Taveney v. International Paper Company

IN THE UNITED STATES DISTRICT COURT

_ FOR THE EASTERN DISTRICT OF NORTH CAROLINA .

EASTERN DIVISION

No. 4:19-CV-103

JOSHUA TAVENEY, )

) . .

Plaintiff, )

)

v. )

)

INTERNATIONAL PAPER )

COMPANY, )

)

Defendant. ) ORDER

)

INTERNATIONAL PAPER )

COMPANY, ) -

)

Third-Party Plaintiff, )

)

v. )

)

THOMAS INDUSTRIAL )

MECHANICAL CONSTRUCTORS, )

LLC, )

)

Third-Party Defendant. )

On July 17, 2019, Joshua Taveney (“Taveney” or “plaintiff”) filed suit against International

Paper Company (“International Paper”) alleging claims arising from injuries Taveney sustained

during a workplace incident [D.E. 1]. On January 9, 2020, International Paper filed a third-party

complaint against Thomas Industrial Mechanical Constructors, Inc. (“Thomas Industrial”) alleging

claims for express indemnity, implied equitable indemnity, apportionment of fault, and a declaratory

judgment [D.E. 11]. On February 10, 2020, Thomas Industrial answered the third-party complaint

and asserted as a defense a motion to dismiss for failure to state a claim [D.E. 17]. Discovery

concluded on April 30, 2021. See Order [D.E. 34]. On June 1, 2021, Thomas Industrial moved to

dismiss for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6) and, in the

alternative, for summary judgment [D.E. 36]. On June 22, 2021, International Paper responded in

opposition [D.E. 39]. On July 6, 2021, Thomas Industrial replied [D.E. 40]. .

On January 27, 2022, International Paper moved for leave to file an amended third-party

complaint [D.E. 41]. On March 10, 2022, Thomas Industrial responded in opposition [D.E. 43]. As

explained below, the court denies Industrial Paper’s motion to amend, construes Thomas Industrial’s

motion to dismiss as a motion for judgment on the pleadings, and grants the motion.

I,

International Paper operates a mill in New Bern, North Carolina. See Compl. [D.E. 1] 73.’

International Paper contracts with Thomas Industrial to provide maintenance services at the mill.

See id. | 10. Taveney worked for Thomas Industrial, which was assigned to complete work for

International Paper at the mill. See id. f79, 11. On March 17, 2019, Taveney had to disconnect and

remove a valve from a pipeline at the mill. See id. ff 12, 14. Before doing so, Taveney twice asked

International Paper’s pipe operator if the pipe was de-energized and asked whether he needed to

obtain a line break permit. See id. Jf 16,27. Both times, the operator assured Taveney the pipe was

de-energized and offline. See id. 19-20, 28. However, a valve upstream of where Taveney was

working had ne aleak. See id. ff 21-22. When Taveney removed the downstream valve, high

pressure steam and boiling water exited the pipe, severely burning him. See id. {J 29-34.

On December 6, 2021, International Paper settled the underlying dispute with Taveney. See

[D.E. 41] 16. In its third-party complaint, International Paper seeks indemnity, contribution, □□□

a declaratory judgment. See Third-Party Compl. {Jj 4-23.

1 International Paper’s third-party complaint expressly references Taveney’s original

complaint. See Third Party Compl. [D.E. 11] ff 2-3.

□

On January 27, 2022, International Paper moved to amend its third-party complaint to allege

additional facts and to add an insurance company as a second third-party defendant. See [D.E. 41].

Thomas Industrial opposes the motion, arguing International Paper’s motion violates this court’s

scheduling order and does not comply with Federal Rules of Civil Procedure 15 and 16. See [D.E.

43].

On November 5, 2019, the court issued a scheduling order. See [D.E. 10]. According to the

order, the parties had to complete discovery by July 31, 2020, and file all potentially dispositive

motions by August 28, 2020. See id. at 1. Additionally, the court ordered that “motions to join

additional parties and to amend pleadings must be made promptly after the information giving rise

to the motion becomes known to the party or counsel. Any such motion filed after January 17, 2020,

must meet the standards of Fed. R. Civ. P. 15 and 16.” Id. at 2. On June 12 and August 31, 2020,

and on February 16, 2021, the court extended the deadlines for expert reports, discovery, □□□

dispositive motions, but the court did not extend the deadline for motions to join additional parties

or to amend the pleadings. See [D.E. 22, 26, 34].

On May 17, 2019, International Paper wrote to Thomas Industrial concerning this litigation,

seeking indemnity and contribution. See [D.E. 41] { 8. International Paper also asked Thomas.

Industrial to notify its insurance carriers. See id. On August 28, 2019, American Casualty Company

of Reading, Pennsylvania (““ACCO”), one of Thomas Industrial’s insurance carriers, informed

International Paper of its position that International Paper was not an insured under the policy and

that it did not consider Thomas Industrial to be responsible for Taveney’s injuries. See id. 7, 9.

