Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_05-cv-01945/USCOURTS-caed-2_05-cv-01945-6/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1332 Diversity-Other Contract

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IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF CALIFORNIA

C. INTERNATIONAL CORPORATION,

Plaintiff,

v.

TURNER CONSTRUCTION COMPANY,

Defendant.

_______________________________

TURNER CONSTRUCTION COMPANY,

Third Party Complainant,

v.

ALPHA OMEGA PAINTING, CAL-AIR,

INC., DCF CONCRETE

CONSTRUCTION, DE SILVA GATES,

F.D. THOMAS, INC., JD2, INC.,

KLEINFELDER, INC., LOWNEY

ASSOCIATES, RAYMOND

PROFESSIONAL GROUP, INC.,

f.k.a. RAYMOND-NOBB, WESTERN

SINGLE PLY, and MOISTURE

CONTROL TECHNOLOGIES, 

Third Party-Defendants.

_______________________________

AND RELATED CROSS-CLAIMS. 

CIV-S-05-1945 DFL KJM

MEMORANDUM OF OPINION 

AND ORDER

Case 2:05-cv-01945-JAM -KJM Document 110 Filed 06/28/06 Page 1 of 5
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Third-party defendant Raymond Professional Group - A/E, Inc.

f.k.a Raymond Nobb (“Raymond”) moves for an order determining

that it settled with plaintiff C. International Corporation

("International") in good faith. Both defendant/third-party

complainant Turner Construction Company (“Turner”) and

third-party defendant/cross-claimant/counter-claimant Moisture

Control Technologies, Inc. (“MCT”) oppose the motion. For the

reasons stated below, the court: (1) DENIES Raymond’s motion for

a good faith settlement with leave to renew; and (2) GRANTS the

opposing parties a continuance to conduct additional discovery.

I.

This cases arises out of the allegedly defective

construction and design of a warehouse in Dixon, California (the

“building”). (Mot. at 2.) International hired Raymond to

provide engineering and architectural services on the building. 

(Chidley Decl. ¶¶ 3-4.) Turner was the general contractor for

the building. (Id. ¶ 8.) After the building was completed,

International alleged that the building’s roof, exterior walls,

and floor were defective. (Id. ¶ 6.) Based on these

allegations, International withheld payment to Raymond. (Id. ¶

8.) On October 5, 2004, Raymond filed suit against International

in the Northern District of Illinois alleging that International

owed it more than $550,000 in engineering and architectural fees

and interest from work on the building. (Id. ¶¶ 13-14.) 

On December 6, 2004, Raymond and International settled their

claim. (Id. ¶ 15.) The settlement provided that: (1) Raymond

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would discount its claim for fees and interest by $225,000; (2)

International agreed to reimburse Raymond up to $75,000 for any

costs, settlement payments, or judgments arising out of any

third-party claims against Raymond; (3) International would issue

an internal memorandum stating that Raymond was not responsible

for the defects at the building; and (4) International would

introduce Raymond to International personnel who make decisions

concerning procurement of professional engineering and

architectural services. (Id. at Ex. A.) On January 21, 2005,

the United States District Court for the Northern District of

Illinois dismissed Raymond’s suit with prejudice. (Raymond

Request for Judicial Notice (“RJN”), Ex. A.) The court made a

finding that the settlement was in “good faith” but specifically

declined to rule on the collateral effects of such a finding. 

Raymond does not assert that the issue of good faith was resolved

by this order.

On March 14, 2005, International filed a suit against Turner

in the Northern District of Illinois. (Korbel Decl. ¶ 4.) On

September 27, 2005, the District Court for the Northern District

of Illinois transferred the case here. (Raymond RJN, Ex. B.) On

September 29, 2005, Turner filed a third-party complaint against

Raymond and ten subcontractors involved with the building. 

(Korbel Decl. ¶ 6.)

II.

Raymond argues that its settlement with International was in

good faith and should bar any contribution and indemnity claims

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against Raymond arising from defects with the building. (Mot. at

6.) In diversity cases, state law governs determinations of good

faith settlements. Federal Sav. and Loan Ins. Corp. v. Butler,

904 F.2d 505, 510 (9th Cir. 1990); Owen v. United States, 713

F.2d 1461, 1464-66 (9th Cir. 1983). Under California law,

“[w]here a release, dismissal with or without prejudice or a

covenant not to sue or not to enforce judgment is given in good

faith before verdict or judgment to one or more of a number of

tortfeasors claimed to be liable for the same tort– . . . (b) It

shall discharge the tortfeasor to whom it is given from all

liability for any contribution to any other tortfeasors.” 

Cal.Civ.Proc.Code § 877. 

 “A determination by the court that the settlement was made

in good faith shall bar any other joint tortfeasor or co-obligor

from any further claims against the settling tortfeasor or

co-obligor for equitable comparative contribution, or partial or

comparative indemnity, based on comparative negligence or

comparative fault.” Cal.Civ.Proc.Code § 877.6(c). Under

California Code of Civil Procedure section 877.6(d), “the party

asserting lack of good faith shall have the burden of proof on

that issue.”

Here, MCT has not had an opportunity to investigate the

building. MCT needs a reasonable opportunity to conduct

discovery because, as the opposing party, it bears the burden to

show a lack of good faith in the settlement. See City of Grand

Terrace v. Superior Court, 192 Cal.App.3d 1251, 1265 (1987)

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(finding that an objecting nonsettlor may move for a continuance

“for the purpose of gathering facts, which could include further

formal discovery, to support its statutory burden of proof as to

all Tech-Bilt factors nonsettlors placed in issue in order that

the matter can be fully and fairly litigated.”). Therefore, the

court: (1) DENIES Raymond’s motion for a good faith settlement

with leave to renew; and (2) GRANTS the opposing parties a

continuance to conduct additional discovery. The court directs

the special master to accommodate discovery on this issue. 

Raymond may renew its motion in September 2006.

IT IS SO ORDERED.

Dated: 6/26/2006

DAVID F. LEVI

United States District Judge

Case 2:05-cv-01945-JAM -KJM Document 110 Filed 06/28/06 Page 5 of 5