GENERALI - U.S. BRANCH v. LACHEL & ASSOCIATES, INC.
Filing
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ORDER GRANTING DEFENDANT'S MOTION TO DISMISS - For the foregoing reasons, the Court GRANTS Defendant Lachel & Associates, Inc.'s Motion to Dismiss (Filing No. 5 ), and this action is DISMISSED with prejudice. Final judgment will issue under separate order. See Order for details. Signed by Judge Tanya Walton Pratt on 2/19/2019. (MAT)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF INDIANA
NEW ALBANY DIVISION
GENERALI - U.S. BRANCH Subscribing to
Policy No. CAR700005, as subrogee of Walsh
Construction Company/Vinci Gran Projects JV
d/b/a Walsh Vinci Joint Venture, d/b/a THE
GENERAL INSURANCE COMPANY OF
TRIESTE & VENICE - U.S. BRANCH,
Plaintiff,
v.
LACHEL & ASSOCIATES, INC.,
Defendant.
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Case No. 4:17-cv-00168-TWP-DML
ORDER GRANTING DEFENDANT’S MOTION TO DISMISS
This matter is before the Court on Defendant’s Motion to Dismiss or in the Alternative, for
Summary Judgment, filed pursuant to Federal Rule of Civil Procedure 12(b)(6) or in the
alternative, Fed. R. Civ. P. 56, by Defendant Lachel & Associates, Inc. (“Lachel”) (Filing No. 5).
Plaintiff, Generali – U.S. Branch doing business as The General Insurance Company of Trieste &
Venice – U.S. Branch (“Generali”), initiated this lawsuit, seeking damages as the subrogee of
Walsh Construction Company/Vinci Gran Projects JV doing business as Walsh Vinci Joint
Venture (“Walsh Vinci JV”). Lachel moved to dismiss Generali’s claims, arguing that the
applicable statute of limitations bars this action and a contractual waiver of subrogation further
bars the claims asserted in this action. For the following reasons, the Court grants Lachel’s Motion
to Dismiss.
I.
BACKGROUND
The following facts are not necessarily objectively true, but as required when reviewing a
motion to dismiss, the Court accepts as true all factual allegations in the complaint and draws all
inferences in favor of Generali as the non-moving party. See Bielanski v. County of Kane, 550
F.3d 632, 633 (7th Cir. 2008).
Generali is a New York corporation with its principal place of business in New York. It
sells and issues insurance policies. Lachel specializes in design and construction management
services for tunneling and other heavy civil construction projects in the areas of transportation,
water and wastewater infrastructure, and hydroelectric power. It provides consulting and design
engineering services (Filing No. 1-1 at 2–3).
The East End Crossing is a public-private partnership between the Indiana Finance
Authority and WVB East End Partners, LLC for a project to develop, design, construct, finance,
operate, and maintain a bridge facility and associated roadway and facilities across the Ohio River
in Southern Indiana and Louisville, Kentucky (Filing No. 1-1 at 2; Filing No. 5-5). The Indiana
Finance Authority and WVB East End Partners entered into a public-private agreement for
construction of the project on December 27, 2012 (Filing No. 1-1 at 3; Filing No. 5-5 at 3). The
project included a new bridge across the Ohio River that would tie into existing interstate highway
via two new highway tunnels (Filing No. 12 at 3).
After the public-private agreement was executed, WVB East End Partners contracted with
Walsh Vinci JV to perform the design and construction work for the project. Id. at 3–4. Walsh
Vinci JV “specialized in financing, designing and constructing major highway and bridges
projects.” (Filing No. 1-1 at 3.) Walsh Vinci JV is “a separate entity from WVB East End Partners,
LLC which was tasked with the design of the project among other duties.” Id.
Generali issued an insurance policy to WVB East End Partners and Walsh Vinci JV, with
a policy number CAR700005, to provide insurance protection for the project against builder’s risk,
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constructional plant and equipment risk, existing property risk, and delay in startup risk (Filing
No. 5-4 at 2, 6; Filing No. 1-1 at 3; Filing No. 12 at 4).
