Estrada v. Consolidated Utility Services, Inc. et al
Filing
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ORDER granting dfts' 12 Motion to Dismiss the Punitive Damages Claim of plf's cmp. Plf's claim dismissed without prejudice. Signed by District Judge Richard Voorhees on 6/2/2011. (Pro se litigant served by US Mail.)(cbb)
UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF NORTH CAROLINA
STATESVILLE DIVISION
5:10-CV-161-RLV
MARIA LUISA MOJICA
ESTRADA as Administrator of the
Estate of MARCELO ESTRADAAVELLANEDA, deceased,
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Plaintiff,
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vs.
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CONSOLIDATED UTILITY
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SERVICES, INC., and PROMARK
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UTILITY LOCATORS, INC.
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Defendant.
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___________________________________ )
MEMORANDUM AND ORDER
THIS MATTER is before the Court on Defendants’ Consolidated Utility Services, Inc. and
ProMark Utility Locators, Inc. (collectively referred to as “Defendants”) Motion to Dismiss Punitive
Damages Claim of Plaintiff’s Complaint and the accompanying Memorandum in Support
(Documents #12-13), filed December 13, 2010; Plaintiff’s Maria Luisa Mojica Estrada (“Estrada,”
acting as Administrator of the Estate of Marcelo Estrada-Avellaneda, “Marcelo,” deceased)
Response in Opposition (Document #14), filed December 30, 2010; Defendants’ Reply (Document
#15), filed January 10, 2010. This matter is ripe for disposition.
BACKGROUND1
Plaintiff is a resident of Iredell County, North Carolina and is the duly appointed
Administrator of the Estate of her late husband, Marcelo Estrada-Avellaneda. (Compl. ¶ 1).
Marcelo was also a resident of Iredell County, North Carolina, until his death on April 15, 2010.
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All facts are presented in the light most favorable to Plaintiff Estrada, the party opposing the motion to dismiss.
(Compl. ¶ 2). Defendant Consolidated Utility Services, Inc. is a Nebraska company engaged in the
business of locating underground utility lines, including high voltage electrical lines, so that work
can be done by other companies safely. (Compl. ¶ 3, 9). Defendant ProMark Utility Locators, a
Nebraska company, is a wholly owned subsidiary corporation of Consolidated Utility Services, Inc.,
engaged in similar work. (Compl. ¶ 4-5, 9).
On April 15, 2010, Marcelo and his co-workers were assigned to a work site in Iredell
County, North Carolina. (Compl. ¶ 7). Marcelo was working for Distribution Construction
Company (“Distribution Construction”) of Greensboro, North Carolina. (Compl. ¶ 10). Distribution
Construction had contacted the North Carolina “One-Call” Center in order to have a team sent to
locate and mark any underground utility lines at the work site. (Compl. ¶ 10). Defendants were
contracted with Energy United (a utility company) to act as an underground utility locator, and the
Defendants’ employees were sent to locate and mark any underground utility lines as a result of
Distribution Construction’s call. (Compl. ¶ 8, 11). The Defendants indicated that the work site that
Marcelo was working on was clear of underground electrical utility lines. (Compl. ¶ 11). Marcelo
then started operating an augur in a trench as a part of his work duties at this site, and was
electrocuted by a 7200-volt underground electric utility owned by Energy United. (Compl. ¶ 8).
Marcelo died later that day. (Compl. ¶ 8).
On October 13, 2010, Plaintiff initiated this suit in the North Carolina Superior Court of
Iredell County alleging wrongful death and seeking punitive damages. (Doc. #1). On October 27,
2010, Defendants filed a notice of removal with this court pursuant to 28 U.S.C. §§ 1332(a) and
1441(a). (Doc. #1). Jurisdiction is founded on diversity of citizenship. (Doc. #1). On December
13, 2010, Defendants filed a Motion to Dismiss the Punitive Damages Claim pursuant to Fed. R.
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Civ. P. 12(b)(6). (Doc. #11). In their motion, Defendants argue that Plaintiffs cannot recover
punitive damages based on vicarious liability, and that Plaintiff failed to allege facts to state a
plausible claim for punitive damages. (Doc. #11).
