The Creelgroup, Inc. v. NGS American, Inc., et al

Filing

Per Curiam OPINION filed : AFFIRMED, decision not for publication. Ronald Lee Gilman, Circuit Judge; John M. Rogers, Circuit Judge and Jeffrey S. Sutton, Circuit Judge.

Case: 12-1686

Document: 006111631045

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NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
File Name: 13a0289n.06
No. 12-1686

FILED

UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT

THE CREELGROUP, INC.,
Plaintiff-Appellant,
v.
NGS AMERICAN, INC., Employee Benefit Plan
Trust; TRUSTCO HOLDINGS, INC.; SCOTT
MCLELLAN,
Defendants-Appellees.

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Mar 22, 2013
DEBORAH S. HUNT, Clerk

ON APPEAL FROM THE
UNITED STATES DISTRICT
COURT FOR THE EASTERN
DISTRICT OF MICHIGAN

BEFORE: GILMAN, ROGERS, and SUTTON, Circuit Judges.
PER CURIAM. The Creelgroup claims that NGS American breached its contract with
Creelgroup, under which Creelgroup agreed to provide broker services in exchange for a fee. NGS
denies that Creelgroup was ever party to the contract, which was between NGS and Oakwood
Healthcare. NGS moved to dismiss the action under Federal Rule of Civil Procedure 12(b)(6). The
district court granted NGS’s motion and denied Creelgroup’s motion for reconsideration. Because
Creelgroup was never a party to the contract between Oakwood and NGS, we agree with the district
court that Creelgroup has failed to state a claim for relief.
Creelgroup is a healthcare-consulting firm and broker, which provides its services to
employers with self-funded medical benefit plans. Creelgroup assists its clients with selection and
oversight of third-party plan administrators, such as NGS American, Inc. In 2005, Creelgroup

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The Creelgroup v. NGS American, et al.
brokered a deal in which NGS administered Oakwood’s healthcare plan.

That deal was

memorialized in an agreement. In a subsequent amendment to that agreement, NGS agreed to remit
to Creelgroup a commission of two dollars per employee per month under the amended terms of its
contract with Oakwood.
Creelgroup was not mentioned in the original agreement between Oakwood and NGS, the
“Administrative Services Agreement,” which came into effect on January 1, 2005. See R.12-1.
Later that year, NGS and Oakwood entered into an amendment, the “First Amendment to Service
Agreement.” See R. 12-2. This “First Amendment” provided for the commission to be paid by NGS
to Creelgroup. The First Amendment indicates that the “Product” is “Medical Administration” and
the “Fee or Commission” is “$2.00 [per employee per month].” Id. at 14. Appendix A indicates that
“IN THE EVENT FEES OR COMMISSIONS ARE PAYABLE TO AN AGENT BY NGS UNDER
THIS ADDENDUM, SUCH FEES OR COMMISSIONS WILL BE MAILED FIRST CLASS MAIL
TO:” and Creelgroup’s address is provided. Id. at 15 (caps in original). The signature page also
states the following:
By the signatures of their duly authorized officers or other persons, . . . [Oakwood
agrees] to pay NGS the fees set forth in Appendix A of the Agreement, and
acknowledge and approve as reasonable the fees and commissions, if any, paid to
NGS and any designated agent/broker with respect to the Plan related insurance
products listed above.
Id. (emphasis added). NGS, Oakwood, and Creelgroup representatives each signed this page.
NGS and Oakwood renewed their agreement in 2008 for an additional thirty-six months
under the “Second Amendment to Service Agreement,” which, as in the First Agreement, designated

