Roblin v. Newmar Corporation et al

Filing 201

ORDER: Newmar's Motion for Partial Summary Judgment on its claim for contractual indemnity 173 is GRANTED and FCCC's Motion for Partial Summary Judgment 171 is DENIED. Signed on 12/30/2020 by Judge Michael J. McShane. (cp)

Case 6:17-cv-01902-MC

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IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF OREGON
ROBERT ROBLIN,
Plaintiff,

No. 6:17-cv-01902-MC

v.

OPINION AND ORDER

NEWMAR CORPORATION,
Defendant.
__________________________________
MCSHANE, Judge:
Before the Court are cross-motions for partial summary judgment between Third-Party
Plaintiff Newmar Corporation (“Newmar”) and Third-Party Defendant Freightliner Customer
Chassis Corporation (“FCCC”). See ECF No.’s 171 & 173. Because the Customer Sales
Agreement (“Agreement”) entitles Newmar to contractual indemnity, its Motion for Partial
Summary Judgment (ECF No. 173) is GRANTED and FCCC’s Motion for Partial Summary
Judgment (ECF No. 171) is DENIED.
BACKGROUND
Robert Roblin bought a Recreational Vehicle (“RV”) manufactured by Newmar. The
chassis of the RV was manufactured by FCCC. After experiencing mechanical and servicerelated issues with his RV, Mr. Roblin sued Newmar and FCCC. The Court dismissed FCCC
from Mr. Roblin’s original complaint for lack of personal jurisdiction. See ECF No. 22. After
FCCC’s dismissal, Newmar sent FCCC the following notice:
Although FCCC clearly has been aware of the litigation by Mr. Roblin since at
least early 2018, please consider this letter to constitute notice pursuant to ORS

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72.6070(5)(a)1 of the litigation. Further, pursuant to that statute, please be advised
that FCCC may come in and defend Newmar in this litigation and, that if FCCC
does not do so, FCCC will be bound in any action against FCCC by Newmar by
any determination of fact common to the two litigations.
FCCC’s counsel declined to step in and defend. The Court later granted Newmar’s Motion for
Leave to File a Third-Party Complaint against FCCC and determined that the Court had personal
jurisdiction over this third-party action. See ECF No.’s 46 & 95. The Court then granted Mr.
Roblin’s motion for partial summary judgment against Newmar and awarded Mr. Roblin
damages consisting of: (1) a buyback of the RV in the amount of $501,371.70; (2) prejudgment
interest for $182,106.88; (3) attorney fees for $582,349.83; and (4) costs in the amount of
$57,018.53. See ECF No.’s 100 & 155.
Newmar now seeks contractual indemnity from FCCC for all liability incurred to Mr.
Roblin. FCCC and Newmar executed an Agreement for chassis on Newmar’s 2015 and 2016
model year motorhomes. FCCC drafted the Agreement. The Agreement contains several
pertinent provisions: (1) an express warranty provision; (2) a Limitation of Liability provision;
(3) mutual indemnification provisions; and (4) an integration clause. While Newmar argues that
the Agreement entitles them to indemnify FCCC for damages incurred against Newmar in the
underlying proceeding, FCCC counters that the Limitation of Liability provision of the
Agreement “bar[s] all potential special, indirect or consequential damages on Newmar’s [claims
for relief].” Third-Party Def.’s Mot. for Summ. J. 2, ECF No. 171.
STANDARDS
The court must grant summary judgment if there is no genuine issue of material fact and
the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a). An issue is
“genuine” if a reasonable jury could return a verdict for the non-moving party. Rivera v. Phillip
The parties and Court agree that Indiana law applies. Oregon and Indiana’s adoption of U.C.C. § 607(5) is
substantively identical.
1

