APPLE AMERICAN GROUP, LLC v. GBC DESIGN, INC.

Filing 58

MEMORANDUM OPINION AND ORDER - The Court grants in part and denies in part Jackson Taylor's Motion to Dismiss GBC's Third-Party Complaint (ECF No. 39 ). Specifically: a. The Court denies Jackson Taylor's motion to dismiss as it perta ins to GBC' s contribution claim. b. The Court grants Jackson Taylor's motion to dismiss as it pertains to GBC' s indemnity claim. The Court grants GBC leave to amend. GBC shall have 21 days from the date of this order to file an Amen ded Third-Party Complaint. The Court denies Jackson Taylor's Motion to Dismiss Kimball's Cross-claim (ECF No. 45 ). The Court denies ACA' s Motion to Dismiss GBC's Third-Party Complaint (ECF No. 49 ), and as more fully stated in said Memorandum Opinion and Order. Signed by Judge Kim R. Gibson on 2/15/2018. (dlg)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF PENNSYLVANIA
APPLE AMERICAN GROUP, LLC,

)

CIVIL ACTION NO. 3:15-325

)

Plaintiff,

)
)

v.

JUDGE KIM R. GIBSON

)

)

GBC DESIGN, INC.,

)
)

Defendant/Third-Party Plaintiff,

)

v.

)

)
)

JACKSON TAYLOR CONTRACTORS,
LLC., ACA ENGINEERING, INC., and
L.R. KIMBALL & ASSOCIATES, INC.,

)

)
)
)

Third-Party Defendants.

)

MEMORANDUM OPINION
I.

Introduction
Pending before the Court are: (1) a Motion to Dismiss GBC's Third-Party Complaint,

filed by Third-Party Defendant Jackson Taylor Contractors, LLC. ("Jackson Taylor") (ECF
No. 39); (2) a Motion to Dismiss L.R. Kimball & Associates, Inc.'s 1 Cross-claim, also filed by
Jackson Taylor (ECF No. 45); and (3) a Motion to Dismiss GBC's Third-Party Complaint,
filed by Third-Party Defendant ACA Engineering, Inc. (" ACA") (ECF No. 49). The motions
have been fully briefed and are ripe for disposition.

1

L.R. Kimball & Associates, Inc. is referred to as "Kimball" throughout.

For the reasons explained below, the Court will grant in part and deny in part
Jackson Taylor's Motion to Dismiss GBC's Third-Party Complaint (ECF No. 39) and will
grant CBC leave to amend. The Court will deny Jackson Taylor's Motion to Dismiss
Kimball's Crossclaim (ECF No. 45). Finally, the Court will deny ACA's Motion to Dismiss
GBC's Third-Party Complaint (ECF No. 49).

II.

Jurisdiction and Venue
The Court has subject matter jurisdiction over the original Complaint filed by Apple

American Group, LLC. ("Apple") because Apple and CBC are completely diverse and the
amount in controversy exceeds $75,000. 28 U.S.C. § 1332. Venue is proper because a
substantial part of the events or omissions giving rise to Apple's claims occurred in the
Western District of Pennsylvania. 28. U.S.C. § 1391.
The Court has supplemental jurisdiction over GBC's third-party claims against
Kimball, Jackson Taylor, and ACA because GBC's third-party claims form part of the same
case or controversy. 28. U.S.C. § 1367(a). Similarly, the Court has supplemental jurisdiction
over Kimball's cross-claims against Jackson Taylor and ACA because Kimball's crossclaims form part of the same case or controversy. Id.

III.

Background
A.

Apple's Complaint Against GBC 2

Apple owns and operates Applebee's Neighborhood Restaurant franchises. (ECF
No. 1 at 'iI 7.)

The facts contained in this section are derived from Apple's Complaint (ECF No. 1). The Court
accepts these facts as true for the sole purpose of deciding the pending motions.

2

2

In 2013, Apple purchased a property in Ebensburg, Pennsylvania, on which it
planned to construct an Applebee's restaurant. (Id. at <J[ 10.) Apple contracted with ACA to
conduct a "Ceotechnical Investigation Report" of the premises "to guide site planning."
(Id. at <J[ 11.) Apple also contracted with CBC to provide Site Plans which included, among

other things, a "grading, drainage, and erosion control plan .... " (Id. at <J[ 12.) Apple's
contract with CBC provided that CBC would rely on other contractors' work, including
ACA's Ceotechnical Investigation Report, to prepare the Site Plans. (Id. at <J[ 14.) CBC
completed the Site Plans in September 2013 after receiving ACA's Ceotechnical Report and
reports from other contractors. (Id. at <J[ 15.)
Construction on the Applebee's began in 2013 and was completed by spring of 2014.
(Id. at <J[ 18.) The appropriate agencies inspected the Applebee's and approved the