On January 9, 2020, International Paper filed its third-party complaint, naming Thomas Industrial,

but not ACCO, as a third-party defendant. See [D.E. 11].

On April 30, 2021, discovery closed. On May 18, 2021, the parties participated inamediated

settlement conference. International Paper asserts that Thomas Industrial and ACCO “refused to

participate in good faith.” [D.E. 41] 911. On June 1, 2021, after the settlement conference resulted

in an impasse, Thomas Industrial moved to dismiss International Paper’s third-party complaint. See

[D.E. 36]. International Paper unsuccessfully attempted to communicate with ACCO on May 20 and

June 11, 2021, concerning indemnity and contribution. See [D.E. 41] {J 12-13. On December 6,

2021, International Paper settled its dispute with Taveney. See id. { 16. On December 29, 2021,

International Paper informed Thomas Industrial of the settlement. See id. J 17. Nearly a month

later, International Paper moved for leave to amend its third-party complaint to allege additional

factual allegations and to add ACCO as a third-party defendant. See id. at 1.

A party’s complaint puts its opponent on notice of the claims in the case. If a party wishes

to amend those claims, the party must comply with the Federal Rules of Civil Procedure. Under

Rule 15, provided certain time requirements are met, a party may amend a pleading once as a matter

of course. See Fed. R. Civ. P. 15(a)(1). Rule 15 allows additional amendments only with the

permission of the opposing party or with leave of court, and such leave should be freely given “when

justice so requires.” Fed. R. Civ. P. 15(a)(2). However, once a court enters a scheduling order under

Rule 16 with a deadline concerning amendments to pleadings, and the deadline expires, the process

changes. At that point, to amend a pleading, a party must first establish “good cause” under Rule

16 and then establish the traditional requirements under Rule 15 (i.e., the absence of prejudice,

futility, and bad faith). See, e.g., Attkisson v. Holder, 925 F.3d 606, 625-26 (4th Cir. 2019);

Nourison Rug Corp. v. Parvizian, 535 F.3d 295, 298-99 (4th Cir. 2008). If the party fails to

establish “good cause” under Rule 16, a trial court may deny the motion to amend and need not

analyze the motion under Rule 15. See Nourison Rug, 535 F.3d at 299; see also Gilbert v. Deutsche

Bank Tr. Co. Ams, for Res. Accredit Loans, Inc., No. 4:09-CV-181-D, 2016 WL 7378985, at *1-2

(E.D.N.C. May 25, 2016) (unpublished); Royce v. Wyeth, No. 2:04-0690, 2011 WL 1397043, at *1-

2 (S.D.W. Va. Apr. 13, 2011) (unpublished); Rodgers v. Hill, No. 5:08-CT-3105-D, 2010 WL

3239104, at *13 (E.D.N.C. Aug. 16, 2010) (unpublished); Halpern v. Wake Forest Univ. Health

Scis., 268 F.R.D. 264, 266 (M.D.N.C. 2010); Remediation Prods., Inc. v. Adventus Ams., Inc., No.

3:07CV00153-RJC-DCK, 2009 WL 101692, at *1—-2 (W.D.N.C. Jan. 8, 2009) (unpublished).

Rule 16’s “good cause” requirement focuses primarily on “the diligence of the moving

party.” Montgomery v. Anne Arundel Cnty., 182 F. App’x 156, 162 (4th Cir. 2006) (per curiam)

(unpublished). In considering diligence, the court looks to whether the “evidence supporting the

proposed amendment would not have been discovered... until after the amendment deadline had

passed.” United States v. Godwin, 247 F.R.D. 503, 506 (E.D.N.C. 2007) (quotation omitted). The

court also “focuses on the timeliness of the amendment and the reasons for its tardy submission.”

Montgomery, 182 F. App’x at 162; see Opsitnick v. Crumpler, No. 5:13-CV-835-D, 2015 WL

12860285, at *1 (E.D.N.C. Oct. 19, 2015) (unpublished).

“Given their heavy case loads, district courts require the effective case management tools

provided by Rule 16.” Nourison Rug, 535 F.3d at 298. A trial court’s scheduling order “is not a

frivolous piece of paper, idly entered, which can be cavalierly disregarded by counsel without peril.”

Gestetner Corp. v. Case Equip. Co., 108 F.R.D. 138, 141 (D. Me. 1985). Where Rule 16(b) applies

in addition to Rule 15(a)(2), “the district court’s discretion is substantial.” Moore v. Equitrans, L.P.,

F. App’x 212, 218 (4th Cir. 2020) (unpublished); cf. Cahoon v. Edward Orton, Jr. Ceramic

Found., No. 2:17-CV-63-D, 2020 WL 918753, at *4—-5 (E.D.N.C. Feb. 24, 2020) (unpublished).

