ALLSTATE v. OMEGA FLEX, INC.

Filing 117

ORDER AND OPINION granting The Knight Group, Inc.s Motion for Judgment on the Pleadings 88 and Beckom Electric, Inc.s Motion for Judgment on the Pleadings 95 . Signed by Judge Julie E. Carnes on 3/31/14. (ddm)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF GEORGIA
ATLANTA DIVISION
ALLSTATE PROPERTY & CASUALTY
INSURANCE COMPANY, as subrogee
of William and Josephine Leon,
Plaintiff,

CIVIL ACTION NO.

v.

1:13-cv-879-JEC

OMEGA FLEX, INC.,
Defendant and
Third-Party Plaintiff
v.
THE KNIGHT GROUP, INC., BECKOM
ELECTRIC, INC., and CHARLES A.
THORNTON d/b/a LANDMARK
PLUMBING,
Third-Party Defendants.
ORDER & OPINION
This matter is before the Court on third-party defendant The
Knight Group, Inc.’s Motion for Judgment on the Pleadings [88] and
third-party defendant Beckom Electric, Inc.’s Motion for Judgment on
the Pleadings [95].

The Court has reviewed the parties’ pleadings

and briefs, and for the reasons explained herein, GRANTS The Knight
Group, Inc.’s Motion for Judgment on the Pleadings [88] and GRANTS
Beckom Electric, Inc.’s Motion for Judgment on the Pleadings [95].
BACKGROUND
On September 26, 2010, a fire broke out at the home of William
and Josephine Leon (the “Leons”), located at 228 Rustico Court in

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McDonough, Georgia (the “Leon Home”). (Third-Party Compl. [80] at ¶¶
5-9.)

The

Insurance

Leons’

Company

home

insurer,

(“Allstate”),

Allstate

claims

to

Property
have

paid

$440,000 on their subsequent insurance policy claim.

&

Casualty
the

Leons

(First Am.

Compl. [80-1] at ¶ 14.)
From the ashes emerged a lawsuit.

On April 4, 2012, Allstate

filed suit in the United States District Court for the Southern
District of Indiana against Omega Flex, Inc. (“Omega Flex”), alleging
that the corrugated stainless steel tubing (“CSST”) manufactured by
Omega Flex and used in constructing the Leon Home, failed when it was
struck by lightning, which then caused the fire. (Third-Party Compl.
[80] at ¶ 10.)

The suit initially included several other claims

against Omega Flex for fires at other houses insured by Allstate. On
March 20, 2013, the Magistrate hearing the case ordered the claims
severed, and the suit involving the fire at the Leon Home was
transferred to this Court.
On July 16, 2012, Omega Flex filed a third-party complaint
against other parties, including The Knight Group, Inc. (“Knight”)
and Beckom Electric, Inc. (“Beckom”), who installed the CSST in the
Leon Home.
was

caused

Omega Flex there alleged that any damage to the Leon Home
by

faulty

manufacturing defect.

installation,

rather

than

any

design

or

After Allstate’s suit against Omega Flex was

transferred to this Court, Omega Flex re-filed its third-party
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complaint, seeking to recover on theories of indemnity (Counts One
and Three) and contribution (Counts Two and Four).
Compl. [80].)
complaint
pleadings.

and

(See Third-Party

Beckom and Knight each answered the third-party
subsequently

filed

motions

for

judgment

on

the

Based on the same argument, Beckom and Knight contend

that Omega Flex has failed to state a claim under Georgia law,
because Omega Flex’s claims have been abrogated by statute in
Georgia.

(See Knight’s Mot. [88] and Beckom’s Mot. [95].)

Flex filed responses.

Omega

(See Omega Flex’s Br. in Opp’n [90] and Omega

Flex’s Br. in Opp’n [103].)

Beckom and Knight replied.

(See

Knight’s Reply [93] and Beckom’s Reply [105].)
DISCUSSION
I.

MOTION FOR JUDGMENT ON THE PLEADINGS STANDARD
Under the Federal Rules of Civil Procedure, a defense for

failure to state a claim upon which relief can be granted may be
raised by a motion for judgment on the pleadings.
12(c) and (h)(2).

FED. R. CIV. P.

