Opinion
CIVIL ACTION NO: 03-2273, SECTION "R" (5)
March 22, 2004
ORDER AND REASONS
Before the Court is plaintiff's motion to strike defendants' third — party claims against Beery-Rio Associates and Chad Danos d/b/a Danos Land Design. Third — party defendants Beery-Rio and Danos join in plaintiff's motion. For the following reasons, the Court denies the motion.
I. Background
This lawsuit arises out of the construction of an assisted living facility in Baton Rouge, Louisiana, operated by plaintiff Sunrise Development, Inc. Sunrise develops, manages and operates assisted living facilities throughout the United States and in the United Kingdom and Canada. Sunrise hired architect Beery-Rio to design the facility in Baton Rouge, and Beery-Rio subcontracted with Danos to design the landscaping. Sunrise entered into a contract to construct the facility with defendants Carl E. Woodward, Inc. and Carl E. Woodward, LLC (collectively, UCEW") as the general contractor. In its complaint, Sunrise avers that CEW achieved substantial completion of the contract on July 18, 2000. Sunrise alleges that it has experienced two major problems as a result of CEW's defective construction work: (1) a ground heaving problem around and underneath the building and (2) a mold and mildew problem within the building walls. In connection with these problems, the parties entered into a second contract, the Remediation Agreement. In its complaint, Sunrise avers that under the Remediation Agreement, CEW agreed to perform certain corrective work and reserved its rights to recover its costs from Sunrise or others. Sunrise states that it also reserved its rights to recover its costs from CEW or others.
Rec. Doc. 1, Complaint, at p. 58.
Id.
Sunrise filed this action against CEW, in which it asserts claims based on breach of the construction contract, breach of statutory warranty under Louisiana law, and breach of the Remediation Agreement. CEW filed an answer to plaintiff's complaint, in which it asserted a counterclaim against Sunrise for reimbursement for the remedial work that it performed under the Remediation Agreement. CEW also impleaded numerous parties, including, inter alia, Beery-Rio and Danos, and asserted various third — party claims against them. CEW alleges that Beery-Rio is liable to it for all costs associated with the remediation of the facility and the costs that CEW incurred to remove and replace the vinyl wall covering because Beery-Rio failed to prepare adequate plans and specifications for the facility. CEW alleges that Danos is liable to it for amounts incurred to remediate the facility and for any future damages for which CEW may be liable because Danos improperly designed the facility's landscaping.
Rec. Doc. 1, Complaint.
Rec. Doc. 6, CEW's Answer, Counter — claim, and Third — Party Impleader. CEW billed Sunrise $610,951.30 for the remediation work. Defs.' Opp. to Mot. to Strike, Ex. B, Invoice dated Dec. 23, 2003.
Rec. Doc. 6, CEW's Answer, Counter — claim, and Third — Party Impleader.
Id.
Sunrise now moves to strike the third — party claims against Beery-Rio and Danos. Beery-Rio and Danos join in Sunrise's motion. Sunrise contends that the parties were improperly impleaded under Rule 14. Sunrise also argues that the third — party claims are unnecessary to the adjudication of the original cause of action and will serve only to prolong and complicate this proceeding. CEW counters that it has properly impleaded Beery-Rio and Danos because it asserts subrogation claims against them.
II. Discussion
A. Rule 14 Impleader
In its third — party complaint, CEW impleads Beery-Rio and Danos under Federal Rule of Civil Procedure 14. Rule 14(a) provides:
At any time after commencement of the action a defending party, as a third — party plaintiff, may cause a summons and complaint to be served upon a person not a party to the action who is or may be liable to the third — party plaintiff for all or part of the plaintiff's claim against the third — party plaintiff.
FED. R. Civ. P. 14(a). Sunrise argues that impleader of Beery-Rios and Danos under Rule 14 is improper because they will never be liable to CEW for all or part of Sunrise's claims against CEW. Sunrise asserts that it alleges only breach of contract and warranty claims against CEW and contends that neither Beery-Rio nor Danos will ever be liable to CEW for any part of those claims.
