United States District Court, D. Maryland
Xinis United States District Judge.
in this complex construction case are the following
dispositive motions filed by subcontractor Third-Party
Defendants: (1) Elliott Co. I d/b/a Elliott Co.
(“Elliott”), Cleaver-Brooks, Inc.
(“Cleaver-Brooks”), IA Manufacturing, LLC d/b/a
Industrial Steam (“Industrial Steam”), Rentech
Boiler Systems, Inc. (“Rentech”), and Tate
Engineering Systems, Inc. (“Tate”) moved to
dismiss the third-party Complaints filed by Pierce
Associates, Inc. (“Pierce”) (ECF Nos. 358, 359,
361, 362, 363); (2) ValvTechnologies, Inc.
(“ValvTech”) moved for summary judgment against
Pierce (ECF No. 360); (3) Elliott moved to dismiss the
third-party Complaint filed by Engineered Systems Alliance,
LLC (“ESA”) (ECF No. 357); and (4) Thermo
Systems, LLC (“Thermo”) moved to dismiss part of
the third-party Complaint filed by Hankins and Anderson, Inc.
(“H&A”). ECF No. 244. The motions are fully
briefed, and no hearing is necessary. See Loc. R.
105.6. For the following reasons, the Court GRANTS
Third-Party Defendants' motions. ECF Nos. 244, 357, 358,
359, 360, 361, 362, 363.
2010, the United States General Services Administration
(“GSA”) entered into a contract with Honeywell
International, Inc. (“Honeywell”) to design and
build a central utility plant. ECF No. 283 ¶ 9. The
central utility plant provides electricity, steam, and water
to a federal facility in Maryland, in part through turbine
generators. The failure of the G-9 and G-12 turbines and
related equipment form the basis of this and other lawsuits.
Id. ¶ 32.
hired ESA to provide “the design, construction,
installation, and other services for the
infrastructure” of the plant. Id. ¶ 10.
In the Honeywell-ESA contract, the parties included a mutual
indemnity clause for losses caused by the other's
negligence, willful misconduct, or breach of contract. ECF
No. 183-1, art. 11.1-11.2. ESA then contracted with Pierce, a
member of ESA, for Pierce to provide the mechanical and
plumbing systems for the project. ECF No. 283 ¶ 11. The
Pierce-ESA subcontract stated that “the terms and
conditions of ESA's contract with Honeywell Corporation
are incorporated by reference as applicable to Pierce
Associates [sic] scope of work.” ECF No. 382-2 at 1
(original in all capital letters).
then procured equipment and services from Third-Party
Defendants to design and build the G-12 and other machinery
as follows: Elliott designed and furnished a steam turbine
generator package that included a lube and control oil
system, a trip and throttle valve to control steam flow,
spare parts, labor, and support for a functional performance
test. ECF No. 283 ¶ 12. The contract specifications
required Elliott to provide data for the generator's
routine maintenance and overhaul. Id. ¶ 18.
ValvTech furnished valves, actuators, documentation, and
labor for startup, training, and revision of a feed water
connection. ECF No. 202 ¶ 12. Cleaver-Brooks designed
and manufactured a fire tube boiler, valves, a surface
blowdown system, and provided the labor to install, startup,
and test a steam boiler. ECF No. 295 ¶ 13. Industrial
Steam and Tate collaborated with ESA member, H&A, to
design, build, install, and provide start up services for
deaerators. ECF No. 341 ¶¶ 13, 14. Rentech designed
and furnished the heat recovery steam generator systems,
stacks and valves, and provided startup services and
reworking for a superheater. ECF No. 330 ¶ 13. Several
of these subcontractors claimed to have substantial training
and experience in their respective roles. See ECF
No. 283 ¶ 20 (Elliott attesting to “high-quality
management standards, accreditations, licensures, and [an]
‘unwavering goal to achieve zero incidents of any
kind'”); ECF No. 295 ¶ 17
(“Cleaver-Brooks' reputation and alleged experience
and commitment to providing the most advanced, integrated
engineered boiler room solutions”); ECF No. 330 ¶
17 (averring “Rentech's reputation and alleged
experience and leadership”).
Purchase Orders for the above work formed the basis of the
contracts between Pierce and Third-Party Defendants. These
Purchase Orders incorporate by reference external documents,
including job specifications. By the terms of the Purchase
Orders, Third-Party Defendants agreed to perform in
“strict accordance” with applicable
specifications. ECF No. 283 ¶ 16; ECF No. 293 ¶ 18;
ECF No. 202 ¶ 13; ECF No. 295 ¶ 14; ECF No. 330
¶ 14; ECF No. 342 ¶ 29; ECF No. 341 ¶
External specifications for each Third-Party Defendant,
except ValvTech, refer to the “[d]rawings and general
provisions of the Contract, including General and
Supplementary Conditions.” ECF No. 283 ¶ 16
(Elliott); ECF No. 295 ¶ 15 (Cleaver-Brooks); ECF No.
