Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_03-cv-04114/USCOURTS-cand-3_03-cv-04114-0/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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United States District Court

For the Northern District of California

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United States District Court

For the Northern District of California

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

WESTERN/SCOTT FETZER CO,

Plaintiff,

v

BRADEN PARTNERS, LP, et al,

Defendants. /

No C-03-4114 VRW

ORDER

AND RELATED COUNTERCLAIMS AND

THIRD-PARTY CLAIMS

 /

On September 10, 2003, plaintiff Western/Scott Fetzer

Company (“Western”) brought this diversity suit against defendants

Braden Partners, LP (“Braden”) and Braden Management Corporation

(“Braden Management”) to recover money owed for several thousand

oxygen cylinders that Western had sold to defendants. Doc #1-1. 

On April 19, 2004, Braden asserted counterclaims against Western

for negligent and intentional misrepresentation, breach of express

warranty and breach of written contract. Doc #22. Braden also

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asserted counterclaims against both Western and Catalina Cylinders,

a division of Aluminum Precision Products, Inc, (“Catalina”), which

had produced the oxygen cylinders, for breach of implied warranty,

breach of implied warranty of fitness, breach of oral contract and

negligence. Id. On September 13, 2004, Catalina filed third-party

claims against Young Do Ind Co, Ltd (“Young Do”) for indemnity, and

contribution and apportionment of fault. Doc #47.

On November 29, 2004, the court granted summary judgment

for Western on its claim against Braden. Doc #78. Five motions

remain to be decided here. On December 22, 2005, Catalina moved

for summary judgment against Braden. Doc ##125, 126. On August

22, 2005, Young Do moved for summary judgment against Catalina. 

Doc ##95, 96. On September 15, 2005, Catalina requested leave to

amend its third-party complaint to add claims for breach of implied

warranty and negligent misrepresentation against Young Do. Doc

##100; 101, Ex B. On October 7, 2005, Western requested leave to

amend its answer by adding third-party claims against Young Do and

Catalina for implied indemnity and comparative indemnity and

contribution; Western also seeks claims against Catalina for

express indemnity, breach of implied warranty and negligent

misrepresentation. Doc ##104; 105, Ex B. And on October 13, 2005,

Braden moved for leave to file cross-claims against Catalina and

Young Do for a tort of another. Doc ##107; 108, Ex 1.

A hearing was held on Catalina’s motion for summary

judgment on February 16, 2006, and on the remaining motions on

November 17, 2005. For the reasons stated below: (1) Catalina’s

motion for summary judgment is GRANTED; (2) Young Do’s motion for

summary judgment is GRANTED; (3) Catalina’s motion for leave to

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amend its third-party complaint is GRANTED; (4) Western’s motion

for leave to amend its answer is GRANTED IN PART AND DENIED IN PART

and (5) Braden’s motion for leave to file cross-claims is GRANTED.

I

Young Do is a South Korean valve manufacturer that makes

post medical valves that are incorporated in oxygen assemblies used

by patients who need oxygen supplementation. Young Do SJ Br (Doc

#96) at 7:24-25; Catalina SJ Br (Doc #115) at 4:8-21. Post medical

valves thread into medical oxygen cylinders at one end and attach

to regulators at the other end. A seal is formed by compressing

one or two teflon o-rings between the cylinder gland and the valve. 

Young Do SJ Br at 7:27-8:19; Catalina SJ Br at 4:18-19. All valves

sold or used in the United States must comply with standards set by

the Compressed Gas Association (“CGA”). Catalina SJ Br at 4:19-21.

Young Do sold these valves to Superior Valve Company

(“Superior”), which in turn resold the valves to oxygen cylinder

manufacturers. Byun Decl (Doc #97), ¶¶ 2-3. In 1998, another

valve manufacturer that produced “Sherwood valves” bought the

Superior Valve Company and stopped ordering valves from Young Do. 

Id ¶¶ 8-9. Young Do then began marketing their valves directly to

cylinder manufacturers that used Superior valves. Id ¶ 9.

Catalina is a company that manufactures aluminum

cylinders for storing oxygen and other gases. Newell Affidavit

(Doc #113), ¶ 3. Catalina does not make its own valves, but sells

its product in three different configurations: cylinders, cylinders

with valves that are not installed and cylinders with valves

installed. Id ¶ 4. Beginning in late 1999, Catalina bought post

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medical valves from Young Do, which manufactured the valves based

on the same dimensions and specifications as those produced for

Superior. Id ¶ 10; Byun Decl, ¶ 10.

