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United States Conference of Mayors v. Great-West Life & Annuity Insurance Co.

United States District Court, District of Columbia

December 8, 2017

UNITED STATES CONFERENCE OF MAYORS, et al., Plaintiffs,
v.
GREAT-WEST LIFE & ANNUITY INSURANCE CO., Defendant.

          MEMORANDUM OPINION

          Thomas F. Hogan Senior United States District Judge.

         Defendant Great-West Life & Annuity Insurance Company (“Great-West” or Defendant) has moved to preclude the United States Conference of Mayors and United States Mayor Enterprises, Inc. (collectively, “the Mayors” or Plaintiffs) from presenting evidence, testimony, and argument relating to categories of damages that Great-West claims their contract excluded in what Great-West argues is an exclusive remedies provision governing all claims in the contract. Def. Mot. in Limine to Exclude Improper Damages Evidence, Testimony, and Argument, at 1-2, ECF No. 98 (hereinafter Mot. to Exclude). Plaintiffs respond that Great-West refers to language that appears in the contract's indemnification section and refers to third-party claims, but not to disputes arising between the parties. Each party argues that the contract unambiguously supports its view. Upon consideration of the motion, opposition, contract language, and relevant case law, the Court agrees with that the contract is unambiguous and finds that Plaintiffs have the better reading. Therefore, Defendant's Motion is denied.

         BACKGROUND

         The parties are familiar with the facts relevant to this motion. Nevertheless, a brief recitation is appropriate. The United States Conference of Mayors (“USCM”) is “a non-partisan organization of cities with populations of 30, 000 or more.” Am. Compl. ¶ 5, (ECF No. 22). USCM's wholly-owned subsidiary, United States Mayor Enterprises, Inc., markets certain products to cities and their employees, such as deferred compensation and retirement products and services. Id. ¶¶ 2, 6. In 2012, Plaintiffs entered into two contracts with Defendant Great-West relating to USCM's Retirement Program: (1) a License Agreement between USCM and Great-West, and (2) a Joint Marketing and Training Agreement (“JMTA”) between USME and Great-West (collectively, the “Agreements”). Id. ¶¶ 1, 16. Both Agreements included an initial ten-year term. JMTA ¶ 4.1; License Agreement ¶ 6.1.

         In December 2015, Plaintiffs notified Great-West of their intention to terminate the Agreements for cause due to Great-West's non-payment and other contractual breaches. Am. Compl. ¶ 28. The parties initially agreed to mediation as set forth in the Agreements' dispute resolution provisions, but were unable to agree whether the mediation should take place in Washington, D.C., or Denver, Colorado. March 15, 2016 Letters to JAMS (ECF Nos. 9-12 & 9-13). Plaintiffs filed their Complaint on April 7, 2016. (ECF No. 1). Defendant challenged venue, but on August 31, this Court found Defendant had failed to show that considerations of convenience and interests of justice weighed in favor of transfer. Plaintiffs filed their First Amended Complaint on September 30, 2016, alleging breach of contract and breach of implied covenant of good faith and fair dealing. Am. Compl. ¶¶ 29-38 (ECF No. 22). Defendant filed its Answer and Counterclaim to the Amended Complaint on October 17, asserting counterclaims for breach of contract, breach of implied covenant of good faith and fair dealing, and unjust enrichment, (ECF No. 26), and Plaintiffs filed their Answer on October 28, (ECF No. 28).

         The Agreements include many provisions not at issue in this Motion. The question currently before the Court is whether the parties contracted to limit the types of damages they could seek if a dispute arose between them. Mot. to Exclude at 4. The Court finds that the parties did not and so denies Defendant's motion.

