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Buffalo v. Dalrada Financial Corp.

September 15, 2011

BUFFALO SPORTS ENTERPRISES LLC, PLAINTIFF,
v.
DALRADA FINANCIAL CORP., ET AL., DEFENDANTS.



The opinion of the court was delivered by: William M. Skretny Chief Judge United States District Court

DECISION AND ORDER

I. INTRODUCTION

In this diversity action, Plaintiff Buffalo Sports Enterprises LLC ("Buffalo Sports"), a New York corporation, brings suit against Defendants Source One Group, Inc. ("SourceOne") and its parent Dalrada Financial Corp. ("Dalrada"), both incorporated under the laws of Delaware, claiming a breach of an agreement to indemnify Plaintiff for all costs and expenses incurred as a result of claims arising from Defendants' failure to act in accordance with a client service agreement. Presently before this Court is Plaintiff's Motion for Summary Judgment.*fn1 For the reasons discussed below, Plaintiffs' motion is denied.

II. BACKGROUND

A. Facts

Buffalo Sports, formerly known as the Buffalo Destroyers, was a franchise in the Arena Football League. Plaintiff's Rule 56.1 Statement ("Pl.'s Statement"), Docket No. 56, ¶¶ 1.) Buffalo Sports was incorporated under the laws of New York, with its principal place of business in Buffalo, New York. (Id. at ¶ 8; Plaintiff's Memorandum of Law ("Pl.'s Mem."), Docket No. 57, 14.) Defendant SourceOne is a Professional Employment Organization providing workers' compensation coverage, with its principal place of business in Richmond, Virginia. (Pl.'s Statement ¶ 2, 7.) SourceOne, a Delaware corporation, is a subsidiary of Dalrada, itself a Delaware corporation. (See id. at ¶ 27; Pl.'s Mem. 14.)

Buffalo Sports and SourceOne entered into a Client Service Agreement ("Agreement") on March 7, 2003, whereby SourceOne would provide insurance coverage for Plaintiff's employees, including its professional athletes. (Pl.'s Statement ¶¶ 3-4, 16.) The Agreement provided that each party would indemnify the other for all costs and expenses incurred by the other Party as a result of claims against one Party arising from the other Party's acts or failure to act. (Id. at ¶ 4.) The Agreement further provided that each party would bear its own costs and expenses, including attorney fees, for defending itself in any litigation in which Buffalo Sports and SourceOne were both named defendants. (Affidavit of Jack Turesky, ("Turesky Aff."), Docket No. 58, Ex. 1.)

Over the course of the Agreement eight of Plaintiff's players were injured and sought relief in Workers Compensation proceedings commenced against Buffalo Sports and Liberty Mutual Insurance Company ("Liberty Mutual"), the insurance company through which SourceOne had obtained insurance coverage for Plaintiff. (Pl.'s Statement ¶¶ 20-21, 31.) The Workers' Compensation Board ultimately concluded that Liberty Mutual was obligated to pay the injured claimants. (See Defendant's Supplemental Memorandum of Law in Response to Plaintiff's Motion for Summary Judgment ("Defs.' Supp. Resp."), Docket No. 81, 2-3.) Although the decision held Liberty Mutual solely responsible, Plaintiff incurred costs defending itself in the proceeding. (Plaintiff's Second Reply Memorandum of Law in Response to Defendant's Supplemental Memorandum of Law ("Pl.'s Second Reply"), Docket No. 86, 6-7.) Plaintiff now seeks indemnification of these costs from Defendant SourceOne and Dalrada. (Id.)

B. Procedural History

Plaintiff commenced this action on September 22, 2004 by filing a complaint in the New York Supreme Court, Erie County against SourceOne and Dalrada, alleging a breach of contract. (Notice of Removal, Docket No. 1, Ex. A.)*fn2 The action was subsequently removed to the United States District Court for the Western District of New York on December 23, 2004. (Id.)

On June 23, 2006 Plaintiff filed a motion for summary judgment on its breach of contract claim against SourceOne and Dalrada Financial Corp. (Pl.'s Mem 15.) In the same motion, Plaintiff sought a stay pending the resolution of the Workers' Compensation proceeding, then ongoing. (Id. at 19.) This Court granted a stay on August 10, 2006. (Docket No. 64.) The case was ordered reopened on March 11, 2009, following the conclusion of that proceeding. (Docket No. 73.)

Based on the decision by the Workers' Compensation Board and its affirmance by the Appellate Division, Plaintiff withdrew from its motion for summary judgment the part claiming a breach of the insuring agreement. (Pl.'s Second Reply 3-4.) Plaintiff continues to seek summary judgment on defendants' obligation to indemnify Plaintiff for costs incurred in defending the Workers' Compensation proceeding. (Id.)

III. DISCUSSION

A. Choice ...


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