WalMart Stores, Inc. v. Adena Corporation of Mansfield, OH
Filing
121
MEMORANDUM OPINION & ORDER: 1) Third Party Defendant Bray Arnsperger Excavating's Partial Motion to Dismiss 81 is granted in part and denied in part; 2) Bray's motion to dismiss Count 1 (Indemnity) is denied; 3) Bray 39;s motion to dismiss Count 11 (Contribution and Apportionment) is granted and Count II is dismissed; 4) Bray's motion to dismiss Count III (Breach of Contract) is granted and Count III is dismissed. Signed by Judge David L. Bunning on 10/6/2016.(TJZ)cc: COR
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF KENTUCKY
NORTHERN DIVISION
AT COVINGTON
CIVIL ACTION NO. 14-161-DLB-CJS
WAL-MART STORES, INC.
v.
PLAINTIFF
MEMORANDUM OPINION AND ORDER
ADENA CORP. OF MANSFIELD, OHIO
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DEFENDANT
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This matter is before the Court upon Third-Party Defendant Bray Arnsperger
Excavating, Inc.’s (“Bray”) Motion to Dismiss (Doc. # 81) Defendant/Third-Party Plaintiff
Adena Corp. Of Mansfield, Ohio’s (“Adena”) Third-Party Complaint (Doc. # 63). In its
Complaint, Adena alleges claims for contractual and/or common-law indemnity and/or
contribution, apportionment and contribution, and breach of contract. Bray argues that
Adena’s contribution claims should be dismissed because they are no longer recognized
under Kentucky law, and the contractual indemnity and breach of contract claims should
be dismissed because a contract was never formed between Adena and Bray.
I.
FACTUAL AND PROCEDURAL BACKGROUND
Given the present procedural context, the factual summary that follows is construed
in Adena’s favor. See Crugher v. Prelesnik, 761 F.3d 610, 614 (6th Cir. 2014) (internal
citations omitted). On May 29, 2007, Wal-Mart Stores, Inc. (“Wal-Mart”) entered into a
construction contract with Adena for the expansion of a Wal-Mart store in Alexandria,
Kentucky. (Doc. # 1 at ¶ 7). Adena was responsible for constructing, designing, and
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completing utility lines and/or utility trenches and/or backfilling or compacting or recompacting the area behind the store. Id. at ¶ 8. After Adena’s work was complete, WalMart noticed cracks, distress, and fractures in the pavement around the work area. Id. at
¶ 9. Wal-Mart filed a complaint in federal court, asserting claims against Adena for breach
of contract, negligence, breach of standard of care, breach of express warranties, and
breach of implied warranties. Id.
On January 5, 2015, Westfield Insurance Company (“Westfield”) intervened as a
defendant and cross-claimant in this action based on insurance policies it issued to Adena
covering the period from January 1, 2007 to January 1, 2009. (Doc. # 24 at ¶ 11).
Westfield seeks a declaration that its insurance policies do not provide coverage to Adena
for the underlying litigation, and that it owes no duties of a continued defense or indemnity
to Adena relative to the underlying litigation. Id. at ¶¶ 46-47.
On January 8, 2016, Wal-Mart filed an amended complaint, adding Ohio Farmers
Insurance Company (“Ohio Farmers”) as a defendant. (Doc. # 48). Ohio Farmers issued
performance and payment bonds on behalf of Adena, naming Wal-Mart as the
Owner/Obligee, on or about May 29, 2007. Id. at ¶¶ 8-9. Wal-Mart’s amended complaint
includes a breach of contract claim against Ohio Farmers for failure to fulfill its obligations
under the terms of the Performance Bond. Id. at ¶¶ 16-18.
Several additional parties were joined on February 17, 2016, when Adena filed a
third-party complaint naming Bray, Performance Site Company, LLC, Moraine Materials
Company, J.A. Fielden Company, Inc. (“J.A. Fielden”), and R.M.P. Concrete, Inc. as
defendants. (Doc. # 63). Adena brought claims against the third-party defendants for
contractual and/or common-law indemnity and/or contribution, apportionment and
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contribution, and breach of contract. Id. Performance Site Company, Moraine Materials,
and R.M.P. Concrete had each contracted with Adena to perform work on the Wal-Mart
expansion. Id. at 5. Wal-Mart had hired J.A. Fielden in 2006, prior to contracting with
Adena for the expansion work. (Doc. # 89, p. 2). J.A. Fielden was responsible for repairing
a slope failure and preparing the site for expansion. Id. J.A. Fielden subcontracted with
Bray to perform this work for Wal-Mart. Id.
