BARRY W. ASHE, District Judge.
Before the Court are two motions to dismiss filed by third-party defendant Timken Gears and Services, Inc., doing business as Philadelphia Gear ("Philadelphia Gear").
On or about December 22, 2016, Fucich Contracting, Inc. ("FCI") entered into a construction contract with St. Bernard Parish Government ("the Parish") to be the general contractor for the public works improvement project known as the Lake Borgne Basin Levee District Pump Station #1 & #4 Pump Upgrade ("the Project").
Philadelphia Gear (operating under the name Western Gear) manufactured the pumps' original right angle gear reducers, which were manufactured, purchased, and installed in approximately 1968, and which rotate counterclockwise.
FCI also communicated directly with Philadelphia Gear during its preparation of the bid for the Project.
On or before March 9, 2017, FCI submitted a proposal to Project engineer SKA for a prospective replacement engine: the Caterpillar 3512C land engine, an engine that FCI says it believed was specified in its contract with the Parish.
On March 19, 2018, FCI filed suit against the Parish, SKA, and XL Specialty Insurance Co. ("XL"), SKA's insurer, seeking to recover unpaid contract balances owed to FCI for work performed on the Project and other damages.
In its third-party demand, SKA alleges that the gear reducers manufactured by Philadelphia Gear turn in the opposite direction of the Caterpillar engines purchased by FCI for the Project and are thus "unreasonably dangerous in a reasonably anticipated use of the product."
Philadelphia Gear argues that SKA's third-party demand fails to state a claim upon which relief can be granted because under the applicable comparative fault regime, Philadelphia Gear cannot be held liable for contribution or indemnity to SKA.
In opposition, SKA argues that many of Philadelphia Gear's arguments regarding the LPLA are substantive defenses, which may not be used to attack a complaint on a motion to dismiss.
In reply, Philadelphia Gear responds that tort principles apply to SKA's LPLA claims, which Philadelphia Gear argues are simply affirmative defenses to the claims brought against SKA by FCI and the Parish, and therefore, should be dismissed as a third-party demand against Philadelphia Gear.
Philadelphia Gear argues that SKA's third-party demand is also defective on the grounds that it fails to state a detrimental reliance claim.
SKA responds that it has sufficiently alleged the three elements of detrimental reliance: (1) it alleges that Philadelphia Gear provided specifications for the gear reducers without noting the existing rotation, visited the site, and reviewed SKA's draft specifications ("a representation by conduct or word"); (2) it alleges that engineers commonly rely on such specifications by manufacturers and that Philadelphia Gear is an expert in this field ("justifiable reliance"); and (3) it alleges that it used the materials from Philadelphia Gear in preparing its design for the Project ("change in position to one's detriment because of the reliance").
In reply, Philadelphia Gear argues that the first element of a detrimental reliance claim has not been met because, even if SKA's allegations are true, SKA could not reasonably rely on the specifications provided and reviewed by Philadelphia Gear during the bid process as public bid law precludes the specification of a particular brand of product in a government bid, and thus, the sample specifications were only "gratuitous."
The Federal Rules of Civil Procedure require a complaint to contain "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). Rule 8 "does not require `detailed factual allegations,' but it demands more than an unadorned, thedefendant-unlawfully-harmed-me accusation." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). The statement of the claim must "`give the defendant fair notice of what the ... claim is and the grounds upon which it rests.'" Twombly, 550 U.S. at 555 (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)). A pleading does not comply with Rule 8 if it offers "labels and conclusions," "a formulaic recitation of the elements of a cause of action," or "`naked assertion[s]' devoid of `further factual enhancement.'" Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 555-57).
Rule 12(b)(6) of the Federal Rules of Civil Procedure permits a party to move to dismiss for "failure to state a claim upon which relief can be granted." Fed. R. Civ. P. 12(b)(6). "To survive a 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.'" Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 570). A claim is plausible on the face of the complaint "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. (quoting Twombly, 550 U.S. at 556). Plausibility does not equate to probability, but rather "it asks for more than a sheer possibility that a defendant has acted unlawfully." Id. (citing Twombly, 550 U.S. at 556). "Where a complaint pleads facts that are `merely consistent with' a defendant's liability, it `stops short of the line between possibility and plausibility of "entitlement to relief."'" Id. (quoting Twombly, 550 U.S. at 557). Thus, if the facts pleaded in the complaint "do not permit the court to infer more than a mere possibility of misconduct, the complaint has alleged — but it has not `show[n]' — `that the pleader is entitled to relief.'" Id. at 679 (quoting Fed. R. Civ. P. 8(a)(2)).
