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Homes v. Financial Pacific Insurance Co.

January 7, 2010

CENTEX HOMES, PLAINTIFF,
v.
FINANCIAL PACIFIC INSURANCE COMPANY, AMERICAN STATES INSURANCE COMPANY, SAFECO INSURANCE COMPANY, CARR BUSINESS ENTERPRISES, INC. ET AL., DEFENDANTS.



The opinion of the court was delivered by: Anthony W. Ishii Chief United States District Judge

MEMORANDUM OPINION AND ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT CARR'S MOTION FOR SUMMARY JUDGMENT OR SUMMARY ADJUDICATION

Doc. # 65

This is an action in diversity by plaintiff Centex Homes ("Centex") against Financial Pacific Insurance Company, American States Insurance Company and Safeco Insurance Company (the "insurance company Defendants") and against defendant Carr Business Enterprises, Inc., a concrete fabrication subcontractor ("Carr"). This action is one of four filed in this court that arise out of alleged construction defects in a number of residential development projects in the San Joaquin Valley. This case and related case number 07cv0568 name the same insurance Defendant but name different subcontractors who are alleged to have provided defective concrete work resulting in a number of construction defect lawsuits against Plaintiff. This action and the related actions seek express indemnification, damages and declaratory relief. In the instant action, the named subcontractor-defendant, Carr, seeks summary adjudication as to liability relating to construction defects on homes that were substantially completed 10 years or more before the filing of the instant action. Diversity jurisdiction exists pursuant to 28 U.S.C. § 1332. Venue is proper in this court.

PROCEDURAL HISTORY

Centex's complaint was filed on April 12, 2007, and alleges a total of six claims for relief. The first, fourth and fifth claims for relief are alleged against the insurance company Defendant and are not the subject of the instant motion. Centex's second claim for relief is against Carr for breach of contract, the third claim is against Carr for express indemnity, and the sixth claim for relief is against Carr for declaratory relief. On May 30, 2007, this case was related to cases numbered 07cv0568, 07cv0569, and 07cv0570. The instant motion for summary adjudication was filed on July 21, 2009. Centex's opposition was filed on September 4, 2009, and Carr's reply was filed on September 14, 2009. The hearing date of September 21, 2009, was vacated and the matter was taken under submission as of that date.

UNDISPUTED MATERIAL FACTS

The facts of this case are largely undisputed. Centex is a general partnership organized under the laws of Nevada with a principal place of business in Texas. Carr is a corporation organized under the laws of California with a principal place of business in California. Carr entered into a contract or contracts with Centex to provide construction work and services for Pinecastle Estates and Pinecastle Estates Addition subdivisions projects located in the San Joaquin Valley. Alleged construction defects involving the foundations and concrete work on homes in these subdivisions gave rise to a number of construction defect lawsuits (the "underlying suits"). The complaint alleges defense in the underlying suits was tendered to Carr and the insurance Defendants but neither participated in the defense of the underlying suits or indemnified Centex for costs of settlement of the underlying suits.

Carr alleges that Centex's claims "relate to work Carr allegedly performed at the subdivision projects mentioned in [Centex's] Complaint." Doc. # 71 at ¶ 4. Carr disputes the proffered fact in that they contend that Centex's claims are not limited to work and services performed at the subdivisions, but also include claims for failure to provide insurance and failure to provide a defense in the underlying construction defect lawsuits. Id.

Carr alleges Centex's complaint claims damages that include costs incurred to defend underlying homeowner lawsuits in specified cases and damages that include costs to "inspect repair and/or settle homes on which Carr allegedly worked," and damages arising from "the alleged failure of Carr to obtain additional insured endorsements allegedly required to be procured by Carr prusuant to the construction agreements for the projects [that are the] subject of [Centex's] Complaint." Doc. # 71 at ¶¶ 5, 6, 7. The parties agree the underlying homeowner lawsuits that are the basis for Centex's claims for failure to defend and indemnify were construction defect lawsuits.

Carr alleges several facts concerning the underlying construction defect lawsuits that are not disputed. Essentially the parties do not dispute that close of escrow dates for each home occurred after substantial construction on the home had been completed. Carr lists a number of homes located in the subject subdivision projects that were the subject of construction defect lawsuits and where the close of escrow dates were more than 10 years prior to the date of filing of this action; that is, where escrow closed prior to April 12, 1997. The list is set forth at paragraph 13 of Carr's proffered listed of undisputed facts and includes in excess of 400 addresses. Carr alleges and Centex does not dispute that Centex did not cross-complain against Carr in any of the underlying construction defect lawsuits.

LEGAL STANDARD

Summary judgment is appropriate when it is demonstrated that there exists no genuine issue as to any material fact, and that the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c); Adickes v. S.H. Kress & Co., 398 U.S. 144, 157 (1970); Poller v. Columbia Broadcast System, 368 U.S. 464, 467 (1962); Jung v. FMC Corp., 755 F.2d 708, 710 (9th Cir. 1985); Loehr v. Ventura County Community College Dist., 743 F.2d 1310, 1313 (9th Cir. 1984).

