Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_16-cv-01494/USCOURTS-casd-3_16-cv-01494-1/pdf.json

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

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

ARCHER WESTERN CONTRACTORS, 

LLC, a Delaware limited liability 

company,

Plaintiff,

v.

INTERNATIONAL FIDELITY 

INSURANCE COMPANY, a New Jersey 

corporation,

Defendant.

Case No.: 16-CV-1494 JLS (BGS)

ORDER (1) DENYING IN PART AND 

GRANTING IN PART

DEFENDANT’S MOTION TO 

DISMISS; AND (2) DENYING 

MOTION TO STRIKE

(ECF No. 21)

Presently before the Court is Defendant International Fidelity Insurance 

Company’s Motion to Dismiss Counts I and II of Plaintiff’s First Amended Complaint 

Pursuant to Rule 12(b)(6) or, in the Alternative, Motion to Strike Count I Pursuant to 

Rule 12(f). (“MTD,” ECF No. 21.) Also before the Court are Plaintiff Archer Western 

Contractors, LLC’s Opposition to Defendant’s [Second] Motion to Dismiss, (“Opp’n,” 

ECF No. 27), and Defendant’s Reply Memorandum in Support of Motion to Dismiss.

(“Reply,” ECF No. 29.) After considering the parties’ arguments and the law, the Court 

GRANTS IN PART and DENIES IN PART Defendant’s Motion to Dismiss and 

DENIES Defendant’s alternative Motion to Strike.

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BACKGROUND

On or around July 7, 2011, Plaintiff entered into a written Subcontract Agreement 

(the “Subcontract”) with Allied Industries, Inc. (“Allied”) in connection with a project 

commonly known as the Point Loma WWTP Grit Processing Improvement Project 

located in San Diego, CA (the “Project”). (First Amended Complaint (“FAC”) ¶ 5, ECF 

No. 14.) The City of San Diego is the owner of the Project, and Plaintiff is its general 

contractor. (Id.) Allied served as a subcontractor to Plaintiff pursuant to the Subcontract. 

(Id.) 

Allied was contractually required to provide payment and performance bonds 

guaranteeing its performance of the work under the Subcontract. (Id. ¶ 6.) To that end, 

Defendant issued a Subcontractor Performance Bond on or around August 18, 2011, 

identified by Bond No. SU0567272 (the “Performance Bond”) for Allied as principal and 

Plaintiff as obligee. (Id. ¶ 7.) Defendant also issued a Subcontractor Labor and Material 

Payment Bond, dated on or about September 14, 2011, identified by Bond No. 

SU0567272 (the “Payment Bond”) for Allied as principal and Plaintiff as obligee. (Id. ¶ 

8.) Allied’s Subcontract amount was originally set at $334,450, but was later increased 

pursuant to one or more executed change orders to $519,691. (Id. ¶¶ 9–10.) From late 

2012 through 2013, Allied’s work on the Project grew progressively slower, and Allied 

ultimately abandoned the Project, thus allegedly breaching the Subcontract. (Id. ¶¶ 11–

12.) 

On or about April 11, 2013, Plaintiff sent Allied and Defendant notice that Allied 

was allegedly in default of the Subcontract. (Id. ¶ 13.) This correspondence advised 

Allied and Defendant that Plaintiff would proceed to mitigate damages through remedies 

available to Plaintiff under the Subcontract. (Id. ¶ 14; see also Ex. D.) On or about April 

26, 2013, Plaintiff submitted a claim on the Bonds to Defendant and demanded 

Defendant respond to Plaintiff’s declaration of Allied’s default. (Id. ¶ 15; see also Ex. E.) 

Defendant allegedly breached the terms of the Performance Bond by, among other things, 

failing to perform according to the Bond. (Id. ¶ 16.) Defendant also allegedly attempted 

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to impose pre-conditions on Plaintiff, which were not authorized under the terms of the 

Performance Bond. (Id. ¶ 30.) Plaintiff made multiple claims on the Bonds requesting 

Defendant’s performance, but Defendant continued to fail and/or refuse to perform its 

obligations under the Bonds. (Id. ¶ 17.) 

