Third-Party Defendant Not Responsible for Indemnifying Brake Supplier Prior to Existence

U.S. District Court for the Western District of Kentucky, Owensboro Division, November 12, 2020

Plaintiff Jack Papineau was employed by Smith Coal from 1984 to 1992. In his complaint against multiple defendants, including Brake Supply, he alleged that he contracted mesothelioma from exposure to asbestos-containing friction products during his employment at Smith Coal. The plaintiff alleged that Brake Supply purchased friction products from suppliers and resold the products by either using the products to reline brakes or reselling parts.

Brake Supply filed a Third-Party Complaint and an Amended Third-Party Complaint, alleging common law indemnity and apportionment under K.R.S. §411.182 against Carlisle Industrial Brake and Friction, Inc., Fras-le North America, Fras-le S.A. and Rudd Equipment Company. Fras-le North America, a domestic corporation, is a subsidiary of Fras-le S.A, a Brazilian corporation. The court permitted Brake Supply to conduct discovery for service of process and personal jurisdiction regarding Fras-le S.A. Thereafter, Fras-le North America moved for summary judgment against Brake Supply. In turn, Brake Supply moved to hold Fras-le North America’s motion in abeyance.

The court first considered Rule 56(d) since it is on that basis that Brake Supply requests to hold Fras-le North America’s motion in abeyance. Federal Rule of Civil Procedure 56(d) governs when facts are unavailable to the non-movant: “if a non-movant shows by affidavit or declaration that, for specified reasons, it cannot present facts essential to justify its opposition, the court may: (1) defer considering the motion or deny it; (2) allow time to obtain affidavits or declarations or to take discovery; or (3) issue any other appropriate order.”

“Beyond the procedural requirement of filing an affidavit, Rule 56(d) has been interpreted as requiring that a party making such a filing indicate to the district court its need for discovery, what material facts it hopes to uncover, and why it has not previously discovered the information.” United States v. Kentucky Manor Apartments, Ltd., No. 15-CV-00167, 2016 WL 1261157, at *1 (W.D. Ky. Mar. 30, 2016). “If an affidavit makes only general and conclusory statements regarding the need for more discovery, then denial of the request for more discovery is proper.” Id. 

In support of its motion, Brake Supply submitted an affidavit of counsel.  The affidavit explained that at the time Fras-le North America moved for summary judgment, Brake Supply was in the process of seeking discovery from Fras-le S.A. Fras-le S.A. moved for a protective order to preclude Brake Supply from taking discovery on issues focused on any alter-ego status regarding Fras-le S.A.  The affidavit stated that the alter-ego topics in dispute are relevant to Brake Supply’s arguments in opposition to Fras-le North America’s motion for summary judgment because the information may rebut Fras-le North America’s argument that it cannot be held liable to Brake Supply for indemnity.

The court considered the following factors under the Rule 56(d) motion: “(1) when Brake Supply learned of the issue that is the subject of the desired discovery; (2) whether the desired discovery would change the potential ruling of the District Court; (3) how long the discovery period had lasted prior to the dispositive motion; (4) whether Brake Supply was dilatory in their discovery efforts; and (5) whether Fras-le North America was sufficiently responsive to discovery requests.” Brown v. Tax Ease Lien Servicing, LLC, No. 15-CV-208, 2017 WL 6940734, at *9 (W.D. Ky. May 25, 2017).

Using the above factors, the court found that since Brake Supply did not present its piercing of the corporate veil theory in its Third-Party Complaint or Amended Third-Party Complaint, waited until the last minute before the discovery deadline to request additional discovery regarding the alter-ego argument and never asserted that Fras-le North America was unresponsive to discovery prior to the discovery deadline, that four out of the five factors weighed against holding the motion for summary judgment in abeyance. Therefore, the court denied Brake Supply’s motion to hold Fras-le North America’s motion for summary judgment in abeyance.

After denying Brake Supply’s motion, the court considered Fras-le North America’s motion for summary judgment under Rule 56(a). “Before the Court may grant a motion for summary judgment, it must find that there is no genuine dispute as to any material fact and that the moving party is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). The Federal Rules of Civil Procedure require the nonmoving party to present specific facts showing that a genuine factual issue exists by “citing to particular parts of materials in the record” or by “showing that the materials cited do not establish the absence . . . of a genuine dispute[.]” Fed. R. Civ. P. 56(c)(1). “The mere existence of a scintilla of evidence in support of the [non-moving party’s] position will be insufficient; there must be evidence on which the jury could reasonably find for the [non-moving party].” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986).

In Kentucky a party may recover under common law indemnity in two classes of cases: “(1) where the party claiming indemnity has not been guilty of any fault, except technically, or constructively, as where an innocent master was held to respond for the tort of his servant acting within the scope of his employment; or (2) where both parties have been in fault, but not in the same fault, towards the party injured, and the fault of the party from whom indemnity is claimed was the primary and efficient cause of the injury.” Adams v. Family Dollar Stores of Ky., LP #11504, No. 19-CV-167, 2019 WL 6107857, at *4 (W.D. Ky. Nov. 15, 2019).  The second class of cases is relevant here in deciding the motion. The Court had to consider if there was enough evidence for a reasonable jury to determine that Fras-le North America was the primary, active tortfeasor and that Brake Supply was the secondary, passive tortfeasor.

Here, Fras-le North America did not exist until 1990, which is after the time that Brake Supply stopped selling asbestos-containing friction products. Also, Fras-le S.A. did not acquire Fras-le North America until 1995, which is after the relevant time period of 1984 to 1992. Accordingly, the court found that Fras-le North America could not be held responsible for indemnifying Brake Supply for the plaintiff’s alleged injuries that occurred before Fras-le North America existed.  Thus, Fras-le North America’s motion for summary judgment was granted.