AGCS Marine Insurance Company v. Tutor Perini Corporation et al

Filing 58


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1 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE NORTHERN DISTRICT OF CALIFORNIA 8 9 AGCS MARINE INSURANCE COMPANY, 11 For the Northern District of California United States District Court 10 12 No. C 17-00544 WHA Plaintiff, v. 13 TUTOR PERINI CORPORATION, et al., 14 Defendants. / 15 16 TUTOR PERINI CORPORATION, 17 Third-Party Plaintiff, 18 19 20 ORDER DENYING TUTOR PERINI’S MOTION TO DISMISS PACIFIC GAS & ELECTRIC COMPANY’S FIRST AMENDED COUNTERCLAIM v. PACIFIC GAS & ELECTRIC COMPANY, a California corporation, et al., Third-Party Defendants. / 21 22 AND RELATED COUNTERCLAIM / 23 24 25 INTRODUCTION In this negligence action, defendant asserted a third-party complaint for indemnity and 26 contribution in the event that it is ultimately held liable to plaintiff and now moves to dismiss a 27 third-party defendant’s reciprocal counterclaim for indemnity and contribution on the same 28 contingent basis. The motion is DENIED. 1 2 STATEMENT Plaintiff AGCS Marine Insurance Company sued defendant Tutor Perini Corporation for 3 negligence, trespass to chattels, trespass, conversion, and ultra-hazardous activity, alleging that 4 Tutor Perini’s excavation, demolition, and construction activities caused water to intrude and 5 damage real property located at 212 Stockton Street, San Francisco, and occupied by AGCS’s 6 insured, Warren Corporation dba Lora Piana & Co., Inc. (see Dkt. No. 1). Tutor Perini 7 answered and filed a third-party complaint against Pacific Gas & Electric Company and General 8 Growth Properties, Inc. (GGP), for equitable indemnity, contribution, comparative fault, and 9 negligence, alleging that the third-party defendants failed to properly seal points of entry into 11 For the Northern District of California United States District Court 10 the Stockton property that could have prevented the water intrusion (see Dkt. No. 16). PG&E answered Tutor Perini’s third-party complaint and counterclaimed against both 12 Tutor Perini and GGP for equitable indemnity, implied indemnity, comparative indemnity, 13 contribution, apportionment, negligence, and declaratory relief, alleging that Tutor Perini 14 negligently broke a water line and that GGP negligently designed, constructed, maintained, and 15 owned the underground electrical utility vault that provided the point of entry for the resulting 16 water intrusion. PG&E further alleges it merely installed electrical equipment in the vault and 17 otherwise had no responsibility for the construction or maintenance of the vault (Dkt. No. 36). 18 The gravamen of PG&E’s counterclaim (which it has already amended once) is that Tutor 19 Perini and GGP negligently caused and bear all liability for the water damage to Lora Piana’s 20 property. As counsel for both sides have confirmed, the counterclaim is a mirror image of the 21 third-party complaint except for its claim for declaratory relief. 22 23 24 25 Tutor Perini now moves to dismiss PG&E’s counterclaim under FRCP 12(b)(6). This order follows full briefing and oral argument. ANALYSIS FRCP 13(a), which governs compulsory counterclaims, provides, “A pleading must state 26 as a counterclaim any claim that — at the time of its service — the pleader has against an 27 opposing party if the claim: (A) arises out of the transaction or occurrence that is the subject 28 matter of the opposing party’s claim; and (B) does not require adding another party over whom 2 1 the court cannot acquire jurisdiction.” The purpose of the rule is “to prevent multiplicity of 2 litigation and to promptly bring about resolution of disputes.” See, e.g., Mitchell v. CB Richard 3 Ellis Long Term Disability Plan, 611 F.3d 1192, 1201 (9th Cir. 2010). 