A court considering a motion for judgment on the

pleadings must accept the facts alleged in the complaint as true and
view them in the light most favorable to the nonmoving party.
v. Taylor, 405 F.3d 1251, 1253 (11th Cir. 2005).

Scott

A court must grant

judgment on the pleadings when there are no material facts in dispute
and the moving party is entitled to judgment as a matter of law.

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Id.

II.

OMEGA FLEX’S THEORIES OF RECOVERY
Omega Flex seeks to recover from Beckom and Knight on theories

of indemnity and contribution.
29.)

(Third-Party Compl. [80] at ¶¶ 12-

Beckom and Knight both contend that Georgia law no longer

recognizes joint and several liability, and thus contribution, and
that indemnification premised on the active/passive negligence theory
is likewise barred.
A.

Omega Flex’s Contribution Claims

Contribution is derivative of the principle of joint and several
liability.

McReynolds v. Krebs, 290 Ga. 850, 852 (2012)(citing

Weller v. Brown, 266 Ga. 130 (1996)(“[C]ontribution will not lie in
the absence of joint or joint and several liability.”)) “Independent
wrongdoers are joint tortfeasors if their actions produce a single
indivisible result and a rational apportionment of damages cannot be
made.”

Kroger Co. v. Mays, 292 Ga. App. 399, 401 (2008)(quoting Gay

v. Piggly Wiggly S., Inc., 183 Ga. App. 175, 177-78 (1987)).

Joint

and several liability permits a plaintiff to recover the full amount
of a judgment against joint tortfeasors from any of them.
Mitchell v. Gilson, 233 Ga. 453 (1975).

See, e.g.,

Contribution then permits

the tortfeasor who paid the judgment to seek a pro rata share based
on the percentages of fault from the other joint tortfeasors.

See,

e.g., City of Albany v. Pippin, 269 Ga. App. 22, 24-25 (2004).
The right of contribution has been limited in various ways.
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At

common

law,

contribution

was

barred

where

the

tortfeasors

had

committed an intentional tort, but did not apply to unintentional
torts.

Greyhound Lines, Inc. v. Cobb Cnty., Ga., 681 F.2d 1327, 1332

(11th Cir. 1982).

When contribution was first recognized in Georgia

law by statute in 1863, it applied only where there was a joint
judgment against co-tortfeasors.
revisions

in

1966

eliminated

Id. at 1333 n.10.1

the

extending contribution to more cases.

joint

judgment

However,

requirement,

Id.

In 2005, Georgia enacted the Tort Reform Act, which, among other
reforms, amended Georgia’s joint liability and apportionment of
damages statutory provisions. See O.C.G.A. §§ 51-12-31 and 51-12-33.
The latter code section presently apportions damages in the following
way:
Where an action is brought against more than one person for
injury to person or property, the trier of fact, in its
determination of the total amount of damages to be awarded,
if any, shall after a reduction of damages pursuant to
subsection (a) of this Code section, if any, apportion its
award of damages among the persons who are liable according
to the percentage of fault of each person.
Damages
apportioned by the trier of fact as provided in this Code
section shall be the liability of each person against whom
they are awarded, shall not be a joint liability among the
persons liable, and shall not be subject to any right of
contribution.

1

The current version of that statute is O.C.G.A. § 51-12-32.
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O.C.G.A. § 51-12-33(b).2 The Georgia Supreme Court has explicated the
statute, stating that “[d]amages are apportioned among tortfeasors
according to their percentages of fault, regardless of whether the
total amount of damages was first reduced under subsection (a) to
account for the plaintiff’s share of liability.” McReynolds, 290 Ga.
at 852.

Further, “[a]s to contribution, O.C.G.A. § 51-12-33(b)

flatly states that apportioned damages ‘shall not be subject to any
right of contribution.’

And the statute reiterates this point by

saying that damages ‘shall not be a joint liability among the persons
liable.’”

Id.

The Georgia Court of Appeals has recently construed

the Georgia Supreme Court’s decision in McReynolds to hold that the
revised

“O.C.G.A.

§

51-12-33

supplanted

contribution and apportionment.”

claims

for

common-law

Dist. Owners Ass’n, Inc. v. AMEC

Envtl. & Infrastructure, Inc., 322 Ga. App. 713, 718 (2013).
Thus, based on the text of O.C.G.A. § 51-12-33, McReynolds, and
District Owners, it seems correct that Georgia law has abrogated
joint and several liability and contribution.

