Ruiz v. Carmeuus Lime & Stone et al
Filing
63
OPINION AND ORDER: Granting the 43 Motion to Dismiss Third Party Complaint, and the 17 and 24 Third Party Complaint is DISMISSED with prejudice. The Counterclaim of Illini against Carmeuse REMAINS PENDING. Signed by Magistrate Judge Paul R Cherry on 8/4/11. (mc)
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF INDIANA
HAMMOND DIVISION
JOHN RUIZ,
)
Plaintiff,
)
v.
)
)
CARMEUSE LIME, INC. d/b/a CARMEUSE
)
LIME & STONE,
)
Defendant.
)
--------------------------------------------------------------)
CARMEUSE LIME, INC. d/b/a CARMEUSE
)
LIME & STONE,
)
Third Party Plaintiff,
)
v.
)
)
ILLINI STATE TRUCKING, INC.,
)
Third Party Defendant.
)
--------------------------------------------------------------)
ILLINI STATE TRUCKING, INC.,
)
Third Party Counter-Claimant,
)
v.
)
)
CARMEUSE LIME, INC. d/b/a CARMEUSE
)
LIME & STONE,
)
Third Party Counter-Defendant.
)
CAUSE NO.: 2:10-CV-21-PRC
OPINION AND ORDER
This matter is before the Court on a Motion to Dismiss Third Party Complaint [DE 43], filed
by Third Party Defendant Illini State Trucking, Inc. (“Illini”) on May 18, 2011. Third Party Plaintiff
Carmeuse Lime, Inc. d/b/a Carmeuse Lime & Stone (“Carmeuse”) filed a response on July 15, 2011.
For the reasons set forth in this Order, the Court grants the Motion to Dismiss.
PROCEDURAL AND FACTUAL BACKGROUND
On November 30, 2009, Plaintiff John Ruiz (“Ruiz”) filed a Complaint in the Lake Superior
Court against Carmeuse, alleging negligence in relation to burns Ruiz sustained to his legs from
“lime” or other chemicals when Ruiz exited his truck after driving off a snowy road into a ditch on
Carmeuse’s property. Ruiz alleges that he was driving while employed by Nick’s Transport, LLC
(“Nick’s Transport”), a sub-contractor of Illini. Carmeuse removed the case to this Court on January
14, 2010, and filed an Answer on January 29, 2010.
On July 28, 2010, Carmeuse filed a Third Party Complaint against Illini for indemnification
pursuant to a Motor Carrier/Shipper Agreement (“Agreement”) between Illini and Carmeuse and
subsequently, on November 15, 2010, re-filed the Third Party Complaint. Illini did not file an
answer or otherwise respond to the Third Party Complaint. On March 1, 2011, Carmeuse filed a
Motion for Entry of Default, and a clerk’s entry of default was entered against Illini on March 2,
2011.
Illini filed a Motion to Vacate Entry of Default and a memorandum in support on April 6,
2011. On May 12, 2011, the Court granted the motion.
On May 18, 2011, Illini filed the instant Motion to Dismiss Third Party Complaint and a
memorandum in support, seeking dismissal of Carmeuse’s Third Party Complaint pursuant to
Federal Rule of Civil Procedure 12(b)(6). Illini also filed a Counterclaim against Carmeuse the
same date. On July 15, 2011, pursuant to an extension of time granted by the Court, Carmeuse filed
a response to the Motion to Dismiss.
The parties have consented to have this case assigned to a United States Magistrate Judge
to conduct all further proceedings and to order the entry of a final judgment in this case. Therefore,
this Court has jurisdiction to decide this case pursuant to 28 U.S.C. § 636(c).
STANDARD OF REVIEW
A motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) tests the
sufficiency of the complaint and not the merits of the suit. See Gibson v. City of Chi., 910 F.2d
2
1510, 1520 (7th Cir. 1990). In ruling on such a motion, the Court accepts as true all of the wellpleaded facts alleged by the plaintiff and all reasonable inferences that can be drawn therefrom. See
Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555-56 (2007); see also Tamayo v. Blagojevich, 526
F.3d 1074, 1082 (7th Cir. 2008).
