Kruis v. Tamko Building Products, Inc. et al
Filing
48
MEMORANDUM OPINION AND ORDER Denying 38 Third-Party Defendatn E. Stewart Mitchell, Inc.'s Motion to Dismiss Allmine Paving, LLC's Third Party Complaint. Signed by District Judge Gina M. Groh on 10/8/2013. (cmd)
IN THE UNITED STATES DISTRICT COURT FOR THE
NORTHERN DISTRICT OF WEST VIRGINIA
MARTINSBURG
LESLIE KRUIS, t/o/u & t/u/o
American Zurich Insurance,
Plaintiff,
v.
CIVIL ACTION NO: 3:13-CV-25
(JUDGE GROH)
ALLMINE PAVING, LLC,
Defendant and Third-Party
Plaintiff,
v.
E. STEWART MITCHELL, INC.,
Third-Party Defendant.
MEMORANDUM OPINION AND ORDER DENYING THIRD-PARTY DEFENDANT E.
STEWART MITCHELL, INC.’S MOTION TO DISMISS ALLMINE PAVING, LLC’S
THIRD-PARTY COMPLAINT
Currently pending before the Court is Third-Party Defendant E. Stewart Mitchell,
Inc.’s (“Mitchell”) Motion to Dismiss Allmine Paving, LLC’s (“Allmine”) Third-Party
Complaint. Mitchell filed its motion to dismiss on June 13, 2013. On July 8, 2013, Allmine
filed its response. On July 22, 2013, Mitchell filed its reply. Therefore, the motion has been
fully briefed and is ripe for this Court’s review. For the following reasons, the Court
DENIES Mitchell’s motion to dismiss.
I. BACKGROUND
On November 13, 2012, Plaintiff Leslie Kruis filed a Complaint in the United
States District Court of Maryland against Allmine to recover for injuries Kruis sustained
while at an Allmine facility in Inwood, West Virginia. On March 1, 2013, this case was
transferred from the United States District Court of Maryland to the United States
District Court of the Northern District of West Virginia.
On March 29, 2013, Allmine filed a Third-Party Complaint against Mitchell
seeking to enforce its alleged right of contractual indemnity for the claims asserted by
Kruis against Allmine. Allmine and Mitchell are parties to a Standard Overriding Truck
Transportation Agreement (“Agreement”), entered into on December 23, 2010. Allmine
alleges that pursuant to Paragraph 5 of the Agreement, “Mitchell agreed that it ‘shall be
fully responsible for, and shall defend and hold harmless Allmine from and against any
and all liabilities, costs, damages and expenses whatsoever (including legal expenses)
arising out of or relating to [Mitchell’s] and [Mitchell’s] Agents’ transportation of Allmine
shipments or [Mitchell’s] other operations, or from [Mitchell’s] or [Mitchell’s] agents’
presence at or about Allmine’s properties, including but not limited to all personal injury,
death or property damage losses, damages, actions or claims whatsoever.”
Allmine alleges that the claims asserted by Kruis against Allmine arise from
Mitchell’s transportation of Allmine shipments or Mitchell’s agents’ presence at or about
Allmine’s properties. Therefore, Allmine argues that Mitchell is required to defend and
indemnify Allmine.
II. RULE 12(b)(6) STANDARD
To survive a motion to dismiss filed pursuant to Federal Rule of Civil Procedure
12(b)(6), a complaint must contain factual allegations sufficient to state a plausible claim
for relief. Ashcroft v. Iqbal, 556 U.S. 662, 678-79 (2009); Bell Atl. Corp. v. Twombly,
550 U.S. 544, 570 (2007). In recognition of the Supreme Court’s plausibility standard
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for evaluating a motion to dismiss, a complaint must be dismissed if it does not allege
“‘enough facts to state a claim to relief that is plausible on its face.’” Giarratano v.
Johnson, 521 F.3d 298, 302 (4th Cir. 2008) (quoting Twombly, 550 U.S. at 570
(emphasis added)). Legal conclusions and labels are insufficient to state a claim under
Rule 8(a) of the Federal Rules of Civil Procedure, and only allegations of fact are
entitled to the presumption of truth. See Iqbal, 556 U.S. at 678-79.
