AGCS Marine Insurance Company v. Tutor Perini Corporation et al

Filing 58

ORDER DENYING 41 TUTOR PERINI'S MOTION TO DISMISS PACIFIC GAS & ELECTRIC COMPANY'S FIRST AMENDED COUNTERCLAIM by Hon. William Alsup. (whalc2, COURT STAFF) (Filed on 6/22/2017)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE NORTHERN DISTRICT OF CALIFORNIA
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AGCS MARINE INSURANCE COMPANY,

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For the Northern District of California

United States District Court

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No. C 17-00544 WHA

Plaintiff,
v.

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TUTOR PERINI CORPORATION, et al.,

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Defendants.
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TUTOR PERINI CORPORATION,

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Third-Party Plaintiff,

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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.
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AND RELATED COUNTERCLAIM
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INTRODUCTION
In this negligence action, defendant asserted a third-party complaint for indemnity and

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contribution in the event that it is ultimately held liable to plaintiff and now moves to dismiss a

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third-party defendant’s reciprocal counterclaim for indemnity and contribution on the same

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contingent basis. The motion is DENIED.

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STATEMENT
Plaintiff AGCS Marine Insurance Company sued defendant Tutor Perini Corporation for

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negligence, trespass to chattels, trespass, conversion, and ultra-hazardous activity, alleging that

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Tutor Perini’s excavation, demolition, and construction activities caused water to intrude and

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damage real property located at 212 Stockton Street, San Francisco, and occupied by AGCS’s

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insured, Warren Corporation dba Lora Piana & Co., Inc. (see Dkt. No. 1). Tutor Perini

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answered and filed a third-party complaint against Pacific Gas & Electric Company and General

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Growth Properties, Inc. (GGP), for equitable indemnity, contribution, comparative fault, and

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negligence, alleging that the third-party defendants failed to properly seal points of entry into

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For the Northern District of California

United States District Court

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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

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Tutor Perini and GGP for equitable indemnity, implied indemnity, comparative indemnity,

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contribution, apportionment, negligence, and declaratory relief, alleging that Tutor Perini

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negligently broke a water line and that GGP negligently designed, constructed, maintained, and

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owned the underground electrical utility vault that provided the point of entry for the resulting

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water intrusion. PG&E further alleges it merely installed electrical equipment in the vault and

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otherwise had no responsibility for the construction or maintenance of the vault (Dkt. No. 36).

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The gravamen of PG&E’s counterclaim (which it has already amended once) is that Tutor

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Perini and GGP negligently caused and bear all liability for the water damage to Lora Piana’s

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property. As counsel for both sides have confirmed, the counterclaim is a mirror image of the

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third-party complaint except for its claim for declaratory relief.

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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

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as a counterclaim any claim that — at the time of its service — the pleader has against an

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opposing party if the claim: (A) arises out of the transaction or occurrence that is the subject

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matter of the opposing party’s claim; and (B) does not require adding another party over whom
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the court cannot acquire jurisdiction.” The purpose of the rule is “to prevent multiplicity of

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litigation and to promptly bring about resolution of disputes.” See, e.g., Mitchell v. CB Richard

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Ellis Long Term Disability Plan, 611 F.3d 1192, 1201 (9th Cir. 2010).

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FRCP 13(g), which governs crossclaims, provides, “A pleading may state as a

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crossclaim any claim by one party against a coparty if the claim arises out of the transaction or

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occurrence that is the subject matter of the original action or of a counterclaim, or if the claim

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relates to any property that is the subject matter of the original action. The crossclaim may

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include a claim that the coparty is or may be liable to the cross-claimant for all or part of a

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claim asserted in the action against the cross-claimant.”
PG&E characterizes its pleading only as a compulsory counterclaim under FRCP 13(a)

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For the Northern District of California

United States District Court

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(Dkt. No. 43 at 5). Its claims against GGP, however, should actually be framed as a crossclaim

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against a coparty pursuant to FRCP 13(g). This is merely a technical hiccup, since the

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fundamental nature of the dispute between Tutor Perini, PG&E, and GGP in this action is a

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simple one. In short, in the event that AGCS is able to prove entitlement to damages, Tutor

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Perini, PG&E, and GGP disagree as to how liability for those damages should be distributed

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among the three of them. Only the procedures by which they may assert their respective

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interests against each other differ.

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Nevertheless, Tutor Perini contends PG&E’s counterclaim should be dismissed because

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(1) it is inherently predicated on the outcome of AGCS’s claims against Tutor Perini and

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therefore cannot be mature under FRCP 13(a), and (2) it merely mirrors Tutor Perini’s third-

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party complaint without seeking any affirmative relief. Tutor Perini does not otherwise dispute

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PG&E’s position that its counterclaim would be compulsory under FRCP 13(a).
MATURITY CONDITION UNDER FRCP 13(A).