Bray has filed a Motion to Dismiss with respect to certain claims in Adena’s ThirdParty Complaint. (Doc. # 81). Specifically, Bray argues that Adena’s contractual indemnity,
contribution, and breach of contract claims brought against Bray should be dismissed for
failure to state a claim upon which relief can be granted. Id. That motion is ripe for
decision (See Docs. # 89 & 98).
II.
ANALYSIS
A.
Applicable Law
Federal courts sitting in diversity apply federal procedural law. Hanna v .Plumer, 380
U.S. 460, 465 (1965). The substantive law of the forum state governs the claims asserted.
Erie R. Co. v. Tompkins, 304 U.S. 64 (1938); Moore v. Coffey, 992 F.2d 1439 (6th Cir.
1993); Gafford v. Gen. Elec. Co., 997 F.2d 150, 165 (6th Cir. 1993). Accordingly, the Court
will evaluate the instant Motion in accordance with the Federal Rules of Civil Procedure and
apply Kentucky law to Adena’s claims.
B.
Standard of Review
To survive a Rule 12(b)(6) motion to dismiss, “a complaint must contain sufficient
factual matter, accepted as true to state a claim to relief that is plausible on its face.”
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Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). The plausibility standard is met when the facts
in the complaint allow “the court to draw the reasonable inference that the defendant is
liable for the misconduct alleged.” Id. A complaint need not contain “detailed factual
allegations,” but must contain more than mere “labels and conclusions.” Id. Put another
way, the “[f]actual allegations must be enough to raise a right to relief above the speculative
level.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007).
C.
Contribution Claim
The right to contribution arises when two or more joint tort-feasors are guilty of
concurrent negligence of substantially the same character which converges to cause the
plaintiff’s damages. Degener v. Hall Contracting Corp., 27 S.W.3d 775, 778 (Ky. 2000).
Kentucky law provides for the allocation of fault and damages in tort actions as follows:
(1) In all tort actions . . . involving fault of more than one (1) party to the
action, including third-party defendants and persons who have been released
under subsection (4) of this section, the court, unless otherwise agreed by all
parties, shall instruct the jury to answer interrogatories or, if there is no jury,
shall make findings indicating:
(a) The amount of damages each claimant would be entitled to
recover if contributory fault is disregarded; and
(b) The percentage of the total fault of all the parties to each claim that
is allocated to each claimant, defendant, third-party defendant, and
person who has been released from liability under subsection (4) of
this section.
KRS § 411.182.
Pursuant to KRS § 411.182, fault in a tort action is automatically subject to
apportionment, “render[ing] a cross-claim for contribution . . . needless.” Sommerkamp v.
Linton, 114 S.W.3d 811, 817 (Ky. 2003). Because fault is automatically apportioned, each
defendant is liable only for the harm attributable to him. Consequently, a third-party
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defendant could not possibly be liable to another defendant for contribution damages. See
Kevin Tucker & Assoc., Inc. V. Scott & Ritter, Inc., 842 S.W.2d 873, 874 (Ky. Ct. App.
1992) (abrogated on other grounds). Thus, it is appropriate to dismiss contribution claims
against third-party defendants. See Sommerkamp, 114 S.W.3d at 817; see also Compton
v. City of Harrodsburg, Civil No. 5:12-CV-302, 2013 WL 5503195, *5 (E.D. Ky. Oct. 2,
2013).
In its third-party complaint, Adena brought claims for apportionment and contribution
against Bray. (Doc. # 63, ¶¶ 16-17). These claims are needless in light of KRS § 411.182.
Notwithstanding the dismissal of Adena’s third-party claim for apportionment, an
apportionment instruction may be warranted at trial, if Adena sets forth evidence at trial on
which a reasonable jury could find Bray at fault. See Owens Corning Fiberglass Corp. V.
Parrish, 58 S.W.3d 467, 471 n. 5 (Ky. 2001); Adam v. J.B. Hunt Transport, Inc., 130 F.3d
219, 229 (6th Cir. 1997).
Accordingly, Count Two of Adena’s complaint should be
dismissed.
D.
