant. )
                          )
                          )


       BEFORE:         KEITH, CLAY, and COOK, Circuit Judges.

       KEITH, Circuit Judge. This is an action for contractual indemnity and breach of contract.

The case arises out of plaintiff-appellee Honeywell International’s suit against defendant-appellant

Lutz Roofing Company for attorney’s fees and other costs Honeywell incurred while defending itself

in a tort claim brought by Geraldo Galvan, one of Lutz’s former employees, and in prosecuting this

action against Lutz. The district court held that Lutz, the subcontractor, breached its obligations to

indemnify and insure Honeywell, the general contractor, under the contract governing Honeywell

and Lutz’s relationship. Lutz appeals, arguing that given the terms of the contract and the scope of

Mr. Galvan’s complaint, it cannot be held liable. It also argues that the district court incorrectly

denied its motion as to Honeywell’s claim for breach of contract with regards to a provision

requiring that Lutz obtain insurance for Honeywell. For the first time, Lutz argues, on appeal, that

the fees Honeywell requests for prosecuting this action are not recoverable under Michigan law. For

the reasons discussed below, we AFFIRM the district court’s rulings and decline to address Lutz’s

new argument regarding attorney’s fees, finding that it was waived.


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No. 09-1877, Honeywell, Inc. v. Lutz Roofing Co., Inc.



                                      FACTUAL BACKGROUND
        Plaintiff-Appellee Honeywell was the general contractor in charge of making improvements

at Algonac High School in Algonac, Michigan. Defendant-Appellant Lutz was the roofing

subcontractor. The parties’ relationship was governed by the Subcontract Agreement (“Agreement”)

that both parties signed.

        Under the Agreement’s terms, Lutz agreed to take reasonable precautions to protect the safety

of its employees. In particular, Lutz agreed to implement appropriate safety measures on its work
at the site, including establishing “safety rules, posting applicable warnings and notices, erecting

safety barriers, and establishing proper notice procedures to protect persons and property at the site

and adjacent thereto from injury, loss or damage.” R. 6-2, Subcontract Agreement, § 8.14.3. Lutz

also pledged to comply with all required and recommended governmental safety rules and

regulations. The Agreement also included an indemnity clause requiring Lutz to indemnify

Honeywell in certain situations:

        To the fullest extent permitted by law, Subcontractor shall indemnify and hold
        harmless Customer, Honeywell and Owner and their agents and employees from
        claims, demands, causes of actions and liabilities of every kind and nature, including
        reasonable attorney’s fees, incurred in connection with the execution of the
        Subcontract Work by the Subcontractor, its subcontractors, agents, or employees to
        the extent such claims, demands causes of actions and liabilities result from or arise
        from the negligent acts or willful misconduct of the Subcontractor, its subcontractors,
        agents or employees. This indemnification shall extend to claims occurring after this
        Subcontract is terminated as well as while it is in force. Subcontractor shall not be
        obligated to indemnify Customer, Honeywell, or Owner for claims arising from the
        negligence or willful misconduct of Customer, Honeywell, or Owner or their agents
        of employees or caused by the design and specifications provided by such parties.
        The indemnity set forth in this section shall not be limited by insurance requirements
        or by any other provision of this Subcontract.

Id. § 10.

        The Agreement separately provided that Lutz would “procure and maintain insurance on all

of its operations” including General Liability insurance covering all operations. Id. § 9. Lutz agreed

to name Honeywell as an additional insured under the policy and to provide Honeywell with a

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No. 09-1877, Honeywell, Inc. v. Lutz Roofing Co., Inc.

certificate of insurance verifying such coverage before the project commenced. Lutz obtained

insurance from Lexington Insurance Company. Lutz provided Honeywell a Certificate of Insurance,

supposedly extending liability coverage to Honeywell. The certificate, issued by Lutz and not by

Lexington, stated that

        Honeywell . . . [is] an additional insured on the general liability policy . . . with
        respect to liability arising out of ongoing and completed operations performed by the
        named insured on the above named project. Such insurance afforded to the
        additional Insured(s) shall be primary and not excess over . . . any insurance
        purchased . . . .

R. 8-10, Certificate of Liability Insurance. However, the insurance Lutz procured from Lexington
explained that “[a]ny coverage provided by this endorsement to an additional insured shall be excess

over any other valid and collectible insurance available to the additional insured . . .” R. 8-16, Letter

from Lexington Insurance Company to Honeywell at 3 (emphasis added).

