United States District Court, E.D. Kentucky, Central Division
MITSUI SUMITOMO INSURANCE USA, INC. as subrogee of ASAHI BLUEGRASS FORGE CORPORATION, Plaintiff,
DENHAM-BLYTHE COMPANY, INC., et al., Defendants.
SECOND AMENDED MEMORANDUM OPINION AND ORDER
M. Hood Senior U.S. District Judge
matter comes before the Court on Defendant Denham-Blythe
Company, Inc's (“Denham-Blythe”) Motion to
Dismiss Pursuant to Federal Rule of Civil Procedure 12(b)(6).
[DE 20]. Having considered the matter fully, and being
otherwise sufficiently advised, the undersigned will grant
Defendant Denham-Blythe's Motion to Dismiss Pursuant to
Federal Rule of Civil Procedure 12(b)(6) [DE 20].
AND PROCEDURAL BACKGROUND
case arises from a January 31, 2011 design-build contract
(“the Contract”) between Asahi Bluegrass Forge
Corporation (“Asahi”) and Denham-Blythe for the
construction of a 68, 000 square foot manufacturing facility
(“the Building”). [DE 20-1, at 2].
“Denham-Blythe and Asahi utilized AIA Document A141 -
2004 Standard Form of Agreement Between Owner and
Design-Builder, with modifications specific to this job, for
the Contract.” [DE 20-1, at 2 (citing [DE 20-2])]. On
March 2, 2012, the roof of the Building was damaged by severe
winds and was subsequently repaired by Denham-Blythe. [DE
20-1, at 2]. Again, on March 1, 2017, the roof of the
Building sustained damage from severe winds, and
Denham-Blythe completed both the temporary repair work and
permanent repair work. Id.
the roof was damaged on March 1, 2017, Asahi submitted
property damages claims to its insurer, Plaintiff Mitsui
Sumitomo Insurance USA, Inc. (“Mitsui”).
Id. “According to the Complaint, Mitsui
Sumitomo made payments to Asahi in response to the claims in
the amount of $1, 315, 092.00 under policy PKG3126694
(hereinafter referred to as ‘the Policy') with
effective dates of October 1, 2016 through October 1,
2017.” Id. (citing [DE 20-3]). On February 22,
2018, Mitsui, as subrogee of Asahi, filed its Complaint [DE
1] against Denham-Blythe, BlueScope, Varco, and Arrow
asserting subrogation rights against Defendants for the
amounts paid to repair the property damage caused by the 2017
severe winds. [DE 1]. Mitsui's claims against
Denham-Blythe include negligence, breach of contract, breach
of warranty of workmanlike services, and negligent
misrepresentation. Id. On April 13, 2018,
Denham-Blythe filed the present Motion to Dismiss [DE 20].
Rule of Civil Procedure 12(b)(6) provides that a complaint
may be attacked for failure “to state a claim upon
which relief can be granted.” To survive a Rule
12(b)(6) motion to dismiss, 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) (citing
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570
(2007)). “A motion to dismiss is properly granted if it
is beyond doubt that no set of facts would entitle the
petitioner to relief on his claims.” Computer
Leasco, Inc. v. NTP, Inc., 194 Fed.Appx. 328, 333 (6th
Cir. 2006). When considering a Rule 12(b)(6) motion to
dismiss, the court will presume that all the factual
allegations in the complaint are true and draw all reasonable
inferences in favor of the nonmoving party. Total
Benefits Planning Agency v. Anthem Blue Cross & Blue
Shield, 552 F.3d 430, 434 (6th Cir. 2008) (citing
Great Lakes Steel v. Deggendorf, 716 F.2d 1101, 1105
(6th Cir. 1983)). “The court need not, however, accept
unwarranted factual inferences.” Total Benefits
Planning Agency, 552 F.3d at 434 (citing Morgan v.
Church's Fried Chicken, 829 F.2d 10, 12 (6th Cir.
DEFENDANT DENHAM-BLYTHE'S MOTION TO DISMISS PURSUANT TO
support of dismissal, Defendant Denham-Blythe argues the
following: (1) “Kentucky law recognizes the sacred
right to contract;” (2) “[t]he claim is barred by
the waiver of subrogation clause contained in the design
build contract between Denham-Blythe and Asahi Bluegrass
Forge Corporation;” (3) “[t]he insurance policy
issued by Plaintiff to Asahi Bluegrass Forge Corporation
granted Asahi the right to waive subrogation;” and (4)
“[t]he claim is barred by the dispute resolution
clauses in the contract.” [DE 20-1, at 1].
KENTUCKY LAW AND THE RIGHT TO CONTRACT
correctly asserts, “Kentucky Courts have long honored
the freedom to contract[, ]” and “The Kentucky
Supreme Court has affirmed this principle many times.”
[DE 20-1, at 4].“Generally, the doctrine of freedom
to contract prevails and, in the absence of ambiguity, a
written instrument will be enforced strictly according to its
terms.” Mullins v. N. Kentucky
Inspections, Inc., No. 2009-CA-000067-MR, 2010 WL
3447630, at *1 (Ky. Ct. App. Sept. 3, 2010) (citing Frear
v. P.T.A. Industries, Inc., 103 S.W.3d 99, 106
(Ky. 2003)); see also Commonwealth v. L. G. Wasson Coal
Mining Corp., Ky., 358 S.W.2d 347 (1962) (“In
considering the legality of Contract B, we recognize the
sacred right to contract without undue interference.”).
In Mullins, the Supreme Court of Kentucky recited
Jones v. Hanna, 814 S.W.2d 287, 289 (Ky. Ct. App.
1991) as follows:
“[C]ontracts voluntarily made between competent persons
are not to be set aside lightly. As the right of private
contract is no small part of the liberty of the citizen, the
usual and most important function of courts is to enforce and
maintain contracts rather than to enable parties to escape
their obligations on the pretext of public policy or
illegality. If the legality of the contract can be sustained
in whole or in part under ...