Free Reply - District Court of Colorado - Colorado

Case 1:01-cv-00568-LTB-PAC

Document 428

Filed 04/07/2006

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO Civil Action No. 01-CV-00568-LTB-PAC CROSS COUNTRY LAND SERVICES, INC., a Texas corporation, Plaintiff, v. PB NETWORK SERVICES, INC., a Delaware corporation, PB TELECOMMUNICATIONS, INC., a Delaware corporation, LEVEL 3 COMMUNICATIONS, LLC, a Delaware limited liability company, KIEWIT NETWORK SERVICES CO., a Delaware corporation, and KIEWIT CONSTRUCTION CO., a Delaware corporation, Defendants, and PB NETWORK SERVICES, INC., a Delaware corporation, LEVEL 3 COMMUNICATIONS, LLC, a Delaware limited liability company, and KIEWIT NETWORK SERVICES CO., a Delaware corporation, Third-Party Plaintiffs, v. JAMES STEVENSON, WILLIAM STEVENSON, ED CROWSTON, and LARRY ORTH, Third-Party Defendants. _____________________________________________________________________________ KIEWIT NETWORK SERVICES CO.'S REPLY BRIEF REGARDING REMAINING CONSTRUCTIVE TRUST ISSUE _____________________________________________________________________________ Defendant Kiewit Network Services Co. ("KNS"), through counsel, Grimshaw & Harring, P.C., submits the following reply brief regarding the constructive trust issue remaining before the Court.

Case 1:01-cv-00568-LTB-PAC

Document 428

Filed 04/07/2006

Page 2 of 4

ARGUMENT A. The interpleader motion. Cross County first argues that although it may not have specifically pled rescission in its initial pleadings setting forth its claims against PBNS, it had articulated a claim to void the payment provisions of the PBNS-Cross Country Contract and therefore PBNS was on constructive notice that Cross Country sought rescission. However, even if it is assumed that PBNS was on constructive notice that Cross Country sought to rescind the contract, at the time the interpleader motion was filed Cross Country was simultaneously asserting a claim for breach of contract against PBNS (Cross Country's original fifth claim for relief). PBNS' interpleader motion clearly demonstrates that PBNS had determined, based upon the rates in the contract, that $344,810.60 was owing to either Cross Country or to one or more of its subcontractors under the contract. Therefore, Cross Country's argument that the admission contained in the interpleader motion should somehow be viewed as an admission that such monies were due to Cross Country even if Cross Country abandoned its contract claim must be rejected. The interpleader motion clearly referred to the monies that may be owed under the contract, a contract pursuant to which Cross Country was then asserting a claim. After Cross Country elected to seek to rescind the contract rather than to seek to enforce the contract the contract claim was dismissed and the contract right, if any, was abandoned and the corresponding obligation of PBNS was, therefore, discharged. B. Unjust Enrichment/Evidence of wrongdoing. Cross Country next argues that a constructive trust may be imposed against KNS because KNS has been unjustly enriched and because KNS has no legal right to the $344,810.60. However, the Court has made no finding that KNS has been unjustly enriched, nor did Cross Country ever assert an unjust enrichment claim against KNS in this litigation. The appropriate question is not whether KNS has a legal right to the funds, but whether Cross Country has a legal right to the funds. All of Cross Country's claims that would give Cross Country a right to the funds have either been dismissed as a result of Cross

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Case 1:01-cv-00568-LTB-PAC

Document 428

Filed 04/07/2006

Page 3 of 4

Country's election to pursue rescission rather than the contract or have been adjudicated against Cross Country by the Court at trial. KNS had paid these funds to PBNS because PBNS had submitted invoices to KNS supporting the payment under the contract terms. The sole basis for PBNS' invoices in this amount to KNS were the invoices from Cross Country to PBNS for services performed by Cross Country and its subcontractors. Because Cross Country can no longer recover for these invoices as a result of its election against the contract and because of its failure to prevail on any claims at trial, Cross Country is the party with no legal right to the funds. Cross Country cannot therefore be found to be the party in whom the funds justly belong nor can it be said that KNS unfairly holds the property. See Lyons v. Jefferson Bank & Trust, 793 F. Supp. 981 (D. Colo. 1992). Without a legal right to the funds the constructive trust imposed upon KNS as the current holder of the funds should be discharged. Dated this 7th day of April, 2006.

Respectfully submitted, GRIMSHAW & HARRING, P.C. s/ Philip M. Quatrochi Richard L. Harring Philip M. Quatrochi 1700 Lincoln Street, Suite 3800 Denver, Colorado 80203 Telephone: (303) 839-3800 Attorneys for Defendants PB Network Services, Inc., Level 3 Communications, LLC, Kiewit Network Services Co. and Kiewit Construction Co.

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Case 1:01-cv-00568-LTB-PAC

Document 428

Filed 04/07/2006

Page 4 of 4

CERTIFICATE OF SERVICE I hereby certify that on April 7th, 2006, I electronically filed the foregoing KIEWIT NETWORK SERVICES CO.'S REPLY BRIEF REGARDING REMAINING CONSTRUCTIVE TRUST ISSUE using the CM/ECF system which will send notification of such filing to the following: Gregory C. Smith Fairfield and Woods, P.C. Wells Fargo Center, Suite 2400 1700 Lincoln Street Denver, CO 80203-4524 s/ Philip M. Quatrochi

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