EQT PRODUCTION COMPANY v. TERRA SERVICES, LLC

Filing 204

MEMORANDUM OPINION indicating that, for reasons more fully stated within said Opinion, the Court finds Trumbull cannot be held liable for contribution or common law indemnity to either Terra or ECI. Trumbull's Motions 167 and 189 will be granted and Terras third-party Complaint, as against Trumbull, and ECIs cross-claims will be dismissed, with prejudice. An appropriate order follows. Signed by Judge Nora Barry Fischer on 4/12/16. (jg)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF PENNSYLVANIA
EQT PRODUCTION COMPANY,
Plaintiff,
v.
TERRA SERVICES, LLC,
Defendant/Third-Party Plaintiff
v.
TRUMBULL CORPORATION and
ENVIRONMENTAL CONSTRUCTION,
INC.,
Third-Party Defendants

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Civil Action No. 14-1053
Hon. Nora Barry Fischer

MEMORANDUM OPINION
I.

INTRODUCTION
This is a diversity action in which Plaintiff EQT Production Company (“EQT”) seeks to

recover from Defendant Terra Services (“Terra”) for damages stemming from leaks in a natural
gas well site operated by EQT and constructed, in part, by Terra. Terra has filed a third-party
Complaint for contribution and common law indemnity against two other contractors that EQT
hired to complete various phases of the site’s construction, Trumbull Corporation (“Trumbull”)
and Environmental Construction (“ECI”). (Docket No. 160). ECI in turn, filed identical crossclaims against Trumbull. (Docket No. 182). Currently pending before the Court are Trumbull’s
Motions to Dismiss Terra’s third-party Complaint and ECI’s cross-claims. The relevant parties
have all submitted briefing, (Docket Nos. 168, 179, 185, 190-91, 195, 197), and the Court heard
oral argument on the Motions on January 29, 2016, with counsel for all parties present, (Docket
1

No. 200). The Motions are now ripe for disposition. After careful consideration of the parties’
positions and having evaluated the relevant standard and legal authority, for the following
reasons Trumbull’s Motions [167] and [189] are granted and the claims against it are dismissed.
II.

FACTUAL BACKGROUND AND PROCEDURAL HISTORY
From 2010-2012, EQT developed a natural gas well site in Tioga County, Pennsylvania.

(Docket No. 1-3 at ¶¶ 3, 13). As part of the development, EQT constructed a large reserve water
impoundment (the “S-Pit”) to temporarily contain fluids generated by the well drilling and
hydraulic fracturing. (Id. at ¶¶ 14-16). Through separate contracts, EQT hired three contractors
to construct and service the S-Pit. (Id. at ¶¶ 14-16; Docket No. 160 at ¶¶ 22-29). Trumbull
excavated the site and prepared the subgrade.1 (Docket No. 160 at ¶¶ 22-24). ECI then installed
the geotextile and the geomembrane liner in the S-Pit. (Id. at ¶¶ 25-29). Subsequently, Terra
designed and installed a system to suction out, treat, and return fluids back into the S-Pit.
(Docket No. 1-3 ¶¶ 14, 20). Terra’s work lasted from around April 18, 2012 through April 30,
2012. (Id. at ¶¶ 19-21). Once constructed, the S-Pit measured approximately 265 feet by 305
feet, was 16.7 feet deep, and could hold an estimated 5,241,300 gallons of water. (Id. at ¶ 15).
Sometime after construction, fluids began to leak into the ground through several hundred holes
in the S-Pit liner. (Id. at ¶¶ 23-28). As a result, the Pennsylvania Department of Environmental
Protection (the “DEP”) and an adjacent landowner, Danzer Forestland, Inc. (the “landowner”)
are seeking to hold EQT responsible for environmental contamination in separate legal
proceedings not before this Court. (Docket No. 179 at 1).

1

Trumbull avers that at the time it contracted with EQT, the S-Pit was supposed to be a freshwater
impoundment and that EQT’s decision to use the S-Pit for other purposes came after Trumbull finished its work.
(Docket No. 185 at 7).