When reviewing a motion to dismiss pursuant to Rule 12(b)(6) of the Federal
Rules of Civil Procedure, the Court must assume all of the allegations to be true, must
resolve all doubts and inferences in favor of the plaintiff, and must view the allegations
in a light most favorable to the plaintiff. Edwards v. City of Goldsboro, 178 F.3d 231,
243-44 (4th Cir. 1999). When rendering its decision, the Court may also consider facts
derived from sources beyond the four corners of the complaint, including documents
attached to the complaint, documents attached to the motion to dismiss “so long as they
are integral to the complaint and authentic,” and facts subject to judicial notice under
Federal Rules of Evidence 201. Philips v. Pitt Cnty. Mem’l Hosp., 572 F.3d 176, 180
(4th Cir. 2009) (citing Blankenship v. Manchin, 471 F.3d 523, 526 n. 1 (4th Cir. 2006));
see also Katyle v. Penn Nat’l Gaming, Inc., 637 F.3d 462, 466 (4th Cir. 2011). In this
case, the Court considered the Agreement attached to Allmine’s Complaint.
III. ANALYSIS
Mitchell argues that Allmine’s Complaint fails to state a claim upon which relief
can be granted pursuant to Federal Rule of Civil Procedure 12(b)(6). First, Mitchell
argues that Allmine failed to state factual allegations upon which any relief can be
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granted. Mitchell also contends that various West Virginia and Missouri statutes bar the
indemnification agreement. Thus, Mitchell asserts it is not contractually bound to
indemnify Allmine. Second, Mitchell argues that it is immune to Allmine’s
indemnification claim because Plaintiff filed a claim under Maryland’s workers
compensation statutory scheme.
1.
Allmine has Stated a Claim for Indemnification Pursuant to the
Agreement
Mitchell contends that there is no substantive law basis for Allmine’s third-party
claim against it. To determine whether Allmine has stated a sufficient claim, this Court
will apply the substantive law of the state in which it sits as this Court has jurisdiction
pursuant to diversity. See Erie R.R. Co. v. Tompkins, 304 U.S. 64 (1938). However,
this Court applies federal procedural law. See Gasperini v. Ctr. for Humanities, Inc., 518
U.S. 415, 427 (1996).
Federal Rule of Civil Procedure 14 outlines the process for third-party pleadings.
Rule 14(a) 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.” See Erickson v. Erickson, 849 F. Supp. 453, 457 (S.D.W. Va. 1994). Thirdparty practices “does not in itself create a right to indemnity or contribution.” Lewis v.
City of Bluefield, 48 F.R.D. 435, 437-38 (S.D.W. Va. 1969). Therefore, this court must
determine whether Allmine has a right to indemnity or contribution under the
circumstances.
A.
Allmine has Alleged Sufficient Facts to State a Claim
In its motion to dismiss, Mitchell argues that Allmine has failed to establish any
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right of indemnity from Mitchell. To survive a motion to dismiss filed pursuant to Federal
Rule of Civil Procedure 12(b)(6), a complaint must contain factual allegations sufficient
to state a plausible claim for relief. Iqbal, 556 U.S. at 678-79; Twombly, 550 U.S. at
570.
In Allmine’s Third-Party Complaint, Allmine states that, on December 23, 2010, it
entered into the Agreement with Mitchell, which contained an indemnification clause.
Compl. ¶¶ 8-9. Allmine alleges that the indemnification clause, Paragraph 5, provided
that Mitchell will be “fully responsible for, and shall defend and hold harmless Allmine
from and against any and all liabilities, costs, damages and expenses whatsoever
(including legal expenses) arising out of or relating to [Mitchell’s] and [Mitchell’s] Agents’
transportation of Allmine shipments or [Mitchell’s] other operations.” Compl. ¶ 9.1
Allmine states that Kruis’s claims against it “arise from Mitchell’s transportation of
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Paragraph 5 of the Agreement states:
Carrier shall be fully responsible for, and shall defend and
hold harmless Allmine from and against any and all liabilities,
costs, damages and expenses whatsoever (including legal
expenses) arising out of or relating to Carrier’s and Carrier’s
Agents’ transportation of Allmine shipments or Carrier’s
other operations, or from Carrier’s or Carrier’s agents’
presence at or about Allmine’s properties, including but not
limited to all personal injury, death or property damage
losses, damages, actions or claims whatsoever. If any
liabilities, costs, damages and expenses indemnified by
Carrier pursuant to this provision arise in whole or in part
from Allmine’s own negligence, fault, breach of this
Agreement, or the condition of Allmine’s properties, Carrier’s
obligation to indemnify hereunder shall be reduced by the
proportion of Allmine’s responsibility for such liability, costs,
item of damage and/or expense. Carrier’s indemnity
obligations under this paragraph shall survive any
termination or expiration of this Agreement.
