Tronox LLC v. Industrial Silosource, Inc. et al
Filing
57
MEMORANDUM OPINION re 56 Order on Motion for Leave to File, Order on Motion to Dismiss. Signed by Senior Judge Glen H. Davidson on 7/8/13. (rel)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF MISSISSIPPI
ABERDEEN DIVISION
PLAINTIFF
TRONOXLLC
CNIL ACTION NO. 1:12-CV-00237-GHD-DAS
v.
INDUSTRIAL SILOSOURCE, INC.;
TRAVELERS INDEMNITY COMPANY;
TRAVELERS INDEMNITY COMPANY OF AMERICA;
JOHN DOES 1-5; and ABC CORPORATIONS A-E
DEFENDANTS
MEMORANDUM OPINION DENYING DEFENDANT'S MOTION TO DISMISS AND
GRANTING PLAINTIFF'S MOTION TO JOIN ADDITIONAL PARTIES AND AMEND
FIRST AMENDED COMPLAINT
Presently before the Court is a motion to dismiss [11] filed by Defendant Industrial
Silosource, Inc., as well as a motion for leave to join additional parties and amend the first
amended complaint [45] filed by Plaintiff Tronox LLC. Upon due consideration, the Court finds
that the motion to dismiss [11] is not well taken and should be denied, and the motion for leave
[45] to join additional parties and amend the first amended complaint is well taken and should be
granted, for the reasons set forth herein.
A. Factual and Procedural Background
Industrial Silosource, Inc. ("ISS") is a West Virginia service-contracting company
specializing in engineering, maintenance, and repair services for the silo and bulk storage
industries. In April of 2005, ISS entered into a Master-Work Agreement for Construction or
Field Services ("MWA") with Kerr-McGee Chemical LLC, an international chemical
manufacturing company which subsequently changed its name to Tronox LLC ("Tronox").
Under the MWA, ISS agreed to perform certain work for Tronox at Tronox's titanium dioxide
manufacturing facility and sodium chlorate manufacturing facility located on the same site in
Hamilton, Mississippi.
The MWA contained a provision that required ISS to "indemnify,
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defend, and hold [Tronox] free and hannless from and against any and all liability, losses,
damages, [and] bodily injuries ... directly or indirectly arising out of or resulting from" ISS's
work under a Work Order "or from any operation or activity of [ISS] . . . in connection
therewith" or "any failure by [ISS] ... to comply with the requirements of [the MWA] or of the
Work Order, unless caused by [Tronox's] sole negligence." MWA [3-1] ~ 15(a).
In November of 2011, ISS and Tronox entered into a Work Order for the cleaning of a
salt silo located at Tronox's Hamilton facility. One of ISS's former employees, Dustin W. Poe,
sustained injuries while cleaning the silo. Poe sued Tronox and ISS et alii in the Circuit Court of
Wood County, West Virginia. In that suit, Poe alleges that Tronox and ISS are liable for Poe's
injuries due to Tronox' s alleged negligence in failing to provide a safe work environment and
ISS's alleged negligence in exposing Poe to the hazard. Poe subsequently sued Tronox in the
Circuit Court of Monroe County, Mississippi for the purpose ofpreserving Poe's right to proceed
against Tronox if the West Virginia court dismissed Tronox from that lawsuit based on lack of
personal jurisdiction. Although the Monroe County lawsuit was brought against Tronox and not
against ISS, Poe alleges liability on the part of Tronox due in part to ISS's alleged negligence.
The Monroe County case was subsequently removed to federal court, I and ISS filed cross-claims
against Tronox seeking a declaratory judgment that ISS does not have a duty to defend or
indemnify Tronox in the two lawsuits (the "Poe lawsuits").
On November 14, 2012, Tronox commenced this suit in this Court, seeking a declaratory
judgment that ISS and Travelers have a duty to defend Tronox in the Poe lawsuits, because "no
determination of liability has been made" and Poe's "[c]omplaints clearly allege that the acts
and/or omissions of ISS proximately caused Poe's alleged damages," PL's Am. Compi. [3]
1 The Monroe County case was removed to the United States District Court for the Northern District of
Mississippi and is styled Dustin Poe v. Tronox LLC, et al., Civil Action No. 1:12-CV-00241-MPM-DAS.
