RBC Capital Mkts., LLC v. Talentnet, Inc.

2024 NY Slip Op 31629(U)

• Court: New York Supreme Court, New York County
• Decided: May 8, 2024
• Status: Unpublished

Opinion

RBC Capital Mkts., LLC v Talentnet, Inc. 2024 NY Slip Op 31629(U) May 8, 2024 Supreme Court, New York County Docket Number: Index No. 652290/2022 Judge: Arlene P. Bluth Cases posted with a "30000" identifier, i.e., 2013 NY Slip Op 30001(U), are republished from various New York State and local government sources, including the New York State Unified Court System's eCourts Service. This opinion is uncorrected and not selected for official publication. INDEX NO. 652290/2022 NYSCEF DOC. NO. 126 RECEIVED NYSCEF: 05/08/2024

SUPREME COURT OF THE STATE OF NEW YORK NEW YORK COUNTY PRESENT: HON. ARLENE P. BLUTH PART 14 Justice ---------------------------------------------------------------------------------X INDEX NO. 652290/2022 RBC CAPITAL MARKETS, LLC MOTION DATE 05/02/2024 Plaintiff, MOTION SEQ. NO. 005 -v- TALENTNET, INC., DECISION + ORDER ON MOTION Defendant. ---------------------------------------------------------------------------------X

The following e-filed documents, listed by NYSCEF document number (Motion 005) 72, 73, 74, 75, 76, 77, 78, 79, 80, 81, 82, 83, 84, 85, 86, 87, 88, 89, 91, 92, 95, 96, 97, 98, 99, 100, 101, 102, 103, 104, 105, 106, 107, 108, 109, 110, 111, 112, 113, 114, 115, 116, 118, 119, 120, 121, 122, 123, 124, 125 were read on this motion to/for JUDGMENT - SUMMARY .

Plaintiff’s motion for summary judgment is granted.

Background

This action arises out of a contract between plaintiff and defendant in which defendant

purportedly marketed itself to plaintiff as a “solutions provider for contingent labor issues.”

Defendant found and placed individuals to work for plaintiff. The contract contained an

indemnity provision and plaintiff alleges that defendant has dragged it into a wage and hour

lawsuit between defendant and a former employee of defendant. Plaintiff claims that defendant

refuses to honor the indemnity provision in the contract and so plaintiff brings this case for

indemnification.

Plaintiff explains that a former employee of defendant (Qayumi) commenced a lawsuit

for wage and hour violations in California in July 2020. Defendant placed this employee at

plaintiff as a business analyst in late 2016 and, allegedly, plaintiff fired her in April 2019. Then

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Ms. Qayumi filed a complaint alleging a host of claims, including that plaintiff and defendant

jointly employed her and violated California’s Labor Code through her purportedly wrongful

termination. Plaintiff says it notified defendant about the lawsuit (which included both plaintiff

and defendant as parties) and sought indemnification for the legal fees expended but defendant

refused to pay.

Plaintiff contends that the contract unambiguously required defendant to either assume

plaintiff’s defense in the Qayumi trial or to indemnify plaintiff for the costs related to that

lawsuit. It emphasizes that the Qayumi complaint alleged that plaintiff and defendant were joint

employers of Ms. Qayumi and that directly implicates the terms of the indemnification provision

in the parties’ contract. Plaintiff emphasizes that there is no dispute that it entered into a contract

with defendant and that defendant assigned Ms. Qayumi to work for plaintiff pursuant to that

contract.

In opposition, defendant contends that plaintiff engaged in willful misconduct and that

raises an issue of fact regarding the indemnification clause. Defendant contends that there is a

limitation of liability clause in the parties’ agreement that excludes indemnification for the other

party’s willful misconduct. Specifically, defendant alleges that Ms. Qayumi was instructed by an

employee for plaintiff (Ms. Druyan) to submit sham time entries. Defendant claims that Ms.

Druyan approved hours for Ms. Qayumi that were not plausible and reflected time that Ms.

Qayumi did not work. It alleges that plaintiff had immediate control over Ms. Qayumi’s hours

and approving those submitted hours. Defendant argues that plaintiff and Ms. Druyan directed

Ms. Qayumi to bill for time that she did not work. It theorizes that this is why plaintiff fired Ms.

