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Fujian Pacific Electric Co. Ltd. v. Bechtel Power Corp.

November 19, 2004

FUJIAN PACIFIC ELECTRIC COMPANY LIMITED, PLAINTIFF,
v.
BECHTEL POWER CORPORATION, DEFENDANT.



The opinion of the court was delivered by: Patel, J.

MEMORANDUM AND ORDER

Motion to Dismiss

Plaintiff Fujian Pacific Electric Company Limited ("Fujian") brought this diversity action against defendant Bechtel Power Corporation ("Bechtel") seeking payment of damages pursuant to a written guaranty. Fujian also seeks specific performance of the terms of the guaranty that allegedly afford it access to records and documents in Bechtel's possession. Now before the court is Bechtel's motion to dismiss the complaint for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6), or alternatively, to stay this action pending arbitration of a related dispute. Having considered the arguments presented, and for the reasons set forth below, the court rules as follows.

BACKGROUND

This action arises out of a series of agreements relating to the construction of two coal-fired electric power generating units located in Fujian Province, People's Republic of China ("the Project"). Pl.'s Compl. ¶ 5. Fujian, a corporation formed to develop and operate the Project, entered into two contracts with wholly-owned subsidiaries of Bechtel in which the Bechtel entities agreed to provide various construction-related services. Id. ¶¶ 6- 7. In the first of these contacts, the "Engineering Contract," Bechtel Overseas Corporation ("BOC") agreed to furnish certain engineering, design, procurement, construction, and supervision services for the Project. Id. ¶ 7. Under the second contract, the Construction Agreement, another Bechtel subsidiary, Bechtel China, Inc. ("BCHI"), agreed to provide similar construction-related services. Id.

In addition, Fujian, Bechtel, BOC, and BCHI entered into a "Coordination Agreement" in which the Bechtel entities collectively agreed to carry out the project on a fixed-price, "turnkey" basis. Id. ¶ 8. As a condition of the Coordination Agreement, Bechtel was required to execute and deliver a "Corporate Guaranty" providing Fujian with assurances of performance. Lindsay Decl., Exh. 2, Coordination Agreement at 12 § 3. Pursuant to the Corporate Guaranty, Bechtel agreed to "absolutely, irrevocably, and unconditionally" guarantee:

(i) the full and prompt payment when due, whether by indemnification or otherwise, of all the payment obligations of the Companies under the Guaranteed Documents [i.e., the Engineering Contract, the Construction Agreement and the Coordination Agreement], together with all renewals, modifications, consolidations, extensions thereof, and (ii) the full and prompt payment and/or performance, as the case may be, when due of all warranties, indemnity obligations, liquidated damages, covenants and agreements, both monetary and non-monetary, of [BOC and BCHI] under the Guaranteed Documents.

Id., Corporate Guaranty at 2 § 2(a). The guaranty further provides that Bechtel's liability "shall be direct and immediate and not conditional or contingent upon the pursuit of any remedy against [BOC, BCHI,] or any other Person." Id. at 7 § 5.

Fujian now alleges that BOC and BCHI breached the Construction Agreement and Engineering Contract by failing to meet the January 15, 2001 and June 1, 2001 deadlines for substantially completing construction of the first and second power generating units, respectively. Pl.'s Compl. ¶¶ 16, 19. In addition, Fujian asserts that the BOC and BCHI failed to fulfill various duties of performance under the contracts and refused to complete their remaining duties under the Guaranteed Documents after leaving the Project site in June 2001. Id. ¶¶ 23-24. Fujian also seeks equitable relief, alleging that Bechtel has a contractual duty to produce certain documents relating to the transaction. Id. ¶¶ 44-53.

In addition to proceedings in this court, BOC and BCHI have filed a demand for arbitration of their disputes with Fujian, seeking payment of the more than $41 million for services rendered under the Construction Agreement and Engineering Contract. Lindsay Decl. ¶ 10 & Ex. 1. In their demand, BOC and BCHI rely on the "Dispute Resolution" clauses contained in the two contracts, which provide for the arbitration of all disputes involving an amount in excess of $1 million. Lindsay Decl., Ex. 1, Construction Agreement, art. XVI, § 16.2 & Engineering Contract, art. XVI, § 16.2. Bechtel now moves to dismiss this action, or alternatively, to stay proceedings in this court pending arbitration of the dispute between Fujian, BOC, and BCHI.

LEGAL STANDARD

I. Motion to Dismiss

A motion to dismiss for failure to state a claim will be denied unless it appears beyond doubt that the plaintiff can prove no set of facts which would entitle him or her to relief. Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957); Parks Sch. of Bus., Inc. v. Symington, 51 F.3d 1480, 1484 (9th Cir.1995). All material allegations in the complaint will be taken as true and construed in the light most favorable to the plaintiff. NL Indus., Inc. v. Kaplan, 792 F.2d 896, 898 (9th Cir.1986). Although the court is generally confined to considering the allegations in the pleadings, any documents attached to the complaint are deemed part of the pleadings and may be considered in determining whether dismissal is proper without transforming the motion to one for summary judgment. Durning v. First Boston Corp., 815 F.2d 1265, 1267 (9th Cir.), cert. denied, 484 U.S. 944, 108 S.Ct. 330, 98 L.Ed.2d 358 (1997). In addition, the ...


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