Opinion
Case No. 2:01-CV-934
September 30, 2002
OPINION AND ORDER
This breach of contract action is before the Court on the Motion of Defendants Eveleth Taconite Company, Ontario Eveleth Company, and Virginia Horn Taconite Corporation to Dismiss Count II of Plaintiff ON Marine Services Company, Inc.'s Complaint. For the reasons that follow, the Motion to Dismiss Count II is granted.
I.
Plaintiff, ON Marine Company, Inc., is a Delaware corporation formerly known as Oglebay Norton Company with its principal place of business in the State of Ohio. (Complaint, ¶ 1.) Prior to November 30, 1996, Plaintiff (then operated under the business name of Oglebay Norton Company), served as a manager of certain iron mines located in Northern Minnesota called the "Eveleth Mines." (Complaint, ¶ 7.) At that time, Plaintiff's subsidiary company, Oglebay Norton Taconite Company, functioned as the employer of the employees who worked at the Eveleth Mines. (Complaint, ¶ 8.) On or about November 30, 1996, Plaintiff and Defendants Eveleth Taconite Company ("ETCO"), Ontario Eveleth Company ("Ontario Eveleth"), Virginia Horn Taconite Corporation ("Virginia Horn"), EVTAC Mining Company ("EVTAC" or "Newco") executed the Eveleth Mines Exit Agreement whereby Plaintiff terminated its services as manager of the Eveleth Mines and transferred the stock of Oglebay Norton Taconite Company to Defendants.
EVTAC is referred to in the Exit Agreement as "Newco." (Exit Agreement, pg. 1.)
Under the terms of the Exit Agreement, Oglebay Norton Taconite Company became a wholly-owned subsidiary of EVTAC. (Complaint, ¶ 16.)
Under Article 1, Paragraphs 1.4 and 1.5 of the Eveleth Mines Exit Agreement, in consideration for the transfer of various interests, EVTAC/Newco assumed all "Known Liabilities" relating to or arising from the ownership and operation of the Eveleth Mines. Further, in Paragraph 1.6, EVTAC/Newco acknowledged that there were liabilities arising out of pension or other employee benefit plans, including the workers compensation program related to the Eveleth Mines.
Again, EVTAC is referred to as "Newco" in these provisions of the Exit Agreement. The parties do not dispute that EVTAC is Newco and that Newco is obligated under the cited terms of the Exit Agreement.
Paragraph 1.5 defined "Known Liabilities" as all liabilities and obligations relating to or arising out of various contracts, leases, licences and other agreements used in the operation of the business and included among other things environmental and reclamation liabilities. (Exit Agreement, ¶ 1.5(a) — (f).)
The Exit Agreement specifically provides that,
Newco will cause [Oglebay Norton Taconite Company] to recognize and discharge all liabilities for the cost of processing and for payment of all workers compensation claims arising from injuries, conditions, or occupational diseases that occurred prior to the Closing Date.
(Exit Agreement, ¶ 1.6(c).)
The Eveleth Mines workers' compensation program in force at the time of the execution of the Exit Agreement, and continuing through the present, was a company-wide plan and was retrospectively rated. (Complaint, ¶ 17.) A retrospectively-rated workers' compensation program means that the final premium is based upon the employer's actual loss experience developed during the policy term. The policy is, or may be, subject to a minimum and maximum premium, which is determined by a rating formula. Under a retrospectively rated program, the policy is also subject to adjustments that may occur years after the policy has expired. These adjustments are referred to as "retros." (Complaint, ¶ 18.)
The insurance companies underwriting the Eveleth Mine's workers' compensation program claim that there are now due and owing substantial sums of money, aggregating in excess of a million dollars, in retro premiums. The insurance companies are making demands for payment upon Plaintiff for these retro premiums. (Complaint, ¶ 19.) Plaintiff alleges that it has requested that Defendants make payment of all such retro premiums pursuant to Paragraph 1.6(c) of the Exit Agreement, but that the Defendants have refused to make the payments. (Complaint, ¶ 20.)
II.
A motion to dismiss for failure to state a claim pursuant to Fed.R.Civ.P. 12(b)(6) "should not be granted unless it appears beyond a doubt that the plaintiff can prove no set of facts in support of his claim that would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46 (1957). All well-pleaded allegations must be taken as true and be construed most favorably toward the non-movant. Schuer v. Rhodes, 416 U.S. 232, 236 (1974); Mayer v. Mylod, 988 F.2d 635, 637 (6th Cir. 1993). While a court may not grant a Rule 12(b)(6) motion based on disbelief of a complaint's factual allegations, Lawler v. Marshall, 898 F.2d 1196, 1199 (6th Cir. 1990), the court "need not accept as true legal conclusions or unwarranted factual inferences." Morgan v. Church's Fried Chicken, 829 F.2d 10, 12 (6th Cir. 1987). Consequently, a complaint will not be dismissed pursuant to Rule 12(b)(6) unless there is no law to support the claims made, the facts alleged are insufficient to state a claim, or there is an insurmountable bar on the face of the complaint.
Matters outside of the pleadings are not to be considered by a court in ruling on a 12(b)(6) motion to dismiss. See Hammond v. Baldwin, 866 F.2d 172, 175 (6th Cir. 1989). Federal Rule of Civil Procedure 10(c) provides, however, that "[a] copy of any written instrument which is an exhibit to a pleading is a part thereof for all purposes." Rule 10(c) is permissive, and a plaintiff is under no obligation to attach to his complaint documents upon which his action is based. See 5 Charles A. Wright Arthur R. Miller, Federal Practice and Procedure, § 1327, at 762 (2d ed. 1990). A defendant may introduce certain pertinent documents if the plaintiff fails to do so. "`[D]ocuments that a defendant attaches to a motion to dismiss are considered part of the pleadings if they are referred to in the plaintiffs complaint and are central to her claim.'" Weiner v. Klais Co., 108 F.3d 86, 89 (6th Cir. 1997) (quoting Venture Assoc. v. Zenith Data Sys., 987 F.2d 429, 431 (7th Cir. 1993)); see also Amini v. Oberlin College, 259 F.3d 493, 502 (6th Cir. 2001) (noting that in the Sixth Circuit, documents attached by defendant to a motion to dismiss are part of the pleadings if plaintiff has referred to them or if they are central to the claims made in the complaint).
