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The Travelers Indemnity Company of Connecticut v. Lessard Design, Inc.

United States District Court, E.D. Virginia, Alexandria Division

June 12, 2018

THE TRAVELERS INDEMNITY COMPANY OF CONNECTICUT, as Subrogee of the Penrose Group,
v.
LESSARD DESIGN, INC., Defendant.

          MEMORANDUM OPINION

          T. S. ELLIS, III UNITED STATES DISTRICT JUDGE.

         At issue on a motion for judgment on the pleadings in this breach of contract and quantum meruit case is whether the contractual indemnification provision on which plaintiff's claim is based is invalid pursuant to Virginia Code § 11-4.1. Plaintiff, an insurance company, as subrogee, seeks recovery from defendant of litigation costs in connection with defendant's alleged contractual obligation to indemnify plaintiff's insured. Defendant argues, inter alia, that the contractual provision upon which plaintiff relies for its breach of contract claim is void under Virginia law, and that plaintiff has failed to allege a claim on a quantum meruit theory.

         The matter has been fully briefed and argued, and is now ripe for disposition.

         I.

         Plaintiff, Travelers Indemnity Company of Connecticut (Travelers), is an insurance company organized and existing under the laws of Connecticut with its principal place of business in Hartford, Connecticut and corporate offices in St. Paul, Minnesota.

         Defendant, Lessard Design, Inc. (Lessard), is a corporation organized under the laws of Virginia, with its principal place of business in Vienna, Virginia. Lessard provides architectural services, including design plans and construction supervision and consulting services.

         PDT Builders LLC (PDT Builders) is a Virginia limited liability company with its principal place of business in Vienna, Virginia. PDT Builders and several other companies do business in an association called the Penrose Group.

         This case stems from a previous now-concluded lawsuit in this district in which Humphreys & Partners Architects, LP (Humphreys), another architectural firm, sued Lessard, PDT Builders, and other entities associated with the Penrose Group for copyright infringement. See Humphreys & Partners Architects LP v. Lessard Design, Inc., No. 1:13-cv-433 (E.D. Va. 2013) (hereafter “Humphreys Litigation”). Humphreys argued that Lessard Design's architectural plans infringed on Humphreys' copyrighted design for a condominium building located in Minneapolis, Minnesota. Pursuant to an agreement between Lessard and PDT Builders, PDT Builders tendered its defense to Lessard. After Lessard declined to defend PDT Builders absent conditions, PDT Builders and the other Penrose Group entities tendered their defense to Travelers Indemnity Company of Connecticut, pursuant to the Penrose Group's own Commercial General Liability policy under Policy number Y-630-0454R469-TIL-10. Travelers accepted PDT's tender of defense, and paid the attorneys' fees and costs associated with defense of PDT and related entities in the Humphreys Litigation. By virtue of this, Travelers is subrogated to the rights of its insureds - PDT and the other Penrose entities.

         Following thorough discovery, defendants filed a motion for summary judgment, which was granted. See Humphreys & Partners Architects, L.P. v. Lessard Design, Inc., 43 F.Supp.3d 644 (E.D. Va. 2014). Humphreys thereafter appealed this decision to the Court of Appeals for the Fourth Circuit, which affirmed. See Humphreys & Partners Architects, L.P. v. Lessard Design, Inc., 790 F.3d 532 (4th Cir. 2015).

         Following the Fourth Circuit's affirmance, the prevailing parties sought attorneys' fees in the amount of $990, 995. Following full briefing, the district court awarded attorneys' fees in the amount of $792, 796. Humphreys & Partners Architects, L.P. v. Lessard Design, Inc., 152 F.Supp.3d 503 (E.D. Va. 2015). To avoid further litigation over the fee award, the parties elected to settle the fee dispute for $745, 000. This concluded the Humphreys Litigation.

         Following the conclusion of the Humphreys Litigation, Travelers, as subrogee for the other Humphreys Litigation defendants, requested that Lessard indemnify Travelers for the outstanding attorneys' fees and costs related to the Humphreys Litigation. This request was based on a January 25, 2011 Architect's Agreement (the Agreement). Specifically § 2.7 of that Agreement provides that Lessard shall:

[i]ndemnify, defend and hold the Owner, Owner's Developer, and Owner's and Owner's Developer's wholly owned affiliates and the agents, employees and officers of any of them harmless from and against any and all losses, liabilities, expenses, claims, fines and penalties, costs and expenses, including, but not limited to reasonable attorneys' fees and court costs relating to the services performed by the Architect hereunder . . .[1]

         Lessard declined Travelers requests for indemnification. Thereafter, Travelers filed the instant complaint alleging: (i) breach of contract, and (ii) quantum meruit. Lessard filed a motion for judgment on the pleadings pursuant to Rule 12(c), Fed.R.Civ.P. ...


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