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Rigdon v. Flowserve Corp.

United States District Court, N.D. Oklahoma

March 23, 2017

MICHELLE RIGDON, individually, and as Widow and Next of Kin of GREG RIGDON, deceased, Plaintiff,
v.
FLOWSERVE CORPORATION, et al., Defendants.

          OPINION AND ORDER

          GREGORY K. FRIZZELL, CHIEF JUDGE UNITED STATES DISTRICT COURT

         Before the court is the plaintiffs' Motion for Partial Summary Judgment [Doc. No. 108');">8]. For the reasons set forth below, the motion is denied.

         I. Background

         This dispute arises from an explosion at an oil refinery in Coffeyville, Kansas on July 29, 2014. That refinery-Coffeyville Resources Refining & Marketing, LLC (“CRRM”)-is an operating subsidiary of defendant CVR Refining L.P. (“CVR Refining”) and indirectly owned subsidiary of defendant CVR Energy, Inc. (“CVR Energy”) (collectively, “the CVR defendants”). [Doc. No. 108');">8-5, p. 2]; [Doc. No. 142-2]; [Doc. No. 142, p. 10, ¶ 5] (noting “CVR Energy owns 66% of CVR Refining”). On December 31, 2012, CVR Energy executed a Services Agreement to provide subsidiaries-including CRRM-certain services, including safety advice and asset management. [Doc. No. 108');">8-7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7, p. 31');">p. 31].

         Plaintiffs argue the Services Agreement created a duty on the part of CVR Energy to provide a safe working environment for CRRM employees. Specifically, plaintiffs contend the CVR defendants assumed responsibility for pump P-2217');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7-whose seal failure triggered the explosion in this case. The CVR defendants dispute that characterization, arguing plaintiffs misread and lack standing under the Services Agreement.

         II. Legal Standard

         Summary judgment shall be granted if “there is no genuine issue as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). A dispute is “genuine” if the evidence permits a rational trier of fact to resolve the issue either way. Adler v. Wal-Mart Stores, Inc., 144 F.3d 644, 67');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">70 (10th Cir. 1998');">8). A fact is “material” if it is essential to the outcome of the case. Id. On review, a court must examine the record in the light most favorable to the party opposing summary judgment. Wolf v. Prudential Ins. Co. of Am., 50 F.3d 7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">793');">50 F.3d 7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">793, 7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">796 (10th Cir. 1995). “In contract actions, the interpretation of a written agreement is a question of fact.” See SCO Grp., Inc. v. Novell, Inc., 57');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">78');">8 F.3d 1201');">57');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">78');">8 F.3d 1201, 1214 (10th Cir. 2009) (citing Gomez v. Am. Elec. Power Serv. Corp., 7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">726 F.2d 649');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">726 F.2d 649, 651 (10th Cir. 198');">84)). And “‘in an ambiguous contract, if the intent of the parties is disputed, a genuine issue of material fact exists which cannot be determined summarily by the court.'” See Ultra Clean Holdings, Inc. v. TFG-Cal., L.P., 534 Fed. App'x 7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">77');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">76, 7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">78');">80 (10th Cir. 2013) (quoting Gomez, 7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">726 F.2d at 651).

         III. Analysis

         Under Kansas law, an employer owes a non-delegable duty to provide employees a safe workplace. See Allen v. Shell Petroleum Corp., 8');">8 P.2d 651');">68');">8 P.2d 651, 657');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7 (Kan. 1937');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7); accord Howard v. TMW Enter., Inc., 1998');">8 WL 404358');">8, at *2 (D. Kan. July 8');">8, 1998');">8). To that end, a corporation is not responsible for the working conditions of a subsidiary's employees solely on the basis of a parent-subsidiary relationship. See Smith v. Atl. Richfield Co., 8');">814 F.2d 148');">81');">8');">814 F.2d 148');">81, 148');">88');">8 (10th Cir. 198');">87');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7); Malkiewicz v. R.R. Donnelly & Sons Co., 7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">703 F.Supp. 49');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">703 F.Supp. 49, 51 (W.D. Tenn. 198');">89); AgriStor Leasing v. Meuli, p. 1208');">8');">634 F.Supp. 1208');">8, 1213 (D. Kan. 198');">86) (“The law in Kansas is that a holding or parent corporation has a separate corporate existence and is treated separately from its subsidiary in the absence of circumstances justifying disregard of the corporate entity.”).