To survive a 12(b)(6) motion to dismiss for failure to state a claim, the complaint must first
comply with Rule 8(a) by providing “a short and plain statement of the claim showing that the
pleader is entitled to relief,” Fed. R. Civ. P. 8(a)(2), such that the defendant is given “fair notice of
what the . . . claim is and the grounds upon which it rests.” Twombly, 550 U.S. at 555 (quoting
Conley v. Gibson, 355 U.S. 41, 47 (1957)); see also Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009).
Second, the “complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to
relief that is plausible on its face.’” Iqbal, 129 S. Ct. at 1949 (citing Twombly, 550 U.S. at 570); see
also Tamayo, 526 F.3d at 1082. The Supreme Court explained that the “plaintiff’s obligation to
provide the grounds of his entitlement to relief requires more than labels and conclusions, and a
formulaic recitation of the elements of a cause of action will not do.” Twombly, 550 U.S. at 555
(quotation marks and brackets omitted); see also Iqbal, 129 S. Ct. at 1949-50; Brooks v. Ross, 578
F.3d 574, 581 (7th Cir. 2009). Determining whether a complaint states a plausible claim for relief
requires the Court to draw on its judicial experience and common sense. Iqbal, 129 S. Ct. at 1950.
In ruling on the Motion to Dismiss, the Court considers the Agreement between Carmeuse
and Illini that Carmeuse attached to its Third Party Complaint. See Fed. R. Civ. P. 10(c) (“A copy
of a written instrument that is an exhibit to a pleading is a part of the pleading for all purposes.”);
see also Massey v. Merrill Lynch & Co., Inc., 464 F.3d 642, 645 (7th Cir. 2006) (“[W]e will
3
consider the exhibits attached to a complaint, but, where an exhibit conflicts with the allegations of
the complaint, the exhibit typically controls.”).
ANALYSIS
In its Third Party Complaint, Carmeuse alleges that, on December 7, 2007, John Ruiz, the
plaintiff in the underlying matter, was allegedly injured on Carmeuse’s property after stepping into
lime and/or other chemicals and receiving chemical burns. Carmeuse acknowledges that Ruiz
claims that the incident was caused by Carmeuse carelessly and negligently allowing a hazardous
and dangerous condition to remain and exist on its property without warning or notice. The Third
Party Complaint recognizes that Ruiz has sued Carmeuse for his damages and personal injuries
arising out of the incident. Carmeuse in turn alleges that Ruiz was an employee of Nick’s Transport,
that Nick’s Transport is a sub-contractor of Illini, and that Illini and Carmeuse had executed the
Motor Carrier/Shipper Agreement (“Agreement”). Carmeuse further alleges that Ruiz was driving
for Nick’s Transport at the time of the incident, carrying out duties arising out of the Agreement.
Carmeuse then invokes the indemnification provision contained within the Agreement,
alleging that Illini has a duty to indemnify, defend, and hold harmless Carmeuse against the
allegations of Ruiz in the underlying Complaint. Specifically, Carmeuse alleges:
All of the claims against Carmeuse, as alleged in plaintiff’s Complaint, are covered
by the [Agreement] between Carmeuse and Illini. As Illini agreed to indemnify,
defend, and hold harmless Carmeuse for any incidents arising out of Illini’s
performance of the contract, which would include the subject incident.
Third Party Compl., ¶ 10. The indemnification provision which is Paragraph 12.1 of the Agreement,
provides in its entirety:
4
Carrier [Illini] shall indemnify, defend, and hold harmless Shipper [Carmeuse], its
employees, agents, representatives, successors and assigns from and against any and
all judgments, costs, damages, claims, causes of action and expenses (including
attorneys fees) resulting from or arising out of any injuries to persons (including
death) and damage to property caused by Carrier’s [Illini’s] performance hereunder
or the negligent acts or omissions of the Carrier [Illini], its employees, agents,
servants or representatives.