In 2000, Catalina’s general manager and vice president

Tom Newell (“Newell”) informed Young Do that its o-rings were not

perfectly round and did “not comply with the specifications on the

standards.” Byun Decl, Ex 1. Catalina alleges that its

specifications are within the industry standard for the no 210

teflon o-rings used in the medical gas industry. Newell Decl, ¶ 18

& Ex 5; Catalina SJ Br at 7:28-8:3. Young Do indicated that the oring manufacturer would change the o-ring to match one depicted in

a drawing furnished by Catalina and, in July 2000, Catalina

approved new o-rings supplied by Young Do. Byun Decl, Exs 6, 18.

Western is a gas products supplier that buys compressed

gas cylinders and valves from third parties, attaches its own

regulator to the valve and resells the completed assembly. 

Companies like Braden then fill the cylinder tanks with oxygen and

sell or lease the cylinders to patients who need oxygen

supplementation. Doc #78 at 2:2-6. Western started buying

Catalina cylinders in 2000 and approved Young Do’s valves for

Catalina cylinders in 2001. Newell Affidavit, ¶¶ 7, 11.

According to Catalina, in November 2001, Western informed

Catalina that Young Do valves did not meet the tolerance set by the

CGA. Id ¶ 13. Young Do corrected the defect and replaced these

valves with CGA-compliant ones. Id ¶ 15.

In January 2002, Ward Dekker (“Dekker”), a manager at

Catalina, reported to Newell in an internal memorandum that some

customers had complained of leaky valve/cylinder assemblies. Byun

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Decl, Ex 20 at 2. Dekker concluded that the smaller diameter of

the Young Do valve body coupled with a slightly smaller o-ring

caused leaks in rare cases. Id. Newell forwarded this report,

along with some Sherwood and Young Do valves, to Young Do. Id at

1. Young Do then agreed to increase both the valve and o-ring

diameters. Id, Ex 21.

On January 23, 2002, Dekker sent an email to Young Do

listing in Catalina’s order of preference three recommendations on

how to fix the leak: (1) increase only the valve body diameter;

(2) increase the o-ring size or (3) increase both the valve body

diameter and the o-ring size. Id, Ex 22. Young Do accepted

Catalina’s first recommendation and sent samples to Catalina, which

Dekker accepted as within tolerance. Id, Exs 23, 24.

In December 2002, Braden returned to Western 1900

Catalina cylinders with Young Do valves that were leaking. Kern

Decl (Doc #134, Ex 1), ¶ 18. Dekker and some Western and Braden

representatives then met to discuss potential causes for the

leaking valves. Dekker Affidavit (Doc #114), ¶ 8. Based on a

proposal drafted by Western’s representatives on December 20, 2002,

Braden claims that Catalina agreed at the meeting to replace all

Young Do valves with Sherwood valves. Foreman Decl (Doc #134), Ex

42; Doc #132 at 9. Catalina claims that it only agreed to replace

leaking Young Do/Catalina assemblies with Sherwood valves, which

Catalina has been doing since January 2003. Dekker Affidavit, ¶ 9;

Newell Affidavit, ¶ 21. This purported oral agreement forms the

basis for Braden’s breach of oral contract claim against Western

and Catalina.

//

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In January 2003, Catalina again contacted Young Do,

because the valve pin holes on the necks of some of the valves were

not in the correct location. Newell Affidavit, ¶ 16. Young Do

again corrected the defect and shipped back CGA-compliant valves. 

Id ¶ 17.

II

In reviewing a summary judgment motion, the court must

determine whether genuine issues of material fact exist, resolving

any doubt in favor of the party opposing the motion. “[S]ummary

judgment will not lie if the dispute about a material fact is 

‘genuine,’ that is, if the evidence is such that a reasonable jury

could return a verdict for the nonmoving party.” Anderson v

Liberty Lobby, Inc, 477 US 242, 248 (1986). “Only disputes over

facts that might affect the outcome of the suit under the governing

law will properly preclude the entry of summary judgment.” Id. 

And the burden of establishing the absence of a genuine issue of

material fact lies with the moving party. Celotex Corp v Catrett,

477 US 317, 322-23 (1986). Summary judgment is granted only if the

moving party is entitled to judgment as a matter of law. FRCP

56(c).