On May 10, 2013, Lachel and Walsh Vinci JV entered into a contract for Lachel to perform
consulting and design engineering services for the project. Lachel performed work on the project
pursuant to this agreement. Lachel provided professional design services related to the initial
support systems for the tunnel portions of the project. The agreement called for Lachel to provide
professional engineering services that included design of the initial tunnel support, blasting plans,
vibration monitoring, and contingency planning. The agreement required Lachel to perform its
professional engineering services in a manner consistent with the professional skill and care
ordinarily provided by members of the engineering profession practicing in the same locality
(Filing No. 1-1 at 3, 8, 13–15; Filing No. 12 at 5).
On Friday, September 19, 2014, at 6:30 p.m., normal tunneling activities were taking place
when a noise was heard coming from the south tunnel. The workers were evacuated from the
tunnel, and then rock from the roof of a portion of the south tunnel collapsed (Filing No. 12 at 7;
Filing No. 1-1 at 4). After this incident occurred, Generali retained geotechnical engineers to
determine the cause of the incident, and Generali’s engineers determined that the primary reason
for the roof collapse was inadequate design of the initial support for the tunnel provided by Lachel
(Filing No. 1-1 at 4). “Pursuant to the terms of its [insurance] policy, Generali paid [Walsh Vinci]
JV for its damages and became subrogated to all rights and causes of action of the Insured.” Id.
On August 10, 2017, Generali filed a Complaint in the Clark County Circuit Court of
Indiana as subrogee of Walsh Vinci JV. Id. at 1. In its Complaint, Generali alleged that Lachel
breached the agreement between Walsh Vinci JV and Lachel by failing to provide adequate initial
support design and contingency plans for the tunnel and that Lachel’s design failure was the
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proximate cause of Walsh Vinci JV’s loss. Generali made payments in excess of $13 million, and
it alleged in the Complaint that it is now subrogated to the extent of the payments made to Walsh
Vinci JV. Id. at 5. Generali asserted a second claim in the Complaint, alleging that Lachel is
required to indemnify Walsh Vinci JV for “property damage that may arise from the performance
of the Services to the extent caused by the negligent acts or omissions of [Lachel],” and this claim
for indemnification was subrogated to Generali. Id. at 5–6.
On September 5, 2017, Lachel removed the lawsuit from state court to this Court on the
basis of diversity jurisdiction. Then six days later, Lachel filed its Motion to Dismiss, asserting
that the applicable statute of limitations bars Generali’s claims and a contractual waiver of
subrogation also bars the claims.
II.
LEGAL STANDARD
Federal Rule of Civil Procedure 12(b)(6) allows a defendant to move to dismiss a complaint
that has failed to “state a claim upon which relief can be granted.” Fed. R. Civ. P. 12(b)(6). When
deciding a motion to dismiss under Rule 12(b)(6), the court accepts as true all factual allegations
in the complaint and draws all inferences in favor of the plaintiff. Bielanski, 550 F.3d at 633.
However, courts “are not obliged to accept as true legal conclusions or unsupported conclusions
of fact.” Hickey v. O’Bannon, 287 F.3d 656, 658 (7th Cir. 2002).
The complaint must contain a “short and plain statement of the claim showing that the
pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). In Bell Atlantic Corp. v. Twombly, the
Supreme Court explained that the complaint must allege facts that are “enough to raise a right to
relief above the speculative level.” 550 U.S. 544, 555 (2007). Although “detailed factual
allegations” are not required, mere “labels,” “conclusions,” or “formulaic recitation[s] of the
elements of a cause of action” are insufficient. Id.; see also Bissessur v. Ind. Univ. Bd. of Trs., 581
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F.3d 599, 603 (7th Cir. 2009) (“it is not enough to give a threadbare recitation of the elements of
a claim without factual support”). The allegations must “give the defendant fair notice of what the
. . . claim is and the grounds upon which it rests.” Twombly, 550 U.S. at 555. Stated differently,
the complaint must include “enough facts to state a claim to relief that is plausible on its face.”
Hecker v. Deere & Co., 556 F.3d 575, 580 (7th Cir. 2009) (citation and quotation marks omitted).