        On July 14, 2004, Geraldo Galvan, one of Lutz’s employees, was injured when he fell off the

school’s roof. The district court described the fall:

        Galvan was on the roof installing a pressure bar and flashing. He was not working
        on an exposed edge, but in a location where the roof met a short parapet wall. Galvan
        testified that he left the area where [he] had been working and went to get a drink of
        water from his lunch box, which was in the middle of the roof. He was walking
        toward the next area where he was to work when his boot became stuck in tar that
        had not been covered by gravel. This occurred near the edge of the roof, and Galvan
        lost his balance and fell to the concrete below. He injured his wrists and had surgery.

Galvan v. Honeywell Int’l, Inc., No. 07-12670, 2009 U.S. Dist. LEXIS 43266, at *3 (E.D. Mich. May

21, 2009) (internal citation omitted).

        Galvan received a settlement of a worker’s compensation claim from Lutz’s insurer, and

then, along with his wife, Lourdes Galvan, sued Honeywell. The action was filed in state court and

removed to federal court on the basis of diversity jurisdiction. The Galvans alleged that Honeywell

was negligent in failing to take reasonable safety precautions. They specifically claimed:

        There was no gravel on the sticky asphalt on which Plaintiff’s foot became stuck.
        There were barriers along the perimeter of the roof initially at the start of the project.
        However, there were no flags, warnings, barriers, railings, fall arrest devices or guard
        rails after the first two or three days of the project. Honeywell did not inspect or

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No. 09-1877, Honeywell, Inc. v. Lutz Roofing Co., Inc.

        require any safety devices and warnings.

R. 8-11, Galvan’s Answer to Honeywell’s Discovery Request at 5.

        The Galvans did not file a separate claim against Lutz for these same failures, as the

Workers’ Disability Compensation Act barred them from doing so. However, when deposed, their

experts explained that Lutz had failed to use proper safety measures as it had pledged to do in the

Agreement and that if such measures had been taken, Mr. Galvan would not have been injured. In

response to a question regarding Lutz’s failure to use proper safety measures, Mumtaz Usmen, one

of the Galvans’ experts, explained the preventative role perimeter guarding would have played:
        Question: I take it it’s your opinion that if Lutz would be using whatever you defined
        as proper safety measures, that this accident could have been avoided entirely?

        Answer: Yes. For instance, if they had used perimeter guarding all around, this
        accident would not have occurred.

R. 11-2, Dep. of Mumtaz Usmen at 35-36. Similarly, Ronald Tyson, another of the Galvans’

experts, reiterated Lutz’s fault:

        Question: Correct. [I]f Lutz had complied with the provisions of [OSHA Regulation]
        1926.501 B 10 would Mr. Galvan have been injured?

        Answer: More likely than not. Okay, I want to make sure that that answer is clear.
        More likely than not he would not have been injured.

R. 11-3, Dep. of Ronald Tyson at 77-78.

        John Pyrzewski, an employee of Lutz, testified that Lutz did not use the types of materials

other contractors commonly used to prevent workers from tripping on hidden hazards:

        Question: How about safety nets? Have you ever seen them?

        Answer: Yeah, I have seen them.

        Question: Have you seen them on a Lutz project?

        Answer: No, not on a Lutz project.

        Question: Do you have an understanding of when safety nets are supposed to be
        used?

        Answer: Like all the jobs we did so far that we probably never used them.

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No. 09-1877, Honeywell, Inc. v. Lutz Roofing Co., Inc.

[R. 8-4, Dep. of John Pyrzewski at 26-27.]

       Honeywell tendered a request for defense and indemnification to Lutz and a request to insure

to Lexington. Both refused Honeywell’s request. Lexington rejected Honeywell’s request on the

grounds that the Agreement did not specifically require the liability coverage to be primary, that

Lexington did not issue the certificate of insurance, and that Honeywell’s claim was within the limits

of Lutz’s self-insured retention. Lutz declined defense and indemnification on the basis that the

indemnity language of the Agreement did not require indemnification under Michigan common law

and statutory law in the light of the scope of the Galvans’ suit.
       In response to Lutz’s refusal, Honeywell filed a motion to add Lutz as a third-party defendant

to assert its indemnity claim. The Galvans filed a supplemental response in opposition to

Honeywell’s motion to file a third-party complaint seeking indemnity from Lutz. In their response,

the Galvans stated:

       Reference must be made to plaintiff’s complaint to see what Honeywell is being sued
       for. Honeywell is being sued for its own negligence. Pursuant to the contract terms,
       Lutz shall not be obligated to indemnify Honeywell for claims arising from the
       negligence of Honeywell. Plaintiffs are only alleging Honeywell’s negligence, not
       Lutz’s.

R. 6-5, Galvans’ Supplemental Resp. to Honeywell’s Motion for Leave to Amend the Pleadings and

Add Parties. However, at the hearing on the motion before Magistrate Judge R. Steven Whalen, the

Galvans explained that their opposition was based primarily on the delay it would cause and the

resulting prejudice to their case. The Galvans conceded that Honeywell could later add Lutz as a

“Non-Party at Fault.”

