AT&T Mobility LLC v. Holaday-Parks-Fabricators, Inc.

Filing 63

ORDER by Judge Thomas S. Zilly. The Court DENIES Defendant's 49 Motion to Amend its Answer and Third-party Claims. (CL)

01
02
03
04
05

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF WASHINGTON
AT SEATTLE

06
07
08

AT&T MOBILITY LLC, a Delaware
limited liability corporation,

09

Plaintiff,

10
11
12

v.
HOLADAY-PARKS-FABRICATORS,
INC., a Washington corporation,
Defendant,

13
14
15
16
17

v.
EVERGREEN POWER SYSTEMS,
INC., a Washington corporation, et al.,
Third-Party Defendants.
________________________________

)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)

CASE NO. C10-468TSZ

ORDER

18
19

This MATTER comes before the Court on Defendant Holaday-Parks-

20

Fabricators, Inc.’s (“Holaday-Parks”) Amended Motion for Leave to Amend Answer

21

and Third-Party Claims, docket no. 49. For the following reasons, the Court DENIES

22

Defendant’s motion to amend its answer and third-party claims.

ORDER
PAGE -1

01
02

I.

BACKGROUND
On August 1, 2008, 16,000 gallons of diesel fuel overflowed from an

03 above-ground storage tank at AT&T’s Bothell facility. Compl. ¶ 12 (docket no. 1).
04
05

On March 19, 2010, AT&T Mobility LLC (“AT&T”) filed suit against Holaday-Parks,
the contractor who had installed the fuel system. On April 12, 2010, Holaday-Parks

06

filed a third-party complaint against Evergreen Power Systems, Inc. (“Evergreen”),
07

their electrical subcontractor, Source North America Corporation (“Ace Tanks”), which
08
09
10

supplied the fuel control system, and Phillips Pump, LLC, which manufactured the fuel
control system. Def. Answer and Third Party Compl. (docket no. 7). On June 29,

11 2010, the Court set a November 29, 2010 deadline to join parties. Minute Order
12 (docket no. 22). Although the Court later extended other pretrial deadlines, including
13 extending the deadline to amend pleadings to June 29, 2011, the Court has not extended
14 the deadline to join parties. Minute Order (docket no. 39).
15

Defendant Holaday-Parks now moves for leave to serve a third-party complaint

16 to Gerber Engineering (“Gerber”), a subcontractor to Evergreen. Holaday-Parks states
17
18

that it was not until May 23, 2011, when counsel for Ace Tanks forwarded to counsel for
Holaday-Parks a wiring diagram, that Holaday-Parks became aware that it was Gerber

19

who had specified the wiring for the fuel level sensor. Holaday-Parks argues that
20

Gerber should be joined because it believes AT&T will allege that the wiring specified
21
22

by Gerber was the wrong wiring. However, that diagram has been in the possession of

ORDER
PAGE -2

01 Holaday-Parks since August 15, 2007, and was even produced by Holaday-Parks in
02 response to requests for production issued by Plaintiff AT&T in February, 2011. Decl.
03 of Seann C. Colgan ¶ 2, Ex. A. (docket no. 55). The wiring diagram was also produced
04
05

to Holaday-Parks in December 2010 as part of Evergreen’s production of 1400
documents. Am. Decl. of Jeffrey D. Laveson (“Laveson Decl.”) ¶ 8 (docket no. 50);

06

Decl. of Shilpa Bhatia (“Shipa Decl.”), Ex. 4 (docket no. 52-1).
07

II.

DISCUSSION

08
09
10

A. Standard of Review
Once a pretrial schedule has been set by the Court, it may only be modified “for

11 good cause” and with the judge’s consent. Fed. R. Civ. P. 16(b)(4). The “good cause”
12 standard primarily considers the diligence of the party seeking the amendment. The
13 district court may modify the pretrial schedule “if it cannot reasonably be met despite
14 the diligence of the party seeking the extension.” Johnson v. Mammoth Recreations,
15 Inc., 975 F.2d 604, 609 (9th Cir. 1992). Mistake or inadvertence of counsel is
16 insufficient to support a finding of good cause. Davis v. Washington, No. 04-5509,
17
18

2008 WL 701576, at *1 (W.D. Wash. Mar. 13, 2008). If good cause is shown, the
movant must show that the amendment is proper under Fed. R. Civ. P. 15. Although

19

leave to amend shall be freely given under Rule 15, “it may be denied if the proposed
20

amendment either lacks merit or would not serve any purpose because to grant it would
21
22

ORDER
PAGE -3

01 be futile….” Universal Mortg. Co., Inc. v. Prudential Ins. Co., 799 F.2d 458, 459 (9th
02 Cir. 1986).
03
04
05

B. Holaday-Parks Has Failed to Show Good Cause
Holaday-Parks has proffered no legitimate excuse for why it has taken it almost
four years to interpret a document in its possession. It complains that over a half

06

million pages of documents needed to be reviewed, and it is only 20/20 hindsight that
07

shows the importance of the wiring diagram. Yet Holaday-Parks produced the same
08
09
10

wiring diagram, along with emails, meeting minutes, and other documents showing
Gerber’s role in the project, to the other parties during discovery. Shipa Decl. ¶ 5.