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Morris, Inc., 395 F.3d 1142, 1146 (9th Cir. 2005) (citing Anderson v. Liberty Lobby, Inc., 477
U.S. 242, 248 (1986)). A fact is “material” if it could affect the outcome of the case. Id. The
court reviews evidence and draws inferences in the light most favorable to the non-moving party.
Miller v. Glenn Miller Prods., Inc., 454 F.3d 975, 988 (9th Cir. 2006) (quoting Hunt v.
Cromartie, 526 U.S. 541, 552 (1999)). When the moving party has met its burden, the nonmoving party must present “specific facts showing that there is a genuine issue for trial.”
Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586–87 (quoting Fed. R. Civ.
P. 56(e)).
DISCUSSION
There are two questions before the Court. First, does the Agreement allow Newmar to
seek indemnity from FCCC for the damages stemming from the underlying action between Mr.
Roblin and Newmar? Second, assuming Newmar can seek indemnification, does the Court’s
prior decision in the underlying action preclude FCCC from arguing that the damages sought
were not established?
I. Damages
Newmar’s damages are recoverable under the Agreement. In Indiana, “[i]f the words of an
indemnity agreement are clear and unambiguous, they are to be given their plain and ordinary
meaning.” Henthorne v. Legacy Healthcare, Inc., 764 N.E.2d 751, 756 (Ind. App. 2002). The
Agreement contained the following mutual indemnity provisions:
Indemnity Obligations:
•
Customer agrees to indemnify and save harmless FCCC, its parents,
affiliates, subsidiaries and employees from any and all liability, loss, damage or
expense which may be incurred by them or any of them, including without
limitation attorney fees and costs, arising out of or in connection with or related to
any claim of defect in the Body or the installation of the Body, or any defect in
the Chassis caused by Customer not end user.

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•
FCCC agrees to indemnify and save harmless Customer, its parents,
affiliates, subsidiaries and employees from any and all liability, loss, damage or
expense which may be incurred by them or any of them, including without
limitation attorney fees and costs, arising out of or in connection with or related to
(i) any claim of defect in the Chassis, except for defects caused by Customer; (ii)
failure of the Chassis to perform in accordance with the warranty granted
hereunder; or (iii) infringement of patent or copyright or application for them.
Aff. of Dennis Rostenbach, Ex. 1 at 3, ECF No. 172. “A contract should be construed so as to
not render any words, phrases, or terms ineffective or meaningless.” Ryan v. TCI
Architects/Engineers/Contractors, Inc., 72 N.E.3d 908, 914 (Ind. 2017). Courts “look to the
contract as a whole . . . and accept an interpretation of the contract that harmonizes all its
provisions.” Id.
Consistent with the general principle of freedom of contract, Indiana allows parties to
limit their remedies in the event of breach. See Ind. Code Ann. § 26-1-2-719 (West 2020). The
Agreement contained the following Limitation of Liability provision:
Limitation of Liability: EXCEPT AS SET FORTH HEREIN, FCCC MAKES NO
WARRANTIES TO CUSTOMER, EITHER EXPRESS OR IMPLIED,
INCLUDING
WITHOUT
LIMITATION
WITH
REGARD
TO
MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE. IN
NO EVENT SHALL FCCC BE LIABLE FOR LOSS OF PROFIT OR
GOODWILL OR OTHER SPECIAL INDIRECT OR CONSEQUENTIAL
DAMAGES SUFFERED BY CUSTOMER.
Aff. of Dennis Rostenbach, Ex. 1 at 2. Though enforceable, limitations of remedy are disfavored
and are strictly construed “against the seller on the basis of public policy.” Kensworth of
Indianapolis, Inc. v. Seventy-Seven Limited Eyeglasses, 134 N.E.3d 370, 379 (Ind. 2019).
Classification of damages is a question of law. The distinction between direct and
consequential damages generally lies in how much the damages were foreseeable.
DaimlerChrysler Motors Co., LLC v. Manuel, 362 S.W.3d 160, 180 (Tex. App. 2012) (citing
Rexnord Corp. v. DeWolff Roberg & Assocs., 286 F.3d 1001, 1004 (7th Cir. 2002) (Posner, J.)).

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“If the language of the contract indicates that the parties contemplated lost profits as the probable
result of the breach, then those lost profits are more properly seen as a part of the contract, itself,
and thus a form of direct damages.” Id. (citing ViaStar Energy, LLC v. Motoral, Inc., No. 1:05CV-1095-DFH-WTL, 2006 WL 3075864, at *5–6 (S.D. Ind. Oct. 26, 2006)). Generally, “a claim
for contractual indemnity is a claim for direct damages, not consequential damages.” KaiserKane
v. N. Am. Roofing Servs., Inc., No. 1:15-cv-00189, 2017 WL 1293984, at *4 (W.D. N. Car. Jan.
13, 2017).
The damages Roblin sought from Newmar (a complete refund for the RV and attorney
fees) are direct damages. In their Agreement, Newmar and FCCC contemplated that they may
incur loss or damages to a third party such as Mr. Roblin. This is reflected in the indemnification
provisions. The Agreement also included an express warranty provision where FCCC
“warrant[ed] that the Chassis [would] comply with all applicable federal, state and local laws,
rules and regulations” and that “[t]he Chassis will be . . . free from defects.” Aff. of Dennis
Rostenbach, Ex. 1 at 2. When read together, the express warranty and indemnification provisions
reflect that the parties contemplated the possibility of third-party damages resulting from
problems with the chassis. In other words, Newmar’s liabilities to Mr. Roblin are direct damages
because they were reasonably foreseeable and contemplated under the Agreement.
II. Liability
FCCC argues that even if the Court finds that the damages alleged by Newmar are
recoverable under the Agreement, summary judgment is inappropriate because there remain
genuine issues of material fact. The Court disagrees.