       Judge Whalen denied the motion on the grounds that the language in the Agreement provided

that Lutz would be liable only “to the extent such claims . . . arise from the negligent acts of Lutz,”

and because under Michigan law Honeywell could only be held liable for acts for which it was

responsible, the court need not have allowed Honeywell to seek indemnity from Lutz. The court

explained further:


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No. 09-1877, Honeywell, Inc. v. Lutz Roofing Co., Inc.

       The complaint itself alleges only that it was Honeywell’s negligence that was the
       proximate cause of the injuries. To the extent that the jury were to find Honeywell
       partially responsible or totally responsible to whatever extent it would find
       Honeywell responsible, under the contract Lutz would have no – neither Lutz nor
       Lexington would have any duty to indemnify. So in that regard it would be futile to
       add them.

R. 8-16, Tr. of the Mar. 18, 2008 Hr’g Regarding Def’s Mot. for Leave to Amend the Pleadings to

Add Third Parties at 12. Finally, the court noted the potential delay that may be caused by the

addition.

       After Judge Whalen denied Honeywell’s motion to add Lutz as a third-party defendant,
Honeywell filed a motion to name Lutz as a “Non-Party at Fault” in the underlying action, which

Judge Whalen granted. Under Michigan law, if Honeywell was found liable, the court could hold

a hearing and then assess to Lutz any costs attributable to Lutz’s percentage of fault.

       As for the Galvans’ suit against Honeywell, the district court granted Honeywell’s motion

for summary judgment. Galvan, 2009 U.S. Dist. LEXIS 43266, at *12. The court explained that,

under Michigan law, the sole tort theory under which a worker can recover against a general

contractor is the common work doctrine. Id. at *4-5. To proceed successfully under the doctrine,

a plaintiff must show, among other things, that the risk the employer created affected an area used

by a significant number of workers. Id. at *5-6. As the Galvans could not show that a sufficient

number of workers had been working on the roof on the day of Mr. Galvan’s injury, they could not

proceed under the theory. Id. at *8-10. Alternatively, the Galvans claimed that they were third-party

beneficiaries of the contract between the Algonac School System and Honeywell governing the

construction project and, thus, they should be able to recover on account of Honeywell’s alleged

contractual breach. Id. at *10-11. As an alleged third-party beneficiary, the Galvans claimed that

they were entitled to recovery on account of Honeywell’s failure to find and correct any safety

defects in the workspace, as the contract required. Id. at *11. The district court, however, did not

reach the issue of Honeywell’s fault, but rather found that the Galvans were not third-party

beneficiaries of the contract. Id. at *12.

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No. 09-1877, Honeywell, Inc. v. Lutz Roofing Co., Inc.

        While the underlying case was pending, Honeywell filed an action for contractual indemnity

against Lutz. The complaint alleged four counts. Count One, seeking a declaratory judgment, asked

that the court declare that Lutz had a duty to defend and indemnify Honeywell. Count Two, seeking

indemnification and defense, alleged that Lutz had breached its contractual duty to defend and

indemnify Honeywell in the underlying action. Count Three alleged that Lutz breached the insurance

provision of the Agreement when Lexington, Lutz’s insurer, declined to insure Honeywell. Finally,

Count Four alleged that Lutz, by failing to indemnify Honeywell as it requested, breached the

certificate of insurance Lutz provided Honeywell.
        Lutz filed a motion for judgment on the pleadings, arguing primarily that because Honeywell

could only have been held liable, under Michigan law, for the fault that was its own, Lutz need not

indemnify Honeywell for any damages or costs it incurred. For the same reasons, Lutz argued that

it had not breached its obligation to insure. Honeywell filed a cross-motion for summary judgment

as to all claims.

        The motions were heard on January 13, 2009 by district judge Marianne Battani. Judge

Battani denied Lutz’s motion for judgment on the pleadings and granted Honeywell’s motion for

summary judgment as to all claims. Honeywell Int’l, Inc. v. Lutz Roofing Co., No. 08-13311, 2009

U.S. Dist. LEXIS 47922, at *5-14 (E.D. Mich. June 8, 2009). The district court subsequently denied

Lutz’s motion for reconsideration. Honeywell Int’l, Inc. v. Lutz Roofing Co., No. 08-13311, 2009

U.S. Dist. LEXIS 106425, at *9 (E.D. Mich. Nov. 16, 2009). Lutz timely appealed.