construction as conforming to CBC's Site Plans. (Id. at <J[ 19.) The Applebee's opened for
business in November 2014. (Id. at <J[ 20.)
The Applebee' s immediately began to experience drainage and moisture issues. (Id.
at <J[ 21.) The rain garden installed on the north side of the building failed and caused water
to pool and freeze in the downspouts and under the sidewalks. (Id.) The drainage and water
management systems malfunctioned and allowed water infiltration that cracked and
buckled the sidewalks. (Id.) And the drainage and grading systems proved deficient and
caused the roof, doors, and windows to suffer severe damage. (Id.)
These defective systems conformed with CBC's Site Plans. (Id.)
Apple hired ACA-the engineering firm that had prepared the Ceotechnical
Investigation Report-to inspect the premises. (Id. at <J[ 23.) ACA determined that the
3

damage to the premises was due to the fact that CBC' s Site Plans failed to properly follow
ACA's Ceotechnical Investigation Report. (Id. at 'II 24.) ACA also hired Wallace & Pancher,
Inc.-another engineering firm-to inspect the premises. (Id. at 'II 26.) Like ACA, Wallace &
Pancher determined that CBC' s Site Plans failed to conform to ACA' s Ceotechnical
Investigation Report and that this failure caused the water damage. (Id. at 'II 27.)
Apple spent approximately $300,000.00 to fix the defects. (Id. at 'II 29.) Apple also
sustained lost profits and damage to its reputation because it closed its business "for several
days" to make the necessary repairs. (Id. at 'II 28.)
Apple brings four counts against CBC: (1) breach of contract; (2) professional
negligence; (3) negligence; and (4) unjust enrichment. (ECF No. 1 at 'il'il 32-52.)
B.

GBC's Third-Party Complaint Against Third-Party Defendants ACA,
Jackson Taylor, and Kimball3

On March 31, 2017, CBC filed its Third-Party Complaint. (ECF No. 24.) CBC asserts
one count of indemnification/contribution against each third-party defendant (id.) and
alleges the facts described below.
ACA served as the engineering firm for the Applebee' s construction project and was
responsible for producing a Ceotechnical Investigation Report and ensuring that the
report's recommendations were followed during construction. (Id. at 'il'il 17, 18.) Apple's
harm resulted from ACA' s negligent failure to ensure that the construction complied with
the recommendations set forth in its Ceotechnical Investigation Report. (Id. at 'II 19.)

3 The facts contained in this section are derived from GBC's Third-Party Complaint (ECF No. 24).
The Court accepts these facts as true for the sole purpose of deciding the pending motions.

4

Jackson Taylor served as the general contractor for the Applebee's construction
project and performed the defective work described in Apple's Complaint. (Id. at 11 12.)
Jackson Taylor knew about the recommendations set forth in ACA's Geotechnical
Investigation Report but failed to abide by these recommendations when it constructed the
Applebee's. (Id. at 1113.) Apple's harm resulted from Jackson Taylor's negligent failure to
conform its construction to the specifications of ACA' s Geotechnical Investigation Report.
(Id. at 11 16.)

Kimball provided constriction services to Apple. (Id. at 11 20.) Kimball supervised
the construction of the Applebee' s and was responsible for ensuring that the design
documents-including ACA's Geotechnical Investigation Report-were followed. (Id. at 11
21.) Apple's harm resulted from Kimball's negligent failure to properly supervise the

construction and ensure that the construction complied with the design recommendations.
(Id. at

1111 22, 23.)
C.

Finally,

Kimball's Cross-claims Against ACA and Jackson Taylor

Third-Party

Defendant

Kimball

asserts

cross-claims

for

indemnification/contribution against ACA and Jackson Taylor. Kimball asserts its crossclaims on the last page of its Answer and Affirmative Defenses to GBC's Third-Party
Complaint (see ECF No. 35). While Kimball's cross-claims are pled sparingly and merely
allege that ACA and Jackson Taylor are liable to Kimball for any monies that Kimball is
found to owe CBC, Kimball "incorporates by reference the factual allegations in the
Complaint and the Third-Party Complaint." (Id. at 8.)

5

IV.

Legal Standards
A.

Standard of Review

A complaint may be dismissed under Federal Rule of Civil Rule 12(b)(6) for "failure
to state a claim upon which relief can be granted." Connelly v. Lane Const. Corp., 809 F.3d
780, 786 (3d Cir. 2016). But detailed pleading is not generally required. Id. The Rules
demand only "a short and plain statement of the claim showing that the pleader is entitled
to relief" to give the defendant fair notice of what the claim is and the grounds upon which
it rests. Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Fed. R. Civ. P.
8(a)(2)).
Under the pleading regime established by Twombly and Iqbal, a court reviewing the
sufficiency of a complaint must take three steps. 4 First, the court must "tak[e] note of the
elements [the] plaintiff must plead to state a claim." Ashcroft v. Iqbal, 556 U.S. 662, 675
(2009). Second, the court should identify allegations that, "because they are no more than
conclusions, are not entitled to the assumption of truth." Id. at 679; see also Burtch v. Milberg

Factors, Inc., 662 F.3d 212, 224 (3d Cir. 2011) ("Mere restatements of the elements of a claim
are not entitled to the assumption of truth.") (citation omitted). Finally, "[w]hen there are
well-pleaded factual allegations, [the] court should assume their veracity and then
determine whether they plausibly give rise to an entitlement to relief." Iqbal, 556 U.S. at
679. "A claim has facial plausibility when the plaintiff pleads factual content that allows

Although Iqbal described the process as a "two-pronged approach," Iqbal, 556 U.S. at 679, the
Supreme Court noted the elements of the pertinent claim before proceeding with that approach, id.
at 675-79. Thus, the Third Circuit has described the process as a three-step approach. See Connelly,
809 F.3d at 787; Burtch v. Milberg Factors, Inc., 662 F.3d 212, 221 n.4 (3d Cir. 2011) (citing Santiago v.
Warminster Township, 629 F.3d 121, 130 (3d Cir. 2010)).

