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State Automobile Mutual Insurance Co. v. Burrell

United States District Court, E.D. Kentucky, Central Division, Lexington

May 1, 2018

STATE AUTOMOBILE MUTUAL INSURANCE COMPANY, Plaintiff,
v.
MICHAEL BURRELL, individually and d/b/a FLYING ARMADILLO SIGN COMPANY, Defendant and Third-Party Plaintiff,
v.
WESTWARD HO, INC. d/b/a THE BOOT STORE, Third-Party Defendant.

          MEMORANDUM OPINION AND ORDER

          DANNY C. REEVES UNITED STATES DISTRICT JUDGE

         This matter is pending for consideration of Third-Party Defendant Westward Ho, Inc. doing business as The Boot Store's (“The Boot Store”) motion to dismiss the Third-Party Complaint filed by Defendant/Third-Party Plaintiff Michael Burrell, individually and doing business as Flying Armadillo Sign Company. [Record No. 31] The motion will be granted for the reasons that follow.

         I.

         Lex Di Inc. (“Lex DI”) owned real property in Nicholasville, Kentucky, which it leased to The Boot Store for use as a retail operation. [Record No. 5, ¶ 6; Record No. 31-1, ¶¶ 1-2] The property was substantially damaged by a fire on August 8, 2015. [Record No. 5, ¶¶ 11- 12] State Automobile Mutual Insurance Company (“State Auto”) insured the property and paid Lex DI $290, 992.14, for the cost of repairs and the loss of rental income caused by the fire. [Id. ¶¶ 7, 13] State Auto then brought this negligence and breach of contract action, as subrogee of Lex DI, against Burrell. [Id. ¶¶ 14-26] State Auto alleges that the fire was caused by an exterior electric sign Burrell installed on the property, including electrical wiring and junction boxes which were not water-tight. [Id. ¶¶ 8-11]

         Burrell subsequently filed a Third Party Complaint against The Boot Store, claiming that any damages to Lex DI's property were caused by The Boot Store's negligence and not his own. [Record No. 26, ¶ 3] Burrell alleges that The Boot Store “negligently and carelessly failed to maintain, repair, and/or monitor its electrical system so as to cause the fire which is the subject of this litigation.” [Id.] He seeks “indemnity, contribution and/or apportionment” for any judgment rendered against him. [Id. at the ad damnum clause]

         The Boot Store has moved to dismiss the Third Party Complaint for failure to state a claim under Ruele 12(b)(6) of the Federal Rules of Civil Procedure. [Record No. 31] The Boot Store contends that the Third Party Complaint fails to allege that it breached a duty owed to Burrell as required to state a negligence claim, or that it was actively negligent as required to state a common law claim for indemnity. [Record Nos. 31, 39] Burrell opposes the motion on the grounds that he has adequately stated a common law indemnity claim. [Record No. 36]

         II.

         A Rule 12(b)(6) motion requires the Court to determine whether the subject pleading (here, the Third Party Complaint) alleges “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 plausibility standard 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.” Id. (citing Twombly, 550 U.S. at 556). Although the Third Party Complaint need not contain “detailed factual allegations” to survive a motion to dismiss, the “plaintiff's obligation to provide the grounds of his entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Twombly, 550 U.S. at 555 (internal quotation marks and citation omitted); see also Iqbal, 556 U.S. at 678 (“[T]he tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions.”).

         In a diversity action, such as this one, the Court applies “the substantive law of the forum state and federal procedural law.” Hoven v. Walgreen Co., 751 F.3d 778, 783 (6th Cir. 2014). Accordingly, the motion to dismiss will be evaluated under Kentucky substantive law and the Federal Rules of Civil Procedure.

         III.

         The Boot Store construes the claim asserted in Burrell's Third Party Complaint as an attempted negligence claim. [Record No. 31, p. 3 (“[I]t is difficult to fully evaluate the nature of the claim. However, it appears that [Burrell] is attempting to assert a negligence claim against the Boot Store[.]”).] It argues that this construed negligence allegation fails as a matter of law because Burrell has not asserted that The Boot Store breached any duty that it owed to him. [See Id. at 3-6.]

         Rule 14(a)(1) of the Federal Rules of Civil Procedure allows a defendant to serve a third-party complaint on a non-party “who is or may be liable to it for all or part of the claim against it.” “Under Fed.R.Civ.P. 14(a), a third party complaint is permitted only when the third party plaintiff is attempting to transfer liability for the plaintiff's claim against him.” Baker v. Pierce, 812 F.2d 1406 (6th Cir. 1987). As one treatise explains,

[a]n impleader claim is proper only to assert that the third-party defendant is liable to the party impleading it (usually the defendant). Despite the clear language of the impleader rule on this point, some defendants continue to attempt to implead a third party on the basis of the third-party defendant's direct liability to the plaintiff. The courts properly reject such ...

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