Communications Unlimited Contracting Services, Inc. et al v. Broadband Infrastructure Connection, LLC et al
MEMORANDUM AND ORDER : IT IS HEREBY ORDERED that the motion (ECF 38 ) of Plaintiff Communications Unlimited to dismiss Mid-Continents counterclaim for indemnification is converted to a motion for summary judgment pursuant to Federal Rule of Civi l Procedure 12(d). IT IS FURTHER ORDERED that Communications Unlimited shall have up to and including June 10, 2017, to supplement its memorandum in support of the motion at issue and to submit any additional pertinent materials. Mid-Continent sh all have 28 days after the filing of the supplemental memorandum to respond to Communication Unlimiteds motion for summary judgment on Mid-Continents counterclaim for indemnification. Communications Unlimited shall have 14 days thereafter to file a reply.. Signed by District Judge Audrey G. Fleissig on 05/10/2017. (KCB)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
CONTRACTING SERVICES, INC.;
CHARTER OAK FIRE INSURANCE
COMPANY; and ST. PAUL FIRE &
MARINE INSURANCE COMPANY,
CONNECTION, LLC; and MIDCONTINENTAL CASUALTY
Case No. 4:16CV00516 AGF
MEMORANDUM AND ORDER
This diversity action seeking indemnification and equitable contribution is before
the Court on the motion of Plaintiff Communications Unlimited Contracting Services
(“Communications Unlimited”) to dismiss the counterclaim for indemnification filed by
Defendant Mid-Continent Casualty Company (“Mid-Continent”). For the reasons set
forth below, the Court will convert the motion to a motion for summary judgment
pursuant to Federal Rule of Civil Procedure 12(d).
In 2007, a company named Communications Unlimited entered into a Master
Contractor Agreement with Charter Communications, Inc. (“Charter”), under which
Communications Unlimited agreed to install cable services for Charter customers in
Missouri. ECF No. 1-5. In 2012, Communications Unlimited entered into a Master
Service Agreement with Defendant Broadband Infrastructure Connection, LLC
(“Broadband”), setting forth terms under which Broadband would perform cable
installation work assigned to it by Communications Unlimited. ECF No. 1-6. 1 The
Master Service Agreement contained an “Insurance” provision, requiring Broadband to
obtain Commercial General Liability Insurance, with coverage for a minimum amount of
$1 million per occurrence, as well as Umbrella Excess Insurance in the same amount.
The Master Service Agreement obligated Broadband to name Communications Unlimited
as an additional insured party under Broadband’s policies. Id. at 21-22. Broadband
obtained such insurance, with Mid-Continent as the insurer.
The Master Service Agreement between Communications Unlimited and
Broadband also contained an “Indemnification” provision pursuant to which Broadband
agreed to indemnify Communications Unlimited for any claims and liabilities arising out
of, as relevant here, wrongdoing on the part of any Broadband employee. Id. at 28-29.
Communications Unlimited itself was insured under a Commercial General
Liability Policy issued by Plaintiff Charter Oak Fire Insurance Company (“Charter
Oak”), and an Umbrella Excess Liability Policy issued by Plaintiff St. Paul Fire &
The Master Contractor Agreement was between Charter and a company named
“Communications Unlimited, Inc.” The Master Service Agreement was between
Broadband and a company named “CU Employment, Inc.” For purposes of the motion
before the Court, the Court will treat the presumably related companies as
Marine Insurance Company (“St. Paul”).
On September 23, 2014, Jane Doe filed an action in Missouri state court for
damages against Charter; Broadband; Communications Unlimited; and James Helderle, a
cable technician. See ECF No. 39-2 at 21. Doe alleged in her first amended petition that
the three corporate defendants were joint employers of Helderle, in that they each had the
right to control hiring, supervising, and firing him. ECF No. 1-7. Doe alleged that
Helderle came into contact with her “through his employment and/or agency and/or
affiliation with” the three corporate defendants. She alleged that he entered her
apartment on December 2, 2012, to perform technical cable services, and acted
inappropriately. Helderle was fired on December 4, 2012, based on Doe reporting his
inappropriate behavior, and was told the reason for his termination. The next night he
forced his way into Doe’s apartment and sexually assaulted her. Doe asserted claims of
negligent hiring, negligent supervision, and negligent failure to warn against each of the
three corporate defendants, and a battery claim against Helderle. Id.
