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Great-West Financial Retirement Plan Services, LLC v. Computer Consulting Services of America, Inc.

United States District Court, D. Kansas

August 23, 2019

GREAT-WEST FINANCIAL RETIRMENT PLAN SERVICES, LLC, Third-Party Plaintiff,
v.
COMPUTER CONSULTING SERVICES OF AMERICA, INC. d/b/a CLIENTSOLV TECHNOLOGIES, Third-Party Defendant.

          MEMORANDUM AND ORDER

          CARLOS MURGUIA, UNITED STATES DISTRICT JUDGE

         This matter comes before the court on third-party defendant Computer Consulting Services of America, Inc. d/b/a ClientSolv Technologies' Motion for Judgment on Pleadings (Doc. 75) and third-party plaintiff Great-West Financial Retirement Plan Services, LLC's Motion for Judgment on the Pleadings (Doc. 78). In dispute is whether third-party defendant is obligated under its agreement with third-party plaintiff to indemnify third-party plaintiff for its cost of defending this action. For the reasons below, the court grants third-party defendant's motion and denies third-party plaintiff's motion.

         I. Background

         In 2006, third-party plaintiff entered into a contract with Corporate Employment Resources, Inc. (“CoreStaff”) in which CoreStaff agreed to provide temporary workers to third-party plaintiff. On June 28, 2010, CoreStaff and third-party defendant entered into an agreement under which third-party defendant agreed it would supply temporary workers to third-party plaintiff. In October 2015, third-party defendant placed plaintiff Tom Pattison (“Pattison”) as a temporary employee with third-party plaintiff. Pattison and third-party defendant had an employment agreement which contained an arbitration provision. On March 2016, CoreStaff and third-party defendant entered into another contractual agreement (“the agreement”) in which CoreStaff subcontracted its temporary services provision to third-party defendant. Third-party plaintiff is an express third-party beneficiary to the agreement.

         Third-party plaintiff terminated Pattison's temporary employment on August 25, 2016. Pattison then filed a petition against third-party plaintiff in Johnson County District Court on February 6, 2017, alleging statutory and common law claims arising from his termination. The case was removed to this court on March 3, 2017, and Pattison's claims were dismissed on July 10, 2018.

         In response to Pattison's petition, third-party plaintiff requested indemnification from third-party defendant pursuant to the indemnification provision in the agreement. Despite the timely notifications, third-party defendant rejected the demand for indemnification claiming that Pattison's claims arose from the “intentional misconduct” of third-party plaintiff-excluding them from the indemnification provision set forth in the agreement. Third-party plaintiff renewed its demand for indemnification to third-party defendant pursuant to the agreement. Third-party defendant again rejected this demand on May 23, 2017. On July 7, 2017, third-party plaintiff filed its third-party complaint alleging breach of contract for refusing to indemnify it in the action filed by Pattison. On September 21, 2018, third-party defendant filed a third-party motion for judgment on pleadings arguing that the lawsuit arose out of “intentional misconduct” by third-party plaintiff, rendering the indemnification clause unenforceable. On October 12, 2018, third-party plaintiff filed an opposing motion for judgment on the pleadings, claiming that third-party defendant breached their contractual obligations. Third-party plaintiff requests relief in the form of fees, including costs for defense in the suit with Pattison, attorney's fees, and court costs.

         II. Legal Standards

         When considering a Rule 12(c) motion for judgment on the pleadings, the court evaluates the motion under the same standard as a Rule 12(b)(6) motion to dismiss. Turner v. City of Tulsa, 525 Fed.Appx. 771, 772 (10th Cir. 2013). Under Rule 12(b)(6), a court may dismiss a complaint for “failure to state a claim upon which relief can be granted.” Rule 8(a)(2) states that a pleading must contain “a short and plain statement of the claim showing that the pleader is entitled to relief.” To withstand a motion to dismiss under 12(b)(6), a complaint must contain “enough allegations of fact, taken as true, ‘to state a claim to relief that is plausible on its face.'” Khalik v. United Air Lines, 671 F.3d 1188, 1190 (10th Cir. 2012) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007)). A claim is plausible when “the pleaded factual content allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 663 (2009). When the complaint contains well-pleaded factual allegations, a court should “assume their veracity and then determine whether they plausibly give rise to an entitlement to relief.” Id.

         “All well-pleaded facts, as distinguished from conclusory allegations, must be taken as true.” Swanson v. Bixler, 750 F.2d 810, 813 (10th Cir. 1984); see also Ashcroft v. Iqbal, 129 S.Ct. 1937, 1951 (2009). The court construes any reasonable inferences from these facts in favor of the plaintiff. Tal v. Hogan, 453 F.3d 1244, 1252 (10th Cir. 2006). The issue in reviewing the sufficiency of a complaint is not whether the plaintiff will prevail, but whether the plaintiff is entitled to offer evidence to support his claims. Scheuer v. Rhodes, 416 U.S. 232, 236 (1974), overruled on other grounds by Harlow v. Fitzgerald, 457 U.S. 800 (1982).

         III. Analysis

         At issue in the parties' competing motions for judgment on the pleadings is whether third-party defendant is obligated under its agreement with third-party plaintiff to indemnify third-party plaintiff for the costs of defending this action. The relevant provision in the agreement states:

[Third-party defendant] shall defend, indemnify and hold harmless [third-party plaintiff] and CORESTAFF from any and all claims, damages, suits, judgments, fines, settlements, or liabilities of any kind either CORESTAFF or [third-party plaintiff] may incur which are arising from or related to: . . . (b) any claim or suit asserted by any employee of [third-party defendant] against [third-party plaintiff] or CORESTAFF (except where such suit arises out of the intentional misconduct of CORESTAFF or [third-party plaintiff] . . . .

(Doc. 77-1, at 13.) The term “intentional misconduct” is not defined within the agreement. To resolve the dispute, the court must determine whether third-party plaintiff's alleged actions against Pattison were intentional misconduct that fall outside the scope of the indemnification provision.

         It is undisputed that the agreement contains a choice of law provision that provides that the agreement is to be interpreted and enforced under Colorado law. “Under Colorado law, indemnity provisions are governed generally by the same rules of construction that govern other contract provisions.” Five Rivers Ranch Cattle Feeding LLC v. KLA Env't Srvs, Inc., No. 08-2185-EFM, 2010 WL 2609426, at *4 (D. Kan, June 25, 2010) (citing Mid Century Ins. Co. v. Gates Rubber Co., 43 P.3d 737, 739 (Colo. Ct. App. 2002)). Indemnity provisions, therefore, “are generally construed to effectuate the parties' intentions.” Id. To ascertain the ...


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