2

A. EQT’s Complaint Against Terra
EQT filed the present lawsuit against Terra only, alleging that Terra is solely responsible
for the holes in the liner. (Docket No. 1-3 at ¶¶ 26-31) (“The holes in the geomembrane liner
were directly and proximately caused by Terra Services’ failure to conduct its Water Treatment
Work in a proper and workmanlike manner pursuant to its agreement with EQT Production.”).
According to EQT, the holes in the liner were found “in the location where Terra Services had
placed its suction and return lines during the performance of its Water Treatment Work.” (Id. at
¶ 26). EQT goes on to allege in its Complaint that Terra’s “improper, unworkmanlike and
defective” work subjected EQT and its well site to remedial obligations to the DEP and the
adjacent landowner. (Id. at ¶¶ 28-30).
EQT avers that its Master Services Agreement (“MSA”)2 with Terra required Terra to
“furnish its best skill and judgement in the discharge of its obligations and to complete its Water
Treatment Work in a good, workmanlike, safe, expeditious and economic manner.” (Id. at ¶ 7).
EQT further alleges that the MSA: required Terra to use skill and judgment customary to the
trade and complete its work free from defects; contained an express warranty “against all
deficiencies and defects in materials and/or workmanship”; contained an agreement that Terra
“would not cause or permit a violation of, or perform its [work] in a manner that would subject
[the well site] to, any remedial obligations under any local, state or federal environmental laws”;
and provided that in the event Terra’s performance did result in the violation of any laws, that
Terra agreed to indemnify EQT “from any and all costs and damages arising from any such
violations . . .” (Id. at ¶¶ 8-11). EQT brings claims against Terra for breach of contract (Count

2

The Court notes that for confidentiality purposes, the parties have not provided the Court with copies of
any of the contracts involved in this case. (See Docket No. 160 at 3 n. 2). However, in briefing and at oral argument
the parties did not dispute the existence of the contracts or the relevant terms as alleged in either Complaint.

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I), breach of express warranty (Count II), contractual indemnification (Count III), and in the
alternative, common law indemnification (Count IV). (Id.).
B. Terra’s Third-Party Complaint3
More than a year after EQT commenced this lawsuit, Terra filed a third-party Complaint
against Trumbull and ECI, bringing claims for contribution and common law indemnity.
(Docket No. 160). Specifically, Terra alleges that Trumbull left sharp rocks and debris at the
bottom of the S-Pit and that ECI improperly installed the geotextile and liner, causing the rocks
to poke holes in the liner. (Id. at ¶¶ 37-41). At oral argument, counsel for Terra indicated that
the ongoing discovery between EQT and Terra has revealed evidence, including photos and
testimony, proving that sharp rocks and debris were left in the S-Pit and that inspection of the
liner showed that the holes were poked up through the liner from the ground rather than down
through the liner. (Tr. 15:23-16:8, 29:1-30:16) (“it’s very clear it was the sharp rocks beneath
the liner that caused the holes in that liner and it had nothing to do with Terra’s performance of
services.”).
Terra’s third-party Complaint also alleges that Trumbull and ECI’s respective contracts
with EQT set forth that Trumbull and ECI both agreed: to perform their duties in a “good,
workmanlike, safe, expeditious and economic manner”; to use skill and judgment customary to
the trade and complete their work free from defects; that they would not “cause or permit a
violation of, or perform [work] in a manner that will subject [the well site] to any remedial
obligation under any local, state or federal environmental laws”; and provided that in the event
Trumbull’s or ECI’s performance did result in the violation of any laws, that they each agreed to
indemnify EQT from any and all costs and damages arising from their performance under their
3

For the purposes of a Motion to Dismiss, the Court assumes as true the factual allegations in Terra’s thirdparty Complaint. Connelly v. Lane Const. Corp., 809 F.3d 780, 790 (3d Cir. 2016).

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respective contracts.

