“Refusing leave to amend is generally only justified upon a showing of undue delay, undue prejudice to the opposing party, bad faith or dilatory motive, failure to cure deficiencies by amendments previously allowed, or futility of amendment.”
How later courts described this case
- “Refusing leave to amend is generally only justified upon a showing of undue delay, undue prejudice to the opposing party, bad faith or dilatory motive, failure to cure deficiencies by amendments previously allowed, or futility of amendment.”
Written by the judges who cited it.
The opinion
IN THE UNITED STATES DISTRICT COURT FOR THE
WESTERN DISTRICT OF OKLAHOMA
ROBERT BROWN, )
an Individual, )
)
Plaintiff, )
)
v. ) No. CIV-21-353-R
)
BLACKSTONE CONSULTING, INC., )
a Foreign Corporation, )
)
Defendant. )
ORDER
Before the Court is Defendant Blackstone Consulting Inc.’s (“Blackstone”) motion
to dismiss, Doc. No. 13. Plaintiff Robert Brown (“Brown”) responded in opposition, Doc.
No. 15, and Blackstone filed a reply in Doc. No. 16.
In evaluating a motion to dismiss, the Court assumes the truth of a plaintiff’s well-
pled factual allegations and evaluates them in the light most favorable to the non-
movant. Cory v. Allstate Ins., 583 F.3d 1240, 1244 (10th Cir. 2009). Brown alleges the
following.
Under the Randolph Sheppard Act, 20 U.S.C. § 107, the United States Government
prioritizes blind persons when evaluating bids for the provision of food services on federal
property. The state licensing agency initially chose Mr. A.B. Swanson (“Swanson”) to
serve as the blind licensed manager on the Fort Sill Contract—the food service contract
awarded to the State of Oklahoma at the Fort Sill Army Base. Doc. No. 1-2 ¶ 2. Swanson
then selected Cantu Services, Inc. (“Cantu”) to serve as his teaming partner under a
Manager Support Agreement (“MSA”). Id. ¶ 3.
“In settlement of a certain dispute between [the agency] and Swanson, Swanson
agreed to retire as the licensed manager on the Fort Sill Contract.” Id. ¶ 4. The agency
replaced Swanson with the Plaintiff, Robert Brown. Id. ¶ 5. After the agency selected
Brown, he entered into a Vendor Support Agreement (“VSA”) with Blackstone, “whereby
[Blackstone] would serve as the teaming partner on the Fort Sill Contract.” Id.
In response to Blackstone and Brown agreeing to serve as partners, Cantu filed suit
in state court—in Comanche County—against the agency “on the ground that Brown had
stepped into Swanson’s shoes and was subject to the MSA between Swanson and Cantu.”
Id. ¶¶ 6–7 (citing Cantu Services, Inc. v. ODRS, CJ-2011-440). Cantu prevailed “by way
of an order entered by the Hon. Keith Aycock” finding that “Cantu, and not BCI, had
retained all rights and responsibilities to continue as the teaming partner for the blind
vendor/manager.” Id. ¶ 8.
Despite Judge Aycock’s Order, Brown alleges that Blackstone, “by and through the
attorney it hired to represent both Brown and [Blackstone,]” advised both parties to ignore
the court’s order and to proceed as partners on the Fort Sill Contract. Id. ¶ 9. Brown relied
on the advice, terminating Cantu and replacing it with Blackstone. Thereafter, Cantu
initiated arbitration proceedings against Brown, seeking “revenues it alleged it lost after
having been deprived of the opportunity to continue as the teaming partner.” Id. ¶ 10. Cantu
prevailed and received an arbitration award of approximately $5 million against Brown
because the panel found Cantu would have received that amount had it served as Brown’s
teaming partner instead of Blackstone. Id. ¶¶ 10–11. The award was confirmed on January
14, 2020. Id. ¶ 12. Pursuant to the VSA’s indemnification clause, Brown “made demand
on [Blackstone] to indemnify [him] … from liability associated with the Arbitration
Award.” Id. ¶ 13. After receiving the demand, Blackstone refused to indemnify Brown. Id.
Attempting to recover an amount equal to the $5 million arbitration award against
him, Brown filed this suit against Blackstone for Breach of Contract, Tortious Breach of
Contract, Negligence, and Gross Negligence. Id. ¶¶ 13, 18–22. Blackstone, asserting that
the indemnification provision does not apply, filed this motion to dismiss. Doc. No. 13.
