Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_18-cv-02300/USCOURTS-azd-2_18-cv-02300-4/pdf.json

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

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IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

quasar energy group LLC,

Plaintiff,

v. 

WOF SW GGP 1 LLC,

Defendant.

No. CV-18-02300-PHX-RCC (EJM)

ORDER 

On December 9, 2019, Magistrate Judge Eric J. Markovich issued a Report and 

Recommendation (“R&R”) (Doc. 162) in which he recommended this Court enter an 

order denying Third-Party Defendants, Mankel Mechanical, LLC (“Mankel”), and Iron 

Dynamics, Inc.’s (“Iron Dynamics”) Motions to Dismiss (Docs. 48, 98). After an 

independent review of the R&R (Doc. 162), Third-Party Defendants’1 Objections2(Docs. 

174 - 175), and Third-Party Plaintiff Quasar’s Responses to the Objections (Docs. 181 -

182), this Court adopts the R&R in part, denying Third-Party Defendants’ Motions to 

Dismiss (Docs. 48 & 98), but finds that Ariz. Rev. Stat. § 12-2602’s requirements are

applicable here.

Factual and Procedural Background

The Parties do not dispute the case’s factual and procedural background. The sole 

issue here is the applicability of A.R.S. § 12-2601, et. seq. Since there is no dispute as to 

1 The Court refers to Defendants Mankel, Iron Dynamics, and Hardrock collectively as “Third-Party Defendants.”

2 Third-Party Defendant Hardrock Concrete Placement Company (“Hardrock”) made its first appearance after the 

Motions to Dismiss had already been filed. Doc. 175 at ¶1. Since Third-Party Plaintiff Quasar named Hardrock as a 

Third-Party Defendant, Hardrock has also filed objections to the R&R. Doc. 175. 

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the factual and procedural background, this Court adopts the factual and procedural 

background as set forth in the R&R and will not reiterate it here. 

Report and Recommendation: Standard of Review

“District judges have the power to refer a case to magistrate judge to hear and 

determine pretrial matters before the court.” 28 U.S.C. § 636(b)(1); LRCiv 72.1(a). While 

magistrate judges do not have the authority to dismiss, they may prepare a Report and

Recommendation (“R&R”) to aid the district judge in the disposition of the case. § 

636(b)(1)(B)-(C). After receiving the magistrate judge’s R&R, the parties may file 

written objections to the magistrate judge’s recommendation. § 636(b)(1)(C). After 

receiving the magistrate judge’s R&R and any objections from the parties, the district 

judge conducts a de novo review of the portions of the record to which the parties object. 

Id. Finally, the district judge determines whether to accept, reject, or modify the 

magistrate judge’s recommendation. Id.

Analysis

The sole contention here is the applicability of Ariz. Rev. Stat. § 12-2602. § 12-

2602(A) requires, among other things, that a plaintiff making a civil claim against a 

licensed professional submit an affidavit certifying whether or not an expert’s testimony 

is necessary to prove the licensed professional’s liability or standard of care. If the 

plaintiff certifies that expert testimony is necessary, plaintiff must prepare “a preliminary 

expert opinion affidavit with the initial disclosures that are required by rule 26.1, Arizona 

[R]ules of [C]ivil [P]rocedure.” §12-2602(B). 

Third-Party Defendants have filed Motions to Dismiss under this statute because 

Quasar has not filed the required affidavit certifying whether an expert’s opinion 

testimony is required. Since Quasar has not filed the required written statement, ThirdParty Defendants assert that Quasar’s claim should be dismissed because there is no way 

to show that Third-Party Defendants’ work fell below the standard of care without an 

expert’s testimony. 

Quasar counters Third-Party Defendants’ argument with the assertion that the 

provisions of § 12-2602 do not apply here. Specifically, Quasar argues that because it 

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brings an indemnity claim and indemnity claims do not fall within the scope of § 12-

2602’s applicability. In support of this assertion, Quasar cites to Ariz. Rev. Stat. § 12-

2601(b). § 12-2601(b) makes the statutory expert certification requirements applicable to 

cases where the “[t]he claim is based on the licensed professional’s alleged breach of 

contract, negligence, misconduct, errors or omissions in rendering professional services.” 

Quasar asserts that the plain text of § 12-2601(b) limits application to the types of claims 

listed and there is no mention of indemnity claims in § 12-2601(b). Thus, § 12-2602’s 

requirements are not applicable to Quasar’s claims. 

Conversely, Third-Party Defendants assert that Quasar’s indemnity claims fall 

squarely within the scope of § 12-2602’s affidavit requirement because negligence is an 

essential element of Quasar’s claim. Quasar’s claim is based on a contractual indemnity 

provision. By the terms of the indemnity provision, Quasar must present evidence of each 

of the Third-Party Defendants’ “negligent acts or omissions” to determine the extent of 

indemnity Quasar is entitled to. Since Quasar must make a showing of negligence, Ariz. 

Rev. Stat § 12-2602’s affidavit requirements apply. 

Magistrate Judge Markovich agreed with Quasar’s argument and recommended 

denying the Third-Party Defendants’ Motions to Dismiss because § 12-2601(b) does not 

list indemnity specifically. 

This Court declines to adopt this approach. § 12-2602 is applicable because the 

section applies to claims “based” on a licensed professional’s negligence. § 12-2601(b). 

Thus, the Court must first determine the basis of Quasar’s claim to determine the § 12-

2602’s applicability. 

Here, the basis of Quasar’s claim is negligence, making it fall squarely within the 

scope of § 12-2602’s applicability. Quasar is attempting to enforce contractual indemnity 

provisions. Under the text of each indemnity provision, which are substantially similar, 

Quasar must show the “negligent acts or omissions of the subcontractor.” Docs. 46-1 at ¶ 

9.1, 46-3 at ¶ 9.1, 46-5 at ¶ 9.1. While Quasar’s claims are listed in the Third-Party 

Complaint as indemnity claims, the indemnity provisions are based on a showing of the 

Third-Party Defendants’ negligence. Therefore, Quasar’s claims are based on a licensed 

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professional’s negligence and Third-Party Plaintiff Quasar must comply with § 12-2602’s 

expert affidavit requirements. 

While the Court finds that § 12-2602 is applicable, dismissal is not appropriate in 

this instance. Given the contingent nature of Quasar’s indemnity claims, efficient use of 

judicial resources may warrant extending the time for compliance under § 12-2602(E). 

Nonetheless, Quasar must file the expert affidavit in accordance with § 12-2602.

Conclusion

Accordingly, IT IS HEREBY ORDERED this Court adopts the R&R in part and

denies Third-Party Defendants’ Motions to Dismiss. Docs. 48 & 98.

Dated this 9th day of March, 2020.

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