4

6

the court to draw the reasonable inference that the defendant is liable for the misconduct
alleged." Id.; see also Connelly, 809 F.3d at 786. Ultimately, the plausibility determination 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.

B.

Joinder Under Rule 14

Under Federal Rule of Civil Procedure 14, "[a] defending party may, as third-party
plaintiff, serve a summons and complaint on a non party who is or may be liable to it for all
or part of the claim against it." Fed. R. Civ. P. 14(a)(l). Therefore, "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." EQT Prod. Co. v. Terra Servs., LLC, 179 F. Supp. 3d 486, 492
(W.D. Pa. 2016) (Fischer, J.) (citing C. Wright, A. Miller, & M. Kane, 6 Fed. Prac. & Proc. Civ.

§ 1446 (3d ed.)). In other words, "[a] defendant may only use Rule 14 [of the Federal Rules
of Civil Procedure] to implead a third-party defendant where the third-party defendant is,
or may be, liable to the defendant derivatively or secondarily, and not to join a person who
is or may be liable solely to the plaintiff." Flickinger v. Toys R Us, Inc., No. 3:10-CV-305, 2010
Wi, 4384252, at *1 (M.D. Pa. 2010), citing FDIC v. Bathgate, 27 F.3d 850, 873 (3d Cir.
1994); see Gamble v. Treetop Dev., LLC, No. 3:16-CV-01960, 2017 WL 3392356, at *2 (M.D. Pa.
2017) (explaining that "it is not permissible to bring in a person as a third-party defendant
simply because he is or may be liable to the plaintiff") (citing National Fire Ins. Co. of Hartford

v. Daniel J. Keating Co., 35 F.R.D. 137 (W.D. Pa. 1964)).
"Rule 14 is procedural in nature, and a party's substantive rights must derive from
state law." Herndon Borough Jackson Twp. Joint Mun. Auth. v. Pentair Pump Grp., Inc., No.
7

4:12-CV-01116, 2015 WL 2166097, at *2 (M.D. Pa. May 8, 2015) (citing Garcia v. Cummings,
1:07-cv-1886, 2009 WL 136785, at *2 (M.D. Pa. Jan. 20, 2009)). "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." EQT Prod. Co., 179 F. Supp. 3d at 492-93
(quoting In re One Meridian Plaza Litig., 820 F. Supp. 1492, 1496 (E.D. Pa. 1993) (citing Smith

v. Whitmore, 270 F.2d 741 (3d Cir. 1959)).
B.

Gist of the Action

"The gist of the action doctrine precludes tort claims where the true gravamen, or
gist, of the claim sounds in contract." Dommel Properties LLC v. Jonestown Bank & Tr. Co., 626
F. App'x 361, 364 (3d Cir. 2015) (citing Bruno v. Erie Ins. Co., 630 Pa. 79, 111, 106 A.3d 48, 68
(2014)). Courts apply the gist of the action doctrine when the claims "(1) aris[e] solely from
a contract between the parties; (2) where the duties allegedly breached were created and
grounded in the contract itself; (3) where liability stems from a contract; or (4) where the
tort claim essentially duplicates a breach of contact claim ... ."Addie v. Kjaer, 737 F.3d

854, 866 (3d Cir. 2013) (quoting eToll, Inc. v. Elias/Savion Adver., Inc., 811 A.2d 10, 19 (Pa.
Super. Ct. 2002)); Sbarra v. Horizontal Exp!., LLC, No. CV 14-866, 2016 WL 3268860, at

*4 (W.D. Pa. June 15, 2016); Patel v. Patel, No. CV 14-5845, 2016 WL 3000821, at *3
(E.D. Pa. May 25, 2016).
"Under Pennsylvania law, the 'gist of the action' doctrine 'precludes plaintiffs from
recasting ordinary breach of contract claims into tort claims."' Jones v. ABN Amro Mortg.

Grp., Inc., 606 F.3d 119, 123 (3d Cir. 2010) (quoting Erie Ins. Exch. v. Abbott Furnace Co., 2009
PA Super 88, 972 A.2d 1232, 1238 (2009)). As the Pennsylvania Supreme Court recently
8

explained in Bruno, "[i]f the facts of a particular claim establish that the duty breached is
one created by the parties by the terms of their contract-Le., a specific promise to do
something that a party would not ordinarily have been obligated to do but for the existence
of the contract-then the claim is to be viewed as one for breach of contract." Bruno, 106
A.3d at 68. However, if "the facts establish that the claim involves the defendant's violation
of a broader social duty owed to all individuals, which is imposed by the law of torts and,
hence, exists regardless of the contract, then it must be regarded as a tort." Id. As the Third
Circuit stated, Bruno '"reaffirm[ed]' the 'duty-based' analytical framework 'as the
touchstone standard for ascertaining the true gist or gravamen of a claim."' Dommel, 626 F.
App'x at 365 (quoting Bruno, 106 A.3d at 69.)