                                      STANDARD OF REVIEW
        This court reviews de novo a trial court’s ruling on a motion for judgment on the pleadings.
Miller v. Javitch, Block & Rathbone, 561 F.3d 588, 592 (6th Cir. 2009). We also review de novo
the district court’s decision on a motion for summary judgment. UAW v. Dana Corp., 278 F.3d 548,
554 (6th Cir. 2002). To avoid usurping the role of the fact-finder, a court deciding a summary
judgment issue must accept as true the non-moving party’s evidence and accept all justifiable


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No. 09-1877, Honeywell, Inc. v. Lutz Roofing Co., Inc.

inferences that can be drawn therefrom. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S.
574, 587 (1986).

       Though the parties agree that de novo review is appropriate, they raise varying arguments as

to the appropriate level of deference due state court decisions in a diversity case such as this. Lutz

argues that, in a diversity case where the state supreme court has not issued a ruling on the matter,

we are bound by the decisions of an intermediate state court. Lutz relies primarily on the Sixth

Circuit’s decision in Birgel v. Board of Commissioners, 125 F.3d 948 (6th Cir. 1997). The court’s

ruling in Birgel was premised on the fact that the federal case involved exactly the same parties and

issues as a case previously ruled upon by an intermediate state court. Id. at 951-52. In fact, the

Birgel court specifically stated that its decision was based on the concept of issue preclusion. Id. at

952. Instead, we agree with Honeywell that the appropriate level of deference due intermediate state

court decisions was set out by the Supreme Court in Commissioner v. Estate of Bosch, 387 U.S. 456

(1967). As the Court explained:

       This Court has . . . held that while the decrees of lower state courts should be
       attributed some weight . . . the decision is not controlling . . . where the highest court
       of the State has not spoken on the point. . . . [T]his Court [has] further held that an
       intermediate appellate state court . . . is a datum for ascertaining state law which is
       not to be disregarded by a federal court unless it is convinced by other persuasive
       data that the highest court of the state would decide otherwise. Thus, under some
       conditions, federal authority may not be bound even by an intermediate state
       appellate court ruling.
Id. at 464-65 (internal citations and quotation marks omitted); see also Pack v. Damon Corp., 434

F.3d 810, 818 (6th Cir. 2010).

                                             DISCUSSION
       The parties agree that resolution of the main issues in this case turns on the interpretation of

the Subcontractor Agreement.

       Subcontractor agreements are construed in accordance with the general rules for construction

of contracts. Triple E Produce Corp. v. Mastronardi Produce, Ltd., 530 N.W.2d 772, 776 (Mich.

Ct. App. 1995). Consequently, the contract should be construed to effectuate the intentions of the

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No. 09-1877, Honeywell, Inc. v. Lutz Roofing Co., Inc.

parties. Id. Courts determine the intent from the language of the provision itself, the parties’

situation, and the circumstances surrounding the making of the contract. Id.; Sherman v. DeMaria

Bldg. Co., 513 N.W.2d 187, 190 (Mich. Ct. App. 1994).

        As noted, the district court found that Lutz breached both its duty to indemnify and its duty

to insure Honeywell. Lutz appeals both rulings. Additionally, Lutz, for the first time, challenges

Honeywell’s right to recover its attorney’s fees for prosecuting this action. We discuss each issue

in turn below.

        I. The Indemnity Clause Obligated Lutz to Indemnify Honeywell.
        As the district court found, the indemnity provision is unambiguous. The provision requires

Lutz to indemnify Honeywell for any claim that arises from the execution of the subcontract work

to the extent that the claim arises or results from a “negligent act” of Lutz or its employees. In

essence, the Agreement requires fault on Lutz’s part or Mr. Galvan’s, and the phrase “to the extent”

limits Lutz’s indemnity in proportion to their fault. Further, Lutz is not obligated to indemnify

Honeywell for claims arising solely from Honeywell’s own negligence. See MSI Constr. Managers

Inc. v. Corvo Iron Workers Inc., 527 N.W.2d 79, 81 (Mich. Ct. App. 1995) (interpreting a similar

provision – one that required the subcontractor to indemnify the contractor “to the extent caused in

whole or in part by any negligent act or omission of the [s]ubcontractor,” – and finding that the

language limited the extent of the subcontractor’s liability to its own negligence).

        Despite the provision’s apparent clarity, the parties interpret the agreement in varying

manners such that neither believe they should be liable for the attorney’s fees Honeywell incurred

in defending against the Galvans’ suit.

        Lutz argues that because the Agreement on its face states that Lutz can only be liable to

Honeywell for its negligence and the Galvans’ complaint did not allege that Lutz was negligent, Lutz

cannot be responsible for Honeywell’s costs in defending itself from the Galvans’ suit. Lutz further

argues that this conclusion is reinforced by Michigan’s abolition of joint liability, after which a party


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No. 09-1877, Honeywell, Inc. v. Lutz Roofing Co., Inc.

may only be held liable for costs in proportion to its percentage of fault. Accordingly, Lutz argues

that under no circumstances can it be responsible for the costs Honeywell incurred in defending itself

in a suit by Lutz’s employee where the employee did not allege that Lutz was at fault.