11 Holaday-Parks had numerous other missed opportunities to determine the diagram’s
12 importance. It could have spoken with its own employees who communicated with
13 Gerber during the project. It could have sent interrogatories or requests for production
14 to Evergreen. It could have deposed Evergreen’s employees. That it was only until
15 Holaday-Parks received the diagram as part of an email from Ace Tanks that
16 Holaday-Parks realized the importance of the diagram does not demonstrate diligence.
17
18

Laveson Decl. Ex. A. Accordingly, the Court finds that Holaday-Parks has failed to
demonstrate good cause for adding a party past the deadline.

19

The Court also notes that Holaday-Parks will not be prejudiced by a refusal to
20

join Gerber, and that other parties would be prejudiced by adding a party at this late date.
21
22

The Court construes Evergreen’s statement that “it is not going to use Gerber

ORDER
PAGE -4

01 Engineering’s participation in the project as an empty chair” as stating that Evergreen
02 takes responsibility for the actions of its subcontractor Gerber and will not seek
03 indemnity from Gerber in this action. Evergreen Opp’n at 7 (docket no. 51).
04
05

Therefore it does not appear that Holaday-Parks will be prejudiced by Gerber’s absence.
At the same time, allowing Gerber to be added as a party at this late juncture would

06

delay discovery and trial by months, which would prejudice the other parties.
07

C. Granting Leave to Amend Would be Futile
08
09
10

Moreover, even if Holaday-Parks had acted diligently, it has no basis for a claim
against Gerber Engineering, and therefore the amendment is futile under Fed. R.

11 Civ. P. 15. Holaday-Parks is not in contractual privity with Gerber and concedes that it
12 has no legal basis to sue Gerber unless the Court allows it to advance a tort claim under
13 the recent Washington Supreme Court case, Affiliated FM Ins. Co. v. LTK Consulting
14 Services, Inc., 170 Wn.2d 442 (2010), because “[w]here, as here, there was no direct
15 contractual relationship, the general contractor would have no claim at all against the
16 design professional.” Am. Mot. for Leave to Answer Third-Party Claims,
17
18

5 (docket no. 49). See also Reply, 2 (docket no. 57) (“Until the Washington Supreme
Court decided the Affiliated FM case, there was no legal basis for [Holaday-Parks] to

19

sue Gerber.”).
20

Holaday-Parks argues that Affiliated now provides reason for it to amend its
21
22

third-party claims to advance a tort claim against Gerber Engineering. It does not.

ORDER
PAGE -5

01 Before Affiliated was decided, Berschauer/Phillips Constr. Co. v. Seattle Sch. Dist.
02 No. 1, held that in the context of a construction project, a general contractor could not
03 recover purely economic damages in tort from a design professional, and was limited to
04
05

those damages recoverable in contract. 124 Wn.2d 816, 833 (1994).1 The court in
Affiliated did not overrule Berschauer/Phillips, rather it noted that “extending that case

06

to all classes of harm and all classes of people would be unjust.” Affiliated held for the
07

first time that an engineering contractor had a duty of reasonable care independent of its
08
09
10

contractual obligations. 170 Wn.2d at 451-54. The court in Affiliated then extended
this duty of care to a Seattle Monorail concessionaire who had a legally protected

11 interest in the Monorail, which was damaged by fire due to the engineering contractor’s
12 negligence, and who had claimed economic loss for lost business profits during the
13 monorail’s shutdown. Id. at 456-58. But unlike in Affiliated, Holaday-Parks is not
14 seeking its own damages; it seeks only indemnification for claims brought against it by
15 ///
16 ///
17 ///
18 ///
19 ///
20 ///
21

1

Berschauer/Phillips involved a contractor who sought recovery of economic loss due to construction delays
caused by the architect, structural engineer, and the project inspector. The court reasoned that the contractor
22 should be barred from recovery in tort “to ensure that the allocation of risk and the determination of potential future
liability is based on what the parties bargained for in the contract.” Id. at 826.

ORDER
PAGE -6

01 AT&T.2 Nor does Holaday-Parks have a legally-protected interest in AT&T’s
02 property.3 Affiliated is therefore inapplicable to Holaday-Parks, and does not save
03 Holaday-Parks from the futility of adding a party for whom it lacks a legal basis to sue.
04

III.

05

CONCLUSION
For the foregoing reasons, the Court DENIES Defendant’s motion to amend its

06

answer and third-party claims.
07

IT IS SO ORDERED.
08

DATED this 8th day of July, 2011.

09

A

10
11

Thomas S. Zilly
United States District Judge

12
13
14
15
16
17
18
19
2

Although Holaday-Parks captions its claims as “negligence,” “indemnity,” “breach of warranty,” “breach of

20 contract,” and “contribution,” under each claim it only seeks indemnification. It does not claim damages of its
own. Am. Mot. for Leave to Answer Third-Party Claims, 19-22 (docket no. 49).
The Court leaves for another day the questions of how far the duty of care established by Affiliated extends and
whether that duty applies in the context of construction contracts, and holds only that where, as here, no tort
22 damages or legally-protected interests are alleged, Affiliated is inapplicable.

21

3

ORDER
PAGE -7