Third Party Compl., Exh. A, p. 5, ¶ 12.1 (emphasis added).1
In the instant Motion to Dismiss, Illini argues that this indemnity provision is governed by
Indiana Code § 8-2.1-26-1 through 8-2.1-26-5, which is entitled “Invalidity of Indemnity
Agreements in Motor Carrier Transportation Contracts.” Illini contends that Carmeuse’s claim for
indemnification does not fall within the exception for allowable indemnity agreements under the
statute because there are no factual allegations in the Third Party Complaint that Ruiz’s injuries were
caused by the negligence, intentional acts, or omissions of Illini, Ruiz, or any other agent, employee,
servant, or independent contractor directly responsible to Illini.
As an initial matter, the anti-indemnity statute applies to indemnity provisions entered into
or renewed after June 30, 2006. Ind. Code § 8-2.1-26-1. The Agreement containing the indemnity
provision in Paragraph 12.1 at issue in this case was entered into or renewed on April 1, 2007, and,
thus, is subject to the provisions of Chapter 26.
The effect of Chapter 26 is to render void and unenforceable as against public policy
indemnity agreements that require one party (e.g. the carrier, Illini) to indemnify, defend, and hold
1
The Agreement contains a reciprocal indemnity clause, requiring Carmeuse to indemnify Illini for the
negligent acts or omissions of Carmeuse:
Shipper [Carmeuse] agrees to indemnify, defend and hold harmless Carrier [Illini], its employees,
agents, representatives, successors and assigns from and against any and all judgments, costs,
damages, claims, causes of action and expenses (including attorneys fees) resulting from or arising
out of any injuries to persons (including death) and damage to property caused by the negligent acts
or omissions of Shipper [Carmeuse], its employees, agents, servants or representatives.
Third Party Compl., Exh. A, p. 5, ¶ 12.2.
5
harmless the other party (e.g. the shipper, Carmeuse) for that second party’s (e.g., the shipper’s,
Carmeuse’s) own negligence, intentional acts, or omissions. First, the statute narrowly defines the
term “indemnity provision” as
a provision, a clause, a covenant, or an agreement that:
(1)
is contained in, collateral to, or affecting a motor carrier transportation
contract; and
(2)
purports to indemnify, defend, or hold harmless, or has the effect of
indemnifying, defending, or holding harmless, a promisee against liability for
loss or damage resulting from:
(A) negligence;
(B) intentional acts; or
(C) omissions;
of the promisee or an agent, employee, servant, or independent contractor
that is directly responsible to the promisee.
Ind. Code § 8-2.1-26-2 (emphasis added).
The parties do not dispute that the Agreement between Carmeuse and Illini is a “motor
carrier transportation contract,” which is defined by the statute as
a contract, an agreement, or an understanding covering:
(1)
the transportation of property for compensation or hire by a motor carrier as
defined under this article or by 49 U.S.C. 13102(12);
(2)
the entrance on real property by a motor carrier to:
(A) load;
(B) unload; or
(C) transport property for compensation or hire; or
(3)
a service incidental to an activity described in subdivision (1) or (2),
including storage of property.
Ind. Code § 8-2.1-26-3. The term “promisee” is defined for purposes of the statute as
a person that an indemnity provision:
(1) purports to indemnify, defend, or hold harmless; or
(2) has the effect of indemnifying, defending, or holding harmless.
Ind. Code § 8-2.1-26-4.
6
Then, the statute declares this narrow definition of indemnity provision to be void and
unenforceable as against public policy:
Notwithstanding any other law, an indemnity provision under this chapter is:
(1)
against public policy; and
(2)
void and unenforceable.
Ind. Code § 8-2.1-26-5(b).2
The indemnity provision in Paragraph 12.1 of the parties’ Agreement does not constitute a
void and unenforceable indemnification agreement under the statute because it does not require Illini
to indemnify, defend, and hold harmless Carmeuse for Carmeuse’s negligence, intentional acts, or
omissions. Rather, Paragraph 12.1 requires Illini to indemnify, defend, and hold harmless Carmeuse
for Illini’s negligence, intentional acts, or omissions, which is explicitly permitted as an exception
to the invalidity of indemnity provisions under the statute:
(1) An indemnity provision in which a motor carrier [Illini] indemnifies a promisee
[Carmeuse] for and only to the extent of loss or damage that results directly from the
negligence, omission, or intentional act of the motor carrier [Illini] or an agent,
employee, servant, or independent contractor that is directly responsible to the motor
carrier.