Plaintiffs in the present case made a demand upon Mid-Continent to defend and
indemnify Communications Unlimited in the Doe action, but Mid-Continent denied the
request. Communications Unlimited alleges that on January 20, 2016, the three Plaintiffs
in the present case paid a confidential sum in settlement of Doe’s claims against
Communications Unlimited. Communications Unlimited now seeks indemnification
from Broadband (Count I), under the Master Service Agreement, for the full amount of
the Doe settlement plus expenses and costs incurred in that action; and for the same
amount from Mid-Continent (Count II) for breach of the Broadband insurance policies
naming Communications Unlimited as an additional insured. Charter Oak and St. Paul
seek equitable contribution against Mid-Continent (Count III).
Mid-Continent filed a Counterclaim against Communications Unlimited in which
it states that (on or about January 3, 2017) Mid-Continent settled Doe’s claims against
Broadband, its insured, for a confidential amount. EFC. No. 36. Mid-Continent further
states that Broadband assigned Broadband’s rights against Communications Unlimited to
Mid-Continent, with respect to the amount paid to settle Doe’s claims against Broadband.
Mid-Continent alleges that Communications Unlimited was the corporate party that was
solely responsible for, and at fault in, hiring and supervising Helderle, in that
Communications Unlimited “completely dominated all operations of Broadband . . .
includ[ing] complete control regarding hiring, training, supervision, disciple and firing of
employees.” More specifically, Mid-Continent alleges that “[i]t was employees or
officers of [Communications Unlimited] who hired Helderle and were responsible for his
training, job assignment and supervision.” Id. at 5-6. Mid-Continent claims that, as such,
Communications Unlimited is liable to Mid-Continent for contribution or indemnity for
the amount Mid-Continent paid to settle Doe’s claims against Broadband.
ARGUMENTS OF THE PARTIES
In support of its motion to dismiss Mid-Continent’s counterclaim,
Communications Unlimited argues that Mid-Continent’s claims for contribution or
noncontractual indemnity are barred pursuant to Mo. Rev. Stat. § 537.060, by virtue of
Communications Unlimited’s settlement of Doe’s claim against it. Section 537.060
provides as follows:
When an agreement by release . . . is given in good faith to one of two or
more persons liable in tort for the same injury or wrongful death, such
agreement shall not discharge any of the other tort-feasors for the damage
unless the terms of the agreement so provide; however such agreement
shall reduce the claim by the stipulated amount of the agreement, or in the
amount of consideration paid, whichever is greater. The agreement shall
discharge the tort-feasor to whom it is given from all liability for
contribution or noncontractual indemnity to any other tort-feasor. The term
“noncontractual indemnity” as used in this section refers to indemnity
between joint tort-feasors culpably negligent, having no legal relationship
to each other and does not include indemnity which comes about by reason
of contract, or by reason of vicarious liability.
Communications Unlimited submits with its motion to dismiss, a copy of the
January 28, 2016 voluntary dismissal with prejudice of Doe’s claims against Charter and
Communications Unlimited in the state case. ECF No. 39-1. Communications
Unlimited also submits a copy of the docket sheet in the Doe case, that shows that on
December 22, 2016, Doe filed a notice of her dismissal with prejudice of the case against
Broadband, which was granted by the court on January 3, 2017. ECF No. 39-2.
According to the docket sheet, the order of dismissal stated that the case “remained set
for 1-6-17 to show cause why the cause of action against James Helderle should not be
dismissed for failure to prosecute.” Id. The next day Doe dismissed her claim against
Mid-Continent responds that the motion to dismiss its counterclaim should be
denied on both procedural and substantive grounds. Procedurally, Mid-Continent argues
that the motion must be converted to one for summary judgment under Federal Rule of
Civil Procedure 12(d) because the motion relies on the settlement agreement between
Doe and Charter and Communications Unlimited, and whether it was entered into in good
faith, matters outside the pleadings. Relatedly, Mid-Continent argues that § 537.060 is an
affirmative defense on which Communications Unlimited has the burden of proving the
existence of a settlement agreement, and its good faith, a burden Communications
Unlimited has not met.