After Allied filed for bankruptcy, Plaintiff completed Allied’s work as authorized 

by the terms of the Subcontract and the Bonds. (Id. ¶ 19.) To do so, Plaintiff hired other 

subcontractors, suppliers, and laborers to complete the work, thus incurring $815,442 in

extended overhead, extended general conditions and lost production as a result of the 

delays caused by Allied’s breach of the Subcontract. (Id. ¶¶ 20, 23.1.) Additionally, the 

Project was delayed by 108 days solely as a result of the delay caused by Allied, which 

caused Plaintiff $108,000 due to liquated damages of $1,000 per day. (Id. ¶ 23.2.)

Finally, Plaintiff claims $83,760 in direct material and rental costs. (Id. ¶ 23.3.) In total, 

Plaintiff claims at least $1,007,203 in damages and losses. (Id. ¶ 23.)

Defendant previously moved to dismiss Plaintiff’s complaint, which the Court 

denied in part and granted in part. (“Prior MTD Order,” ECF No. 13.) The dismissal in 

the previous Order was without prejudice. (Id. at 9.) Accordingly, Plaintiff filed a First 

Amended Complaint, (ECF No. 14), which led to the Motion currently before the Court.

LEGAL STANDARD

Federal Rule of Civil Procedure 12(b)(6) permits a party to raise by motion the 

defense that the complaint “fail[s] to state a claim upon which relief can be granted,” 

generally referred to as a motion to dismiss. The Court evaluates whether a complaint 

states a cognizable legal theory and sufficient facts in light of Federal Rule of Civil 

Procedure 8(a), which requires a “short and plain statement of the claim showing that the 

pleader is entitled to relief.” Although Rule 8 “does not require ‘detailed factual 

allegations,’ . . . it [does] demand more than an unadorned, the-defendant-unlawfullyharmed-me accusation.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. 

Corp. v. Twombly, 550 U.S. 544, 555 (2007)). In other words, “a plaintiff’s obligation to 

provide the ‘grounds’ of his ‘entitle[ment] to relief’ requires more than labels and 

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conclusions, and a formulaic recitation of the elements of a cause of action will not do.” 

Twombly, 550 U.S. at 555 (citing Papasan v. Allain, 478 U.S. 265, 286 (1986)). A 

complaint will not suffice “if it tenders ‘naked assertion[s]’ devoid of ‘further factual 

enhancement.’” Iqbal, 556 U.S. at 677 (citing Twombly, 550 U.S. at 557).

In order to survive a motion to dismiss, “a complaint must contain sufficient 

factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” Id.

(quoting Twombly, 550 U.S. at 570); see also Fed. R. Civ. P. 12(b)(6). A claim is facially 

plausible when the facts pled “allow the court to draw the reasonable inference that the 

defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 677 (citing Twombly, 

550 U.S. at 556). That is not to say that the claim must be probable, but there must be 

“more than a sheer possibility that a defendant has acted unlawfully.” Id. Facts “‘merely 

consistent with’ a defendant’s liability” fall short of a plausible entitlement to relief. Id. 

(quoting Twombly, 550 U.S. at 557). Further, the Court need not accept as true “legal 

conclusions” contained in the complaint. Id. This review requires context-specific 

analysis involving the Court’s “judicial experience and common sense.” Id. at 678 

(citation omitted). “[W]here the well-pleaded facts do not permit the court to infer more 

than the mere possibility of misconduct, the complaint has alleged—but it has not 

‘show[n]’—‘that the pleader is entitled to relief.’” Id.

ANALYSIS

Plaintiff brings three causes of action against Defendant in its FAC: (1) Recovery 

on Performance Bond, (FAC ¶¶ 25–43), (2) Declaratory Relief, (id. ¶¶ 44–52), and (3) 

Claim on Payment Bond, (id. ¶¶ 53–64). Defendant only seeks to dismiss Plaintiff’s first 

and second causes of action and does not contest the third cause of action. (MTD 8.)1

Accordingly, the Court considers only Plaintiff’s claim for recovery on the Performance 

Bond and its claim for Declaratory Relief.

