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American Towers LLC v. Bpi, Inc.

United States District Court, E.D. Kentucky, Southern Division, Pikeville

December 17, 2014

AMERICAN TOWERS LLC, Plaintiff,
v.
BPI, INC., et al., Defendants.

MEMORANDUM OPINION AND ORDER

AMUL R. THAPAR, District Judge.

Like in the childhood game, the parties here attempt to pass around blame in the hopes that, when the Court or jury adjudicates fault, they will not be stuck holding the hot potato. Some of the parties are able to exit the game at the summary-judgment stage, while others must wait for the final adjudication of fault.

BACKGROUND

The growing number of opinions in this case provides the full set of facts. See R. 162; R. 163. For the indemnity claims, the following summary suffices: American Towers, LLC sued BPI, Inc., alleging that BPI breached its contract during construction of a cell tower and access road. R. 162 at 1-2. According to American Towers, BPI's faulty construction resulted in the collapse of the access road. See R. 163 at 2. BPI, in turn, filed a third-party complaint against its subcontractors, McVey Land Development, LLC ("McVey") and Cumberland Valley Engineering, Inc. ("CVE"). R. 42. BPI, the general contractor for the project, hired McVey to build the access road and prepare the tower site. R. 169 at 2. BPI also hired CVE to provide engineering services, such as soil testing. R. 168-1 at 2. BPI seeks indemnity from McVey and CVE in the event BPI is liable to American Towers. R. 42 at 4. CVE, concerned about its liability as well, asks for indemnity from McVey. R. 50 at 5. CVE and McVey each filed motions for summary judgment against BPI, R. 168 (CVE's motion); R. 169 (McVey's motion); BPI filed cross-motions for summary judgment against CVE, R. 174, and McVey, R. 175; and McVey filed a motion for summary judgment against CVE, R. 170.

DISCUSSION

The Court may grant summary judgment where the moving party demonstrates the absence of a genuine issue of material fact. Fed.R.Civ.P. 56(a). At the summary-judgment stage, the Court takes the facts in the light most favorable to the non-moving party. Scott v. Harris, 550 U.S. 372, 378 (2007). If a reasonable fact finder could find for the non-moving party, then the Court may not grant summary judgment. Cordell v. McKinney, 759 F.3d 573, 579-80 (6th Cir. 2014).

I. CVE's Motion For Summary Judgment Against BPI Is Granted

CVE is entitled to summary judgment against BPI on BPI's indemnity claim. Because BPI and CVE do not have a contract for indemnity, BPI's argument rests entirely on common-law indemnification. To succeed on the common-law theory, BPI must show that CVE is the primary tortfeasor. See Degener v. Hall Contracting Corp., 27 S.W.3d 775, 780 (Ky. 2000). Kentucky has recognized two situations appropriate for common-law indemnity: (1) where the party seeking indemnity was only constructively liable, and the other party was the active tortfeasor, such as in a master-servant relationship, and (2) where both parties have some fault, but one party "was the primary and efficient cause of the injury." Id. (internal quotation marks omitted). While the two categories enunciated by the Kentucky Supreme Court are instructive, the indemnity determination comes down to whether the indemnitor (CVE here) was the "active wrongdoer or primarily negligent, " while the indemnitee (BPI) was "only constructively or secondarily liable" to the plaintiff. Id. at 780-81 (internal quotation marks omitted); Stanford v. United States, 948 F.Supp.2d 729, 745 (E.D. Ky. 2013). Because indemnity transfers all liability to one party, "[a]n indemnity claim must allege one tortfeasor's negligence is different in kind - categorically worse - than the other tortfeasor's." Stanford, 948 F.Supp.2d at 745. But where the parties are in pari delicto, described as both "guilty of concurrent negligence of substantially the same character which converges to cause the plaintiff's damages, " indemnity is not appropriate. Degener, 27 S.W.3d at 778.

