Farmers Insurance Exchange v. LG Electronics USA, Inc. et al

Filing 76

ORDER Granting Defendant LG's 49 Motion to Dismiss Best Buy Stores, LP's 44 Third-Party Complaint. Signed by Judge James C. Mahan on 2/8/2017. (Copies have been distributed pursuant to the NEF - SLD)

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UNITED STATES DISTRICT COURT

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DISTRICT OF NEVADA

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FARMERS INSURANCE EXCHANGE for
Itself and as subrogee of its insured
DOREEN FILOMENA,

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ORDER

Plaintiff(s),

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Case No. 2:15-CV-1389 JCM (VCF)

v.
LG ELECTRONICS USA, INC., et al.,

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Defendant(s).

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Presently before the court is third-party defendant LG Electronics USA, Inc.’s (“LG”)

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motion to dismiss third-party plaintiff Best Buy Stores, L.P.’s (“Best Buy”) third-party complaint.

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(ECF No. 49). Best Buy filed a response (ECF No. 52), to which LG replied (ECF No. 65).

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I.

Facts

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The instant dispute arises from a home fire allegedly caused by a dryer manufactured by

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LG and sold by Best Buy. Plaintiff Farmers Insurance Exchange (“Farmers”) insured the property

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at issue, which is owned by Doreen Filomena. (ECF No. 1-2). Farmers filed suit for itself and as

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subrogee of its insured, Ms. Filomena. (ECF No. 1-2).

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Ms. Filomena purchased the LG dryer from Best Buy, as well as a four-year warranty for

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the dryer.

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subcontractor, delivered and allegedly installed the dryer. (ECF No. 1-2). Subsequently, the dryer

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and/or its attached power cord failed and cause a fire at the property. (ECF No. 1-2).

(ECF No. 1-2).

Penn-Ridge Transportation, Inc. (“Penn-Ridge”), Best Buy’s

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Ms. Filomena submitted an insurance claim to Farmers, incurring a deductible in the

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amount of $1,000.00, which Farmers seeks to recover on Ms. Filomena’s behalf. (ECF No. 1-2).

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Farmers paid approximately $214,145.48 on Ms. Filomena’s claim. (ECF No. 1-2).

James C. Mahan
U.S. District Judge

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Farmers filed the original complaint in state court on June 22, 2015, which defendants

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removed on July 21, 2015. (ECF No. 1). In its complaint, Farmers alleges five causes of action:

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(1) breach of contract against Best Buy; (2) negligent hiring against Best Buy; (3) negligence

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against Best Buy; (4) strict products liability against LG; and (5) negligent products liability

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against LG. (ECF No. 1-2).

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On April 13, 2016, the court entered an order granting LG’s emergency motion for

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determination of good faith settlement between Farmers and LG, wherein LG agreed to pay

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$9,000.00 to Farmers in exchange for Farmers dismissing its claims against LG with prejudice.

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(ECF No. 39).

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On June 16, 2016, Best Buy filed a third-party complaint alleging five causes of action: (1)

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equitable and implied indemnity against Penn-Ridge; (2) contractual, express indemnity against

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Penn-Ridge; (3) contribution against Penn-Ridge; (4) apportionment against Penn-Ridge; and (5)

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contractual, express indemnity against LG. (ECF No. 44).
On December 12, 2016, the court granted a stipulation of dismissal of Farmers’s claims

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against LG with prejudice pursuant to their settlement agreement. (ECF Nos. 39, 74).
In the instant motion, LG moves to dismiss Best Buy’s third-party complaint, which seeks

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indemnity against it, pursuant to Federal Rule of Civil Procedure 12(b)(6). (ECF No. 49).

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II.

Legal Standard

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A court may dismiss a complaint for “failure to state a claim upon which relief can be

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granted.” Fed. R. Civ. P. 12(b)(6). A properly pled complaint must provide “[a] short and plain

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statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2); Bell

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Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). While Rule 8 does not require detailed

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factual allegations, it demands “more than labels and conclusions” or a “formulaic recitation of the

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elements of a cause of action.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citation omitted).

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“Factual allegations must be enough to rise above the speculative level.” Twombly, 550

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U.S. at 555. Thus, to survive a motion to dismiss, a complaint must contain sufficient factual

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matter to “state a claim to relief that is plausible on its face.” Iqbal, 556 U.S. 662, 678 (citation

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omitted).

James C. Mahan
U.S. District Judge

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In Iqbal, the Supreme Court clarified the two-step approach district courts are to apply

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when considering motions to dismiss. First, the court must accept as true all well-pled factual

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allegations in the complaint; however, legal conclusions are not entitled to the assumption of truth.

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Id. at 678–79. Mere recitals of the elements of a cause of action, supported only by conclusory

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statements, do not suffice. Id. at 678.