(Docket No. 160 at ¶¶ 8-12, 17-21). It is also averred that Trumbull

agreed to notify EQT immediately if the conditions of the surface and subsurface were such that
work could not continue. (Id. at ¶ 10). Similarly, ECI agreed that it would inspect all surfaces
prior to installing the liner, not to commence work “until deficiencies and other
surface/subsurface conditions that would adversely affect the integrity” of ECI’s work had been
corrected, and to immediately notify EQT if any such conditions existed. (Id. at ¶ 19).
Terra alleges that Trumbull’s and ECI’s “improper, unworkmanlike, and defective” work
subjected the well site to the remedial obligations in the form of liability to the DEP and the
adjacent landowner. (Id. at ¶¶ 37-41). With regard to its contribution claims, Terra’s third-party
Complaint avers “[i]f EQT suffered any damages as alleged, which is denied, to the extent Terra
is determined to be liable to EQT, such damages were caused by reason of the joint negligence,
carelessness, recklessness, and breaches of contract, by Third Party Defendant Trumbull [and/or
ECI] . . .” (Id. at ¶¶ 43, 52). With respect to its common law indemnity claims, Terra avers that
“[t]o the extent Terra is deemed responsible for the asserted damages alleged by EQT, said
responsibility is secondary in nature.” (Id. at ¶¶ 49, 58).
ECI answered Terra’s third-party Complaint and filed cross-claims against Trumbull,
also seeking contribution and common law indemnity. (See Docket No. 182). ECI’s crossclaims incorporate by reference the allegations of negligence against Trumbull as contained in
Terra’s third-party Complaint. (Id.). Trumbull’s Motions to Dismiss are now before the Court.
(Docket Nos. 167, 189).
III.

OVERVIEW OF THE MOTIONS TO DISMISS
Both Trumbull and ECI agree that the issues presented in the Motion to Dismiss Terra’s

third-party Complaint mirror the issues with respect to Trumbull’s Motion to Dismiss ECI’s
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cross-claims. (Docket Nos. 190 at 2; 195 at 2-3). For the sake of brevity and because the
majority of the briefing and argument occurred between Trumbull and Terra, the Court will
generally refer to that Motion. The same analysis and conclusions apply to Trumbull’s Motion
to Dismiss ECI’s cross-claims as well.
Trumbull argues essentially that its and Terra’s respective liability to EQT, if any, is
contractual in nature. This would mean Terra has failed to state claims against Trumbull for
contribution and common law indemnity since under Pennsylvania law both types of actions are
available only for liability that sounds in tort and not for breach of contract. Trumbull also
argues that under the facts as alleged in both Complaints, Terra cannot make out the elements of
its common law indemnity claim. In reply, Terra argues that EQT has alleged a tort claim
against it in the form of EQT’s common law indemnity claim; hence, Terra asserts it is
potentially liable for damages resulting from the negligence of Trumbull and ECI and thus
should be allowed the benefit of having them in this lawsuit. (Docket No. 179 at 6-7); (Tr. 28:733:7).
IV.

LEGAL STANDARDS
A. Motion to Dismiss Standard
A valid complaint requires only “a short and plain statement of the claim showing that

the pleader is entitled to relief.” FED. R .CIV. P. 8(a)(2). To survive a motion to dismiss brought
pursuant to Federal Rule of Civil Procedure 12(b)(6), “a complaint must contain sufficient
factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft
v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570
(2007)). The United States Supreme Court in Iqbal clarified that its decision in Twombly
“expounded the pleading standard for ‘all civil actions.’” Iqbal, 556 U.S. at 684. The Supreme
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Court further explained that even though a court must accept as true all of the factual allegations
contained in a complaint, that requirement does not apply to legal conclusions; therefore, the
pleadings must include factual allegations to support the legal claims asserted. Id. at 678–79.
“Threadbare recitals of the elements of a cause of action, supported by mere conclusory
statements, do not suffice.” Id. at 678 (citing Twombly, 550 U.S. at 555). Thus, “[a]lthough a
reviewing court now affirmatively disregards a pleading's legal conclusions, it must still . . .
assume all remaining factual allegations to be true, construe those truths in the light most
favorable to the plaintiff, and then draw all reasonable inferences from them.” Connelly v. Lane
Const. Corp., 809 F.3d 780, 790 (3d Cir. 2016) (citing Foglia v. Renal Ventures Mgmt., LLC,
754 F.3d 153, 154 n. 1 (3d Cir.2014)). The facial plausibility requirement is met “when the
plaintiff pleads factual content that allows the court to draw the reasonable inference that the
defendant is liable for the misconduct alleged.

