Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_18-cv-05403/USCOURTS-cand-3_18-cv-05403-2/pdf.json

Nature of Suit Code: 150
Nature of Suit: Overpayments &amp; Enforcement of Judgments
Cause of Action: 28:1332 Diversity-Breach of Contract

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United States District Court

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

CHINESE HOSPITAL ASSOCIATION,

Plaintiff,

v.

JACOBS ENGINEERING GROUP, INC.,

Defendant.

Case No. 18-cv-05403-JSC 

ORDER RE: DEFENDANT’S MOTION 

FOR SUMMARY JUDGMENT

Dkt. No. 29

Chinese Hospital Association alleges that Jacobs Engineering Group, Inc. breached its 

written agreement with Chinese Hospital for architectural services. Jacobs’ motion for summary 

judgment is now pending before the Court.1 (Dkt. No. 29.2) Having considered the parties’ briefs 

and having had the benefit of oral argument on August 22, 2019, the Court DENIES Jacobs’

motion for summary judgment. While it is undisputed that Chinese Hospital terminated the Design 

Contract “for convenience,” Jacobs has not met its burden of proving as a matter of law its 

affirmative defense that Chinese Hospital thereby waived its right to recover damages from 

Jacobs. 

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1 All parties have consented to the jurisdiction of a magistrate judge pursuant to 28 U.S.C. § 

636(c). (Dkt. Nos. 10, 16.)

2 Record citations are to material in the Electronic Case File (“ECF”); pinpoint citations are to the 

ECF-generated page numbers at the top of the documents.

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DISCUSSION

Jacobs insists that it is entitled to summary judgment because Chinese Hospital terminated 

the parties’ Design Contract for convenience and not for cause. In particular, it argues that the 

language of the Design Contract and case law from other states compel this Court to conclude that 

Chinese Hospital waived its right to seek damages and no reasonable jury could find otherwise. 

Jacobs has not met its summary judgment burden.

1. The Design Contract Language 

The Design Contract language does not unambiguously provide that a termination for 

convenience waives Chinese Hospital’s rights to seek damages. 

The “for cause” provision states:

If Architect fails or neglects to comply with this Agreement, Owner 

may give written notice that the Owner intends to terminate this 

Agreement. If Architect fails to correct such defaults, failure or 

neglect within seven days after being given such notice, Owner may 

without prejudice to any other remedy terminate the employment of 

Architect.

(Dkt. No. 1-3 at ECF 19, Sec. 1.3.8.2 (emphasis added.) The “convenience and without cause” 

provision states: 

This Agreement may be terminated by the Owner upon not less than 

seven days’ written notice to the Architect for the Owner’s 

convenience and without cause.

(Id. at Sec. 1.3.8.5.) Unlike the for cause provision, the convenience termination provision is 

silent as to the effect such termination has on the availability of remedies. Jacobs argues that this 

silence means that a “convenience and without cause” termination negates Chinese Hospital’s 

ability to pursue “any other remedy,” otherwise the “without prejudice” part of the with cause 

termination provision would be meaningless. In other words, because the Design Contract for 

cause termination provision has explicit language regarding reservation of remedies, the absence 

of such language from the convenience and without cause termination clause means that there is 

no remedy available following a convenience termination. 

Jacobs has not persuasively explained why the “without prejudice to any other remedy” 

language itself means that termination pursuant to the for convenience provision means that such a 

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termination waives any remedy given that there is nothing in the for convenience provision or 

otherwise in the Design Contract that provides for a waiver. Assuming, without deciding, that the 

Design Contract’s termination for cause provision is expressly providing a remedy by stating that 

termination pursuant to that provision is without prejudice to any other remedy, California law 

commands that “[w]here a contract expressly provides a remedy for a breach thereof, the language 

used in the contract must clearly indicate an intent to make the remedy exclusive.” Nelson v. 

Spence, 182 Cal. App. 2d 493, 497 (1960). Jacobs has not identified anything in the Design 

Contract that clearly indicates an intent to make the for cause termination provision the exclusive 

method of termination for obtaining a remedy.

Further, it has not been established that the for cause termination provision even contains a 

remedy. Stating that the termination is without prejudice to a remedy is not the same as providing 

a remedy, let alone an exclusive one. See Shelter Products, Inc. v. Steelwood Const., Inc., 257 Or.

App. 382, 399, 307 P.3d 449 (2013) (holding that a contract termination provision that states that 

it is “without prejudice to any other right or remedy” “does not itself confer any right or remedy”). 

Under these circumstances, the Court cannot hold as a matter of law that the absence of language 

preserving a remedy under the convenience termination provision means Chinese Hospital waived 

its right to seek a remedy.