The nonmoving party may not simply rely on the pleadings,

but must produce significant probative evidence, by affidavit or as

otherwise provided in FRCP 56, supporting its claim that a genuine

issue of material fact exists. TW Elec Serv, Inc v Pacific Elec

Contractors Ass’n, 809 F2d 626, 630 (9th Cir 1987). The evidence

presented by the nonmoving party “is to be believed, and all

justifiable inferences are to be drawn in his favor.” Anderson,

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477 US at 255. “[T]he judge’s function is not himself to weigh the

evidence and determine the truth of the matter but to determine

whether there is a genuine issue for trial.” Id at 249.

A

Catalina contends that Braden’s claims for breach of

implied warranty and breach of implied warranty of fitness must

fail because there is no contractual privity between the parties. 

Catalina SJ Br at 10. Under California law, “[v]ertical privity is

a prerequisite * * * for recovery on a theory of breach of the

implied warranties of fitness and merchantability.” US Roofing,

Inc v Credit Alliance Corp, 228 Cal App 3d 1431, 1441, 279 Cal Rptr

533 (1991) (internal citation omitted). And “there is no privity

between an original seller and a subsequent purchaser who is in no

way a party to the original sale.” Burr v Sherwin Williams Co, 42

Cal 2d 682, 695, 268 P2d 1041 (1954).

In this case, Braden and Catalina were not in privity. 

Even though Catalina stenciled Braden’s trade name on the oxygen

cylinders intended for it, Braden has not shown that Catalina was

doing anything more than fulfilling its obligations to Western. 

And more importantly, Braden never dealt directly with Catalina

during the period in which Catalina supplied the allegedly

defective valves.

Braden nonetheless contends that a narrow exception to

the privity rule applies here. Braden SJ Br at 15-16. Originally

developed for cases involving defective foodstuffs, this exception

enables injured plaintiffs to file claims against a food

manufacturer, even though the plaintiff purchased the food from an

intermediary. Klein v Duchess Sandwich Co, 14 Cal 2d 272, 281-82,

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93 P2d 799 (1939). Lower courts have expanded this exception to

encompass vaccines and pesticides that, like the foodstuffs, were

defective and injured the plaintiffs who had ingested them. See

Arnold v The Dow Chemical Company, 91 Cal App 4th 698, 720, 110 Cal

Rptr 2d 722 (2001) (pesticides); Gottsdanker v Cutter Laboratories,

182 Cal App 2d 602, 608, 6 Cal Rptr 320 (1960) (vaccines). Braden

contends that this exception should apply here because, like

vaccines, medical-grade oxygen is a “drug regulated by the FDA.” 

Braden SJ Br at 15.

Braden’s argument is not persuasive. The cases applying

the foodstuff/vaccine exception are distinguishable on at least two

grounds. First, those cases treat an ingestible substance, rather

than a mechanism releasing the substance, as the relevant defective

product for the purpose of the exception. More importantly, those

cases involved actual harm to the person who had ingested the

defective product; here, there is no evidence that the defective

valves caused injury to anyone. As a federal court sitting in

diversity, this court is unwilling to expand the narrow

foodstuff/vaccine exception in this case beyond the boundaries the

California courts have set.

B

Catalina also argues that there was no agreement to

replace all Young Do valves already supplied to Braden, and that

Braden’s claim for breach of oral contract therefore fails. 

Catalina SJ Br at 12. For an enforceable contract to exist,

California law requires a “manifestation of willingness to enter

into a bargain, so made as to justify another person in

understanding that his assent to that bargain is invited and will

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conclude it.” Donovan v Rrl Corp, 26 Cal 4th 261, 271, 27 P3d 702

(2001) (internal citation omitted). Further, the “objective

manifestation of the party’s assent ordinarily controls, and the

pertinent inquiry is whether the individual to whom the

communication was made had reason to believe that it was intended

as an offer.” Id (internal citation omitted).