International Paper has failed to demonstrate good cause under Rule 16. As for adding

ACCOas a third-party defendant, according to International Paper’s own filings, it knew that ACCO

insured Thomas Industrial, that ACCO did not consider International Paper an insured, and that

ACCO did not believe Thomas Industrial owed International Paper indemnity or contribution at least

as early as August 28, 2019, two months before the court issued its scheduling order and more than

four months before International Paper filed its third-party complaint against Thomas Industrial. See

[D.E. 41] 9. International Paper has provided no reason why it could not have included ACCO as

a third-party defendant in its original third-party complaint, which it timely filed against Thomas

Industrial in accordance with the court’s scheduling order. .

There are other moments in the history of this case when International Paper could have

_ sought leave to amend its third-party complaint and add ACCO as a defendant. ACCO apparently

attended the parties’ May 18, 2021 settlement conference and allegedly “refused to participate in

good faith.” [D.E. 41] J 11. International Paper could have moved for leave to amend immediately

after the settlement conference but did not do so. Instead, International Paper waited eight months

after the settlement conference to move for leave to amend. Moreover, on December 6, 2021,

International Paper settled the underlying dispute with Taveney. See id. § 16. However,

International Paper waited nearly a month before informing Thomas Industrial and ACCO of the

settlement, pee id. ¢ 17, and nearly a month after that to move for leave to amend. See id. at 5.

International Paper has not explained these delays.

As for the new factual allegations International Paper seeks to allege in its amended

complaint, International Paper has long known these facts. International Paper relies on many of the

facts in its memorandum opposing Thomas Industrial’s motion to dismiss. Compare [D.E. 39] 2-4,

with [D.E. 41-2] J 14. International Paper filed that memorandum on June 22, 2021. See [D.E. 39].

Thus, even though International Paper was aware of facts potentially supporting its claims at least

as early as June 2021, International Paper did not move to amend its third-party complaint until

6 .

seven months later in January 2022. International Paper has not explained this delay. Moreover, this

delay is especially perplexing because International Paper could have amended its third-party

complaint as a matter of course in the three weeks following Thomas Industrial’s motion to dismiss

on June 1, 2021. See Fed. R. Civ. P. 15(a)(1)(B). Instead, International Paper included the facts in

its briefing without exercising its right under Rule 15 to amend as a matter of course.

A trial court’s scheduling order “is not a frivolous piece of paper, idly entered, which can be

cavalierly disregarded.” Gestetner Corp., 108 F.R.D. at 141. The record demonstrates that

International Paper unreasonably delayed in moving to amend and has not shown good cause for its

delay under Rule 16. Thus, the court need not consider whether International Paper’s proposed

amended complaint satisfies Rule 15. Accordingly, the court denies International Paper’s motion

to amend.

I.

Thomas Industrial moves to dismiss under Rule 12(b)(6) a in the alternative, for summary

judgment [D.E. 36]. Although Thomas Industrial asserted its motion to dismiss in its answer to the

third-party complaint [D.E. 17], it did not file a separate motion and brief the issue until after

discovery closed. The court construes the motion as a motion for judgment on the pleadings under

Federal Rules of Civil Procedure 12(c) and 12(h)(2)(B).

A party may move for judgment on the pleadings at any time “[a]fter the pleadings are

closed—but early enough not to delay trial.” Fed. R. Civ. P. 12(c). A court should grant the motion

if “the moving party has clearly established that no material issue of fact remains to be resolved and

the party is entitled to judgment as a matter of law.” Park Univ. Enters. Inc. v. Am. Cas. Co. of

Reading, Pa., 442 F.3d 1239, 1244 (10th Cir. 2006) (quotation omitted), abrogated on other grounds

by Magnus, Inc. v. Diamond State Ins. Co., 545 F. App’x 750 (10th Cir. 2013) (unpublished); see

Mayfield v. NASCAR, Inc., 674 F.3d 369, 375 (4th Cir. 2012); Burbach Broad. Co. v. Elkins Radio

Corp., 278 F.3d 401, 405-06 (4th Cir. 2002). A court may consider the pleadings and any materials

referenced in or attached to the pleadings, which are incorporated by reference. See Fed. R. Civ. P.

10(c); Fayetteville Invs. v. Com. Builders, Inc., 936 F.2d 1462, 1465 (4th Cir. 1991). A court also

may consider a document submitted by a moving party if it is “integral to the complaint and there

isno dispute about the document’s authenticity” without converting the motion into one for summary

judgment. Goines v. Valley Cmty. Servs. Bd., 822 F.3d 159, 166 (4th Cir. 2016). A court also may

consider “matters of which a court may take judicial notice.” Tellabs, Inc. v. Makor Issues & Rts.,

Ltd., 551 U.S. 308, 322 (2007).