4 FRCP 13(g), which governs crossclaims, provides, “A pleading may state as a 5 crossclaim any claim by one party against a coparty if the claim arises out of the transaction or 6 occurrence that is the subject matter of the original action or of a counterclaim, or if the claim 7 relates to any property that is the subject matter of the original action. The crossclaim may 8 include a claim that the coparty is or may be liable to the cross-claimant for all or part of a 9 claim asserted in the action against the cross-claimant.” PG&E characterizes its pleading only as a compulsory counterclaim under FRCP 13(a) 11 For the Northern District of California United States District Court 10 (Dkt. No. 43 at 5). Its claims against GGP, however, should actually be framed as a crossclaim 12 against a coparty pursuant to FRCP 13(g). This is merely a technical hiccup, since the 13 fundamental nature of the dispute between Tutor Perini, PG&E, and GGP in this action is a 14 simple one. In short, in the event that AGCS is able to prove entitlement to damages, Tutor 15 Perini, PG&E, and GGP disagree as to how liability for those damages should be distributed 16 among the three of them. Only the procedures by which they may assert their respective 17 interests against each other differ. 18 Nevertheless, Tutor Perini contends PG&E’s counterclaim should be dismissed because 19 (1) it is inherently predicated on the outcome of AGCS’s claims against Tutor Perini and 20 therefore cannot be mature under FRCP 13(a), and (2) it merely mirrors Tutor Perini’s third- 21 party complaint without seeking any affirmative relief. Tutor Perini does not otherwise dispute 22 PG&E’s position that its counterclaim would be compulsory under FRCP 13(a). MATURITY CONDITION UNDER FRCP 13(A). 23 1. 24 The maturity condition that Tutor Perini cites comes from FRCP 13(a), which describes 25 a compulsory counterclaim as “any claim that — at the time of its service — the pleader has 26 against an opposing party” (emphasis added). Tutor Perini contends PG&E’s counterclaim is 27 immature, and therefore improper under FRCP 13(a), because it is “contingent upon the 28 outcome of the litigation” between AGCS and Tutor Perini (Dkt. No. 41-1 at 8–9). But Tutor 3 1 Perini does not contend — nor could it — that such contingency would bar either its own third- 2 party complaint against PG&E under FRCP 14(a) or a crossclaim by PG&E against GGP under 3 FRCP 13(g). See Glens Falls Indem. Co. v. United States ex rel. and to Use of Westinghouse 4 Elec. Supply Co., 229 F.2d 370, 373–74 (9th Cir. 1955) (construing FRCP 13 and 14 to 5 “authorize the assertion of cross-claims and third-party claims contingent upon ultimate 6 adjudication of claimant’s liability to plaintiff”). In other words, Tutor Perini urges the odd 7 result that — despite the similarities in their interests in this action — Tutor Perini can assert 8 contingent indemnity and contribution claims against PG&E and GGP under FRCP 14(a), and 9 PG&E can also assert such claims against GGP under FRCP 13(g), but PG&E cannot do so 11 For the Northern District of California United States District Court 10 against Tutor Perini merely because it has brought its claims under FRCP 13(a). Tutor Perini relies primarily on Stahl v. Ohio River Co., 424 F.2d 52 (3d Cir. 1970), a 12 decision from the Third Circuit, in support of its position. In Stahl, plaintiffs injured in a 13 collision between a barge and their motorboat sued the company that owned the barge. The 14 barge owner joined the company operating the barge as a third-party defendant. The barge 15 operator then counterclaimed for contribution against the plaintiffs. The jury found the barge 16 operator negligent and further found that one plaintiff negligently contributed to the collision. 17 The district court entered judgment accordingly. On appeal, the plaintiff argued, as Tutor Perini 18 does here, that a third-party defendant cannot counterclaim for contribution. Id. at 54. The 19 Third Circuit, applying Pennsylvania law, agreed that a claim for contribution could not be the 20 subject matter of a counterclaim under FRCP 13 “because such claim is contingent upon a 21 verdict and judgment establishing liability of a party as a joint tortfeasor.” Id. at 54–55 & n.2. 