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."' EQT Prod. Co., 179 F. Supp.
3d at 493 (quoting Swartz v. Sunderland, 403 Pa. 222, 169 A.2d 289, 290 (1961)). The
Pennsylvania Uniform Contribution Among Joint Tortfeasors Act (the" Act") governs the
right of contribution under Pennsylvania law. 42 Pa. C.S. §§ 8322-8327. The Act only
provides for contribution among joint tortfeasors. Id. at § 8324(a); EQT Prod. Co., 179 F.
Supp. 3d at 493; Foulke v. Dugan, 212 F.R.D. 265, 270 (E.D. Pa. 2002) (citing Kemper Nat'l P &
C Cos. v. Smith, 419 Pa. Super. 295, 309, 615 A.2d 372, 380 (1992)). The Act defines "joint
tortfeasors" as "two or more persons jointly or severally liable in tort for the same injury to
persons or property, whether or not judgment has been recovered against all or some of
them." 42 Pa. C.S. § 8322 (emphasis added). Accordingly, "to be joint tortfeasors, 'the parties
9

must either act together in committing the wrong, or their acts, if independent of each other,
must unite in causing a single injury."' Agere Sys., Inc. v. Advanced Envtl. Tech. Corp., 552 F.
Supp. 2d 515, 520 (E.D. Pa. 2008) (quoting Foulke, 212 F.R.D. at 270).
"[C]ontribution is not available for breach of contract claims." EQT Prod. Co., 179 F.
Supp. 3d at 493 (collecting cases); Smerdon v. GEICO Cas. Co., No. 4:16-CV-02122, 2017 WL
2506421, at *4 (M.D. Pa. June 9, 2017).

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."' EQT Prod. Co.,
179 F. Supp. 3d at 493 (quoting City of Wilkes-Barre v. Kaminski Bros., 804 A.2d 89, 92 (Pa.
Commw. Ct. 2002)). Common law indemnity applies "to a person who, without active fault
on his own part, has been compelled, by reason of some legal obligation, to pay damages
occasioned by the initial negligence of another, and for which he himself is only secondarily
liable." Bank v. City of Philadelphia, 991 F. Supp. 2d 523, 530 (E.D. Pa. 2014) (internal citation
and quotation marks omitted).
The Supreme Court of Pennsylvania has stated that, in the context of common law
indemnity claims:
[T]he 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.

10

Builders Supply Co. v. McCabe, 366 Pa. 322, 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." EQT Prod. Co., 179 F. Supp. 3d at 493-94
(internal citations omitted).

V.

Discussion
The Court is presented with three pending motions: (1) Jackson Taylor's motion to

dismiss GBC's third-party claim; (2) Jackson Taylor's motion to dismiss Kimball's crossclaim; and (3) ACA's motion to dismiss GBC's third-party claim. The Court will discuss
these motions in tum.

A.

The Court Will Grant in Part and Deny in Part Jackson Taylor's Motion to
Dismiss GBC's Third-Party Claim

Jackson Taylor articulates four arguments for why this Court should dismiss GBC's
third-party claim. The Court will examine these arguments in tum, starting with Jackson
Taylor's argument that GBC improperly joined it as a third-party defendant.

1.

GBC Properly Alleged that Jackson Taylor is Derivatively Liable to GBC

First, Jackson Taylor asserts that GBC may not join it as a third-party defendant
because GBC alleges that Jackson Taylor is liable to Apple instead of alleging that Jackson
Taylor is derivatively liable to GBC for GBC's potential liability to Apple. (ECF No. 40 at 57.) Jackson Taylor further argues that GBC's third-party claim is improper because GBC
alleges that Jackson Taylor's negligence directly and proximately caused the injuries Apple
sustained. (Id. at 7.) In response, GBC argues that it's Third-Party Complaint does not assert
that Jackson Taylor is liable directly to Apple, but merely alleges that if GBC were found