        Honeywell, in contrast, argues that our review cannot be constrained by the Galvans’

complaint, but must be guided by the operative set of facts out of which the Galvans’ claims arose.

Applying this approach, Honeywell attests that the Galvans’ claims were the product of Lutz’s

negligence. In support, Honeywell relies on the deposition testimony of the Galvans’ experts and

employee who testified that the accident would not have occurred had Lutz taken proper safety
measures. It further argues, in support, that given the district court’s ruling that it was not negligent,

either Lutz or Galvan must have been negligent. Together, Honeywell argues, these facts and

holdings support the conclusion that Lutz is responsible for any and all costs Honeywell incurred in

defending itself from the Galvans’ suit.

        The district court largely accepted Honeywell’s argument. In making its ruling, the court

began by examining Sixth Circuit jurisprudence interpreting Michigan law governing contracts with

language similar to the one in this case. The court emphasized that under the terms of the

indemnification agreement, “there is no dispute that the contract between Honeywell and Lutz placed

the responsibility for safety measures relative to roofing on Lutz.” Honeywell Int’l, 2009 U.S. Dist.

LEXIS 47922, at *12. The court then noted that Michigan courts have found that similarly worded

agreements carry with them a duty that the subcontractor defend the contractor even if it has no duty

to indemnify because a jury could conclude that the subcontractor or the plaintiff was comparatively

negligent. Id. (citing Turner Constr. Co. v. Robert Carter Corp., No. 97-1394, 1998 U.S. App.

LEXIS 20544, at *6 (6th Cir. Aug. 17, 1998)). Accordingly, “even if the Court had found Honeywell

solely negligent on the facts, and therefore contractually barred from indemnification, Lutz would

owe Honeywell a duty to defend under the circumstances presented.” Id.




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No. 09-1877, Honeywell, Inc. v. Lutz Roofing Co., Inc.

        The district court further noted the Michigan Court of Appeals’ decision in Walbridge Co.

v. Walcon Corp., 525 N.W.2d 489, 492 (Mich. Ct. App. 1995), in which a general contractor was

sued under similar circumstances. Accepting the reasoning of this case, the district court held that

the contractual provision barring indemnification by the subcontractor “did not apply absent the

actual establishment of a breach of duty by the general contractor.” Id. at *13. Accordingly, as

Honeywell had not been found to have breached any duty, Lutz retained a responsibility to defend

Honeywell. Id.

        We agree with the district court’s conclusion.
        In Turner Construction, we considered the claim of a general contractor who sought to

compel indemnification from a subcontractor for the costs associated with defending a claim of

injury caused by one of the subcontractor’s employees. 1998 U.S. App. LEXIS 20544, at *6. Like

this case, Turner Construction involved the application of Michigan contract law. Id. at *8. Though

the court eventually rejected the general contractor’s request for indemnification, it provided useful

guidance as to when a duty to indemnify should apply in the context of attorney’s fees, and on what

basis the court should make the determination that such a duty exists:

        Thus, even though [the general contractor] was the only defendant named by [the
        injured party] in his action, that fact standing alone, would not relieve [the
        subcontractor] of its contractual duty to defend [the general contractor]. [The
        subcontractor] had no obligation to defend [the general contractor] because based
        upon the facts alleged in the underlying complaint, [the subcontractor] could not have
        owed [the general contractor] indemnification.

Id. at *14.

        Accordingly, the court explicitly rejected the argument advanced by Lutz that the injured

party’s decision to name or not name the subcontractor in its action is determinative as to whether

a duty to indemnify exists. Rather, the focus should be on the general source of the injury described

in the complaint. Though Turner Construction involved a clause that imposed liability on the

subcontractor for all injuries “arising out of or occurring in connection with the execution of the

[subcontractor’s] Work,” id. at *2, we see nothing in the Turner court’s reasoning or Lutz’s briefs

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No. 09-1877, Honeywell, Inc. v. Lutz Roofing Co., Inc.

that would limit the rule from Turner to cases involving identical indemnity clauses. Nor can we

see any reason why Turner should be limited as such. While contracts that require indemnification

where the injury “arises out of” the subcontractor’s work do not require that the subcontractor have

been negligent, they nonetheless require that the subcontractor have caused the injury. Empire Fire

& Marine Ins. Co. v. Minuteman Int’l, Inc., No. 274660, 2008 Mich. App. LEXIS 101, at *2 (Mich.