Plaintiff alleges that Defendant breached its obligations under the Performance 

 

1 Pin citations refer to the CM/ECF page numbers electronically stamped at the top of each page.

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Bond by failing to timely elect one of its various options under the Performance Bond 

within fifteen days of receiving a notice of default. (FAC ¶¶ 27–29.) Defendant also 

allegedly attempted to impose pre-conditions on Plaintiff not authorized by the 

Performance Bond. Specifically, Defendant attempted to require Plaintiff to first 

subordinate Plaintiff’s rights to Allied’s Subcontract balance funds before Defendant 

would commit to perform the Subcontract work under the terms of the Performance 

Bond. (Id. ¶ 30.) Thus, Plaintiff seeks $1,007,203, which includes the penal sum limit of 

the Performance Bond of $519,9612as well as the additional cost above the penal sum

due to Defendant’s independent violations of the contract. (Id. ¶¶ 38, 40.) Plaintiff adds a 

new cause of action for declaratory relief arguing that Defendant waived the penal sum 

limit by failing to timely perform on the contract. (Id. ¶ 47.)

I. Motion to Dismiss: Recovery on the Performance Bond

Defendant advances two broad arguments why any amount of damages above the 

penal sum is unrecoverable as a matter of law. First, Defendant argues that express terms 

of the bond preclude recovery above the penal sum. Second, Defendant argues that 

California statutory law limits its liability. The Court addresses each argument in turn.

A. Express Terms of the Performance Bond

“In general, a surety bond is interpreted by the same rules as other contracts. That 

is, we seek to discover the intent of the parties, primarily by examining the words the 

parties have chosen.” First Nat’l Ins. Co. v. Cam Painting, Inc. 173 Cal. App. 4th 1355, 

1365 (2009) (citations omitted). “The extent of the surety’s liability must be gathered 

from the language used when read in the light of the circumstances surrounding the 

transaction.” Id. Defendant argues that Paragraphs 4 and 6 of the Performance Bond, 

when read together, state that Defendant cannot be liable for more than the penal sum. 

(MTD 17.) Paragraph 4 contains six options for Defendant to elect within 15 days of 

Plaintiff notifying Defendant of Allied’s default. (FAC Ex. B.) Plaintiff alleges 

 

2 As before, the Court notes that this sum assumes Plaintiff can prove that the penal sum limit was 

properly increased from the original amount of $334,450 to $519,961. (See Prior MTD Order 5 n.1.) 

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Defendant failed to make an election under Paragraph 4. (Id. ¶¶ 27–29.) Paragraph 6(b) 

states that Defendant shall be liable for “[t]he responsibilities of the Subcontractor for 

additional legal and design professional costs resulting or arising from the 

Subcontractor’s default, or resulting or arising from the actions or failure to act of the 

Surety under Paragraph 4 herein.” (Id. Ex. B.)

Defendant’s argues that if it did indeed fail to act under Paragraph 4, as Plaintiff 

alleges, then any failure to act, as contemplated by Paragraph 6(b), must be read with 

Paragraph 6(d) which states “[t]he Surety’s liability under this Paragraph 6 shall not 

exceed, in the aggregate, the penal sum.” (MTD 17; FAC Ex. B.) Defendant’s reading of 

the express terms of the Performance is plausible; however, this Court previously read

Paragraph 6(b) as only applying to “additional legal and design costs.” (Prior MTD Order 

8.) Thus, costs other than additional legal and design costs would not be limited by 

Paragraph 6(d). Defendant does not address this language. That omission is not 

dispositive, but Plaintiff alleges none of its costs were legal or design—thus not covered 

by Paragraph 6(d). (FAC ¶ 40.) At this stage, Defendant has not demonstrated why this 

reading is not plausible.

Moreover, Plaintiff alleges that Defendant required pre-conditions from Plaintiff 

before Defendant took any action under the express terms of the Performance Bond at 

issue. (FAC ¶ 30; see also Opp’n 10.) Specifically, Plaintiff alleges that Defendant 

required Plaintiff to subordinate its rights to the Allied Subcontract balance funds3to 

Defendant before Defendant would commit to perform the Subcontract work. (FAC ¶ 

30.) Defendant defends the requested precondition as proper under both the terms of the 

bond itself and well-established law. (MTD 19.)

First, Defendant points to various provisions within Paragraph 4 that contemplate 

 

3 The Performance Bond defines balance of Subcontract Price as “the amount of the Subcontract Price, 

including any amendments issued thereto prior to the declaration of default, less the amount paid by 

Obligee to Subcontractor in accordance with the terms of the Subcontract, and less any amounts for 

which Surety is liable under this Bond.” (FAC Ex. B, ¶ 5.)