To be facially plausible, the complaint must allow “the court to draw the reasonable inference that
the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)
(citing Twombly, 550 U.S. at 556).
III. DISCUSSION
Lachel filed the instant Motion seeking dismissal pursuant to Rule 12(b)(6) or alternatively,
pursuant to Rule 56 for summary judgment. As an initial matter, the Court determines that it need
not consider the Motion under Rule 56 because, “[i]n deciding a Rule 12(b)(6) motion, the court
may consider documents attached to a complaint, such as contract documents, without converting
the motion into one for summary judgment. See Fed. R. Civ. P. 10(c).” Bible v. United Student
Aid Funds, Inc., 799 F.3d 633, 639–40 (7th Cir. 2015). While review under Rule 12(b)(6) is
limited to the complaint, courts consider documents attached to and incorporated in the complaint
as part of the complaint and will consider documents that are referred to in the complaint, which
are concededly authentic and central to the plaintiff’s claim. Santana v. Cook County Bd. of
Review, 679 F.3d 614, 619 (7th Cir. 2012); Reger Dev., LLC v. Nat’l City Bank, 592 F.3d 759, 764
(7th Cir. 2010). “As a general rule, we may take judicial notice of public records not attached to
the complaint in ruling on a motion to dismiss under Rule 12(b)(6).” Olson v. Champaign Cty.,
784 F.3d 1093, 1097 n.1 (7th Cir. 2015). The documents filed in connection with the Motion to
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Dismiss are public records and contract documents, which can be considered as part of the
Complaint, so the Court will decide Lachel’s Motion under Rule 12(b)(6).
In its Motion to Dismiss, Lachel asserts two arguments for the dismissal of this action.
First, Lachel argues that the applicable statute of limitations bars Generali’s claims. Second, it
argues that a waiver of subrogation among the contracting parties also bars the claims. The Court
will first address the statute of limitations argument and then turn to the waiver of subrogation
argument.
A.
Statute of Limitations
Liability for professional services related actions are defined in Indiana Code § 34-11-2-3,
specifically, that code provides:
An action of any kind for damages, whether brought in contract or tort, based upon
professional services rendered or which should have been rendered, may not be
brought, commenced, or maintained, in any of the courts of Indiana against
physicians, dentists, surgeons, hospitals, sanitariums, or others, unless the action is
filed within two (2) years from the date of the act, omission, or neglect complained
of.
Indiana Code § 34-11-2-3 provides: “(a) An action for: (1) injury to person or character; (2) injury
to personal property; or (3) a forfeiture of penalty given by statute; must be commenced within
two (2) years after the cause of action accrues.”
Lachel argues that, while Generali’s claims are labeled as contractual—breach of contract
and indemnification—the nature and substance of the claims are actually based on negligent acts
or omissions by Lachel in rendering professional services. The Complaint alleges that Lachel’s
acts or omissions in rendering consulting and design engineering services (i.e., professional
services) resulted in injury to the personal property of Generali’s subrogor, Walsh Vinci JV.
(Filing No. 1-1 at 3-5.) According to Lachel, the cause of action alleged by Generali is subject to
the two-year statute of limitations for professional services resulting in injury to personal property
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based on Indiana Code § 34-11-2-4. (Filing No. 6 at 14.) They cite to Shaum v. McClure, 902
N.E.2d 853, 856 (Ind. Ct. App. 2009) (holding that despite plaintiff’s styling of its claim, Indiana
Code § 34-11-2-4 applied because the claim was “a claim for professional malpractice”). Lachel
points out that in Indiana, “the nature or substance of the cause of action, rather than the form of
the action, determines the applicable statute of limitations,” King v. Terry, 805 N.E.2d 397, 400
(Ind. Ct. App. 2004), and thus, Generali cannot label its claims as contract claims to avoid the twoyear statute of limitations applicable to the allegations of negligence by Lachel in providing
professional services resulting in damage to personal property.