The same standard applies under Rule 12(c) and Rule 12(b)(6). See Mayfield, 674 F.3d-at

375; Burbach Broad. Co., 278 F.3d at 405-06. Thus, a motion under Rule 12(c) tests the legal and.

factual sufficiency ofthe claim. See, e.g., Ashcroft v. Iqbal, 556 U.S. 662, 677-80, 684 (2009); Bell

Atl. Corp. v. Twombly, 550 U.S. 544, 554-63 (2007); Coleman v. Md. Court of Appeals, 626 F.3d

190 (4th Cir. 2010), aff'd, 566 U.S. 30 (2012); Giarratano v. Johnson, 521 F.3d 298, 302 (4th

Cir. 2008). To withstand a Rule 12(c) motion, a pleading “must contain sufficient factual matter,

accepted as true, to state a claim to relief that is plausible on its face.” Iqbal, 556 U.S. at 678

(quotation omitted); see Twombly, 550 U.S. at 570; Giarratano, 521 F.3d at 302. In considering the

motion, the court must construe the facts and reasonable inferences in the “li ght most favorable to

the [nonmoving party].” Massey v. Ojaniit, 759 F.3d 343, 347, 352-53 (4th Cir. 2014) (quotation

omitted); see Clatterbuck v. City of Charlottesville, 708 F.3d 549, 557 (4th Cir. 2013), abrogated on

other grounds by Reed v. Town of Gilbert, 576 U.S. 155 (2015); Burbach Broad. Co., 278 F.3d at

406. A court need not accept as true a complaint’s legal conclusions, “unwarranted inferences,

unreasonable conclusions, or arguments.” Giarratano, 521 F.3d at 302 (quotation omitted); see Iqbal,

□ .

556 U.S. at 678-79. Rather, a party’s allegations must nudge[] [its] claims,” Twombly, 550 U.S.

at 570, beyond the realm of “mere possibility” into “plausibility.” Iqbal, 556 U.S. at 678-79.

This court has subject-matter jurisdiction based on diversity. See 28 U.S.C. § 1332.” Thus,

the court applies state substantive law and federal procedural tules. See Erie R.R. v. Tompkins, 304

U.S. 64, 78-80 (1938); Dixon v. Edwards, 290 F.3d 699, 710 (4th Cir. 2002).

The parties’ contract contains a choice-of-law provision. It states: “Unless otherwise agreed,

this [contract] shall be interpreted under the laws of the state of Tennessee, without recourse to

conflict of law provisions.” IDE. 37-1] 5. But the parties’ contract concerns the maintenance of

International Paper’s mill in New Bern, North Carolina. Under North Carolina law, “[a] provision

in any contract, subcontract, or purchase order for the improvement of real property in this State .

void and against public policy if it makes the contract, subcontract, or purchase order subject

to the laws of another state.” N.C. Gen. Stat. § 22B-2; see DFA Dairy Brands, LLC v. Primus

Builders, Inc., No. 5:21-CV-00026-KDB-DSC, 2021 WL 4258797, at *3-4 (W.D.N.C. July 27,

2021) (unpublished), report and recommendation adopted, 2021 WL 3616711 (W.D.N.C. Aug. 16,

2021) (unpublished). To improve real property means “[t]o build, effect, alter, repair, or demolish

any improvement upon, connected with, or on or beneath the surface of any real property.” N.C.

Gen. Stat. § 44A~-7(3); see id. § 22C-1(2). An improvement can be “all or any part of any building

structure, erection, alteration, demolition, excavation, clearing, grading, filling, or landscaping.” Id.

§ 44A-7(4); see id. § 22C-1(3). Under these definitions, repairing the valves at International Paper’s

mill, as contemplated in the parties’ contract, constitutes an improvement to real property. _

2 Thomas Industrial and Taveney are both citizens of Louisiana. See Third-Party Compl. □

1; Compl. { 1. However, because Thomas Industrial and Taveney are not adverse, complete

diversity is not destroyed. See Caterpillar Inc. v. Lewis, 519 US. 61, 68 & n.3 (1996).

9

Moreover, the parties’ arguments overwhelmingly rely on North Carolina law, and the parties

relegate their cursory discussion of Tennessee law to footnotes. See, e.g., [D.E. 37] 16 n.4; [D.E.

39] 10n.3. Thus, the court applies North Carolina substantive law.

To apply North Carolina substantive law, this court must predict how the Supreme Court of

North Carolina would rule on any disputed state law issues. See Twin City Fire Ins. Co. v. Ben

Arold-Sunbelt Beverage Co. of S.C., 433 F.3d 365, 369 (4th Cir. 2005). In doing so, the court must

look first to opinions of the Supreme Court of North Carolina. See id.; Parkway 1046, LLC v. U.S.

Home Corp., 961 F.3d 301, 306 (4th Cir. 2020); Stahle v. CTS Corp., 817 F.3d 96, 100 (4th Cir.

2016). If there are no governing opinions from the Supreme Court of North Carolina, this court may

consider the opinions of the North Carolina Court of ponent treatises, and “the practices of other

states.” Twin City Fire Ins. Co., 433 F.3d at 369 (quotation omitted).? In predicting how the highest

court of a state would address an issue, this court must “follow the decision of an intermediate state

appellate court unless there is persuasive data that the highest court would decide differently.”