Braden states that it believed that Catalina had

manifested its willingness to replace all Young Do valves. But the

record does not support this contention. There is no reason to

believe that Western’s December 20, 2002, proposal can be

attributed to Catalina. Braden also points to the declaration of

Alan Kern, Braden’s director of operations, who stated that, at the

December 18, 2002, meeting with representatives of Catalina and

Western, “we all agreed” that the Young Do valves would be

replaced. Kern Decl, ¶ 16. But in Kern’s subsequent deposition,

he stated that “there was no decision or conclusions made on that

request at the meeting.” Foreman Decl, Ex 8, 105:22-23. When

asked to clarify whether the parties had decided that all of

Braden’s inventory would be exchanged, Kern reiterated, “That

decision or conclusion was not made definitively at that meeting.” 

Id at 106:13-14. See also id at 107:2-18. In California,

admissions against interest are considered so highly credible that,

on motions for summary judgment, they “should receive a kind of

deference not normally accorded evidentiary allegations in

affidavits.” D’Amico v Bd of Medical Examiners, 11 Cal 3d 1, 22,

520 P2d 10 (1974). This is especially true when the “admission is

obtained * * * in the context of an established pretrial procedure

whose purpose is to elicit facts.” Id.

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The court could follow D’Amico’s lead by crediting Kern’s

deposition and disregarding his contrary declaration. But it need

not do so to decide this issue. Catalina also asserts that, even

had it made an offer to Braden, there was neither acceptance by

Braden nor consideration, both of which are required by California

law. Catalina SJ Br at 14; 1 Witkin, Summary of California Law

(10th ed 2005) Contracts, §§ 116, 202. In its opposition brief,

Braden does not attempt to demonstrate acceptance or consideration. 

See Braden SJ Br at 16. Braden does state that, “[b]ecause of this

agreement, Braden agreed to continue buying cylinders from

Western.” Id at 8. Without deciding whether this arrangement

constitutes valid consideration for a contract between Braden and

Western, it clearly does not constitute consideration with respect

to Catalina.

Accordingly, the court finds that no oral contract

existed between Catalina and Braden to replace all the Young Do

valves that had been provided to Braden.

C

Turning to Braden’s negligence claim, Catalina argues

that it fails on two grounds. First, Catalina denies any

responsibility for the defect in the valve design. Catalina SJ Br

at 15. Second, even if it shares responsibility for the defect,

Catalina contends that California’s economic loss rule bars

recovery. Id at 15-16.

Under the economic loss rule, there is no recovery in

tort for economic losses without separate injury to persons or

property. Seely v White Motor Co, 63 Cal 2d 9, 18, 403 P2d 145

(1965). Economic losses include, inter alia, damages for

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inadequate value, costs of repair and replacement of the defective

product and consequent claims of lost profits. Sacramento Regional

Transit Dist v Grumman Flxible, 158 Cal App 3d 289, 294, 204 Cal

Rptr 736 (1984). The rule is intended to ensure that a

manufacturer bears the risk for physical injury and property damage

caused by a defective good but does not bear costs for a product’s

failure to meet a consumer’s economic expectations. Seely, 63 Cal

2d at 18. Contract law, not tort law, governs the latter

situation. See id.

Braden makes two arguments to avoid the bar imposed by

the economic loss rule. First, Braden contends that the rule does

not apply because property separate from the defective valve was

injured. Braden SJ Br at 22. In particular, Braden alleges that

the oxygen in the cylinders was “damaged” as it escaped through the

defective valves, and that there is a genuine issue of material

fact whether the “damaged” oxygen constitutes a separate product. 

Id.

The court is not persuaded by this argument. First, even

assuming that the valves caused the oxygen to escape, the oxygen

was lost, not damaged. Second, the cases Braden cites involve a

defective component causing verifiable physical damage to the

assembly containing the component; none involves property simply

disappearing into the ether. See KB Home v Superior Court, 112 Cal

App 4th 1076, 5 Cal Rptr 3d 587 (2003); Jimenez v Superior Court,

29 Cal 4th 473, 58 P3d 450 (2002). If anything was injured in this

case, it was not the oxygen but Braden, which has lost its

property. But, as discussed above, the economic loss rule is

intended to ensure that redress for lost property alone,

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unaccompanied by collateral harm, may only be sought under contract

law. See Seely, 63 Cal 2d at 18.

Braden also argues that, even if the economic loss rule

applies, California’s limited “special relationship” exception

enables recovery here. Braden SJ Br at 18-22. Under this

exception, if a defendant has a “special relationship” with a

plaintiff, then the defendant owes the plaintiff a duty of care. 

