CSX Transp., Inc. v. Gen. Mills, Inc.
| Decision Date | 18 July 2018 |
| Docket Number | CIVIL ACTION FILE NO. 1:14-CV-201-TWT |
| Court | U.S. District Court — Northern District of Georgia |
| Parties | CSX TRANSPORTATION, INC., Plaintiff, v. GENERAL MILLS, INC., Defendant. |
This is a breach of contract action. It is before the Court on the Defendant's Motion to Dismiss [Doc. 86]. For the reasons set forth below, the Defendant's Motion to Dismiss [Doc. 86] is DENIED.
This case, which has a long and tortured history, is once again before the Court on a Motion to Dismiss by the Defendant. The facts are set out in greater detail in this Court's numerous previous Orders. On February 3, 2015, this Court granted the Defendant's initial Motion to Dismiss.1 The Court, applying federal collateral estoppel law, concluded that the Plaintiff was barred from relitigating its negligence due to the factual findings that were made in theunderlying Burchfield litigation. The Court also concluded that the Sidetrack Agreement (the "Agreement") does not provide a right of indemnity when the Plaintiff's sole negligence causes an accident.2 The Plaintiff then appealed, arguing that: (1) this Court incorrectly applied federal collateral estoppel law in concluding that the issue of fault could not be relitigated: and (2) the Agreement entitles the Plaintiff to indemnification regardless of who is at fault. The Eleventh Circuit reversed, holding that state collateral estoppel law, and not federal law, should determine the preclusive effect of a federal judgment where the district court exercised diversity jurisdiction.3 It declined to decide the Plaintiff's second argument on appeal because this Court "should have the first opportunity to decide the predicate question of privity."4 It then remanded to this Court to determine whether the parties were in privity under Georgia law, and thus, whether collateral estoppel precludes the Plaintiff's claim for indemnification.
On October 6, 2017, the Court granted in part and denied in part the Defendant's second Motion to Dismiss. Relevant to this Motion, the Court declined to dismiss Counts II and III of the Amended Complaint, concluding that collateral estoppel did not bar relitigation of fault in the underlying accidentsince the Defendant and Mr. Burchfield were not in privity under Georgia law. The Court dismissed Count I for the same reasons that it previously dismissed that claim in its Order from February 3, 2015. The Defendant now moves to dismiss once again. In its Motion to Dismiss, the Defendant makes two arguments. First, it contends that the Plaintiff's claims for indemnity in Counts II and III are not ripe. Second, it argues that it is entitled to judgment on the pleadings because the Amended Complaint fails to set forth facially plausible claims for breach of contract under Georgia law.
A complaint should be dismissed under Rule 12(b)(1) only where the court lacks jurisdiction over the subject matter of the dispute.5 Attacks on subject matter jurisdiction come in two forms: "facial attacks" and "factual attacks."6 Facial attacks "require[ ] the court merely to look and see if [the] plaintiff has sufficiently alleged a basis of subject matter jurisdiction, and the allegations in his complaint are taken as true for the purposes of the motion."7 On a facial attack, therefore, a plaintiff is afforded safeguards similar to those provided in opposing a Rule 12(b)(6) motion.8 "'Factual attacks,' on the other hand, challenge'the existence of subject matter jurisdiction in fact, irrespective of the pleadings, and matters outside the pleadings, such as testimony and affidavits, are considered.'"9 The presumption of truthfulness does not attach to the plaintiff's allegations.10 Further, "the existence of disputed material facts will not preclude the trial court from evaluating for itself the merits of jurisdictional claims."11
On the other hand, a complaint should be dismissed under Rule 12(b)(6) only where it appears that the facts alleged fail to state a "plausible" claim for relief.12 A complaint may survive a motion to dismiss for failure to state a claim, however, even if it is "improbable" that a plaintiff would be able to prove those facts; even if the possibility of recovery is extremely "remote and unlikely."13 In ruling on a motion to dismiss, the court must accept the facts pleaded in the complaint as true and construe them in the light most favorable to theplaintiff.14 This standard also applies to a motion under Rule 12(c) for judgment on the pleadings.15
First, the Defendant argues that the Plaintiff's remaining claims for indemnity are not ripe. Counts II and III of the Amended Complaint claim that the Defendant owes the Plaintiff a duty of indemnity under the Agreement due to its partial fault in the accident. The Defendant contends that the Plaintiff's remaining indemnity claims are not ripe because its duty to indemnify would not be triggered until the Plaintiff incurs losses "based on findings of General Mills' partial fault or concurring negligence."16 According to the Defendant, the Plaintiff's "self-serving allegations" that the Defendant is partially at fault are insufficient to establish a ripe claim for indemnification.17 However, the Court concludes that the Plaintiff's claims are ripe for review.