Toloczko, 728 F.3d at 398 (quotation omitted); see Hicks v. Feiock, 485 U.S. 624,630 &n3 (1988).

Moreover, in predicting how the highest court of a state would address an issue, this court “should

not create or expand a [s]tate’s.public policy.” Time Warner Ent.-Advance/Newhouse P’ship v.

Carteret-Craven Elec. Membership Corp., 506 F.3d 304, 314 (4th Cir. 2007) (alteration and

quotation omitted); see Day & Zimmermann, Inc. v. Challoner, 423 U.S. 3, 4 (1975) (per curiam);

Wade v. Danek Med., Inc., 182 F.3d 281, 286 (4th Cir. 1999).

3 North Carolina has no mechanism for certifying questions of state law to the Supreme Court

of North Carolina. See Town of Nags Head v. Toloczko, 728 F.3d 391, 398 (4th Cir. 2013).

10

A.

International Paper seeks indemnity based on the indemnification provision in its contract

with Thomas Industrial. See Third-Party Compl. [D.E. 11] f] 4-11; see also Schenkel & Shultz, Inc.

v. Hermon F. Fox & Assocs., P.C., 180 N.C. App. 257, 259, 636 S.E.2d 835, 837 (2006) (“A right

to indemnity may rest on the express contractual provisions between two parties ... .”), aff'd, 362

N.C. 269, 658 S.E.2d 918 (2008). The parties’ indemnity provision states:

Indemnity. [Thomas Industrial] agrees to indemnify, defend and hold harmless ~

[International Paper], its agents, servants and employees from and against any and

all expenses, claims, demands, losses, damages, actions, or liability of any kind,

including attorney’s fees incurred for any and all damage or injury of any kind or

nature whatever (including death) to all persons, (including those employed by

[Thomas Industrial]) or property which is caused by, arises out of, on account of, or

as a result of the performance by [Thomas Industrial], or any sub-contractor of

[Thomas Industrial] in connection with this Order. Upon demand, [Thomas

Industrial] agrees to assume on behalf of [International Paper] the defense of any

action, at law or in equity, which may be brought against [International Paper] upon

any such claim and to pay on behalf of [International Paper] the amount of any

judgment that may be entered against [International Paper] in any such action.

[Thomas Industrial] hereby expressly waives any immunity from suit by

_ [International Paper], which may be conferred by the workers’ compensation laws,

or any other law of any state that would preclude enforcement of the indemnification

clause of this agreement by [International Paper]. [Thomas Industrial] further agrees

to pay any reasonable attorney’s fees incurred by [International Paper] in securing □

compliance with the provisions of this indemnification agreement. [Thomas

Industrial] agrees that its obligations to indemnify under this section are distinct

from, independent of, and not intended to be coextensive with its duty to procure

insurance required herein.

37-1] 5. The parties’ contract separately states that “[Thomas Industrial] further agrees to

indemnify and hold harmless [International Paper] for any loss, damage, fine, penalty or any expense

whatsoever as a result of the failure of [Thomas Industrial] or its subcontractors to comply with”

OSHA safety standards and regulations. Id.

Thomas Industrial argues that the indemnity provision is void against public policy under

North Carolina law. See [D.E. 37] 15—22. International Paper disputes that the indemnity provision

\ □

11

is void under North Carolina law. International Paper also responds that the waiver in the indemnity

provision means Thomas Industrial expressly waived that argument. See [D.E. 39] 5-12. Thomas

Industrial replies that the waiver is unenforceable. See [D.E. 40] 2-5.

Courts interpret indemnity provisions like other contractual provisions. The “primary

purpose in construing a contract of indemnity is to ascertain and give effect to the intention of the

parties, and ordinary rules of construction apply.” Dixie Container Corp. v. Dale, 273 N.C. 624, 621,

160 S.E.2d 708, 711 (1968); see Schenkel & Shultz, Inc. v. Hermon F. Fox & Assocs., P.C., 362

N.C. 269, 273, 658 S.E.2d 918, 921 (2008). A court may interpret an ambiguous contract as a matter

of law, but if ambiguity in the contract creates uncertainty regarding the intentions of the parties, the

question is for the jury. See Schenkel & Shultz, 362 N.C. at 273, 658 S.E.2d at 921; Lane v.

! Scarborough, 284.N.C. 407, 410, 200 S.E.2d 622, 624 (1973); Farmers Bank v. Michael T. Brown

' Distributors, Inc., 307 N.C. 342, 347-48, 298 S.E.2d 357, 360 (1983); WakeMed v. Surgical Care

Affiliates, LLC, 243 N.C. App. 820, 824-25, 778 S.E.2d 308, 312 (2015). “[C]ourts strictly construe

indemnity clauses against the party asserting it.” City of Wilmington v. N.C. Nat. Gas Corp., 117

N.C. App. 244, 248, 450 S.E.2d 573, 575-76 (1994).