2
~
22-23, 25, despite ISS's "fail[ure] to procure proper and/or adequate insurance coverage in
violation of the requirements of the [MWA]," id.
~
26. Tronox additionally seeks a declaratory
judgment that "insurance coverage exists under one or both of [the insurance policies issued to
ISS] for any judgment, ... or other damages it incurs as a result [of the Poe lawsuits]." Id.
~
30.
Finally, Tronox asserts additional counts for breach of contract, promissory estoppel, fraudulent
misrepresentation and/or fraudulent concealment, negligent misrepresentation, negligence, and
breach of the duty of good faith and fair dealing.
Travelers filed an answer. ISS filed a motion to dismiss pursuant to Rule 12{b)(6) of the
Federal Rules of Civil Procedure; Tronox filed a response; ISS filed a reply; and Tronox filed a
surreply after seeking leave and being granted leave to do
SO.2
Tronox then filed a motion for
leave [45] to join additional parties and to amend the first amended complaint; ISS and Travelers
filed responses; and Tronox filed a reply.
B. Federal Rule ofCivil Procedure 12(b)(6) Motion to Dismiss Standard
Motions to dismiss pursuant to Rule 12(b)(6) ofthe Federal Rules of Civil Procedure "are
viewed with disfavor and are rarely granted." Kocurek v. Cuna Mut. Ins. Soc'y, 459 F. App'x
371, 373 (5th Cir. 2012) (citing Gregson v. Zurich Am. Ins. Co., 322 F.3d 883, 885 (5th Cir.
2003». "The ultimate question in a Rule 12(b)(6) motion is whether the complaint states a valid
claim when all well-pleaded facts are assumed true and are viewed in the light most favorable to
the plaintiff." Lone Star Fund V (U.S.), L.P. v. Barclays Bank PLC, 594 F.3d 383,387 (5th Cir.
2010) (citing In re Katrina Canal Breaches Litig., 495 F.3d 191, 205 (5th Cir. 2007».
2 In that motion, Tronox also requested that the Court consider ISS's motion to dismiss a motion for
summary judgment under Rule 56 of the Federal Rules of Civil Procedure. The Court denied this request, holding
that the motion to dismiss would be properly considered under the Rule 12 standard, as no matters outside the
pleadings were presented to the Court. See FED. R. CIV. P. 12(d) ("If, on a motion under Rule 12(b)(6) ..., matters
outside the pleadings are presented to and not excluded by the court, the motion must be treated as one for summary
judgment under Rule 56.").
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The complaint must allege "enough facts to state a claim to relief that is plausible on its
face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S. Ct. 1955, 167 L. Ed. 2d 929 (2007).
A claim is facially plausible when the pleaded factual content "allows the court to draw the
reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal,
556 U.S. 662,678, 129 S. Ct. 1937, 173 L. Ed. 2d 868 (2009) (citing Twombly, 550 U.S. at 556,
127 S. Ct. 1955). "[A] complaint need not pin plaintiff's claim for relief to a precise legal
theory. Rule 8(a)(2) of the Federal Rules of Civil Procedure generally requires only a plausible
'short and plain' statement of the plaintiffs claim, not an exposition of his legal argument."
Skinner v. Switzer, _
U.S.
131 S. Ct. 1289, 1296, 179 L. Ed. 2d 233 (2011). However,
"[t]hreadbare recitals of a cause of action, supported by mere conclusory statements, do not
suffice." Iqbal, 556 U.S. at 678, 129 S. Ct. 1937. In a Rule 12(b)(6) determination, the court
must not evaluate the likelihood of the claim's success, but instead ascertain whether the plaintiff
has stated a legally cognizable claim that is plausible. Lone Star Fund, 594 F.3d at 387 (citing
Iqbal, 556 U.S. 662, 129 S. Ct. 1937).
