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GANTON TECHS. v. QUADION CORP.

December 21, 1990

GANTON TECHNOLOGIES, INC., Plaintiff,
v.
QUADION CORPORATION and O.H. MATERIALS CORPORATION, Defendants, and QUADION CORPORATION, Third-Party Plaintiff, v. H.D.R. INFRASTRUCTURE, INC., et al., Third-Party Defendants


James F. Holderman, United States District Judge.


The opinion of the court was delivered by: HOLDERMAN

JAMES F. HOLDERMAN, UNITED STATES DISTRICT JUDGE

 Third-party plaintiff Quadion Corporation ("Quadion") brought this action against third-party defendant H.D.R. Infrastructure, Inc. ("HDR") alleging breach of contract, negligence, and entitlement to indemnification and/or contribution. HDR has moved to dismiss this third-party complaint under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief may be granted. For the reasons stated below, the court grants HDR's motion in part and denies HDR's motion in part.

 FACTS

 The facts alleged in the third-party complaint are as follows. On or about March 24, 1986, Quadion and HDR entered into a contract whereby HDR would provide engineering observation services at Quadion's Addison Die Casting facility in Addison, Illinois (the "Site"). The services were to be performed during the course of remediation activities at the Site conducted by O.H. Materials ("OHM") to clean up PCB contamination to a level set forth in a contract between Quadion and OHM. (Complaint, para. 5.) Throughout the cleanup activities, HDR was Quadion's representative at the Site and oversaw OHM's remediation activities. (Complaint, para. 7.)

 On or about April 15, 1987, Quadion was informed by counsel for Metalmasters, Inc. (or Ganton Technologies, Inc. ("Ganton")), its successor-in-interest to the Site, that additional PCB contamination had been discovered on the Site. (Complaint, para. 9.) Since this discovery, Quadion has incurred additional response costs investigating and disposing of the PCB contamination. Ganton, too, has expended funds for PCB cleanup. (Complaint, paras. 10-11.) On or about September 13, 1989, Ganton served a summons and complaint upon Quadion alleging that it is entitled to recover damages from Quadion arising from the PCB contamination at the Site. (Complaint, para. 12.) In response, Quadion brought this third-party action against HDR on October 13, 1989.

 DISCUSSION

 I. CHOICE OF LAW

 The parties agree that the breach of contract claim (Count I) is governed by Nebraska law in accordance with the choice of law provision in the contract. However, the parties disagree over which state's law applies to the negligence and contribution/indemnification claim. Quadion believes Illinois law applies, and HDR claims that Nebraska law applies.

 In diversity actions, the court is bound to apply the law of the forum state, including its choice of law rules. U.S. Fire Ins. Co. v. Beltmann North American Co., 883 F.2d 564, 565-66 (7th Cir. 1989). In tort cases, including third-party actions for contribution and indemnification, Illinois has adopted the "most significant relationship" test. Miller v. Long-Airdox Co., 914 F.2d 976 (7th Cir. 1990); Albert Trostel & Sons Co. v. Canadian Imperial Bank of Commerce, No. 82 C 7536, slip op. (N.D. Ill. August 21, 1984) This test seeks to find which state bears the most significant relationship to the occurrence and the parties involved in the action, and then applies that state's laws. Id. Courts analyze several contacts to determine which state has the most significant relationship to the litigation. Id. Generally, in a tort case, the two most important contacts are the place where the injury occurred and the place where the conduct causing the injury occurred. Id.1

 The negligent conduct alleged by Quadion occurred in Illinois. While the question of where the injury occurred is a more difficult question, it was clearly not in Nebraska, a state to which Quadion has no significant connection. The parties' relationship is centered in Illinois since that is where the contract called for HDR to provide engineering observation services for Quadion. Together these factors establish that the occurrence and the parties here have a more significant relationship with Illinois than Nebraska. Thus, the court will apply Illinois law to Counts II and III.

 II. COUNT I: BREACH OF CONTRACT

 In Count I, Quadion alleges that HDR materially breached its contract with Quadion in that it failed to provide engineering observation services in a reasonable and prudent manner. (Complaint, para. 8.) Under the subheading "Standard of Performance and No Warranties," the contract states:

 
All services of ENGINEER [H.D.R.] and its independent professional associates, consultants and subcontractors will be performed in a reasonable and prudent manner in accordance ...

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