Under summary judgment practice, the moving party always bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any," which it believes demonstrate the absence of a genuine issue of material fact.

Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Although the party moving for summary judgment always has the initial responsibility of informing the court of the basis for its motion, the nature of the responsibility varies "depending on whether the legal issues are ones on which the movant or the non-movant would bear the burden of proof at trial." Cecala v. Newman, 532 F.Supp.2d 1118, 1132-1133 (D. Ariz. 2007). A party that does not have the ultimate burden of persuasion at trial -- usually but not always the defendant -- "has both the initial burden of production and the ultimate burden of persuasion on the motion for summary judgment." Nissan Fire & Marine Ins. Co., Ltd. v. Fritz Companies, Inc., 210 F.3d 1099, 1102 (9th Cir. 2000). "In order to carry its burden of production, the moving party must either produce evidence negating an essential element of the nonmoving party's claim or defense or show that the nonmoving party does not have enough evidence of an essential element to carry its ultimate burden of persuasion at trial." Id.

If the moving party meets its initial responsibility, the burden then shifts to the opposing party to establish that a genuine issue as to any material fact actually does exist. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986); First Nat'l Bank of Arizona v. Cities Serv. Co., 391 U.S. 253, 288-89 (1968); Ruffin v. County of Los Angeles, 607 F.2d 1276, 1280 (9th Cir. 1979). In attempting to establish the existence of this factual dispute, the opposing party may not rely upon the mere allegations or denials of its pleadings, but is required to tender evidence of specific facts in the form of affidavits, and/or admissible discovery material, in support of its contention that the dispute exists. Rule 56(e); Matsushita, 475 U.S. at 586 n.11; First Nat'l Bank, 391 U.S. at 289; Strong v. France, 474 F.2d 747, 749 (9th Cir. 1973). The opposing party must demonstrate that the fact in contention is material, i.e., a fact that might affect the outcome of the suit under the governing law, Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); T.W. Elec. Serv., Inc. v. Pacific Elec. Contractors Ass'n, 809 F.2d 626, 630 (9th Cir. 1987), and that the dispute is genuine, i.e., the evidence is such that a reasonable jury could return a verdict for the nonmoving party, Anderson, 477 U.S. 248-49; Wool v. Tandem Computers, Inc., 818 F.2d 1433, 1436 (9th Cir. 1987).

In the endeavor to establish the existence of a factual dispute, the opposing party need not establish a material issue of fact conclusively in its favor. It is sufficient that "the claimed factual dispute be shown to require a jury or judge to resolve the parties' differing versions of the truth at trial." First Nat'l Bank, 391 U.S. at 290; T.W. Elec. Serv., 809 F.2d at 631. Thus, the "purpose of summary judgment is to 'pierce the pleadings and to assess the proof in order to see whether there is a genuine need for trial.'" Matsushita, 475 U.S. at 587 (quoting Fed. R. Civ. P. 56(e) advisory committee's note on 1963 amendments); International Union of Bricklayers v. Martin Jaska, Inc., 752 F.2d 1401, 1405 (9th Cir. 1985).

In resolving the summary judgment motion, the court examines the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any. Rule 56(c); Poller, 368 U.S. at 468; SEC v. Seaboard Corp., 677 F.2d 1301, 1305-06 (9th Cir. 1982). The evidence of the opposing party is to be believed, Anderson, 477 U.S. at 255, and all reasonable inferences that may be drawn from the facts placed before the court must be drawn in favor of the opposing party, Matsushita, 475 U.S. at 587 (citing United States v. Diebold, Inc., 369 U.S. 654, 655 (1962)(per curiam); Abramson v. University of Hawaii, 594 F.2d 202, 208 (9th Cir. 1979). Nevertheless, inferences are not drawn out of the air, and it is the opposing party's obligation to produce a factual predicate from which the inference may be drawn. Richards v. Nielsen Freight Lines, 602 F. Supp. 1224, 1244-45 (E.D. Cal. 1985), aff'd, 810 F.2d 898, 902 (9th Cir. 1987).

DISCUSSION

In the instant motion for summary adjudication, Carr seeks what is essentially declaratory judgment on the issue of whether Centex's claims for damages incurred in settlement or defense of the underlying suits pertaining to homes where escrow closed more than ten years before the commencement of this action are time-barred. Carr's sole contention in support of its motion for partial summary judgment is that Centex's action is barred by the ten-year limitations period provided by section 337.15 of the California Code of Civil Procedure. Section 337.15 provides as follows in pertinent part:

(a) No action may be brought to recover damages from any person, or the surety of any person, who develops real property or performs... construction of an improvement to real property more than 10 years after the substantial completion of the development or improvements for any of the following:

(1) any latent deficiency in the design, specifications, surveying, planning, supervision, or observation of construction or construction of an ...


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