JAMES C. TURK, Senior District Judge.
Pending before the court is a motion to dismiss by Fourth-Party Defendant Sam Rust Seafood & Produce ("Sam Rust"), ECF No. 40, in which it seeks dismissal of the common law indemnification claim brought by Performance Food Group, Inc. d/b/a Performance Food Service-Virginia ("PFG") in the Fourth-Party Complaint. The Court concludes that the express indemnification clause in the written contract between PFG & Sam Rust governs the indemnification obligations between the two parties and that it precludes any implied or common law indemnification claim in this case. For this reason, explained in more detail below, Sam Rust's motion to dismiss, ECF No. 40, is
Plaintiff Robert J. Collier alleges that he suffered personal and bodily damages due to food poisoning after consuming "unwholesome food," including shellfish, at Defendant's restaurant on April 14, 2011. See ECF No. 17, Amended Complaint. The Amended Complaint asserts a common law negligence claim, as well as claims for breaches of the implied warranties of merchantability and of fitness for a particular purpose. See generally id. After filing its Answer, Defendant Land & Sea filed an Amended Third-Party Complaint against two entities that supplied the shellfish that Collier allegedly consumed — PFG and Weaver Fresh Seafood & Produce. ECF No. 30. The Amended Third-Party Complaint contains the same causes of action against each of the third-party defendants as the Amended Complaint, i.e., negligence and breaches of the implied warranties of merchantability and of fitness for a particular purpose. See generally id.
In addition to filing an answer denying the allegations against it, PFG filed a Fourth-Party Complaint against Sam Rust. ECF No. 29. The Fourth-Party Complaint alleges that Sam Rust supplied PFG with the shellfish that it, in turn, provided to Land & Sea. ECF No. 29 at ¶¶ 5-6. According to PFG, Sam Rust provided the shellfish at issue to PFG pursuant to a written contract, titled a "Foodservice Products Supplier Agreement dated January 29, 2009" (hereinafter
Now pending before the Court is Sam Rust's motion to dismiss, which seeks dismissal of the claim of common law indemnity in the Fourth-Party Complaint. See ECF No. 40, 41. PFG has filed a response in opposition to the motion to dismiss, ECF No. 45, and Sam Rust has filed a reply, ECF No. 46. The Court heard argument on the motion during a September 6, 2013 hearing, and the motion is now ripe for disposition.
In order to survive a motion to dismiss under Fed.R.Civ.P. 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, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). In considering a motion to dismiss under Rule 12(b)(6), the Court is obligated to accept as true all of the complaint's factual allegations and take the facts in the light most favorable to the plaintiff. Giarratano v. Johnson, 521 F.3d 298, 302 (4th Cir.2008). When reviewing the legal sufficiency of a claim, however, the Court "need not accept the legal conclusions drawn from the facts." Id.
The sole issue raised by the pending motion to dismiss is whether, under Virginia law, PFG's claim of "common law indemnity" can survive when there is an "express contractual provision for indemnity between the parties."
ECF No. 29, Ex. A at 3, ¶ 14. The Agreement also contains an integration clause that states that it "constitutes the entire Agreement and understanding between the parties regarding the subject matter hereof, and supersedes and merges all prior discussions and agreements between them relating thereto." Id. at 4, ¶ 15.
Sam Rust argues that there is "no implied duty of indemnity when the parties have reduced an indemnification agreement to writing." ECF No. 41 at 3. Sam Rust acknowledges there are no cases from the Supreme Court of Virginia on point, but cites to a Fourth Circuit case which holds that courts should not "resort to implied indemnity principles ... when an express indemnification contract exists.'" ECF No. 41 at 3 (citing Fidelity & Dep. Co. v. Bristol Steel & Iron Works, Inc., 722 F.2d 1160, 1163 (4th Cir. 1983) ("Fidelity & Deposit")). Sam Rust also cites, without discussion, to four other cases that have cited Fidelity & Deposit for the same proposition. ECF No. 41 at 3-4 (citing Dacotah Mktg. & Research, LLC v. Versatility, Inc., 21 F.Supp.2d 570, 580 (E.D.Va.1998); Sanderling v. Donohoe Co., Inc., 47 Va. Cir. 345, 346 (Va.Cir.Ct. 1998); Transamerica Premier Ins. Co. v. Turf Specialists of N. Va., Inc., 31 Va. Cir. 26, 28 (Va.Cir.Ct.1993); and Fairfax Cty. Bd. of Supervisors v. Culbertson Constr. Co., 12 Va. Cir. 118, 120 (Va.Cir.Ct.1987)).