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Allmine shipments and/or Mitchell’s agents’ presence at or about Allmine’s properties.”
Compl. ¶ 10.
Accordingly, Allmine has alleged sufficient factual allegations to state a plausible
claim for indemnification from Mitchell pursuant to the Agreement. Therefore, Allmine’s
Third-Party Complaint will not be dismissed unless Mitchell can establish that the
indemnification provision’s enforcement is prohibited.
B.
West Virginia Code § 55-8-14 Does Not Prohibit the
Enforceability of the Indemnification Provision
Mitchell argues that West Virginia Code § 55-8-14 renders the indemnity clause
“unlawful and unenforceable” because the indemnity provision “deals with the
transportation of asphalt materials which are used in the construction, alteration, repair,
improvement to or maintenance of highways and roads.” Third-Party Def.’s Mot. to
Dismiss 7.
In this case, there is an express indemnity agreement. “[A]n express indemnity
agreement can provide the person having the benefit of the agreement, the indemnitee,
indemnification even though the indemnitee is at fault. . . . Courts have traditionally
enforced indemnity contract rights so long as they are not unlawful.” Valloric v. Dravo
Corp., 357 S.E.2d 207, 211 (W. Va. 1987) (citations omitted). To enforce the
indemnification agreement, an indemnitee must show it is either actually liable or
potentially liable for the plaintiff’s claims. Id. An indemnitee must show it is only
potentially liable for a plaintiff’s claim if the indemnitee (1) gave actual notice to the
indemnitor of the underlying claim, (2) gave indemnitors an opportunity to defend
against the claims, and (3) gave indemnitors the right to participate in any settlement
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negotiations. Id.
First, in this case, Allmine gave notice to Mitchell because it was impleaded as a
third-party defendant early on in the litigation. See Hill v. Joseph T. Ryerson & Son,
Inc., 268 S.E.2d 296, 302 (W. Va. 1980) (finding that indemnitee gave notice because it
impleaded indemnitor as a third-party defendant and indemnitor participated in the
action). Second, Mitchell, as a party to the case, has an opportunity to defend on the
underlying claim. Last, Mitchell does not allege that Allmine has denied it the right to
participate in any settlement negotiations. Therefore, Allmine must only show it is
potentially liable to Kruis for his claims. Allmine sufficiently alleged in its Complaint that
it is potentially liable because Kruis’s injuries arise from injuries sustained at an Allmine
facility in Inwood, West Virginia.
West Virginia Code § 55-8-14 also provides any agreements “relative to the
construction, alteration, repair, addition to, subtraction from, improvement to, or
maintenance of any . . . highway, road . . . purporting to indemnify against liability for
damages arising out of bodily injury to persons or damage to property caused by or
resulting from the sole negligence of the indemnitee, his agents, or employees” is void
and unenforceable against public policy. In this case, the Agreement concerned
Mitchell’s transportation of Allmine’s asphalt to TAMKO Building Products, a facility in
Maryland that utilizes the asphalt to manufacture roof shingles. Therefore, the
Agreement does not concern the construction, repair, or maintenance of highways or
raods.
Most importantly, even assuming West Virginia Code § 55-8-14 applies to this
Agreement, it does not void “a broad indemnity clause that specifically exempt[s] the
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‘sole negligence’ of the indemnitee.” Dalton v. Childress Serv. Corp., 432 S.E.2d 98,
100 (W. Va. 1993). Rather, a broad indemnity agreement should be rendered void only
if two elements are met: “(1) if the indemnitee is found by the trier-of-fact to be solely
(100 percent) negligent in causing the accident; and (2) it cannot be inferred from the
contract that there was a proper agreement to purchase insurance for the benefit of all
concerned.” Id. at 101.
First, in this case, the broad indemnity clause specifically exempts Mitchell from
indemnifying Allmine’s own negligence or fault. Indeed, the indemnity clause provides
that Mitchell’s indemnity obligation shall be reduced by the proportion of Allmine’s
liability. Second, this matter has not proceeded to a jury trial. Therefore, Allmine has
not been found by a trier of fact to be solely negligent in causing the accident. Third,
the Agreement provides that Mitchell must purchase insurance for the benefit of all
concerned. Paragraph 4 of the Agreement states that Mitchell shall, at all times,
maintain a minimum amount of insurance as provided for in the Agreement, and
Mitchell’s insurance policies are primary to any applicable Allmine insurance policies.