The plausibility standard is not akin to a

‘probability requirement,’ but it asks for more than a sheer possibility that a defendant has acted
unlawfully.” Iqbal, 556 U.S. at 678 (citing Twombly, 550 U.S. at 556–57) (internal citations
omitted). Furthermore, the determination as to whether a complaint contains a plausible claim
for relief is “a context-specific task that requires the reviewing court to draw on its judicial
experience and common sense.” Iqbal, 556 U.S. at 679 (citation omitted).
In light of Iqbal, the United States Court of Appeals for the Third Circuit has instructed
that district courts should first separate the factual and legal elements of a claim, and accepting
the “well-pleaded facts as true,” then should “determine whether the facts alleged in the
complaint are sufficient to show that the plaintiff has a ‘plausible claim for relief.’” Fowler v.
UPMC Shadyside, 578 F.3d 203, 211 (3d Cir. 2009) (citing Iqbal, 556 U.S. at 679). The matter
for this Court’s determination is not whether the pleading party ultimately will prevail on the
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claim, but rather whether that party is entitled to offer evidence in support of it. United States ex
rel. Wilkins v. United Health Grp., 659 F.3d 295, 302 (3d Cir. 2011). Accordingly, a plaintiff
must plead “factual content that allows the court to draw the reasonable inference that the
defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678 (citing Twombly, 550
U.S. at 556). As part of this task, this Court must “identify those allegations that, being merely
conclusory, are not entitled to the presumption of truth.” Connelly, 809 F.3d at 789. The Court
is mindful that to meet the standard a plaintiff “need only put forth allegations [of fact] that raise
a reasonable expectation that discovery will reveal evidence of the necessary element.” Fowler,
578 F.2d at 213 (internal quotations omitted); see also Connelly, 809 F.3d at 791.
B. Rule 14
Federal Rule of Civil Procedure 14 provides: “[a] defending party may, as third-party
plaintiff, serve a summons and complaint on a nonparty who is or may be liable to it for all or
part of the claim against it.” FED. R. CIV. P. 14(a)(1). Therefore, in order for a third-party claim
to be valid, there must be a basis for liability between the third-party defendant and the
defendant/third-party plaintiff. See C. Wright, A. Miller, & M. Kane, 6 Fed. Prac. & Proc. Civ. §
1446 (3d ed.) (“A third-party claim may be asserted under Rule 14(a)(1) only when the third
party’s liability is in some way dependent on the outcome of the main claim or when the third
party is secondarily liable to the defending party.”). A defendant may not bring in a third-party
that is solely liable to the plaintiff. See e.g., Herndon Borough Jackson Twp. Joint Mun. Auth. v.
Pentair Pump Grp., Inc., No. 4:12-CV-01116, 2015 WL 2166097, at *2 (M.D. Pa. May 8, 2015);
O'Mara Enterprises, Inc. v. Mellon Bank, N.A., 101 F.R.D. 668, 670 (W.D. Pa. 1983).
“Where . . . state substantive law recognizes a right of contribution and/or indemnity,
impleader under Rule 14 is the proper procedure by which to assert such claims.” In re One
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Meridian Plaza Litig., 820 F.Supp. 1492, 1496 (E.D. Pa. 1993) (citing Smith v. Whitmore, 270
F.2d 741 (3d Cir. 1959). As Rule 14 only provides the procedural mechanism for filing a thirdparty complaint, a party’s substantive rights to contribution and common law indemnity are
determined by state law. Herndon Borough, 2015 WL 2166097, at *2. “In general, whether a
particular third-party defendant may be impleaded is a question which ‘rests with the sound
discretion of the trial court.’” State Coll. Area Sch. Dist. v. Royal Bank of Can., 825 F.Supp.2d
573, 379 (M.D. Pa. 2011) (quoting Hartford Casualty Ins. Co. v. ACC Meat Co., 2011 WL
398087, at *1 (M.D. Pa. Feb.2, 2011)).
C. Contribution
Contribution “is not a recovery for the tort, but rather it is the enforcement of an equitable