209-2 at 1 (Industrial Steam); ECF No. 208-2 at 1 (Tate); ECF
No. 330 ¶ 15 (Rentech); see also ECF No. 330
¶ 16 (Rentech) (averring, in addition, a reference to
“the Contract, including General and Supplementary
Conditions”). The Purchase Orders also require each to
act in strict “accordance with applicable contract
documents.” ECF No. 283-1 at 43 (Elliott); ECF No.
202-1 at 1 (ValvTech); ECF No. 330 ¶ 14 (Rentech);
see also ECF No. 209-1 at 1 (Industrial Steam)
(requiring strict compliance “with applicable contract
plans and specifications”); ECF No. 208-1 at 1 (Tate)
(same); ECF No. 200-1 at 1 (Cleaver-Brooks) (same). Finally,
each Purchase Order included indemnification provisions for
patent infringements but for no other wrongdoing or losses.
ECF No. 202-1 at 2; ECF No. 361-2 at 2; ECF No. 208-1 at 2;
ECF No. 209-1 at 2; ECF No. 204-1 at 2; ECF No. 206-1 at 3.
the work was substantially completed, Honeywell identified an
array of design and construction defects of the high-pressure
feed water system, the turbine bypass valve assembly, the
cooling tower basin retaining wall, the G-12 Turbine system,
and an underground pipe installation. ECF No. 141. The
defective work, Honeywell contends, has forced the plant to
run back-up generators to provide sufficient power and
spinning reserve, which has led to Honeywell's
“failure to meet performance guarantees that have been
made to GSA.” Id. at ¶ 27.
the current motions concern damages for a wide range of
equipment, the original suit related solely to damages
sustained to the G-9 turbine after the G-9 failed
catastrophically in 2014. ECF No. 197 ¶ 19. On January
14, 2015, Plaintiff Hanover Insurance Company initiated suit,
seeking a declaration as to the scope of insurance coverage
related to claims on its policy for the G-9 damages. ECF No.
1. Honeywell, in turn, filed crossclaims against ESA as to
liability for the G-9 damage (ECF No. 56), which prompted ESA
to file a third-party Complaint against Thermo, seeking
indemnity for any G-9 related damages (hereinafter “G-9
Litigation” or “G-9 Claims”). ECF No. 64.
Court issued a scheduling order for the G-9 Litigation, which
required amendment of pleadings or joinder of additional
parties by no later than February 6, 2017. ECF No. 90 at 3.
Pursuant to that Order, Honeywell sought leave to amend its
crossclaims against ESA, asserting claims for additional
defective work performed in connection with the Honeywell-ESA
contract. ECF No. 96. Honeywell's new claims covered a
high pressure feed water system, deaerator tank valves and
piping, steam vent valves, turbine bypass valve assembly,
cooling tower basin retaining wall, underground pipe, and
G-12 turbine system (altogether, and excluding the G-9
Claims, hereinafter “G-12 Litigation” or
“G-12 Claims”). ECF No. 141 ¶ 24.
Accordingly, the Court granted amendment to allow Honeywell
to preserve the G-12 Claims against ESA, Pierce, and H&A.
ECF Nos. 140-42. H&A, in response, filed a third-party
Complaint against Thermo, asserting not only G-12 Claims but
also claims related to the G-9 Litigation. ECF No. 197
¶¶ 15-22, 32.
the G-12 Claims, ESA and Pierce then filed third-party
Complaints against Elliott, Cleaver-Brooks, Industrial Steam,
Rentech, Tate, and ValvTech. ECF Nos. 202, 283, 293, 295,
330, 341, 342. In each third-party Complaint, ESA and Pierce
contend that Third-Party Defendants must indemnify ESA and
Pierce pursuant to their respective agreements for any
liability arising from the G-12 claims. ESA also avers that
Elliott owes contribution to ESA.
before the Court are Third-Party Defendant ValvTech's
motion for summary judgment and the remaining Third-Party
Defendants' motions to dismiss the indemnity and
contribution claims against them. All essentially argue that
ESA and Pierce do not retain any right to indemnification as
a matter of law. Also pending is Thermo's motion to
dismiss or strike H&A's G-9 Claims as untimely. ECF
No. 244. The Court first addresses the sufficiency of the
indemnity and contribution claims, then turns to Thermo's
motion to dismiss.