C. Analysis and Discussion
(1) ISS's Motion to Dismiss the Amended Complaint
ISS contends in its motion to dismiss that Tronox's amended complaint [3] fails to state a
claim upon which relief can be granted, because Tronox's claims are based on the indemnity
provision in the MWA, and that provision is invalid under Mississippi's anti-indemnity statute,
Mississippi Code § 31-5-41. ISS further contends that the contractual provision requiring ISS to
obtain and maintain appropriate insurance coverage is also invalid to the extent it attempts to
circumvent the anti-indemnity statute by requiring ISS to indemnify Tronox from Tronox's own
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negligence. Thus, ISS contends that Tronox has failed to state a legally cognizable claim that is
plausible in its amended complaint, and therefore contends that dismissal is appropriate.
Tronox maintains in its response to the motion to dismiss that the anti-indemnity statute
does not apply to any of its claims, as (1) Tronox does not seek declaratory relief based upon
indemnity for Tronox's own negligent acts or omissions, but based upon any negligence of ISS
and indemnity and/or damages relating to ISS's failure to comply with other requirements under
the MWA, including the obligation to purchase general and excess liability insurance coverage
and an "additional insured" endorsement for the operations at the Hamilton facility; and (2)
Tronox's claims for compensatory relief are based on ISS's alleged breach of its obligations
under the contract and associated Work Orders and do not stem from any alleged duties under
the indemnity provision or insurance provision of the MWA.
The parties agree that the MW A is a construction contract governed by Mississippi law,
and that certain indemnity provisions in construction contracts are void under Mississippi law as
against public policy. The issues before the Court at this juncture are (1) whether the indemnity
provision in the MWA is void under Mississippi's anti-indemnity statute; (2) whether the
insurance provision in the MWA is also at least to some extent void under Mississippi's antiindemnity statute; and (3) how the decision on those two issues impacts Tronox's amended
complaint.
Mississippi's anti-indemnity statute provides:
With respect to all public or private contracts or agreements, for
the construction, alteration, repair[,] or maintenance of buildings,
structures, highway bridges, viaducts, water, sewer[,] or gas
distribution systems, or other work dealing with construction, or
for any moving, demolition or excavation connected therewith,
every covenant, promise[,] and/or agreement contained therein to
indemnify or hold harmless another person from that person's own
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negligence is void as against public policy and wholly
unenforceable.
MISS. CODE ANN. § 31-5-41 (emphasis added). "Whether [an] indemnification agreement [is]
valid and applicable is a complicated question of law." Weyerhaeuser Co. v. Wells, 593 So. 2d
1010, 1013 (Miss. 1992). Under Mississippi law, "[c]lauses that limit liability are given strict
scrutiny ..." Pitts v. Watkins, 905 So. 2d 553 (Miss. 2005) (quoting Royer Homes ofMiss., Inc.
v. Chandeleur Homes, Inc., 857 So. 2d 748, 754 (Miss. 2003». "Th[e anti-indemnity] statute
blocks indemnity for one's own negligence." Ramsey v. Georgia-Pacific Corp., 597 F.2d 890,
894 (5th Cir. 1979) (quoting Crosby v. The Gen. Tire & Rubber Co., 543 F.2d 1128, 1130--1131
(5th Cir. 1976»; accord Family Dollar Stores ofMiss., Inc. v. Montgomery, 946 So. 2d 426,432
~
24 (Miss. Ct. App. 2006) ("[A]n express provision in a construction contract to indemnify a
party from its own negligence is not enforceable [under the statute].").
In the case sub judice, the subject indemnity provision in the MWA provides:
INDEMNITY. (a) [ISS] agrees to indemnify, defend, and hold
[Tronox] free and harmless from and against any and all
liability, losses, damages, bodily injuries (including sickness,
disease[,] and death), property damages, contamination or
adverse effects on the environment, fines, penalties, and
expenses directly or indirectly arising out of or resulting from
(i) the performance of the Work under a Work Order by [ISS]
or its subcontractors or from any operation or activity of [ISS]
or its subcontractors in connection therewith and (ii) any
failure by [ISS] or its subcontractors to comply with the
requirements of this Agreement or of the Work Order, unless
caused by [TronoxJ's sole negligence.
MWA ~ 15(a) (emphasis added).
The Fifth Circuit has found a similar provision void under Mississippi's anti-indemnity
statute. The indemnity provision at issue in that case, Certain London Market Insurance Co. v.