duty to share liability for the wrong done by both.” Swartz v. Sunderland, 169 A.2d 289, 290
(Pa. 1961). The right of contribution under Pennsylvania law is governed by the Pennsylvania
Uniform Contribution Among Tortfeasors Act. 42 Pa. C.S. §§ 8322-8327. Under this statute,
contribution is only available among joint tortfeasors. 42 Pa. C.S. § 8324(a); Bank v. City of
Philadelphia, 991 F.Supp.2d 523, 538 (E.D. Pa. 2014); see also Travelers Indem. Co. v. Stengel,
512 Fed.App’x 249, 251 (3d Cir. 2013). The Act defines joint torfeasors as “two or more
persons jointly or severally liable in tort for the same injury to persons or property . . .” 42 Pa.
C.S. § 8322 (emphasis added). Accordingly, contribution is not available for breach of contract
claims. See e.g., Agere Sys., Inc. v. Advanced Envtl. Tech. Corp., 552 F.Supp.2d 515, 520 (E.D.
Pa. 2008); Unique Techs., Inc. v. Micro Stamping Corp., No. CIV.A. 02-CV-6649, 2003 WL
21652284, at *3 (E.D. Pa. Apr. 15, 2003); Higgins Erectors & Haulers, Inc. v. E.E. Austin &
Son, Inc., 714 F.Supp. 756, 759 (W.D. Pa. 1989); Atchison Casting Corp. v. Deloitte & Touche,
LLP, 2003 WL 1847665, at *3 (Pa. Com. Pl. Mar. 14, 2003).
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D. Common Law Indemnity
Unlike the right of contribution, common law indemnity is an “equitable remedy that
shifts the entire responsibility for damages from a party who, without any fault, has been
required to pay because of a legal relationship to the party at fault.” City of Wilkes-Barre v.
Kaminski Bros., 804 A.2d 89, 92 (Pa. Commw. Ct. 2002). “Common law indemnity is not
a fault-sharing mechanism that allows a party, whose negligence was minor, to recover from the
tortfeasor whose negligence was dominant. It is a fault-shifting mechanism that comes into play
when a defendant held liable by operation of law seeks to recover from a defendant whose
conduct actually caused the loss.” Id. It “is appropriate when a defendant’s liability ‘arises not
out of its own conduct, but out of a relationship that legally compels the defendant to pay for the
act or omission of a third party.” Bank, 991 F.Supp.2d at 530 (quoting Morris v. Lenihan, 192
F.R.D. 484, 489 (E.D. Pa. 2000)). The touchstone of common law indemnity is the notion of
secondary liability on the part of the party seeking indemnity:
But the important point to be noted in all the cases is that secondary as
distinguished from primary liability rests upon a fault that is imputed or
constructive only, being based on some legal relation between the parties, or
arising from some positive rule of common or statutory law or because of a failure
to discover or correct a defect or remedy a dangerous condition caused by the act
of the one primarily responsible.
Builders Supply Co. v. McCabe, 77 A.2d 368, 371 (1951). Like contribution, common law
indemnity is only available for liability sounding in tort and is not available for breach of
contract. See e.g., E. Elec. Corp. of N.J. v. Rumsey Elec. Co., No. CIV.A. 08-5478, 2010 WL
2788294, at *2 (E.D. Pa. July 14, 2010); Higgins, 714 F. Supp. at 759.
E. Gist of Action Doctrine
“Under Pennsylvania law, the gist of action doctrine maintains the conceptual distinction
between contract law and tort law.” Gadley v. Ellis, No. CIV.A. 3:13-17, 2015 WL 2345619, at
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*6 (W.D. Pa. May 15, 2015). The doctrine seeks to prevent plaintiffs from repackaging breach
of contract claims as tort claims. The Supreme Court of Pennsylvania recently clarified the
appropriate analytical framework for applying the gist of action doctrine. See Bruno v. Erie Ins.
Co., 106 A.3d 48 (Pa. 2014). Justice Todd’s opinion in Bruno explained that gist of action
analysis is a fact specific inquiry and that “duty-based demarcation” is the “touchstone standard”
in evaluating the gist of the claims at issue. Id. at 69. In other words, courts must look at where
the duty allegedly breached originates.
V.

