Arizaga v. John Bean Technologies Corporation et al
Filing
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Order Denying Third-Party Defendant Ventura Coastal, LLC's Motion For Summary Judgment (ECF No.46), signed by Magistrate Judge Michael J. Seng on 1/25/2016. (Yu, L)
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IN THE UNITED STATES DISTRICT COURT
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FOR THE EASTERN DISTRICT OF CALIFORNIA
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1:13-cv-1981-MJS
STEVEN ARIZAGA
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v.
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ORDER DENYING THIRD-PARTY
Plaintiff, DEFENDANT VENTURA COASTAL, LLC’S
MOTION FOR SUMMARY JUDGMENT
(ECF No. 46)
JOHN BEAN TECHNOLOGIES
CORPORATION,
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Defendant.
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AND RELATED ACTION
I.
INTRODUCTION
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Plaintiff Steven Arizaga initiated this case against John Bean Technologies
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Corporation and related entities in Tulare County California Superior Court on November
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12, 2013. He there sought, and continues to seek, recovery, under negligence and
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products liability theories, for personal injuries he sustained during the course of his work
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for Ventura Coastal, LLC, using equipment sold by Bean (or its predecessor) to Ventura
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and installed in Ventura’s fruit processing facility. Bean removed the case to this Court
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and, as a Third Party Plaintiff, sued Third Party Defendant Ventura Coastal, LLC, for
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indemnity. Ventura answered and then, on November 13, 2015, filed this motion for
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summary judgement (ECF No. 46). Bean filed an opposition (ECF No. 47) and Ventura
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a reply (ECF No. 48). All parties having consented to Magistrate Judge jurisdiction for all
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purposes, the matter was argued before the undersigned on December 11, 2015, and
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submitted for decision on that date.
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II.
UNDISPUTED FACTS
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The following brief and straight-forward facts give rise to this litigation and this
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motion for summary judgement; they are found to be without material dispute unless
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otherwise indicated1:
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Ventura Capital is a wholesale processor of citrus juice and has a juice
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processing facility in Visalia, California. Bean, an equipment seller and servicer, has
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long done business with Ventura and apparently continues to do so. Bean formerly
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operated as FMC Technologies, Inc. and had a division named FMC FoodTech-Citrus
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Systems. It was under these two latter names that the equipment at issue in this case
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was sold and the contract at issue signed. Bean has since succeeded to and assumed
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all of the seller’s rights and obligations under the sales contract. For sake of simplicity,
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the Court will simply refer to the seller/Third Party Plaintiff as Bean and the buyer/Third
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Party Defendant as Ventura.
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Pursuant to a May, 2008, Sales Contract, Bean sold to Ventura and installed in
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Ventura’s Visalia plant a conveyor belt system. [Ventura Undisputed Fact (“VUF”) 1.]
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The installation was completed in 2008. [VUF 8.]
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Plaintiff Arizaga was a mechanic employed by Ventura. On December 28, 2012,
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while he was performing maintenance on the conveyor belt within the course and scope
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of his employment with Ventura, he reports he slipped on oil residue and was injured by
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the belt’s operation. He brought suit against Bean alleging design and/or manufacturing
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defects in the conveyor system – specifically, absence of a guard that would have
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They may include, if and as the Court deems relevant, facts proffered by John Bean Technologies
Corporation (ECF No. 47-2) that, though objected to as irrelevant by Ventura Coastal, were not disputed
(ECF No. 48-1).
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prevented his injury and shortage of emergency stops – and other allegedly tortious
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conduct. [VUF 12-17.]
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Bean sues Ventura for indemnity against Arizaga’s claims pursuant to the terms
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of the sales contract between Ventura and Bean. Ventura argues that the contract
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precludes indemnity on facts such as those presented here.
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The determinative contractual “Indemnity and Disclaimer” language, in Paragraph
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4 of the Sales Contract, is referenced as briefly as the facts. Again for simplicity’s sake,
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the Court will substitute the parties’ current names for their former names and, as
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applicable, for “purchaser.” The contract, prepared by Bean and apparently accepted
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without modification by Ventura, provides in pertinent part: Ventura “shall release,
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defend, hold harmless and indemnify” Bean against personal injury suits by Ventura’s
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employees and contractors “arising out of the Work.” Likewise, Bean is obligated to
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“release, defend and hold harmless and indemnify” Ventura against personal injury suits
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brought by Bean’s employees and contractors “arising out of the Work.”