2
In its response brief, Carmeuse relies on the following quoted language, which comes from McClish v.
Niagara Mach. and Tool Works, 266 F. Supp. 987 (S.D. Ind. 1967):
The right to indemnity and the corresponding obligation to indemnify generally spring from contract,
express or implied, and in the absence of an express or implied contract a right to indemnity generally
does not exist. When indemnity is the subject of an express contract, Indiana takes the broad view that
parties may lawfully bind themselves to indemnify against future acts of negligence, whether the
negligence indemnified against be that of the indemnitor or his agents or that of the indemnitee or his
agents.
Pl. Br., p. 4 (improperly attributing the quotation to Thomson Consumer Elecs. v. Wabash Valley Refuse Removal, 682
N.E.2d 792 (Ind. 1997)) (emphasis added). To the extent Carmeuse is applying this principle in the context of a motor
carrier transportation contract, the italicized portion of the quotation has been abrogated by Indiana Code § 8-2.1-26-5(b),
which now prohibits indemnification for the negligence of the indemnitee in motor carrier transportation contracts.
In its response brief, Carmeuse also argues that the anti-indemnification statute only precludes
“indemnification” but does not preclude “defense.” This is incorrect. The definition of “indemnity provision” in the
statute explicitly includes “defense”: “‘indemnity provision’ means a provision that . . . purports to indemnify, defend,
or hold harmless, or has the effect of indemnifying, defending, or holding harmless . . . .” Ind. Code § 8-2.1-26-2
(emphasis added).
7
Ind. Code § 8-2.1-26-5(a).3 Thus, the indemnity provision, on its face, is not void or unenforceable.
However, the Third Party Complaint nevertheless fails to state a claim for indemnification
under the provision because Carmeuse has not alleged any facts that Ruiz’s personal injuries were
“caused by [Illini’s] performance [under the Agreement] or the negligent acts or omissions of
[Illini], its employees, agents, servants or representatives” to bring the claim for indemnification
within the terms of Paragraph 12.1 of the Agreement. The Third Party Complaint is devoid of any
factual allegation as to causation. There are no factual allegations connecting any action by Ruiz,
Illini, or any other agent or representative of Illini to the injury Ruiz sustained on Carmeuse’s
property. Notably, the Third Party Complaint inaccurately represents the meaning of Paragraph
12.1, stating that it requires Illini to indemnify, defend, and hold harmless Carmeuse for “any
incidents arising out of Illini’s performance of the contract.” Third Party Compl., p. 3 (emphasis
added). Paragraph 12.1 does not require indemnification for incidents “arising out of” Illini’s
performance but rather requires Illini to indemnify, defend, and hold harmless Carmeuse for
damages or injury “caused by” Illini’s performance under the contract or the negligent acts or
omissions of Illini or its agents. The allegation that Ruiz was performing under the Agreement on
behalf of Illini at the time of the incident does not constitute an allegation that the injuries were
caused by his performance.
3
The statute provides for two additional exceptions not applicable in this case:
(2) An indemnity provision contained in, collateral to, or affecting a motor carrier
transportation contract with a regulated public utility, including an energy utility (as defined in IC
8-1-2.5-2) or an affiliate of an energy utility, if the contract relates to a utility product, service, or
business operation. For purposes of this subdivision, a contract relates to a utility product, service, or
business operation if it involves an activity necessary for or ancillary to the production or delivery of
heat, power and light, or a product or service under the jurisdiction of the Indiana utility regulatory
commission (as described by IC 8-1-1).
(3) The Uniform Intermodal Interchange and Facilities Access Agreement administered by
the Intermodal Association of North America.
Ind. Code § 8-2.1-26-5(a).
8
In its response brief, Carmeuse argues that a “central allegation of Carmeuse, in this matter,
pertains to Ruiz’s own comparative fault for the alleged injuries Ruiz alleges to have sustained.”
