Opinion
C18-5445 BHS
12-14-2021
ENVIRONMENTAL TRANSPORTATION OF NEVADA, LLC, et al., Plaintiffs, v. MODERN MACHINERY CO., INC., et al., Defendants.
ORDER
BENJAMIN H. SETTLE UNITED STATES DISTRICT JUDGE
THIS MATTER is before the Court on Plaintiff Environmental Transport of Nevada's (“ETON”) motion for summary judgment on the Komatsu Defendant/Counterclaimants' (“Komatsu”) indemnity counterclaims, Dkt. 238, and on Komatsu's responsive Motion to Amend its Answer and Counterclaim, Dkt. 248.
Komatsu America Corp (“KAC”) and Komatsu Equipment Company (“KEC”) are defendants. See Dkts. 1, 27, and 28. For purposes of the pending motions, the distinction between them is not relevant. The Order uses the singular “Komatsu” for clarity and ease of reference.
The background of this case has been detailed in a prior order, Dkt. 146, and in subsequent hearings. In short, Komatsu sought to ship two excavators from its dealer in Rochester, Washington, Defendant Modern Machinery, to a different Komatsu dealer in 1 Las Vegas, Nevada. Komatsu listed the shipping job with a broker, non-party, JNI Logistics, and through JNI, ETON was engaged to transport the excavators. ETON and its driver, Plaintiff Henry Abadia, picked up the excavators at Modern Machinery, and Modern Machinery's employee, Defendant Tyler Piles, loaded them onto Abadia's trailer. The excavators were some two feet over the maximum height permitted on Washington highways, and the excavators collided with an overpass near Chehalis, Washington.
The Washington State Department of Transportation (“WSDOT”) sued ETON for the damage to the overpass. Komatsu alleges that ETON's principal, Moe Truman, “sent WSDOT some case law” in a successful effort to persuade WSDOT to also assert claims against Komatsu. Komatsu ultimately prevailed in that case. See Dkt. 249-1 at 6.
ETON and Abadia also sued Modern Machinery, Piles, and Komatsu in this Court, asserting that they were responsible for the improper loading. Dkt. 1. Komatsu asserted an equitable indemnity counterclaim, Dkt. 27 at 16, seeking indemnity for all claims asserted against Komatsu by third parties, attorneys' fees and costs, and increased insurance and business expenses. Id. at 16-17.
In an earlier round of motions practice, Judge Leighton granted Komatsu's motion for summary judgment and dismissed all of ETON's claims against it, Dkt. 106, and denied Komatsu's motion for summary judgment on its indemnity claim against ETON, Dkt. 107. See Dkt. 146. The indemnity claim addressed in Komatsu's motion was 2 a contractual one, based on what Komatsu claimed was a provision in the Broker/Carrier Agreement between JNI (the broker) and ETON. Dkt. 107 at 2, 5. Judge Leighton denied that motion because the existence of the contract was a question of fact precluding summary adjudication:
The case was transferred to the undersigned following Judge Leighton's retirement in August 2020. Dkt. 184.
Komatsu provides conflicting evidence as to whether the contract ever existed. It admits that neither of the parties to the contract has produced it, but it also offers testimony from one party that it must have been executed. Quite simply, the motion is self-defeating as the evidence presented raises a genuine issue of fact material to the relief sought. Komatsu's Motion for Summary Judgment on its affirmative indemnity claim is DENIED.Dkt. 146 at 12.
ETON now seeks summary judgment on Komatsu's contractual and equitable indemnity claims. Dkt. 238. In response, and to “conform the pleadings to the facts, ” Komatsu seeks to amend its Answer and Counterclaims to formally articulate that it asserts both a contractual indemnity claim and an equitable indemnity claim, the former based on the Broker/Carrier Agreement. Dkt. 248 at 2.
The issues are addressed in reverse order.