Ct. App. Jan. 15, 2008) (collecting cases). Accordingly, Lutz’s argument as to the determinative

nature of the injured party’s complaint would be applicable where the clause merely required that

the injury have arisen from the subcontractor’s work; a subcontractor could argue that because it was
not named in the injured party’s suit against the general contractor it could not have caused the injury

and thus could not be responsible for the general contractor’s costs in defending itself. Nonetheless,

in Turner, we refused to be limited by the precise wording of the injured party’s complaint. If a

contract requires negligence on the part of the subcontractor, as the contract does here, this imposes

an additional requirement that the district court determine whether, based on the facts before it, the

subcontractor not only caused the harm, but was also at fault. However, it has no effect on the scope

of facts the court may examine in determining whether such fault exists.

       We are further persuaded by the fact that our analysis is consistent with the general

jurisprudential approach of Michigan court decisions issued after our decision in Turner

Construction. See generally Empire Fire & Marine Ins., 2008 Mich. App. LEXIS 101, at *5 (“We

agree with Minuteman that the trial court erred to the extent it found the allegations in Empire’s

complaint were dispositive of Minuteman’s third-party complaint for indemnification of its litigation

expenses, including attorney fees and defense costs.”); Westfield Ins. v. Mitchell, No. 209558, 2000

Mich. App. LEXIS 2231, *2 (Mich. Ct. App. May 30, 2000) (“[T]he duty to defend and indemnify

is not determined solely by the terminology used in the pleadings. Rather, it is necessary to focus

on the basis for the injury and not the nomenclature of the underlying claim in order to determine

whether coverage exists.” (internal quotation marks and citations omitted)).


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No. 09-1877, Honeywell, Inc. v. Lutz Roofing Co., Inc.

       Finally, we note that adherence to Turner Construction respects the practical realities of tort

litigation. In a case such as this, where the injured party is barred by the Workers’ Disability

Compensation Act from pursuing claims against his employer, the subcontractor, a rule based solely

on whether the complaint named the subcontractor would needlessly elevate form over substance.1

       Here, the Galvans alleged in their complaint that the injury occurred when Honeywell failed

to take reasonable safety precautions on the roof on which Mr. Galvan was working. Under the

terms of the indemnity agreement, Lutz specifically agreed to implement appropriate safety measures

on the roof, namely the placement of safety belts and warning signs. Accordingly, the Galvans’ suit
specifically implicated Lutz’s negligence regardless of whether Lutz was named as a party in their

complaint.

       Lutz, in response, relies almost exclusively on the Michigan Court of Appeals’ decision in

Ormsby v. Capital Welding, Inc., 660 N.W.2d 730 (Mich. Ct. App. 2003), rev’d on other grounds,

684 N.W.2d 320 (Mich. 2004). In Ormsby, the court dismissed the general contractor’s third-party

complaint seeking indemnity from the subcontractor for any damages assessed to it in a suit against

it by an injured worker. Id. at 745-46. The court reasoned that because Michigan had abolished joint

and several liability, in favor of comparative negligence, the general contractor could only be held

liable for the portion of his costs associated with his negligence. Id. at 745. Accordingly, as the

general contractor would not have to pay for any portion of the damages for which the subcontractor

was responsible, the general contractor could not seek indemnity from the subcontractor. Id. at 745-

46. Ormsby is clearly distinguishable in that the general contractor did not seek, and the court did

not address, any costs or fees the general contractor might incur in defending the suit.



1
 Furthermore, the record undercuts Lutz’s argument as to why the Galvans opposed adding Lutz to
the case. The transcript from the hearing regarding Honeywell’s motion to add Lutz as a third-party
defendant reveals that the Galvans opposed adding Lutz to the case not because they believed Lutz
to be free of fault, as Lutz speculates, but rather because they believed the addition would further
delay the case and thereby prejudice them.

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No. 09-1877, Honeywell, Inc. v. Lutz Roofing Co., Inc.

       Having established that Lutz may be liable for the costs Honeywell incurred despite not

having been named as a defendant by the Galvans, the only remaining question is whether Lutz was

in fact negligent. The district court concluded that Lutz was negligent, relying in large part on the

fact that Honeywell was not found liable. Accordingly, it reasoned that either Lutz or Galvan must

have been negligent. While we have questions as to whether the dismissal of the Galvans’ case

against Honeywell necessitates that Lutz or Galvan must be found negligent,2 an independent review

of the evidence before the court supports a finding of negligence on Lutz’s part.

       As noted above, testimony from the Galvans’ experts and one of Lutz’s employees
demonstrates that Lutz failed to follow applicable safety protocols and this failure caused Mr.

