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FDIC v. JACKSON-SHAW PTNRS. NO. 46

April 12, 1994

FEDERAL DEPOSIT INSURANCE CORPORATION, Plaintiff,
v.
JACKSON-SHAW PARTNERS NO. 46, LTD., et al., Defendants.


Williams


The opinion of the court was delivered by: SPENCER WILLIAMS

Plaintiff Federal Deposit Insurance Corporation ("FDIC") brought this action against Jackson-Shaw Partners No. 46, Ltd. Wallace Murfit, Jackson-Shaw's general partner, and others for judicial foreclosure, specific performance of assignment of rents and profits, and for damages for the impairment of FDIC's security interest. In response, Jackson-Shaw and Murfit (hereafter referred to collectively as "Jackson-Shaw") filed cross-claims against Chevron U.S.A, Inc. ("Chevron") and Solvent Service Company, Inc. ("SSI"). Chevron and SSI now move to dismiss the cross-claims for temporary trespass and temporary nuisance. Chevron also moves to strike and/or dismiss Jackson-Shaw's cross-claim for contractual indemnity. For the reasons expressed below, cross-defendants' motion to dismiss is GRANTED; and Chevron's motion to strike and/or dismiss is DENIED.

 BACKGROUND

 On May 14, 1985, Jackson-Shaw, which is a Texas limited partnership and FDIC's assignor bank ("Lender") executed loan documents, including a Deed of Trust Note in the principal sum of $ 20,000,000. The purpose of the loan was to provide all funds for Jackson-Shaw's acquisition of and construction of improvements on a 20-acre parcel of land in San Jose, California.

 Jackson-Shaw constructed a number of buildings on the property, containing approximately thirty-one commercial/industrial rental units. These units are now occupied by various businesses. Around the same time, it was discovered that releases of hazardous substances from two adjacent sites had contaminated the soil and groundwater beneath a small portion of the property. Subsequently, SSI and Chevron, the owners of the adjacent sites, agreed to indemnify the partnership and Wallace Murfit, the general partner, for liabilities that arose out of the contamination. SSI and Chevron also agreed to clean up the sites. The clean-up operation is under way, but it is expected that the property will not be restored to its pre-contamination condition for at least 20 years.

 When the loan became due on September 1, 1988, Jackson-Shaw was unable to pay it in full, but Jackson-Shaw and FDIC entered into a new agreement, under which Jackson-Shaw would continue the operation and management of the property and remit the net operating income to FDIC. This arrangement continued until early in 1992, when Jackson-Shaw delayed both in rendering its monthly accountings and paying the net operating income. After Jackson-Shaw failed and refused to render any accountings and pay any rents for the period after March 31, 1992, FDIC instituted this action.

 Jackson-Shaw's original cross-claim against SSI and Chevron stated claims for permanent trespass and nuisance. Realizing that those causes of action were barred by the statute of limitations, Jackson-Shaw voluntarily dismissed them. On December 10, 1993, this Court entered an order to that effect and granted Jackson-Shaw leave to file an amended cross-claim adding claims for continuing trespass and continuing nuisance.

 I. THE MOTIONS TO DISMISS

 
A. Jackson-Shaw's Failure to Timely File its Amended Cross-Claim

 Chevron contends that Jackson-Shaw's amended cross-claim should be dismissed as untimely. The Order of December 10, 1993, granted Jackson-Shaw 10 days' leave to file its amended cross-claim. Jackson-Shaw filed the amended cross-claim on January 12, 1994. According to Jackson-Shaw's counsel, its failure to timely file the amended cross-claim was inadvertent. Counsel for Jackson-Shaw also contends that SSI and Chevron have suffered no prejudice because they received a draft of the amended cross-claim while their motion for summary judgment was pending.

 In light of these considerations, Jackson-Shaw is hereby granted leave to file its amended cross-claim nunc pro tunc to January 12, 1994.

 However, the Court is disturbed that Jackson-Shaw's counsel filed the amended cross-claim long after the deadline without filing an application for leave to do so. Counsel is advised that untimely pleadings must be accompanied by an application for leave to file. It is also incumbent on counsel to adhere to the ...


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