The Fifth Circuit has addressed the claims that may and may not be properly raised by third — party complaints. See Southeast Mortgage Co. v. Mullins, 514 F.2d 747 (5th Cir. 1975), P.O. Majors v. American Nat'l Bank of Huntsville, 426 F.2d 566 (5th Cir. 1970). Impleader is proper "only when the third — party defendant's potential liability is dependent upon the outcome of the main claim." Mullins, 514 F.2d at 749. The Mullins Court made clear that an entirely separate and independent claim may not be maintained against a third — party under Rule 14, "even though it does rise out of the same general set of facts as the main claim." Id. (quoting U.S. v. Joe Grasso Son, Inc., 380 F.2d 749 (5th Cir. 1967)). The Court emphasized that the test is whether the third — party's liability was derivative of the outcome of the main claim:
In most such cases it has been held that for impleader to be available the third — party defendant must be `liable secondarily to the original defendant in the event that the latter is held liable to the plaintiff.' Stating the same principle in different words, other authorities declare that the third — party must necessarily be liable over to the defendant for all or part of the plaintiff's recovery, or that the defendant must attempt to pass on to the third — party all or part of the liability asserted against the defendant. Whichever expression is preferred, it is clear that impleader under Rule 14 requires that the liability of the third — party be dependent upon the outcome of the main demand.Id.
Here, CEW seeks recovery from Beery-Rio and Danos for amounts that it has incurred and will incur in the future to remediate the facility under the Remediation Agreement with Sunrise. Sunrise asserts a claim against CEW for additional remediation costs under the Remediation Agreement. CEW contends that if it incurs additional remediation costs as a result of plaintiff's claims, then it has a claim against Beery-Rio and Danos based on legal subrogation. Thus, because CEW's claims for future remediation costs are derivative of plaintiff's claims in this case, impleader of Beery-Rio and Danos is proper if CEW has stated a claim against them, based on legal subrogation.
In its third — party complaint, CEW seeks to hold Beery-Rio liable for "all costs associated with the remediation of the Sunrise facility." Rec. Doc. 6, CEW's Answer, Counter — claim and Third — Party Impleader. CEW also alleges that "Danos is liable for any damages for [which] CEW may be liable or for which it has incurred [sic] including but not limited to all costs expended by CEW in remediation efforts." Id.
Sunrise contends that CEW has not stated a claim against Beery-Rio and Danos and moves to strike the third — party claims under Rule 12(b)(6). CEW argues that remediation of the assisted living facility is a result of the failure of Beery-Rio and Danos to provide adequate designs for the construction of the facility. CEW contends that, as a result, Beery-Rio and Danos are liable for the remediation costs, and it seeks to recover the amounts it paid and will pay on their behalf.
In a motion to dismiss for failure to state a claim under Rule 12(b)(6), the Court must accept all well — pleaded facts as true and view the facts in the light most favorable to the third — party plaintiff. See Baker v. Putnal, 75 F.3d 190, 196 (5th Cir. 1996); American Waste Pollution Control Co. v. Browning-Ferris, Inc., 949 F.2d 1384, 1386 (5th Cir. 1991). The Court must resolve doubts as to the sufficiency of the claim in CEW's favor. See Vulcan Materials Company v. City of Tehuacana, 238 F.3d 382, 387 (5th Cir. 2001). In this case, dismissal is warranted if it appears certain that CEW cannot prove any set of facts in support of its claim that would entitle it to relief. Id.; Piotrowski v. City of Houston, 51 F.3d 512, 514 (5th Cir. 1995) (quoting Leffall v. Dallas Indep. Sch. Dist., 28 F.3d 521, 524 (5th Cir. 1994)). With this standard in mind, the Court turns to CEW's subrogation claim.
Louisiana Civil Code article 1825 defines subrogation as "the substitution of one person to the rights of another." LA. C.C. art. 1825. Article 1825 notes that the subrogation "may be conventional or legal." Id. When subrogation results from one party's performance of the obligations of another (the obligor), then that obligation subsists in favor of the party who performed it, the obligation is extinguished for the original obligee, and the performing party may now avail itself of the action and security of the original obligee against the obligor. See LA. C.C. art. 1826. The Supreme Court of Louisiana elucidates the concept of subrogation in A. Copeland Enterprises, Inc. v. Slidell Memorial Hosp., 657 So.2d 1292 (La. 1995), as follows:
In other words, subrogation is the legal fiction established by law whereby an obligation, extinguished with regard to the original creditor by payment which he has received from a third person, or from the original debtor but with funds that a third person has provided, is regarded as substituting in favor of this third person who in essence steps into the shoes of the original [creditor] and is entitled to assert, in the measure of what he has paid, the rights and actions of the former creditor.Id. at 1296.