Substantively, Mid-Continent argues that § 537.060 is not applicable here because
that statutory provision addresses liability among two or more parties whose concurrent
or successive actions proximately cause a single injury, whereas Mid-Continent’s
counterclaim is based on an allegation that Communications Unlimited – through its own
negligence and legal domination of Broadband (Mid-Continent’s insured) – is solely
responsible for the injury at issue. Mid-Continent requests that at the least, the
counterclaim should not be dismissed until discovery can be completed into this
allegation. Mid-Continent further states that it “anticipates that this discovery may reveal
contracts demanding indemnity and/or facts establishing vicarious liability, which would
preclude [Communications Unlimited’s] claimed affirmative defense under Section
537.060 and will further establish [Communications Unlimited’s] liability to MidContinent, regardless of any settlements of Jane Doe’s underlying claims.” ECF No. 40
In reply, Communications Unlimited submits a copy of a protective order entered
by the state court in the Doe case on June 22, 2016, protecting the confidentiality of “the
settlement releases” between Doe and Charter and Communications Unlimited, pursuant
to which a copy of the settlement agreement was produced to Broadband.
Communications Unlimited maintains that the Court can take judicial notice of the state
court documents Communications Unlimited has submitted, and that there is sufficient
support in the record to grant Communications Unlimited’s motion to dismiss.
Communications Unlimited offers to produce the settlement agreement between it and
Doe to the Court for in camera review, should the Court so request. Communications
Unlimited asserts that the remaining discovery identified by Mid-Continent has no
bearing on Communication Unlimited’s discharge from liability for contribution of
The parties are in agreement that Missouri substantive law governs this diversity
action. This Court must predict how the Missouri Supreme Court would rule on
substantive issues, and follow decisions of the state’s intermediate courts when they are
the best evidence of state law. See Walker v. Hartford Life & Accident Ins. Co., 831 F.3d
968, 973 (8th Cir. 2016) (citation omitted). The Missouri Supreme Court has explained
that the policy behind the relevant portion of § 537.060 is to encourage settlements by
allowing an alleged a tort-feasor to “buy peace by good faith settlement with the
claimant,” and that the “advantages of promoting settlement outweigh the possible
disadvantage to those who settle late, or who do not settle at all and stand trial.” Lowe v.
Norfolk & W. Ry. Co., 753 S.W.2d 891, 894-95 (Mo. 1988). The statute reaffirmed the
common law rule that a defendant in a tort action who reaches a good-faith settlement
with the plaintiff is protected from contribution and indemnity claims asserted by other
defendants. Id. The term “good faith” as used in § 537.060 refers to “the good faith in
which the release is given by the claimant,” and does not contemplate “delving into the
intent of a joint tort-feasor who settles, even though the intent may be to avoid
contribution.” State ex rel. Sharma v. Meyers, 803 S.W.2d 65, 67-68 (Mo. Ct. App.
Communications Unlimited’s motion to dismiss could perhaps be granted based
on the record before the Court, including the state court documents Communications
Unlimited submitted. The Court takes judicial notice of these state court documents.
See, e.g., Levy v. Ohl, 477 F.3d 988, 991 (8th Cir. 2007). Communications Unlimited has
offered strong argument that suggest that the Missouri Supreme Court would hold that
Mid-Continent’s counterclaim for contribution or indemnity is barred by § 537.060.
And Mid-Continent’s argument that § 537.060 is not applicable here because MidContinent’s claim for indemnification is based on Mid-Continent’s allegation that
Communications Unlimited was totally at fault appears to undermine the purpose of the
statute to encourage settlements.
However, in an abundance of caution, the Court will convert the motion to one for
summary judgment, and, pursuant to Rule 12(d) give the parties “a reasonable
opportunity to present all the material that is pertinent to the motion.” Fed. R. Civ. P.
12(d). Although Mid-Continent argues that discovery may reveal contracts of indemnity
or facts establishing vicarious liability, Mid-Continent has had ample time for discovery
on these issues. The Case Management Order was entered on January 24, 2017, and the
motion to dismiss now under consideration has been pending for almost three months.
IT IS HEREBY ORDERED that the motion (ECF 38) of Plaintiff
Communications Unlimited to dismiss Mid-Continent’s counterclaim for indemnification
is converted to a motion for summary judgment pursuant to Federal Rule of Civil
IT IS FURTHER ORDERED that Communications Unlimited shall have up to
and including June 10, 2017, to supplement its memorandum in support of the motion at
issue and to submit any additional pertinent materials. Mid-Continent shall have 28 days
after the filing of the supplemental memorandum to respond to Communication
Unlimited’s motion for summary judgment on Mid-Continent’s counterclaim for
indemnification. Communications Unlimited shall have 14 days thereafter to file a reply.
AUDREY G. FLEISSIG
UNITED STATES DISTRICT JUDGE
Dated this 10th day of May, 2017.
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