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Defendant’s use of the Subcontractor balance funds. (MTD 17–18.)4 These provisions, 

taken independently, would support Defendant’s contention that it was authorized to 

demand Plaintiff credit any remaining subcontract funds against its costs before seeking 

reimbursement from Defendant under the Performance Bond. Yet, Paragraph 4 cannot be 

read independent of Paragraph 5. Paragraph 5 specifically conditions Plaintiff’s return of 

the Subcontractor balance funds upon “issuance of written notice by Surety to Obligee of 

the commitment to remedy the default through one of the options set forth in Paragraph 

4.” (FAC Ex. B.) Thus, Defendant had to send written notice of a Paragraph 4 election 

before Plaintiff was required to apply any Subcontractor balance funds. Neither party 

speaks to whether that event occurred or when, which given this stage in the litigation 

does not foreclose Plaintiff’s allegations.

Defendant also counters that Plaintiff should have had to apply the remaining 

subcontract balance to reduce its losses before seeking reimbursement from Defendant. 

(MTD 18–19.) Otherwise, Plaintiff would benefit from a windfall by not paying for its 

original obligation and pushing the obligation entirely onto Defendant without the benefit 

of the contract funds. (Id. at 19.) While this concern is valid, it does not, by itself, excuse 

Defendant from taking some action under the Bond. Plaintiff concedes that Defendant 

would have rights in the Subcontract funds had it made an election under the 

Performance Bond. (Opp’n 11.) Further, California statute supports Defendant’s claim 

for reimbursement had Defendant satisfied the principal’s obligation. See Cal. Civ. Code 

§§ 2847–48. 

In its Reply, Defendant points out that Plaintiff appears to change its position

between the FAC and the Opposition Brief. (Reply 7.) In its Opposition, Plaintiff alleges 

that Defendant required actual payment of Subcontract funds before it would perform. 

(Opp’n 10 (“Clearly, the Bond does not provide that Plaintiff was required to pay 

 

4 Defendant notes that 4(a) references the Subcontract terms and conditions, which includes payment of 

the entire subcontract amount. (MTD 18.) 4(b) requires Defendant to obtain bids from replacement 

contractors and then Plaintiff pays the balance of the Subcontract Price. (Id.) 4(f) allows Plaintiff to 

complete any work and the cost to perform is credited against any remaining Subcontract balance. (Id.)

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Defendant IFIC the balance of the Subcontract Price until IFIC committed to actually 

perform at all.”).) Yet, in its FAC Plaintiff alleges that Defendant required Plaintiff to 

“subordinate [its] rights to [the] Allied Subcontract balance funds. (FAC ¶ 30.) This 

distinction does not change the Court’s analysis—at its core Plaintiff alleges that 

Defendant attempted to extract some sort of remuneration (payment of funds or 

subordinate right to the funds) before electing an option under the Performance Bond. At 

this stage in the proceedings the pleadings need only be plausible on their face, but 

Plaintiff surely will need to clarify and specify the facts going forward.

Finally, Defendant argues that, as a matter of law, a surety has the right to apply 

the remaining contract funds to reduce the amount of the obligee’s loss, i.e. the right of 

subrogation. Defendant’s subrogation argument is misplaced. Defendant states the 

general rule that “there are few doctrines better established than that a surety who pays

the debt of another is entitled to all the rights of the person he paid to enforce his right to 

be reimbursed.” (MTD 18 (quoting Pearlman v. Reliance Ins. Co., 371 U.S. 132, 136–37 

(1962)).) Defendant correctly states the law, but does not apply it to this case. The rule in 

Pearlman only applies to sureties who have paid the debt of another and seek 

reimbursement. Defendant did not pay out any funds and Pearlman does not apply.5 This

is true in California where: 

The prerequisites to the assertion of a right of subrogation are these: ‘(1) 

Payment must have been made by the subrogee to protect his own interest. 

(2) The subrogee must not have acted as a volunteer. (3) The debt paid must 

be one for which the subrogee was not primarily liable. (4) The entire debt 

must have been paid. (5) Subrogation must not work any injustice to the 

rights of others.

