ORDER
AMIT
P. MEHTA UNITED STATES DISTRICT JUDGE
Before
the court is a Motion to Dismiss Third-Party Complaint by
Third-Party Defendants MBI Logistics, LLC
(“MBI”), and Star Transportation, LLC.
See MBI's Mot. to Dismiss Third-Party Complaint,
ECF No. 31 [hereinafter MBI's Mot.]; see also
Minute Order, July 13, 2018, (granting Star
Transportation's Motion to Adopt MBI Logistics, LLC's
Pleadings, ECF No. 46). Of the three indemnification theories
asserted by Defendant/Third-Party Plaintiff Medical
Transportation Management (“MTM”), Inc.,
Third-Party Defendants challenge only one: contractual
indemnification pursuant to the services agreements between
Third-Party Defendants and MTM (“Services
Agreement”).[1] Third-Party Defendants contend that the
Services Agreement does not provide indemnification for
claims by Plaintiffs, who are employees of Third-Party
Defendants, for the non-payment of wages. The court
disagrees.
The
Services Agreement contains an indemnification provision in
Paragraph 10 that requires Third-Party Defendants to
“defend, indemnify, and hold harmless MTM and MTM's
Client[s] against any claims, liabilities and
expenses, including reasonable attorney's fees,
arising from performance of any service by
[Third-Party Defendants] in connection with this
Agreement.” See MBI's Reply Mem. in Supp.
of Mot. to Dismiss Third-Party Compl., ECF No. 39
[hereinafter MBI's Reply], Ex. 1, ECF No. 31-1
[hereinafter Services Agreement], ¶ 10 (emphasis added).
Third-Party Defendants contend that the indemnification
provision does not apply to the underlying wage claims
against MTM because the payment of compensation to employees
is not a “service” required to be performed under
the Service Agreement. MBI's Mot., Mem. in Supp., ECF No.
31-1, at 6; MBI's Reply Mem. at 2-5. That argument,
however, interprets the indemnification clause too narrowly.
The D.C. Court of Appeals has characterized similarly-worded
indemnification clauses as “broad, ”
“sweeping, ” and “comprehensive.”
See W.M. Schlosser Co., Inc. v. Md. Drywall Co.,
Inc., 673 A.2d 647, 653-54 (D.C. 1996). Applying such a
construction here, Plaintiffs' wage claims plainly
“aris[e] from performance” of a service covered
by the contract-the provision of transportation services by
Third-Party Defendants to MTM. Put another way, the wage
claims against MTM arise only because Third-Party Defendants
“performed” under the Services Agreement.
Plaintiffs' wage claims therefore are subject to the
indemnification clause.
To
avoid this result, Third-Party Defendants ask the court to
read the indemnification clause in Paragraph 10 of the
Services Agreement in light of another indemnification
provision found in Paragraph 24, which concerns costs and
litigation expenses incurred by MTM, including attorney's
fees. See MBI's Reply at 2-4.[2] Third-Party
Defendants make this argument for the first time in their
reply brief and, for that reason alone, the court rejects it.
See Am. Wildlands v. Kempthorne, 530 F.3d 991, 1001
(D.C. Cir. 2008).
In any
event, the court finds Third-Party Defendants' reliance
on Paragraph 24 to be confusing and ultimately incorrect.
Third-Party Defendants argue that, because Paragraph 24
specifically references a breach-of-contract claim, the scope
of indemnification under that Paragraph is broader than under
Paragraph 10 and, therefore, Paragraph 10 should be construed
narrowly as reaching only “claims based on MBI's
services.” See MBI's Reply at 3 (arguing
that Paragraph 24 “is general and is applicable for any
breach, whereas [Paragraph 10] is limited only to matters
related to the services under the contract”). But this
parsing ultimately does not help Third-Party Defendants
because MTM does not contend that its indemnification demand
is based on the breach of any contractual duty owed under the
Services Agreement. Rather, MTM argues only that
Plaintiffs' wage claims arise out of Third-Party
Defendants' “performance of . . . services.”
See MTM's Third-Party Complaints, ECF No. 24,
¶¶ 4, 17. As discussed, the court agrees with
MTM's reading; therefore, resort to Paragraph 24 to
interpret Paragraph 10 is unnecessary.
Moreover,
Third-Party Defendants misread Paragraph 24. As the D.C.
Circuit has observed, “indemnification clauses have
traditionally been used and interpreted as extending only to
third-party claims.” Hensel Phelps Constr. Co. v.
Cooper Carry Inc., 861 F.3d 267, 275 (D.C. Cir. 2017).
Paragraph 24's purpose is to extend indemnification
beyond that traditional function and apply it to first-party
claims between the contracting parties. That is why Paragraph
24 contains two introductory dependent clauses, one
concerning a “breach of any term of this
Agreement” and the other concerning “any claim or
liability arising out of the performance of any service by
[Third-Party Defendant] in connection with this
Agreement.” See Services Agreement ¶ 24.
The former clause covers first-party breach of contract
claims between the parties; the latter clause covers
third-party claims “arising out of the transportation
provider's services. See James G. Davis Constr. Corp.
v. HRGM Corp., 147 A.3d 332, 340-41 (D.C. 2016)
(similarly reading a more broadly worded indemnification
provision as reaching first-party claims). As the
indemnification demand at issue here concerns only
third-party claims, Paragraph 24's broader scope is
irrelevant.
For the
foregoing reasons, Third-Party Defendants' Motion to
Dismiss is denied.
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Notes:
[1] In MBI's Reply Memorandum in
Support of Motion to Dismiss Third-Party Complaint, MBI
concedes that, under Rule 14 of the Federal Rules of Civil
Procedure, MTM's claims for statutory and common law
indemnification may proceed. See MBI's Reply
Mem. in Supp. of Mot. to Dismiss Third-Party Compl., ECF No.
39, at 1-2.
[2] Paragraph 24 of the Services Agreement
states:
In the event that Transportation Provider fails to
comply with each and every term of this Agreement or
otherwise is in breach of any term of this Agreement; or in
the event that Transportation Provider is required to defend,
indemnify and hold harmless MTM with respect to any claim or
liability arising out of performance of any service by
Transportation Provider in connection with this Agreement,
Transportation Provider shall pay all of MTM's costs and
litigation expenses, including reasonable attorney's fees
that may be incurred by MTM.
Services Agreement ¶ 24.