Contractual and Common-law Indemnity Claims
Kentucky recognizes both contractual and common-law indemnity. Contractual
indemnity exists when parties agree that in the event one is held liable, the other will pay
whatever damages result. On the other hand, common-law indemnity “is available to one
exposed to liability because of the wrongful act of another with whom he/she is not in pari
delicto.” Degener, 27 S.W.3d at 780. An action for common-law indemnity arises “(1)
[w]here the party claiming indemnity has not been guilty of any fault, except technically, or
constructively, as where an innocent master was held to respond for the tort of his servant
acting within the scope of his employment; or (2) where both parties have been in fault, but
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not in the same fault, towards the party injured, and the fault of the party from whom
indemnity is claimed was the primary and efficient cause of the injury.” Id. (quoting
Louisville R. Co. v. Louisville Taxicab & Transfer Co., 77 S.W.2d 36, 39 (Ky. 1934)).
Bray’s Motion to Dismiss acknowledges that Adena “correctly limit[s] its contractual
indemnity claims in Paragraph 15 of the Third-Party Complaint.” (Doc. # 81, p. 4, n. 2).
Nevertheless, Bray raises this claim in its Motion to Dismiss in hopes of “address[ing] the
lack of merit of such a claim against Bray to the extent that Adena explicitly or implicitly
intended to assert a contractual indemnity claim against Bray.” Id. The Court concurs with
Bray’s initial acknowledgment, that Count One appears to be limited to common-law
indemnity with respect to Bray. (See Doc. # 63 at ¶ 15). Adena’s Response further
clarifies that it “did not claim that it had a contract with Bray or that it was entitled to
contractual indemnity from Bray.” (Doc. # 89, p. 4). This statement, along with the limiting
paragraph in the third-party complaint, makes Adena’s intention clear: it does not raise a
contractual indemnity claim against Bray.
Bray does not seek dismissal of the common-law indemnity claim. Accordingly,
Count One should not be dismissed.
E.
Breach of Contract Claim
To establish a claim for breach of contract under Kentucky law, a plaintiff must show
(1) the existence of a contract, (2) breach of that contract, and (3) damages resulting from
that breach. Barnett v. Mercy Health Parttners-Lourdes, Inc., 233 S.W.3d 723, 727 (Ky.
Ct. App. 2007). Generally, even if all other elements are met, “a contract cannot be
enforced by a person who is not a party to it or in privity with it.” Presnell Const. Managers,
Inc. V. EH Const., LLC, 134 S.W.3d 575, 579 (Ky. 2004) (quoting 17A Am. Jur. 2d,
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Contracts § 425 (1991)). A non-party may enforce a contract only if he is a third-party
beneficiary. Sexton v. Taylor County, 692 S.W.2d 808, 810 (Ky. Ct. App. 1985). In order
to be a third-party beneficiary, “it must be proven that the contract in question was made
for the actual and direct benefit of the third party.” Id.
In this case, Adena does not claim to have formed a contract with Bray, nor does it
claim to be a third-party beneficiary of Bray’s contract with J.A. Fielden. (Doc. # 63).
Adena does allege that “Walmart, J.A. Fielden and Bray knew that the repairs to the slope
failure and preparation of the site for an expansion would be the foundation for additional
construction that was later performed by Adena.” (Doc. # 89, p. 2). If this statement
constitutes Adena’s implicit claim that it is a third-party beneficiary, it fails. The contract
between J.A. Fielden and Bray was made for Wal-Mart’s direct benefit, not Adena’s. Adena
has not alleged any facts that would show otherwise. Thus, Adena is not a third-party
beneficiary of the contract between J.A. Fielden and Bray.
It is unclear whether Adena intended to include Bray, specifically, in Count Three
of its third-party complaint. Count Three’s broad breach of contract claim appears to apply
to all third-party defendants, and it does not contain a paragraph limiting the claim to those
defendants with whom Adena had formed a contract, as was included in Count One. (Doc.
# 63). Thus, Count Three appears to apply to Bray. However, because Adena is not privy
to a contract with Bray, it cannot raise a breach of contract claim against Bray. Therefore,
Count Three’s breach of contract claim against Bray must be dismissed.
III.
CONCLUSION
Accordingly, for the reasons stated herein,
IT IS ORDERED as follows:
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(1)
Third-Party Defendant Bray Arnsperger Excavating, Inc.’s Partial Motion to
Dismiss (Doc. # 81) certain claims in Adena’s Third-Party Complaint (Doc. # 63) is granted
in part and denied in part;
(2)
Bray’s Motion to Dismiss Count I (Indemnity) is denied;
(3)
Bray’s Motion to Dismiss Count II (Contribution and Apportionment) is
granted and Count II is hereby dismissed; and
(4)
Bray’s Motion to Dismiss Count III (Breach of Contract) is granted and Count
III is hereby dismissed.
This 6th day of October, 2016.
K:\DATA\ORDERS\Cov14\14-161 MOO re Bray MTD.wpd
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