Am. Contractors Indem. Co. v. Saladino, 115 Cal. App. 4th 1262, 1268 (Ct. App. 2004) 

(quoting Caito v. United Cal. Bank, 20 Cal.3d 694, 704 (1978)). Once a surety pays the 

debt in full then it has a “right of reimbursement implied in law.” Id. at 1270.

 

5 Additionally, California courts have noted that Supreme Court decisions are not controlling of state 

law. See E. Quincy Servs. Dist. v. Gen. Accident Ins. Co. of Am., 88 Cal. App. 4th 239, 246 (Cal. App. 

2001) (“[O]n questions of state law even U.S. Supreme Court decisions are not controlling...”). 

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Defendant quotes California Civil Code § 2849, but does not further explain its 

applicability in any depth. Thus, while it is clear that a “surety is entitled to the benefit of 

every security for the performance of the principal obligation held by the creditor,” Cal 

Civ. Code § 2849, it is not clear that the statutory language preempts the express 

language of the Performance Bond. Defendant may be able to show that, as a matter of 

law, Plaintiff had to apply the remaining Subcontract balance funds to any remedial 

work. Yet, Defendant has not demonstrated to the Court how this excuses following the 

requirements of Paragraphs 4, 5, and 6. 

At this stage of the proceedings, the Court finds that Defendant has not 

demonstrated why, as a matter of law, Plaintiff’s claims are not plausible. This is not to 

say that Defendant will not be able to later demonstrate that it did indeed follow the 

express terms of the contract, or that Plaintiff had to commit to applying the Subcontract 

Balance funds before Defendant made an election. At this stage, however, the Court 

declines to dismiss Plaintiff’s claim on the express terms of the bond.

B. California Statutory Liability

Defendant’s second argument is that California statute limits liability to no more 

than the amount of the Penal Sum. (MTD 20.) Specifically, California Code of Civil 

Procedure § 996.470(a) limits liability to the amount of the bond (i.e. the penal sum). 

(Id.) In its first order, the Court stated that liability limitation in § 996.470 refers only to 

“breaches of the condition of the bond . . . [i]t does not limit liabilities of a surety which 

are imposed by statute rather than for breach of the condition of the bond.” (Prior MTD 

Order 6 n.3 (quoting Harris v. Nw. Nat’l Ins. Co., 6 Cal. App. 4th 1061, 1065 (Ct. App.

1992) (quotations omitted).) Indeed, Harris relied on § 996.475, which provides 

“[n]othing in this chapter is intended to limit the liability of a surety pursuant to any other 

statute. Cal. Civ. Proc. Code § 996.475; Harris, 6 Cal. App. 4th at 1065. Defendant 

argues that Harris only allows independent liability imposed by statute and concludes 

that none of the statutes cited by Plaintiff give rise to the statutory right to damages. 

(MTD 21.) Defendant examines several statutes but finds no relevant exception, nor does 

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Plaintiff point to any relevant statutory exception. (MTD 24–25; see generally FAC; 

Opp’n.) The Court agrees with Defendant insofar as there is no apparent statutory 

exception identified that meets the statutory exception in § 995.475.

The Court also cited General Insurance Co. v. Mammoth Vista Owners’ Ass’n, 174 

Cal. App. 3d 810, 827 n.10 (Ct. App. 1985), in its previous order. (Prior MTD Order 6 

n.3.) At issue in Mammoth Vista was whether a surety was liable in “tort for breach of the 

implied covenant of good faith and fair dealing or for breach of statutory duties under the 

Unfair Practices Act (Ins. Code §790.03).” 174 Cal. App. 3d at 822. As Defendant 

correctly notes, this Court previously denied Plaintiff’s claim to the extent it relied on 

Insurance Code § 790. (Prior MTD Order 9.) Mammoth Vista signaled—but did not 

hold—that a surety could be liable in tort for independent breaches of the bond. 174 Cal. 