ANALYSIS
1. Standard of Review
When deciding a motion to dismiss pursuant to Rule 12(b)(6), the Court must view the facts
“in a light most favorable to the Plaintiff.” Giarratano v. Johnson, 521 F.3d 298, 302 (4th Cir. 2008)
(internal citations omitted). However, the Court does not need to “accept as true unwarranted
inferences, unreasonable conclusions, or arguments,” and “need not accept the legal conclusions
drawn from the facts.” Id. The allegations must provide “enough facts to state a claim to relief that
is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). The “mere
possibility of misconduct” is not enough for a claim to survive a motion to dismiss. Ashcroft v.
Iqbal, 129 S.Ct. 1937, 1950 (2009). The Court must disregard conclusory statements unsupported
by factual allegations while considering the plausibility of a claim, but “[w]hen there are wellpleaded factual allegations, a court should assume their veracity and then determine whether they
plausibly give rise to an entitlement to relief.” Id. The Court should be guided by “its judicial
experience and common sense.”2 Id.
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Plaintiff erroneously relies on the “no set of facts” standard. See Conley v. Gibson, 355 U.S. 41, 45-46 (1957). The
“no set of facts” standard has been significantly abrogated by the Twombly and Iqbal line of cases. Twombly, 550 U.S.
at 563 (“The [‘no set of facts’] phrase is best forgotten as an incomplete, negative gloss on an accepted pleading
standard”), See also Iqbal, 129 S.Ct. at 1949 (Rule 8 “asks for more than a sheer possibility that a defendant has acted
unlawfully”). This Court will use the accepted pleading standard as set by the Supreme Court in Twombly.
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II. The Motion to Dismiss
In North Carolina, punitive damages “are awarded as punishment due to the outrageous
nature of the wrongdoer's conduct.” Juarez-Martinez v. Deans, 424 S.E.2d 154, 159-60 (N.C.App.
1993), rev. denied, 333 N.C. 539 (1993). Punitive damages are for the purpose of punishment and
deterrence. Watson v. Dixon, 532 S.E.2d 175, 178 (N.C. 2000) (citing Oestreicher v. American Nat'l
Stores, Inc., 225 S.E.2d 797, 807-08 (N.C. 1976)). In order to prove that punitive damages are
warranted, the plaintiff must show at trial that the defendant is responsible for compensatory
damages, and that an aggravating factor was present and related to the offense. N.C. Gen. Stat. §1D15(a) (2003). The aggravating factors are (1) fraud; (2) malice; or (3) willful or wanton conduct.
N.C. Gen. Stat. § 1D-15(a). The Plaintiff does not allege that Defendants or Defendants’ agents
acted with fraud or malice, but with “willful or wanton conduct.” Willful and wanton conduct is
defined as “the conscious and intentional disregard of and indifference to the rights and safety of
others, which the defendant knows or should know is reasonably likely to result in injury, damage,
or other harm.”3 N.C. Gen. Stat. § 1D-5(7).
Defendant correctly notes that North Carolina law does not allow punitive damages on the
grounds of vicarious liability,4 citing N.C. Gen. Stat. § 1D-15(c). (“Punitive damages shall not be
3
The analysis for the “willful and wonton” aggregating factor required for a punitive damages claim, see N.C. Gen.
Stat.§ 1D -15(a), is different from the analysis used with regards to the “willful and wonton” standard relating to the
“intentional torts” exception to the W orkers’ Compensation Act’s bar on suits against the employer. E.g. W oodson v.
Rowland, 407 S.E.2d 222, 226 (N.C. 1991) (allowing evidence of “willful and wonton” conduct with a substantial
certainty of harm to count as an intentional tort, and thus allowing a civil suit against the employer in addition to the
W orkers’ Compensation claim), See infra note 4.
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N.C. Gen. Stat. Section 97-10.1 provides that if an employee gets worker’s compensation, then that bars almost all
other compensation, including punitive damages, against the employer at common law. (1985), See W oodson v.
Rowland, 407 S.E.2d 222, 227 (N.C. 1991) (Noting an exception to this general rule that allows additional compensation
when employer commits an intentional tort). However, the liability of third parties (like Defendants) is not completely
barred by the acquisition of worker’s compensation. NC Gen. Stat. § 97-10.2 (allowing tort claims against third parties,
but any amount awarded in worker’s compensation must be subtracted from the damages).
