Edison Learning, Inc. v. Sch. Dist. of Phila., Civil Action No. 11–7190.

56 F.Supp.3d 674

EDISON LEARNING, INC., Plaintiff

v.The SCHOOL DISTRICT OF PHILADELPHIA, Defendant.

Civil Action No. 11–7190.

United States District Court, E.D. Pennsylvania.

Signed Oct. 21, 2014.

Chanda A. Miller, Drinker Biddle & Reath LLP, Philadelphia, PA, Michael O. Adelman, Drinker Biddle & Reath LLP, New York, NY, for Plaintiff.

Miles H. Shore, School District of Phila., Philadelphia, PA, for Defendant.

Opinion

ANITA B. BRODY, District Judge.

Plaintiff Edison Learning, Inc. (“Edison Learning” or “Edison”) brings suit against Defendant School District of Philadelphia (“School District”) for breach of contract, claiming that the School District must reimburse Edison Learning for its legal fees and settlement costs from a prior suit. The School District moves for summary judgment, claiming sovereign immunity. The School District has filed a counterclaim seeking its own attorneys' fees from Edison Learning for the same prior suit. Both the School District and Edison Learning move for summary judgment on the counterclaim. For the reasons discussed below, I will grant the School District's motion for summary judgment on Edison's claims, grant Edison Learning's motion for summary judgment on the School District's counterclaim, and deny the School District's motion on its counterclaim.¹

I. BACKGROUND

A. The Agreement

Edison Learning is a private education services contractor that partners with school districts across the country to administer their public schools. On July 29, 2002, Edison entered into one such agreement with the School District of Philadelphia called the Educational Services Agreement (“ESA”). The ESA obligated Edison to provide curriculum management, administrative support, and academic support at a number of Philadelphia public schools, including the John B. Stetson Middle School (“Stetson”).

Three aspects of the ESA are relevant to the instant lawsuit. First, the contract between Edison and the School District carefully delineates the obligations of each entity in the relevant schools. Specifically, with respect to school security, the ESA states that:

[The] School District shall at School District's sole expense provide all appropriate safety and police protection to all students and employees in [relevant schools] during school hours.

Pl.'s Resp. to Def.'s Mot. Summ. J., ECF No. 56, Ex. 1, at 34 (emphasis added).

The ESA also contains provisions allocating liability between the two parties in the event of a lawsuit. Section 12.2, labeled “Indemnification,” entitles the School District to payment for any liability it incurs as a result of Edison Learning's negligent or wrongful conduct. It states in relevant part:

[Edison Learning] hereby agrees to indemnify the School District ... and agrees to hold [the School District] harmless from any and all liabilities, losses, ... lawsuits ... and costs and expenses (including without limitation reasonable expenses of investigation and reasonable attorneys' fees ...) incurred or suffered by [the School District] arising out of the willful misconduct or negligent act or negligent omission of [Edison Learning] in connection with the performance of its obligations or the delivery of Educational Services contained in this agreement....

Id., Ex. 1, at 47.

Finally, the ESA contains two provisions purporting to maintain the School District's statutory sovereign immunity:

Section 12.5 provides that nothing in the agreement “shall be considered as a waiver of ... sovereign or governmental immunity [of] the School District....”

Section 15.2 reiterates that “[t]he School District does not waive any immunity or defense ... as a result of the execution of this Agreement and performance of the functions or obligations described herein. Nothing herein shall waive or amend any defense ... under the Pennsylvania Political Subdivision Tort Claims Act.”

Id., Ex. 1., at 48, 55 (citations omitted).

B. The Viruet Incident and Litigation

On November 16, 2004, Christopher Viruet, a sixth grade student at Stetson Middle School, asked his math teacher for a hall pass to use the restroom. While Viruet was in the restroom Angel Cuevas, another Stetson student, approached Viruet, threatened him, chased him through the halls to a secluded area of the school, and sexually assaulted him. See id., Ex. 7, at 35–48.

On September 13, 2006, Viruet, through his guardian, filed suit in the Court of Common Pleas of Philadelphia County against Edison Learning and the School District (the “Viruet litigation”). Viruet asserted a variety of tort claims against both Edison Learning and the School District, claiming that they negligently and intentionally failed to ensure a safe school environment and allowed the assault to take place. See id., Ex. 15 (including negligent, reckless, intentional and outrageous conduct, assault and battery, and infliction of emotional distress).