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Instead, the Court agrees with Newmar that FCCC is bound by voucher. Voucher is a
mechanism that allows an indemnitee to “vouch in” an indemnitor to support its indemnification
claim. Indiana has adopted the U.C.C.’s vouching-in provision verbatim:
(5) Where the buyer is sued for breach of warranty or other obligation for which
his seller is answerable over:
(a) He may give his seller written notice of the litigation. If the notice
states that the seller may come in and defend and that if the seller does not do so
he will be bound in any action against him by his buyer by any determination of
fact common to the two (2) litigations, then unless the seller after reasonable
receipt of the notice does come in and defend he is so bound.
IC 26-1-2-607(5)(a) (West 2020). Voucher binds the indemnitor “to any determination of fact
common to the two litigations.” Uniroyal, Inc. v. Chambers Gasket & Mfg. Co., 380 N.E.2d 571,
580 (Ind. App. 1978) (internal quotations omitted). The facts common to the two litigations are
generally “the existence of a breach of warranty as between the voucher and the plaintiff, the fact
of the voucher’s liability to the plaintiff, and the amount of damages the voucher must pay as a
result of the judgment against him.” Blommer Chocolate Co. v. Bongards Creameries, Inc., 635
F. Supp. 919, 924 (N.D. Ill. 1986); see also Uniroyal, 380 N.E.2d at 580.
Voucher serves several purposes, including “avoid[ing] duplicative litigation [, avoiding]
the risk of inconsistent results in adjudicating indemnification claims,” and preserving judicial
resources. Master Blaster, Inc. v. Dammann, 781 N.W.2d 19, 26 (Minn. Ct. App. 2010)
(quotation omitted); see also Hertz Corp. v. Century Prods., Inc., No. C.A. 97C-05-039, 1999
WL 459291, at *2 (Del. Super. Ct. Apr. 1, 1999).
In Hertz Corp., a car rental agency sued the manufacturer of a defective child seat after
the seat caused an injury for which the car rental agency was found liable. Id. at *1. Holding that
the manufacturer was bound under Delaware’s identical codification of § 607(5), the court wrote:
Century contends that Hertz’s defense of the child seat was inadequate, and that
Hertz failed to introduce items such as product warnings. Century contends that

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because the child seat was not defended in a manner that Century would have
defended the action, Century is entitled to another bite at the apple. This argument
flies in the face of Section 2-607(5). In fact, the purpose of this Section is to
prevent attempts at relitigating issues that should have been decided in prior
litigation, the exact situation occurring in this case. Century cannot stand idly by
while litigation involving its product proceeds, and then claim, after the fact, that
Hertz did a poor job. The way to correct this problem was to join in, or take over,
the defense of the Missouri Action; not to wait until the dust settles and poke
holes in Hertz’s defense. Century is bound by the determinations made in the
Missouri Action regarding the dangerous condition of the child seat and the
amount of resulting damages.
Id. at *3 (emphasis in original).2 Though voucher has largely been “supplanted by modern thirdparty pleading practice,” it “continues to be employed, primarily in situations . . . where the
vouchee is not subject to personal jurisdiction in the underlying action.” Master Blaster, Inc.,
781 N.W.2d at 27 (citations omitted).
A “small exception” to voucher exists when the underlying proceeding is not a good
faith, adversarial one. Moldex, Inc. v. Ogden Engineering Corp., 652 F. Supp. 584, 587 (D.
Conn. 1987). “A full dress, good faith, adversary proceeding has been defined as an ‘actual trial
by court rather than a resolving of those same issues by agreement of the parties under a prior
settlement agreement.’” Id. at 587–88 (quotation omitted). It has also been called an “attempt by
the parties to arrange the record . . . so as to use such record on a basis for judgment in the
second action.” Id. at 588 (citing Grummons v. Zollinger, 240 F. Supp. 63, 76 (N.D. Ind. 1964)).
“Such conduct present[s] a serious risk of collusion and undermines the purpose of § 607(5) to
hold a seller liable only after a conscientiously conducted defense was performed on its behalf.”
Id. (quotations omitted).