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awarded against a person solely on the basis of vicarious liability for the acts or omissions of
another”). Instead, a punitive damage claim requires direct action by the alleged wrongdoer. N.C.
Gen. Stat. § 1D-15(c) (“Punitive damages may be awarded against a person only if that person
participated in the conduct constituting the aggravating factor giving rise to the punitive damage”).
If the defendant is a corporation, the “direct action” requirement is satisfied if “the officers,
directors, or managers of the corporation participated in or condoned the conduct constituting the
aggravating factor giving rise to punitive damages.” N.C. Gen. Stat. § 1D-15(c). To survive a
motion to dismiss, Plaintiff must plead sufficient facts to support a plausible claim that at least one
of the officers, directors, or managers of the Defendant corporations acted with or condoned “willful
and wanton” conduct with regards to this incident.
It’s not clear from Plaintiff’s complaint how Plaintiff intends to support a claim for punitive
damages. The complaint does not point to any specific officers, directors, or managers taking part
in or condoning any willful or wanton conduct. Willful and wanton conduct by Defendants’
employees is not enough to support a claim for punitive damages without direct action or approval
from Defendants’ officers, directors, or managers. N.C. Gen. Stat. § 1D-15(c). Plaintiff alleges
insufficient employee training and inadequate policies and procedures related to the locating and
marking of the underground utility lines. (Compl. ¶ 12(d-e, g-h)). It is possible that officers,
directors, or managers of Defendants could have been involved in or approved of employee training
and creation of policies and procedures. However, Plaintiff does not proffer any specific facts
tending to show that an officer, director, or manager of Defendant companies “willfully and
wantonly” trained or caused employees to be trained insufficiently. While willful and wanton
conduct can be inferred at least partially from company policies, Plaintiff presents no facts that an
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officer, director, or manager of the Defendant participated in the allegedly negligent policies or
procedures. E.g. Everhart v. O'Charley's Inc., 683 S.E.2d 728 (N.C.App. 2009) (finding that “willful
or wanton conduct” could be inferred when company policy required a manager to fill out paperwork
before helping an injured customer). Plaintiff’s allegations are more akin to a mere negligence claim
as opposed to willful or wanton conduct.
Construing the facts in the light most favorable to the Plaintiff, there are insufficient facts that
support a plausible claim of “willful or wanton conduct.” Plaintiff’s complaint does not allege any
facts that provide a plausible claim that “the officers, directors, or managers of the corporation
participated in or condoned” any of the actions involved in this incident. See Phillips v. Restaurant
Management of Carolina, L.P., 552 S.E.2d 686, 694 - 695 (N.C.App. 2001) (Dismissing a punitive
damages claim when no evidence supported the proposition that the restaurant condoned or
participated in the waiter’s actions), See also Strawbridge v. Sugar Mountain Resort, Inc., 320
F.Supp.2d 425, 436 (W.D.N.C. 2004) (Punitive damage claim against ski resort that did not mark
bare spots on the slope, even after reported injuries, misrepresented the amount of snow on the
slopes, and misrepresented customer’s rights under the law was not enough evidence to survive a
motion to dismiss. Further evidence to support “willfulness” was required).
Plaintiff’s allegations are merely conclusory and are unsupported by any allegations of fact.
Thus, the complaint does not rise to the level required to merit punitive damages. Taking these facts
in the light most favorable to the Plaintiff, and the requirement that a punitive damage claim must
rest on more than vicarious liability, the Court finds that the Punitive Damages claim cannot survive
this motion to dismiss.
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CONCLUSION
WHEREFORE, for the foregoing reasons, Defendants’ Motion to Dismiss the Punitive
Damages Claim of Plaintiff’s Complaint is GRANTED. Plaintiff’s claim will be dismissed without
prejudice.
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Signed: June 2, 2011
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“Dismissal with prejudice is a harsh sanction which should not be invoked lightly.” Davis v. W illiams, 588 F.2d 69,
70 (4th Cir. 1978). The Court is dismissing this action without prejudice in order to allow for the possibility that punitive
damages may become appropriate with further discovery, giving particular consideration to the fact that any evidence
that could support punitive damages appears to lie within the control of the Defendants.
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