Galvan’s injury. Mumtaz Usmen, one of the Galvans’ experts, testified that Lutz failed to use proper

safety measures, namely perimeter guarding, on the roof. Had Lutz used such guarding, Usmen

stated, the accident would not have occurred. Likewise, Ronald Tyson, another of the Galvans’

experts, testified that Lutz failed to comply with an applicable federal safety regulation. Had Lutz

followed this requirement, Tyson explained, more likely than not, Mr. Galvan would not have been

injured. Similarly, John Pyrzewski, an employee of Lutz, testified that, despite the fact that other

employers commonly used safety nets to protect workers from the type of hidden hazard that caused

Mr. Galvan’s injury, Lutz never used such nets.



2
 The district court, in making its negligence determination, relied primarily on the Michigan Court
of Appeals’ decision in Walbridge, 525 N.W.2d at 492, which is inapplicable to the facts of this case.
As Lutz correctly points out, the indemnity provision at issue in Walbridge was broader than the one
in this case in that it provided that the general contractor would be indemnified as long as the claims
arose out of the work of the subcontractor and the general contractor was not solely negligent. Id.
at 492 n.1. Said differently, the sole bar to the general contractor’s indemnification for harm
resulting from the subcontractor’s work was if the general contractor was itself negligent in its
performance. Accordingly, where the general contractor was found not negligent, it was reasonable
to assess costs on the subcontractor on this basis alone. Here, as Lutz correctly notes, it is not as
clear that the general contractor has the right to indemnification simply because it was not negligent.
Under the present Agreement’s indemnification clause, for Honeywell to be due indemnification,
we must find that the claim was the product of Lutz or Mr. Galvan’s negligence, i.e., that they
breached an applicable duty under the circumstances.

                                                  14
No. 09-1877, Honeywell, Inc. v. Lutz Roofing Co., Inc.

       Lutz, in response, presents no evidence that it complied with these requirements, that it used

such safety materials, or that its failure to do such did not cause Mr. Galvan’s injuries. Nor do we

see any evidence in the record suggesting otherwise. Lutz, as mentioned, relies wholly upon the

scope of the Galvans’ suit from its perspective. However, as discussed above, we reject the limited

view that Lutz advocates. Examining the operative set of facts outlined in the complaint, there is

no question that Lutz’s conduct was the source of Mr. Galvan’s injuries. Accordingly, having before

us convincing evidence of Lutz’s negligence, we affirm the district court’s grant of Honeywell’s

motion for summary judgment.

       II. Lutz Breached its Contractual Duty to Insure.
       Lutz also argues that the district court erred in denying its motion for judgment on the

pleadings and granting Honeywell’s cross-motion for summary judgment as to whether Lutz

breached its duty to insure Honeywell. The Agreement provided that Lutz was required to procure

insurance for the site, name Honeywell as an “additional insured,” and provide a certificate

evidencing such. Lutz delivered a certificate of insurance extending liability coverage to Honeywell

and stating that the coverage would be primary. Nevertheless, Lexington, Lutz’s insurer, denied

Honeywell coverage, because the policy Lutz purchased only provided excess coverage for

Honeywell. Furthermore, Lexington did not issue the certificate Lutz provided Honeywell.

Therefore, the district court denied Lutz’s motion.

       Lutz raises three arguments on appeal. First, Lutz argues that it met its obligation in naming

Honeywell as an additional insured. It argues that its mere provision of a certificate, which Lutz

produced, on which it added Honeywell’s name was sufficient to meet this obligation.

       The term “additional insured” is not defined in the Agreement. Nor does the Agreement

delineate the scope of coverage to be provided to an “additional insured.” Michigan courts have held

that if a term is ambiguous, the fact-finder may look to relevant extrinsic evidence, such as “the

parties’ conduct, the statements of its representatives, and past practice to aid in interpretation.”


                                                 15
No. 09-1877, Honeywell, Inc. v. Lutz Roofing Co., Inc.

Klapp v. United Ins. Grp. Agency, Inc., 663 N.W.2d 447, 454 (Mich. 2003) (quoting Penzien v.

Dielectric Prods. Eng’g Co., Inc., 132 N.W.2d 130, 132 (1965)). In this case, available extrinsic

evidence suggests that Lutz, rather than satisfying its obligation, failed to meet it. The certificate

Lutz provided Honeywell specifically stated that the coverage it had procured for Honeywell was

primary. Accordingly, we can conclude that the parties intended that Honeywell, as an additional

insured, be provided with primary coverage, as opposed to the excess coverage Lutz actually

procured.

       Furthermore, we are cautioned against adopting the interpretation Lutz advocates by its
practical implications. Were we to accept Lutz’s argument that merely providing Honeywell a

certificate was all that the Agreement required, the provision requiring Lutz to name Honeywell as

an additional insured would be superfluous. The same amount of coverage would exist regardless

of whether Lutz provided Honeywell a certificate with or without it named as an additional insured.

