MGM Resorts Miss., Inc. v. ThyssenKrupp Elevator Corp.

• Decision Date: 30 September 2014
• Docket Number: No. 3:13–CV–134–DMB–SAA.,3:13–CV–134–DMB–SAA.
• Citation: 58 F.Supp.3d 697
• Parties: MGM RESORTS MISSISSIPPI, INC. doing business as Gold Strike Casino and Resort, Plaintiff v. THYSSENKRUPP ELEVATOR CORP., Defendant.
• Court: U.S. District Court — Northern District of Mississippi

58 F.Supp.3d 697

MGM RESORTS MISSISSIPPI, INC. doing business as Gold Strike Casino and Resort, Plaintiff

v.THYSSENKRUPP ELEVATOR CORP., Defendant.

No. 3:13–CV–134–DMB–SAA.

United States District Court, N.D. Mississippi, Oxford Division.

Signed Sept. 30, 2014.

Scott Burnham Hollis, Jones, Walker, Waechter, Poitevent, Carrere & Denegre LLP, Olive Branch, MS, for Plaintiff.

David Joseph Schexnaydre, Pajares & Schexnaydre, LLC, Mandeville, LA, for Defendant.

MEMORANDUM OPINION AND ORDER

DEBRA M. BROWN, District Judge.

This declaratory judgment action arises from a dispute between MGM Resorts Mississippi, Inc. d/b/a Gold Strike Casino & Resort (“Gold Strike”), and ThyssenKrupp Elevator Corporation (“ThyssenKrupp”) regarding whether the elevator maintenance contract they entered requires ThyssenKrupp to defend Gold Strike in an underlying state court case. ThyssenKrupp argues that it does not have a duty to defend or indemnify unless and until there is a determination that Gold Strike did not contribute to the conduct alleged in the underlying case. Gold Strike argues that the claims asserted in the underlying case are within the scope of the contract at issue and, therefore, trigger ThyssenKrupp's duty to defend. Before the Court are the parties' cross-motions for summary judgment. Upon due consideration of the motions and for the reasons below, the Court finds that ThyssenKrupp is obligated to provide a defense in the underlying action and, therefore, summary judgment should be entered in favor of Gold Strike.

I

On or about May 27, 2002, Gold Strike and ThyssenKrupp entered an Elevator Maintenance Agreement wherein ThyssenKrupp agreed to maintain certain elevator and escalator equipment at the Gold Strike Casino in Robinsonville, Mississippi. See Elevator Maintenance Agreement [17–1]. According to the Agreement, ThyssenKrupp is required to:

Examine the elevator equipment for optimum operation.

...

Lubricate equipment for smooth and efficient performance.

Adjust elevator parts and components to maximize the elevator's performance and safe operation.

[Re-lamp] all signals as required (during regularly scheduled visits).

Repair or replace components worn due to normal wear.

...

Test equipment as outlined in the American National Standard Safety Code for Elevators and Escalators.... We will perform governor and safety tests on traction elevators once per year and relief pressure tests on hydraulic elevators once per year.

...

ThyssenKrupp Elevator-employed and supervised elevator technicians ... will provide all maintenance courteously and dependably.

Id. at 2. As to Gold Strike's responsibilities, the Agreement provides in relevant part:

Safety. You agree to follow our recommendations as they pertain to instructing or warning passengers in the proper use of the equipment and to have competent personnel observe the operation at least once every 8 hours. You agree to report immediately any condition that may indicate the need for correction before the next regular examination. You agree to shut down the equipment immediately upon manifestation of any irregularities in operation or appearance of the equipment, notify us at once, and keep the equipment shut down until the completion of any repairs.... You agree to provide a suitable machine room including secured doors, waterproofing, lighting, ventilation and heat to maintain the room at temperature of 50°F minimum to 90°F maximum. You also agree to maintain the elevator pit in a dry condition at all times. Should water or other liquids become present, you will contract with others for removal and the proper handling of such liquids.

Other. You agree not to permit others to make alterations, additions, adjustments, or repairs or replace any component or part of the equipment during the term of this agreement.

Id. at 3. The Agreement includes a defense and indemnification clause, which states:

Delete and replace indemnity provisions so that Purchaser/Owner is indemnified for those claims which arise out of the acts, omissions, or neglect of Elevator Contractor, but not for those acts, actions, omissions or neglect of the Purchaser/Owner. Claims containing allegations that the acts, actions, omissions, or neglect of both elevator contractor and purchaser/owner have contributed in causing a claim to be filed are not subject to indemnification unless and until it is determined that Purchaser's own acts, actions omissions, or neglect did not contribute to the claim and/or accident. When Elevator Contractor is obligated to indemnify Purchaser under this provision, Elevator Contractor will pay and/or reimburse purchaser for monies paid to defend, settle, or satisfy judgment on the claim.