Lachel further argues that Generali previously argued that the two-year statute of
limitations statute of limitations in Indiana Code § 34-11-2-3 applied when it brought these same
claims as subrogee of WVB East End Partners in the Western District of Kentucky. On September
14, 2016, Generali filed a complaint in the Western District of Kentucky as the subrogee of WVB
East End Partners, asserting claims for breach of contract and negligence arising from the same
tunnel collapse incident and the same insurance payment exceeding $13 million that is at issue in
this case (Filing No. 13-1).
When facing a similar motion to dismiss in the Kentucky case, Generali argued,
The incident giving rise to this suit occurred on September 19, 2014. Am. Compl.
¶ 15. In accordance with Indiana Code § 34–11–2–3, Plaintiff filed its original
Complaint on September 14, 2016. In its Complaint, Plaintiff alleged breach of
contract and negligence related to the performance of Lachel’s professional
services. Am. Compl. ¶ 22, 28. As a result of the terms of WVJV and Lachel’s
contract, Indiana Code § 34–11–2–3 is the governing statute of limitation.
Therefore, Plaintiff’s claims are not barred by the applicable statute of limitations
under Indiana law.
(Filing No. 5-2 at 15–16.) Generali further argued in the Kentucky case, “According to the contract
between WVJV and Lachel, the choice of law governing this suit is Indiana, which has a two-year
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statute of limitations for negligence and contract claims. (Exhibit B, p. 4). Ind. Code Ann. § 3411-2-3 (West).” Id. at 5.
In this case, Lachel argues that, because Generali unequivocally asserted that Indiana Code
§ 34-11-2-3 applied to both its tort and contract claims, Generali should be held to this statute of
limitations in this case involving the same claims arising out of the same incident. Lachel asserts
that Generali’s position regarding the applicability of Indiana Code § 34-11-2-3 is consistent with
Allstate Ins. Co. v. Burgher, 2010 U.S. Dist. LEXIS 19192, at *7–8 (S.D. Ind. Mar. 2, 2010), where
the court held this statute of limitations applied to professional engineering services. The court
explained that “regardless of the type of property involved, all claims based on professional
malpractice are governed by the two-year statute of limitations.” Id.
Lachel asserts that, under either Indiana Code § 34-11-2-3 or § 34-11-2-4, a two-year
limitation period applies, and this case is barred because it was filed too late. The harm to
Generali’s subrogor, Walsh Vinci JV, accrued on September 19, 2014, when the tunnel collapse
incident occurred, and Walsh Vinci JV knew of the incident that day. As a subrogee, Generali
stands in the shoes of Walsh Vinci JV, 1 and thus, Generali’s claims accrued on September 19,
2014. Generali waited until August 10, 2017, more than ten months after the statute of limitations
had run, to file its Complaint. Therefore, Lachel asserts, Generali’s claims are time-barred, and
the Complaint must be dismissed.
Generali responds that its claims arise from a written contract wherein Lachel was hired to
design the structural support for the tunnel. Generali asserts that Lachel assumed a heightened
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“Subrogation has been defined as the substitution of one person in the place of another with reference to a lawful
claim, demand or right, so that he who is substituted succeeds to the rights of the other in relation to the debt or claim,
and its rights, remedies, or securities. . . . When an insurer claims a right through subrogation, it stands in the shoes of
the insured and takes no rights other than those which the insured had.” Farm Bureau Ins. Co. v. Allstate Ins. Co., 765
N.E.2d 651, 656 (Ind. Ct. App. 2002) (internal citations and quotation marks omitted).
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duty in its contract that extends beyond a duty of care. Because of Lachel’s deficient construction
procedures and failure to properly perform the engineering services it agreed to perform in the
contract, Generali filed a breach of contract claim against Lachel. Generali points out that breach
of contract claims are subject to a ten-year statute of limitations in Indiana, citing Indiana Code §
34-11-2-11. Because the incident occurred in 2014 and this lawsuit was filed in 2017, Generali
argues that it brought its claims before the ten-year period has expired.
