Co-Defendant’s Cross-Claim for Indemnification/Contribution Denied Due to Failure to Plead Sufficient Factual Basis to Support the Claim

Arguetta v. McGill Airflow, LLC, Civ. No. JKB-11-1102(D. Md.) (Jan. 4, 2012).

Gillermo Arguetta (the “Plaintiff”) brought a products liability suit after sustaining injures while using a tool called a Leak Detective Testing Kit (“Leak Detective”).  The Plaintiff filed suit against McGill Airflow, LLC, McGill Airsilence, LLC, United McGill Corporation (hereinafter, collectively “McGill Defendants”) and the Cincinnati Fan. Co. (“CFC”), claiming the Leak Detective was negligently designed and/or manufactured.  The Complaint alleged that while the Plaintiff was using the Leak Detective to locate and seal leaks at a bio-medical facility, his hand was sucked through the machine’s air inlet and into its unguarded fan housing.  The blade of the fan struck the Plaintiff’s hand, and crushed the bones in three (3) of his fingers, which then had to be amputated.

Initially, the Plaintiff filed suit in the Circuit Court for Frederick County against only the McGill Defendants, whom he alleged designed, manufactured and distributed the Leak Detective.  The McGill Defendant’s removed this case to federal court on April 27, 2011. Subsequently, during a joint physical inspection of the Leak Detective, the parties discovered labels under the machine’s fan indicating that the fan was actually manufactured by CFC.  Soon thereafter, the Plaintiff filed an Amended Complaint, adding CFC as a Defendant.  The McGill Defendants then moved for leave to file a Cross-Claim against CFC for indemnification and contribution.

CFC attacked the McGill Defendants’ motion and underlying Cross-Claim on three (3) grounds: (1) that the motion was untimely; (2) that the Cross-Claim would be more appropriately adjudicated in state court; and (3) that the Cross-Claim failed to allege a sufficient factual basis to properly support a claim for indemnification or contribution.  The Court found the first two arguments to be without merit and did not consider them; however, the Court agreed with CFC that the McGill Defendants’ proposed Cross-Claim was factually deficient and therefore failed to state a claim upon which relief could be granted.

The Court held that the Cross-Claim alleged no facts supporting even an inference that McGill was entitled to the relief that it sought.  To the contrary, the Court found that the Cross-Claim did little more than describe the parties and subject matter of the underlying action, and make conclusory declarations that it was entitled to indemnification and contribution from CFC if it was found liable to the Plaintiff.

Essentially, because the McGill Defendants’ Cross-Claim failed to meet the basic pleading standards of Fed. R. Civ. P. 8(c), the Cross-Claim could not survive a Motion to Dismiss under Fed. R. Civ. P. 12(b)(6) (failure to state a claim upon which relief can be granted, or, in more archaic legalese, a “demurrer”).  The McGill Defendants’ Motion for Leave to File the Cross-Claim was therefore denied without prejudice.  The Court stated that the McGill Defendants were free to renew their motion to set out a plausible legal theory, with adequate factual support, under which CFC would be liable to them for indemnity and contribution.

In retrospect, in order to set forth an adequate factual basis to support the Cross-Claim, the McGill Defendants might have pled that CFC failed to install the requisite safety mechanisms or failed to warn of the possibility of the machine’s hazardous and un-guarded fan housing.  This would likely have been a sufficient factual basis to support the McGill Defendants’ claim for entitlement to indemnity or contribution.  Had they done this, reasonable inferences could have been drawn that CFC might be found liable to the McGill Defendants for indemnification and contribution, and the Court could very well have granted their Motion for Leave to File the Cross-Claim.  

The rules relating to pleading in both state and federal courts have been greatly relaxed over the course of the past several decades.  Relaxed though they might be, a party must still plead sufficient facts to support any claim for entitlement to relief.  Bald assertions and conclusory allegations by the pleader will not suffice.  

Article contributed by James Buck

RSRM Featured in Baltimore Business Journal

         The February 16, 2012, edition of the “Baltimore Business Journal” listed the 50 largest law firms in Baltimore and the surrounding area.  RSRM was again featured in this list.  