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A third reciprocal paragraph governs claims by third parties who are not
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employees of either Bean or Ventura. It provides in essence that Bean will indemnify
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Ventura for injuries caused by Bean, and Ventura will indemnify Bean for injuries caused
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by Ventura. There is no reference in this third party paragraph to injuries arising “out of
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the Work.” [VUF 3.]
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III.
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THE DISPUTE
So, the issue, like the facts, is quite simple: Did Mr. Arizaga’s injuries “arise out to
the Work” as that phrase is used in the contract.
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Bean claims the contractual indemnity language is clear: Where, as here, a
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Ventura employee suffers an injury arising out of operation of this conveyor belt, Ventura
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is to indemnify Bean against the employee’s claims.
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Ventura responds that the clear wording of the contract makes the foregoing true
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only as to a personal injury claim which arises out of installation of the belt because
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another portion of the 2008 contract defines the “scope of work” to be Bean’s provision
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of “materials and labor to install” the conveyor belt at issue in this case (as well as other
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equipment not at issue). [VUF 4 & 6.] According to Ventura, once installation of the
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conveyor was complete in 2008, Ventura’s employees performed no other work falling
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within the said “scope of work” and no indemnity is owed for injuries, such as Arizaga’s,
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occurring after the installation was complete. [VUF 9.]
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More specifically, all agree that the indemnity obligation is limited to personal
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injury suits which arise out of the “Work.” What is the “Work”? Ventura argues (see
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generally VUF 4-7): that since the word is not explicitly defined in connection with its use
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in the indemnity contract, we must look elsewhere in the contract for definition. It finds,
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and refers us to, the third “Proposal Note” on the first page of the Sales Contract which
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states “Pricing shown is for the scope of work as defined. . .” (ECF 46-5.) Regrettably,
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“scope of work” is not defined there and nowhere does it say where it is defined.
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But, Ventura asserts, without explaining how it arrives at this conclusion, “scope
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of work’’ in the notes and “Work” in the indemnity provision both refer to the same thing,
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i.e., to what has been called the “Scope Document” for the “Phase II Plant Upgrade
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2008.” (ECF 46-8.) The Scope Document lists the various tasks each of the parties is to
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carry out with regard to this Plant Upgrade. It provides, among other things, that Bean is
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to provide the material and labor necessary to install modifications necessary to add
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several pieces of equipment including the conveyor belt Mr. Arizaga blames for his
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injuries. Ventura likewise is charged with providing employees and contractors to supply
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specified labor and materials necessary to adding the equipment. Ventura notes, without
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dispute, that Arizaga’s injuries arose long after installation of the belt was completed.
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Ventura then comes to the conclusion that since the indemnity obligation only applies to
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injuries arising out of “the Work,” and the only definition of “the Work” is that contained in
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the Scope of Work Document which describes only installation of the belt, no indemnity
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obligation exists for this post-installation injury. The problem, as Bean points out, with
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this final conclusion of Ventura is that it is based exclusively on Ventura’s interpretation
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of the contract and unsupported by general rules of construction, case law, or other
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authority.
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Bean argues that such a strained and limited interpretation of the contractual
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indemnity language would defeat its very purpose by cutting off protection for Bean at
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the very time it would begin to need it – when Ventura’s employees began working with
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the equipment under Ventura’s exclusive control and direction and without any
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participation by Bean. In this regard, Bean notes Arizaga’s complaint that the belt was
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too close to a barrier and that it should have had emergency stops and a pull cord
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running its full length. He complains that his work for Ventura required him to remove
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the guards and maintain the belt while it was running. He says he slipped on a spilled
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substance near the belt, fell onto it and could not shut it off. Bean argues without
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dispute that it had no responsibility for any of those circumstances or their correction. All
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were under the control of Ventura who trained Arizaga, told him to remove the guard for
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maintenance, determined where to put emergency stops and had its contractor install
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them, modified the belts and their guards after Bean’s installation, and maintained the
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walkway where Arizaga slipped.
