Foley Company v. Mixing & Mass Transfer Technologies, LLC
ORDER granting 30 Defendant/Third Party Plaintiff M2T2's motion for leave to file sur-reply and denying 14 Third-Party Defendant HDR Engineering, Inc.'s Motion to Dismiss for Failure to State a Claim and finding as moot HDR's Motio n for More Definite Statement. M2T2's Amended Answer, Affirmative Defenses, and Counterclaims attached to its Suggestions in Opposition which provide a more definite statement is not deemed filed. M2T2 shall file the attachment as a separate document on or before March 23, 2012. Signed on 3/16/12 by Chief District Judge Fernando J. Gaitan, Jr. (Enss, Rhonda)
IN THE UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF MISSOURI
MIXING & MASS TRANSFER
TECHNOLOGIES, LLC, et. al.,
) No. 11-01080-CV-W-FJG
Currently pending before the Court is Third-Party Defendant HDR Engineering, Inc.’s
(“HDR”) Motion to Dismiss or, in the alternative, Motion For More Definite Statement and
Memorandum in Support (Doc. No. 14). Also pending before the Court is Defendant/ThirdParty Plaintiff Mixing & Mass Transfer Technologies, LLC’s (“M2T2") Motion for Leave to File
a Sur-Reply (Doc. No. 30).
On January 24, 2006, Foley Company and Unified Government of Wyandotte County,
Kansas City, Kansas (“UG”) entered into a contract (“Contract”), pursuant to which Foley
was to serve as the general contractor for a project known as the Kaw Point Wastewater
Treatment Plant Improvements Project I.D. 6176 (“Project”).1 The Contract required that
Foley complete all work specified by the Contract documents within three hundred sixty-five
(365) calendar days after the date established in the Notice to Proceed, unless the period
for completion was extended. Pursuant to the Contract, Foley was to pay liquidated
The facts contained herein are taken from the pleadings (Doc. No. 1, 9, 18, 18-1 & 30-1)
and are used solely for purposes of this order. The Court is not bound by the facts contained
herein. Defendants neither admit or deny the allegations contained herein.
damages of Two Thousand and 00/100 Dollars ($2,000.00) per day for each calendar day
thereafter. The Notice to Proceed was issued by UG on February 13, 2006. As such, the
date for completion of all work was established as February 12, 2007.
Foley’s scope of work under its Contract included Section 13180, Retrofitted
Oxygenation System (“Oxygenation System”), of the Specifications for the Project. Foley
entered into a subcontracting or purchase order agreement (“Purchase Order”) with Mixing
& Mass Transfer Technologies, LLC (“M2T2") with respect to the Oxygenation System. In
the Purchase Order, M2T2 agreed to pay liquidated damages to Foley if M2T2 did not meet
agreed upon dates in the delivery schedule and Foley had to pay liquidated damages to UG.
On June 4, 2010, by letter, UG advised Foley that the Project was completed on
February 1, 2010, which was the date on which Performance Testing on the Oxygenation
System was approved. According to the June 4, 2010 letter, there was a delay in completion
of 1,084 days, and at the daily liquidated damages rate of $2,000.00 per day, the amount
owed by Foley to UG on account of liquidated damages was Two Million One Hundred Sixty
Eight Thousand and 00/100 Dollars ($2,168,000.00). Pursuant to discussions between
Foley and UG aimed toward amicably resolving the issue of liquidated damages, UG agreed
to reduce the liquidated damages assessment to a period of 283 calendar days and an
amount of Five Hundred Sixty Six Thousand and 00/100 Dollars ($566,000.00). Foley and
UG executed a deductive change order to the Contract for Five Hundred Sixty Six Thousand
and 00/100 Dollars ($566,000.00).
Subsequently, on October 21, 2011, Foley filed the present action claiming that all
conditions precedent to Foley’s right to recovery from M2T2 have been met by Foley, or
have been waived, released, or excused by M2T2. In Defendant M2T2's Answer, M2T2 filed
a Counterclaim and a Third-Party Petition against HDR Engineering, Inc. HDR contracted
with UG to perform design engineering work for the Project. Specifically, HDR prepared
specifications for paint or protective coatings and aerators applied at the Plant. During the
course of HDR’s performance on the Project, problems arose which resulted in having to reapply paint and protective coating and adjusting aerators several times before proper
performance. This occurred before M2T2 could do its final performance testing of the
Oxygenation System. As a result, the Project was delayed.
