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Bitco General Insurance Corporation v. Wynn Construction Co., Inc.

United States District Court, W.D. Oklahoma

August 11, 2017

BITCO GENERAL INSURANCE CORPORATION, Plaintiff,
v.
WYNN CONSTRUCTION CO., INC., and NABHOLZ CONSTRUCTION SERVICES, Defendants.

          ORDER

          VICKI MlLES-La GRANGE UNITED STATES DISTRICT JUDGE

         Before the Court is plaintiff's Motion to Dismiss Nabholz Construction Services' Counterclaim Based upon an Alleged Duty to Defend, filed June 5, 2017. On July 3, 2017, defendant Nabholz Construction Services (“Nabholz”) filed its response, and on July 10, 2017, plaintiff filed its reply.

         I. Introduction

         On May 15, 2017, Nabholz filed its Answer and Counterclaim. Through its counterclaim, Nabholz is alleging a breach of contract claim and a bad faith claim against plaintiff. Plaintiff now moves, pursuant to Federal Rule of Civil Procedure 12(b)(6), to dismiss Nabholz's counterclaim to the extent it is based upon plaintiff's alleged breach of a duty to defend.

         II. Standard for dismissal

         Regarding the standard for determining whether to dismiss a claim pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief may be granted, the United States Supreme Court has held:

To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face. A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. The plausibility standard is not akin to a “probability requirement, ” but it asks for more than a sheer possibility that a defendant has acted unlawfully. Where a complaint pleads facts that are merely consistent with a defendant's liability, it stops short of the line between possibility and plausibility of entitlement to relief.

Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal quotations and citations omitted). Further, “where the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged - but it has not shown - that the pleader is entitled to relief.” Id. at 679 (internal quotations and citations omitted). Additionally, “[a] pleading that offers labels and conclusions or a formulaic recitation of the elements of a cause of action will not do. Nor does a complaint suffice if it tenders naked assertion[s] devoid of further factual enhancement.” Id. at 678 (internal quotations and citations omitted). A court “must determine whether the complaint sufficiently alleges facts supporting all the elements necessary to establish an entitlement to relief under the legal theory proposed.” Lane v. Simon, 495 F.3d 1182, 1186 (10th Cir. 2007) (internal quotations and citation omitted). Finally, “[a] court reviewing the sufficiency of a complaint presumes all of plaintiff's factual allegations are true and construes them in the light most favorable to the plaintiff.” Hall v. Bellmon, 935 F.2d 1106, 1109 (10th Cir. 1991).

         III. Discussion

         Plaintiff asserts that to the extent Nabholz's counterclaim is based upon plaintiff's alleged failure to defend Nabholz as an additional insured, it fails to state a legally cognizable claim for relief. Specifically, plaintiff contends that under Oklahoma's anti-indemnity statute, Okla. Stat. tit. 15, § 221, plaintiff owes no defense obligation to Nabholz under the facts alleged. Plaintiff, therefore, contends that because no defense is owed by plaintiff to Nabholz under § 221, it is impossible for Nabholz to state a claim for breach of contract or breach of the duty of good faith and fair dealing premised upon any duty by plaintiff to defend Nabholz.

         Nabholz asserts the defense/indemnity language in the contracts between Nabholz and defendant Wynn Construction Co., Inc. (“Wynn”) does not run afoul of § 221 but, on the contrary, clearly complies with Oklahoma's anti-indemnity statute. Nabholz further asserts that it not asking plaintiff to defend it against liability which arises out of Nabholz's negligence but is simply trying to compel plaintiff to defend and indemnify Nabholz from and against damage claims attributable to Wynn's negligence. Nabholz also asserts that the insurance policies and additional insured endorsements issued by plaintiff are project-specific and fall squarely within the paragraph D exception to § 221.

         Section 221 provides, in pertinent part:

A. For purposes of this section, “construction agreement” means a contract, subcontract, or agreement for construction, alteration, renovation, repair, or maintenance of any building, building site, structure, highway, street, highway bridge, viaduct, water or sewer system, or other works dealing with construction, or for any moving, demolition, excavation materials, or labor connected with such construction.
B. Except as provided in subsection C or D of this section, any provision in a construction agreement that requires an entity or that entity's surety or insurer to indemnify, insure, defend or hold harmless another entity against liability for damage arising out of death or bodily injury to persons, or damage to property, which arises out of the negligence or fault of the indemnitee, its agents, ...

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