22 PG&E points out that California law permits cross-claims for indemnity or contribution 23 among tortfeasors before any defendant has been found liable. See Evangelatos v. Superior 24 Court, 44 Cal. 3d 1188, 1197–98 (1988) (citing Am. Motorcycle Ass’n v. Superior Court, 20 25 Cal. 3d 578, 604–07 (1978)); see also NuCal Foods, Inc. v. Quality Egg LLC, 918 F. Supp. 2d 26 1037, 1041–42 (E.D. Cal. 2013) (Judge Kimberly Mueller). It also notes that, after Stahl, other 27 courts have decided the issue differently. See, e.g., In re Oil Spill by Amoco Cadiz Off Coast of 28 France on March 16, 1978, 491 F. Supp. 161, 165 (N.D. Ill. 1979) (acknowledging Stahl but 4 1 concluding that “the recent trend, and the more pragmatic approach, has been to permit 2 counterclaims for contribution”). Amoco Cadiz, for example, adopted the rationale that “This 3 approach seems sound when . . . the counterclaim is based on pre-action events and only the 4 right to relief depends upon the outcome of the main action.” Ibid. (quoting 6 Wright & Miller, 5 Fed. Prac. & Proc. § 1411 (1971)). The only decision from our district to consider Stahl for the 6 holding relied upon by Tutor Perini acknowledged this split and found the “pragmatic 7 approach” more persuasive, also citing Wright & Miller, “because it facilitates the litigation of 8 all of the claims arising from the same occurrences in the same lawsuit.” Lucas v. Hertz Corp., 9 No. C 11–01581, 2012 WL 1496182, at *2 n.3 (N.D. Cal. Apr. 27, 2012) (Judge Laurel Beeler). Springs v. First Nat’l Bank of Cut Bank, 835 F.2d 1293 (9th Cir. 1988), a decision cited 11 For the Northern District of California United States District Court 10 by neither side, is also instructive. There, the defendant bank won a default judgment in a 12 foreclosure action against the plaintiff homeowner. The homeowner then sued the bank for 13 negligence and bad faith. The district court found both claims to be compulsory counterclaims 14 that should have been brought in the prior foreclosure action and granted summary judgment for 15 the bank. Id. at 1295. On appeal, the homeowner argued that his negligence claim did not 16 mature as a counterclaim under FRCP 13(a) until his right to relief arose upon completion of the 17 foreclosure action. Our court of appeals rejected this argument, adopting the rationale 18 articulated by Wright & Miller that a counterclaim is not barred “solely because recovery on it 19 depends on the outcome of the main action,” an approach that “seems sound when the 20 counterclaim is based on pre-action events and only the right to relief depends on the outcome 21 of the main action.” Id. at 1296 (quotations and citation omitted). 22 Here, PG&E’s counterclaim against Tutor Perini — like its crossclaim against GGP and 23 Tutor Perini’s third-party complaint against PG&E and GGP — is clearly based on “pre-action 24 events” concerning the parties’ alleged roles in causing the damage to Lora Piana’s property. 25 Only their respective rights to relief actually depend on the outcome of the main litigation 26 between AGCS and Tutor Perini. In short, this case presents the same conditions under which 27 our court of appeals construed a claim as a compulsory counterclaim under FRCP 13(a) in 28 Springs. This order agrees with Judge Beeler that the “pragmatic approach” to indemnity and 5 1 contribution counterclaims, which draws on the same rationale from Wright & Miller that our 2 court of appeals adopted in Springs, is more persuasive here. PG&E’s counterclaim against 3 Tutor Perini is therefore not barred by FRCP 13(a). 4 2. REDUNDANCY BETWEEN COUNTERCLAIM AND THIRD-PARTY COMPLAINT. 