Hanover Insurance Company v. Cummins Inc. et al
Filing
82
MEMORANDUM OPINION AND ORDER GRANTING THIRD-PARTY PLAINTIFFS' MOTION TO DISMISS OR STRIKE THIRD-PARTY COMPLAINT: Granting 68 Motion to Dismiss for failure to State a Claim; Signed by Senior Judge Frederick P. Stamp, Jr on 5/16/16. (soa)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF WEST VIRGINIA
HANOVER INSURANCE COMPANY,
a subrogee of FTS International, Inc.,
Plaintiff,
v.
CUMMINS
CUMMINS
CUMMINS
CUMMINS
Cummins
CUMMINS
Civil Action No. 5:15CV56
(STAMP)
INC.,
DIESEL SALES CORPORATION,
CORPORATION,
INC, formally known as
Engine Company, Inc.,
ENGINE COMPANY, INC.,
Defendants and
Third-Party Plaintiffs,
v.
FTS INTERNATIONAL, INC.,
Third-Party Defendant,
and
LIBERTY MUTUAL FIRE INSURANCE COMPANY,
a subrogee of FTS International, Inc.,
Plaintiff,
v.
CUMMINS
CUMMINS
CUMMINS
CUMMINS
Cummins
CUMMINS
Civil Action No. 5:15CV57
(STAMP)
INC.,
DIESEL SALES CORPORATION,
CORPORATION,
INC, formally known as
Engine Company, Inc.,
ENGINE COMPANY, INC.,
Defendants and
Third-Party Plaintiffs,
v.
FTS INTERNATIONAL, INC.,
Third-Party Defendant.
MEMORANDUM OPINION AND ORDER
GRANTING THIRD-PARTY PLAINTIFFS’ MOTION TO
DISMISS OR STRIKE THIRD-PARTY COMPLAINT
In this subrogation action, the defendants filed a third-party
complaint
against
indemnification.
the
insured
ECF No. 66.
seeking
contribution
and
The third-party defendant filed a
motion to dismiss for failure to state a claim upon which relief
can be granted under Federal Rule of Civil Procedure 12(b)(6) or to
strike the third-party complaint under Rule 14(a)(4).
ECF No. 68.
For the following reasons, the motion to dismiss or strike is
granted.
I.
FTS
International,
Facts
Inc.
(“FTS”)
purchased
an
engine
manufactured by the defendants, Cummins Inc., Cummins Diesel Sales
Corporation, Cummins Corporation, Cummins Inc. formerly known as
Cummins Engine Company, Inc., and Cummins Engine Company, Inc.
(collectively “Cummins”).
FTS used the engine to operate a
fracking rig.
The engine malfunctioned and caused a fire at the
fracking site.
The damage was covered by FTS’s insurance policies
with the plaintiffs Hanover Insurance Company and Liberty Mutual
Fire Insurance Company (collectively “the Subrogees”), who each
paid for damage caused by the fire under their respective policies.
The Subrogees filed separate civil actions against Cummins in
West Virginia state court as subrogees of FTS.
Both allege claims
for strict products liability, negligence, breach of the implied
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warranty of merchantability, breach of the implied warranty of
fitness for a particular purpose, breach of express warranties, and
violations of the West Virginia Consumer Credit Protection Act
(“WVCCPA”).
Cummins removed both cases to this Court citing
diversity jurisdiction. Cummins then filed a third-party complaint
against FTS for comparative fault and implied indemnity, alleging
that the fire was caused by FTS’s failure to properly maintain,
service, or repair the engine rather than by a manufacturing
defect.
FTS then filed a motion to dismiss or strike the third-
party complaint.
II.
Applicable Law
Under Federal Rule of Civil Procedure 14(a)(4), “[a]ny party
may move to strike [a] third-party claim.”
14(a)(4).
Fed. R. Civ. P.
A third-party claim is subject to dismissal under Rule
14(a)(4) and may also be attacked under Rules 12 and 56.
See 6
Charles Alan Wright, Arthur R. Miller, Mary Kay Kane, Richard L.
Marcus & Adam N. Steinman, Federal Practice and Procedure § 1460
(3d ed. 2014). To survive a motion to dismiss under Rule 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).
This plausibility
standard requires a plaintiff to articulate facts that, when
accepted as true, demonstrate that the plaintiff has stated a claim
that makes it plausible he is entitled to relief.
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Francis v.