Generali acknowledges that Indiana Code § 34-11-2-3 refers to actions brought against
professional service providers and does have a two-year statute of limitations. However, Generali
argues, such professional service providers are “defined in the statute to include physicians,
dentists, and other professionals of the medical field. The statute was clearly not meant to apply
to engineers but rather it must be narrowly construed so as to apply solely to medical practitioners
and other similarly situated professionals.” (Filing No. 12 at 11.) Generali argues that the Seventh
Circuit held in Lewis v. Methodist Hosp., Inc., 326 F.3d 851, 855–56 (7th Cir. 2003), that Indiana’s
two-year tort statute of limitations for professional malpractice claims should not be applied to
actions that arise in the context of a contract, and the Indiana Supreme Court has refused to collapse
all contract claims into tort.
Generali then argues that, assuming the two-year statute of limitations for professional
malpractice applies, it still timely filed its Complaint because the original action—the Kentucky
lawsuit filed on September 14, 2016—was filed within the two-year period after the tunnel collapse
incident occurred and before the statute of limitations expired. Generali asserts that Indiana’s
savings statute or “the Journey’s Account,” Indiana Code § 34-11-8-1, allows for an action to be
refiled or continued as long as it was dismissed for any cause other than negligence in the
prosecution of the action and as long as no judgment has been rendered. Generali argues the
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Journey’s Account statute allows for the continuation of the action when a plaintiff fails to obtain
a decision on the merits, and different arguments and precedent may be considered in the new suit.
Generali asserts the original suit filed in Kentucky was dismissed for being filed after Kentucky’s
one-year statute of limitations had expired, and thus, it was dismissed for reasons other than “on
the merits,” so Indiana’s Journey’s Account statute allows this action as a continuation of the
original Kentucky action.
The allegations in the Complaint and the parties’ contract reveals that the nature and
substance of Generali’s claims are based in tort law. The agreement required Lachel to perform its
professional engineering services in a manner consistent with the professional skill and care
ordinarily provided by members of the engineering profession practicing in the same locality
(Filing No. 1-1 at 8)—the failure to do so is the tort of professional negligence.
In its Complaint, Generali alleged that Lachel failed to provide adequate initial support
design and contingency plans for the tunnel, and Lachel’s inadequate initial support design and
contingency plans were the proximate cause of Walsh Vinci JV’s loss. Generali hired other
professional engineers to determine the cause of the tunnel collapse, and those professional
engineers opined that Lachel inadequately designed the initial support system. These allegations
sound in tort—providing professional services below the standards of ordinary professional skill
and care in the engineering field. The Complaint also alleges that Lachel was required to indemnify
Walsh Vinci JV for “property damage that may arise from the performance of the Services to the
extent caused by the negligent acts or omissions of [Lachel],” and Lachel breached this duty to
indemnify. Id. at 5–6. However, this claim for indemnity is explicitly based upon Lachel’s
negligence.
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The Complaint alleges that the contract required Lachel to perform consulting and design
engineering services for the project. The Complaint also alleges that Lachel did provide these
engineering services. The Complaint then alleges that the engineering services provided were
inadequate and caused damage. Thus, the allegations claim that Lachel provided the contractually
required engineering services but did so in a manner that fell below the professional standard. This
is a negligence claim.
The Seventh Circuit’s opinion in Lewis did not hold, as Generali seems to suggest, that the
two-year statute of limitations for professional negligence claims can never be applied in actions
involving a contract. Rather, the Lewis decision reaffirmed that the nature and substance of the
claim is what counts, and if the parties’ duties arise solely from a contract, then the claim should
be treated as a contract claim, and the longer statute of limitations will apply. Lewis, 326 F.3d at
855–56.
Generali argued, without citation to any legal authority, that Indiana Code § 34-11-2-3 is
limited to cases involving professional service providers in the medical field and does not apply to
engineers. The statute provides a two-year limitation period for an “action of any kind for
damages, whether brought in contract or tort, based upon professional services rendered . . . against
physicians, dentists, surgeons, hospitals, sanitariums, or others . . . .” Ind. Code § 34-11-2-3.
While one Indiana Supreme Court decision has limited the term “or others,” as used in the
statute, to “others of the medical care community,” Shideler v. Dwyer, 417 N.E.2d 281, 283 (Ind.