It is true that Carmeuse has asserted affirmative defenses for contributory and comparative
negligence as well as for incurred risk in its Answer to Ruiz’s Complaint. However, there are no
such factual allegations contained within the four-corners of Carmeuse’s Third Party Complaint.
Rule 12(b)(6) tests the sufficiency of the allegations in the Third Party Complaint, and Carmeuse
does not allege any facts in the Third Party Complaint that would state a plausible claim of
negligence, omission, or intentional act against Illini or its agents. Accordingly, the Court finds that
Carmeuse’s Third Party Complaint fails to state a claim for relief for indemnification under
Paragraph 12.1 of the Agreement.
Carmeuse argues in its response brief that Indiana’s anti-indemnity statute does not apply
in this case because Ruiz’s underlying Complaint sounds in premises liability. However, Carmeuse
has explicitly invoked the indemnity provision contained in the Agreement (a “motor carrier
transportation contract” under the statute) to seek indemnification from Illini for damages Carmeuse
may incur as a result of that premises liability action. Paragraph 12.1 is contained within the motor
carrier transportation contract and, thus, is subject to the provisions of Indiana Code § 8-2.1-26-1
et seq. regarding the invalidity of indemnity provisions.
Carmeuse also contends that the purpose of Indiana’s anti-indemnity statute is to “protect
the public from accidents and confusion about who is financially liable if accidents occur and,
thereby, provide financially responsible defendants,” citing Illinois Bulk Carrier, Inc. v. Jackson,
908 N.E. 2d 248 (Ind. Ct. App. 2009). Pl. Br., p. 4. However, Jackson is inapposite as it does not
mention or discuss any Indiana statutes or regulations, including the Indiana motor carrier safety
9
regulations and the anti-indemnity statute at issue in this case, and does not involve an indemnity
agreement. To the extent Jackson discusses vicarious liability of a motor carrier for the negligence
of an independent contractor under the federal motor carrier safety regulations, Illini does not
challenge the allegations of the Third Party Complaint that Ruiz was an employee of Nick’s
Transport, hired by Illini as an independent contractor.
Moreover, the purpose of the anti-indemnity statute is to rectify what many states, including
Indiana, have perceived to be an inequitable “shift of risk” in the shipper and carrier relationship in
motor carrier transportation contracts when a carrier is contractually required to indemnify a shipper
for the shipper’s own negligence. See Jenifer L. Kienle, Industry Activism and Legislation Shifts
the Indemnity Burden Both Ways in Motor Carrier Contracts, In Transit, DRI The Voice of the
D
e
f
e
n
s
e
B
a
r
,
http://www.imakenews.com/trucking/e_article001010825.cfm?x=bclPFrF,b31C2f4K,w (Feb. 5,
2008) (last visited Aug. 4, 2011); see also Indiana Enacts Anti-Indemnification Law, CCJ Digital,
Commercial Carrier Journal, http://www.ccjdigital.com/indiana-enacts-anti-indemnification-law/
(June 2, 2006) (last visited Aug. 4, 2011). In June 2004, the American Trucking Associations
published the “Model Truckload Motor Carrier/Shipper Agreement with Commentaries” to serve
as a template for future motor carrier transportation agreements. The model agreement contains only
reciprocal indemnity provisions documenting the agreement of the shipper and the carrier to
indemnify the other for the indemnitor’s negligence or intentional misconduct. Taking an additional
step, several states then adopted anti-indemnification legislation, such as Indiana Code § 8-2.1-265(b), nullifying provisions requiring indemnification for the indemnitee’s own negligence or
intentional acts. See Kienle, Industry Activism.
10
CONCLUSION
Based on the foregoing, the Court hereby GRANTS the Motion to Dismiss Third Party
Complaint [DE 43], and the Third Party Complaint [DE 17 and DE 24] is DISMISSED without
prejudice.
The Counterclaim of Illini against Carmeuse REMAINS PENDING.
SO ORDERED this 4th day of August, 2011.
s/ Paul R. Cherry
MAGISTRATE JUDGE PAUL R. CHERRY
UNITED STATES DISTRICT COURT
cc: All counsel of record
11
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?