Instead, the trier of

fact assesses “the fault of all persons or entities who contributed
to the alleged injury or damages, regardless of whether the person or
entity was, or could have been, named as a party to the suit.”

2

O.C.G.A. § 51-12-33(a) is the comparative negligence
provision, directing the trier of fact to assign to the plaintiff its
own percentage of fault, if any, and then reducing the plaintiff’s
recovery accordingly.
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O.C.G.A. § 51-12-33(c).

The trier of fact takes nonparties into

consideration when plaintiff has entered into a settlement agreement
with them, or when “a defending party gives notice not later than 120
days prior to the date of trial that a nonparty was wholly or
partially at fault.”

O.C.G.A. § 51-12-33(d).

The trier of fact

assesses “percentages of fault of nonparties . . . only in the
determination of the percentage of fault of named parties.” O.C.G.A.
§ 51-12-33(f)(1).

These assessments of nonparties’ percentages of

fault “shall not subject any nonparty to liability in any action or
be introduced as evidence of liability in any action.”
51-12-33(f)(2).

O.C.G.A. §

Thus, plaintiffs, to maximize their recovery, have

the incentive to settle with or sue all the potentially liable
parties; and defendants, so long as they properly name potentially
liable nonparties, will only be held liable for their portion of the
damages.

Contribution, however, is not permitted.

Based on the foregoing, Omega Flex’s contribution claim against
Beckom and Knight must be dismissed, as Omega Flex has failed to
state a valid claim under Georgia law.
B.

Omega Flex’s Indemnity Claims

Omega Flex also asserts indemnity claims against Beckom and
Knight.

Indemnity, unlike contribution, is neither derivative of

joint and several liability, nor a creation of statute.

The Georgia

Court of Appeals has stated that even after the Tort Reform Act of
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2005, “we have no reason to dispute that actual claims for common-law
indemnity . . . are still viable.”
718.

Dist. Owners, 322 Ga. App. at

Indemnity is “the obligation or duty resting on one person to

make good any loss or damage another has incurred by acting at his
request or for his benefit.”

Douglas Asphalt Co. v. Ga. Dep’t of

Transp., 319 Ga. App. 47, 49 (2012).

“Georgia law recognizes two

broad categories of indemnity: as created by contract and as under
the common law of vicarious liability.”

Id.

The former category

includes, for example, surety bonds, through which a surety who has
satisfied a principal debtor’s liability to a creditor can then seek
indemnification from the principal debtor.

City of Coll. Park v.

Fortenberry, 271 Ga. App. 446, 451 (2005).

As for the latter

category, “[i]f a person is compelled to pay damages because of
negligence imputed to him as the result of a tort committed by
another, he may maintain an action for indemnity against the person
whose wrong has thus been imputed to him.”
Benator, 310 Ga. App. 597, 608-609 (2011).

City of Atlanta v.
Thus, for example, an

employer who has had to satisfy a judgment arising from a tort
committed by an employee may then seek indemnification from the
employee.
Omega Flex’s claim for indemnity is premised on neither contract
nor vicarious liability. Rather, Omega Flex relies on a third theory
of indemnification, pleading that its own negligence, if any, was
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merely “passive,” whereas the negligence, if any, of Beckom or Knight
was “active.” (Am. Third-Party Compl. [80] at ¶¶ 17-19, 25-27.) The
passive/active negligence theory of indemnification “is an exception
to the general rule that a joint tortfeasor may not maintain an
action for indemnity against another tortfeasor.” Carolina Cas. Ins.
Co. v. R.L. Brown & Assocs., Inc., No. 1:04-CV-3537-GET, 2007 WL
174336, at *3 (N.D. Ga. Jan. 19, 2007)(Tidwell, J.)(citing Jones v.
Otis Elevator Co., 861 F.2d 655, 665 (11th Cir. 1988)).

As the

Georgia Supreme Court has explained, the active tortfeasor is one
“whose negligence produced or brought about the defect or dangerous
condition . . . which . . . was the proximate cause of the injury.”
Cent. of Ga. Ry. Co. v. Macon Ry. & Light Co., 140 Ga. 309 (1913).
In contrast, a passive tortfeasor is one who is liable “because he
has failed to exercise due diligence to discover [that] defect or
danger . . . and has been compelled to pay damages for injuries
growing out of the tort.”

