Reinke Manufacturing Co., Inc. v. Elecsys Corporation et al
Filing
114
MEMORANDUM AND ORDER that Hemisphere GNSS's Motion to Dismiss AgJunction's third claim for relief for equitable indemnity and contribution (Filing No. 99) is denied without prejudice to reassertion in a properly supported motion for summary judgment.Ordered by Senior Judge Richard G. Kopf. (CCB)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEBRASKA
REINKE MANUFACTURING CO.,
INC., a Nebraska Corporation,
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Plaintiff,
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v.
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ELECSYS CORPORATION and
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AGJUNCTION f/k/a HEMISPHERE, )
a/k/a AGJUNCTION INC. f/k/a
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HEMISPHERE GPS, INC., a/k/a
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AGJUNCTION LLC f/k/a
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HEMISPHERE GPS LLC,
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Defendants.
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AGJUNCTION f/k/a HEMISPHERE, )
a/k/a AGJUNCTION INC. f/k/a
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HEMISPHERE GPS, INC., a/k/a
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AGJUNCTION LLC f/k/a
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HEMISPHERE GPS LLC,
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Third-Party Plaintiff,
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v.
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HEMISPHERE GNSS (USA) INC., a )
Delaware corporation,
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Third-Party Defendant.
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4:16CV3115
MEMORANDUM
AND ORDER
Reinke Manufacturing Co., Inc., brings this action against Elecsys Corporation
and AgJunction generally alleging that AgJunction supplied defective global
positioning system (“GPS”) units to Elecsys, which placed the units in “Blue Box
Assemblies” and sold the assemblies to Reinke. Reinke then installed such assemblies
in its center-pivot irrigation systems. Reinke alleges that shortly after it began using
the Blue Box Assemblies, it began receiving customer complaints, and Reinke was
ultimately required to replace the defective products at the cost of $3,000,000. In turn,
AgJunction sues Hemisphere GNSS (USA) Inc., (“HGNSS”) for supplying the
defective GPS products to AgJunction that resulted in Reinke’s lawsuit against
AgJunction. As against HGNSS, AgJunction asserts claims for breach of contract,
contractual indemnity, and common-law indemnity or contribution. (Filing No. 95,
Amended Third-Party Complaint.) Contrary to HGNSS counsel’s statement that
AgJunction “does not specifically cite any allegations in the [Amended Third-Party
Complaint] that are pled in the alternative” (Filing No. 108 at CM/ECF p. 8),
AgJunction’s Amended Third-Party Complaint expressly alleges its equitable
indemnity and contribution claim “[a]lternatively.” (Filing No. 95 at CM/ECF p. 9.)
In what has resulted in 361 pages of briefing and evidence1 in support and
opposition, HGNSS moves to dismiss AgJunction’s claim for common-law or
equitable indemnity or contribution pursuant to Fed. R. Civ. P. 12(b)(6). (Filing No.
99.)
When confronted with a Rule 12(b)(6) motion, all the factual allegations
contained in the complaint are accepted as true, and the complaint is reviewed to
determine whether its allegations show that the pleader is entitled to relief. Bell
Atlantic Corp. v. Twombly, 550 U.S. 544, 556-57 (2007). If the complaint does not
state “enough facts to state a claim to relief that is plausible on its face,” it must be
dismissed for failure to state a claim. Id. at 570. The plaintiffs must state enough facts
1
The court has not relied on any of this evidence in reaching its decision. In any
event, on a motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(6), I may consider the
contracts upon which the Plaintiff’s and Third-Party Plaintiff’s claims rest because
they are “embraced by the pleadings” and not considered “matters outside the
pleadings” for purposes of Fed. R. Civ. P. 12(d). Gorog v. Best Buy Co., 760 F.3d
787, 791 (8th Cir. 2014).
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to “nudge[] their claims across the line from conceivable to plausible.” Id. “[A]
well-pleaded complaint may proceed even if it strikes a savvy judge that actual proof
of those facts is improbable, and that a recovery is very remote and unlikely.” Id. at
556 (internal quotation and citation omitted).
The basis for HGNSS’s Rule 12(b)(6) motion is that when parties have
expressly contracted regarding the duty to indemnify, “the independent doctrines of
equitable indemnity or contribution” are inapplicable. Therefore, HGNSS argues,
AgJunction’s claims for equitable indemnity and contribution must be dismissed
because the parties have a written agreement that defines HGNSS’s duty to indemnify
AgJunction. (Filing No. 99, Motion to Dismiss, at CM/ECF p. 2.)
There is a difference between pleading and actual recovery. While the state law
applicable to AgJunction’s claims against HGNSS might preclude simultaneous
recovery under both contractual and equitable theories of indemnity, the Federal Rules
of Civil Procedure2 explicitly provide that pleadings “may include relief in the
alternative” and allow parties to “set out 2 or more statements of a claim . . .
alternatively or hypothetically, either in a single count . . . or in separate ones” and
“state as many separate claims . . . as it has, regardless of consistency.” Fed. R. Civ.