DISCUSSION
Terra’s third-party claims, as against Trumbull, and ECI”s cross-claims fail. First, the

facts of the case, as pled, do not support recovery on a common law indemnity claim. Second,
after careful review of Terra’s third-party Complaint, it is clear that Trumbull’s potential
liability, if any, to EQT would stem from their contract.

The conclusion that Trumbull’s

potential liability is contractual in nature requires dismissal of both Terra’s contribution and
common law indemnity claims against Trumbull. The Court will discuss each of these issues, in
turn.
A. Terra Cannot Recover Using Common Law Indemnity
Trumbull argues Terra’s common law indemnity claim fails on the grounds that there is
no possible legal basis that would result in Terra being held liable for negligence committed
exclusively by Trumbull. (See Docket No. 185 at 8-10) (“there simply is no scenario under
which a jury could determine that Trumbull’s work caused the holes, but hold Terra legally
responsible”). While it does not concede the argument, Terra does not provide any legal basis to

11

counter it.4 (See Docket No. 191 at 4-5). The Court finds this argument compelling.
Common law indemnity is not available to a joint tortfeasor or a party whose negligence
contributed to the injury at issue. See Bank, 991 F.Supp.2d at 530 (“the party seeking common
law indemnity must demonstrate that there was no active fault on his own part”); see also City of
Wilkes-Barre, 804 A.2d at 92 (“Common law indemnity is not a fault-sharing mechanism that
allows a party, whose negligence was minor, to recover from the tortfeasor whose negligence
was dominant.”) Thus, in order to succeed on common law indemnity, Terra would have to
prove not only that Trumbull was at fault, but that Terra was not. If Terra were to ultimately
succeed at proving this, Trumbull’s negligence would provide Terra a full defense from liability
to EQT. Terra and Trumbull do not have a special legal relationship of any kind that would
result in secondary liability for Terra for the harm caused by Trumbull’s negligence. The Court
cannot imagine, and Terra has not offered, a single scenario in which Terra could be held liable
to EQT for Trumbull’s negligence, where Terra is found to have had no active fault of its own.
Therefore, if Terra’s negligence contributed to the holes in the liner in any way, common law
indemnity is unavailable. If it did not, Terra would prevail against EQT and not have any
liability for Trumbull to indemnify. See Unique Techs., Inc., 2003 WL 21652284, at *3 (thirdparty claim for common law indemnity failed because the defendant would either prevail against
the plaintiff or be found to have some degree of fault). Thus, Terra has not stated a claim for
common law indemnity.5

4

Terra argues that Trumbull raised this argument for the first time in its Reply and the Court should not
consider it. (Docket No. 191 at 4-5 n. 5). Review of Trumbull’s initial Brief reveals that this is simply not the case.
(See Docket No. 168 at 10-12).
5
Although it does not dismiss the contribution claim on this basis, the Court notes that it is also not clear
whether Terra has adequately pled facts that would support recovery on its contribution claim. Unlike common law
indemnity, contribution is exclusively available for joint tortfeasors. 42 Pa. C.S. § 8324(a). Parties are joint
tortfeasors when they both contributed to the same injury and can be held jointly and severally liable. 42 Pa. C.S. §
8322. In its pleadings and at oral argument, Terra generally lays all of the blame with Trumbull and ECI. Again, if

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B. The Basis for Trumbull’s Liability to EQT, if any, Is Contractual
Trumbull takes the position that (1) EQT has only sued Terra in contract; and (2)
Trumbull’s liability to EQT, if any, would be based on actions covered by its contract with EQT.
(See generally Docket Nos. 168, 185). As noted above, and undisputed by Terra, if either of
these situations are true, Terra’s third-party claims fail because both common law indemnity and
contribution claims must be grounded in tortious conduct.

(See Docket No. 179 at 4)

(acknowledging that both of its claims “must be grounded in tortious conduct”). Further, the
Federal Rules do not allow a defendant to file third-party claims premised only upon the thirdparty’s liability to the plaintiff. FED. R. CIV. P. 14(a)(1). After close examination of Terra’s
third-party Complaint, the Court concludes that Trumbull’s potential liability to EQT, if any,
would be contractual in nature.
Terra’s third-party claims fail, regardless of its own liability to EQT, because it is evident
from the face of Terra’s third-party Complaint that Trumbull’s liability to EQT, if any, would be
through its contract with EQT. Perhaps tellingly, Terra itself spends much of its third-party
Complaint detailing Trumbull’s and ECI’s contracts with EQT. Terra’s allegations regarding
Trumbull’s failures fall squarely within Terra’s own description of Trumbull’s contractual
obligations to EQT. As alleged by Terra, the contract between EQT and Trumbull provides that
Trumbull would perform its work in a “workmanlike” and “safe” manner, free from defects.
(Docket No. 160 at ¶¶ 8-12). Trumbull also agreed that it would not “cause or permit a violation
the fault lies entirely with Trumbull and/or ECI, that would provide Terra with a complete defense to liability from
EQT and there would be nothing towards which Terra could seek contribution. Terra would only be able to receive
contribution from Trumbull if Terra and Trumbull were found to be joint tortfeasors. Despite being able to describe
in detail how Trumbull and ECI allegedly contributed to the S-Pitt leaks, Terra does not explain exactly how it may
be found to be a joint tortfeasor along with Trumbull and/or ECI. Terra states only that “there are any number of
conceivable outcomes in which Terra could be held jointly and severally liable, but not wholly responsible, for the
environmental response costs” and argues it need not be more specific at the pleading stage. (Docket No. 179 at 1011).