North Carolina law generally allows a party “to contractually provide for indemnification

_ against its own negligence.” CSX Transp., Inc. v. City of Fayetteville, 247 N.C. App. 517, 523, 785

S.E.2d 760, 763-64 (2016); see Gibbs v. Carolina Power & Light Co., 265 N.C. 459, 467, 144

S.E.2d 393, 400 (1965). However, a statutory exception applies for indemnification in construction

agreements. A “construction agreement” is “[a]ny promise or agreement in, or in connection with,

a contract or agreement relative to the design, planning, construction, alteration, repair, or

maintenance of a building [or] structure... .” N.C. Gen. Stat. § 22B-1(f)(1). Under N.C. Gen. Stat.

§ 22B-1, “[p]rovisions in, or in connection with, a construction agreement . . . purporting to require

12

a promisor to indemnify or hold harmless the promisee, the promisee’s independent contractors,

agents, employees, or indemnitees against liability for damages arising out of bodily injury to

persons or damage to property proximately caused by or resulting from the negligence, inwholeor

in part, of the promisee, its independent contractors, agents, employees, or indemnitees, is against

public policy, void and unenforceable.” Id. § 22B-1(a); see One Beacon Ins. Co. v. United Mech.

Corp., 207 N.C. App. 483, 487-88, 700 S.E.2d 121, 124 (2010). The statute does not prohibit

indemnification for liabilities arising from “the sole negligence of the promisor.” N.C. Gen. Stat.

§ 22B-1(a). Put simply, a construction contract “generally may not include a provision whereby a

party is indemnified for its own negligence.” One Beacon, 207 N.C. App. at 488; 700 S.E.2d at 124

(quotation omitted); see Bridgestone/Firestone, Inc. v. Ogden Plant Maint. Co. of N.C., 144 N.C.

App. 503, 506, 548 S.E.2d 807, 810 (2001), aff'd, 355 N.C. 274, 559 S.E.2d 786 (2002) (per

curiam); Int’! Paper Co. v. Corporex Constructors, Inc., 96 N.C. App. 312, 315, 385 S.E.2d 553, 555

(1989). The parties agree that their contract is a construction contract. .

The parties’ indemnity provision is unambiguous and is not void against public policy.‘

Under the provision, Thomas Industrial must indemnify International Paper “for any and all damage

or injury of arly kind or nature” that is “caused by, arises out of, on account of, or as a result of”

Thomas Industrial’s performance under the contract. [D.E. 37-1] 5. Under its plain language, the

indemnification clause applies to liabilities caused by or arising from Thomas Industrial’s

performance under the contract. Stated differently, the clause does not indemnify International Paper

“for its own negligence,” but for Thomas Industrial’s negligence. One Beacon, 207 N.C. App. at

488; 700 S.E.2d at 124 (quotation omitted); see City of Wilmington, 117 N.C. App. at 248, 450

. 4 Because the indemnity provision is not void‘against North Carolina public policy, the court

need not resolve whether the contract’s waiver is enforceable.

13

S.E.2d at 576 (“Mere general, broad, and seemingly all-inclusive language in the indemnifying

agreement has been said not to be sufficient to impose liability for the indemnitee’s own negligence.”

(quotation omitted)).* Similarly, the clause requiring compliance with OSHA safety standards and

regulations limits any indemnification to liabilities arising from Thomas Industrial’s failure to

comply with the relevant OSHA requirements. See [D.E. 37-1] 5.

International Paper does not plausibly allege that Thomas Industrial acted negligently.

Rather, International Paper alleges that Thomas Industrial “was negligent or in some other actionable

manner legally responsible, for the events and happenings referred to, and for proximately causing

_ injuries and damages incurred by Plaintiff, if any, as alleged in [Taveney’s] Complaint.” Third-

Party Compl. 73. International Paper does not allege any facts to support its conclusion that Thomas

Industrial acted negligently. Thus, International Paper’s allegations in its third-party complaint are

vague, threadbare allegations devoid of any factual matter that plausibly alleges either that Thomas

Industrial performed negligently or that Thomas Industrial failed to follow OSHA safety standards

> Thomas Industrial cites Jackson v. Associated Scaffolders and Equipment Co., 152 N.C.

App. 687, 568 S.E.2d 666 (2002), and Miller Brewing Co. v. Morgan Mechanical Contractors, Inc.,

N.C. App. 310, 368 S.E.2d 438 (1988), as examples where the North Carolina Court of Appeals

construed broad language in indemnity clauses as impermissibly encompassing the negligence of the

promisee. See [D.E. 37] 18-20. Jackson and Miller are distinguishable because the indemnity

_ Clauses in those cases did not specify whose conduct triggered the provision. See Jackson, 152 N.C.