P. 8(a) & (d) (Westlaw 2018). See Fastrich v. Cont’l Gen. Ins. Co., No. 8:16CV487,
2017 WL 3610535, at *8 (D. Neb. Aug. 21, 2017) (“the right to plead and argue in the
alternative is a matter of procedure and, as such, is governed by federal law”; denying
motion to dismiss quasi-contract claim when pled alternatively to express contract
claim (internal quotations and citations omitted)); J & J Sports Prods., Inc. v. Argueta,
224 F. Supp. 3d 700, 702 (W.D. Ark. 2016) (while plaintiff could recover under only
one of two mutually exclusive federal statutes, plaintiff was permitted to plead two
2
In suits based on diversity jurisdiction, federal courts apply federal law to
matters of procedure. Archer v. Pavement Specialist, Inc., 278 F.3d 845, 847 (8th Cir.
2002).
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alternative theories of liability under Fed. R. Civ. P. 8); Wines, Vines & Corks, LLC
v. First Nat’l of Nebraska, Inc., No. 8:14CV82, 2014 WL 12665802, at *4 (D. Neb.
Aug. 20, 2014) (“A plaintiff may plead alternative and inconsistent legal causes of
action arising out of the same facts.” (citing Fed. R. Civ. P. 8(d)(2) & 8(d)(3)));
Superior Edge, Inc. v. Monsanto Co., 44 F. Supp. 3d 890, 900 (D. Minn. 2014) (while
state law prevented recovery under both express contract and quasi-contract claims,
Fed. R. Civ. P. 8(a) and (d) allows parties to plead alternative theories of relief,
regardless of consistency; to recover under quasi-contract theory, plaintiff will need
to prove damages outside scope of contract, but “it is not required to do so at this
motion to dismiss stage”); Kehrer Bros. Constr., Inc. v. Intercoastal Roofing Sols.,
LLC, No. 3:13-CV-0085-JAJ, 2013 WL 11740243, at *2 (S.D. Iowa Dec. 19, 2013)
(unpublished) (denying motion to dismiss alternative theory of recovery, holding that
plaintiff was allowed to plead equitable theories in the alternative to express contract
claim because Fed. R. Civ. P. 8(d) “allows a plaintiff to plead alternative theories of
recovery even if they are inconsistent with each other”; emphasizing “there is an
important distinction between pleading and recovery”); Kinetic Co. v. Medtronic, Inc.,
672 F. Supp. 2d 933, 948 (D. Minn. 2009) (Fed. R. Civ. P. 8 allows plaintiff to plead
inconsistent facts in support of alternative theories of recovery; “At a later stage it
may be necessary for plaintiff to elect a theory, but at the pleading stage it is not.”
(citing Babcock & Wilcox Co. v. Parsons Corp., 430 F.2d 531, 536 (8th Cir. 1970))).
Resolution of a contractual indemnity claim hinges upon application of the
language of the indemnity agreement to the claim, including determining whether the
court must interpret the contractual indemnity language due to ambiguity, whether the
indemnity language is enforceable, and whether the claim and alleged damages fall
within the scope of the indemnity provision. Scott M. Seaman & Jason R. Schulze,
Allocation of Losses in Complex Insurance Coverage Claims § 16:4 (Dec. 2017
Update). These are not matters to be taken up at the pleading stage when parties are
entitled to cover their bases by pleading alternative theories of recovery under Fed. R.
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Civ. P. 8(a) and (d).3
Accordingly, HGNSS’s Motion to Dismiss pursuant to Fed. R. Civ. P. 12(b)(6)
(Filing No. 99) will be denied.
IT IS ORDERED that HGNSS’s Motion to Dismiss AgJunction’s third claim
for relief for equitable indemnity and contribution pursuant to Fed. R. Civ. P. 12(b)(6)
(Filing No. 99) is denied without prejudice to reassertion in a properly supported
motion for summary judgment.
DATED this 20th day of February, 2018.
BY THE COURT:
s/ Richard G. Kopf
Senior United States District Judge
3
HGNSS cites several cases in support of its argument that the existence of an
express indemnity agreement precludes a claim for implied indemnity and
contribution. (Filing No. 108 at CM/ECF p. 15.) However, out of the six United States
cases HGNSS cites for this proposition, five of them are distinguishable because they
did not involve motions to dismiss, but rather motions for summary judgment, an
appeal after a bench trial, and an appeal from what the court described as a “trial” on
depositions, documents, and trial briefs. As stated above, HGNSS may be correct that
the plaintiff can only recover under one theory (which would have been the issue in
the five cases at the motion for summary judgment and trial stages), but the issue here
is whether a claim under an express indemnity agreement can be pled alongside a
claim for equitable indemnity and contribution.
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