Id.

Under the passive/active negligence

theory of indemnity, “if the negligence of the tortfeasor is passive
as opposed to active, a tortfeasor can seek indemnity against [the]
party whose conduct is alleged to be the proximate cause of the
injury.”

Colt Indus. Operating Corp. v. Coleman, 246 Ga. 559, 560

(1980); Crockett v. Uniroyal, Inc., 772 F.2d 1524, 1530-31 (11th Cir.
1985)(“If

it

may

be

demonstrated

that

one

party

was

actively

negligent in the face of the other party’s passive negligence, an
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action for indemnity lies.”)
The validity under current Georgia law of an indemnification
claim based on the active/passive negligence distinction is in
dispute in this case.

Beckom and Knight point out that, following

the 2005 amendments of O.C.G.A. § 51-12-33, the Georgia Court of
Appeals seems to have limited indemnification to its contractual or
vicarious liability theories:
[B]y its very language the third-party complaint does not
allege contractual indemnity or vicarious liability based
on any agent-principal or employer-employee relationship.
Rather, the complaint seeks payment from the third-party
defendants as joint tortfeasors for any amount that [the
third-party plaintiff] is ultimately found liable to the
plaintiff.
Thus, because no allegations of imputed
negligence or vicarious liablity have been made in this
case, ‘common law indemnity principles do not apply’ . . .
.
Dist. Owners, 322 Ga. App. at 716 (quoting Benator, 310 Ga. App. at
609).

This rejection of indemnification between joint tortfeasors

would seem to rule out the passive/active negligence theory.
The

question

of

whether

Georgia

law

still

recognizes

the

passive/active theory of indemnification is somewhat uncertain at the
moment.

Fortunately, the Court need not wade into this matter.

For

even if the passive/active theory is still good law in Georgia, Omega
Flex’s third-party complaint cannot be construed as making out a
valid claim.
For Omega Flex to have a valid claim under the passive/active

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negligence theory, it would have to have merely failed “to exercise
due diligence to discover a defect or danger” proximately caused by
another party.

Cent. of Ga. Ry. Co., 140 Ga. at 309.

Based on the

allegations in the pleadings, there seems to be no set of facts that
could support a finding that Omega Flex’s liability was merely
passive, merely a failure to discover a defect caused by Beckom or
Knight.
Should the trier of fact find that Omega Flex, Beckom, or Knight
are liable for damages on account of negligence, it would do so in
one of three ways.

First, it could find that Omega Flex negligently

designed or manufactured the CSST, and that negligence proximately
caused the fire.

In that case, Omega Flex would not be a passive

tortfeasor, but an active one.

It would therefore be liable to

Allstate without any claim for indemnification against Beckom or
Knight. Second, the trier of fact could find that the CSST, although
designed and manufactured without defect, was negligently installed
by Beckom and Knight, which proximately caused the fire.

In that

case, Omega Flex would not be found liable to Allstate at all.
Third, it could find that the CSST was both negligently designed or
manufactured by Omega Flex, and negligently installed by Beckom and
Knight, and the combined negligence proximately caused the fire.

In

the third case, Omega Flex, Beckom, and Knight would be joint, active
tortfeasors, and their liability would be determined under the
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apportionment statute, O.C.G.A. § 51-12-33.

In none of these

scenarios would Omega Flex have a passive/active negligence claim for
indemnity, because under none of the three would Omega Flex’s
negligence be merely a “failure to exercise due diligence in the
matter of making inspection” of the acts of Beckom or Knight.

Cent.

of Ga. Ry. Co., 140 Ga. at 309.
Omega Flex’s claims for indemnification against Beckom and
Knight thus fail to state an actionable claim as a matter of law and
must be dismissed.
CONCLUSION
Based on the foregoing analysis, Omega Flex as failed to state
any actionable claim against Beckom or Knight.

The Court therefore

GRANTS The Knight Group, Inc.’s Motion for Judgment on the Pleadings
[88] and GRANTS Beckom Electric, Inc.’s Motion for Judgment on the
Pleadings [95].
SO ORDERED, this 31st day of March, 2014.

/s/ Julie E. Carnes
JULIE E. CARNES
CHIEF UNITED STATES DISTRICT JUDGE

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