Add Insurance provisions so that the purchaser/owner is named as an additional insured and is defended and indemnified for actions arising from elevator contractor's acts, actions, omissions, or neglects but is not defended for its own acts, actions, omissions, neglects, or bare allegations.

Elevator Maintenance Agreement [17–1] at Amendment No. 1.

ThyssenKrupp did not secure an insurance policy despite the language to “[a]dd insurance provisions so that [Gold Strike] is named as an additional insured.” Id. However, ThyssenKrupp maintains that it is self-insured.

On May 27, 2011, the underlying state court action, Brasel v. MGM Resorts Miss., Inc., Cause No. 2011–0122, was filed in the Circuit Court of Tunica County, Mississippi. Doc. [17–2]. The state court plaintiffs allege that on June 1, 2009, they were passengers on a Gold Strike elevator when the elevator rapidly dropped three floors, jolted to an abrupt stop, and trapped them inside for approximately forty-five minutes. Gold Strike is the only named defendant in the original complaint. However, on or about March 27, 2012, the state court plaintiffs filed an amended complaint wherein they added ThyssenKrupp and three other defendants to the lawsuit. Doc. [17–3]. In the amended complaint, the plaintiffs assert claims against Gold Strike, ThyssenKrupp, and the other defendants for negligence and products liability. Id. at 3–4. They allege that Gold Strike, ThyssenKrupp, and the other defendants “failed to maintain, operate, inspect and/or service the elevator such that it was in a reasonably safe condition ... [and] warn the plaintiffs of the elevator's unreasonable dangerous condition;” that they knew or should have known the elevator was defective; and that they breached an implied warranty of merchantability. Doc. [17–3] at 3–4.

On June 12, 2009, Gold Strike tendered a request by email to ThyssenKrupp for indemnity and defense regarding the elevator incident, but received no response from ThyssenKrupp to the tender. See Doc. [19–12] at 2. On September 23, 2011, after the original complaint was filed, Gold Strike sent ThyssenKrupp a notice of claim and tender of defense and indemnity letter. Doc. [19–11]. On September 28, 2011, ThyssenKrupp denied the tender on grounds that all claims in the original complaint were asserted against Gold Strike only. Doc. [19–14]. On April 3, 2012, after the amended complaint was filed, Gold Strike sent ThyssenKrupp another notice of claim and tender of defense and indemnity letter. Doc. [19–12]. On April 18, 2012, ThyssenKrupp denied that tender as well on grounds that the duty to indemnify is not triggered unless and until it is determined that Gold Strike did not contribute to the alleged conduct. Doc. [19–15]. On April 30, 2012, Gold Strike sent its final notice of claim and tender of defense and indemnity letter to ThyssenKrupp regarding the state court action. Doc. [19–13]. On May 7, 2012, ThyssenKrupp denied the final tender on grounds that the allegations in the complaint and amended complaint do not trigger ThyssenKrupp's duty to indemnify or defend. Doc. [19–16].

On May 21, 2013, Gold Strike filed this declaratory judgment action seeking a determination that ThyssenKrupp has an immediate obligation under the Elevator Maintenance Agreement to provide a defense for Gold Strike in the underlying state court case. Compl. [1]. Gold Strike contends that the allegations in the underlying case do not preclude a finding that ThyssenKrupp is solely liable, thereby triggering the duty to defend, and that ThyssenKrupp should be estopped from refusing to defend because it has previously defended Gold Strike in similar cases. Id. at 6–7. On September 20, 2013, ThyssenKrupp and Gold Strike filed the instant motions for summary judgment.

II

Rule 56(a) of the Federal Rules of Civil Procedure provides that summary judgment should be granted if there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. See Coury v. Moss, 529 F.3d 579, 584 (5th Cir.2008). When evaluating whether summary judgment is appropriate, a court must construe the facts and evidence in the light most favorable to the nonmoving party. Ford, Bacon & Davis, LLC v. Travelers Ins. Co., 635 F.3d 734, 736 (5th Cir.2011) (citing Holt v. State Farm Fire & Cas. Co., 627 F.3d 188, 191 (5th Cir.2010) ). A material fact issue exists if a jury could reasonably find for the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). After the party seeking summary judgment meets its burden, the nonmoving party must “come forward with specific facts showing a genuine factual issue for trial.” Harris ex rel. Harris v. Pontotoc Cnty. Sch. Dist., 635 F.3d 685, 690 (5th Cir.2011). The nonmoving party cannot rely on metaphysical doubt, conclusive allegations, or unsubstantiated assertions but rather must show that there is an actual controversy warranting trial. Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir.1994) (internal citations omitted).

A

“A declaratory judgment claim is not jurisdiction-conferring; there must be an independent basis for federal jurisdiction.” Budget Prepay, Inc. v. AT & T Corp., 605 F.3d 273, 278 (5th Cir.2010) (citing TTEA v. Ysleta del Sur Pueblo, 181...