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of, or perform [work] in a manner that will subject [the well site] to any remedial obligation
under any local, state or federal environmental laws” and to indemnify EQT if its performance
resulted in any such remedial obligations. (Id.). After detailing these obligations, Terra avers
“Trumbull’s improper, unworkmanlike and defective construction services provided at the S-Pit
subjected the [well site] to remedial obligations under [various environmental laws].” (Id. at ¶
39) (emphasis added). Thus, taking as true the allegations in Terra’s third-party Complaint, both
Trumbull’s allegedly “improper, unworkmanlike and defective” work and its responsibility to
avoid and indemnify EQT for the remedial obligations to the DEP and the adjacent landowner
would be governed by the contract.
In Pennsylvania, where there is a written indemnity agreement between the parties,
common law indemnity is not available. Fid. Nat. Title Ins. Co. v. B & G Abstractors, Inc., No.
2:15-CV-835, 2015 WL 6472216, at *10 (W.D. Pa. Oct. 27, 2015) (“[T]he Pennsylvania
Supreme Court has held that where ‘there is a written contract setting forth the rights and duties
of the parties,’ the terms of the contract, rather than common law principles of indemnity,
govern.”) (citing Eazor Express Inc. v. Barkley, 272 A.2d 893, 895 (Pa. 1971)); Bracken v.
Burchick Const. Co., No. 1432 WDA 2012, 2014 WL 10790110, at *7 (Pa. Super. Ct. Oct. 10,
2014) (“Common law indemnity concerns are irrelevant to our determination here since the
parties entered into a written contract of indemnity that specifically sets forth the rights and
duties of each party to the contract.”). Where there is no dispute that “the parties’ Agreement
covers the issue of indemnity,” the claim “must live or die under the terms of the Agreement.”
Fid. Nat. Title Ins. Co., 2015 WL, at *10. The indemnity provision of EQT’s contract with
Trumbull would therefore mean that the only way Trumbull could be liable to EQT for EQT’s
liability to the DEP and the landowner is through their contract.
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Even if the Court found EQT’s common law indemnity claim to constitute a tort claim
against Terra, Terra’s attempt to pass that tort liability onto Trumbull fails through application of
the gist of action doctrine. It is true that “the mere existence of a contract between two parties
does not, ipso facto, classify a claim by a contracting party for injury or loss suffered as the result
of actions of the other party in performing the contract as one for breach of contract.” Bruno,
106 A.3d at 69-70 (citations omitted). Terra cites Gambo v. Commonwealth of Pennsylvania,
No. 04 CV 3318, 2005 WL 4346598, at *1 (Pa. Comm. Ct. Aug. 26, 2005), where the liability
for pollution stemming from the negligent storage of chemicals was found to sound in tort
despite the existence of a contract between the parties. However, the facts in Gambo are
distinguishable. In that case, PennDOT leased land from private individuals on which it stored
various chemicals. As a result of allegedly negligent storage by PennDOT, the chemicals leaked
into the ground causing property damage and unsafe conditions.

Id. at *1-2.

The

Commonwealth Court held that the private landowners’ suit was not contractual under the gist of
action doctrine because the complaint did not seek damages for, or enforcement of, any terms of
the lease, but rather for various torts. Id. at *3.
Unlike the contract in Gambo, which was simply a lease agreement for the use of the
land, the MSA between EQT and Trumbull expressly obligated Trumbull to avoid the type of
harm Terra alleges that Trumbull caused. Trumbull was contractually obligated to perform its
work in a “workmanlike” and “safe” manner, free from defects. (Docket No. 160 at ¶¶ 8-12).
Terra alleges “Trumbull’s improper, unworkmanlike and defective construction services” caused
the damages at issue in this case. (Id. at ¶ 39) (emphasis added). Terra also notes that Trumbull
specifically agreed to notify EQT immediately if the conditions of the surface and subsurface
were such that work could not continue. (Id. at ¶ 10). This is precisely what Terra alleges
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Trumbull failed to do when it allegedly left sharp rocks and debris at the bottom of the S-Pitt,
overtop of which ECI subsequently installed the liner. If Trumbull has any liability to EQT, it is
through failures of performance clearly covered by their contract. See e.g., Higgins, 714 F.
Supp. at 759 (dismissing fifth-party complaint where although “couched in negligence terms, it
is actually based upon an alleged breach [of contract]”); Bruno, 106 A.3d at 69 (gist of claims
determined by the origin of the duty at issue); Fid. Nat. Title Ins. Co., 2015 WL, at *10 (common
law indemnity not available when there is a written indemnity agreement).