2

FCCC distinguishes Hertz Corp. by pointing out that there was no limitation of remedies provision in that case.
But this is a distinction without meaning. Whether liability incurred to a third party is direct or consequential
damages is separate from whether voucher may bind a party. Simply put, the non-existence of a limitation of
remedies provision is irrelevant to the decision of whether voucher may be applied.

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To begin, Newmar presented FCCC with written notice of Mr. Roblin’s litigation as
required by IC 26-1-2-607(5)(a) and FCCC repeatedly declined to step in and defend.
Additionally, applying voucher here will avoid duplicative litigation, the risk of inconsistent
results, and will preserve judicial resources. In the language of the Hertz Corp. court, should
FCCC fail to join the suit—as it did here—“it should not be entitled to reargue issues in a later
suit that it should have raised in the original suit.” 1999 WL 459291, at *3 (emphasis in original).
And it is appropriate to apply voucher here because the Court lacked personal jurisdiction over
FCCC in the underlying proceeding. Master Blaster, Inc., 781 N.W.2d at 27; ECF No. 22.
FCCC still argues that the conflict of interest between Newmar and FCCC was strong
enough to give Newmar “an improper incentive to guide any possible defeat in the direction of
indemnification.” Third-Party Def.’s Resp. 7, ECF No. 189. But FCCC has failed to identify
evidence that the proceeding was an “attempt by [Newmar] to arrange the record.” Moldex, Inc.,
652 F. Supp. at 588. Simply pointing out that Newmar may have had incentive to guide the
litigation does not prove that Newmar acted on this motivation.
More importantly, and despite FCCC’s critiques of Newmar’s litigation strategy,
Newmar did not fail to defend the chassis. Newmar submitted testimony that the service work
performed on the chassis corrected any defects or problems and questioned whether there was a
single nonconformity of the FCCC chassis. Third-Party Pl.’s Mot. for Part. Summ. J. 22.
Newmar’s submitted testimony and connected arguments shows that the underlying proceeding
was “a contest of the issues for actual determination of the facts . . . and of law . . . rather than a
resolving of those same issues by agreement of the parties under a prior settlement agreement.”
Moldex, Inc., 652 F. Supp. at 587–88. While FCCC may have litigated that action differently, the
fact that Newmar emphasized certain testimony more than other testimony was a matter of

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strategy, not an attempt to arrange the record. Id. at 588. For FCCC, “[t]he way to correct this
problem was to join in, or take over, the defense of the [underlying proceeding]; not to wait until
the dust settles and poke holes in [Newmar’s] defense.” Hertz Corp., 1999 WL 459291, at *3.
FCCC has therefore not met its burden of establishing that the underlying proceeding was not a
good faith, adversarial one.
The Court’s decision to apply voucher binds FCCC “to any determination of fact
common to the two litigations.” Uniroyal, Inc., 380 N.E.2d at 580. As the Court made clear in its
original decision, “it is undisputed that the RV was out of service for more than 60 days and that
three or more unsuccessful attempts were made to repair the RV’s cooling systems, which is part
of the chassis.” Op. and Order 2, ECF No. 100 (emphasis added). FCCC is accordingly bound to:
(1) “the existence of a breach of [Lemon Law] warranty as between [Newmar] and [Roblin],” (2)
“the fact of [Newmar]’s liability to [Roblin],” and (3) “the amount of damages.” Blommer
Chocolate, 635 F. Supp. at 924.
CONCLUSION
For the above reasons, Newmar’s Motion for Partial Summary Judgment on its claim for
contractual indemnity (ECF No. 173) is GRANTED and FCCC’s Motion for Partial Summary
Judgment (ECF No. 171) is DENIED.

IT IS SO ORDERED.
DATED this 30th day of December, 2020.

/s/ Michael J. McShane______
Michael J. McShane
United States District Judge

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