App. at 690, 568 S.E.2d at 668 (stating the lessee must indemnify lessor “for loss, damage or

personal injury which results from non-compliance with any portion of this Paragraph, or from non-

compliance with any law, regulation, or other safety order”); Miller, 90 N.C. App. at 313, 368 S.E.2d

at 439 (stating the seller must indemnify for liability “arising out of or in any way connected with

the work done or goods furnished under this P.O.”). Here, the provision specifically states the injury

or harm must arise from or be caused by Thomas Industrial’s performance. It is not so broad as to

require indemnification for liability that is “in any way connected to” the contract. Miller, 90 N.C.

App. at 313, 368 S.E.2d at 439.

14

and regulations. See, e.g., Iqbal, 556 U.S. at 677-80; Twombly, 550 U.S. at 554-63.° Moreover,

even though the third-party complaint references Taveney’s original complaint, Taveney’s original

complaint only contains facts alleging International Paper, not Thomas Industrial, was negligent.

See Compl. ff 8-36. Accordingly, International Paper fails to plausibly allege an express indemnity

claim, and the court dismisses the claim.

B.

International Paper also seeks indemnification based on a theory of implied equitable

indemnity. Third-Party Compl. ff 12-16. A claim for implied equitable indemnity “arisfes] from

the tort theory of indemnity, often referred to as a contract implied-in-law.” Woody v. FlightGest,

Inc., 265 N.C. App. 602, 827 S.E.2d 346, 2019 WL 2189279, at *2 (2019) (unpublished table

_ decision) (quotation omitted); see Willoughby v. Johnston Mem’! Hosp. Auth., 248 N.C. App. 837,

791 SiE.2d 283, 2016 WL 4091370, at *11 (2016) (unpublished table decision); Kaleel Builders, Inc.

v. Ashby, 161 N.C. App. 34, 38, 587 S.E.2d 470, 474 (2003); McDonald v. Scarboro, 91 N.C. App.

13, 22, 370 S.E.2d 680, 686 (1988).

Thomas Industrial argues that the Workers’ Compensation Act, N.C. Gen. Stat. §§ 97-1, et

seq., bars International Paper’s implied indemnity claim. See [D.E. 37] 11-15. International Paper

responds that Thomas Industrial expressly waived that argument in the parties’ contract. See [D.E.

39] 5-9. Again, the court need not resolve whether the waiver is enforceable, because even if it is

§ International Paper alleges numerous facts in its memorandum opposing Thomas

Industrial’s motion to dismiss. See [D.E. 39] 2-4. However, under Iqbal, Twombly, and their

progeny, the allegations in the complaint are the relevant facts, not later factual assertions in a party’s

briefing. See, e.g., Odjaghian v. HHS Tech. Grp., LLC, 848 F. App’x 534, 541 (4th Cir. 2021) □

(unpublished); S. Walk at Broadlands Homeowner’s Ass’n, Inc. v. OpenBand at Broadlands, LLC,

713 F.3d 175, 184 (4th Cir. 2013); E.L. du Pont de Nemours & Co. v. Kolon Indus., Inc., 637 F.3d

435, 449 (4th Cir. 2011).

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enforceable, International Paper fails to state a claim for at least two reasons.

First, “[i]f there is an express contract of indemnity, the indemnitee is relegated to his

contract....” Greene v. Charlotte Chem. Labs., Inc., 254 N.C. 680, 691, 120 S.E.2d 82, 89 (1961);

see Willoughby, 2016 WL 4091370, at *11 (“[T]here can be no implied contract where there is an

express contract between the parties in reference to the same subject matter.” (cleaned up));

Charlotte Motor Speedway v. Tindall Corp., 195 N.C. App. 296, 302-03, 672 S.E.2d 691, 695

(2009). As stated, the parties have an express indemnity provision in their contract, and that

provision is not void against North Carolina public policy. Thus, as a matter of law, International

Paper cannot state an implied indemnity claim.

Second, “to successfully assert a right to indemnity based on a contract implied-in-law, a

party must be able to prove each of the elements of an underlying tort such as negligence.” Schenkel

& Shultz, Inc., 180 N.C. App. at 268, 636 S.E.2d at 843; see Woody, 2019 WL 2189279, at *2;

Willoughby, 2016 WL 4091370, at *11, Kaleel Builders, Inc., 161 N.C. App. at 39, 587 S.E.2d at

474; see also Hunsucker v. High Point Bending & Chair Co., 237 N.C. 559, 563-64, 75 S.E.2d 768,

771 (1953) (explaining that implied indemnity arises from an underlying tort). As discussed,

International Paper fails to allege any factual matter to support its threadbare assertion that Thomas

Industrial acted negligently. See Third-Party Compl. 73. Thus, International Paper has not plausibly

alleged the elements of an underlying tort, which is necessary to state an implied indemnity claim.

Accordingly, International Paper’s implied indemnity claim fails, and the court dismisses the claim.

C.

International Paper alleges a claim for apportionment of fault, which the court construes as

a contribution claim. See Third-Party Compl. {J 17-19; [D.E. 39] 1 (stating “IP [is] . . . asserting

indemnity, contribution, and declaratory judgment claims”). As with the implied indemnity claim,

16

the parties dispute whether Thomas Industrial waived the application of the Workers’ Compensation

Act in the contract. Again, the court need not resolve this dispute, because International Paper fails

to state a claim regardless of whether the waiver applies.