In considering a Rule 12(b)(6) motion to dismiss for failure to state a claim, a court employs the two-pronged approach utilized in Twombly. The court "can choose to begin by identifying pleadings that, because they are no more than conclusions [unsupported by factual allegations], are not entitled to the assumption of truth." Iqbal, 556 U.S. at 679. However, "[w]hen there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief." Id. Motions to dismiss are disfavored and rarely granted. Turner v. Pleasant, 663 F.3d 770, 775 (5th Cir. 2011) (citing Harrington v. State Farm Fire & Cas. Co., 563 F.3d 141, 147 (5th Cir. 2009)).
A court's review of a Rule 12(b)(6) motion to dismiss "is limited to the complaint, any documents attached to the complaint, and any documents attached to the motion to dismiss that are central to the claim and referenced by the complaint." Lone Star Fund V (U.S.), L.P. v. Barclays Bank PLC, 594 F.3d 383, 387 (5th Cir. 2010) (citing Collins v. Morgan Stanley Dean Witter, 224 F.3d 496, 498-99 (5th Cir. 2000)). A court may also take judicial notice of certain matters, including public records and government websites. Dorsey v. Portfolio Equities, Inc., 540 F.3d 333, 338 (5th Cir. 2007); see also Kitty Hawk Aircargo, Inc. v. Chao., 418 F.3d 453, 457 (5th Cir. 2005). Thus, in weighing a Rule 12(b)(6) motion, district courts primarily look to the allegations found in the complaint, but courts may also consider "documents incorporated into the complaint by reference or integral to the claim, items subject to judicial notice, matters of public record, orders, items appearing in the record of the case, and exhibits attached to the complaint whose authenticity is unquestioned." Meyers v. Textron, Inc., 540 F. App'x 408, 409 (5th Cir. 2013) (citing Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322 (2007)).
Under Federal Rule of Civil Procedure 14, 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." Fed. R. Civ. P. 14(a)(1). A third-party plaintiff may not, however, implead a third-party defendant "merely because [the third-party defendant] may be liable to the plaintiff." Owen Equip. & Erection Co. v. Kroger, 437 U.S. 365, 368 n.3 (1978) (emphasis in original). A third-party demand is improper when it "amounts to no more than a mere offer of a party to the plaintiff." Smallwood ex rel. T.M. v. New Orleans City, 2015 WL 5883802, at *5 (E.D. La. Oct. 8, 2015) (citing advisory committee's notes on 1946 amendment to Rule 14). A third-party claim must be secondary or derivative of the main claim and "the original defendant must be able to demonstrate a basis for the third-party defendant's liability to the defendant (also known as the third-party plaintiff)." USAA Gen. Indem. Co. v. Scott, 2016 WL 8711678, at *2 (E.D. La. July 29, 2016) (quoting McCain v. Clearview Dodge Sales, Inc., 574 F.2d 848, 849-50 (5th Cir. 1978)) (internal quotation marks omitted); see also Hanover Ins. Co. v. Superior Lab. Servs., Inc., 316 F.R.D. 179, 182 (E.D. La. 2016) (citations omitted).
A third-party plaintiff must base its third-party claim on "indemnity, subrogation, contribution, express or implied warranty, or some other theory" of secondary or derivative liability. Martco Ltd. P'ship v. Bruks Inc., 430 F. App'x 332, 334 (5th Cir. 2011) (quoting 6 CHARLES ALAN WRIGHT, ARTHUR R. MILLER & MARY KAY KANE, FEDERAL PRACTICE & PROCEDURE § 1446, at 415-20 (3d ed. 2010)). If a right to relief does not exist under the applicable substantive law, the third-party claim must be dismissed. Id. at 335. State substantive law determines whether the right to contribution or indemnity exists. Smallwood, 2015 WL 5883802, at *4 (citing Gen. Dynamics Corp. v. Adams, 340 F.2d 271, 279 (5th Cir. 1965)).
