Williams v. Nik-Net LLC

• Decision Date: 07 January 2016
• Docket Number: 12 CV 3310 (PKC) (RML)
• Parties: STANLEY WILLIAMS, Plaintiff, v. NIK-NET LLC, KJ TRANSPORTATION, LLC, and LOUIS ROJAS, Defendants/Third-Party Plaintiffs, v. SPOTLESS ON ROCKAWAY CORP., RICHARD G. DELPOZO, and CENTURY SURETY INSURANCE COMPANY, Third-Party Defendants.
• Court: U.S. District Court — Eastern District of New York

STANLEY WILLIAMS, Plaintiff, v. NIK-NET LLC, KJ TRANSPORTATION, LLC, and LOUIS ROJAS, Defendants/Third-Party Plaintiffs, v. SPOTLESS ON ROCKAWAY CORP., RICHARD G. DELPOZO, andCENTURY SURETY INSURANCE COMPANY, Third-Party Defendants.

12 CV 3310 (PKC) (RML)

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK

January 7, 2016

MEMORANDUM & ORDER

PAMELA K. CHEN, United States District Judge:

This diversity action arises out of alleged injuries sustained by Plaintiff Stanley Williams ("Williams") as a result of a motor vehicle accident that occurred on April 19, 2010, when a vehicle being driven by Richard G. Delpozo ("Delpozo"), an employee of Spotless on Rockaway Corp. car wash ("Spotless"), struck a vehicle in which Williams was a passenger. (Dkts. 22 (Third-Party Complaint) ¶¶ 1-2, 10; 53 (Third Amended Complaint) ¶¶ 22, 25.) The vehicle driven by Delpozo was owned and/or leased by Nik-Net LLC ("Nik-Net"), KJ Transportation LLC ("KJ Transportation"), and Luis Rojas ("Rojas"). (Dkts. 22 ¶¶ 2, 11; 53 ¶¶ 3-7.)

Prior to the filing of this lawsuit, Spotless's insurance company, Century Surety Insurance Company ("Century"), negotiated a settlement with Williams, pursuant to which Williams releases his claims against Spotless, Delpozo, and Century in exchange for $17,500.00. (Dkt. 22 ¶¶ 5, 20 & Ex. C.) On June 5, 2012, Williams initiated this action against Defendants Nik-Net, KJ Transportation, and Rojas (collectively, "Defendants")¹ in New York State court. (Dkt. 1 at 6-9.)² Defendants subsequently removed this action to this Court (id. at 1-3), and filed a Third-Party Complaint against Spotless, Delpozo, and Century (collectively, "Third-Party Defendants"), seeking common-law indemnification for Spotless and Delpozo's alleged negligence in operating the vehicle, and claiming that Defendants are entitled to defense and indemnification coverage from Century as "additional insureds", pursuant to Spotless's "Garage Policy" with Century (Dkt. 22 ¶¶ 12-16, 21-22).³ Century, in turn, filed a cross-claim seeking contribution or indemnification from Spotless and Delpozo. (Dkt. 24 ¶ 31.)

Presently before the Court are (1) Spotless and Delpozo's motion to dismiss the Third-Party Complaint and Century's cross-claim, pursuant to Federal Rule of Civil Procedure ("FRCP") 12(b)(6), for failure to state a claim (Dkts. 35; 35-3 at 7; 54), and (2) Century's motion for summary judgment, pursuant to FRCP 56, seeking a declaration that it is not required to provide defense and indemnification coverage to Defendants (Dkts. 42; 55). For the reasons set forth below, the Court denies Spotless and Delpozo's motion to dismiss the Third-Party Complaint, and grants as unopposed the motion to dismiss Century's cross-claim. The Court also denies Century's motion for summary judgment and request to sever this action.

Lastly, given the Court's resolution of the issues that are the subject of Williams's pending request for reconsideration (Dkt. 66) in a manner favorable to Williams, the Court denies Williams's request as moot.

DISCUSSION

I. Legal Standards

A. Failure to State a Claim Pursuant to FRCP 12(b)(6)

To withstand a motion to dismiss pursuant to FRCP 12(b)(6), a complaint must plead facts sufficient "to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). In evaluating a FRCP 12(b)(6) motion, a district court must accept the factual allegations set forth in the complaint as true, and draw all reasonable inferences in favor of the plaintiff. Id. at 555-56; see also Nielsen v. Rabin, 746 F.3d 58, 62 (2d Cir. 2014); Cleveland v. Caplaw Enters., 448 F.3d 518, 521 (2d Cir. 2006). A complaint that "tenders 'naked assertion[s]' devoid of 'further factual enhancement'" will not suffice. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 555 U.S. at 557). Rather, "[f]actual allegations must be enough to raise a right to relief above the speculative level[.]" Twombly, 550 U.S. at 555. A complaint should be dismissed where a plaintiff has not "nudged [its] claims across the line from conceivable to plausible[.]" Id. at 570. A claim is plausible "when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Matson v. Bd. of Educ. of City Sch. Dist. of N.Y., 631 F.3d 57, 63 (2d Cir. 2011) (quoting Iqbal, 556 U.S. at 678); see also Pension Benefit Guar. Corp. ex rel. Saint Vincent Catholic Med. Ctrs. Ret. Plan v. Morgan Stanley Inv. Mgmt. Inc., 712 F.3d 705, 717-18 (2d Cir. 2013).

