United States District Court, D. Vermont
OPINION AND ORDER (Doc. 53)
JOHN M. CONROY, Magistrate Judge.
This diversity action stems from a fire that destroyed a garage and damaged a dwelling on property that Plaintiffs David Bisson and Suzanne Brosseau (the "Bissons") were leasing to Defendants Alycia Horn (now Alycia Reppel) and Jeremy Reppel (the "Reppels"). According to the Amended Complaint, the Reppels had allowed Defendant Joseph Yared to reside at the property in violation of the lease, and the fire was caused by Yared's attempt to charge a car battery in the garage. (Doc. 36 at 3-4.) The Bissons allege that Yared had left the charger attached overnight for several days. ( Id. at 3.)
Previously in this case, the Court dismissed the Bissons' negligence and negligent-supervision claims against the Reppels. (Doc. 21.) The remaining claims are the Bissons' negligence claim against Yared, and their breach-of-contract claim against the Reppels. On April 2, 2014, the Court granted the Bissons' motion to amend their contract claim, (Doc. 35), and the Bissons thereafter filed their Amended Complaint (Doc. 36). On April 17, 2014, the Reppels filed an Answer as well as a Cross-Claim for implied indemnity against Yared. (Doc. 42.)
Currently pending before the Court is Yared's Rule 12(b)(6) Motion to Dismiss the Reppels' Cross-Claim (Doc. 53). Yared argues that the doctrine of implied indemnity does not apply because the Reppels' alleged violation of the lease (i.e., permitting him to reside at the premises) was an active cause of the fire and resulting damage. The Reppels oppose Yared's Motion. (Doc. 55.) Yared filed a Reply on June 30, 2014. (Doc. 58.) All parties have consented to direct assignment to the undersigned Magistrate Judge. (Docs. 2, 7, 16.) For the reasons stated below, Yared's Motion to Dismiss the Reppels' Cross-Claim (Doc. 53) is DENIED.
The factual allegations in the Reppels' Cross-Claim are as follows. On April 19, 2011, the Reppels entered into a lease with the Bissons to rent real property (the "Property") located in Colchester, Vermont for the period of May 1, 2011 to June 30, 2012. Beginning in December 2011, the Reppels allowed Yared to reside at the Property when he was in Vermont.
On April 29, 2012, a fire destroyed the garage and severely damaged the dwelling unit at the Property. At the time of the fire, Yared was allegedly attempting to charge the car battery of a Porsche in the garage. The fire originated in the vicinity of the Porsche. The Reppels were not in the State of Vermont at the time of the fire.
The Bissons allege that the Reppels breached the lease by failing to return the Property in the same condition as it was at the start of the lease, by failing to indemnify the Bissons under the terms of the lease, and by allowing Yared to reside at the property in violation of a lease term limiting the number of occupants to two.
I. Rule 12(b)(6) Standard
To survive Yared's Motion to Dismiss under Fed.R.Civ.P. 12(b)(6), the Reppels' Cross-Claim "must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.'" Nielsen v. Rabin , 746 F.3d 58, 62 (2d Cir. 2014) (quoting Ashcroft v. Iqbal , 556 U.S. 662, 678 (2009)); see also Fed.R.Civ.P. 8(a)(2). The Court must accept the factual allegations in the Cross-Claim as true and draw all reasonable inferences from those allegations in favor of the Reppels. Nielsen , 746 F.3d at 62. The Reppels' Cross-Claim is facially plausible only if it "pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Krys v. Pigott , 749 F.3d 117, 128 (2d Cir. 2014) (quoting Iqbal , 556 U.S. at 678).
II. Vermont's Law of Implied Indemnity
As the Court previously noted, the substantive law of Vermont applies in this diversity case. (Doc. 21 at 4.) The Reppels have the burden of establishing their right to indemnification. See White v. Quechee Lakes Landowners' Ass'n, Inc. , 170 Vt. 25, 31, 742 A.2d 734, 738 (1999). "The right to indemnity is an exception to the longstanding rule in Vermont barring contribution among joint tortfeasors." Knisely v. Cent. Vt. Hosp. , 171 Vt. 644, 646, 769 A.2d 5, 8 (2000) (mem.) (citing Chapman v. Sparta , 167 Vt. 157, 159, 702 A.2d 132, 134 (1997)). "Indemnity is available where (1) an express agreement or undertaking by one party to indemnify the other exists or (2) circumstances require the law to imply such an undertaking." City of Burlington v. Arthur J. Gallagher & Co. , 173 Vt. 484, 486, 788 A.2d 18, 21 (2001) (mem.) (citing Bardwell Motor Inn, Inc. v. Accavallo , 135 Vt. 571, 572, 381 A.2d 1061, 1062 (1977)).
Because "indemnification shifts the entire loss from one party to another, one who has taken an active part in negligently injuring another is not entitled to indemnification from a second tortfeasor who also negligently caused the injury." White , 170 Vt. at 29, 742 A.2d at 737 (internal citation omitted). "[I]ndemnity is a right accruing to a party who, without active fault, has been compelled by some legal obligation, such as a finding of vicarious liability, to pay damages occasioned by the negligence of ...