5 Tutor Perini also criticizes PG&E’s counterclaim as “a purely defensive pleading that 6 does not seek or allege any affirmative relief or damages which are not already at issue in the 7 Third-Party Complaint” (Dkt. No. 41-1 at 7). Though styled as a motion to dismiss under 8 FRCP 12(b)(6), the thrust of Tutor Perini’s argument is about the counterclaim’s 9 superfluousness and redundancy, not its legal sufficiency (see, e.g., Dkt. No. 47 at 3–4). The argument therefore seems to draw from FRCP 12(f), which allows a district court to strike from 11 For the Northern District of California United States District Court 10 a pleading any redundant or immaterial matter “to avoid the expenditure of time and money that 12 must arise from litigating spurious issues by dispensing with those issues prior to trial.” See 13 Whittlestone, Inc. v. Handi-Craft Co., 618 F.3d 970, 973 (9th Cir. 2010). 14 To this criticism, PG&E offers no rebuttal except to say that its claim for declaratory 15 relief, at least, constitutes an “affirmative” claim for relief (see Dkt. No. 43 at 5). True, that 16 claim for relief has no counterpart in Tutor Perini’s third-party complaint, but at this stage it is 17 difficult to see any qualitative difference between the parties’ claims for indemnity or 18 contribution and PG&E’s claim for declaratory relief. The upshot remains that Tutor Perini, 19 PG&E, and GGP all seek adjudication of their respective share of liability (if any) for the water 20 damage to Lora Piana’s property. Moreover, if PG&E’s pleading remains of record at trial, it 21 would present an extra and potentially confusing step for the jury that seems to needlessly invite 22 the possibility of conflicting verdicts on a relatively straightforward question of shared liability. 23 See Ayat v. Societe Air France, No. C 06-01574, 2007 WL 1840923, at *1 (N.D. Cal. June 27, 24 2007) (Judge Jeffrey White) (“The possibility that issues will be unnecessarily complicated or 25 that superfluous pleadings will cause the trier of fact to draw unwarranted inferences at trial . . . 26 is sufficient to support the granting of a motion to strike.” (citation omitted)). 27 28 Striking PG&E’s counterclaim under FRCP 12(f) would therefore be a viable option. On the other hand, its presence in the case is, at most, a theoretical problem at this time. There 6 this early stage may eventually prove premature. The multitude of pleadings are little more 3 than bare bones thus far and, if nothing else, PG&E’s counterclaim has added a little factual 4 detail to the sparse allegations of AGCS’s complaint and Tutor Perini’s third-party complaint 5 (compare Dkt. No. 36 ¶¶ 9–11 with Dkt. No. 1 ¶¶ 8 and Dkt. No. 16 ¶¶ 10–12). Whether or not 6 the counterclaim is truly redundant will likely become clearer as this litigation progresses. In 7 the meantime, there is no harm in allowing it to remain. See, e.g., Stickrath v. Globalstar, Inc., 8 No. C07–1941, 2008 WL 2050990, at *5 (N.D. Cal. May 13, 2008) (Judge Thelton Henderson) 9 (the safer course is to deny the request to strike the counterclaim unless there is no doubt that it 10 will be rendered moot by the adjudication of the main action) (quotations and citations omitted). 11 For the Northern District of California is no practical difference one way or the other, and there is some chance that disposing of it at 2 United States District Court 1 This order therefore declines to strike PG&E’s counterclaim as redundant at this time but 12 expressly reserves the possibility that it may be stricken later on if no justification for its 13 continued presence emerges, including to simplify the issues needing resolution at trial. 14 15 CONCLUSION For the foregoing reasons, Tutor Perini’s motion to dismiss PG&E’s counterclaim is 16 DENIED. If PG&E nevertheless wishes to amend its counterclaim, it may seek leave to do so 17 pursuant to the case management scheduling order (Dkt. No. 40). 18 19 IT IS SO ORDERED. 20 21 Dated: June 22, 2017. WILLIAM ALSUP UNITED STATES DISTRICT JUDGE 22 23 24 25 26 27 28 7

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