I. DISCUSSION
A. Komatsu's Motion to Amend is GRANTED.
Leave to amend a complaint under Federal Rule of Civil Procedure 15(a) “shall be freely given when justice so requires.” Carvalho v. Equifax Info. Servs., LLC, 629 F.3d 876, 892 (9th Cir. 2010) (citing Foman v. Davis, 371 U.S. 178, 182 (1962)). This policy is “to be applied with extreme liberality.” Eminence Cap., LLC v. Aspeon, Inc., 316 F.3d 1048, 1051 (9th Cir. 2003) (citations omitted). In determining whether to grant leave under Rule 15, 3 courts consider five factors: “bad faith, undue delay, prejudice to the opposing party, futility of amendment, and whether the plaintiff has previously amended the complaint.” United States v. Corinthian Colls., 655 F.3d 984, 995 (9th Cir. 2011) (emphasis added). Among these factors, prejudice to the opposing party carries the greatest weight. Eminence Capital, 316 F.3d at 1052.
A proposed amendment is futile “if no set of facts can be proved under the amendment to the pleadings that would constitute a valid and sufficient claim or defense.” Gaskill v. Travelers Ins. Co., No. 11-cv-05847-RJB, 2012 WL 1605221, at *2 (W.D. Wash. May 8, 2012) (citing Sweaney v. Ada County, Idaho, 119 F.3d 1385, 1393 (9th Cir. 1997)).
Komatsu argues that its indemnity claims have been based on the alleged JNI Broker/Carrier agreement all along and that the issue has been the subject of discovery and motions practice dating to early 2020. See Dkt. 107. It argues that amendment would not be futile and would not prejudice ETON. Dkt. 252.
ETON argues that it would be prejudicial to permit Komatsu to assert a contractual indemnity claim and to force it to defend that claim, when it is rooted only in “Komatsu's wishful thinking, conjecture, and speculation.” Dkt. 238 at 2. This assertion is based on ETON's continued argument that there is no evidence of a contract. ETON made the same argument in its March 23, 2020 response to Komatsu's summary judgment motion on its contractual indemnity claim. Dkt. 128 at 1 (“Komatsu's motion argues that it has a contractual right to indemnification from Environmental Transportation of Nevada []. Conspicuously absent from its motion, however, is a copy of 4 the contract upon which it is based.”). It is also the basis for ETON's pending motion for summary judgment. Dkt. 238 at 4-5 (“Because there is no evidence of any contract which could give Komatsu indemnification rights, Komatsu has resorted to arguing that there must have been a contract between Eton and JNI because it was JNI's practice to execute one with all carriers.” (emphasis in original)).
It would not be prejudicial to permit Komatsu to amend its counterclaim to conform to the facts and claims in the case. The existence and terms of the contract have been the subject of discovery and motions practice. ETON has a pending motion for summary judgment on that very claim, which amply demonstrates that the claim is not new. Nor would permitting the assertion of a contractual indemnification claim be futile; Judge Leighton already ruled that there is a question of fact regarding the existence of a contract supporting that claim.
Komatsu's motion to amend its counterclaim, Dkt. 248, is GRANTED.
B. ETON's Motion for Summary Judgment is DENIED.
Summary judgment is proper “if the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(c). In determining whether an issue of fact exists, the Court must view all evidence in the light most favorable to the nonmoving party and draw all reasonable inferences in that party's favor. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-50 (1986); Bagdadi v. Nazar, 84 F.3d 1194, 1197 (9th Cir. 1996). A genuine issue of material fact exists where there is sufficient evidence for a reasonable factfinder to find for the nonmoving party. 5
Anderson, 477 U.S. at 248. The inquiry is “whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law.” Id. at 251-52. The moving party bears the initial burden of showing that there is no evidence which supports an element essential to the nonmovant's claim. Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). Once the movant has met this burden, the nonmoving party then must show that there is a genuine issue for trial. Anderson, 477 U.S. at 250. If the nonmoving party fails to establish the existence of a genuine issue of material fact, “the moving party is entitled to judgment as a matter of law.” Celotex, 477 U.S. at 323-24. There is no requirement that the moving party negate elements of the non-movant's case. Lujan v. Nat'l Wildlife Fed'n, 497 U.S. 871 (1990). Once the moving party has met its burden, the non-movant must then produce concrete evidence, without merely relying on allegations in the pleadings, that there remain genuine factual issues. Anderson, 477 U.S. at 248.