11

liable to Apple, Jackson Taylor would be liable to CBC for contribution and common law
indemnity. (ECF No. 47 at 5.)
The Court finds that CBC properly alleged that Jackson Taylor is derivatively liable.
CBC's Third-Party Complaint alleges that, if CBC is found to be liable to Apple, CBC is
entitled to indemnification and contribution from Jackson Taylor. (See ECF No. 24 at <j[<j[ 26,
27.) Accordingly, CBC's third-party claim argues that Jackson Taylor is secondarily liable
to CBC should CBC be found liable to Apple. (Id.) Therefore, CBC's claim against Jackson
Taylor satisfies Rule 14' s requirement that a defendant allege that the third-party defendant
"is or may be liable to it for all or part of the claim against it." Fed. R. Civ. P. 14(a)(l).
Jackson Taylor cites one case from within the Third Circuit to support its argument
that CBC improperly alleged that Jackson Taylor is liable to CBC. However, this case is
inapposite. In Foulke, 212 F.R.D. 265, the plaintiff hired an attorney to bring a negligence
suit against an employee of a company who had allegedly assaulted him. Id. at 267. The
attorney inspected the company's personnel files during his investigation into the
allegations. Id. The attorney determined that the personnel files did not contain any
information that would have placed the employer on notice of its employee's violent
tendencies and, accordingly, recommended that the plaintiff drop his case. Id. The plaintiff
followed his attorney's advice. Id. Two years later, the plaintiff sued the attorney for
malpractice for dismissing the plaintiff's negligence suit. Id. During discovery, the attorney
uncovered a transcript from a disciplinary hearing where the employee who had allegedly
assaulted the plaintiff was accused of assaulting a fellow employee at work. Id. The attorney
brought a third-party claim against the corporation and argued that the corporation was
12

directly liable to the plaintiff for the malpractice claim because it failed to produce the
disciplinary report. Id. The district court rejected this argument, holding that "there is no
way that [the corporation] can be held liable for any part of [the attorney's] alleged [legal]
malpractice." Id. at 269.
Foulke does not apply here. While the corporation in Foulke could not be held liable
for all or part of the plaintiff's legal malpractice claim against his attorney, there is no reason
why Jackson Taylor could not be held liable for all or part of Apple's negligence claim
against CBC. Accordingly, Jackson Taylor's analogy to Foulke fails to persuade this Court
that CBC's third-party claim is improper. 5
The Court's finding that CBC properly alleged that Jackson Taylor is derivatively
liable to CBC does not end the Court's inquiry into whether it should grant Jackson Taylor's
motion dismiss. "Rule 14 creates no substantive rights." Smerdon, 2017 WL 2506421, at *3.
Rather, "a party's substantive rights must derive from state law." Herndon Borough, 2015

The Court notes that paragraph 25 of CBC's Third-Party Complaint states that "CBC denies any
liability to [Apple] in any amount" and asserts that the "Third-Party Defendants are actively,
primarily, and directly responsible for [Apple's] claimed damages." (ECF No. 24 at 'lI 25.) If this were
CBC' s only allegation of causation and liability, CBC' s Third-Party Complaint would be
impermissible under Rule 14 because a defendant may not join a party who "is or may be liable
solely to the plaintiff." Flickinger, 2010 WL 4384252, at *l. However, paragraphs 26 and 27 assert
proper third-party claims: CBC asserts that if CBC is found liable to Apple, CBC is entitled to
indemnification and contribution against the Third-Party Defendants. (ECF No. 24 at 'lI'll 26, 27.)
Contrary to Jackson Taylor's argument, CBC's alternative pleading does not doom its third-party
claims. The Federal Rules expressly permit alternative pleading, even when the alternative theories
are inconsistent. Fed. R. Civ. P. 8(d); see Grimsley v. Manitowoc Co., Inc, 675 F. App'x 118, 122 (3d Cir.
2017) (noting that Rule 8 "provid[es] for alternative and inconsistent pleadings"); Indianapolis Life
Ins. Co. v. Hentz, No. CIV A 1:06CV2152, 2009 WL 36454, at *4 (M.D. Pa. Jan. 6, 2009) (noting that
under Rule 8's alternative pleading scheme, "[e]ven contradictory statements of fact are allowable
subject to the requirements of Rule 11 when the pleader is legitimately in doubt about the facts in
question.") (internal citations omitted).
5

13

WL 2166097, at *2. Accordingly, the Court must determine whether CBC may hold Jackson
Taylor liable for indemnity and/or contribution under Pennsylvania law. The first step in
this inquiry is to address Jackson Taylor's argument that the gist of the action doctrine bars
CBC's third-party claims.

2.

Viewing the Facts in the Light Most Favorable to GBC, the Gist of the
Action Doctrine Does Not Bar GBC's Third-Party Claim

Jackson Taylor contends that, under the gist of the action doctrine, Apple's
negligence and professional negligence claims sound in contract rather than in tort. (ECF
No. 40 at 9-11.) If the Court accepts Jackson Taylor's argument, the Court must dismiss
CBC's third-party claim against Jackson Taylor because, under Pennsylvania law,
indemnification and contribution are unavailable in contract actions. CBC contends that the
gist of the action doctrine does not bar its third-party claim and argues that Apple's
negligence and professional negligence claims sound in tort rather than in contract. (ECF
No. 47 at 7-9.)
The Third Circuit has stated that "[a]pplication of [the gist of the action] doctrine
frequently requires courts to engage in a factually intensive inquiry as to the nature of a
plaintiff's claims." Addie, 737 F.3d at 868 (citing Baker v. Family Credit Counseling Corp., 440
F. Supp. 2d 392, 418 (E.D. Pa. 2006)). Accordingly, district courts in the Third Circuit
commonly allow contract and tort claims to simultaneously proceed into discovery and
defer evaluating a gist of the action challenge until the summary judgment stage. See, e.g.,
Crestwood Membranes, Inc. v. Constant Servs., Inc., No. 3:15-CV-537, 2016 WL 659105, at *5
(M.D. Pa. Feb. 17, 2016) (denying motion to dismiss tort claims after gist of the action