App. 3d at 826 (“Under common law, an insurer who breaches the duty of good faith and 

fair dealing may be held liable in tort beyond the limits of the policy.”) (citing Gruenberg 

v. Aetna Ins. Co., 9 Cal.3d 566, 574 (1973)). Mammoth Vista stated in a footnote that 

Code of Civil Procedure § 996.470 was “expressly limited to breaches of the condition of 

the bond.” Id. at 827 n.10. Defendant correctly points out that Mammoth Vista did not 

foreclose an action in tort for independent violations and that the California Supreme 

Court later concluded that there is no tort recovery for a breach of the implied covenant 

of good faith and fair dealing in the context of a construction performance bond. Cates 

Construction, Inc. v. Talbot Partners, 21 Cal. 4th 28, 60 (1999). Defendant correctly

states that Cates is controlling on the availability of a tort remedy. (MTD 22.) 

That said, Defendant neglects to address the contractual remedy discussed in 

Cates. Cates dealt with whether an obligee could recover in tort against a surety for delay 

damages by the principal. 21 Cal. 4th at 38–39. The California Supreme Court stated,

“[b]y now it is well established that a covenant of good faith and fair dealing is implicit 

in every contract. Id. at 43 (citations omitted). It went on to say that “[b]ecause the 

covenant of good faith and fair dealing essentially is a contract term that aims to 

effectuate the contractual intentions of the parties, ‘compensation for its breach has 

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almost always been limited to contract rather than tort remedies.’” Id. (quoting Foley v. 

Interactive Data Corp., 47 Cal. 3d 654, 684–85 (1988)). Cates held that there is no tort 

remedy for breaches of good faith and fair dealing in a construction performance bond. 

Id. at 60. This does not mean there is no remedy whatsoever. Cates also held that 

“recovery for a surety’s breach of the implied covenant of good faith and fair dealing is 

properly limited to those damages within the contemplation of the parties at the time the 

performance bond is given or at least reasonably foreseeable by them at that time.” Id. at 

61 (citing Applied Equipment Corp. v. Litton Saudi Arabia Ltd., 7 Cal. 4th 503, 516 

(1994); and Cal. Civ. Code § 3300).

Defendant persuasively argues that there is no tort remedy for any independent 

violations of the terms of a construction bond, but has not shown that there is no remedy 

whatsoever for an independent violation. Indeed, the Cates Court declined to decide 

whether there was a breach of the terms of the bond specifically because it upheld the 

alternative grounds—i.e. contractual recovery for breach of good faith and fair dealing—

to hold a surety liable. 21 Cal. 4th at 42 n.6. Thus, at this procedural stage, where the 

Court assumes all factual allegations to be true, it is plausible that Plaintiff could show 

there was a breach independent of the conditions of the contract warranting recovery.

In its Opposition, Plaintiff argues that the entire statutory scheme is inapplicable to 

the Performance Bond in this case. (Opp’n 14.) Section 996.470 lies within Chapter 2 of 

Title 14 of the California Code of Civil Procedure, which according to Plaintiff, only 

applies to statutory bonds and not common-law bonds. (Opp’n 14–15.) Defendant 

counters California law is the same for statutory and private bonds and points to several 

cases that might support this position. (Reply 3.) The Court does not have the benefit of 

Plaintiff’s position on these cases. Furthermore, Harris, Mammoth Vista, and Cates, 

when read together, support the proposition that Section 996.470 does not apply to a 

surety’s breach of good faith and fair dealing of a construction performance bond.

Therefore, the Court declines to rule on whether § 996.470 entirely limits Defendant’s 

liability.

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In sum, Plaintiff plausibly states a claim that if proven, provides relief—at the very 

least up to amount of the Penal Sum on the Performance Bond. Given all the foregoing 

and limited to the current procedural posture, the Court DENIES Defendant’s Motion to 

Dismiss as to Plaintiff’s first cause of action.

II. Motion to Strike: Recovery on the Performance Bond

In the alternative, Defendant argues that the Court should strike Plaintiff’s 

complaint to the extent it is above the Penal Sum. Defendant’s motion to strike falls 

under Federal Rule of Civil Procedure 12(f), which permits a court to “strike from a 

pleading . . . any redundant, immaterial, impertinent, or scandalous matter.” “Motions to 

strike are ‘generally disfavored because they are often used as delaying tactics and 

because of the limited importance of pleadings in federal practice.’” Cortina v. Goya 

Foods, Inc., 94 F. Supp. 3d 1174, 1182 (S.D. Cal. 2015) (quoting Rosales v. Citibank, 

133 F. Supp. 2d 1177, 1180 (N.D. Cal. 2001)). Accordingly, “motions to strike should 

not be granted unless it is clear that the matter to be stricken could have no possible 

bearing on the subject matter of the litigation.” Colaprico v. Sun Microsys., Inc., 758 F. 