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Further, according to Bean, and again without argument from Ventura: Ventura is
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a sophisticated user who advises Bean as to what it wants Bean’s equipment to do and
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where and how within their plant it wants the equipment to do it and then asks Bean to
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design and build and install equipment that will meet those needs. Everything Bean does
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within its scope of work is done exclusively by Bean. It does not work side-by-side with
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Ventura on the installation. Ventura designs the emergency stops and has its contractor
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install and wire them independently of Bean’ installation work. The result according to
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Bean: There could never have been a circumstance where a Ventura employee was
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injured during the installation of what was in Bean’s scope of work because no Ventura
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employee worked on that installation. Thus, under Ventura’s interpretation of the
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indemnity provision, its coverage would have ended at the very time Bean needed it –
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when the installation was complete and Ventura and its employees became solely
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responsible for, and in control of, its operation and maintenance without involvement on
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the part of Bean. Ventura’s interpretation would leave the parties with an agreement to
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indemnify against something which by definition could not occur.
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Bean also cites compellingly to cases interpreting “arising out of” in the much
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broader sense it urges on this Court. Under these cases, the phrase “arising out of”
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“broadly links a factual situation with the event creating liability, and connotes only a
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minimal causal connection or incidental relationship.” Crown v. Capital Secs., L.P. v.
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Endurance Am. Specialty Ins. Co., 235 Cal. App. 4th 1122, 1131 (2015) (quoting
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Acceptance Ins. Co. v. Syufy Enterprises, 69 Cal. App. 4th 321, 328 (1999)). Thus, Bean
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argues, the indemnity provision for actions “arising out of the Work” is not time-limited to
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the period during the installation, but instead extends to any injuries with any minimal
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causal connection to the conveyor belt or its installation. The claims at issue here arise
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out of Mr. Arizaga’s use of the conveyor and alleged defects with its installation, and
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therefore fall within the indemnity provision.
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Ventura offers no response to this line of cases beyond insisting that the Scope
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Document controls. Ventura maintains that given that document, the indemnity provision
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is limited to the time of the Phase II Plant Upgrade, and any obligation to indemnify
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ceased upon completion of installation of the belt as described therein.
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IV.
DISCUSSION
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“[T]he question [of] whether an indemnity agreement covers a given case turns
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primarily on contractual interpretation, and it is the intent of the parties as expressed in
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the agreement that should control.” Rossmoor Sanitation, Inc. v. Pylon, Inc., 13 Cal. 3d
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622, 632 (1975). The intent of the parties is to be ascertained primarily from the clear
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and explicit language of the agreement. Centex Golden Constr. Co. v. Dale Tile Co., 78
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Cal. App. 4th 992, 996 (2000). Unless given some special meaning by the parties, the
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words of a contract are to be understood in their ordinary and popular sense. Id. at 996–
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997.
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Given the primacy of the words of the contract, the Court begins its analysis by
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examining the phrase “arising out of.” As previously stated, California courts routinely
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interpret this phrase broadly to encompass any injury having “a minimal causal
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connection or incidental relationship” to the subject of the agreement. Crown, 235 Cal.
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App. 4th at 1131. No contrary interpretation has been urged on the Court. Thus, the
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Court interprets the indemnity provision to apply to any injury “originating from, having its
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origin in, growing out of, or flowing from, or in short, incident to, or having connection
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with” the Work. See id. at 1130-31 (quoting Davis v. Farmers Ins. Group, 134 Cal. App.
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4th 100, 107 (2005)).
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There remains, however, some dispute as to what constitutes the “Work.”
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According to Ventura, the Work is comprised only of the installation detailed in the Scope
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Document. According to Bean, the Work includes both the installation and the installed
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equipment. In light of the broad interpretation of the phrase “arising out of,” this
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distinction is somewhat inconsequential. Nevertheless, the Court notes that the Scope
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Document, relied on heavily by Ventura, discusses with some specificity the “materials
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and labor” included within the Phase II Plant Upgrade. Nothing in the sales contract or
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the Scope Document purports to limit the Work to the installation or to exclude the
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equipment from the scope of the Work. Reading the sales contract as a whole, the only
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supportable conclusion is that the Work includes both the equipment and its installation.
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The Court therefore must conclude that the indemnity provision applies to any
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injury having “a minimal causal connection or incidental relationship” with the “materials
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and labor” that are the subject of the sales contract. Mr. Arizaga’s alleged injuries,
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allegedly attributable to the conveyor belt installed by Bean pursuant to the sales
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contract, clearly fall within the scope of this provision.
