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CSX Transportation Inc. v. Columbus Downtown Development Corp.

United States District Court, S.D. Ohio, Eastern Division

March 26, 2018

CSX Transportation, Inc. and Norfolk Southern Railway Company, Plaintiffs,
v.
Columbus Downtown Development Corp. et al., Defendants.

          OPINION AND ORDER

          JAMES L. GRAHAM, UNITED STATES DISTRICT JUDGE

         The Scioto Greenways Project in downtown Columbus reshaped the Scioto River by removing the Main Street Dam and narrowing and deepening the river channel. Plaintiffs CSX Transportation, Inc. and Norfolk Southern Railway Company each operate two railroad tracks that run across a bridge spanning the Scioto River a few hundred feet downstream of where the Main Street Dam was located. Knowing that the Project would affect the river's flow, CSX and Norfolk entered into contractual arrangements in 2014 with defendant Columbus Downtown Development Corporation (CDDC). CDDC agreed to implement measures designed to protect the bridge's piers from “scour, ” or the erosion of sediment around the bridge's foundation.

         Plaintiffs allege that they discovered in 2015 that the bridge had become unstable and shifted and that they spent $10 million to repair the bridge. Plaintiffs allege that CDDC and defendants Messer Construction Company (the construction manager at risk) and George J. Igel & Company (a subcontractor) are liable for the damage because they failed to properly implement the scour protection measures.

         The filing of the complaint, which has been amended, triggered the filing of third-party complaints and numerous counter- and cross-claims against entities involved in the Project.

         Pending before the court are five motions for judgment on the pleadings - two filed by third-party defendant Stantec Consulting Services, Inc. and three filed by Messer. These motions seek dismissal of certain indemnification and contribution claims brought against the movants.

         I. Background

         A. Relationships Among the Parties[1]

         Prior to the start of the Project, CDDC contracted with Stantec to serve as the project engineer, as memorialized in a Professional Design Services Agreement of July 2, 2012. (Doc. 82-1). CDDC retained Stantec to complete geotechnical explorations and to conduct a hydraulic and scour analysis at the CSX bridge. Stantec prepared a written report concerning river restoration and greenspace development along a 1.2 mile stretch of the Scioto River. Stantec also provided design and engineering plans, which included bridge scour protection measures for the bridge.

         Stantec entered into a Subconsultant Agreement with third-party defendant MSK2 LLC on July 6, 2012. (Doc. 100-1). MSK2 agreed to provide support and park design services in connection with the Project. Stantec alleges that MSK2 prepared landscape designs which called for the removal of existing vegetation and for the planting of plants, shrubs and other vegetation throughout the Project's 1.2 mile stretch. (Doc. 100 at PAGEID #1096, ¶ 18).

         CDDC hired Messer in October 2012 to serve as the construction manager for the Project under a Standard Form of Agreement for Construction Manager at Risk (the “CM Agreement”). (Doc. 95 at PAGEID #1036, ¶ 9).

         Messer in turn entered into a Subcontracting Agreement with Igel whereby Igel agreed to perform river channel excavation work and related services. (Doc. 76-1). Messer alleges that the Subcontracting Agreement required Igel to perform scour protection work at the bridge piers. (Doc. 76 at PAGEID #701, ¶ 3).

         It is alleged that Igel entered into some type of contract directly with CDDC. (Doc. 98 at PAGEID #1049, ¶ 5). Igel denies the existence of such a contract. (Doc. 106 at PAGEID #1165, ¶ 1). A copy of the alleged contract between Igel and CDDC is not on the record.

         CSX and Norfolk have an agreement between themselves that CSX is the party responsible for maintenance and repair of the bridge. (Doc. 70 at PAGEID #634, ¶ 24).

         At some point, CSX retained third-party defendant STV Incorporated. STV provided engineering services and reviewed Stantec's scour protection plans for CSX. (Doc. 41 at PAGEID #187, ¶ 9).

         On October 1, 2014, after the Main Street Dam had been removed, CSX entered into a Construction Agreement with CDDC. CSX granted a license to CDDC to access and cross the bridge and CDDC agreed to “[c]onstruct grouted riprap scour protections around [the] bridge piers.” (Doc. 99-1 at PAGEID #1072). Section 1.1 of the Agreement provided that CSX had reviewed and approved of the various design plans prepared by Stantec. (Id. at PAGEID #1065). A schedule attached to the Agreement and signed by Messer provided that Messer would serve as CDDC's contractor to perform the work and would abide by the Agreement between CSX and CDDC. (Id. at PAGEID #1084).

         In September and October of 2014, Norfolk entered into right of entry agreements with CDDC and with Messer, granting them access to Norfolk's lines on the bridge. (Doc. 99-2).

