China Life Ins. Co. v. Baby Trend, Inc.

CHINA LIFE INSURANCE COMPANY, as assignee of; Plaintiff, v. BABY TREND, INC., Defendant.

8:18CV213

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEBRASKA

April 24, 2020

MEMORANDUM AND ORDER

This matter is before the Court on defendant's, Baby Trend, Inc.'s ("Baby Trend"), motion for judgment on the pleadings pursuant to Fed. R. Civ. P. 12(c), Filing No. 50. Plaintiff China Life Insurance Company ("China Life") brought this action for express indemnification, implied or equitable indemnification, and breach of contract. Baby Trend crossclaims with two separate breach of contract claims. Complaint, Filing No. 1.

I. BACKGROUND

The issues in this case stem from a previously settled dispute in this Court.¹ China Life is the assignee of a group of companies, including Lerado Group Co., Ltd., Lerado Group (Holding) Company, Ltd., Lerado (Zhong Shan) Industrial Co., Ltd., Lerado China Limited, and Lerado H.K. Limited ("Lerado"). Lerado is a manufacturer of infant products. Laredo produces their products in China but sells throughout the world, including in the United States. China Life insured the Lerado group during all times relevant to this litigation.

Baby Trend is a California corporation doing business across the United States, including the state of Nebraska. Baby Trend and Laredo entered into an OPP Car SeatProduction Agreement (the "agreement"). The agreement dictated that Laredo would manufacture car seats using Baby Trend's designs and specifications. This agreement controlled all dealings between Laredo and Baby Trend with regard to baby seat production. The contract provides no information as to what state's law would control or where the contract was entered into.

The relevant language of the agreement is as follows: "Baby Trend acknowledges that all design work was performed by Baby Trend, and accordingly, Baby Trend agrees to hold Lerado harmless for any design defects." Filing No. 52-2 at 2. China Life alleges this provision is an indemnification clause. The parties do not agree as to whether the Ribeiro litigation stemmed from a product defect or design defect. Laredo alleges they manufactured all baby seats under the specifications provided exclusively by Baby Trend. Baby Trend's witnesses and designer testified during the Ribeiro litigation that the car seat was manufactured consistent with Baby Trend's design.

The previous litigation resulted in a private settlement with all parties, including Laredo and Baby Trend. Beginning September 18, 2014, Laredo tried three times to request a defense and indemnification from Baby Trend and their insurer. Each of those requests was allegedly ignored or denied. Both parties allege they incurred significant costs defending the Ribeiro litigation, including attorney's fees, costs of expert witnesses, and settling the claim.

Baby Trend's counterclaims against China Life for breach of contract are based on the following language contained therein: "Lerado hereby agrees to reimburse Baby Trend for any and all expenses incurred by Baby Trend as a result of production defectsin the product or components thereof, and to name Baby Trend, Inc. as an additional insured with Lerado's liability insurance." Filing No. 35, ¶ 16, at 17.

II. STANDARD OF REVIEW

a. Motion for Judgment on the Pleadings under Fed. R. Civ. P. 12(c)

As a general rule, a motion for judgment on the pleadings under Federal Rule of Civil Procedure 12(c) is reviewed under the same standard as a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6). Ginsburg v. InBev NV/SA, 623 F.3d 1229, 1233 n.3 (8th Cir. 2010). When reviewing a Rule 12(c) motion, the Court must view all facts pleaded by the nonmoving party as true and grant all reasonable inferences in favor of that party. Poehl v. Countrywide Home Loans, Inc., 528 F.3d 1093, 1096 (8th Cir. 2008). Judgment on the pleadings is appropriate when there is no dispute as to any material facts and the moving party is entitled to judgment as a matter of law. Ashley Cty. v. Pfizer, Inc., 552 F.3d 659, 665 (8th Cir. 2009); Poehl, 528 F.3d at 1096.

b. Motion to Dismiss under Fed. R. Civ. P. 12(b)(6)

Under the Federal Rules, a complaint must contain "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2); Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 556 n.3. (2007); Braden v. Wal-Mart Stores, Inc., 588 F.3d 585, 594 (8th Cir. 2009). "Specific facts are not necessary; the statement need only 'give the defendant fair notice of what the . . . claim is and the grounds upon which it rests.'" Erickson v. Pardus, 551 U.S. 89, 93 (2007) (quoting Twombly, 550 U.S. at 555). In order to survive a motion to dismiss under Fed. R. Civ. P. 12(b)(6), the plaintiff's obligation to provide the grounds for his entitlement to relief necessitates that thecomplaint contain "more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Twombly, 550 U.S. at 555.