         An entity that voluntarily “undertakes to improve safety for [ ] workers, ” however, “becomes potentially liable under § 324A” of the Restatement (Second) of Torts. See Malkiewicz, 7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">703 F.Supp. At 51; Schmeck v. City of Shawnee, 51 P.2d 58');">85');">651 P.2d 58');">85, 597');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7 (Kan. 198');">82) (adopting theory of liability espoused in Restatement (Second) of Torts § 324A). “Neither mere concern with nor minimal contact about safety matters” will suffice. See Muniz v. Nat'l Can Corp., 7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">737');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7 F.2d 145, 148');">8 (1st Cir. 198');">84). Instead, to be held liable, a parent company must take affirmative action to provide a safe working environment at a subsidiary. See Id. Such liability “might originate in a contractual duty.” See First Nat'l Bank of Camden, Ark. v. Tracor, Inc., 8');">851 F.2d 212');">8');">851 F.2d 212, 214 (8');">8th Cir. 198');">88');">8); see also Ingram v. Howard-Needles-Tammen & Bergendoff, 7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">72 P.2d 108');">83');">67');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">72 P.2d 108');">83, 108');">88');">8 (Kan. 198');">83); Johnson v. Bd. of Cty. Com'rs of Pratt Cty., 913 P.2d 119, 130 (Kan. 1996).

         Here, CVR Energy contracted to provide safety advice to CRRM. By its plain terms, the Services Agreement was made “for the benefit” of certain refining subsidiaries, including CRRM. [Doc. No. 108');">8-7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7, p. 1]. Specifically, CVR Energy agreed “to provide certain services necessary to operate the business conducted by the” refining subsidiaries, including safety advice, management of “day-to-day business, ” “compliance with applicable law, ” and asset management. [Id. at 1, 31]. In filings with the SEC, CVR Refining described the Agreement as obligating CVR Energy to “conduct a substantial portion of its day-to-day business operations, including the management of “the property of its operating subsidiaries in the ordinary course of business” and “providing safety and environmental advice.” [Doc. No. 108');">8-8');">8, p. 3]. Such services were required to conform to applicable laws and industry standards. [Doc. No. 108');">8-7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7, p. 5] (“The Services shall be provided in accordance with . . . applicable material Governmental Approvals and Laws . . . [and] applicable industry standards.”). And in return, CVR Energy received $13.6 million in 2013 and 2014. [Doc. No. 108');">8-8');">8, p. 4].

         The CVR defendants respond that: (1) plaintiffs lack standing to enforce the Services Agreement; and (2) the Agreement is a cost-allocation mechanism, not a safety services contract. The court considers each argument in turn.

         A. Standing

         The CVR defendants argue that plaintiffs lack standing to assert claims under the Services Agreement. That argument elides the distinction between contract and tort law. “‘A party to a contract. . . may place himself in such a position that the law will impose upon him a duty to perform his contractual undertaking in such manner that third persons-strangers to the contract-will not be injured thereby.'” See Lowrimore v. Severn Trent Envt'l Servs., Inc., No. CIV-15-47');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">75-RAW, 2016 WL 28');">858');">88');">822, at *2 (E.D. Okla. May 16, 2016) (quoting Furlan v. Schinder Elevator Corp., 516 Fed. App'x 201, 208');">8 (3d Cir. 2013)). In other words, when a parent corporation undertakes a duty owing directly to third parties, Kansas tort law separately requires performance of that duty with reasonable care. Spires v. Hospital Corp. of Am., 28');">89 F. App'x 269, 27');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">72 (10th Cir. 2008');">8); see also Cunningham v. Braum's Ice Cream & Dairy Stores, 8');">80 P.3d 35');">8');">80 P.3d 35, 40-41 (Kan. 2003); Chadwell v. Clements, 8');">847');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7 P.2d 1344');">8');">847');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7');">7 P.2d 1344, 1349 (Kan.Ct.App. 1993) (“§ 324A applies to injuries to third parties.”); ...


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