Also, Mitchell agreed to name Allmine as an additional insured on all its policies.
Accordingly, West Virginia Code § 55-8-14 does not void the indemnity clause in this
matter.
C.
West Virginia Code § 24A-6-7 and Missouri Statute § 390.372
Do Not Prohibit the Enforceability of the Indemnity Clause
Mitchell argues that the indemnity clause is unenforceable under Missouri law,
the choice of law provision in the Agreement, and under West Virginia law. Both
Missouri and West Virginia law find indemnity and hold harmless provisions in motor
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carrier transportation contracts to be against public policy. Therefore, they are rendered
void and unenforceable. See Mo. Ann. Stat. § 390.372 (providing that an agreement
“contained in, collateral to, or affecting a motor carrier transportation contract” that
indemnifies, defends, or holds harmless an individual for his liability resulting from
negligent or intentional acts or omissions is against public policy and is void and
unenforceable); W. Va. Code § 24A-6-7(a) (providing that an agreement “contained in,
collateral to, or affecting a motor carrier transportation contract” that indemnifies or
holds harmless the negligent or intentional acts or omissions of another is against public
policy and is void and unenforceable).
The indemnity provision in the Agreement is not void and unenforceable under
the Missouri or West Virginia statute because it does not require Mitchell to indemnify,
defend, and hold harmless Allmine for Allmine’s negligence, intentional acts, or
omissions. Indeed, Allmine is responsible for its own negligence, fault, breach of the
Agreement, or condition of its properties, and Mitchell’s indemnification obligation is
reduced by the proportion of Allmine’s liability. Therefore, Missouri Statute § 390.372
and West Virginia Code § 24A-6-7 permit the indemnity provision in the Agreement.
2.
Mitchell is Not Immune from Suit
Mitchell argues that it is immune from suit because Kruis filed an employee’s
claim with Maryland’s Workers’ Compensation Commission for his injuries as a result of
the events.
Maryland law provides that an employer’s liability under the workers
compensation act is exclusive. Md. Code Ann. Lab & Empl. § 9-509. Because a
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worker’s sole remedy against the employer is a claim filed under the workers
compensation act, “the employer is considered to be ‘immune’ from suit at law.”
Lumpkins v. United States, 212 F. Supp. 2d 464, 468 (D. Md. 2002) (citation omitted).
Generally, the immunity prevents suits against an employer by an employee and third
parties who may be held liable to the employee. Id. However, if an employer has
entered into an express indemnification agreement with a third party, then the third party
may pursue a claim against the employer. See id. at 469 (“A statutory employer may
not be sued by a third party for indemnity absent an express indemnification
agreement.”).
Similarly, under Missouri law, a third party’s indemnity action against an
employer is not barred by the workers compensation act “when the employer breaches
an independent duty or obligation to the third party.” Coello v. Tug Mfg. Corp., 756 F.
Supp. 1258, 1262 (W.D. Mo. 1991). Also, West Virginia law provides that, although an
employer is generally insulated by workers compensation immunity, an employer will not
be dismissed from an employee’s negligence action where the employer entered into an
indemnification agreement with a third party. See Riggle v. Allied Chem. Corp., 378
S.E.2d. 282, 289 (W. Va. 1989); see also Deloach v. Appalachian Power Co., Civ.
Action No. 3:10-1097, 2011 WL 5999877, *3 (S.D.W. Va. Nov. 30, 2011) (holding that
general indemnification language may waive workers compensation immunity from third
party claims).
In this case, Kruis, Mitchell’s employee, filed a claim for compensation against
Mitchell under Maryland’s workers compensation act. Although Mitchell is generally
immune from suit by Kruis or a third party who may be held liable to Kruis, Mitchell and
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Allmine entered into an express indemnification agreement. Therefore, Allmine may
pursue a claim against Mitchell pursuant to the indemnification agreement.
IV.
CONCLUSION
Accordingly, the Third-Party Defendant Mitchell’s Motion to Dismiss Allmine’s
Complaint [Doc. 38] is DENIED.
It is so ORDERED.
The Clerk is directed to transmit copies of this Order to all counsel of record
and/or pro se parties.
DATED: October 8, 2013
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