1981), numerous other decisions after the Shideler decision have applied a two-year limitation
period to professional negligence claims against other non-medical professionals such as
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surveyors, 2 real estate brokers, 3 insurance agents, 4 accountants, 5 and engineers. 6 Some of these
cases addressed the predecessor statute to Indiana Code § 34-11-2-4, which establishes a two-year
limitation period for claims of injury to personal property, while other cases addressed Indiana
Code § 34-11-2-3 (the professional services statute), but nonetheless, all of the cases noted the
professional negligence involved in the claims and that a two-year limitation period applied.
The Court concludes that a two-year limitation period is appropriate in this case involving
claims for injury to personal property arising from the provision of professional services. Indiana
Code § 34-11-2-3 set a two-year limitation for bringing an action in contract or tort based on
professional services rendered, and Indiana Code § 34-11-2-4 set a two-year limitation for bringing
an action for injury to personal property.
Lachel responded to Generali’s Journey’s Account argument, explaining that the savings
statute does not apply because the same plaintiff must bring the “original action” and the
“continuation action,” and the original action was brought by Generali as subrogee of WVB East
End Partners and this action was brought as subrogee of Walsh Vinci JV. Lachel points out that
Generali alleged in its Complaint that WVB East End Partners and Walsh Vinci JV are separate
entities (Filing No. 1-1 at 3). Walsh Vinci JV contracted with Lachel. WVB East End Partners
did not contract with Lachel. In the earlier Kentucky action, claims were brought by WVB East
End Partners’ subrogee, and in this action, claims were brought by Walsh Vinci JV’s subrogee.
“When an insurer claims a right through subrogation, it stands in the shoes of the insured and takes
no rights other than those which the insured had.” Farm Bureau Ins., 765 N.E.2d at 656. Lachel
2
Shaum, 902 N.E.2d at 856; Raquet v. Thompson, 693 N.E.2d 969 (Ind. Ct. App. 1998).
Lakeside, Inc. v. DeMetz, 621 N.E.2d 1149 (Ind. Ct. App. 1993); Craig v. ERA Mark Five Realtors, 509 N.E.2d 1144
(Ind. Ct. App. 1987).
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Butler v. Williams, 527 N.E.2d 231 (Ind. Ct. App. 1988).
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Davis v. Geo. S. Olive & Co., 731 F. Supp. 1380 (S.D. Ind. 1990).
6
Burgher, 2010 U.S. Dist. LEXIS 19192.
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concluded, “[b]ecause no timely cause of action was filed against Lachel asserting rights belonging
to Walsh Vinci JV, which are the subject of Generali’s Complaint in the instant action, the
Journey’s Account Statute has no application to Generali’s Complaint in this proceeding.” (Filing
No. 13 at 10.)
Lachel’s argument regarding the inapplicability of the Journey’s Account statute is welltaken. In the Kentucky case, claims were brought for injury to WVB East End Partners, and
damages were sought because of those injuries to WVB East End Partners. In this case, claims
were brought for injury to Walsh Vinci JV, and damages were sought because of those injuries to
Walsh Vinci JV. A subrogee stands in the shoes of the subrogor, and Generali acknowledged that
Walsh Vinci JV and WVB East End Partners are separate entities. In order for the Journey’s
Account statute to apply and “save” a late-filed action, the same plaintiff must bring an action that
is a continuation of the original, timely-filed action. See Cox v. Am. Aggregates Corp., 684 N.E.2d
193, 194–95 (Ind. 1997); Vesolowski v. Repay, 520 N.E.2d 433, 434–36 (Ind. 1988); Hawthorn v.
State, 57 Ind. 286, 286–87 (1877); Ware v. Waterman, 253 N.E.2d 708, 711–12, n. 2–3 (Ind. Ct.
App. 1969). Such is not the case here, and thus, the Journey’s Account statute does not apply to
save this late-filed action.
Because the Court has determined that a two-year limitation period applies in this case and
the Journey’s Account statute does not apply, this action must be dismissed as being untimely filed
because it was filed on August 10, 2017, and the claims accrued on September 19, 2014.
B.
