ISP Chemicals LLC v. Dutchland, Inc.

• Court: U.S. District Court — Western District of Kentucky
• Writing for the Court: Thomas B. Russell
• Decision Date: 06 July 2011
• Docket Number: CASE NO. 5:08-CV-153
• Citation: ISP Chemicals LLC v. Dutchland, Inc., CASE NO. 5:08-CV-153 (W.D. Ky. Jul 06, 2011)
• Parties: ISP CHEMICALS LLC PLAINTIFF v. DUTCHLAND, INC., ET AL. DEFENDANTS

ISP CHEMICALS LLC PLAINTIFF

v.DUTCHLAND, INC., ET AL. DEFENDANTS

CASE NO. 5:08-CV-153

UNITED STATES DISTRICT COURT WESTERN DISTRICT OF KENTUCKY PADUCAH DIVISION

July 6, 2011

MEMORANDUM OPINION AND ORDER

This matter is before the Court upon Dutchland, Inc.'s Motion for Partial Summary Judgment on Breach of Warranty (Docket #162), Dutchland, Inc. and Paul Stoltzfus's Motion for Summary Judgment on Claims Against and Related to Paul Stoltzfus (Docket #164), ISP's Cross-Motion for Summary Judgment on Dutchland's Statute of Limitations Defense (Docket #171), and Dutchland's Motion to Bifurcate (Docket #166). ISP has responded and replied (Docket #170, 181, 182, 190). Dutchland has responded and replied (Docket #178, 187, 191). This matter is now ripe for adjudication.

STANDARD

Summary judgment is appropriate where "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 summary judgment is appropriate, a court must resolve all ambiguities and draw all reasonable inferences against the moving party. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986).

"[N]ot every issue of fact or conflicting inference presents a genuine issue of material fact." Street v. J. C. Bradford & Co., 886 F.2d 1472, 1477 (6th Cir. 1989). The test is whether the party bearing the burden of proof has presented a jury question as to each element in thecase. Hartsel v. Keys, 87 F.3d 795, 799 (6th Cir. 1996). The plaintiff must present more than a mere scintilla of evidence in support of his position; the plaintiff must present evidence on which the trier of fact could reasonably find for the plaintiff. See id. (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252 (1986)). Mere speculation will not suffice to defeat a motion for summary judgment: "the mere existence of a colorable factual dispute will not defeat a properly supported motion for summary judgment. A genuine dispute between the parties on an issue of material fact must exist to render summary judgment inappropriate." Moinette v. Elec. Data Sys. Corp., 90 F.3d 1173, 1177 (6th Cir. 1996).

DISCUSSION

The parties and the Court are well aware of the facts of this case, which centers around the alleged negligent design and construction of an above ground, pre-cast waste water treatment tank at ISP's Calvert City facility. ISP filed the present lawsuit on September 22, 2008, asserting eight counts of relief against Defendants Dutchland, Inc., Erik Lederman, and Paul Stoltzfus. Throughout the course of this lawsuit, the parties have strenuously debated the application of the one year statute of limitations period for professional negligence claims set forth in Kentucky Revised Statutes section 413.245. On January 26, 2011, the Court held that ISP's professional negligence claims accrued on August 27, 2007. Because ISP did not file its lawsuit until September 22, 2008, the one year statute of limitations prevents ISP from bringing a claim for professional negligence against engineer Erik Lederman, who was dismissed from this action.

On March 1, 2011, the Court clarified the remaining issues in this case. First, the Court noted that the contractual indemnity claim is not subject to the one year statute of limitations. Inaddition, in order for the one year statute of limitations period to apply to non-engineer Paul Stoltzfus, Dutchland must establish either that a licensed engineer had oversight of his work or delegated work to him for completion. Next, the Court noted that for the statute of limitations period to apply to Dutchland, it must be shown that the firm had at least one professional engineer on staff and the firm must hold itself out as an engineering firm. If the statute of limitations applies to Dutchland, the breach of warranty claim is barred. The motions currently before the Court address whether the one year statute of limitations period set forth in Kentucky Revised Statutes section 413.245 applies to Dutchland and non-engineer Paul Stoltzfus. Before delving into these issues, the Court believes a summary of the procedural history and the Court's rulings up to this point is necessary.