         B. The Parties' Claims

         1. The Amended Complaint

         According to the amended complaint, CSX discovered in April 2015 that the bridge “had shifted because it piers had settled and become unstable.” (Doc. 70 at PAGEID #633, ¶ 21). CSX conducted an investigation, which led it to believe that “CDDC and its contractors failed to protect, and/or undermined the structural integrity of the Bridge.” (Id. at ¶ 22). In order to keep the railroad tracks over the bridge in service, CSX had the bridge repaired and stabilized at a cost of $10 million. CSX demanded that CDDC and Messer pay the costs for the repairs, but they refused to do so.

         The amended complaint asserts claims for breach of contract against CDDC and Messer. CSX alleges that CDDC and Messer, in breach of the Construction Agreement, either failed to install scour protection, installed it improperly, or otherwise compromised the integrity of the bridge. Norfolk alleges that CDDC and Messer, in breach of the Right of Entry Agreements, performed their work in a manner that interfered with Norfolk's rail operations. CSX and Norfolk also assert claims for contractual indemnification against CDDC and Messer. In the alternative, plaintiffs allege that CDDC's and Messer's negligence in performing work on the Project caused damage to the bridge.

         Against Igel, plaintiffs assert a negligence claim alleging that Igel failed to properly install scour protection and left the bridge susceptible to damage in the course of dredging near the bridge.

         CSX and Norfolk have also sued Cincinnati Insurance Company, from whom CDDC obtained Railroad Protective Liability insurance policies identifying CSX and Norfolk as named insureds. Plaintiffs allege that Cincinnati Insurance has breached the insurance policies by refusing to pay their claims.

         2. Igel's Third-Party Complaint

         Igel brings claims against Stantec, STV and MSK2. (Doc. 74). Igel denies that it was negligent in performing work on the Project. It asserts that Stantec's designs and plans for scour protection were flawed and negligently prepared. Igel further alleges that STV, having been retained by CSX to review Stantec's scour protection plans, performed its review services negligently and improperly approved of the plans. As to MSK2, Igel alleges that its landscaping designs directed contractors to remove trees and shrubs which were growing from the base of the bridge piers and that removal of the trees and shrubs left holes which caused the bridge's foundation to shift or settle. Igel alleges that the damage to the bridge was proximately caused by the negligent acts of Stantec, STV and MSK2.

         Against each of these three parties Igel asserts a claim for implied indemnification. Igel alleges that, to the extent it is found liable for any portion of the damage to the bridge, its actions were passive and secondary to the active and primary negligence of Stantec, STV and MSK2. Igel also asserts claims for contribution against Stantec, STV and MSK2.

         3. Messer's Claims

         Messer brings crossclaims against Igel, Stantec and STV. (Doc. 76). Messer alleges that, to the extent it is found liable for the damage to the bridge, it is entitled to express indemnification under its Subcontracting Agreement with Igel. Messer further asserts claims for implied indemnification and contribution against Igel, Stantec and STV, alleging that its actions were passive and secondary to the active and primary negligence of those parties.

         Messer also brings crossclaims for implied indemnification and contribution against MSK2. (Doc. 90).

         Messer has filed a third-party complaint Ohio Farmers Insurance Company. (Doc. 77). Messer alleges that on December 11, 2013, Igel obtained a performance bond from Ohio Farmers, in accordance with the terms of Messer's Subcontracting Agreement with Igel. Messer alleges that the terms of the bond imposed a surety obligation on Ohio Farmers. Messer asserts claims for express and implied indemnification and contribution, alleging that Messer is entitled to recovery from Ohio Farmers as surety for Igel.

         4. CDDC's Crossclaims

         CDDC brings a crossclaim against Stantec. (Doc. 89). CDDC alleges that it retained Stantec to prepare scour protection plans for the bridge but that Stantec did not exercise ordinary care in performing its professional design services. CDDC alleges that Stantec failed to properly determine the impact of river flow on the piers and failed to design appropriate scour countermeasures. CDDC asserts claims for professional negligence, breach of the Professional Design Services Agreement, contractual indemnification and contribution.

         CDDC also brings a crossclaim against STV. (Doc. 50). It alleges that STV, upon reviewing Stantec's plans on behalf of CSX, recommended that certain changes be made, including using non-grouted riprap instead of grouted riprap. CDDC alleges that the changes made by STV resulted in damage to the bridge, and it asserts claims for implied indemnification and contribution.

         5. Stantec's Claims

         Stantec brings a crossclaim against Messer, alleging that the CM Agreement between CDDC and Messer contained an indemnity clause which obligates Messer to indemnify the “Indemnified Parties” for claims and damages arising in connection with the Project. (Docs. 95). Stantec asserts a claim for indemnification, alleging that it falls within the definition of “Indemnified Parties.” Stantec asserts crossclaims against MSK2. (Doc. 100). Stantec alleges that pursuant to their Subconsultant Agreement, MSK2 provided landscaping plans which directed contractors to remove trees and shrubs embedded in the bridge's piers. Stantec alleges that removal of the plants created holes which caused the bridge's foundation to shift. Stantec asserts claims for professional negligence, breach of the Subconsultant Agreement and contractual indemnification.