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Pennsylvania National Mutual Casualty Insurance Co., 269 F. Supp. 2d 722, 727 (N.D. Miss.
2003), stated as follows:
INDEMNITY: (a) Contractor agrees to indemnify, defend and hold
the Company free and harmless from and against any and all
losses, damages, bodily injuries ... fmes, penalties, and expenses
directly or indirectly arising out of or resulting from: (i) the
performance of the Work under a Work Order by Contractor or its
subcontractors or from any operation or activity of Contractor or
its subcontractors in connection therewith or (ii) any failure by
Contractor or its subcontractors to comply with the requirements of
this Agreement or of the Work Order.
See Certain London Market Ins. Cos. v. Penn. Nat 'I Mut. Cas. Ins. Co., 106 F. App'x 884, 885
86 (5th Cir. 2004) (per curiam) (affirming district court's decision that defendant was not
required to defend or indemnify plaintiff under insurance policy involved in case on the basis
that indemnity provision was void under Mississippi's anti-indemnity statute). Although the
indemnity provision in that case and the one in the case sub judice are similar, it is notable that
the indemnity provision in Certain London Market did not include the words "unless caused by
Company's sole negligence," as does the indemnity provision in this case.
In Certain London Market, the Fifth Circuit cited its Crosby opinion, which was decided
not long after the anti-indemnity statute was enacted. In Crosby, the Fifth Circuit upheld the
district court's decision that the indemnity provision in that case was void under the antiindemnity statute. 543 F.2d at 1131. The indemnity provision at issue in Crosby stated:
Seller (Vulcan) will indemnify, save harmless and defend buyer
(General Tire) from all liability for loss, damage or injury to
person (including employees or agents of the seller) or property in
any manner arising out of or incident to the performance of the
contract.
Id. at 1130. Again, that indemnity provision does not mirror the one at issue in this case, because
it does not include the "unless caused by Company's sole negligence" language.
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A review of district court decisions on this issue reveals a tendency to hold indemnity
provisions void under Mississippi law. But a closer examination reveals that there are nuances
distinguishing the indemnity provision in this case from those at issue in many of the district
court cases.
For instance, in Ellis v. Landings Associates, Limited, No. I :04CV120LG-RHW, 2006
WL 568706 (S.D. Miss. Mar. 7, 2006), Judge Guirola examined the following contractual
indemnity provision: "[The third-party defendant] agrees to hold harmless [the third-party
plaintiff] ... for any claims arising out of performance of this contract." Id. at *1. Judge
Guirola held that provision was void to the extent that the third-party plaintiff sought
indemnification for its own negligence, but that the provision was not void to the extent that the
third-party plaintiff sought indemnification for the third-party defendant's negligence. Id. at *4,
*5.
In American Cyanamid Co. v. Campbell Construction Co., 864 F. Supp. 480 (S.D. Miss.
1994), Judge Wingate was confronted with a similar indemnity provision as the one at issue in
this case (including the "sole negligence" language of our subject indemnity provision) and held
that that provision was not void under the anti-indemnity statute. In that case, the contract
provided that the defendant would indemnify the plaintiff against
any and all claims, losses, demands, causes of action[,] ... on
account of personal injuries . . . growing out of, incident to, or
resulting directly or indirectly from the performance by [the
defendant] hereunder, whether such loss, damage, injury[,] or
liability is contributed to by the negligence of [the plaintiff] ... or
from other causes whatsoever; except that [the defendant] shall
have no liability for damages or the costs incident thereto caused
by the sole negligence of [the plaintiff].
Id. at 581. Judge Wingate reasoned that if the anti-indemnity statute applied, "it would do so
only to bar recovery by [the plaintiff] for its own negligence." Id. at 584. In the case brought by
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the injured party to recover damages for alleged negligence, the court had ruled that the accident
and the injuries and damages were not caused by any negligence on the part of American
Cyanamid.
Id. at 582.
Thus, in the declaratory judgment action, the plaintiff, American
Cyanamid was not seeking recovery for its own negligence, but based upon the indemnification
provision in the contract between the plaintiff and the defendant. !d. Judge Wingate held that
"[s]o long as [the plaintiff] is not seeking to recover for its own negligence, the contract obligates
[the defendant] to indemnify [the plaintiff]. As such, this court holds that the thrust of this
agreement here falls outside the scope of § 31-5-41." Id. (citations omitted).