J’Aire Corp v Gregory, 24 Cal 3d 799, 804, 598 P2d 60 (1979). If

this duty exists, “[r]ecovery for injury to one’s economic

interests, where it is the foreseeable result of another’s want of

ordinary care, should not be foreclosed simply because it is the

only injury that occurs.” Id at 806. In determining whether a

special relationship exists, the court balances the following six

factors:

(1) The extent to which the transaction was

intended to affect the plaintiff;

(2) The foreseeability of harm to the plaintiff;

(3) The degree of certainty that the plaintiff

suffered injury;

(4) The closeness of the connection between the

defendant’s conduct and the injury suffered;

(5) The moral blame attached to the defendant’s

conduct and

(6) The policy of preventing future harm;

Id at 804.

In this case, the first three factors favor imposing a

duty. By stenciling Braden’s trade name on the oxygen cylinders,

Catalina showed that it was at least aware that those cylinders

would be received by Braden. Doc #134, Ex 3, 101:14-16; see AlesPeratis Foods International, Inc v American Can Co, 164 Cal App 3d

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277, 289, 209 Cal Rptr 917 (1985). Accordingly, Catalina could

foresee that any damage suffered would be suffered by this

particular plaintiff. See Chameleon Engineering Corp v Air

Dynamics, Inc, 101 Cal App 3d 418, 423, 161 Cal Rptr 463 (1980). 

It is also uncontested that Braden suffered actual harm by losing

oxygen from its leaking cylinders.

The fifth and sixth factors weigh slightly against

imposing a duty. Faulty oxygen cylinders could conceivably affect

the safety and well-being of their users. See Platte Anchor Bolt,

Inc v IHI, Inc, 352 F Supp 2d 1048, 1056 (2004). But even with

1900 leaking cylinders, there apparently have not been any injuries

to persons or property, suggesting a very low risk of harm. And

imposing a duty would not necessarily promote the policy of

preventing future harm, because although this duty would possibly

encourage manufacturers to exercise greater care when designing

components, it would just as likely discourage manufacturers from

suggesting improvements to products for fear of future liability.

Moreover, the fourth factor, the closeness of the

connection between defendant’s conduct and the injury suffered,

weighs strongly against imposing a duty on Catalina. Any

connection is limited to suggestions for improvement that Catalina

made to Young Do, the valve supplier, between May 2000 and the

start of 2002. Braden SJ Br at 3-5. Braden alleges that Catalina

thereby assumed responsibility for controlling the valve design. 

Braden SJ Br at 14. But Catalina maintains that it never assumed

this responsibility, which ultimately rested with Young Do. 

Catalina SJ Br at 9, 15. In addition, Braden’s expert report does

not state that Catalina’s specifications resulted in changes that

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caused the valves to leak. See Doc #133, Ex 3, 8-9. Accordingly,

it is at best questionable whether Catalina’s conduct caused

Braden’s economic loss. This fact starkly distinguishes the case

at bar from those that Braden has cited, in which the defendant’s

conduct clearly had caused plaintiff’s injury. See Platte Anchor

Bolt, 352 F Supp 2d at 1056; North American Chemical Co v Superior

Court, 59 Cal App 4th 764, 787, 69 Cal Rptr 2d 466 (1997); AlesPeratis, 164 Cal App 3d at 289; Pisano v American Leasing, 146 Cal

App 3d 194, 197, 194 Cal Rptr 77 (1983) and J’Aire, 24 Cal 3d at

805.

Considering the tenuous connection between Catalina’s

conduct and Braden’s injury, this court is unwilling to expand a

limited exception to a settled California rule by imposing a duty

on Catalina. Although there may still be a genuine issue of

material fact regarding Catalina’s involvement in the valve-design

process, without a corresponding duty, Braden cannot prevail as a

matter of law on its negligence claim. Moreover, this issue will

presumably be litigated in the myriad claims that still remain, and

in the new claims that this order permits Catalina, Western and

Braden to file.

Accordingly, the court GRANTS Catalina’s motion for

summary judgment on Braden’s claims.

D

Having granted summary judgment in favor of Catalina on

all claims, the court finds it unnecessary to consider Catalina’s

39 objections to evidence in support of its motion for summary

judgment. See Doc #136. Accordingly, the court DENIES those

objections as moot.