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Second, the court must consider whether the factual allegations in the complaint allege a

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plausible claim for relief. Id. at 679. A claim is facially plausible when the plaintiff’s complaint

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alleges facts that allow the court to draw a reasonable inference that the defendant is liable for the

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alleged misconduct. Id. at 678.

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Where the complaint does not permit the court to infer more than the mere possibility of

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misconduct, the complaint has “alleged—but not shown—that the pleader is entitled to relief.” Id.

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(internal quotation marks omitted). When the allegations in a complaint have not crossed the line

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from conceivable to plausible, plaintiff's claim must be dismissed. Twombly, 550 U.S. at 570.
The Ninth Circuit addressed post-Iqbal pleading standards in Starr v. Baca, 652 F.3d 1202,

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1216 (9th Cir. 2011). The Starr court stated, in relevant part:

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First, to be entitled to the presumption of truth, allegations in a complaint or
counterclaim may not simply recite the elements of a cause of action, but must
contain sufficient allegations of underlying facts to give fair notice and to enable
the opposing party to defend itself effectively. Second, the factual allegations that
are taken as true must plausibly suggest an entitlement to relief, such that it is not
unfair to require the opposing party to be subjected to the expense of discovery and
continued litigation.

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Id.

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III.

Discussion

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In the third-party complaint, Best Buy asserts that it entered into a vendor agreement with

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LG regarding LG’s products. (ECF No. 44 at 20). Paragraph 17 of the vendor agreement, entitled

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“Indemnification,” states as follows:

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James C. Mahan
U.S. District Judge

Vendor will indemnify, defend, and hold Dealers, its parent, affiliates, agents, and
employees, harmless from and against any and all claims, actions, liabilities, losses,
costs and expenses arising from or in connection with (a) Vendor’s breach of this
Agreement, including but limited to its representations and warranties; (b) acts or
omissions of Vendor relating to the Products which includes, but is not limited
to claims that the Products, or use thereof, caused personal injury, death, or
real or personal property damage; (c) a Product recall, whether or not initiated
by Vendor; (d) claims that the Products or any Vendor Content infringe,
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misappropriate or injury a third party’s intellectual property or proprietary rights;
(e) false or misleading Product specifications or other Vendor Content provided to
Dealer to promote and sell the Products; and (f) Vendor's failure to promptly
perform its obligations in connection with a manufacturer's rebate offer. Dealer
agrees to give Vendor prompt written notice of any claims, to tender the defense to
Vendor, and to grant Vendor the right to control settlement and resolution. Vendor
agrees to pay all costs of liability, settlement and defense, including attorney fees
and costs.

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(ECF No. 44 at 21) (emphasis added).

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Best Buy alleges that LG designed, manufactured, warranted, provided warnings and
instructions for, and distributed the dryer at issue. (ECF No. 44 at 21). Best Buy argues that it did
not cause or contribute to the damages alleged in Farmers’s complaint and that LG’s acts and
omissions caused the damages alleged. (ECF No. 44 at 21). Thus, as Best Buy maintains, it is
entitled to contractual and express indemnity from LG for LG’s acts and omissions that caused the
damages alleged in Farmers’s complaint pursuant to the vendor agreement. (ECF No. 44 at 22).

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In the instant motion, LG contends dismissal is proper because it is not the manufacturer
of the dryer, but rather the distributor, and the court found that “[i]t is undisputed that a faulty
power cord or its faulty installation are responsible for the fire.” (ECF No. 49 at 5 (quoting ECF
No. 39 at 1)). In particular, LG asserts that LG, Inc. is the manufacturer, and it is located in Korea.
(ECF No. 49 at 5).

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In response, Best Buy argues that it is seeking indemnification pursuant to the vendor

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agreement “should any judgment be entered against Best Buy relating to the design, manufacture,

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distribution, monitoring, warnings, instructions, and sale of the subject LG dryer.” (ECF No. 52

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at 5).

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However, Farmers stipulated to dismiss its claims against LG with prejudice—specifically,
its claims against LG for strict products liability and negligent products liability. (ECF Nos. 72,
74). Thus, Farmers’s remaining claims are solely against Best Buy for breach of contract,

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negligent hiring, and negligence. Accordingly, since LG’s acts and/or omissions are not at issue

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in Farmers’s remaining claims against Best Buy, the court will grant LG’s motion to dismiss Best

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James C. Mahan
U.S. District Judge

Buy’s third-party complaint as it relates to LG.
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IV.

Conclusion

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Accordingly,

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IT IS HEREBY ORDERED, ADJUDGED, and DECREED that LG’s motion to dismiss

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Best Buy’s third-party complaint as it relates to LG (ECF No. 49) be, and the same hereby is,

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GRANTED.

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DATED February 8, 2017.
__________________________________________
UNITED STATES DISTRICT JUDGE

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James C. Mahan
U.S. District Judge

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