Michigan courts have rejected interpretations which render contractual provisions meaningless. See

Port Huron Educ. Ass’n MEA/NEA v. Port Huron Area Sch. Dist., 550 N.W.2d 228, 237 (Mich.

1996) (rejecting plaintiff’s interpretation where its effect would have made the provision

superfluous).

       Second, Lutz argues that the insurance Honeywell requested would have violated public

policy, in light of the Michigan Court of Appeals’ decision in Peeples v. City of Detroit, 297 N.W.2d

839 (Mich. Ct. App. 1980). In Peeples, the court held that it would violate Michigan law for a

subcontractor to indemnify a general contractor where the general contractor’s sole negligence was

the cause of the damage or injury. Id. at 843. The Michigan Court of Appeals subsequently

provided further interpretation of the rule it set out in Peeples, explaining that a clause which does

not explicitly address the general contractor’s sole negligence will not be void unless the general

contractor is seeking redress for a matter in which it was solely negligent. Fischbach-Natkin Co. v.




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No. 09-1877, Honeywell, Inc. v. Lutz Roofing Co., Inc.

Power Process Piping, Inc., 403 N.W.2d 569, 573 (Mich Ct. App. 1987). As noted above,

Honeywell was not found negligent.3 Accordingly, Peeples does not apply.

       Finally, we reject Lutz’s third argument, that because Lutz met its obligation under the

contract, Honeywell’s dispute is with Lexington. It is merely derivative of and dependent on Lutz’s

first argument. Thus, this argument is also meritless.

       III. Lutz Waived its Argument Regarding the Amount of Attorney’s Fees it Owes.
       Finally, the parties dispute whether Honeywell is entitled to recovery of attorney’s fees

incurred while prosecuting this action. Lutz argues that Michigan courts follow the “American rule”

pursuant to which a prevailing party may not recover attorney’s fees from a losing party. Honeywell,

while admitting that Michigan courts have generally adhered to this rule, argues that this case is

distinguishable from those that have come before as it involves a breach of contract claim to enforce

an indemnity provision. The provision of fees, Honeywell argues, would merely return Honeywell

to the position it would have been if Lutz had met its obligation to Honeywell under the Agreement.

       Ultimately, we need not decide the issue as Lutz failed to raise this argument before the

district court in either its motion for judgment on the pleadings or its response to Honeywell’s cross-

motion for summary judgment. This Court has held that:

       [We] will not review issues raised for the first time on appeal. Our function is to
       review the case presented to the district court, rather than a better case fashioned after
       a district court’s unfavorable order. The court will consider an issue not raised below
       only when the proper resolution is beyond doubt or a plain miscarriage of justice
       might otherwise result.
DaimlerChrysler Corp. Healthcare Benefits Plan v. Durden, 448 F.3d 918, 922 (6th Cir. 2006)


3
  In Lutz’s discussion of whether it must indemnify Honeywell for the costs Honeywell incurred
while defending itself from the Galvans’ suit, Lutz argues that Honeywell was never found not to
be negligent, but rather was merely found to have not owed a duty to Mr. Galvan. This argument
is internally inconsistent. For a person or entity to have acted negligently under Michigan law, it
must have breached a duty it owed. See Lorencz v. Ford Motor Co., 483 N.W.2d 844, 846 (Mich.
1992) (stating that in order to establish a negligence claim, a plaintiff must prove: (1) duty, (2)
breach of duty, (3) causation, and (4) damages). Accordingly, by definition, a person cannot have
acted negligently where he owed no duty. The district court correctly found that “Honeywell was
not negligent.” Honeywell Int’l, 2009 U.S. Dist. LEXIS 106425, at *8.

                                                  17
No. 09-1877, Honeywell, Inc. v. Lutz Roofing Co., Inc.

(internal citations omitted); see also Enertech Elec., Inc. v. Mahoning Cnty. Comm’rs, 85 F.3d 257,

261 (6th Cir. 1996) (“When a party fails to present an argument to the district court, we have

discretion to resolve the issue only where the proper resolution is beyond any doubt, or where

injustice might otherwise result.” (citation omitted)). Given the lack of a decision directly on point

or the presentation of any reason to believe a miscarriage of justice would result, we choose the

better course of declining to review this issue. Barber v. Louisville & Jefferson Cnty. Metro. Sewer

Dist., 295 F. App’x 786, 791 (6th Cir. 2008) (refusing to consider claim raised for the first time on

appeal because, even though the issue was “a pure question of law, the existence of such a claim

[was] not ‘clear and beyond doubt’”).

                                           CONCLUSION
       For the foregoing reasons, the district court’s denial of Lutz’s motion for judgment on the

pleadings and grant of Honeywell’s cross-motion for summary judgment are, hereby, AFFIRMED.




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