In the case sub judice, ISS contends that the anti-indemnity statute voids the indemnity
provision at issue, because the provision would require ISS to indemnify Tronox for Tronox's
negligence in addition to its own. The parties executed the MWA which includes the indemnity
provision at issue. The indemnity provision requires ISS to "indemnify, defend, and hold ...
free and harmless" Tronox "from and against any and all liability, ...damages ..., and expenses
directly or indirectly arising out of or resulting from" ISS's performance of work under a work
order or ISS's failures to comply with the requirements of the MWA-''Unless caused by
[Tronox]'s sole negligence." MWA
~
15(a). For this Court to hold, as ISS requests, that the
anti-indemnity statute voids the indemnity provision in the MWA, the Court would have to
determine that Tronox was negligent with respect to the claims in Poe's lawsuit, and that Tronox
seeks to be indemnified by ISS and Travelers for Tronox's own negligence.
The issue of
Tronox's alleged negligence in the Poe lawsuits is not before the undersigned, nor has the
undersigned been provided a copy of any decision rendered in the Poe lawsuits pertaining to
Tronox's alleged negligence.
Furthermore, the Court finds no allegations in the amended
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complaint [3] indicating that Tronox seeks indemnification for its own negligence. For these
reasons, the Court denies ISS's motion to dismiss [11] on this ground.
With respect to insurance, the insurance provision in the MW A provides as follows:
INSURANCE. At all times during the term of this Agreement,
[ISS] shall carry, at its own expense and with deductibles for its
sole account, adequate insurance with reputable companies
covering all work to be performed hereunder. . .. Any failure by
[ISS] to obtain and maintain such coverages ... shall constitute a
breach hereof and [ISS] shall be solely responsible fro any loss
suffered as a result of such deficiency in coverage.
It is expressly understood and agreed that the coverages required
represent [Tronox]' s minimum requirements and are not to be
construed to void or limit [ISS]'s indemnity obligations as
contained in this Agreement.
If any defense, indemnity[,] or insurance provision contained in
this Agreement conflicts with, is prohibited by[,] or violates public
policy under any federal, state[,] or other law determined to be
applicable ..., it is understood and agreed that [such] provisions
shall be deemed automatically amended, effective ab initio, in that
situation to the extent-but only to the extent-necessary to
conform with, not be prohibited by and avoid violating public
policy under such applicable law and so as to still accomplish as
nearly as possible the intention fo such provision as originally
written. The parties hereto declare it is their intention that the
defense, indemnity[,] and insurance provisions of this Agreement
to be binding and enforceable in any given situation arising
hereunder to the maximum extent permitted by the law applicable
in that situation.
MWA
~
16. The Fifth Circuit held in Crosby that insurance provisions within construction
agreements are not excepted from the reach of the anti-indemnity statute. 543 F.3d at 1131.
Based on the Crosby holding, a plaintiff cannot enforce an agreement by a defendant to provide
insurance coverage for indemnification for the plaintiffs own negligence, as the same are voided
under the anti-indemnity statute. Therefore, the parties to the contract cannot circumvent the
10
statute by agreeing to provide insurance coverage for indemnification that is itself voided by the
statute.
ISS maintains that to the extent that the MWA requires ISS to obtain insurance to
indemnify Tronox for its own negligence, the provision is void and unenforceable. The Court
agrees with this reasoning, but again, finds nothing to support that the insurance provision in the
MWA requires ISS to indemnify Tronox for Tronox's own negligence. Accordingly, the Court
denies ISS's motion to dismiss [11] on this ground, as well.
(2) Tronox's Motion for Leave to Join Additional Parties and to Amend First
Amended Complaint
Finally, Tronox has filed a motion for leave to join additional parties and to amend the
first amended complaint [45]. The Court notes that the motion was timely filed before the
Court's deadline in the Case Management Order on motions for joinder of parties or amendment
to the pleadings. See CMO [30] ~ 7(D).