Qayumi—for submitting false billing records. Defendant maintains that plaintiff’s failure to

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properly supervise Ms. Qayumi’s time entries constituted willful misconduct and gross

negligence, which bars plaintiff’s claims for indemnification.

Defendant insists that it is entitled to rescission of the entire contract as plaintiff breached

the material terms of the agreement. It also claims that plaintiff’s motion should denied because

plaintiff failed to submit a statement of material facts in support of its motion.

In reply, plaintiff observes that defendant did not dispute that plaintiff properly demanded

indemnification as required under the terms of the parties’ agreement. Plaintiff contends that

defendant’s arguments about plaintiff’s possible liability with respect to false billing is irrelevant

and that defendant did not cite any provision of the agreement that plaintiff allegedly breached.

Plaintiff maintains that the indemnification clause clearly applies because Qayumi sued plaintiff

(as well as defendant). It argues that even if two claims (for retaliation and wrongful termination)

of the fourteen causes of action were not included in the scope of the indemnification provision,

that would still leave twelve claims that fall under this provision’s ambit.

Discussion

The Court’s analysis begins with the indemnification provision in the contract between

plaintiff and defendant.

The agreement required defendant, known as the Supplier in the contract, to:

“Indemnification by Supplier. Supplier will, at its sole cost and expense, indemnify, defend and hold harmless Customer and/or its Affiliates and subsidiaries, with whom they have entered into an executed Statement(s) of Work and are Customers for purposes of that Statement of Work, and their respective officers, directors, employees, contractors, agents, representatives, successors and assigns (collectively, 'Customer Indemnitees") from and against any and all Losses suffered or incurred by any of them arising out of or in connection with a Claim of or for any of the following, whenever made:

(a) that any Deliverable(s), works, information, material(s) and/or Services furnished by or on behalf of Supplier, or the use thereof by Customer, constitutes

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an infringement, misappropriation or unlawful use or disclosure of any Intellectual Property Rights of a third party; or

(b) that Supplier has failed to comply with any Applicable Laws; or

(c) for death or bodily injury, or the damage, loss or destruction of real or tangible personal property of third parties (including employees of Customer and Supplier and their respective subcontractors) brought against a Customer Indemnitee and alleged to have been caused by the fault or negligence of Supplier, its officers, personnel (including Supplier Personnel), agents and/or representatives; or

(d) by or on behalf of any subcontractors or independent contractors of Supplier, or any of Supplier's personnel {including Supplier Personnel); or

(e) (a) in respect of Supplier's obligations as an employer of its personnel (including any Supplier Personnel), or (b) any claim or action alleging that a Customer Indemnitee should be deemed the 'employer" or "joint employer" of any of Supplier's personnel (including any Supplier Personnel)” (NYSCEF Doc. No. 27, § 13.02).

This section also contains the following definitions:

“Claim" means any demand, or any civil, criminal, administrative, or investigative claim, action, or proceeding (including arbitration) asserted, commenced or threatened against an entity or person. " Losses" means all judgments, awards, settlements, liabilities, damages, liens and claims, and all related costs, expenses and other charges suffered or incurred as a result of or in connection with a Claim, including reasonable attorneys' fees and disbursements, costs of investigation, litigation, settlement and judgment, and any taxes, interest. penalties and fines with respect to any of the foregoing (id. § 13.01).

The Court finds that plaintiff met its prima facie burden for indemnification under this

provision. There is no question that plaintiff, the “Customer”, incurred losses (reasonable

attorneys’ fees) arising out of a litigation commenced by Ms. Qayumi (a consultant placed by

defendant). It is undisputed that Ms. Qayumi was assigned to work for plaintiff by defendant

under the terms of the parties’ agreement. The fact is that the indemnification language is

broad—it required defendant to indemnify for any losses “arising out of or in connection with a

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‘Claim.’” The definition of claim includes an action, such as the litigation started by Ms.

Qayumi against plaintiff.

