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KaiserKane, Inc. v. North American Roofing Services, Inc.

United States District Court, W.D. North Carolina, Asheville Division

March 20, 2019

KAISERKANE, INC., Plaintiff,
v.
NORTH AMERICAN ROOFING SERVICES, INC., Defendant.

          MEMORANDUM OF DECISION AND ORDER

          MARTIN REIDINGER UNITED STATES DISTRICT JUDGE.

         THIS MATTER is before the Court on the Plaintiff's Motion for Summary Judgment [Doc. 44] and the Defendant's Cross-Motion for Summary Judgment [Doc. 48].

         I. BACKGROUND

         The following facts are not in dispute. The Plaintiff KaiserKane, Inc. (“KaiserKane”) is a general contractor that provides construction management and design/build construction services for a diverse range of projects. In 2007 or 2008, KaiserKane was selected by the federal Bureau of Prisons (BOP) to serve as the general contractor for a project to replace the roofs on three buildings at the Federal Correctional Institution Fort Dix (FCI Fort Dix), located in Burlington County, New Jersey. After being selected by the BOP as the general contractor for the FCI Fort Dix project, KaiserKane entered into a subcontract agreement with the Defendant North American Roofing Services, Inc. (“NARS”) dated September 16, 2007. In addition to the roof replacement work, the FCI Fort Dix project also involved the removal of asbestos materials. The asbestos removal and abatement work was performed by Briggs Contracting Services, Inc. (“Briggs”) pursuant to a separate agreement between NARS and Briggs. The work at the FCI Fort Dix project lasted approximately thirteen months and was completed in October 2009.

         In 2010, Hitham Abuhouran (“Abuhouran”) filed a federal lawsuit against KaiserKane, NARS, Briggs, and others in the Middle District of Pennsylvania. Abuhouran alleged that he was a prisoner at FCI Fort Dix during the relevant reroofing period and that KaiserKane, NARS, and Briggs were negligent in the removal and abatement of asbestos as a part of that project. Thereafter, the Middle District of Pennsylvania transferred the Abuhouran litigation to the District of New Jersey under 28 U.S.C. § 1404.

         On September 12, 2012, the U.S. District Court for the District of New Jersey dismissed the Abuhouran federal court litigation without prejudice under Federal Rule of Civil Procedure 12(b)(7) for failure to join an indispensable party.[1] Abuhouran then re-filed his lawsuit against KaiserKane, NARS, Briggs, and other defendants in New Jersey state court. KaiserKane, NARS, Briggs, and the other named defendants answered the state court complaint of Abuhouran, denied Abuhouran's allegations against them, and asserted cross-claims against one another. KaiserKane's cross-claims in the Abuhouran state court litigation alleged that: (a) NARS owed it contractual indemnity under the parties' Subcontract Agreement; and (b) KaiserKane was a third-party beneficiary of any contractual claim for indemnity that NARS may have against Briggs under their agreement.

         During the Abuhouran state court litigation, NARS filed and served a motion for summary judgment seeking dismissal of the plaintiff's claims. Abuhouran did not timely respond to NARS's motion for summary judgment. On August 22, 2014, the New Jersey state court granted the motion, dismissed Abuhouran's action with prejudice, and dismissed the cross-claims that KaiserKane and the other defendants had brought against one another. Subsequently, Abuhouran filed a motion to reinstate his claims and alleged in an affidavit that he had changed his residence, did not receive timely notice of NARS's motion for summary judgment and, therefore, did not have an opportunity to file a timely response. The New Jersey state court granted Abuhouran's motion and reinstated his claims. Shortly thereafter, KaiserKane moved to have its cross-claims reinstated so they could be litigated as a part of the pending Abuhouran state court litigation, but the New Jersey state court denied that motion and refused to allow KaiserKane to reinstate its cross-claims.

         KaiserKane then brought this diversity action here. KaiserKane's Complaint included three causes of action: Count I - breach of contract; Count II - specific performance; and Count III - declaratory judgment. In short, KaiserKane requested damages, a declaration regarding the parties' rights under the indemnification portions of their contract, an affirmative injunction requiring NARS to comply with its purported contractual obligations to defend and indemnify KaiserKane, and costs.

         Both parties filed motions for summary judgment on the Plaintiff's claims. [Docs. 20, 22]. On January 13, 2017, this Court issued its Memorandum of Decision, Order, and Declaration ("Order") on the parties' motions. [Doc. 35]. In that Order, the Court held that the Subcontract contains no duty requiring NARS to defend KaiserKane in the Abuhouran litigation, but that this fact did “not prevent KaiserKane from pursuing a claim against NARS that it breached the contract by failing to obtain insurance coverage for KaiserKane as required by the contract.” [Id. at 8]. The Court further held that the Subcontract provides KaiserKane with the right of indemnification by NARS in regard to the Abuhouran litigation “for any claim therein that is based on KaiserKane being derivatively liable for any wrongdoing on the part of NARS or Briggs.” [Id. at 16]. The Court specifically determined that the issues of (1) whether KaiserKane should prevail on its breach of contract claim against NARS for the failure to insure and (2) whether KaiserKane's claim for indemnity was barred by N.C. Gen. Stat. § 22B-1 were not ripe for determination until the underlying Abuhouran litigation was resolved. [Doc. 35 at 15-16]. The Court therefore stayed the action pending a final judgment in the Abuhouran litigation. [Id. at 16-17].

         On June 13, 2018, the Abuhouran litigation was resolved by voluntary dismissal with prejudice without an affirmative ruling on Abuhouran's claims. [Doc. 42, Exh. A]. Thereafter, this Court lifted the stay and reset this matter for trial. [Doc. 42]. Thereafter, the parties filed the present cross-motions for summary judgment. [Docs. 44, 48].

         In its motion for summary judgment, KaiserKane argues that the undisputed forecast of evidence establishes that: (1) NARS is liable for breach of § 5.1 of the Subcontract in failing to insure KaiserKane; (2) NARS is liable for breach of § 5.2 of the Subcontract for failing to indemnify KaiserKane in the Abuhouran litigation; (3) KaiserKane is entitled to indemnification under North Carolina's common law; (4) NARS is liable to KaiserKane for its damages, i.e., attorney fees and costs, incurred in the Abuhouran litigation based upon NARS's (i) breach of contract and (ii) failure to indemnify KaiserKane; and (5) KaiserKane is contractually and statutorily entitled to its attorney fees and costs in the instant litigation, pursuant to the express terms of the Subcontract and the statutory exception of N.C. Gen. Stat. § 6-21.2.

         NARS contends, on the other hand, that: (1) the Court has already ruled that KaiserKane is not entitled to attorneys' fees for defending against Abuhouran's claims; (2) KaiserKane has waived or abandoned the arguments it now seeks to make regarding the rights of recovery of attorneys' fees by virtue of breach of contract or indemnity by failing to raise them in its earlier summary judgment motion; (3) the indemnity provisions in the subcontract between KaiserKane and NARS were never triggered as there is not and can never be a finding of liability against NARS for which KaiserKane would be derivatively liable; (4) the contract between KaiserKane and NARS did not require NARS to provide KaiserKane a defense and therefore NARS did not breach the contract by failing to provide such a defense; and (5) the indemnity provision at issue is void under North Carolina law.

         II. STANDARD OF REVIEW

         Summary judgment is proper “if the movant shows that 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). A fact is “material” if it “might affect the outcome of the case.” N&O Pub. Co. v. RDU Airport Auth., 597 F.3d 570, 576 (4th Cir. 2010). A “genuine dispute” exists “if the evidence is such that a reasonable ...


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