Supp. 1335, 1339 (N.D. Cal. 1991). “When ruling on a motion to strike, this Court ‘must 

view the pleading under attack in the light most favorable to the pleader.’” Id. (citing 

RDF Media Ltd. v. Fox Broad. Co., 372 F. Supp. 2d 556, 561 (C.D. Cal. 2005)).

Defendant asks the Court to strike any allegations that are not supported by 

California law. (MTD 15.) Defendant provides no other reason why the allegations have

no possible bearing on this case. (Id.) Furthermore, the foregoing discussion in Section I, 

supra, demonstrates that pleadings in this case have at least some bearing on the subject 

matter of the litigation. Accordingly, the Court DENIES Defendant’s Motion to Strike.

III. Motion to Dismiss: Declaratory Relief

Plaintiff seeks declaratory relief that Defendant has, by its failure to act, waived the 

Penal Sum limit. (FAC ¶ 47.) Plaintiff also argues Defendant is estopped from claiming 

the Penal Sum, again for the same reason: a failure to perform. (Id. ¶ 48.) In support of its 

second cause of action, Plaintiff recites a litany of statutes regarding general rules of 

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interpretation. (Id. ¶¶ 46, 48–50.) 

A district court cannot grant declaratory relief unless there is an “actual 

controversy” within the meaning of the Declaratory Judgment Act. See 28 U.S.C. § 2201 

(“In a case of actual controversy within its jurisdiction ... any court of the United States, 

upon the filing of an appropriate pleading, may declare the rights and other legal relations 

of any interested party seeking such declaration, whether or not further relief is or could 

be sought.”); see also Md. Cas. Co. v. Pac. Coal & Oil Co., 312 U.S. 270, 272 (1941) 

(“[T]he District Court is without power to grant declaratory relief unless ... a[n actual] 

controversy exists.”). Furthermore, courts regularly deny requests for declaratory relief 

when they are duplicative of other claims—“[a] claim for declaratory relief is 

unnecessary where an adequate remedy exists under some other cause of action.” 

Mangindin v. Wash. Mut. Bank, 637 F. Supp. 2d 700, 707–08 (N.D. Cal. 2009) (finding 

plaintiff’s declaratory relief claim duplicative and unnecessary because it was “entirely 

commensurate with the relief sought through [plaintiff's] other causes of action”); see

Permpoon v. Wells Fargo Bank Nat’l Ass’n, No. 09-CV-01140-H (BLM), 2009 WL 

3214321, at *5 (S.D. Cal. Sept. 29, 2009) (finding the plaintiffs' declaratory relief claim 

“duplicative and unnecessary” because the relief sought was the same as the plaintiffs’

other causes of action); see also Kimball v. Flagstar Bank F.S.B., 881 F. Supp. 2d 1209, 

1220 (S.D. Cal. 2012) (dismissing the plaintiffs’ claim for declaratory relief because it 

was “based upon the same allegations supporting their other causes of action”).

Here, Plaintiff’s declaratory relief claim is duplicative of Plaintiff’s other claim—

i.e., there is an adequate remedy at law for the violation encompassed in Plaintiff’s 

declaratory relief cause of action. The relief sought in both causes of action is the same—

namely to be paid $1,007,203 for completing the Project. The Court, without deciding 

whether the statutory sections cited by Plaintiff may be applicable in another context or 

argument, finds declaratory relief not appropriate when Plaintiff has other adequate relief. 

Accordingly, Plaintiff’s request for declaratory relief fails. The Court GRANTS IN 

PART Defendant’s Motion to Dismiss and DISMISSES WITHOUT PREJUDICE

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Plaintiff’s second cause of action.

CONCLUSION

Accordingly, the Court GRANTS IN PART and DENIES IN PART Defendant’s 

Motion to Dismiss (ECF No. 21) and DISMISSES WITHOUT PREJUDICE Plaintiff’s 

second cause of action. The Court also DENIES Defendant’s alternative Motion to 

Strike.

IT IS SO ORDERED.

Dated: September 27, 2017

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