Article III of the Constitution "limits the jurisdiction of the federal courts to actual cases or controversies and requires [the Court] to consider whether a plaintiff's claims are ripe."18 The question of ripeness "turns on the fitness of the issues for judicial decision and the hardship to the parties of withholding court consideration."19 Essentially, the Court is determining whether "the claim is sufficiently mature, and the issues sufficiently defined and concrete, to permit effective decisionmaking."20 A claim is ripe if the controversy is "definite and concrete, touching the legal relations of parties having adverse legal interests."21
According to the Defendant, only Count I, which alleged that the Defendant owed the Plaintiff an obligation of indemnity regardless of fault, presented a case or controversy that was ripe for review. The Defendant contends that the two remaining claims, Counts II and III, which assert that the Defendant owes a duty of indemnification due to its own partial liability, are not ripe because the Defendant has not been found to be at fault. According to the Defendant, the Plaintiff's remaining claims "are not ripe because any contractual duty General Mills might have to indemnify CSXT (as alleged in Counts IIand III) would not be triggered unless and until CSXT were to incur losses based on findings of General Mills' partial fault or concurring negligence."22 According to the Defendant, the Plaintiff's "self-serving allegations" that the Defendant bears some liability in the underlying accident are not enough to establish a ripe claim for indemnification because it is "pure speculation" whether a jury would conclude that the Defendant bears some liability for Burchfield's injuries.23
However, the Plaintiff's indemnification claims became ripe once it made payment to Burchfield to satisfy its obligations in the underlying dispute. Under Georgia law, a party's right to seek indemnification materializes when it expends the funds it seeks to recover from the indemnitor.24 The party seeking indemnity must show that it has "sustained an actual legal liability to the injured party."25 Otherwise, the party seeking indemnification could "recover a windfall" by receiving reimbursement for a judgment it never ultimatelybecomes obligated to pay for.26 Therefore, under Georgia law, the Plaintiff's claim for indemnification ripened once it paid Burchfield $16,000,000 pursuant to their settlement agreement. At that point, the Plaintiff's legal liability and losses became certain, and its claim for indemnification thus became fit for judicial review.
The cases cited by the Defendant are inapposite. In those cases, the courts found the indemnification claims at issue to be unripe because the underlying cases were still pending.27 Adjudication of those indemnification claims wouldbe premature because the liability issues in the underlying dispute had not yet been determined - the party seeking indemnification had not yet been found liable nor made a payment. Thus, the claims for indemnification were not sufficiently mature nor sufficiently defined and concrete to be appropriate for judicial review. In such a situation, adjudication of the indemnification action would be premature because "the liabilities are contingent and may never materialize."28 "District courts within this circuit have consistently heeded this admonition and declined to declare insurers' indemnity obligations absent a liability determination in the underlying case."29 In contrast, the underlying Burchfield action in this case is not still pending. The Plaintiff has already been found liable in the underlying dispute and made payment to Burchfield. The uncertainties that led the courts to decline to exercise jurisdiction in those cases are not present here. As the Plaintiff correctly notes, those cases would be relevant if the Burchfield litigation was still ongoing. In such a situation, it would be unwise for the Court to adjudicate the issue of indemnification becausethe Plaintiff's legal liability and losses would still be uncertain, and may never come into existence. However, since the Plaintiff has already been found liable and paid Burchfield, its claim is fit for judicial review.
Furthermore, the Defendant's argument is circular. The Defendant argues that the Plaintiff "is attempting to put the cart before the horse" because "[e]ven if the doctrine of collateral estoppel does not prevent CSXT from re-litigating fault for the underlying accident that injured Mr. Burchfield, fault cannot be re-litigated in this premature breach of contract action."30 Essentially, the...
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