Waiver of Subrogation
Lachel next argues that a waiver of subrogation among the contracting parties also bars the
claims brought in this action. The public-private agreement between Indiana Finance Authority
and WVB East End Partners that governed the project included the following waiver of
subrogation provision:
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IFA waives all rights against the Developer-Related Entities, and Developer waives
all rights against the Indemnified Parties, for any claims to the extent covered and
paid by insurance . . . . Developer shall require all Contractors to provide similar
waivers in writing each in favor of all other parties enumerated above.
(Filing No. 5-5 at 5–6.)
WVB East End Partners is the “Developer” under the agreement, and the “DeveloperRelated Entities” include:
(a) Developer, (b) Developer’s Equity Members, (c) Contractors (including
Suppliers), (d) any other Persons (except IFA and the Department) performing any
of the Work, (e) any other Persons except IFA and the Department) for whom
Developer may be legally or contractually responsible, and (f) the employees,
agents, officers, directors, representatives, consultants, successors and assign of any
of the foregoing.
Id. at 9. The agreement defines “Contractor” as:
[A]ny Person with whom Developer has entered into any Contract to perform any
part of the Work or provide any materials, equipment, hardware or supplies for any
part of the Work, on behalf of Developer, and any other Person with whom any
Contractor has further subcontracted any part of the Work, at all tiers.
Id. at 8. The agreement defines “Work” as, “the work required to be furnished and provided by
Developer under the PPA Documents, including all administrative, design, engineering, real
property acquisition and occupant relocation, construction . . . .” Id. at 10.
After WVB East End Partners executed the public-private agreement, WVB East End
Partners contracted with Walsh Vinci JV to perform the design and construction work for the
project (Filing No. 12 at 3–4), and then Walsh Vinci JV contracted with Lachel to perform
consulting and design engineering services for the project. Id. at 5. By virtue of these contracts,
Walsh Vinci JV and Lachel became “Contractors” and “Developer-Related Entities” under the
public-private agreement, and that agreement waived subrogation rights and required all
Contractors to similarly waive subrogation rights.
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Lachel asserts that the services agreement between it and Walsh Vinci JV incorporated as
contract documents the design-build contract between WVB East End Partners and Walsh Vinci
JV as well as the public-private agreement between Indiana Finance Authority and WVB East End
Partners, thereby making the provisions of those contracts part of Lachel’s contract with Walsh
Vinci JV, including the waiver of subrogation rights (Filing No. 1-1 at 19).
Lachel further asserts that the insurance policy issued by Generali to Walsh Vinci JV
provided waivers of subrogation, which made the insurance policy harmonious with the various
agreements governing the project. Lachel points to the policy provisions where Generali waived
subrogation rights: “Where rights of recourse and/or subrogation have been waived . . . , those
parties benefiting from such waiver or agreement shall be considered as Insured Parties for their
respective rights and interests for the purposes of the Insured Contract.” (Filing No. 5-4 at 13.)
“The Insurers hereby agree to waive all rights of subrogation which they may have or acquire
against any insured party . . . .” Id. at 14. Lachel argues it is an “Insured Party” that enjoys the
benefit of the subrogation waiver by virtue of Walsh Vinci JV’s—a named insured under the
policy—waiver of subrogation under the public-private agreement and the services agreement.
Lachel also points out the insurance policy’s “Indiana Finance Authority Endorsement,”
which provides, “Notwithstanding any other provision of this Policy, the following Endorsement
shall apply: . . . 3. Waivers of Subrogation[:] The Insurers of this Policy waive all and any right
of subrogation against the Insured subject to the Multiple Insured’s Clause under the General
Conditions of the Policy.” Id. at 37.
Lachel argues that mutual waivers of subrogation across all tiers of contracting parties are
a common allocation of risk in construction contracts, citing Bd. of Comm’rs v. Teton Corp., 30
N.E.3d 711, 715 (Ind. 2015) (explaining that subrogation waivers are common in the construction
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industry and serve to “remedy[] construction losses through insurance claims, not lawsuits”).
Lachel asserts that, based on the waivers of subrogation found in the project contracts and in the
insurance policy, Generali’s claims in this case are barred because they are claims of subrogation.
Generali responds that Walsh Vinci JV was not the “Developer” under the public-private
agreement, and thus, Walsh Vinci JV did not waive any rights under the public-private agreement.