14

challenge and noting that "[w]hile discovery or trial might prove that [the defendant]
cannot be held liable in tort, the Court cannot so determine at this early stage of the
litigation"); H Contractors, LLC v. E.f.H. Constr., Inc., No. CV 16-368, 2017 WL 658240, at *6
(W.D. Pa. Feb. 16, 2017) (denying motion to dismiss tort claim after gist of the action
challenge, noting that "the Court must proceed cautiously in evaluating Third-Party
Plaintiff's fraudulent inducement claim and whether it is barred by the gist of the action
doctrine[,]" and explaining that the moving party "may revisit this issue after the close of
discovery.").
The Court lacks sufficient information to determine whether the gist of the action
doctrine bars Apple's negligence and professional negligence claims-and therefore also
lacks sufficient information to determine whether the gist of the action doctrine bars GBC' s
third-party claim against Jackson Taylor. Discovery or trial might prove that the gist of the
action doctrine subsumes Apple's and GBC's tort claims. But given the "factually intensive
inquiry" of applying the gist of the action doctrine, Addie, 737 F.3d at 868, the Court will
"proceed cautiously." H Contractors, 2017 WL 658240, at *6. Accordingly, the Court finds
that taking the facts and all reasonable inferences in the light most favorable to GBC,
Apple's-and thus GBC's-tort claims are not barred by the gist of the action doctrine.
The only case that Jackson Taylor cites does not apply here. In EQT Prod. Co., 179 F.
Supp. 3d 486, a developer sued a contractor under various contract theories after the liner
of a natural gas well ripped and caused environmental contamination. Id. at 489-90. The
contractor brought third-party claims against subcontractors who had performed work on
the well. Id. The district court held that the gist of the action doctrine barred the contractor's
15

third-party claims. Id. at 496. The Court emphasized that, according to the contractor's third-

party complaint, the third-party defendants had signed contracts with the original plaintiff
that articulated the obligations that the third-party defendants allegedly failed to perform.

Id. at 495-96. Because the third-party defendants had independent contractual obligations
to the plaintiff, and because their alleged conduct clearly violated these contractual
obligations, the district court held that the gist of the action doctrine barred the defendant's
third-party claim against the third-party defendants. Id. at 496.
EQT does not apply here. Neither Apple's Complaint nor CBC's Third-Party

Complaint alleges that Jackson Taylor signed a contract with Apple, much less provides a
detailed account of any contractual obligations that Jackson Taylor owed Apple.
Accordingly, the Court rejects Jackson Taylor's analogy to EQT and dismisses Jackson
Taylor's argument that the gist of the action doctrine prohibits CBC' s third-party claim
from proceeding to the summary judgment stage.
Having rejected Jackson Taylor's arguments that CBC's third-party claim should be
dismissed for improper joinder and the gist of the action doctrine, the Court turns to the
merits of CBC' s contribution and indemnity claims.

3.

GBC Stated a Plausible Claim for Contribution

Next, Jackson Taylor argues that this Court must dismiss CBC's third-party
contribution claim. Jackson Taylor contends that CBC and Jackson Taylor cannot be
classified as joint tortfeasors because they owed different duties to Apple. (ECF No. 40 at
10.) According to Jackson Taylor, CBC's duties to Apple "related to its preparation, as a
design professional, of the Site Plans, while Jackson Taylor's arose from its construction of
16

the [r]estaurant." (Id. at 11.) CBC responds by arguing that it has plausibly alleged that CBC
and Jackson Taylor are joint tortfeasors because their actions united to cause the singular
harm-moisture and drainage problems-that Apple suffered. (ECF No. 47at11.)
The Court is satisfied that CBC has stated a plausible contribution claim. As CBC
argues in its response brief, Apple sustained a single injury-"water and moisture damage"
(ECF No. 47at12)-which plausibly makes CBC and Jackson Taylor "joint tortfeasors." See
42 Pa. C.S. § 8322 (defining "joint tortfeasors" as "two or more persons jointly or severally
liable in tort for the same injury to persons or property.") (emphasis added).
It is possible that discovery will uncover evidence to corroborate Jackson Taylor's

contention that the duties owed, and injuries inflicted, by Jackson Taylor and CBC were
distinct, thus foreclosing CBC's contribution claim. But the Court agrees with CBC's
assertion that the nature of CBC's relationship with Jackson Taylor turns on issues of fact
that are more properly decided at summary judgment. (ECF No. 47 at 12-13.)

4.

GBC Did Not State a Plausible Common Law Indemnity Claim

Finally, Jackson Taylor argues that this Court should dismiss CBC's common law
indemnity claim. Jackson Taylor asserts that CBC and Jackson Taylor do not have a legal
relationship sufficient to give rise to a common law duty to indemnify and that, therefore,
there is no scenario under which CBC could be held liable for Jackson Taylor's acts or
omissions. (ECF No. 40 at 9.) CBC does not allege that a legal relationship exists between it
and Jackson Taylor, but instead asserts that Pennsylvania law does not require a legal
relationship for one party to owe the other a duty to indemnify. (ECF No. 47at10-11.)