As the suit progressed, Edison Learning and the School District decided it would be advantageous to consult and form a coordinated defense strategy. See, e.g., id., Ex. 25. During these discussions, Edison Learning asserts that its general counsel repeatedly requested that the School District indemnify it for any settlement costs the Viruet litigation might produce. Id., Ex. 26, at 45. To this effect, on November 9, 2007 Edison Learning's general counsel sent a draft letter to the School District which included an agreement that the School District would indemnify Edison Learning. Id., Ex. 27. The School District did not sign this draft agreement. Id., Ex. 26, at 88.

On January 31, 2008, Edison Learning and the School District ultimately codified their discussions in a standstill agreement. See id., Ex. 30. The agreement provided that neither party would pursue cross-claims during the Viruet suit and that the agreement was “without prejudice to the rights of either Edison [Learning] or the School District to seek contribution or indemnification.” Id.

Four days later, on February 4, 2008, the School District filed for summary judgment on all claims against it. See Dist's Mot. for Summ. J. on Pl.'s Claims, ECF No. 48, Ex. 5. In its motion, the School District pursued two separate theories. First, it claimed that Pennsylvania's Political Subdivision Tort Claims Act (“PSTCA”) provided immunity from suit and that the Viruet claims did not fall within any of the PSTCA's enumerated exceptions. Id., Ex. 5, at 6–8, 12–19. Second, it claimed it had no duty to protect Viruet from harm done by third parties. Id., Ex. 5, at 8–12.

The Court of Common Pleas ultimately granted the School District's motion in its entirety and dismissed all claims against the School District with prejudice. See ECF No. 56, Exs. 18, 19. No memorandum accompanied the court's determination; the court did not specify the grounds on which it granted summary judgment, nor did it make findings of fact. Id.

Viruet's claims against Edison Learning proceeded to trial. Edison Learning claims that, notwithstanding the fact that the School District had been dismissed from the suit, the School District and Edison Learning regularly communicated about Edison Learning's settlement offers with Viruet with the expectation that the School District would ultimately indemnify Edison if a settlement was reached. Id., Ex. 26, at 82–3, 137–138.

On June 26, 2008—the third day of trial—Edison Learning and Viruet reached an agreement to settle the case. One year later, the Orphan's Court Division of the Court of Common Pleas approved the settlement, ending the suit. Id., Ex. 34.

Both Edison and the School District now seek to recoup their expenses from the Viruet litigation. On November 17, 2011, Edison filed the instant action. Compl., ECF No. 1. Edison seeks its legal fees and costs of settlement pursuant to two related theories. First, it alleges that the School District breached its contractual obligation to provide “appropriate safety and police protection” to Viruet, which resulted in the Viruet litigation and Edison's settlement of the claims against it. Id. at 8–9. Second, Edison claims that during the Viruet litigation the School District orally agreed to indemnify Edison for the lawsuit. Id. at 9–10.

The School District has counterclaimed for its own attorneys' fees from the Viruet litigation. It seeks recovery pursuant to the indemnification provision (section 12.2) of the ESA. See Answer, ECF No. 12, at 7–9.

The School District has moved for summary judgment on Edison Learning's claims and has also moved for summary judgment on its counterclaim. Edison Learning opposes summary judgment on its claims, and has filed its own motion for summary judgment on the School District's counterclaim.

II. Legal Standard

Summary judgment is appropriate “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a).

The moving party bears the initial burden of demonstrating that there is no genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). The nonmoving party must then “make a showing sufficient to establish the existence of [every] element essential to that party's case, and on which that party will bear the burden of proof at trial.” Id. at 322, 106 S.Ct. 2548. In ruling on a motion for summary judgment, the court must draw all inferences from the facts in the light most favorable to the nonmoving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). However, the nonmoving party may not “rely merely upon bare assertions” to support its claims. Fireman's Ins. Co. of Newark, N.J. v. Du Fresne, 676 F.2d 965, 969 (3d Cir.1982).

In essence, the inquiry at summary judgment is “whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251–52, 106...