In considering a Motion to Dismiss under Rule 12(b)(6), the Court must determine
whether a plaintiff has stated a claim upon which relief may be granted. The motion is
properly granted when the Complaint provides no “more than labels and conclusions, and
a formulaic recitation of the elements of a cause of action.” Bell Atl. Corp. v. Twombly,
550 U.S. 544, 555 (2007). The Complaint must contain enough “facts to state a claim to
relief that is plausible on its face,” id. at 570, and the factual allegations “must be enough
to raise a right to relief above the speculative level.” Id. at 555 (citations omitted). The
Court must accept all the well-pled allegations of the Complaint as true and must construe
the allegations in the light most favorable to the plaintiff. Id.; Alvarado v. KOB–TV, L.L.C.,
493 F.3d 1210, 1215 (10th Cir. 2007). But the Court need not accept as true those
allegations that are conclusory in nature. Erikson v. Pawnee Cnty. Bd. of Cnty. Comm’rs,
263 F.3d 1151, 1154–55 (10th Cir. 2001). “[C]onclusory allegations without supporting
factual averments are insufficient to state a claim upon which relief can be based.” Hall v.
Bellmon, 935 F.2d 1106, 1109–10 (10th Cir. 1991). The Court now addresses each of
Blackstone’s arguments in turn.
1. Whether the Plain Language of the Indemnity Provision Bars Brown’s
Contract Claim.
Blackstone argues that “under the plain language of the indemnity provision,
[Blackstone] is not required to indemnify the Plaintiff.” Doc. No. 13, p. 3. Brown responds
that “[t]he broad indemnification language to which BCI agreed” specifically “requires
BCI to indemnify Brown.” Doc. No. 15, p. 6.
When interpreting contracts in Oklahoma, courts shall not “force[ ] or constrain[ ]
interpretations to create … [or] construe ambiguities.” Max True Plastering Co. v. U.S.
Fid. & Guar. Co., 912 P.2d 861, 869 (Okla. 1996). Additionally, courts “will not undertake
to rewrite … nor to make … either party a better contract than the one … executed.”
Bituminous Cas. Corp. v. Cowen Const., Inc., 55 P.3d 1030, 1033 (Okla. 2002) (citing Max
True Plastering, 912 P.2d at 869 (Okla. 1996)). Likewise, courts “follow the rules
applicable generally to contracts, and [ ] must attempt to ascertain the intention of the
parties, based upon the whole contract[ ]” when interpreting indemnity provisions. Wallace
v. Sherwood Const. Co., 877 P.2d 632, 634 (Okla. Ct. Civ. App. 1994) (citing Luke v.
American Surety Co. of New York, 114 P.2d 950 (Okla. 1941)).
The indemnity provision in the VSA states that
[Blackstone] agrees to indemnify, defend, and save harmless the Department,
its officers, agents, employees, and [Brown] from any claims or liability
arising out of any act or omission of [Blackstone], its agents, employees or
subcontractors under any provision of this agreement. [Blackstone] shall
have no indemnity obligation with respect to disputes between or claims by
the Department against [Brown] or by [Brown] against the Department.
Doc. No. 14 ¶ 10.
By the express language of the VSA, Blackstone agreed to indemnify Brown from
losses deriving from “any act or omission of [Blackstone] … under any provision of [the]
agreement.” Doc. No. 14 ¶ 10 (emphasis added). Brown alleged that Blackstone’s conduct
caused his loss because Blackstone “disregard[ed] the Aycock Order” and continued to “go
forward” as Brown’s teaming partner. Doc. 1-2 ¶ 9. However, Brown does not allege—
neither in the Petition, nor in the response—which provision of the agreement Blackstone
violated. Doc. No. 13, p. 4. When responding to the motion to dismiss his negligence claim,
Brown argues that several provisions of the agreement created duties that Blackstone owed
him. Doc. No. 15, p. 7. However, regarding his breach of contract claim, he does not
explain how Blackstone’s conduct—convincing Brown to terminate Cantu and operate the
Fort Sill Contract with Blackstone—is an “act or omission … under any provision” of the
VSA.
Because Brown has not identified a provision encompassing Blackstone’s conduct,
and therefore triggering its indemnity obligation, he has failed to state a claim for breach
of contract under Fed. R. Civ. P. 12(b)(6). Accordingly, Brown’s breach of contract claim
is dismissed.
2. Whether Brown’s Negligence and Gross Negligence Claims Fail as a Matter of
Law
Next, Blackstone argues that Brown’s negligence claims fail because “the only duty
[Blackstone] owed to Brown” was contractual, and thus, Brown’s only available remedy
lies in a claim for breach of contract. Doc. No. 13, p. 5. In response, Brown lists several
contractual duties Blackstone owed him and explains that “a plaintiff may advance
alternative theories of relief” in pursuing his claims. Doc. No. 15, pp. 7-8.