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The Court holds that CBC failed to state a plausible indemnity claim. CBC has not
alleged that it had a legal relationship with Jackson Taylor, much less one that would
require CBC to pay damages resulting from Jackson Taylor's negligence. Furthermore, CBC
has not alleged that it had any special relationship with Jackson Taylor that would give rise
to an extra-contractual duty to indemnify. Because no special relationship exists, Jackson
Taylor correctly argues that it would be impossible for CBC to be completely without fault
and still be held liable for Jackson Taylor's negligence; either CBC is partially liable, and
indemnity is unavailable, or CBC is blameless and has a complete defense to Apple's
claims.

5.

Conclusion: The Court Will Grant in Part, and Deny in Part, Jackson
Taylor's Motion to Dismiss GBC's Third-Party Claim

CBC stated a plausible third-party claim against Jackson Taylor for contribution.
Accordingly, the Court will deny Jackson Taylor's motion to dismiss as it pertains to CBC' s
contribution claim. However, CBC failed to state a plausible claim for common law
indemnity. Accordingly, the Court will grant Jackson Taylor's motion to dismiss as it
pertains to CBC' s common law indemnity claim.

6.

Leave to Amend

"[I]f a complaint is subject to Rule 12(b)(6) dismissal, a district court must permit a
curative amendment unless such amendment would be inequitable or futile." CollegeSource,
Inc. v. AcademyOne, Inc., 597 Fed. Appx. 116, 126 (3d Cir. 2015) (quoting Phillips v. County of
Allegheny, 515 F.3d 224, 245 (3d Cir. 2008)). Amendment would be futile "if the amended
complaint would not survive a motion to dismiss for failure to state a claim upon which

18

relief could be granted." Munchak v. Ruckno, 692 Fed. Appx. 100, 112 (3d Cir. 2017) (internal
citations omitted).
The Court will grant CBC' s request for leave to amend. As noted above, CBC must
allege a legal or special relationship between CBC and Jackson Taylor to state a plausible
common law indemnity claim. Because the Third-Party Complaint failed to allege in detail
the relationship between CBC and Jackson Taylor, the Court cannot conclusively determine
that amendment would be futile. Accordingly, the Court will allow CBC to amend its
Third-Party Complaint.
B.

The Court Will Deny Jackson Taylor's Motion to Dismiss Kimball's
Cross-claim

Jackson Taylor asks this Court to dismiss Kimball's cross-claim. Jackson Taylor
argues that Kimball cannot maintain a cross-claim against Jackson Taylor if this Court
dismisses CBC's Third-Party Complaint. (See ECF No. 46 at 3-4.)
This argument is flawed in two respects. First, this Court has already denied Jackson
Taylor's motion to dismiss CBC's Third-Party Complaint, instead holding that CBC stated
a plausible contribution claim against Jackson Taylor. Second, Jackson Taylor's argument
misstates the law. In the Third Circuit, "a dismissal of the original Complaint as to one of
the defendants named therein does not operate as a dismissal of a cross-claim filed against
such defendant by a co-defendant." Aetna Ins. Co. v. Newton, 398 F.2d 729, 734 (3d Cir. 1968);
Fairview Park Excavating Co. v. Al Monzo Const. Co., 560 F.2d 1122, 1125 (3d Cir. 1977)
(reaffirming the rule announced in Aetna); see Impex Agr. Commodities Div. of Impex Overseas
Corp. v. Leonard Parness Trucking Corp., 582 F. Supp. 260, 261 (D.N.J. 1984) ("When ... the

19

original claim against a party is dismissed on the merits, crossclaims previously interposed
against the same party remain."); Core Const. & Remediation, Inc. v. Vill. of Spring Valley, NY,
No. CIV.A. 06-CV-1346, 2007 WL 2844870, at *12 (E.D. Pa. Sept. 27, 2007) ("A cross-claim
may remain viable after a defendant is dismissed from the underlying action.").
Accordingly, the Court will deny Jackson Taylor's Motion to Dismiss Kimball's
Cross-claim (ECF No. 45).

C.

The Court Will Deny ACA's a Motion to Dismiss GBC's Third-Party
Complaint

Finally, ACA-the engineering firm that prepared the Ceotechnical Investigation
Report-asks this Court to dismiss CBC's Third-Party Complaint. ACA argues that its
contract with Apple-which ACA attached to its motion to dismiss 6 -mandates dismissal
of CBC's third-party claim. ACA states that it did not have a contractual relationship with
CBC, and asserts that its contract with Apple (1) released ACA from any duty to supervise
the work of the third-party contractors who built the Applebee's; (2) gave Apple the option
to have ACA provide "field monitoring services" or to have ACA review the project plans
to ensure that they conformed to the Ceotechnical Investigation Report, but that Apple
never asked ACA to do so; and (3) contained an indemnity clause, an exculpatory clause,
and a limitation of liability clause. (See ECF No. 50 at 3-6.) In response, CBC argues that
ACA improperly relies on extrinsic documents that are neither attached to nor integral to
Apple's Complaint or CBC's Third-Party Complaint. (ECF NO. 52 at 3-4.)

