Tyson Foods, Inc. v. Routh Enterprises, Inc.

Filing 40

ORDER by Judge Ronald A. White granting motion to dismiss of defendant Routh Enterprises ( 15 Motion to Dismiss ) (lal, Deputy Clerk)

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF OKLAHOMA
TYSON FOODS, INC.,
Plaintiff,
v.
ROUTH ENTERPRISES, INC., and
EMCASCO INSURANCE COMPANY,
Defendants.

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Case No. CIV-14-279-RAW

ORDER
Before the court is the motion of the defendant Routh Enterprises, Inc. (“Routh”) to
dismiss. As the court reads plaintiff’s complaint, it lists four causes of action, one solely
against movant, two solely against defendant Emcasco Insurance Company, and one (Count
III) arguably against both defendants. The claims against Routh involve breach of contract.
To survive a motion to dismiss under Rule 12(b)(6) F.R.CV.P., a plaintiff must plead facts
sufficient to state a claim to relief that is plausible on its face. Albers v. Bd. of Cnty.
Comm’rs of Jefferson City, 771 F.3d 697, 700 (10 th Cir.2014).
Previous litigation in this court (CIV-12-148-RAW) arose out of a construction
project at Tyson’s facility in Broken Bow, Oklahoma. Avimael Martinez, an employee of
Routh Enterprises, was injured during the course of that project. Mr. Martinez sought to
recover from Tyson for various negligence claims. Tyson filed a third-party complaint
against Routh, asserting Routh was required to indemnify Tyson under terms of the
construction contact.

This court granted Tyson’s motion for summary judgment, finding that it was immune
from all plaintiff’s claims pursuant to 85 O.S. §12.1 The court found Tyson’s third-party
claim against Routh (and Routh’s counterclaim against Tyson for subrogation) to be moot.
Plaintiff Martinez filed a notice of appeal, but the appeal was dismissed prior to any Tenth
Circuit decision. In the present case, plaintiff Tyson asserts that (under a contract for
services between Tyson and Routh) Routh had a duty to procure insurance and defend Tyson
in the earlier litigation.
First, Routh makes a valiant effort to establish that plaintiff’s claim is barred by res
judicata based upon the previous litigation. Under Oklahoma law, claim preclusion requires
a final judgment on the merits of an action. See State of Okla. ex rel. Dep’t of Transp. v.
Little, 100 P.3d 707, 720 n.47 (Okla.2004). As the Tenth Circuit has noted “it is wellestablished in other jurisdictions that a dismissal on the grounds of mootness effectively
indicates that the ruling court lacked jurisdiction over the matter, and thus the dismissal does
not operate as a ruling on the merits of the action, even if the ruling nominally indicates
otherwise.” Wisznia v. City of Albuquerque, 135 Fed. Appx. 181, 187 (10 th Cir.2005). Routh

1

The comparable provision now is 85 O.S. §302.

2

protests that Wisznia was decided under New Mexico law, but has not indicated that
Oklahoma law is to the contrary.2 Rather, this appears to be an axiomatic point of law.3
Alternatively, Routh relies upon 15 O.S. §221, a statute evidently not yet the subject
of a published decision.4 Plaintiff alleges that under the contract for services between Routh
and itself, Routh was required to procure insurance and indemnify Tyson. “Construction
contracts usually transfer liability risks to contractors and downstream subcontractors by way
of indemnification and insurance requirements.” Nierengarten, New ISO Additional Insured
Endorsements (2014)(available at Westlaw, 44-FALL BRIEF 30). In recent years, such
arrangements have seen the rise of state “anti-indemnification” statutes. Some of those
statutes make a distinction. “Most anti-indemnification statutes allow the reallocation of risk
to an indemnitor’s insurer, so that while an indemnification agreement may be voided by
statute, a separate promise to procure insurance designed to shift the same risk is enforceable
and unaffected by statutory bars.” 3 Bruner & O’Connor on Construction Law, §10:91
(2014).5

2

Federal courts look to the law of the state in which the federal diversity court sat to determine the
preclusive effect of a federal diversity judgment. Hartsel Springs Ranch of Colo., Inc. v. Bluegreen Corp.,
296 F.3d 982, 986 (10th Cir.2002).
3

To the extent Routh places weight upon the fact that this court entered a Rule 58 judgment as to the
entire case, this argument is also rejected. The Tenth Circuit requires the entry of a judgment even when the
dismissal is not based on the merits. See Warren v. Am. Bankers Ins., 507 F.3d 1239, 1243 (10th Cir.2007).
4

In a companion order, the court repeats much of the following discussion in ruling on the motion
to dismiss of defendant Emcasco Insurance Company.
5

The Westlaw database is BOCL.

3

The Oklahoma statute does not, however, draw this distinction. It provides that
(subject to the exceptions in subsection C or D) “a construction agreement that requires an
entity or that entity’s insurer to indemnify, insure, defend or hold harmless another entity
against liability . . . which arises out of the negligence or fault of the indemnitee . . . is void
and unenforceable as against public policy.” 15 O.S. §221(B) (emphasis added).
Plaintiff argues that this provision does not apply because it was “fault-free” with
regard to Mr. Martinez’s accident. The determinative document, however, is the amended
petition in CIV-12-148-RAW, in which claims of negligence are alleged against Tyson and
Tyson alone. The concept of an obligation to procure insurance or a duty to defend is based
upon the allegations in a lawsuit, not the “truth” of who was at fault – that is the question to
be litigated. The court finds §221(B) does apply and bars Tyson’s claim that Routh had an
obligation to procure insurance.
Plaintiff also incorporates its response to Emcasco’s motion, in which plaintiff argues
that the exception in subsection C applies. That subsection provides that the statute does not
bar an indemnity agreement, but that “such indemnification shall not exceed any amounts
that are greater than that represented by the degree or percentage of negligence or fault
attributable to the indemnitor. . . . “ In other words, plaintiff argues, the statute permits
indemnification agreements up to the amount of negligence or fault attributable to the
indemnitor, which is Routh in this case. This appears to be correct; however, under the result
in CIV-12-148-RAW, the “amount of negligence or fault attributable” to Routh was zero.

4

That litigation is concluded and under the terms of the contract (read in conjunction with
§221(C)), plaintiff’s claim – including for attorney’s fees and costs resulting from the
previous action -- is extinguished.6
It is the order of the court that the motion to dismiss of defendant Routh Enterprises,
Inc. (#15) is hereby granted.
ORDERED THIS 3rd DAY OF FEBRUARY, 2015.

Dated this 3rd day of February, 2015.

J4h4i0

6

Plaintiff proceeds only under the contract. (#24 at 2-3).

5