Although Plaintiff did not attach a copy of the Exit Agreement to the Complaint, it references the document numerous times in the Complaint. Plaintiff's claims are based on the rights under the Exit Agreement and the rights of the parties in this instance are controlled by it. Thus, the Exit Agreement is central to Plaintiff's claims and the Court accordingly considers it as part of the pleadings for purposes of this Motion to Dismiss.
III.
Plaintiff asserts in its Complaint that it has requested that the Defendants make payment of all retro insurance premiums pursuant to Paragraph 1.6(c) of the Exit Agreement. (Complaint, ¶ 20.) Plaintiff asserts that the Defendants have refused to make such payment. Accordingly, Plaintiff seeks a declaration that all Defendants are "obligated to pay the retro premiums for workers' compensation claims which have become due, as well as any that come due in the future."Defendants maintain that Paragraph 1.6 of the Exit Agreement does not apply to all of the Defendants and instead relates exclusively to Defendant EVTAC/Newco. Defendants assert that the remaining Defendants,i.e., Ontario Eveleth, ETCO, and Virginia Horn, are not subject to liability under the express terms of Paragraph 1.6(c) of the Exit Agreement and as such, these Defendants are not liable for any of the retro workers' compensation premiums. On that basis, these Defendants seek dismissal of Count II as it relates to them.
Plaintiff, on the other hand, argues that the Complaint, in substance, alleges that all of the Defendants, as signatories to the Exit Agreement on the whole, are legally liable for the failure of Newco (the new corporation that they formed) to carry out the obligations contained in Paragraph 1.6(c). Plaintiff maintains that, until evidence is presented that the moving Defendants have no legal responsibility or liability for such failure, the allegations of the Complaint set forth in Count II relating to all of these Defendants must be deemed true. The Court disagrees.
Plaintiff's two-page Brief in Opposition to Defendants' Motion to Dismiss Count II of the Complaint does not contain any citations to authority for its propositions.
The clear and unambiguous language of a contract that is made part of the pleadings overcomes contradictory conclusory averments of the Complaint. Consolidated Jewelers, Inc. v. Standard Fin. Corp., 325 F.2d 31, 36 (6th Cir. 1963). While the Court may review the agreement along with the Complaint, it must avoid interpreting the instrument in considering a motion to dismiss under Rule 12(b)(6) unless the contract is so clear and unambiguous on its face that the Court may determine to a certainty that the plaintiff would be entitled to no relief under any provable set of facts. See, e.g., Slife v. Kundtz Properties. Inc., 40 Ohio App.2d 179, 318 N.E.2d 557 (8th App. Dist. 1974). Here, the clear, concise and unambiguous terms of the Exit Agreement demonstrate an insurmountable bar to the relief requested by Plaintiff.
Clearly all of the named Defendants in this action entered into the Eveleth Mines Exit Agreement. Yet, a contract, by its purpose and terms, distributes the rights and obligations of each its signatories. Plaintiff has provided no basis in fact or in precedent for its legal theory that all of the signatory Defendants are liable for the failure of one of its co-signatories to perfect an obligation expressly binding only on the single co-signatory under the contract. Here, the Exit Agreement allocated liabilities, obligations and benefits among the parties precisely as they had bargained and agreed. Simply because Plaintiff avers in its Complaint that all of the Defendants have a legal obligation under Paragraph 1.6(c) of the Exit Agreement does not bind the Court to ignore the express terms of the instrument in front of it. Certainly, while the Court must accept facts as alleged in the Complaint, this does not automatically extend to acceptance of every baseless assertion, subjective characterization or legal conclusion. See, e.g., In re Sofamor Danek Group. Inc., 123 F.3d 394, 400 (6th Cir. 1997).
Here, the applicable provisions of the Exit Agreement, in particular Paragraph 1.6 which is the sole basis for Count II of Plaintiff's Complaint, are clear and unambiguous. They apply solely to Newco (i.e., Defendant EVTAC). The Exit Agreement expressly provides that "Newco acknowledges that there are liabilities. . . ." (Exit Agreement, ¶ 1.6 ("Other Liabilities") (emphasis added)) and that "Newco will cause ONTAC to recognize and discharge all liabilities for the cost of processing and for the payment of all workers' compensation claims. . . ." (Exit Agreement, ¶ 1.6(c) (emphasis added)). Paragraph 1.6 does not expressly mention or even imply that the liabilities imposed by its terms apply to the remaining Defendants. As such, Plaintiff has not presented a factual predicate concrete enough to warrant further proceedings as against the remaining Defendants on its second claim and no legal theory exists on which relief could be accorded to the Plaintiff for Count II as against Defendants Eveleth Taconite Company, Ontario Eveleth Company, and Virginia Horn Taconite Corporation.
IV.
For the foregoing reasons, Defendants' Motion to Dismiss Count II of the Plaintiff's Complaint (Doc. #3) is GRANTED as to Defendants Eveleth Taconite Company, Ontario Eveleth Company, and Virginia Horn Taconite Corporation. This matter will proceed as to Count I as to all Defendants and as to Count II as to Defendant EVTAC Mining Company only.