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Black & Veatch Corporation v. Modesto Irrigation District

February 4, 2013

BLACK & VEATCH CORPORATION,
PLAINTIFF,
v.
MODESTO IRRIGATION DISTRICT, DEFENDANT.
MODESTO IRRIGATION DISTRICT, COUNTERCLAIMANT,
v.
BLACK & VEATCH CORPORATION, COUNTERDEFENDANT.



The opinion of the court was delivered by: Sheila K. Oberto United States Magistrate Judge

FINDINGS AND RECOMMENDATIONS THAT BLACK & VEATCH'S MOTION FOR GOOD FAITH SETTLEMENT AND INDEMNITY BAR BE GRANTED (Docket No. 223) OBJECTIONS DUE: 10 days

AND RELATED ACTIONS.

I. INTRODUCTION

On December 31, 2012, Plaintiff/Counter-Defendant Black & Veatch ("B&V") filed an Application for Motion for Good Faith Settlement and Indemnity Bar. (Doc. 223.) Third-Party Defendant/Counterclaimant/Cross-Defendant/Cross-Complainant Western Summit Constructors, Inc. ("Western Summit") filed a Statement of Non-Opposition, and no other party has filed a responsive brief. The Court has reviewed the motion as well as the supporting documentation and finds that the matter is suitable for decision without oral argument pursuant to Rule 230(g) of the Local Rules of the United States District Court, Eastern District of California; thus, the February 6, 2013, hearing is VACATED.

For the reasons set forth below, the Court RECOMMENDS that B&V's Motion for Good Faith Settlement and Indemnity Bar be GRANTED.

II. FACTUAL AND PROCEDURAL BACKGROUND

Pursuant to B&V's complaint, filed on April 29, 2011, this case arises out of a contractual dispute regarding work performed during the expansion of the Modesto Regional Water Treatment Plant (the "Project"). (Doc. 1, ¶¶ 5-8.) B&V and Modesto Irrigation District ("MID") entered into a written contract, and then an amended contract, for the design and construction of the Project. (Doc. 1, ¶¶ 9-15.) B&V's complaint alleges that MID and B&V discussed amending their agreement to include further construction phase work that extended beyond the original 2009 completion date and to provide compensation for those services. (Doc. 1, ¶ 17.) B&V contends that it provided additional services throughout 2010 at MID's direction and that MID assured B&V that its requests for a contract amendment and additional compensation would be timely and fairly addressed. (Doc. 1, ¶¶ 18-31.) However, B&V was not paid for these services. (Doc. 1, ¶ 33-34.)

MID's counterclaim was filed on July 25, 2011, and alleges B&V's construction phase services commenced in June 2007 after MID's construction contract was awarded to Western Summit. (Doc. 17, ¶ 18.) During the construction phase, MID alleges that the construction was behind schedule, there were numerous engineering defects and errors attributable to B&V, and widespread quality control errors by Western Summit that were not adequately addressed by B&V in its capacity as construction manager. (Doc. 17, ¶ 19.) MID pleads that B&V's failure to fulfill its duties as the construction manager resulted in damages and a widespread overpayment by MID. (Doc. 17, ¶ 23.) As a result, in September 2010, MID suspended its contract with B&V and was required to retain other professionals to rectify the substantial problems caused by B&V. (Doc. 17, ¶ 24.)

On August 8, 2011, MID filed a complaint-in-impleader against third-party defendants Western Summit, Big B Constructors, Inc. ("Big B"); Federal Insurance Company; Fidelity and Deposit Company of Maryland; and Travelers Casualty and Surety Company of America.*fn1 The complaint-in-impleader alleges that Western Summit and Big B entered into a written subcontract agreement. (Doc. 22, ¶ 20.) During construction, MID discovered numerous defects and deficiencies with Western Summit and Big B's work, which substantially delayed the project and prevented its completion. (Doc. 22, ¶¶ 23-24.)

On August 19, 2011, City of Modesto ("City") filed a motion for intervention, which was granted by the Court on October 12, 2011. (Docs. 25, 49.) City of Modesto filed a counter-claim on October 14, 2011, alleging that the purpose of the Project was to provide water to City, and that, in exchange for paying for the construction of the Project and its maintenance, City was entitled to the entire output of treated water provided by the Project. (Doc. 50-1, ¶ 8.) Accordingly, City sought damages based on B&V's alleged breaches in managing the Project. (Doc. 50-1, ¶¶ 33-36.)

On April 30, 2012, Western Summit filed a cross-claim against Siemens Industry, Inc. fka Siemens Water Technologies Corporation ("Siemens"), alleging that Western Summit and Siemens entered into a contract for goods and special services for the delivery and installation of the membrane filtration system for the Project; the contract included an indemnification clause. (Doc. 100, ¶ 10.) Western Summit sought express, implied, and equitable indemnity from Siemens. (Doc. 100, ¶¶ 18-35.) On June 21, 2012, Siemens answered and filed a counter-claim against Western Summit for breach of contract, alleging that Western Summit had not been paid for services provided, including the removal of the installed membrane filtration modules. (Doc. 128, ¶¶ 18-23.)

On October 2, 2012, B&V and MID respectively filed Motions for Summary Judgment, which remain pending before the District Judge Lawrence J. O'Neill. (Docs. 193, 195.) On October 11, 2012, a Notice of Partial Settlement was filed representing that a settlement had been reached between B&V, MID, and City. (Doc. 213.) The instant Motion for Good Faith Settlement was filed on December 31, 2012. (Doc. 223.)

III. DISCUSSION

A. Legal ...


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