SKA argues that if it is found liable to any party in this matter, it is entitled to recover from Philadelphia Gear all damages arising out of the rotational conflict caused by the design of the gear reducers that Philadelphia Gear manufactured.
Article 2323 provides in pertinent part:
La. Civ. Code art. 2323. And article 2424 provides in pertinent part:
La. Civ. Code art. 2324. Therefore, each non-intentional tortfeasor may only be held liable for his own share of fault, and a joint tortfeasor may not be held solidarily liable with any other person for damages attributable to the fault of another. Dumas, 828 So. 2d at 537. This regime applies to products liability cases. See 425 Notre Dame, LLC v. Kolbe & Kolbe Mill Work Co., 151 F.Supp.3d 715, 721 (E.D. La. 2015) (citing Hollybrook Cottonseed Processing, LLC v. Carver, Inc., 2011 WL 2214936, at *2 (W.D. La. June 6, 2011)). After all, the Louisiana Supreme Court has stated that the language of these two articles "clearly and unambiguously provides that comparative fault principles apply in any action for damages and apply to any claim asserted under any law or legal doctrine or theory of liability." Thompson v. Winn-Dixie Montgomery, Inc., 181 So.3d 656, 664 (La. 2015) (internal quotation marks and citation omitted).
SKA argues that Louisiana's comparative fault regime should not be applied to LPLA cases because the LPLA incorporates "other" legal principles aside from tort.
SKA also argues that the obligations in this matter mostly arise out of contract, and that therefore tort concepts should not be applied. But SKA does not allege any contractual relationship between it and Philadelphia Gear. SKA itself states that its third-party demand "does not allege or even imply a contractual indemnity claim."
Only if SKA demonstrates that it has asserted a valid claim for contribution or indemnity, beyond the compass of comparative fault, can its third-party tort claim survive. See 425 Notre Dame, LLC, 151 F. Supp. 3d at 721.
"[C]ontribution is allowed only among tortfeasors who are solidarily liable." Hamway v. Braud, 838 So.2d 803, 807 (La. App. 2002) (citation omitted). Article 2324 (as amended in 1996), only permits intentional or willful tortfeasors to be held liable in solido. La. Civ. Code art. 2324. SKA has not alleged any intentional tort against Philadelphia Gear, nor has the Parish or FCI alleged any intentional tort against SKA. Absent an intentional tort, solidary liability cannot exist between SKA and Philadelphia Gear, and so SKA does not have a valid claim for contribution against Philadelphia Gear. See 425 Notre Dame, LLC, 151 F. Supp. 3d at 721.
Under principles of equity, indemnity permits "a party not actually at fault, whose liability results from the fault of others" to recover from those parties at fault. Nassif v. Sunrise Homes, Inc., 739 So.2d 183, 186 (La. 1999) (quoting Bewley Furniture Co. v. Md. Cas. Co., 285 So.2d 216, 219 (La. 1973)).
The Parish and FCI allege that SKA negligently designed and managed the Project.
In Martco Limited Partnership, the Fifth Circuit held that the third-party plaintiff's allegations stated a plausible basis for indemnity when the third-party plaintiff, a manufacturer, alleged "that any liability that it may have is only technical and a result of the faulty and untimely specifications, designs and other information provided by [the third-party defendant] upon which [the third-party plaintiff] wholly relied in manufacturing the allegedly defective equipment for [the plaintiff]." 430 F. App'x at 337-38. SKA attempts to make a similar claim but is unable to do so. The plaintiff in Martco alleged that the defendant-manufacturer failed to timely deliver and install equipment, and that it suffered damages due to defects in the equipment following installation. Id. at 333. On the face of the third-party complaint, it was plausible that the manufacturer's alleged acts and omissions and the equipment's alleged defects could be wholly the fault of the third-party defendant, the engineer — that is, that the defendant, as third-party plaintiff, was wholly without fault. Here, however, SKA cannot show that it is wholly without fault given the allegations against it.