In deciding a motion to dismiss under Rule 12(b)(6), a court must accept the allegations contained in the complaint as true and draw reasonable inferences in favor of the nonmoving party. Cole v. Homier Dist. Co., Inc., 599 F.3d 856, 861 (8th Cir. 2010). Determining whether a complaint states a plausible claim for relief is "a context-specific task" that requires the court "to draw on its judicial experience and common sense." Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009).

Courts follow a "two-pronged approach" to evaluate Rule 12(b)(6) challenges. Iqbal, 556 U.S. at 679. First, a court divides the allegations between factual and legal allegations; factual allegations should be accepted as true, but legal allegations should be disregarded. Id. Second, the factual allegations must be parsed for facial plausibility. Id. "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." Id. at 677. The Court should not "incorporate some general and formal level of evidentiary proof into the 'plausibility' requirement of Iqbal and Twombly." Whitney v. Guys, Inc., 700 F.3d 1118, 1128 (8th Cir. 2012). The question at this preliminary stage is not whether a plaintiff might be able to prove its claim, but whether it has "adequately asserted facts (as contrasted with naked legal conclusions) to support" those claims. Id.

The court must find "enough factual matter (taken as true) to suggest" that "discovery will reveal evidence" of the elements of the claim. Twombly, 550 U.S. at 558, 556. When the allegations in a complaint, however true, could not raise a claim of entitlement to relief, the complaint should be dismissed for failure to set a claim underFed. R. Civ. P. 12(b)(6). Twombly, 550 U.S. at 558; Iqbal, 556 U.S. at 679. Dismissal under Rule 12(b)(6) is appropriate only if it is clear that no relief can be granted under any set of facts that could be proven consistent with the allegations. O'Neal v. State Farm Fire & Cas. Co., 630 F.3d 1075, 1077 (8th Cir. 2011).

DISCUSSION

1. Review Under Fed. R. Civ. P. 12(c)

The Court will first make a determination as to whether this is a review under Fed. R. Civ. P. 12(c) or 12(b)(6). Baby Trend attached two documents to its motion for judgment on the pleadings, the production agreement between Baby Trend and Laredo (Agreement, Filing No. 52-2) and the seventh amended complaint from the previous litigation (Riberio Complaint, 12cv204, Filing No. 52-3). China Life alleges that the contract and district court decision attached to Baby Trend's Rule 12(c) motion for judgment on the pleadings converts the present motion to a motion for summary judgment, pursuant to Rule 12(d). China Life Opposition Brief, Filing No. 53, at 1-2. Baby Trend alleges the documents are embraced by the pleadings, and therefore should be considered under Rule 12(c). Baby Trend Reply Brief, Filing No. 54, at 1-2.

Generally, matters outside of the pleadings "may not be considered in deciding a Rule 12 motion to dismiss," unless the matters are embraced by the complaint. Zean v. Fairview Health Services, 858 F.3d 520, 526 (8th Cir. 2017) (quoting Enervations, Inc. v. Minn. Min. & Mfg. Co., 380 F.3d 1066, 1069 (8th Cir. 2004)). Items of public record may be considered without "converting the motion into one for summary judgment." Id. (quoting Miller v. Redwood Toxicology Lab, Inc., 688 F.3d 928, 931 n.3 (8th Cir. 2012)). Further, "[i]n a case involving a contract, the court may examine the contract documentsin deciding a motion to dismiss." Stahl v. U.S. Dep't of Agric., 327 F.3d 697, 700 (8th Cir. 2003).

As to the OPP Car Seat Production Agreement, the Court is persuaded by Baby Trend's argument² that these documents are (1) embraced by the pleadings, and (2) because one document is the contract in question while the other is a public document. Although the parties disagree as to the meaning of the clauses at issue, there is no disagreement on the specific language of the agreement. Therefore, this motion is properly considered under Rule 12(c) and will not be converted to a motion for summary judgment pursuant to Rule 12(d).

2. Choice of Law Analysis

The parties argue that a discussion of the merits of this motion begins with a choice of law analysis. The contract contains no choice of law provision and provides no information on the place of negotiation or signing. Baby Trend contends California law applies. China Life does not concede Baby Trend's argument but asserts there is no difference between California and Nebraska law.

A federal court sitting in diversity applies the forum state's choice of law rules. See Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496 (1941); DCS Sanitation Management, Inc. v. Castillo, 435 F.3d 892, 895 (8th Cir. 2006). The Nebraska Supreme Court has held, "that before entangling itself in messy issues of conflict of laws, a court ought to...