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The maturity condition that Tutor Perini cites comes from FRCP 13(a), which describes

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a compulsory counterclaim as “any claim that — at the time of its service — the pleader has

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against an opposing party” (emphasis added). Tutor Perini contends PG&E’s counterclaim is

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immature, and therefore improper under FRCP 13(a), because it is “contingent upon the

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outcome of the litigation” between AGCS and Tutor Perini (Dkt. No. 41-1 at 8–9). But Tutor
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Perini does not contend — nor could it — that such contingency would bar either its own third-

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party complaint against PG&E under FRCP 14(a) or a crossclaim by PG&E against GGP under

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FRCP 13(g). See Glens Falls Indem. Co. v. United States ex rel. and to Use of Westinghouse

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Elec. Supply Co., 229 F.2d 370, 373–74 (9th Cir. 1955) (construing FRCP 13 and 14 to

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“authorize the assertion of cross-claims and third-party claims contingent upon ultimate

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adjudication of claimant’s liability to plaintiff”). In other words, Tutor Perini urges the odd

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result that — despite the similarities in their interests in this action — Tutor Perini can assert

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contingent indemnity and contribution claims against PG&E and GGP under FRCP 14(a), and

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PG&E can also assert such claims against GGP under FRCP 13(g), but PG&E cannot do so

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For the Northern District of California

United States District Court

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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

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decision from the Third Circuit, in support of its position. In Stahl, plaintiffs injured in a

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collision between a barge and their motorboat sued the company that owned the barge. The

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barge owner joined the company operating the barge as a third-party defendant. The barge

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operator then counterclaimed for contribution against the plaintiffs. The jury found the barge

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operator negligent and further found that one plaintiff negligently contributed to the collision.

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The district court entered judgment accordingly. On appeal, the plaintiff argued, as Tutor Perini

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does here, that a third-party defendant cannot counterclaim for contribution. Id. at 54. The

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Third Circuit, applying Pennsylvania law, agreed that a claim for contribution could not be the

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subject matter of a counterclaim under FRCP 13 “because such claim is contingent upon a

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verdict and judgment establishing liability of a party as a joint tortfeasor.” Id. at 54–55 & n.2.

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PG&E points out that California law permits cross-claims for indemnity or contribution

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among tortfeasors before any defendant has been found liable. See Evangelatos v. Superior

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Court, 44 Cal. 3d 1188, 1197–98 (1988) (citing Am. Motorcycle Ass’n v. Superior Court, 20

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Cal. 3d 578, 604–07 (1978)); see also NuCal Foods, Inc. v. Quality Egg LLC, 918 F. Supp. 2d

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1037, 1041–42 (E.D. Cal. 2013) (Judge Kimberly Mueller). It also notes that, after Stahl, other

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courts have decided the issue differently. See, e.g., In re Oil Spill by Amoco Cadiz Off Coast of

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France on March 16, 1978, 491 F. Supp. 161, 165 (N.D. Ill. 1979) (acknowledging Stahl but
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concluding that “the recent trend, and the more pragmatic approach, has been to permit

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counterclaims for contribution”). Amoco Cadiz, for example, adopted the rationale that “This

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approach seems sound when . . . the counterclaim is based on pre-action events and only the

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right to relief depends upon the outcome of the main action.” Ibid. (quoting 6 Wright & Miller,

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Fed. Prac. & Proc. § 1411 (1971)). The only decision from our district to consider Stahl for the

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holding relied upon by Tutor Perini acknowledged this split and found the “pragmatic

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approach” more persuasive, also citing Wright & Miller, “because it facilitates the litigation of

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all of the claims arising from the same occurrences in the same lawsuit.” Lucas v. Hertz Corp.,

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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

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For the Northern District of California

United States District Court

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by neither side, is also instructive. There, the defendant bank won a default judgment in a

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foreclosure action against the plaintiff homeowner. The homeowner then sued the bank for

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negligence and bad faith. The district court found both claims to be compulsory counterclaims

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that should have been brought in the prior foreclosure action and granted summary judgment for

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the bank. Id. at 1295. On appeal, the homeowner argued that his negligence claim did not

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mature as a counterclaim under FRCP 13(a) until his right to relief arose upon completion of the

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foreclosure action. Our court of appeals rejected this argument, adopting the rationale

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articulated by Wright & Miller that a counterclaim is not barred “solely because recovery on it

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depends on the outcome of the main action,” an approach that “seems sound when the

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counterclaim is based on pre-action events and only the right to relief depends on the outcome

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of the main action.” Id. at 1296 (quotations and citation omitted).