Since Project delay is the foundation upon which Foley’s claim against M2T2 is
based, M2T2 submits that HDR, as the design engineer for the Project, bears responsibility
for any failures or deficiencies in its specifications that caused the delay for which Foley is
now seeking liquidated damages from M2T2. Accordingly, M2T2 submits, that should it be
compelled by this Court to pay Foley its demanded liquidated damages, it should be
permitted to discharge its obligation under equitable indemnity principles to HDR because
HDR is ultimately responsible.
HDR adamantly denies such and files the present Motion to Dismiss for failure to
allege sufficient facts to state a claim upon which relief can be granted (Doc. No. 14).
Alternatively, HDR moves the Court for an Order requiring M2T2 to make more definite and
certain the allegations set forth in the Third-Party Petition (Doc. No. 14). Finally, M2T2 files
its Motion for Leave to File a Sur-Reply to address an argument it claims was asserted by
HDR, for the first time, in HDR’s Reply Memorandum in Support of its Motion to Dismiss
(Doc. No. 30).
Motion for Leave to File Sur-Reply (Doc. No. 30)
As an initial matter, M2T2 files a Motion for Leave to File a Sur-Reply (Doc. No. 30).
M2T2 states that HDR argues, for the first time, in its Reply Memorandum in Support of its
Motion to Dismiss, that this Court should dismiss M2T2's equitable or non-contractual
indemnity claim against HDR because “M2T cannot demonstrate that any duties owed by
HDR on the Project were co-extensive and identical to the duties owed by M2T.” (Doc. No.
30). M2T2 attaches a proposed Sur-Reply with its Motion that addresses whether duties
owed by HDR on the Project were co-extensive and identical to M2T2 and also addresses
whether liquidated damages assessed against M2T2 could result in unjust enrichment of
HDR (Doc. No. 30-1). HDR counters that M2T2 should not be permitted to file its Sur-Reply
because the co-extensive and identical argument was raised in HDR’s Original
Memorandum in Support of its Motion to Dismiss. Specifically, HDR’s Original Memorandum
stated, M2T2 “has not even attempted to allege how the discharge of an obligation by M2T2
(the payment of liquidated damages to Foley) is identical to an obligation owed by HDR,
which is fatal to M2T2's claims.” (Doc. No. 33).
The Court finds that although HDR did put one (1) sentence regarding the coextensive and identical argument in its Original Memorandum in Support of its Motion to
Dismiss, in this case, this is insufficient for a determination that the argument was raised
prior to HDR’s Reply Memorandum. Furthermore, HDR’s argument that it would not be
unjustly enriched should M2T2 not be permitted to discharge its payment obligations, was
raised for the first time in HDR’s Reply Memorandum. As such, M2T2 has demonstrated
good cause to file a Sur-Reply. Accordingly, Defendant/Third Party Plaintiff M2T2's Motion
for Leave to File Sur-Reply (Doc. No. 30) is hereby GRANTED. The Sur-Reply attached to
M2T2's Motion shall be deemed filed.
Motion to Dismiss (Doc. No. 14)
Third-Party Defendant HDR submits its present Motion to Dismiss for failure to state
a claim upon which relief can be granted (Doc. No. 14). Specifically, HDR first states that
a tort or statutory duty must be found on the part of HDR in order for M2T2 to discharge its
duties to HDR under equitable indemnity. However, no such duty exists here to support
M2T2's claim. Second, HDR states that it did not have a contract with either Foley or M2T2.
HDR’s contract was with UG. As such, it is therefore not liable to Foley or M2T2 for
liquidated damages. Third, HDR states the obligation owed by M2T2 to Foley is not identical
to an obligation owed by HDR. Since identical obligations are required for equitable
indemnity, HDR is not liable to M2T2. Fourth HDR will not be unjustly enriched should M2T2
be compelled to pay Foley. Finally, in the event that this Court dismisses the Third-Party
Petition, M2T2 is not without a remedy. In defense to Foley’s claims, M2T2 could argue the
assessment of liquidated damages by UG was improper because the alleged delays were
actually caused by UG’s designer, HDR, and not M2T2. If M2T2 prevails on that argument,
it would have no liability to Foley. (Doc. No. 14 & 19).
Defendant/Third Party Plaintiff M2T2 responds by submitting several arguments.