6

See ECF No. 50-1.

20

"To decide a motion to dismiss, courts generally consider only the allegations
contained in the complaint, exhibits attached to the complaint and matters of public
record." Schmidt v. Skolas, 770 F.3d 241, 249 (3d Cir. 2014) (quoting Pension Benefit Guar.

Corp. v. White Consol. Indus., Inc., 998 F.2d 1192, 1196 (3d Cir. 1993)); see also Borough of
Moosic v. Darwin Nat. Assur. Co., 556 Fed. Appx. 92, 95 (3d Cir. 2014) ("Generally, a district
court ruling on a motion to dismiss may not consider matters extraneous to the pleadings.")
(internal citations omitted).
"However, an exception to the general rule is that a' document integral to or explicitly

relied upon in the complaint' may be considered 'without converting the motion to dismiss
into one for summary judgment."' 7 Schmidt, 770 F.3d at 249 (quoting In re Burlington Coat

Factory Sec. Litig., 114 F.3d 1410, 1426 (3d Cir. 1997)) (emphasis in original); see
also Schuchardt v. President of the United States, 839 F.3d 336, 353 (3d Cir. 2016) (stating that a
court deciding a 12(b)( 6) motion may consider document[ s] integral to or explicitly relied
/1

upon in the complaint") (emphasis in original) (internal citations omitted).
"Documents are integral when the plaintiff's claims are based on the document."

Hearbest, Inc. v. Adecco USA, No. 13CV1026, 2013 WL 4786232, at *3 (W.D. Pa. Sept. 6, 2013)
(quoting In re Donald f. Trump Casino Sec. Litig., 7 F.3d 357, 368 n. 9 (3d Cir. 1993)); Ayco Co.,

L.P. v. Lipton, No. 12CV0712, 2012 WL 3746193, at *3 (W.D. Pa. Aug. 29, 2012); Langweiler v.
Borough of Newtown, No. CIV .. A 10-3210, 2011WL1809264, at *5 (E.D. Pa. May 12, 2011).

'The rationale underlying this exception is that the primary problem raised by looking to
documents outside the complaint-lack of notice to the plaintiff-is dissipated '[w]here the plaintiff
has actual notice ... and has relied upon these documents in framing the complaint." Schmidt, 770
F.3d 241at249 (internal citations omitted).

7

21

The Court finds that ACA's contract with Apple is neither "relied on" by nor
"integral to" either of the complaints in this case. While Apple's Complaint mentions in
passing that Apple "contracted" with ACA to "conduct a geotechnical investigation" of the
Applebee's location "to guide site planning," (ECF No. 1 at <J[ll), Apple's claims-all of

which are against CBC- are in no way based on Apple's contract with ACA. Furthermore,
GBC's Third-Party Complaint does not mention any contract between ACA and Apple. (See
ECF No. 24.) Because ACA's contract with Apple is neither "relied on" by nor "integral to"
either of the complaints in this case, the Court will not consider the contract at the motion
to dismiss stage.

VI.

Conclusion
For the reasons described above, the Court will grant in part and deny in part

Jackson Taylor's Motion to Dismiss GBC's Third-Party Complaint (ECF No. 39) and will
grant CBC leave to amend. The Court will deny Jackson Taylor's Motion to Dismiss
Kimball's Cross-claim (ECF No. 45). Finally, the Court will deny ACA's Motion to Dismiss
GBC's Third-Party Complaint (ECF No. 49).
An appropriate order follows.

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IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF PENNSYLVANIA
APPLE AMERICAN GROUP, LLC,

)

CIVIL ACTION NO. 3:15-325

)

Plaintiff,

)
)

v.

JUDGE KIM R. GIBSON

)
)

GBC DESIGN, INC.,

)
)

Defendant.

)

ORDER
AND NOW, this 15th day of February, 2018, upon consideration of Jackson Taylor's
Motion to Dismiss CBC's Third-Party Complaint (ECF No. 39), Jackson Taylor's Motion to
Dismiss Kimball's Cross-claim (ECF No. 45), and ACA' s Motion to Dismiss CBC' s ThirdParty Complaint (ECF No. 49), and for the reasons set forth in the accompanying
memorandum, IT IS HEREBY ORDERED as follows:
1. The Court grants in part and denies in part Jackson Taylor's Motion to

Dismiss CBC's Third-Party Complaint (ECF No. 39). Specifically:
a. The Court denies Jackson Taylor's motion to dismiss as it pertains to
CBC' s contribution claim.
b. The Court grants Jackson Taylor's motion to dismiss as it pertains to
CBC' s indemnity claim. The Court grants CBC leave to amend. CBC
shall have 21 days from the date of this order to file an Amended
Third-Party Complaint.

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2. The Court denies Jackson Taylor's Motion to Dismiss Kimball's Cross-claim
(ECF No. 45).
3. The Court denies ACA' s Motion to Dismiss CBC' s Third-Party Complaint
(ECF No. 49).
BY THE COURT

~1?.

KIM R. GIBSON
UNITED STATES DISTRICT JUDGE

24