With respect to joinder, Tronox requests that the Court allow it to join Tronox Inc. and
Tronox Worldwide as indispensable party plaintiffs under Rule 19, as disposing of the action in
the absence of Tronox Inc. and Tronox Worldwide may impede their ability to protect their
interest relating to the subject of the action. Tronox maintains that Tronox Inc. and Tronox
Worldwide are affiliates of Tronox LLC under the MWA and as such have an interest in this
declaratory judgment action. In the alternative, Tronox requests that the Court allow it to join
Tronox Inc. and Tronox Worldwide as permissive party plaintiffs pursuant to Rule 20, as their
claims arise out of the same transaction or occurrence as the claims currently at issue in this
matter and as such involve questions of law and fact common to Tronox's claims. With respect
to Tronox's request for leave to amend its first amended complaint, Tronox maintains that it
seeks to expand its claims and the factual support for its claims as a result of information
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obtained through the Poe lawsuits and through discovery in this case. ISS and Travelers oppose
the motion to amend.
The Court finds that the proposed amendment of the complaint to join these additional
party plaintiffs is proper under Rule 20, and that the amendment to supplement the claims
asserted is also proper under Rule 15. Rule 15 provides in pertinent part that "a party may
amend its pleading ... with the court's leave. The court should freely give leave when justice so
requires." FED. R. Crv. P. 15(a)(2). Determining whether under Rule 15(a) "justice requires"
leave to amend rests within the discretion of the district court. Daves v. Payless Cashways, Inc.,
661 F.2d 1022, 1024 (5th Cir. Unit A Nov. 1981). Rule 15(c) provides:
An amendment to a pleading relates back to the date of the original
pleading when:
(A) the law that provides the applicable statute of limitations
allows relation back;
(B) the amendment asserts a claim or defense that arose out of
the conduct, transaction, or occurrence set out--or
attempted to be set out--in the original pleading; or
(C) the amendment changes the party or the naming of the
party against whom a claim is asserted, if Rule 15(c)(l)(B)
is satisfied and if, within the period provided by Rule 4(m)
for serving the summons and complaint, the party to be
brought in by amendment:
(i)
received such notice of the action that it will not
be prejudiced in defending on the merits; and
(ii) knew or should have known that the action would
have been brought against it, but for a mistake concerning
the proper party's identity.
FED. R. Crv. P. 15(c). See Slaughter v. So. Talc Co., 949 F.2d 167, 173-75 (5th Cir. 1991)
(applying Rule 15(c) to situation where complaint amended to add plaintiff and stating that "the
linchpin is notice, and notice within the limitations period") (citation omitted); Williams v.
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United States, 405 F.2d 234, 235-39 (5th Cir. 1968) (holding that 1967 amended complaint
adding mother of injured child as party plaintiff related back to filing of original complaint in
1963).
The Court finds that Tronox's proposed amendment unquestionably arose out ofthe same
alleged injury as the original pleadings. ISS and Travelers also had notice of the amendment
within the limitations period. Tronox's initial participation in the lawsuit as a plaintiff gave ISS
and Travelers adequate notice of the possibility that they might have to defend against broader
claims by Tronox, and that Tronox Inc. and Tronox Worldwide might be joined as party
plaintiffs-particularly since both Tronox Inc. and Tronox Worldwide were also sued in the Poe
suits. Finally, ISS and Travelers will not be prejudiced by such an amendment, as they will have
adequate time to respond to the second amended complaint and defend themselves in this action.
The Court notes that permissive joinder of these additional party plaintiffs is proper under
Rule 20( a)( 1) because the plaintiffs all seek relief arising out of the same transaction, occurrence,
or series of transactions or occurrences, and any question of law or fact common to all plaintiffs
with respect to the claims at issue will arise in this action. For these reasons, the Court finds that
Tronox's motion for leave to join additional parties and to amend the first amended complaint
[45] should be granted.
D. Conclusion
In sum, the Court finds that ISS's motion to dismiss [11] shall be DENIED, and Tronox's
motion for leave to join additional parties and amend the first amended complaint [45] shall be
GRANTED.
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A separate order in accordance with this opinion shall issue this day.
THIS, the
~JulY,
PIJ
2013.
~~ ,J9~.a-
--~~~------------------
SENIOR JUDGE
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