Jacobs’ reliance on the Design Contract fails for a second reason: its argument ignores the

evidence that supports a reasonable inference that the parties negotiated a termination of the 

Design Contract different from the options set forth in the Design Contract. The letter in which 

Chinese Hospital initially terminated the Contract recites that “[t]here have been detailed 

discussions regarding the requirements of this transition,” and then goes on to provide a list of 

things that Jacobs must provide to Chinese Hospital, items not required by the Design Contract. 

(Dkt. No. 29, Ex. 1 at ECF 27.) Then, a little over a month later the parties entered into a formal 

written “Termination and License Agreement.” (Dkt. No. 29, Ex. 2 at ECF 30.) The Agreement 

includes the following provision:

8. No Waiver.

Except as expressly set forth herein, this Agreement shall not be 

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construed as a waiver by either Party of any or all of its or their 

rights, remedies, claims, demands, or defenses related to the Project 

arising out of the Contract.

(Id. at ¶ 8, ECF 34.) Further, in a paragraph entitled “Indemnity Agreement,” the Agreement 

states:

The Parties agree that nothing herein shall waive, release, or 

otherwise impair the Hospital’s rights under the Contract, law, and 

equity to bring claims directly against Jacobs for damages arising 

from work performed by Jacobs and/or CBI prior to the Termination 

which the Hospital asserts is in some way improper or deficient and 

has caused damages to the Hospital.

(Id. at ¶ 5.b.) Drawing all reasonable inferences in Chinese Hospital’s favor, these provisions

modified any waiver that may have occurred under the Design Contract to expressly preserve 

Chinese Hospital’s remedies. 

Jacobs insists that the no waiver provision means that Chinese Hospital preserved 

whatever remedies it had under the contract, and given the termination for convenience, Jacobs 

did not preserve a damages remedy. This interpretation is plausible, especially given that the 

“Termination and License Agreement” recites that Chinese Hospital previously “issued a 

Termination for Convenience to Jacobs” and that Jacobs “acknowledged” the Termination. (Dkt. 

No. 29, Ex. 1 at ECF 27.) But Jacobs has not proved that its explanation is the only plausible 

explanation as is its burden on summary judgment of its waiver affirmative defense. That the 

Agreement is titled “Termination and License Agreement” supports a plausible inference that the 

Agreement sets forth the parties’ respective rights as a consequence of the Termination, 

especially since the initial termination letter stated that the parties had been in discussions 

regarding the termination. See Daniel v. Ford Motor Co., 806 F.3d 1217, 1224 (9th Cir. 2015) 

(stating that under California law a “provision is ambiguous when it is capable of two or more 

constructions, both of which are reasonable.”) 

Further, that the parties expressly stated that nothing in the Agreement waives Chinese 

Hospital’s rights under the Design Contract to bring claims against Jacobs for damages arising 

from Jacobs’ work prior to termination supports an inference that the parties understood that 

there had not been a waiver. If the understanding was otherwise, the language would have been 

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surplusage. At a minimum, the “No Waiver” provision creates an ambiguity and Jacobs does not 

cite any evidence that requires that ambiguity to be resolved in favor of a finding that Chinese 

Hospital waived its right to a damages remedy.

Jacobs’ reliance on Pub. Bldg. Auth. of City of Huntsville v. St. Paul Fire & Marine Ins. 

Co., 80 So. 3d 171 (Ala. 2010), is unavailing. It did not involve a subsequent written 

“Termination” agreement with a provision expressly stating the “Termination” agreement does not 

waive any remedies. The facts are also very different from this case. There, the owner terminated 

a building contract for convenience and without cause. Id. at 174. It subsequently sought to 

collect on the contractor’s performance bond. Id. at 176. The bond’s plain language stated that 

the surety is obligated under the bond only if certain conditions are met, including that the owner 

has declared the contractor in default and formally terminated the contractor’s right to complete 

the contract. Id. at 177-78. Further, such default could not be declared earlier than 20 days after 

the owner notified the contractor that it was considering declaring the contractor in default. Id. at 

177. The owner, however, only sought to declare the contractor in default after it had already 

terminated the building contract for convenience and without cause. Id. at 176. The trial court 

granted summary judgment in favor of the surety because the owner had failed to satisfy the 

conditions precedent to collecting on the bond, including that the owner had formally terminated 

the contract based on the contractor’s default. Id. at 178. The Alabama Supreme Court affirmed 

because the record was undisputed that before the owner had ever attempted to terminate the 

contract for cause, it had terminated the agreement for convenience. Only after the owner 

“terminated the contract for convenience did it attempt to satisfy the conditions precedent, which, 

according to the plain language of the bond, [was] too late.” Id. at 179. 

