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BNSF Railway Co. v. Toltz, King, Duvall, Anderson and Associates, Inc.

United States District Court, D. Montana, Missoula Division

June 20, 2017

BNSF RAILWAY CO., Plaintiff and Counter Defendant,
v.
TOLTZ, KING, DUVALL, ANDERSON AND ASSOCIATES, INC., Defendant and Counter Claimant, TOLTZ, KING, DUVALL, ANDERSON AND ASSOCIATES, INC., Third Party Plaintiff,
v.
SAFE HARBOR ACCESS SYSTEMS, LLC; SAFE HARBOR ACCESS SYSTEMS II, LLC; SAFE HARBOR ACCESS SYSTEM Ii, a/k/a SAFE HARBOR Ii, Third Party Defendants.

          ORDER

          DANA L. CHRISTENSEN, UNITED STATES DISTRICT CHIEF JUDGE.

         Before the Court is Third Party Defendant Safe IPs motion for summary judgment.[1] For the reasons explained below, the Court denies the motion.

         Background and Procedural History

         This case involves TKDA's alleged duty to indemnify BNSF for claims arising out of an accident that occurred in 2011 involving a BNSF employee who was injured while working on a fuel unloading dock at the BNSF railroad yard in Whitefish, Montana. On August 23, 2001, BNSF and TKDA entered into a nonexclusive contract in which TKDA agreed to provide engineering services necessary for the completion of work defined by BNSF (hereafter referred to as the "2001 Agreement"). (Doc. 27-1). Pursuant to the 2001 Agreement, TKDA was to indemnify and hold BNSF harmless for "any claims arising from the performance of th[e] Agreement." The contract also included the following choice of law provision: "All questions arising under this Agreement shall be decided according to the laws of the State in which the work is performed." (Doc. 27-1 at 11.) The 2001 Agreement was renewed in 2003, 2004, 2005, 2006, 2008, and January 21, 2009, which was the final renewal of the 2001 Agreement. (Docs. 39-1, 39-2, 39-3, 39-4, 39-5, 39-6.)

         In 2002, pursuant to the 2001 Agreement, TKDA agreed to engineer a fuel unloading facility at the BNSF railway yard in Whitefish, Montana. TKDA contracted to provide an elevated walkway for top-unloading tank cars with retractable gangways and new fuel unloading arms at the two tank car unloading locations. TKDA purchased supply equipment for the two gangway platforms from Safe I. These platforms were designed to allow BNSF employees to access the tops of tank cars and had an integrated fall protection system that would retract with the walkway in order to provide a safety barrier.

         The remaining facts regarding the contractual relationship between BNSF and TKDA will not be restated here, since the Court has already ruled on that issue in its previous order on BNSF and TKDA's cross motions for summary judgment. (See Doc. 75.) The Court found that TKDA was still liable because the indemnity clause in the contract between BNSF and TKDA was valid and enforceable. Here, Safe II argues that it is entitled to summary judgment on all claims because the undisputed facts show that Safe II had no contract with TKDA and is not liable in tort for common law contribution or indemnity as it relates to TKDA's responsibilities to indemnify BNSF in the underlying personal injury case.

         Safe I is no longer in existence because of a judicial foreclosure by one of its creditors, National Loan Investors, L.P. ("NLI"). NLI was the successful bidder at the sale for the assets, plant, and equipment of Safe I. NLI's bid and interest was then assigned and sold in 2007 to Southeastern Realty, LLC, which, in turn, leased the assets, plant, and equipment and intangibles to Safe II after it was formed in May 2007. Thus, TKDA and Safe II are disputing whether Safe II assumed the contract and indemnity liabilities of Safe I.

         Legal Standard

         A party is entitled to summary judgment if it can demonstrate 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). Summary judgment is warranted where the documentary evidence produced by the parties permits only one conclusion. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251 (1986). Only disputes over facts that might affect the outcome of the lawsuit will preclude entry of summary judgment; factual disputes that are irrelevant or unnecessary to the outcome are not considered. Id. at 248. In ruling on a motion for summary judgment, a court must view the evidence "in the light most favorable to the opposing party." Tolan v. Cotton, 134 S.Ct. 1861, 1866 (2014) (quoting Adickes v. S.H. Kress & Co., 398 U.S. 144, 157 (1970)). "[T]he evidence of the nonmovant is to be believed, and all justifiable inferences are to be drawn in his favor." Id. at 1863 (quoting Anderson, 477 U.S. at 255).

         Because jurisdiction over this action is founded upon diversity of citizenship, the Court applies the substantive law of Montana, the forum state. Medical Laboratory Mgmt. Consultants v. American Broadcasting Cos., Inc., 306 F.3d 806, 812 (9th Cir.2002). "The task of a federal court in a diversity action is to approximate state law as closely as possible in order to make sure that the vindication of the state right is without discrimination because of the federal forum." Gee v. Tenneco, Inc., 615 F.2d 857, 861 (9th Cir.1980). Federal courts "are bound by the pronouncements of the state's highest court on applicable state law." Appling v. State Farm Mutual Auto. Ins. Co., 340 F.3d 769, 778 (9th Cir.2003) (quoting Ticknor v. Choice Hotels Int'l, Inc., 265 F.3d931, 939 (9th Cir.2001)).

         Analysis

         In its opening brief, Safe II argues that (1) Safe II and TKDA never contracted together so there can be no breach of contract, (2) there is no proof by TKDA that Safe II ever assumed the contractual liabilities of Safe I, (3) Safe II cannot be a joint tortfeasor for any underlying tort action because Safe II was not in existence at the time the gangways were installed, and (4) Safe II cannot be liable because of the statute of repose. In its response, TKDA contends that Safe II impliedly assumed the contract-based liabilities of Safe I and is therefore liable for indemnification. Even if Safe II did not assume the contractual liabilities of Safe I, TKDA asserts that Safe II is liable under agency and identity theories and also liable for successor liability based on the continuity of enterprise theory. Finally TKDA argues that the statue of repose does not apply because of the existence of a written contract between Safe I and TKDA.

         The Court will address each theory of liability separately below.

         I. Whether Safe II Impliedly Assumed Contractual ...


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