         Additionally, RSRM, which was founded in 1919, is again listed in the top 10 oldest firms in the Baltimore area.  RSRM continues to pride itself on the Firm’s reputation in the legal community and looks forward to its ongoing success and growth.    

When no overtime can equal more money to a claimant

In Montgomery County v. Deibler, 423 Md. 54 (2011), the Court of Appeals recently held that a loss of ability to work overtime, and the loss of the overtime compensation, is a lessening of an injured employee’s wage earning capacity, as defined in the Labor & Employment Article, §9-615.

The Claimant in this case was injured twice – first on November 26, 2006 and then on March 5, 2008.  Both injuries involved his knee.  Those two injuries, and the physical restrictions that followed, forced the Claimant from his regular duties as a firefighter. 

Prior to his injuries, the Claimant worked 96 hours of non-overtime work on a bi-weekly basis as a firefighter.  After his injuries, the Claimant was placed on “light-duty” and only worked 80 hours on a bi-weekly basis.  However, this reduction in hours did not affect his salary.  Montgomery County boosted his hourly wage and maintained all of his cost of living adjustments and benefits.  This guaranteed that the Claimant earned the same amount of base pay after his injuries as he did prior to his injuries. 

The payroll records showed that the 14 weeks prior to each of his injuries, the Claimant worked 11.9 and 15.4 overtime hours each week, respectively.  Due to physical restrictions after his injuries, the Claimant was unable to work any significant overtime and while on light duty his overtime average was approximately one hour per week.  This translated to nearly an $800.00 per week reduction in income for the Claimant, after he was placed on light duty, following each of his injuries. 

Claimant filed Issues with the Workers’ Compensation Commission (“Commission”), requesting payment of temporary partial disability (“TPD”) benefits.  Maryland law creates a two-step process for payment of TPD benefits.  The first requires a reduction in the claimant’s wage earning capacity.  One this is met, the claimant is entitled to one-half of the difference between his or her pre-injury average weekly wage and his post-injury wage earning capacity.  The Commission found that the Claimant had experienced a reduction in wage earning capacity, and ordered that TPD be paid.  Montgomery County appealed the Commission’s order.  The Circuit Court affirmed the Commission’s order.  Montgomery County again appealed, this time to the Court of Special Appeals.  Before the case could be heard, the Court of Appeals issued a writ of certiorari, taking the case. 

The Court of Appeals held that the term “wage” as used in “wage earning capacity” “includes compensation paid for overtime hours worked prior to temporary partial disability.” 

Among other things, this holding makes the calculation of the Claimant’s average weekly wage (“AWW”), using wages paid during the 14 weeks preceding the accident, all the more important.  If the AWW is not correctly calculated, or the figures used to calculate the AWW are not accurate due to poor record keeping, it opens up the potential for serious additional exposure.  

Article contributed by Andy Nichols

Form 8 Late? It Could Co$t You

It appears that the Office of Workers Compensation has recently made the decision to emphasize § 32-1532 of the District of Columbia Workers’ Compensation Act of 1979, which states in relevant part:

(a) Within 10 days from the date of any injury or death or from the date that the employer has knowledge of a disease or infection in respect of such injury, the employer shall send to the Mayor a report setting forth: (1) the name, address, and business of the employer; (2) the name, address, and occupation of the employee; (3) the cause and nature of the injury or death; (4) the year, month, day, and hour when and the particular locality where the injury or death occurred; and (5) such other information as the Mayor may require.

…

(e) Any employer who fails or refuses to send any report required of him by this section shall be subject to a civil penalty not to exceed $1,000 for each such failure or refusal.

While the statute itself is certainly not new, the OWC has recently begun to issue Show Cause Order’s to employers/insurers in instances where the Employer’s First Report (Form 8) was filed late - requesting an explanation as to why.  Based upon the explanation provided, the fine may be enforced, reduced, or waived.

Whether this decision was the result of increasing numbers of Form 8’s being filed late, delaying the claim process (the official explanation) or a method to increase revenue – employers and carriers need to be aware that the decision has been made.

Article contributed by Scott Massengill