First, there are three contexts under which a party may assert a claim for equitable
indemnity: (a) indemnitee discharges a duty ultimately owed by another; (b) tort duty; and
(c) statutory duty. M2T2's claim arises under the first premise that if M2T2 is compelled to
pay Foley liquidated damages stemming from Project delay, it would discharge a duty
ultimately owed by HDR. However, even assuming arguendo that HDR’s contentions
regarding equitable indemnity are correct, HDR’s preparation of deficient or incomplete
specifications for the Plant rises to a tort duty. Second, a contract is not required between
parties for discharging liability under equitable indemnity.
Third, HDR and M2T2's
obligations were identical. Both HDR and M2T2 had a duty to perform their work in a
manner that did not cause delay to the Project. Finally, HDR will be unjustly enriched should
M2T2 not be permitted to discharge its duties because HDR will have avoided having a
separate action filed against it. (Doc. No. 18 & 30-1).
Standard of Review
In ruling on a motion to dismiss, the Court must view the allegations in the Complaint
in the light most favorable to Plaintiff. Graham Constr. Serv., Inc. v. Hammer & Steel, Inc.,
No. 4:11CV1316 JCH, 2012 WL 685459, at *2 (E.D. Mo. March 2, 2012) citing Eckert v.
Titan Tire Corp., 514 F.3d 801, 806 (8th Cir. 2008). Additionally, the Court must accept the
allegations contained in the complaint as true and draw all reasonable inferences in favor
of the nonmoving party. Id. citing Coons v. Mineta, 410 f.3d 1036, 1039 (8th Cir. 2005). A
motion to dismiss must be granted, however, if the Complaint does not contain enough facts
to state a claim to relief that is plausible on its face. Id. citing Bell Atlantic Corp v. Twombly,
550 U.S. 544, 570 (2007). While a Complaint attacked by a Rule 12(b)(6) motion to dismiss
does not need detailed factual allegations, a plaintiff’s obligation to provide the grounds of
his entitlement to relief requires more than mere labels and conclusions, and a formulaic
recitation of the elements of a cause of action will not do. Id. Stated differently, to survive
a motion to dismiss the Complaint’s factual allegations, must be enough to raise a right to
relief above the speculative level. Id.
A Plaintiff seeks indemnity when it seeks to shift to the Defendant the responsibility
for damages the Plaintiff incurred by virtue of its liability to a third party. Am. Nat’l Prop. and
Cas. Co. v. Ensz and Jester, No. WD 73401, 2011 WL 5041204, at *5 (Mo.App. 2011). To
establish a claim for non-contractual indemnity, which is also referred to as common law
indemnity or equitable indemnity, the Plaintiff must show: (1) the discharge of an obligation
by the Plaintiff; (2) the obligation discharged by the Plaintiff is identical and co-extensive to
an obligation owed by the Defendant; and (3) the discharge of the obligation by the Plaintiff
is under such circumstances that the obligation should have been discharged by the
Defendant, and Defendant will be unjustly enriched if the Defendant does not reimburse the
Plaintiff to the extent that the Defendant’s liability has been discharged. Beeler v. Martin,
306 S.W.3d 108, 111 (Mo.App. 2010); See State ex rel. Manchester Ins. and Indem. Co. v.
Moss, 533 S.W.2d 772, 774-75 (Mo. 1975); See also State ex rel. Laclede Gas Co. v.
Godfrey, 468 S.W.2d 693, 698 (Mo.App. 1971). A party asserting equitable indemnity is not
asserting that a contractual right to indemnity exists; rather, such a party is asserting that,
given the special nature of the case’s circumstances, equity demands that one party
indemnify the other. Am. Nat’l Prop. and Cas. Co., 2011 WL 5041204, at *6.
In this case, M2T2 seeks equitable indemnity to shift to HDR the responsibility for
liquidated damages M2T2 incurred as a result of M2T2's Purchase Order with Foley and
subsequent Project delay. Simply stated, M2T2 seeks to discharge its obligation of payment
to HDR. Construing the facts in favor of M2T2 leads the Court to conclude that since the
ultimate cause of Project delay was likely due to the delays caused by HDR, the discharge
of the obligation by M2T2 is under such circumstances that the obligation should - in theory be discharged by HDR. This is especially the case since no contract is required between
M2T2 and HDR to survive a claim for equitable indemnity. Am. Nat’l Prop. and Cas. Co.,
2011 WL 5041204, at *6. If HDR does not reimburse M2T2 for liquidated damages owed
to Foley to the extent that HDR’s liability has been discharged, HDR will be unjustly enriched.