Furthermore, Generali argues, the contract between Lachel and Walsh Vinci JV is the only contract
that governs the parties in this case, and that contract did not waive any rights and did not
incorporate the public-private agreement. Generali also asserts that the service agreement between
Lachel and Walsh Vinci JV required Lachel to provide its own liability insurance.
Generali also argues that Lachel is not an insured party in any capacity under the Generali
insurance policy issued to Walsh Vinci JV. The policy states who is an insured party: WVB East
End Partners and/or Walsh Investors LLC and/or VINCI Concessions SAS and/or Bilfinger Berger
PI International GmbH and/or Parent Groups and/or Sub-Groups and/or Subsidiaries of any tier;
Walsh Construction Company and/or Vinci Construction Grands Projects; the Indiana Finance
Authority; subcontractors of any tier, architects and/or consultants, design bureau and/or suppliers
and/or sub-suppliers, manufacturers and/or vendors of any tier but only to the extent that the
insured had by contract agreed to provide such party with the benefit of the insurance; other
lenders/finance parties; and any other party having an insurable interest to the extent that the
insured was required by contract to provide such insurance to such party (see Filing No. 5-4 at 6).
Because Lachel does not fall under any of the categories of an “insured” pursuant to the policy
language, Generali asserts, Lachel cannot be considered an “insured party” and is not protected by
any waiver of subrogation.
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Generali is incorrect in its assertion that the service agreement between Lachel and Walsh
Vinci JV did not incorporate the public-private agreement governing the project. In fact, the
contract did incorporate the public-private agreement as one of its contract documents (see Filing
No. 1-1 at 19). Additionally, the public-private agreement explicitly required all “Contractors” to
include waivers of subrogation in their contracts (see Filing No. 5-5 at 6), and Lachel and Walsh
Vinci JV both fell under the definition of “Contractor” in the public-private agreement. Generali’s
response ignored this fact. Thus, the provisions of the public-private agreement, including the
waiver of subrogation provision, applied to both Lachel and Walsh Vinci JV.
By virtue of this waiver of subrogation between Lachel and Walsh Vinci JV, the
subrogation provisions in Generali’s insurance policy also apply to Lachel. The policy states that
where rights of subrogation have been waived, the parties benefiting from such waiver are
considered an “Insured Party” for those rights, and Generali agreed to waive all rights of
subrogation against an “Insured Party.” (Filing No. 5-4 at 13, 14.) Because the “named insured,”
Walsh Vinci JV, waived its subrogation rights to benefit Lachel, Lachel became an “Insured Party”
for purposes of that waiver, and Generali agreed to waive all rights of subrogation against Lachel.
The Court concludes that the waivers of subrogation in the contract documents and in the
insurance policy protect both Lachel and Walsh Vinci JV. Generali’s claims against Lachel are
brought by Generali as the subrogee of Walsh Vinci JV. Because Walsh Vinci JV waived its rights
to subrogation, and Generali stands in the shoes of Walsh Vinci JV as its subrogee, the claims
asserted in this action are barred. This serves as an additional basis to grant Lachel’s Motion to
Dismiss. Because all claims are barred, filing an amended complaint would be futile.
Accordingly, the dismissal is with prejudice.
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IV.
CONCLUSION
For the foregoing reasons, the Court GRANTS Defendant Lachel & Associates, Inc.’s
Motion to Dismiss (Filing No. 5), and this action is DISMISSED with prejudice. Final judgment
will issue under separate order.
SO ORDERED.
Date: 2/19/2019
DISTRIBUTION:
Ryan M. Akers
DENENBERG TUFFLEY, PLLC
rakers@dt-law.com
Alyssa J. Endelman
DENENBERG TUFFLEY, PLLC
aendelman@dt-law.com
Geoffrey D. Farnham
DENENBERG TUFFLEY, PLLC
gfarnham@dt-law.com
Mark J. Sandlin
GOLDBERG SIMPSON LLC
msandlin@goldbergsimpson.com
Brian J. Vella
SMITH PATCHER MCWHORTER, PLC
bvella@smithpachter.com
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