I. The Complaint

ISP filed its Complaint in this Court on September 22, 2008, against Defendants Dutchland, Erik Lederman, and Paul Stoltzfus. ISP filed its First Amended Complaint on March 27, 2009, which asserts eight counts for relief:

+----------------------------------------------------------------+
                ¦I.   ¦Breach of Contract (as to Dutchland)                      ¦
                +-----+----------------------------------------------------------¦
                ¦II.  ¦Negligence (as to all Defendants)                         ¦
                +-----+----------------------------------------------------------¦
                ¦III. ¦Professional Negligence (as to all Defendants)            ¦
                +-----+----------------------------------------------------------¦
                ¦IV.  ¦Negligent Misrepresentation (as to all Defendants)        ¦
                +-----+----------------------------------------------------------¦
                ¦V.   ¦Contractual Indemnity (as to Dutchland)                   ¦
                +-----+----------------------------------------------------------¦
                ¦VI.  ¦Specific Performance (as to Dutchland)                    ¦
                +-----+----------------------------------------------------------¦
                ¦VII. ¦Violation of Kentucky Building Code (as to all Defendants)¦
                +-----+----------------------------------------------------------¦
                ¦VIII.¦Negligence Per Se (as to all Defendants)                  ¦
                +----------------------------------------------------------------+
                

Am. Compl., DN 29, p. 6-12. ISP seeks monetary damages in excess of $75,000, punitive damages, an award of indemnity, interest, costs, and attorney's fees. ISP attached to its pleading the Fixed Price Construction Contract entered into on October 12, 2005, by ISP and Dutchland.

II. Defendants' Motion for Summary Judgment

On March 5, 2010, Defendants filed a motion for summary judgment, arguing that the one year statute of limitations period for professional negligence claims barred ISP from bringing its lawsuit. The statute of limitations period is contained in Kentucky Revised Statutes section 413.245, and notes that

a civil action, whether brought in tort or contract, arising out of any act or omission in rendering, or failing to render, professional services for other shall be brought within one (1) year from the date of the occurrence or from the date when the cause of action was, or reasonably should have been, discovered by the party injured.

Ky. Rev. Stat. Ann. § 413.245. "Professional services" are defined as "any service rendered in a profession required to be licensed, administered and regulated as professions in the Commonwealth of Kentucky . . . ." Ky. Rev. Stat. Ann. § 413.243.

The Court issued its Memorandum Opinion and Order on August 6, 2010. In that opinion, the Court noted that Kentucky case law acknowledged engineering as a "professional service," and the application of section 413.245 "is dependent on the 'status of the person performing the activity.'" Mem. Op. & Order, Aug. 6, 2010, DN 83, p. 4. Relying on the Kentucky statutes regulating the licensing of engineering professionals, the Court held that during the time Lederman was not licensed in Kentucky, he could not take advantage of the one year statute of limitations. Therefore, because Lederman did not become licensed in Kentucky until May of 2006, "any work prior to that date does not receive the protection of section413.245." Id. at 9. The Court went on to discuss, in dicta, when ISP's claims accrued. The Court found that, at the time ISP observed leakage from the Tank on August 27, 2007, ISP knew, or reasonably should have known, of its negligence and professional negligence causes of action. The Court also held that the one year statute of limitations period would be applicable to ISP's claims for breach of contract/breach of warranty, negligent misrepresentation, violations of the Kentucky Building Code, and negligence per se. The Court declined to address ISP's contractual indemnity and specific performance claims.

Defendants' motion for summary judgment was denied because there was a genuine issue of material fact as to "whether the work done or supervised by Lederman prior to or after his Kentucky licensure was the cause of Plaintiff's claims, and whether the one year statute of limitations applies." Id. at 10.

III. Motion for Reconsideration

Defendants filed a motion for reconsideration on August 20, 2010. Defendants urged the Court to reconsider its ruling that section 413.245 does not apply to professional engineers who are not licensed within the Commonwealth of Kentucky. The Court granted Defendants' motion on October 21, 2010, holding

Upon further consideration of the issue . . . the Court finds that the Kentucky legislature and the Kentucky Supreme Court must have intended for section 413.245 to apply to all engineers, not just those licensed in the Commonwealth of Kentucky. Defendants' motion caused the Court to revisit the issues on all fronts, and the Court concedes that its initial ruling was too narrow. In light of the Court's additional research and consideration, the Court adopts Defendants' position.

Mem. Op. & Order, Oct. 21, 2010, DN 127, p. 4-5. The Court noted that inclusion of the licensure provision in the definition of "professional services" was intended by the legislatureonly to help identify those professions which are entitled to protection under section 413.245. "Accordingly, section 413.245 applies to all engineers, not just those licensed by the state of Kentucky." Id. at 6.

The Court then directed the parties to brief three remaining issues: (1) whether section 413.245 also applies to work by non-engineer, Paul Stoltzfus; (2) whether section 413.245 applies to Dutchland as a business entity; and (3) whether any...