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Creelgroup as the commission agent. See R. 12-3. Creelgroup expected to receive commissions for
the entire thirty-six month period from January 2, 2008 to December 31, 2010. However, Creelgroup
stopped receiving payments from NGS in October 2008 after Geoff Brieden, Creelgroup’s national
sales manager, left the company to found his own healthcare consultancy, Kane Atwood Group
Services, and took Oakwood’s business with him.1 NGS and Oakwood subsequently negotiated a
new agreement, which replaced Creelgroup with Kane Atwood as the agent designated to receive
the commissions. See R. 13-1.
Creelgroup filed suit in federal district court alleging, among other claims, breach of contract
against NGS and Trustco.2 NGS moved to dismiss, and the district court granted NGS’s motion.
The Creelgroup, Inc. v. NGS Am., Inc., No. 11-CV-13798, 2012 U.S. Dist. LEXIS 52958 (E.D.
Mich. Apr. 16, 2012). The district court held that Creelgroup did not have a contractual relationship

1

Prior to his departure, Creelgroup employed Geoff Brieden, who was previously an employee of
NGS, as its national sales manager. One of Brieden’s duties was to provide in-person services to Oakwood.
The employment relationship between Creelgroup and Brieden ended, and Brieden formed Kane Atwood,
which subsequently replaced Creelgroup as NGS’s commission agent. That replacement was the subject of
a separate lawsuit in federal district court, The Creelgroup v. Brieden, No. 09-12493, 2010 U.S. Dist. LEXIS
76777 (E.D. Mich. July 29, 2010), which the parties eventually resolved and dismissed by stipulation.
Creelgroup contends that Scott McCellan, NGS’s Vice President, began working for Kane Atwood
while still employed at NGS and helped Brieden steal Oakwood’s business from Creelgroup. Creelgroup
notes that Brieden established a Kane Atwood email address for McClellan during his employment at NGS.
Creelgroup alleges that McClellan “intentionally, willfully, unlawfully, without justification, with malice,
and in bad faith, induced, contributed to, participated in, and caused the unlawful breach of the 2005
Agreement and the 2008 Second Amendment among Oakwood, NGS CoreSource and Creelgroup.” First
Amended Complaint, R. 11 at 10.
2

It is unclear from the record, and it was unclear to the district court, why TrustCo Holdings, Inc.
(a separate entity that controls the management and operation of NGS) is a named defendant in this suit. See
The Creelgroup, 2012 U.S. Dist. LEXIS 52958, at *2 n.1.

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with NGS because there was no mutuality of obligation under Michigan law. The district court held
that “[t]he contracts between Oakwood and NGS do not create an obligation for Creel[group] to
discharge.” Id. at *9. The court emphasized that “[n]othing in the language of the contract creates
an obligation for Creel[group] to do anything.” Id. Finally, the district court considered sua sponte
the argument that Creelgroup could enforce the terms of a contract between NGS and Oakwood as
a third-party intended beneficiary, but concluded that Creelgroup was at most an incidental
beneficiary lacking enforcement authority. Id. at *10-11.
Creelgroup moved for reconsideration, but the district court denied that motion in a written
order in which it noted that Creelgroup’s claim failed not because the contracts lacked consideration,
but because Creelgroup “was not a party to the 2005 and 2008 contracts between Oakwood and
NGS, and . . . the contracts did not create an obligation for Creel[group] to discharge.” The
Creelgroup, Inc. v. NGS Am., Inc., No. 11-CV-13798, 2012 U.S. Dist. LEXIS 81285, at *3 (E.D.
Mich. June 12, 2012). Creelgroup now appeals.
We agree that Creelgroup fails to state a claim for relief because it has not pleaded sufficient
facts to show that it was a party to the contract. We review the district court’s grant of the motion
to dismiss de novo. Buck v. Thomas M. Cooley Law Sch., 597 F.3d 812, 816 (6th Cir. 2010). To
survive a motion to dismiss, Creelgroup must plead “enough facts to state a claim to relief that is
plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). “A claim has facial
plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable
inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662,