The relevant facts, viewed in BPI's favor, are as follows: BPI hired CVE as a geotechnical engineer, and, according to BPI, their contract required CVE to test the soil at the tower compound site and notify BPI of the results. R. 174 at 1-2; R. 132 at 55-56. The purpose of the test was to make sure the fill material was adequate for construction. R. 132 at 55. It is undisputed that CVE never reported any results to BPI. R. 168-1 at 3; R. 132 at 56. BPI's representative stated that he was unaware of whether CVE ever performed any work to test the soil, but that BPI received a bill for soil tests.[1] See R. 132 at 55-56. According to American Towers' expert, who tested the soil after the road collapsed, no one had previously evaluated the fill material, and the soil had various problems, including erosion. See R. 129-1 at 11-12; R. 174-1 at 16-17.

Viewing the facts in the light most favorable to BPI, the Court cannot conclude that there is an issue of fact as to whether CVE was primarily negligent. There is no evidence that CVE affirmatively knew that there were problems with the soil and withheld that information from BPI. Indeed, BPI does not cite to any portion of the record demonstrating that CVE actually performed a soil test. If CVE had known about dangers with the soil and not alerted BPI, then denial of CVE's motion for summary judgment might be appropriate.

Without evidence that CVE performed a soil test and failed to inform BPI of the results, BPI's only supportable argument is that CVE never tested the soil, in violation of their contract. The failure to inspect the soil, however, does not rise to the level of active negligence necessary for an indemnity claim. Kentucky courts have allowed indemnity where the indemnitor "created the danger." Brown Hotel Co., 224 S.W.2d at 167. But where a party was "negligent in failing to discover the defect, " that party was not the primary wrongdoer for purposes of indemnity. Id. The evidence in the record, even taken in BPI's favor, does not establish that CVE created any danger, as there is an absence of any evidence that CVE did any soil tests or knew of any soil issues. Rather, the evidence suggests that CVE may have been negligent by not testing the soil at all. Failing to test the soil is more like failing to discover a defect than actively creating a danger. Because BPI does not direct the Court to any evidence that CVE withheld soil-test results or knew of any dangerous soil conditions, BPI cannot point to any issue of fact showing that CVE is primarily negligent.

At most, the evidence in the record establishes that BPI and CVE were in pari delicto. CVE, relying on the Court's previous opinion, says that BPI was at fault because it breached the contract by not using a geotechnical engineer. See R. 162 at 6-7; R. 168-1 at 7. BPI did not fulfill its contractual obligation by simply hiring CVE as a geotechnical engineer. Id. Rather, BPI had a duty to consult with a geotechnical engineer, like CVE, who would evaluate and approve the soil and fill material. See R. 162 at 6-7; R. 139-2 at 27. BPI never received any results and thus could not consult with CVE about the soil and fill material. By proceeding as though the absence of a report from CVE meant the soil-test results were satisfactory, R. 132 at 77, BPI breached its contractual duty, see R. 162 at 6-7. When BPI did not receive results from CVE, BPI could have hired another geotechnical engineer. But it did not. Instead, in violation of the contract, BPI continued with construction as though a geotechnical engineer had blessed the safety of the soil. Even taking the facts in the light most favorable to BPI, CVE and BPI both abdicated their respective responsibilities regarding soil testing. In short, they were in pari delicto. Accordingly, indemnification is not the proper remedy.

BPI says this case is analogous to an example in the Restatement in which indemnification was proper where the "indemnitor supplied a defective chattel or performed defective work upon land... and the indemnitee innocently or negligently failed to discover the defect." R. 174 at 3 (quoting Restatement (Second) of Torts, ยง 886(B)). BPI, however, has not offered any evidence that CVE supplied a chattel or performed any work on the land. As discussed above, the Court has no basis for determining that CVE ever performed a soil test. And CVE did not construct any part of the tower site or road, or perform any other work. See R. 174 at 1 ("[I]t is admitted that CVE was employed to perform Proctor [soil] tests at the tower compound site...."). Indeed, CVE is more akin to the indemnitee in the Restatement example than the indemnitor - like the indemnitee, CVE failed to discover a defect. Instead of reinforcing BPI's position, the Restatement example buttresses CVE's motion for summary judgment. For all the reasons above, CVE is entitled to summary judgment against BPI on BPI's claim of indemnity. Even though CVE is not liable to BPI ...


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