In its response, PFG contends that the cases Sam Rust relies upon do not control the outcome here because those cases all deal with either surety agreements or they are construction cases. ECF No. 45 at 1-2. PFG posits that in the context of a products liability case like this one, "the rights and obligations of the parties are not determined solely by contract, but by operation of law." Id. It points specifically to Virginia Code sections 8.2-314 and 315, which govern the creation of implied warranties in the sale of products, such as the shellfish at issue here. See Va.Code Ann. §§ 8.2-314, 315; see also Va.Code Ann. § 8.2-316 (describing how such implied warranties may be excluded or modified). PFG cites to no cases or other authority,
Moreover, a similar rule has been applied in other jurisdictions, outside the construction or surety context. For example, New Zealand Kiwifruit Mktg. Bd. v. City of Wilmington, 825 F.Supp. 1180 (D.Del.1993) involved a plaintiff who had shipped fruit that was destroyed due to faulty refrigeration while in a port-warehouse facility operated by the defendant city. Id. at 1182. The contract between the city and one of the co-defendants, who was partially responsible for the operation or maintenance of the refrigeration equipment at the port, contained an express indemnification provision. Id. 1184, 1194-95. Applying Delaware law, the court concluded that the indemnification provision governed and that no contrary or different duty to indemnify would be implied. Id. at 1194-95. In ruling, the court noted "Delaware courts have clearly limited implied indemnification to situations in which no express indemnification exists. `When the parties to a contract have entered into a written agreement expressly setting forth one party's indemnity liability, there is no room for any enlargement of that obligation by implication.'" Id. at 1194 (citation omitted).
Similarly, in C & E Servs., Inc. v. Ashland, Inc., 498 F.Supp.2d 242, 266-67 (D.D.C.2007), a case involving underlying claims for negligent misrepresentation, fraud, and the breach of the implied covenant of good faith and fair dealing, the court concluded that District of Columbia law required dismissal of the plaintiffs' equitable indemnification claim because there was an express contract provision governing indemnification. Other courts, too, have applied the same principle outside the surety or construction context. See, e.g., Fontenot v. Mesa Petroleum Co., 791 F.2d 1207, 1218-19 (5th Cir.1986) (applying federal maritime law and refusing to "imply a separate indemnification obligation arising out of an [warranty of workmanlike performance]", because an express indemnification agreement existed between the same parties); Nat'l Labor Coll., Inc. v. Hillier Grp. Architecture N.J., Inc., 739 F.Supp.2d 821, 830-31 (D.Md.2010) (under Maryland law, a claim for common law indemnification, which is a quasi-contractual remedy, was unavailable to the plaintiff because an express indemnity agreement existed and "[a]ny implied common law indemnification scheme would either contradict or add to the[] clearly defined circumstances" under which indemnification is required in the express agreement); General Motors Corp. v. Maritz, Inc., 2009 WL 1259376, at *3-*4 (D.Ariz. May 6, 2009) (applying Arizona law to action for indemnification in case where original claim was based on personal injuries at event sponsored by General Motors, who contracted with Martiz Travel Company to provide services for the event, and concluding that both "implied contractual indemnity" and "equitable indemnity" were precluded by the existence of an express indemnity provision between GM and Maritz).
Based on the cases cited in the preceding two paragraphs, which applied the basic principle set forth in Fidelity & Deposit, the Court concludes that principle is not limited to surety and construction cases, as PFG argues. Particularly since PFG has not cited to a single case stating that the rule should not apply in the products liability context, the Court believes it should apply here.