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678 (2009). While the court must accept all well-pleaded factual allegations as true and construe the
complaint in the light most favorable to Creelgroup, it need not accept unwarranted factual
inferences. Bennett v. MIS Corp., 607 F.3d 1076, 1091 (6th Cir. 2010).
In this diversity case, we apply the substantive law of Michigan. Anton v. Nat’l Union Fire
Ins. Co., 634 F.3d 364, 367 (6th Cir. 2011). Under Michigan law, a breach-of-contract claim
requires that the plaintiff establish that he or she was a party to the contract at issue. See McInerney
v. Detroit Trust Co., 271 N.W. 545 (Mich. 1937); Hallett v. Gordon, 87 N.W. 261, 262 (Mich.
1901); L. Loyer Constr. Co. v. Novi, 446 N.W.2d 364, 370 (Mich. Ct. App. 1989). Creelgroup fails
to make such a showing here.
Although Creelgroup rightly asserts that the relevant question is whether it is “plausible on
its face that Creelgroup pleaded the existence of a contract with NGS,” we must review the contract
itself in addition to the pleadings. Creelgroup cannot survive a motion to dismiss, even if it has
pleaded the existence of a contract, if the written instrument plainly contradicts the pleadings
because “when a written instrument contradicts allegations in the complaint to which it is attached,
the exhibit trumps the allegations.” Williams v. CitiMortgage, Inc., No. 11-3431, 2012 U.S. App.
LEXIS 18718, at *10 (6th Cir. Sept. 14, 2012) (quoting N. Ind. Gun & Outdoor Shows, Inc. v. City
of S. Bend, 163 F.3d 449, 454 (7th Cir. 1998)); see Fayetteville Investors v. Commercial Builders,
Inc., 936 F.2d 1462, 1465 (4th Cir. 1991) (“Indeed, in the event of conflict between the bare
allegations of the complaint and any exhibit attached pursuant to Rule 10(c), Fed. R. Civ. P., the
exhibit prevails.”).

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A close reading of the contract reveals that Creelgroup was never a party to the contract. The
2005 First Amendment and the 2008 Second Amendment indicate only that Creelgroup consented
to receive a fee of two dollars per employee per month for previously brokering the deal between
NGS and Oakwood, and Creelgroup raises no claim that at the time it brokered the deal, it had
entered into a fee agreement. The contract as a whole reinforces the conclusion that this was a
contract between NGS and Oakwood only. See Wilkie v. Auto-Owners Ins. Co., 664 N.W.2d 776,
781 n.11 (Mich. 2003) (“We read contracts as a whole, giving harmonious effect, if possible, to each
word and phrase.”). The Second Amendment’s language refers only to two parties. See R. 12-3 at
1 (“This Agreement may be discontinued . . . [b]y either party . . . [and] either party shall be free to
seek to enforce its rights under the Agreement.”) (emphasis added). The 2005 Agreement also states:
“This Agreement may not be amended without the express written consent of both parties.” R. 12-1
at 18 (emphasis added). It is clear that Creelgroup was not a party to the contract because the 2005
Agreement requires only Oakwood and NGS’s written consent to legally amend its terms. As a nonparty to the agreement, Creelgroup cannot state a claim for relief.
Creelgroup alternatively argues that a contract can be implied by the conduct of the parties,
relying on this court’s decision in Contship Containerlines v. Howard Industries, 309 F.3d 910, 912
(6th Cir. 2002). That case is inapposite, however, because under Michigan law, an implied contract
can exist only if there is no express contract. Martin v. E. Lansing Sch. Dist., 483 N.W.2d 656, 661
(Mich. Ct. App. 1992). Here, there was an express written contract governing the agreement, even
if Creelgroup was not party to that agreement. An implied contract also requires that the parties have

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a mutual intention to contract. Erickson v. Goodell Oil Co., 180 N.W.2d 798, 800 (Mich. 1970).
Creelgroup has not pleaded sufficient facts to show that NGS had any intention to form a contract
with Creelgroup. Creelgroup cannot survive the motion to dismiss on an implied-contract theory.
Finally, Creelgroup cannot enforce a potential right to a broker’s commission as an intended
third-party beneficiary of the contract. Although Creelgroup did not raise the issue below and does
not raise it on appeal, the district court considered the argument sua sponte. We agree with the
district court that Creelgroup was at best an incidental beneficiary of the contract.
The district court’s judgment is affirmed.

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