Jacobs does not identify any language in the Design Contract which is remotely similar to 

that in the Alabama case’s building contract and performance bond (as the decision was based on 

the language of both). It has not identified any conditions precedent to suing for breach of 

contract set forth in the Design Contract or otherwise. This “Design Contract” argument thus 

fails. 

//

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2. The Doctrine of Prevention

Jacobs has also not met its burden of proving as a matter of law that the doctrine of 

prevention precludes Chinese Hospital from recovering money damages. Relying on California 

Civil Code Section 1511 Jacobs insists that Chinese Hospital’s termination of the Design Contract

without giving Jacobs an opportunity to cure its alleged default prevented it from performing the 

Design Contract and thus excused any breach by Jacobs. Section 1511 provides: “[t]he want of 

performance of an obligation, or of an offer of performance, in whole or in part, or any delay 

therein, is excused by the following causes, to the extent to which they operate...When such 

performance or offer is prevented or delayed by the act of the creditor.” See also Hale v. Sharp 

Healthcare, 183 Cal.App.4th 1373, 1387 (2010) (“prevention of performance by one party to a 

contract excuses performance by the other party”). 

As with its Design Contract language argument, Jacobs fails to address the express 

reservation of Chinese Hospital’s right to sue Jacobs for damages in the Termination and License 

Agreement. Further, it has not proven that it could have performed the contract had Chinese 

Hospital terminated the Design Contract for cause and given Jacobs seven days to cure.

The cases cited by Jacobs are inapposite. Again, none involves an agreement which 

expressly reserves the owner’s right to sue. Further, the California cases upon which Jacobs relies 

involved findings that the owner prevented the contractor from performing the construction 

contract. In Peter Kiewit Sons’ Co. v. Pasadena City Jr. Coll. Dist. of Los Angeles Cty., 59 Cal. 2d 

241, 244 (1963), the owner prevented the contractor from timely completing the project. And in 

Bomberger v. McKelvey, 35 Cal.2d 607, 613 (1950), the owner prevented the contractor from 

demolishing the building. Here, Chinese Hospital alleges that Jacobs breached its contract by 

failing to obtain OSHPD approval. The record does not support a finding as a matter of law that 

Chinese Hospital prevented Jacobs from fulfilling that obligation; indeed, the record is virtually 

silent on this issue.

The “for convenience” termination case cited by Jacobs is also inapposite. Tishman Const. 

Corp. v. City of New York, 228 A.D.2d 292, 643 N.Y.S.2d 589 (1996), did not apply Civil Code 

1511; instead, the court’s ruling was based on the express language of the contract, and in 

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particular, that the City had not terminated pursuant to the provision which expressly allowed the 

City to recoup the expense of curing the contractor’s default. Id.at 293. As explained above, 

Jacobs has not identified such unequivocal language here. 

3. Implied Waiver 

Finally, Jacobs has not met its burden of proving as a matter of law that Chinese Hospital 

impliedly waived its right to a monetary remedy. Generally, “[a] party may waive a contract right 

by conduct so inconsistent with the intent to enforce the right as to induce a reasonable belief that 

it has been relinquished.” Sanchez v. Cty. of San Bernardino, 176 Cal. App. 4th 516, 529 

(2009)(internal citations and quotation marks omitted). “Whether a waiver has occurred depends 

solely on the intention of the waiving party.” Velasquez v. Truck Ins. Exch., 1 Cal. App. 4th 712, 

722 (1991). Given the language of the initial termination letter and the subsequent Termination 

and License Agreement, the Court concludes that not every reasonable trier of fact would have to 

find that Chinese Hospital intended to waive its right to monetary damages by terminating the 

Design Contract for convenience. Thus, Jacobs has not met its summary judgment burden.

CONCLUSION

As Jacobs has not proved its various waiver affirmative defenses as a matter of law, its 

motion for summary judgment is denied. As discussed at oral argument, there is no dispute that 

Chinese Hospital waived its right to recover consequential damages; however, the parties have not 

sufficiently briefed whether any of the damages sought by Chinese Hospital are the type of 

damages the Design Contract precludes Chinese Hospital from recovering. The parties shall meet 

and confer and by September 10, 2019 submit a stipulated briefing schedule for a dispositive 

motion on this issue. If they cannot agree, they shall submit their respective proposals by the same 

date.

This Order disposes of Docket No. 29.

IT IS SO ORDERED.

Dated: September 3, 2019

JACQUELINE SCOTT CORLEY

United States Magistrate Judge

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