To plead a claim for negligence, Brown must show Blackstone owed him a duty,
breached that duty, and that he suffered an injury as a proximate result. See Tuffy's, Inc. v.
City of Okla. City, 212 P.3d 1158, 1167 (Okla. 2009). In Oklahoma, “an action for breach
of contract and an action in tort may arise from the same set of facts.” Finnell v. Seismic,
67 P.3d 339, 344 (Okla. 2003). In Embry v. Innovative Aftermarket Sys., 247 P.3d 1158,
1161 (Okla. 2010), the Oklahoma Supreme Court recognized that the confines of a contract
do not create a duty of reasonable care when it explained that “[t]here is simply no general
duty to use reasonable care in the performance of a contract.” Because “a mere matter of
contract cannot be converted into a tort,” Brown must show Blackstone owed it a duty
lying outside of the VSA, and that Blackstone breached that duty proximately causing his
injury. Oklahoma Nat. Gas Co. v. Pack, 97 P.2d 768, 770 (Okla. 1939). Thus, the Court
need not address Brown’s assertion of contractual duties taken from the VSA, and the Court
turns to his allegations lying outside of the agreement.
Brown argues that Blackstone owed him “duties created by the nature of the
Randolph-Sheppard Act and the administrative process associated with the selection” of
Brown and his management partner, Blackstone. Doc. No. 15, p. 7. The “Randolph-
Sheppard Act was enacted to benefit blind persons by providing them with greater
employment and economic opportunities.” Texas Workforce Comm'n v. United States
Dep't of Educ., 973 F.3d 383, 387 (5th Cir. 2020). The Act established a duty for a state
licensing agency to give preference to blind persons when selecting food service providers.
20 U.S.C. § 107(b). The text of the Act does not, however, create a tort duty on behalf of
the management partner—Blackstone—working alongside the blind food service provider.
Further, the Court does not see, nor has Brown explained, how the administrative process
created a tort duty that Blackstone owed Brown.
Brown correctly explains that he may advance alternative theories of relief at this
stage. Doc. No. 15, p. 8. However, Brown’s asserted claims for relief must be “plausible.”
Twombly, 550 U.S. at 570. Here, Brown claims that Blackstone “advised [him]” to
disregard a court order and continue as partners on the Fort Sill Contract. Doc. No. 1-2 ¶ 9.
He alleges that Blackstone’s conduct led to a successful arbitration award against him, and
that thereafter, Blackstone has not indemnified him for his loss. Blackstone’s alleged
breach clearly lies from the contractual duties between the parties, and therefore, Brown
has failed to state that Blackstone owed him a duty outside the scope of the parties’
agreement. Because he has not shown that Blackstone owed him a duty, Brown has not
stated a plausible negligence claim. Accordingly, Brown’s negligence-based claims are
dismissed.
3. Whether Brown’s Tortious Breach of Contract Claim Fails Due to a Lack of a
Special Relationship.
Lastly, Blackstone argues that Brown’s claim for tortious breach of contract should
be dismissed because his allegations are “simply proof of [the] breach of the implied duty
to deal fairly and in good faith, and not an independent theory of recovery.” Doc. No. 13,
p. 7 (internal citations omitted). Brown did not respond to Blackstone’s argument. For this
reason, Brown’s claim for tortious breach of contract is deemed confessed. See, e.g.,
Choctaw Town Square, LLC vy. Kokh Licensee, LLC, No. CIV-13-1246-F, 2016 WL
4430000, at *4 (W.D. Okla. Mar. 16, 2016) (motion deemed confessed when plaintiff failed
to respond).
4. Conclusion
In summary, Blackstone’s motion to dismiss, Doc. No. 13, is hereby GRANTED.
Brown’s breach of contract, tortious breach of contract, and negligence-based claims are
hereby DISMISSED.
Nonetheless, finding that granting leave to amend would not prejudice Blackstone,
the Court hereby grants Brown’s request for leave to amend his Petition. Sinclair Wyoming
Ref. Co. v. A & B Builders, Ltd., 989 F.3d 747, 777 (10th Cir. 2021) (“Refusing leave to
amend is generally only justified upon a showing of undue delay, undue prejudice to the
opposing party, bad faith or dilatory motive, failure to cure deficiencies by amendments
previously allowed, or futility of amendment.”) (internal citations omitted).
IT IS SO ORDERED on this 17th day of August 2021.
UNITED STATES DISTRICT JUDGE