If the waiver is unenforceable, then the Workers’ Compensation Act applies to International

Paper’s contribution claim. The Act states: “Ifthe verdict shall be that actionable negligence of the

employer did join and concur with that of the third party in producing the injury or death, then the

court shall reduce the damages award by the jury against the third party by the amount which the

employer would otherwise be entitled to receive therefrom by way of subrogation . . . and the third

party shall have no further right by way of contribution or otherwise against the employer,” except

as provided by an express indemnity contract. N.C. Gen. Stat. § 97-10.2(e) (emphasis added). Ifthe

contractual waiver is enforceable, International Paper’s right to contribution is governed by N.C.

Gen. Stat. § 1B-1, which states that, subject to exceptions in the statute, “where two or more persons

become jointly or severally liable in tort for the same injury to person or property or for the same

wrongful death, there is a right of contribution among them even though judgment has not been

recovered against all or any of them.” N.C. Gen. Stat. § 1B-1(a) (emphasis added).

Under either statute, both parties must be at fault for a right of contribution to accrue.

“Without a tort, there can be no tort-feasor; and without a tort-feasor, there can be no right to

contribution... .” Kaleel Builders, Inc., 161 N.C. App. at 43, 587 S.E.2d at 477; see Pearsall v.

Duke Power Co., 258 N.C. 639, 642, 129 S.E.2d 217, 219 (1963) (“Of course there can be no

contribution unless the parties are joint tortfeasors.”); Woody, 2019 WL 2189279, at *2; Iowa Nat’]

Mut. Ins. Co. v. Surratt, 19 N.C. App. 745, 746, 200 S.E.2d 220, 221 (1973) (“A basic prerequisite

to plaintif?’s right of contribution is that there be joint tort liability.”). As stated, International Paper

does not plausibly allege any facts indicating Thomas Industrial acted negligently and was

) 17 .

contributing cause of Taveney’s injuries. See Third-Party Compl. 7 3. Thus, International Paper

fails to state a claim for contribution, and the court dismisses the claim. See Kaleel Builders, Inc.,

161 N.C. App. at 43, 587 S.E.2d at 476 (“Because plaintiff has alleged no cause of action in tort,

plaintiff's contribution theory of recovery fails as a matter of law.”).

D.

Finally, International Paper seeks a declaratory judgment declaring the rights and obligations

between it and Thomas Industrial concerning indemnity and contribution. See Third-Party Compl.

{ 20-23. International Paper does not state in its third-party complaint whether it seeks a

declaratory judgment under federal or state law. The court applies federal law because “[flederal

standards guide the inquiry as to the propriety of declaratory relief in federal courts, even when the

case is under the court’s diversity jurisdiction.” White v. Nat’] Union Fire Ins. Co., 913 F.2d 165,

167 (4th Cir. 1990) (quotation omitted); see Wilkerson Francis Invs., LLC v. Am. Zurich Ins. Co.,

No. 3:19¢v582, 2020 WL 4238429, at *4 (E.D. Va. July 23, 2020) (unpublished).

Under the Declaratory Judgment Act, a district court “may declare the rights and other legal

relations of any interested party seeking such declaration, whether or not further relief is or could be

sought,” so long as the case is a “case of actual controversy within its jurisdiction.” 28 U.S.C. §

2201(a). The Declaratory Judgment Act is purely remedial and does not create jurisdiction or create

substantive rights. See CGM, LLC v. BellSouth Telecomm.., Inc., 664 F.3d 46, 55—56 (4th Cir.

2011); Lotz Realty Co., Inc. v. HUD, 717 F.2d 929, 932 (4th Cir. 1983); see also Skelly Oil Co. v.

Phillips Petroleum Co., 339 U.S. 667, 671-72 (1950). Thus, “[a] request for declaratory relief is

barred to the same extent that the claim for substantive relief on which it is based would be barred.”

CGM, 664 F.3d at 55-56 (alteration in original) (quotation omitted); see Int’] Ass’n of Machinists

& Aerospace Workers v. Tenn. Valley Auth., 108 F.3d 658, 668 (6th Cir. 1997).

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As explained, the court has dismissed International Paper’s substantive claims. Thus, the

Declaratory Judgment Act can provide no relief to International Paper, and the court dismisses

International Paper’s declaratory judgment claim.

IV.

In sum, the court DENIES third-party plaintiff's motion for leave to amend [D.E. 41],

GRANTS third-party defendant’s motion to dismiss [D.E. 36], and DISMISSES third-party

plaintiff's complaint [D.E. 11]. Not later than April 8, 2022, Taveney and International Paper

SHALL update the court on the status of the settlement between Taveney and International Paper,

including whether there will be a stipulation of dismissal.

SO ORDERED. This 28 day of March, 2022.

. United States District Judge

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