1. There is a question of fact regarding the Broker/Carrier Agreement.
ETON argues that there is no evidence of a contract and thus no contractual indemnity claim as a matter of law. Dkt. 238. It reiterates that despite the parties' efforts, the broker, JNI, has been unable to produce a copy of the Broker/Carrier Agreement that JNI's broker, Hatfield, insists must have been executed before JNI would award a transportation job to a carrier like ETON. Id. at 5-7; see also Dkt. 146 at 12. It argues that Komatsu has “inexplicably failed to produce any evidence of a contract, let alone one with an applicable indemnity provision.” Dkt. 238 at 8. It also relies on Moe Truman's 6 testimony that there was no such contract and asks the Court to dismiss Komatsu's contractual indemnity claim on summary judgment.
Komatsu's response points out that this Court already ruled there is a question of fact about the existence of a contract, Dkt. 242 at 2, and argues that since Judge Leighton's Order, Dkt. 146, multiple witnesses have testified that there must have been such a contract otherwise ETON would not have ever been hired to ship the excavators. It argues that JNI has since explained why it cannot find a hard copy of the form Broker/Carrier Agreement it continues to assert must be used before a shipment is awarded to a carrier. Dkt. 242 at 4-10. Specifically, JNI's broker, Hatfield, and its owner, Parrish, explained that ETON could not have even bid on a JNI load in the JNI system without executing its Broker/Carrier Agreement, id., and that it is likely the hard copy is in “hundreds of boxes” and “thousands of documents” that are stored in paper form, not digitized. Komatsu also emphasizes that subsequent to Judge Leighton's summary judgment order, Komatsu has learned that another shipping company owned by Moe Truman, Expedite, signed a JNI Broker/Carrier Agreement. Dkt. 242 at 9 (citing Parrish Decl., Dkt. 243). Komatsu also argues that ETON did produce “hundreds, if not thousands” of similar broker/carrier agreements that it executed with other brokers. Id. (citing Parrish Decl., Dkt. 243, ¶ 7).
In short, there is compelling evidence that ETON signed a Broker/Carrier Agreement with JNI as a precondition to obtaining the shipping job. Truman's testimony that ETON did not sign such an agreement may or may not be credible, but in any event is insufficient to support summary judgment in ETON's favor. The Court must instead 7 view the evidence in the light most favorable to the non-moving party, Komatsu. As Judge Leighton already held, the existence and terms of the contract will be resolved at trial. ETON's Motion for Summary Judgment on Komatsu's contractual indemnity claim, Dkt. 238, is DENIED.
2. Komatsu's Equitable Indemnity Claim is plausible.
Finally, ETON seeks summary judgment on Komatsu's equitable indemnity claim, arguing that the relationship among and between the parties does not fit Washington's “ABC Rule, ” which governs such claims.
In Washington, the doctrine of equitable indemnification, otherwise known as the ABC Rule, serves as an exception to the “American Rule, ” which bars liability for attorney fees. Porter v. Kirkendoll, 194 Wn.2d 194, 209-10 (2019). It permits one to recover attorneys' fees where the acts or omissions of one party to an agreement or event have exposed another party to suit by persons not connected with the initial transaction or event. Id. It has three elements, which give it its name: (1) A acts wrongfully toward B, (2) that wrongful act “exposes or involves B in litigation with C, ” and (3) “C was not connected with” A's “wrongful act . . . toward B.” Id. at 210 (citations omitted). The critical inquiry under prong two is whether, apart from A's actions, B's own conduct caused it to be exposed or involved in litigation with C. Id. (internal citations omitted)
ETON argues that Komatsu's equitable indemnity claim under this ABC Rule is fatally flawed because it, (B), seeks indemnification from ETON, (A) based on the fact (A) initiated litigation against (B) and Modern Machinery, (C). In its characterization, Komatsu is seeking indemnity not because ETON's alleged negligence subjected it to 8 litigation with third parties, but because ETON filed suit against Komatsu, and that litigation also involved third parties. Dkt. 238 at 10.
Komatsu, (B), responds that this characterization is incorrect. It argues that it seeks indemnity for the damages cause by ETON's, (A's), wrongful conduct-crashing the excavators into the overpass, and persuading WSDOT, (C), to sue Komatsu, (B). See Dkt. 242 at 17-18.
The Court agrees. Komatsu's equitable indemnity claim under the ABC Rule is not flawed based on an alignment of parties that is consistent with the requirements of that rule. The ultimate, factual viability of such a claim will await trial. ETON's motion for Summary Judgment on Komatsu's equitable indemnity claim based on the relationship among A, B, and C, is DENIED.
IT IS SO ORDERED.. 9