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Here, PG&E’s counterclaim against Tutor Perini — like its crossclaim against GGP and

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Tutor Perini’s third-party complaint against PG&E and GGP — is clearly based on “pre-action

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events” concerning the parties’ alleged roles in causing the damage to Lora Piana’s property.

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Only their respective rights to relief actually depend on the outcome of the main litigation

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between AGCS and Tutor Perini. In short, this case presents the same conditions under which

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our court of appeals construed a claim as a compulsory counterclaim under FRCP 13(a) in

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Springs. This order agrees with Judge Beeler that the “pragmatic approach” to indemnity and
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contribution counterclaims, which draws on the same rationale from Wright & Miller that our

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court of appeals adopted in Springs, is more persuasive here. PG&E’s counterclaim against

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Tutor Perini is therefore not barred by FRCP 13(a).

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REDUNDANCY BETWEEN COUNTERCLAIM AND THIRD-PARTY COMPLAINT.

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Tutor Perini also criticizes PG&E’s counterclaim as “a purely defensive pleading that

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does not seek or allege any affirmative relief or damages which are not already at issue in the

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Third-Party Complaint” (Dkt. No. 41-1 at 7). Though styled as a motion to dismiss under

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FRCP 12(b)(6), the thrust of Tutor Perini’s argument is about the counterclaim’s

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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

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For the Northern District of California

United States District Court

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a pleading any redundant or immaterial matter “to avoid the expenditure of time and money that

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must arise from litigating spurious issues by dispensing with those issues prior to trial.” See

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Whittlestone, Inc. v. Handi-Craft Co., 618 F.3d 970, 973 (9th Cir. 2010).

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To this criticism, PG&E offers no rebuttal except to say that its claim for declaratory

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relief, at least, constitutes an “affirmative” claim for relief (see Dkt. No. 43 at 5). True, that

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claim for relief has no counterpart in Tutor Perini’s third-party complaint, but at this stage it is

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difficult to see any qualitative difference between the parties’ claims for indemnity or

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contribution and PG&E’s claim for declaratory relief. The upshot remains that Tutor Perini,

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PG&E, and GGP all seek adjudication of their respective share of liability (if any) for the water

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damage to Lora Piana’s property. Moreover, if PG&E’s pleading remains of record at trial, it

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would present an extra and potentially confusing step for the jury that seems to needlessly invite

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the possibility of conflicting verdicts on a relatively straightforward question of shared liability.

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See Ayat v. Societe Air France, No. C 06-01574, 2007 WL 1840923, at *1 (N.D. Cal. June 27,

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2007) (Judge Jeffrey White) (“The possibility that issues will be unnecessarily complicated or

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that superfluous pleadings will cause the trier of fact to draw unwarranted inferences at trial . . .

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is sufficient to support the granting of a motion to strike.” (citation omitted)).

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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
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this early stage may eventually prove premature. The multitude of pleadings are little more

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than bare bones thus far and, if nothing else, PG&E’s counterclaim has added a little factual

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detail to the sparse allegations of AGCS’s complaint and Tutor Perini’s third-party complaint

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(compare Dkt. No. 36 ¶¶ 9–11 with Dkt. No. 1 ¶¶ 8 and Dkt. No. 16 ¶¶ 10–12). Whether or not

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the counterclaim is truly redundant will likely become clearer as this litigation progresses. In

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the meantime, there is no harm in allowing it to remain. See, e.g., Stickrath v. Globalstar, Inc.,

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No. C07–1941, 2008 WL 2050990, at *5 (N.D. Cal. May 13, 2008) (Judge Thelton Henderson)

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(the safer course is to deny the request to strike the counterclaim unless there is no doubt that it

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will be rendered moot by the adjudication of the main action) (quotations and citations omitted).

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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

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United States District Court

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This order therefore declines to strike PG&E’s counterclaim as redundant at this time but

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expressly reserves the possibility that it may be stricken later on if no justification for its

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continued presence emerges, including to simplify the issues needing resolution at trial.

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CONCLUSION
For the foregoing reasons, Tutor Perini’s motion to dismiss PG&E’s counterclaim is

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DENIED. If PG&E nevertheless wishes to amend its counterclaim, it may seek leave to do so

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pursuant to the case management scheduling order (Dkt. No. 40).

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IT IS SO ORDERED.

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Dated: June 22, 2017.

WILLIAM ALSUP
UNITED STATES DISTRICT JUDGE

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