Accordingly,

application of Pennsylvania’s gist of action doctrine would render any tort claim brought against
Trumbull contractual in nature. See Bruno, 106 A.3d at 69 (explaining that the origin of the duty
allegedly breached is the “touchstone standard” in evaluating the gist of the claims at issue).
Since Trumbull’s only potential liability to EQT would be contractual, it cannot be liable
to Terra for common law indemnity or contribution, as both claims are available only for tort
liability. If Trumbull cannot be held liable to Terra, Terra cannot join Trumbull in this lawsuit.
FED. R. CIV. P. 14(a)(1).
Trumbull also argues, for the same reasons, that Terra’s potential liability to EQT is only
contractual. EQT’s Complaint brings four claims against Terra. (Docket No. 1-3). Counts I, II,
and III – breach of contract, breach of express warranty, and contractual indemnification – are
clearly contract claims. Terra bases its third-party claims against Trumbull on Count IV of
EQT’s Complaint, which brings a claim, in the alternative, against Terra for common law
indemnity. (Docket No. 179 at 4) (citing Docket No. 1-3 at ¶¶ 53-59). Terra’s argument is
essentially that since common law indemnity is only available for tort liability, on its face,
EQT’s Count IV necessarily attempts to pass EQT’s potential tort liability onto Terra. (Id.).
According to EQT’s Complaint, Terra agreed to perform its work in a “safe” and “workmanlike”
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manner that was free from defects. (Docket No. 1-3 at ¶¶ 8-11). Terra also agreed that it would
not perform its work in such a way that resulted in remedial obligations for violations of
environmental laws and to indemnify EQT in the event that it did cause such remedial
obligations. (Id.). After laying out the terms of the MSA, EQT alleges that Terra’s “improper,
unworkmanlike and defective” work subjected EQT and its well site to remedial obligations to
the DEP and the adjacent landowner. (Id. at ¶¶ 28-30). As Trumbull’s argument goes, both
Terra’s allegedly “improper, unworkmanlike and defective” work and its responsibility to avoid
and indemnify EQT for the remedial obligations to the DEP and the adjacent landowner appear
to be governed by the MSA. Because Terra answered EQT’s Complaint, including the common
law indemnity claim which remains a part of the lawsuit, and because the Motions to Dismiss
will be granted regardless, the Court need not determine the validity of EQT’s common law
indemnity claim against Terra at this time.6
The Court agrees with Terra that it is peculiar that EQT did not also sue Trumbull and
ECI in the first place. Nevertheless, the Federal Rules of Civil Procedure do not permit, and
Pennsylvania law does not support, Terra’s third-party Complaint under the present
circumstances. As already noted, however, if Terra can prove at trial that the fault for the holes
in the liner lies with Trumbull, it will provide Terra a defense from liability to EQT.
VI.

CONCLUSION
For the foregoing reasons, the Court finds Trumbull cannot be held liable for contribution

or common law indemnity to either Terra or ECI. Trumbull’s Motions [167] and [189] will be
granted and Terra’s third-party Complaint, as against Trumbull, and ECI’s cross-claims will be
6

Likewise, because there are other grounds for dismissal, the Court does not decide the novel issue of
Pennsylvania law raised by the parties as to whether a claim for common law indemnity against a defendant for tort
liability is sufficient for the defendant to seek indemnity and contribution from third parties, rather than the more
common example where the plaintiff has actually brought tort claims directly against the defendant.

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dismissed, with prejudice.
An appropriate order follows.
s/Nora Barry Fischer
Nora Barry Fischer
United States District Judge
Dated: April 12, 2016
cc/ecf: All counsel of record

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