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Ventura’s contrary argument that the indemnity provision is limited to injuries
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occurring during the installation and Phase II Plant Upgrade must be rejected. This
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argument is inconsistent with the sales contract and unsupported by case law
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interpreting the phrase “arising out of.” The Court also agrees with Bean that Ventura’s
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interpretation would lead to an absurd result – since no Ventura employees worked on
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the conveyor during its installation, Ventura would have contracted to indemnify against
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something which could not occur. See Cal. Civ. Code § 1638 (the language of a contract
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governs unless it would result in an absurdity); see also Rossmoor, 13 Cal. 3d at 632
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(noting that the analysis regarding the duty to indemnify also “requires an inquiry into the
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circumstances of the damage or injury”).
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Lastly, the Court rejects Ventura’s argument that it would be unconscionable to
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require indemnity in these circumstances. Ventura claims that doing so is “akin to
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Firestone and Ford holding the driver of a vehicle responsible for Firestone’s and Ford’s
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own failure to produce a product free of defects.” (ECF No. 48 at 2.) This analogy is
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inapt. Ventura is a sophisticated user and, unlike the driver of a vehicle, is deeply
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involved in the process of selecting, modifying and maintaining this equipment on its
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premises. Under these circumstances, “[w]hen the parties knowingly bargain for the
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protection at issue, the protection should be afforded.” Rossmoore, 13 Cal. 3d at 632.
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In sum, the Court concludes that the indemnity provision requires Ventura to
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indemnify Bean under the facts of this case. This conclusion appears to resolve not only
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Ventura’s motion for summary judgment, but also the claims in Bean’s third party
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complaint (ECF No. 13). That complaint seeks a court order requiring Ventura to
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indemnify Bean for “for any and all costs, losses, liabilities, expenses (including
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attorneys’ fees), judgments, fines, and amounts actually and reasonably incurred in this
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action attributable to liability caused by Ventura Coastal or its contractors.” (Id.) The
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Court has concluded herein that Ventura has such an obligation. Nevertheless, Ventura
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argues that it would be procedurally improper for the Court to grant summary judgment
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to Bean, a non-movant, without providing Ventura notice of this possibility and a
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reasonable time to respond.
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A district court may sua sponte grant summary judgment in favor of the non-
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moving party if there are no factual issues, the moving party had notice and an adequate
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opportunity to address the issues, and the non-moving party is entitled to judgment as a
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matter of law. Cool Fuel, Inc. v. Connett, 685 F.2d 309, 311 (9th Cir. 1982). Generally,
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the moving party on a motion for summary judgment has “a full and fair opportunity to
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ventilate the issues involved in the motion.” Id. at 312. Here, the Court questions
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Ventura’s claim that it has not had sufficient notice or opportunity to respond to the
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possibility of judgment against it. Indeed, Ventura has twice had the opportunity to draw
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the Court’s attention to facts and authority in support of its position, through its motion for
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summary judgment and reply brief. Nevertheless, out of an abundance of caution, the
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Court herein provides notice to Ventura under Rule 56(f) of the Federal Rules of Civil
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Procedure of the Court's intent to grant summary judgment. The Court also will afford
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Ventura an opportunity to respond.
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V.
CONCLUSION AND ORDER
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Based on the foregoing, the Court concludes that the indemnity provision at issue
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requires Ventura to defend and indemnify Bean in this action. Accordingly, Ventura’s
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motion for summary judgment (ECF No. 46) is HEREBY DENIED.
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The Court further provides notice pursuant to Rule 56(f) of the Court's intent to
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grant summary judgment in favor of the non-moving party, Bean, on the basis of the
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analysis above. The parties will have 14 days from the date of this Order to respond to
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this Court's notice of intent to grant summary judgment. The parties shall keep in mind
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that the Court has carefully considered the points, authorities and arguments in the
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briefing of the instant Motion. Those arguments are preserved for appellate review.
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Accordingly, responses, if any, to the notice of intent to grant summary judgment shall
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not repeat or reassert arguments or facts presented in connection with the instant
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Motion.
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IT IS SO ORDERED.
Dated:
January 25, 2016
/s/
Michael J. Seng
UNITED STATES MAGISTRATE JUDGE
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