         Stantec brings a counterclaim against CDDC. (Doc. 111). According to Stantec, the parties executed a modification of their Professional Design Services Agreement, providing that Stantec would receive $80, 000 for performing additional services not contemplated by the Agreement. Stantec asserts a claim for breach of contract, alleging that it performed the additional services but CDDC failed to pay it the amount due.

         6. MSK2's Crossclaims

         MSK2 brings crossclaims against Messer and Igel. (Docs. 97, 98). As to Messer, MSK2 makes allegations and claims similar to what Stantec made. MSK2 alleges that it is entitled to indemnification under the CM Agreement because MSK2 falls within the definition of “Indemnified Parties.” MSK2 asserts claims against Messer for indemnification and contribution.

         As to Igel, MSK2 alleges that Igel entered into a contract with CDDC. This contract allegedly contains the same indemnity clause which appears in the CM Agreement between Messer and CDDC. MSK2 alleges that it is one of the “Indemnified Parties” under the contract between Igel and CDDC because it falls within the definition of MSK2 asserts claims for indemnification and contribution.

         7. STV's Claims

         STV brings a counterclaim against Igel and crossclaims against Messer and CDDC. (Doc. 41). STV denies that it was negligent in reviewing, on behalf of CSX, Stantec's plans for scour protection. STV alleges that, to the extent it is found liable for any part of the damage to the bridge, its actions were passive and secondary to the active and primary negligence of Igel, Messer and CDDC. STV asserts claims for implied indemnification and contribution against these parties.

         STV has dismissed without prejudice crossclaims (doc. 41) that it had brought against Stantec for implied indemnification and contribution.

         II. Standard of Review

         “After the pleadings are closed - but early enough not to delay trial - a party may move for judgment on the pleadings.” Fed.R.Civ.P. 12(c). The standard applied to motions for judgment on the pleadings is the same standard applicable to motions to dismiss under Rule 12(b)(6). See Hindel v. Husted, 875 F.3d 344, 346 (6th Cir. 2017). “For purposes of a motion for judgment on the pleadings, all well-pleaded material allegations of the pleadings of the opposing party must be taken as true, and the motion may be granted only if the moving party is nevertheless clearly entitled to judgment.” JPMorgan Chase Bank, N.A. v. Winget, 510 F.3d 577, 582 (6th Cir. 2007) (internal citation and quotation marks omitted). However, the court need not accept as true legal conclusions or unwarranted factual inferences. Id. (citing Mixon v. Ohio, 193 F.3d 389, 400 (6th Cir. 1999)).

         To withstand a motion for judgment on the pleadings, “a complaint must contain direct or inferential allegations respecting all the material elements under some viable legal theory.” Commercial Money Ctr., Inc. v. Illinois Union Ins. Co., 508 F.3d 327, 336 (6th Cir. 2007). “The factual allegations in the complaint need to be sufficient to give notice to the defendant as to what claims are alleged, and the plaintiff must plead ‘sufficient factual matter' to render the legal claim plausible, i.e., more than merely possible.” Fritz v. Charter Township of Comstock, 592 F.3d 718, 722 (6th Cir. 2010) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678.

         III. Stantec's Motions as to the Claims of Messer and Igel

         Messer (Construction Manager at Risk) and Igel (Subcontractor) each assert claims for implied indemnification and contribution against Stantec (Project Engineer), based on the allegation that Stantec negligently prepared the scour protection plans which Messer and Igel followed during their work on the Project.

         In its motions for judgment on the pleadings, Stantec makes arguments that apply equally to the claims of both Messer and Igel.

         A. Implied Indemnification

         1. Elements of a Claim

         “Indemnity arises from contract, either express or implied, and is the right of a person, who has been compelled to pay what another should have paid, to require complete reimbursement.” Worth v. Aetna Cas. & Sur. Co., 32 Ohio St.3d 238, 240, 513 N.E.2d 253, 256 (Ohio 1987). The party asserting an indemnification claim “seeks complete reimbursement from the party primarily liable for damages he or she has incurred.” Wagner-Meinert, Inc. v. EDA Controls Corp., 444 F.Supp.2d 800, 804 (N.D. Ohio 2006).

         An implied right to indemnification is recognized under Ohio law “in situations involving related tortfeasors, where the one committing the wrong is so related to a secondary party as to make the secondary party liable for the wrongs committed solely by the other.” Reynolds v. ...


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