First, nowhere in Sam Rust's motion to dismiss does it state that it would not be obligated to indemnify PFG under the contract for any breach of the implied warranties. Second, in its Reply, Sam Rust expressly denies that it "seek[s] to disclaim implied or express warranties as to the quality of the food." ECF No. 46 at 1.
Third, the contractual indemnification provision itself requires Sam Rust to indemnify PFG for damages arising out of a claim for "[d]eath or injury to any person,... resulting or claimed to have resulted, in whole or in part, from any quality or other defect in the Product, whether latent or patent, or failure of the Product to comply with any express or implied warranties or any claim of strict liability in tort." ECF No. 29 at Ex. A, ¶ 14 (emphasis added). This obligation is relieved if the damages are "determined to result from PFG's own gross negligence or willful misconduct," but it otherwise requires that Sam Rust indemnify PFG — and "defend" PFG and hold harmless PFG and related entities, including customers — for the precise types of claims asserted in this lawsuit, including the implied warranty claims. Id. Thus, while the Court is not asked to decide the issue today and does not do so, it appears that the express indemnification clause here is sufficiently broad that it could require Sam Rust to indemnify PFG if the seafood provided by Sam Rust failed to comply with any warranties implied by law. Thus, it is unclear why implied indemnification would even be necessary to make PFG whole.
In light of the parties' imprecise nomenclature regarding "indemnification," see supra at note 1, the Court briefly considers whether PFG's arguments are implicitly based not so much on a distinction between type of claims or cases, but rather on the type of indemnity being sought. That is, perhaps PFG's argument is that "equitable indemnification," a corollary to contribution, can co-exist with an express contract for indemnification, even if implied contractual indemnity cannot.
Although it is far from clear,
By contrast, "equitable indemnification" stems from equitable principles and "arises when a party without personal fault, is nevertheless legally liable for damages caused by the negligence of another." Carr v. The Home Ins. Co., 250 Va. 427, 463 S.E.2d 457, 458 (1995). In such a case, the innocent party can "recover from the negligent actor for the amounts paid to discharge the liability." Id. Additionally, "a prerequisite to recovery based on equitable indemnification is the initial determination that the negligence of another person caused the damage." Id.
Some Virginia courts and courts applying Virginia law have recognized these two types of indemnification. See, e.g., AIU Ins. Co. v. Omega Flex, Inc., 2012 WL 1119791, at *4 (W.D.Va. Apr. 3, 2012) (recognizing a distinction under Virginia law between "contractual indemnification," which arises by contract, and "equitable indemnification" which is equitable in nature); RML Corp. v. Lincoln Window Prods., Inc., 67 Va. Cir. 545, 2004 WL 3568223, at *15-16 (Va.Cir.Ct. Dec. 3, 2004) (citing Carr for the proposition that "[t]he Supreme Court of Virginia has recognized that claims for indemnity may arise in non-contractual cases" and collecting Virginia circuit court authority ruling that "active/passive indemnity" — another term for equitable indemnity — arises between parties from equitable considerations); cf. Pulte Home Corp. v. Parex, Inc., 265 Va. 518, 579 S.E.2d 188, 193 (2003) (recognizing that the Supreme Court of Virginia has held both that indemnity that must grow out of a contractual relationship and that equitable indemnification is available in Virginia, but refusing to reconcile the two confusing holdings).
For all of these reasons, the Court concludes that the Paragraph 14 of the Agreement between Sam Rust and PFG controls the parties' rights as to indemnification and that no different rights should be implied, either through implied contractual indemnification or through equitable indemnification.
For these reasons, the Court concludes that Sam Rust's motion to dismiss, ECF No. 40, should be
The Clerk of the Court is directed to send a copy of this memorandum opinion and accompanying order to all counsel of record.
In accordance with the accompanying Memorandum Opinion entered this day, it is hereby
that Fourth-Party Defendant's Motion to Dismiss (ECF No. 40) is
The Clerk of the Court is directed to send a copy of this memorandum opinion and accompanying order to all counsel of record.