Id. at *4. As such, the first and third elements of the test articulated above for a finding of
equitable indemnity are satisfied.
Nonetheless, in this case, the second element of the test to satisfy a claim for
equitable indemnity requires a bit more inquiry. The Court must decide whether the
obligation sought to be discharged by M2T2 is identical and/or co-extensive to the obligation
owed by HDR. In Beeler, the Missouri Court of Appeals found that the obligation discharged
by the Plaintiff was identical to an obligation owed by the Defendant where the Plaintiff and
Defendant both personally guaranteed a business loan to a particular company. Beeler, 306
S.W.3d 108, 111. In Godfrey, the Court found an identical or co-extensive obligation existed
where liability arose for both parties based on one’s active negligence and the other’s
passive negligence. Godfrey, 468 S.W.2d 693, 698-700. Stated differently, the Court found
that where one party creates the condition which causes injury and the other does not join
therein, but is exposed to liability on account of it, identical obligations are imposed. Id. at
698. The Court particularly emphasized that the point of third party practice is to avoid two
actions which should be tried together to save the time and cost of reduplication of evidence
to obtain consistent results from identical or similar evidence and to accomplish ultimate
justice for all concerned with economy of litigation and without prejudice to the rights of
another. Id. Nonetheless, in Manchester, the Supreme Court of Missouri found that the
Plaintiff’s duties were not co-extensive with that of the Defendant’s duties. Manchester, 522
S.W.2d 772, 774-75. Specifically, the Court found that in the event of an accident, the duty
owed by an uninsured motorist insurer to its insured arising from its insurance contract is
separate and distinct from the duty owed from the other motorist involved in the accident to
the insured. Id. The Court emphasized that this distinction was made because the insurer
had a contract with its insured and played no part in the event which caused the injury. Id.
at 775; See City of St. Joseph v. Kaw Valley Tunneling, Inc., 660 S.W.2d 26, 31 (Mo.App.
The Court finds that the present action is most analogous to Godfrey and the goals
of equitable indemnity articulated therein. M2T2 and HDR have identical or co-extensive
obligations. The subject of this dispute is who ultimately caused Project delay and thus,
should be held responsible for liquidated damages. Whether a contract existed between
M2T2 and HDR is irrelevant. Once again, construing the facts in favor of M2T2, HDR
created the condition of having to re-apply paint or protective coating and adjusting aerators
several times during the Kaw Point Wastewater Treatment Plant Improvements Project I.D.
6176. This, ultimately, caused some Project delay for which M2T2 was exposed to liability.
To dismiss M2T2's Third-Party Petition, now, with the possibility of M2T2 bringing a later
claim against HDR seeking indemnity is not in the interest of judicial economy. As such,
Third-Party Defendant HDR Engineering, Inc.’s Motion to Dismiss (Doc. No. 14) is hereby
Motion for More Definite Statement (Doc. No. 14)
Alternatively, HDR moves the Court for an Order requiring M2T2 to make more
definite and certain the allegations set forth in the Third-Party Petition (Doc. No. 14). M2T2
attached an Amended Answer, Affirmative Defenses, and Counterclaims along with its
Suggestions in Opposition to HDR’s Motion to Dismiss (Doc. No. 18-1). It contains a more
definite statement. As such, HDR’s Motion for More Definite Statement (Doc. No. 14) is
hereby MOOT. However, M2T2's attachment shall not be deemed filed. M2T2 shall file the
attachment as a separate document on or before March 23, 2012.
Defendant/Third Party Plaintiff M2T2's Motion for Leave to File Sur-Reply (Doc. No.
30) is hereby GRANTED. The Sur-Reply attached to M2T2's Motion shall be deemed filed.
Third-Party Defendant HDR Engineering, Inc.’s Motion to Dismiss (Doc. No. 14) is hereby
DENIED. HDR’s Motion for More Definite Statement (Doc. No. 14) is hereby MOOT.
However, M2T2's Amended Answer, Affirmative Defenses, and Counterclaims attached to
its Suggestions in Opposition which provide a more definite statement shall not be deemed
filed. M2T2 shall file the attachment as a separate document on or before March 23, 2012.
IT IS SO ORDERED.
Date: March 16, 2012
Kansas City, Missouri
S/ FERNANDO J. GAITAN, JR.
Fernando J. Gaitan, Jr.
Chief United States District Judge
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