In this case, CEW contends that it asserts claims against Beery-Rio and Danos based on legal subrogation. CEW argues that it performed and will perform the obligations of Beery-Rio and Danos when it incurs the costs of remediation, and therefore it may now avail itself of the action and security of the original obligee, Sunrise, against Beery-Rio and Danes.
Under Louisiana Civil Code article 1829, subrogation occurs by operation of law "[i]n favor of an obligor who pays a debt he owes with others or for others and who has recourse against those others as a result of the payment." LA. C.C. art. 1829(3). The comment to this article indicates that an obligor can be bound with another "regardless of whether his obligation arises from the same act as the obligation of the other or from a different act." Id., Comment (c). The initial inquiry under Article 1829(3) is therefore whether CEW owes the remediation costs at issue "with or for" Beery-Rio and Danos. In Aetna Ins. Co. v. Naquin, 488 So.2d 950 (La. 1986), the Louisiana Supreme Court allowed subrogation recovery on behalf of the insurer of rental property against a negligent roofing contractor. Id. The Court found that both parties were bound for payment of the leaky roof damages. Id. The Court further found that it did not matter that the two parties were bound for a different reason because they were bound for the same thing. Id. at 954. The Court there held that solidarity was not required to trigger subrogation under then Louisiana Civil Code article 2163(3), so that it need not examine the parties' relationship for solidarity. Id.
In Naquin, the Court interpreted former Louisiana Civil Code article 2161(3), the predecessor to Article 1829(3), which tracks its language. See Coates v. AC and S, Inc., 844 F. Supp. 1126, 1134 n. 15 (E.D.La. 1994).
Later cases stress the concepts of whether obligations are solidary or indivisible to find legal subrogation. In Martin v. La. Farm Bureau Cas. Ins. Co., 638 So.2d 1067 (La. 1994), the Louisiana Supreme Court stated that an obligor is bound with others when the obligation is solidary or indivisible. Id. at 1068-69 (citing LA. C.C. art. 1794). The Louisiana Supreme Court further elaborated that an obligation is solidary among obligors "when they are obliged to do the same thing, so that either party may be compelled to perform the whole obligation, and payment by one exonerates the other." Copeland, 657 So.2d at 1297. Solidary liability is never presumed and must arise from a clear expression of the parties' intent or from law. See id. (citing LA. C.C. art. 1796). In Copeland, the Court denied subrogation recovery on behalf of a medical insurance carrier against a tortfeasor. See Copeland, 657 So.2d at 1297. The Copeland Court found that the medical insurer contracts to pay stipulated medical expenses and is not obligated to repair tort damages, and thus the parties are not obligated to "the same thing." Id.
In this case, CEW contends that it is obligated to incur remediation costs under the Remediation Agreement. CEW asserts that Beery-Rio and Danos are liable by law for these same remediation costs because they failed to properly design the facility and its landscaping. If the parties are liable for the same remediation costs, then the case is closer to Naquin than Copeland because the parties are bound for the same thing, albeit for a different reason. In light of its obligations under the Remediation Agreement, CEW would be akin to the insurer in Naquin, who was liable under its insurance contract for the property damage that the insured sustained and could recover under legal subrogation from the contractor that caused the damage. Naquin, 488 So.2d at 954. Because neither party favored the Court with a copy of the Remediation Agreement, the Court cannot determine the exact nature of the obligations of CEW under the agreement. As noted above, however, in a motion to dismiss, the Court views all facts in the light most favorable to CEW and resolves all doubts in its favor. The Court cannot conclude at this point in the proceedings that there is no set of facts under which CEW could establish a right to subrogation recovery from Beery-Rio and Danos. The Court therefore finds that CEW states a claim against Beery-Rio and Danos. As a result, the Court denies Sunrise's motion to strike the third — party claims against Beery-Rio and Danos.
III. Conclusion
For the foregoing reasons, the Court denies plaintiff's motion to strike the third — party claims against third — party defendants Beery-Rio and Danos.