Standard of Review
motion to dismiss brought pursuant to Rule 12(b)(6) tests the
sufficiency of the complaint. Presley v. City of
Charlottesville, 464 F.3d 480, 483 (4th Cir. 2006). A
complaint need only satisfy the standard of Rule 8(a), which
requires 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(a)(2) still requires a
‘showing,' rather than a blanket assertion, of
entitlement to relief.” Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 555 n.3 (2007). That showing must
consist of more than “a formulaic recitation of the
elements of a cause of action” or “naked
assertion[s] devoid of further factual enhancement.”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)
(internal quotation marks omitted) (quoting Twombly,
550 U.S. at 555).
ruling on a motion to dismiss, the well-pleaded allegations
are accepted as true and viewed in the light most favorable
to the party asserting the claim. Twombly, 550 U.S.
at 555. The Court may also consider documents attached to the
motion to dismiss when “integral to and explicitly
relied on in the complaint, and when the [opposing parties]
do not challenge the document[s'] authenticity.”
Zak v. Chelsea Therapeutics, Int'l, Ltd., 780
F.3d 597, 606-07 (4th Cir. 2015) (quoting Am.
Chiropractic Ass'n v. Trigon Healthcare, Inc., 367
F.3d 212, 234 (4th Cir. 2004)) (internal quotation marks
omitted). However, “[f]actual allegations must be
enough to raise a right to relief above a speculative
level.” Twombly, 550 U.S. at 555.
“[C]onclusory statements or a ‘formulaic
recitation of the elements of a cause of action will not
[suffice].'” EEOC v. Performance Food Grp.,
Inc., 16 F.Supp.3d 584, 588 (D. Md. 2014) (quoting
Twombly, 550 U.S. at 555). “‘[N]aked
assertions of wrongdoing necessitate some ‘factual
enhancement' within the complaint to cross ‘the
line between possibility and plausibility of entitlement to
relief.'” Francis v. Giacomelli, 588 F.3d
186, 193 (4th Cir. 2009) (quoting Twombly, 550 U.S.
ValvTech's summary judgment motion, the Court must view
the evidence in the light most favorable to the non-moving
party to determine whether any disputed issue of material
fact precludes entering judgment in the movant's favor as
a matter of law. See Fed. R. Civ. P. 56(a);
Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986);
Emmett v. Johnson, 532 F.3d 291, 297 (4th Cir.
2008). “A party opposing a properly supported motion
for summary judgment ‘may not rest upon the mere
allegations or denials of [his] pleadings,' but rather
must ‘set forth specific facts showing that there is a
genuine issue for trial.'” Bouchat v. Baltimore
Ravens Football Club, Inc., 346 F.3d 514, 522 (4th Cir.
2003) (quoting former Fed.R.Civ.P. 56(e)).
argues that the motions must be denied because the
Third-Party Defendants'contract documents incorporate the
indemnity provision in the Honeywell-ESA contract. ESA makes
the same claim as to Elliott. When construing the contracts
most favorably to non-movants, the Court cannot agree.
common law governs the scope and validity of indemnity
agreements. Atl. Contracting & Material Co. v. Ulico
Cas. Co., 380 Md. 285, 300 (2004) (holding that express
indemnity agreements “must be construed in accordance
with our traditional rules of objective contract
interpretation”); see also Sokolowski v.
Flanzer, 769 F.2d 975, 977 (4th Cir. 1985) (noting that
federal courts sitting in diversity must apply the conflict
of laws rules of the forum state); Cunningham v.
Feinberg, 441 Md. 310, 326 (2015) (noting that Maryland
applies “the law of the jurisdiction where the contract
was made” unless there is a choice of law provision in
the contract). Under Maryland law, contracts are interpreted
objectively “from the perspective of a reasonable
person standing in the parties' shoes at the time of the
contract's formation.” OceanPetroleum, Co. v. Yanek, 416 Md. 74, 86 (2010). The
meaning of a contractual indemnity provision is
“ordinarily a question of law for the court.”
Wells v. Chevy Chase Bank, F.S.B., 363 Md. 232, 250
(2001). The court must “give effect to the plain
meaning of an unambiguous term, ” Weichert Co. of
Md., Inc. v. Faust, 419 Md. 306, 324 (2011), by looking
to “the customary, ordinary, and accepted meaning of
the language used.” Bainbridge St. Elmo
BethesdaApartments, LLC v. White Flint Express
Realty Grp. Ltd. P'ship, LLLP, 454 Md. 475, 485
(2017) (quoting Ulico, 380 Md. at 301) (internal
quotation marks omitted). The court considers the
“entire language of the agreement, not merely a portion