And the Court finds that defendant failed to raise an issue of fact in opposition. Much of

the opposition papers focus on the fact that there is a limitation of liability clause in the

agreement and that plaintiff engaged in willful misconduct such that indemnification is not

required. But the mention of “willful misconduct” arises in a provision providing that:

“IN NO EVENT WILL EITHER PARTY BE LIABLE TO THE OTHER PARTY FOR ANY LOST PROFITS OR LOST REVENUE, OR FOR ANY INDIRECT, INCIDENTAL, SPECIAL, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES ARISING OUT OF OR IN CONNECTION WITH THE MASTER AGREEMENT OR ANY STATEMENT OF WORK; PROVIDED, HOWEVER, THAT THE FOREGOING LIMITATION OF LIABILITY WILL NOT APPLY TO ANY OF THE FOLLOWING: (A) SUPPLIER'S INDEMNIFICATION OBLIGATIONS UNDER THE MASTER AGREEMENT OR ANY STATEMENT OF WORK; (B) A PARTY'S BREACH OF ITS CONFIDENTIALITY OR DATA PROTECTION OBLIGATIONS UNDER THE MASTER AGREEMENT OR ANY STATEMENT OF WORK; OR (C) ANY GROSS NEGLIGENCE OR WILLFUL MISCONDUCT BY A PARTY.” (id. Article XIV [all caps in original]).

The Court fails to see how the reference to willful misconduct operates as a defense to the

indemnification provision. Rather, it appears to be an exception to the limitation on liability; that

is, willful misconduct by a party could result in that party being liable for punitive or

consequential damages. But that is irrelevant to the issue here, where plaintiff seeks recovery of

legal fees under the indemnification provision.

Defendant also devotes a substantial portion of the opposition to making arguments that

plaintiff is negligent. It claims that Ms. Qayumi was fired because she submitted false invoices at

the direction (and with the approval of) an employee for plaintiff. But, as plaintiff points out in

reply, it is unclear how this raises an issue of fact regarding any alleged willful misconduct by

plaintiff. It shows, as plaintiff argues, that Ms. Qayumi benefitted by getting paid for fake

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invoices. Plus, plaintiff pointed to deposition testimony in the Qayumi action that suggests she

was fired because contingent workers are generally only retained by plaintiff for two years and

the department where Ms. Qayumi worked was moved. In any event, defendant’s theory is

simply far too attenuated: it claims that plaintiff told Ms. Qayumi to falsify her work hours so

that years later plaintiff could use that misconduct to fire her. Defendant did not submit adequate

support for such a theory.

And defendant did not oppose the amount of fees sought by plaintiff. That is, defendant

did not contend in its opposition that the fees incurred were not reasonable.

The Court observes that defendant’s claim that plaintiff’s moving papers were

procedurally defective as they lacked a statement of material facts is wholly without merit. That

trial court rule was amended years ago and now provides that a court “may direct” the

submission of such a statement (see 22 NYCRR 202.8-g). It is not required nor is it a basis to

deny the instant motion.

Accordingly, it is hereby

ORDERED that plaintiff’s motion for summary judgment is granted and the Clerk is

directed to enter judgment in favor of plaintiff and against defendant for reasonable attorneys’

fees in the Qayumi Action in the amount of $955,346.04 plus statutory interest from the date of

this decision along with costs and disbursements upon presentation of proper papers therefor;

and it is further

DECLARED that defendant is obligated to provide indemnification against any and all

judgments, awards, settlements, liabilities, liens and claims, and all related costs, expenses, and

other charges, including but not limited to reasonable attorneys’ fees, incurred by plaintiff in

connection with the Qayumi Action; and defendant is obligated to reimburse plaintiff the

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reasonable and verifiable costs and expenses, including fees and disbursements of counsel,

incurred by plaintiff in defending the claims and allegations in the Qayumi Action; and it is

further

ORDERED that the issue of reasonable legal fees in this case is severed and plaintiff

shall make a separate motion for such fees on or before May 30, 2024.

5/8/2024 $SIG$ DATE ARLENE P. BLUTH, J.S.C. CHECK ONE: X CASE DISPOSED NON-FINAL DISPOSITION

□ X GRANTED DENIED GRANTED IN PART OTHER

APPLICATION: SETTLE ORDER SUBMIT ORDER

□ CHECK IF APPROPRIATE: INCLUDES TRANSFER/REASSIGN FIDUCIARY APPOINTMENT REFERENCE

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