Giacomelli, 588 F.3d 186, 193 (4th Cir. 2009) (citing Iqbal, 556
U.S. at 678; Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)).
III.
Discussion
FTS argues that the third-party complaint must be dismissed or
stricken because it fails to state a claim upon which relief can be
granted.
It argues that Cummins’s third-party complaint alleges
causes of action that are simply defenses Cummins may and has
alleged against the Subrogees and because the third-party complaint
essentially seeks to force the insurers to subrogate against their
insured.
First, Cummins fails to state a claim against FTS.
Cummins
alleges that the fire was caused by FTS’s negligence and failure to
properly maintain the engine rather than a defect in the engine.
Thus, Cummins does not allege that FTS is liable for damages it
caused to Cummins.
complaint
is
Instead, Cummins argues that its third-party
proper
because
it
asserts
standard
claims
for
contribution and indemnity; if Cummins is liable to the Subrogees,
then FTS is liable to Cummins. However, the substance of Cummins’s
allegations
are
not
that
it
and
FTS
are
joint
tortfeasors.
Instead, Cummins alleges that it is not a tortfeasor at all, and
that the damage was caused solely by FTS’s negligence.
Thus, the
third-party complaint fails to state a claim against FTS.
Second,
under
West
Virginia
law,
“[t]he
doctrine
of
subrogation is that one who has the right to pay, and does pay, a
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debt which ought to have been paid by another is entitled to
exercise all the remedies which the creditor possessed against that
other.”
Porter v. McPherson, 479 S.E.2d 668, 672 (W. Va. 1996).
“A clause providing for subrogation in an insurance policy simply
places insurer . . . against the . . . alleged [tortfeasor], in the
place of the insured.”
State Farm Mut. Auto Ins. Co. v. De Wees,
101 S.E.2d 273, 277 (W. Va. 1957).
Thus, the subrogee is subject
to the same defenses the tortfeasor has against the insured.
Id.
Cummins’s allegations that FTS caused the fire and resulting damage
is in essence an invocation of comparative fault, which Cummins may
assert as a defense against Hanover and Liberty Mutual’s claims as
subrogees.
In fact, Cummins has asserted comparative fault as a
defense against the Subrogees.
Thus, Cummins may not double-dip
its comparative fault defense by maintaining a third-party claim
for contribution or indemnification against FTS.
See Travelers
Prop. Cas. Co. of Am. v. Mountaineer Gas Co., 2:15cv07959, 2015 WL
7196515, *4 (S.D. W. Va. Nov. 16, 2015); USAA Cas. Ins. Co. v.
Metro. Edison Co., No. 1:12cv1178, 2013 WL 2403309, *2-3 (M.D. Pa.
May 31, 2013).
Third, under West Virginia’s anti-subrogation rule, an insurer
cannot subrogate against its insured to pass its own loss onto the
insured.
Norfold
S.
Ry.
Co.
v.
Nat’l
Union
Fire
Ins.
of
Pittsburgh, 999 F. Supp. 2d 906, 915 (S.D. W. Va. 2014); Richards
v. Allstate Ins. Co., 455 S.E.2d 803, 805 (W. Va. 1995).
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“One of
the most obvious public policy reason[s] for this rule is to
prevent an insurance carrier from having a conflict of interest
[with its insured].” Id. at 805. Taking the third-party complaint
as true, the fire was caused by FTS’s negligence and not by
Cummins’s negligence or by any manufacturing or design defect.
Thus, through its third-party complaint Cummins is removing itself
from the liability equation and alleging that only FTS is liable
for the fire and the Subrogees’ subsequent payouts under their
insurance agreements.
In effect, Cummins is attempting to convert
this civil action into a dispute between insurer and insured.
Thus, Cummins’s third-party complaint seeks to create a conflict of
interest between the Subrogees and FTS, and is not proper under the
anti-subrogation rule.
IV.
Conclusion
For the foregoing reasons, FTS’s motion to dismiss or strike
the third-party complaint (ECF No. 68) is GRANTED. Accordingly, it
is ORDERED that Cummins’s third-party complaint (ECF No. 66) be
dismissed and stricken from the docket in this civil action.
IT IS SO ORDERED.
The Clerk is DIRECTED to transmit a copy of this memorandum
opinion and order to counsel of record herein.
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DATED:
May 16, 2016
/s/ Frederick P. Stamp, Jr.
FREDERICK P. STAMP, JR.
UNITED STATES DISTRICT JUDGE
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