         LEGAL STANDARD

         “[A] contract is not ambiguous merely because the parties do not agree over its meaning, and courts are enjoined not to create ambiguity where none exists.” Hensel Phelps Constr. Co. v. Cooper Carry Inc., 861 F.3d 267, 272 (D.C. Cir. 2017). In interpreting contracts, “D.C. courts ‘adhere[] to an objective law of contracts.'” Id. (quoting Carlyle Inv. Mgmt. LLC v. Ace Am. Ins. Co., 131 A.3d 886, 1894-95 (D.C. 2016)). “The writing must be interpreted as a whole, giving a reasonable, lawful, and effective meaning to all its terms, and ascertaining the meaning in light of all the circumstances surrounding the parties at the time the contract was made.” Id.; see also United States v. Bank of Am., 78 F.Supp.3d 520, 527 (D.D.C. 2015) (“[A] cardinal principle of contract construction [is] that a document should be read to give effect to all its provisions and to render them consistent with each other.”). The language should be understood according to its “plain meaning.” Id. (citing Debnam v. Cran Co., 976 A.2d 193, 197 (D.C. 2009)). Only ambiguous contract provisions require the factfinder to weigh in on the correct interpretation. Debnam, 976 A.2d at 197-98. So, to begin “courts determine what a reasonable person in the position of the parties would have thought the disputed language meant.” Hensel Phelps, 861 F.3d at 272; see also Steele Foundations, Inc. v. Clark Constr. Group, Inc., 937 A.2d 148, 154 (D.C. 2007) (“Fundamentally, when interpreting a contract, the court should look to the intent of the parties entering into the agreement.”).

         “While parties are free to enter into indemnification agreements . . . such agreements are narrowly construed by courts ‘so as not to read into [them] any obligations the parties never intended to assume.'” Rivers & Bryan, Inc. v. HBE Corp., 628 A.2d 631, 635 (D.C. 1993) (quoting Haynes v. Kleinewefers & Lembo Corp., 921 F.2d 453, 456 (2d Cir. 1990)). Indeed, “to find that a party contracted away its own liability by receiving full indemnity therefor, there must be clear intention to do so that is apparent from the fact of the contract.” Id.; cf. United States v. Seckinger, 397 U.S. 203, 212 (1970) (“In short, if the United States expects to shift the ultimate responsibility for its negligence to its various contractors, the mutual intention of the parties to this effect should appear with clarity from the face of the contract.”).

         ANALYSIS

         Great-West argues that exclusive remedy provisions are common, “often limiting speculative and uncertain damages caused by parties' unrealized hopes.” Mot. to Exclude at 4. But the citations supporting this proposition are not instructive in this case.[1] The problem in this case is not whether it is possible to bargain for an exclusive remedies provision, but rather, whether it is clear from the face of the contract that the parties in this case actually did. And contract interpretation in the context of liquidated damages and exclusive remedies, as much as in the context of indemnification and contracts more broadly, relies on a close examination of the contract at issue, as a whole, in context. See Am. Bldg. Maintenance Co. v. L'Enfant Plaza Props., Inc., 655 A.2d 858 (D.C. 1995) (“[T]he cardinal rule of interpretation [of contracts] is to ascertain, if possible from the instrument itself, the intention of the parties, and to give effect to that intention.”). Indeed, parties may contract to provide that one of them “‘will protect the other from litigation costs or claims brought by third persons as well as from claims between themselves' and that ‘when [such a right] is established by contract, the contract controls, so that attorney fees are awarded under such contracts with no difficulty.'” James G. Davis Constr. Corp. v. HRGM Corp., 147 A.3d 332, 339 (D.C. 2016) (quoting 1 Dan B. Dobbs, Law of Remedies § 3.10 (3), at 402-03 (2d ed. 1993)).

         Turning to the text of the contract, several provisions are informative. First, the contract itself admonishes that “[a]ll headings in this Agreement are intended solely for convenience of reference and shall not affect the meaning or interpretation of the provisions hereof.” Ex. A at 2 § 1.2, (ECF No. 98-1). Second, the disputed sections are reproduced here:

         Section 6. In ...


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