B. Summary Judgment Pursuant to FRCP 56

Summary judgment is proper only when, construing the evidence in the light most favorable to the non-movant, "there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a); see also Redd v. N.Y. Div. ofParole, 678 F.3d 166, 173 (2d Cir. 2012). A dispute is "genuine" when "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A fact is material when it "might affect the outcome of the suit under the governing law." Id. In determining whether there are genuine disputes of material fact, the court must "resolve all ambiguities and draw all permissible factual inferences in favor of the party against whom summary judgment is sought." Terry v. Ashcroft, 336 F.3d 128, 137 (2d Cir. 2003) (citation omitted). The nonmoving party cannot avoid summary judgment simply by relying "on conclusory allegations or unsubstantiated speculation." Jeffreys v. City of New York, 426 F.3d 549, 554 (2d Cir. 2005) (quotations and citations omitted). That party must offer "some hard evidence showing that its version of the events is not wholly fanciful." Miner v. Clinton County, 541 F.3d 464, 471 (2d Cir. 2008) (quotations and citation omitted).

II. Applicable New York Law

A. General Obligations Law

New York's General Obligations Law ("GOL") § 15-108 governs the effect of a settlement, release, or covenant not to sue with an alleged tortfeasor. NY GEN OBLIG § 15-108. Generally, GOL § 15-108(a) provides that a settlement reduces a nonsettling tortfeasor's liability to the injured party by the greater of the amount of: (1) consideration that a settling tortfeasor paid for its release, or (2) the settling tortfeasor's equitable share of the damages under CPLR article 14. See Glaser v. M. Fortunoff of Westbury Corp., 524 N.E.2d 413 (N.Y. 1988); Chase Manhattan Bank v. Akin, Gump, Strauss, Hauer & Feld L.L.P., 763 N.Y.S.2d 588, 589(N.Y. App. Div. 2003). At the same time, GOL §§ 15-108(b)⁴ and 15-108(c)⁵, together, extinguish all claims for contribution between nonsettling and settling tortfeasors. See Chase Manhattan Bank, 763 N.Y.S.2d at 589; Mead v. Bloom, 464 N.Y.S.2d 904, 905 (N.Y. App. Div. 1983), aff'd 465 N.E.2d 1262 (1984). However, the New York Court of Appeals has long-held that, in contrast to claims for contribution, GOL §15-108 does not apply to bar claims for common-law indemnification. Glaser, 524 N.E.2d at 414 (GOL "§ 15-108 applies to claims for contribution but not to those seeking to vindicate a party's . . . common-law right of indemnification"); Rosado v. Proctor & Schwartz, Inc., 484 N.E.2d 1354, 1356 (N.Y. 1985); McDermott v. City of New York, 406 N.E.2d 460, 464 (N.Y. 1980); Riviello v. Waldron, 391 N.E.2d 1278, 1283 (N.Y. 1979); see OneBeacon Am. Ins. v. Comsec Ventures Int'l, Inc., 8:07 CV 900, 2010 WL 114819, at *7 (N.D.N.Y. Jan. 7, 2010); Monaghan v. SZS 33 Assocs., L.P., 89 CV 4900, 1995 WL 104083, at *7 (S.D.N.Y. Mar. 8, 1995) (§ 15-108 does not insulate a settling defendant against a claim against it as an indemnitor).

The distinction between claims for indemnification and those for contribution, therefore, is often critical, and the parties' designation of the claim is not controlling. Glaser, 524 N.E.2d at 415. Under New York law, the right to indemnification shifts the entire burden of a judgment to another party based on the other party's actual responsibility for causing the harm. Casey ex rel. Casey v. Ryder Truck Rental, Inc., 00 CV 2856, 2005 WL 1150228, at *5 (E.D.N.Y. May 16, 2005); Riviello, 391 N.E.2d at 1283. Common-law indemnification "is a restitution concept which permits shifting the loss because to fail to do so would result in the unjust enrichment ofone party at the expense of the other." McCarthy v. Turner Constr., Inc., 953 N.E.2d 794, 798-99 (N.Y. 2011). In a "classic indemnification case," the party seeking common-law indemnity "has 'committed no wrong,' but is held liable or exposed to liability to the injured party 'by virtue of some relationship with the tort-feasor or obligation imposed by law.'" O'Connor v. Lowe's Home Ctrs., Inc., 1:11 CV 00506, 2015 WL 507515, at *6 (N.D.N.Y. Feb. 6, 2015) (quoting Glaser, 524 N.E.2d at 415). "Common-law indemnification seeks to ensure that a party not at fault will not be forced to endure the loss." Casey, 2005 WL 1150228, at *6 (citation omitted)). Thus, common-law indemnification is only available to a party who is held liable solely by operation of law or vicarious liability, but not for the party's own acts of negligence. O'Connor, 2015 WL 507515, at *6; Casey, 2005 WL 1150228, at *5; Dora Homes, Inc. v. Epperson, 344 F. Supp. 2d 875, 894 (E.D.N.Y. 2004) (to prevail on its common-law indemnification claim, a party must show that it may not be held responsible in any degree); see also Glaser, 524 N.E.2d at 415 ("where a party who has settled seeks to avoid the bar to reimbursement posed by [GOL] . . ., that party must show that 'it may not be held responsible in any degree' for the plaintiff's damages" (quoting Rosado, 484 N.E.2d at 1357)). "Conversely, where a party is held liable at least partially because of its own negligence, contribution against other culpable tort-feasors is the only available remedy." Glaser, 524 N.E.2d at 415 (...