The Parish and FCI allege that SKA was negligent in its design and management of the Project, and in turn, SKA alleges that Philadelphia Gear specified incompatible gear reducers and that SKA justifiably relied on Philadelphia Gear's design specification. Neither of these allegations, on their face, can completely absolve SKA of its own alleged fault. Even if SKA relied on Philadelphia Gear's allegedly faulty drawings and specifications, such reliance cannot mean that SKA, if found negligent, was not negligent itself in its design or management of the Project. If, for example, SKA is found negligent for incorporating deficient specifications into the contract documents, that Philadelphia Gear provided those specifications cannot mean SKA was not actually negligent in incorporating deficient specifications into the contract documents for which it was responsible as the Project engineer. Accordingly, SKA's alleged fault is more than technical or constructive, and any alleged fault on the part of Philadelphia Gear cannot serve as the basis for tort indemnity. Because there is "no foreseeable combination of findings, viewing the allegations of the pleadings in the light most favorable to [SKA], that could result in [SKA] being cast in judgment for mere technical or passive fault," its third-party claim for indemnity against Philadelphia Gear should be dismissed. 425 Notre Dame, LLC, 151 F. Supp. 3d at 722 (quoting Martco Ltd. P'ship, 430 F. App'x at 335) (citation and original alterations omitted).
SKA argues further that neither comparative fault nor tort indemnity principles apply to its third-party demand because its detrimental reliance claim does not sound in tort — an assertion Philadelphia Gear does not dispute. See Durio v. Metro. Life Ins. Co., 653 F.Supp.2d 656, 666 (W.D. La. 2009) ("A claim under [Louisiana Civil Code article 1967] is based on promissory estoppel, not tort.") (citing Stokes v. Georgia-Pacific Corp., 894 F.2d 764, 770 (5th Cir. 1990)); see also Miller v. Lowe, 2009 WL 4730201, at *3 (W.D. La. 2009) (explaining that, in Louisiana, the elements for detrimental reliance and promissory or equitable estoppel are the same and based on the same civil code provision) (citations omitted). Regardless, SKA's claim for detrimental reliance fails on the merits. Under article 1967:
La. Civ. Code. art. 1967. A party seeking to establish detrimental reliance must prove three elements: "(1) a representation by conduct or word; (2) justifiable reliance; and (3) a change in position to one's detriment because of the reliance." Suire v. Lafayette City-Parish Consol. Gov't, 907 So.2d 37, 59 (La. 2005) (citations omitted). The focus of this analysis is "whether a representation was made in such a manner that the promisor should have expected the promise to rely upon it, and whether the promisee so relies to his detriment." Id. The doctrine is "designed to prevent injustice by barring a party from taking a position contrary to his prior acts, admissions, representations, or silence." Id. (citations omitted). Detrimental reliance claims are "not favored in Louisiana" and "must be examined carefully and strictly." In re Ark-La-Tex Timber, Co., 482 F.3d 319, 334 (5th Cir. 2007) (citations omitted). A claim for detrimental reliance will not lie "[i]f the evidence reveals that the asserting party had actual knowledge, or a ready and convenient means of determining the facts concerning representations made." Miller, 2009 WL 4730201, at *3 (quoting Knippers v. Dr. W.W. Lambard, 620 So.2d 1368, 1375 (La. App. 1993)).
SKA's detrimental reliance claim fails in all three respects. First, any representation by conduct or word by Philadelphia Gear was necessarily gratuitous because public bid law forbids any brand, make, or manufacturer from being specified for a product in a bid for a public works contract, with a few exceptions not present here. See La. R.S. 38:2212.1(C); 38:2290.
In conclusion, SKA cannot state a cause of action for detrimental reliance against Philadelphia Gear, though this claim as a third-party demand might not be barred by the application of comparative fault and indemnity principles.
SKA requests that it be permitted to amend its third-party demand should the Court determine that its current allegations are not sufficient.
Accordingly, for the foregoing reasons,
IT IS ORDERED that Philadelphia Gear's motions to dismiss (R. Docs. 315 & 316) are GRANTED and SKA's third-party claim is hereby dismissed.