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III

Turning now to Young Do’s motion for summary judgment

against Catalina, the court notes that Catalina’s third-party

claims seeking indemnity and contribution and apportionment of

fault depend entirely on Braden’s claims against Catalina for

breach of warranty, breach of contract and negligence. See Doc

#47. Having granted summary judgment in favor of Catalina on

Braden’s claims, the court finds that Catalina’s third-party claims

against Young Do cannot survive. Accordingly, the court GRANTS

summary judgment in favor of Young Do on these claims.

IV

Turning now to the motions to amend, FRCP 15(a) provides

that a party no longer permitted to amend its pleadings “as a

matter of course * * * may amend the party’s pleading only by leave

of court or by written consent of the adverse party.” “In the

absence of any apparent or declared reason —— such as undue delay,

bad faith or dilatory motive on the part of the movant, repeated

failure to cure deficiencies by amendments previously allowed,

undue prejudice to the opposing party by virtue of allowance of the

amendment, futility of amendment, etc —— the leave sought should,

as the rules require, be ‘freely given.’” Foman v Davis, 371 US

178, 182 (1962) (quoting FRCP 15(a)). And “[a]mendments seeking to

add claims are to be granted more freely than amendments adding

parties.” Union Pac RR Co v Nevada Power Co, 950 F2d 1429, 1432

(9th Cir 1991). In any case, the decision to grant or deny leave

to amend rests with the discretion of the court. See Swanson v

United States Forest Service, 87 F3d 339, 343 (9th Cir 1996).

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FRCP 16(b) can also bear on motions to amend. That rule

states in relevant part that once the district court has entered a

scheduling order that limits the time to amend the pleadings, “[a]

schedule shall not be modified except upon a showing of good cause

and by leave of the district judge * * *.” Nonetheless, it does

not appear FRCP 16(b)’s good cause requirement applies here because

the court did not set a deadline for amending the pleadings in this

action. Doc ##40, 89. And in any event, the court finds that good

cause exists for each of the amendments that the court permits

below.

The court address the following motions in turn: 

(1) Catalina’s motion for leave to amend its third-party complaint;

(2) Western’s motion for leave to amend its answer and (3) Braden’s

motion for leave to file cross-claims.

A

Catalina seeks leave to add two more third-party claims

against Young Do for breach of implied warranty and negligent

misrepresentation. Doc ##100; 101, Ex B. Catalina maintains that

through discovery, Catalina “began to suspect that Young Do may be

liable to Catalina Cylinders for damages it has sustained due to

Young Do’s valves, in addition to liability for Catalina Cylinders’

litigation costs.” Id at 5. In particular, Catalina contends that

it “has not unnecessarily delayed in bringing its motion for leave

to amend its third-party complaint, as it was only recently able to

depose Young Do’s persons most knowledgeable, and only recently

received Young Do’s documents.” Id. Catalina also asserts that

Young Do will not be prejudiced because Young Do is already a party

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to this action and it is already defending against claims arising

out of the same facts and transactions. Id at 6.

Young Do challenges Catalina’s motion on several grounds. 

First, Young Do asserts that Catalina has delayed in filing these

claims and that Catalina “knew [at the time of filing of the thirdparty complaint] of the importance of the O ring in forming a seal

and modified the O ring with the intent of improving on its

design.” Doc #109 at 9. Additionally, Young Do contends that

Catalina’s motion to amend might be intended to stave off Young

Do’s motion for summary judgment. Id at 10. Young Do also asserts

that the requested amendment will “necessitate the filing of an

additional motion for summary judgment and additional discovery”

beyond the December 30, 2005, discovery cutoff date. Id at 11. 

Finally, Young Do maintains that Catalina has not stated a claim

for misrepresentation because its proposed amended pleading does

not meet the particularized pleading requirement of FRCP 9(b). Id

at 12-13; see Doc #101-3 for the proposed amended pleading.

The court disagrees with each of Young Do’s arguments. 

Young Do does not cite to any evidence to support its assertion

that Catalina delayed in filing this motion to amend. And by

deciding the summary judgment issue before entertaining Catalina’s

motion to amend, the court has mooted Young Do’s concern that this

motion to amend, or any of the other motions to amend currently at

issue, were filed to stave off summary judgment.

Furthermore, Catalina’s motion, which was filed on

September 15, 2005, was not filed especially late in the discovery

period. By the time discovery closed on December 30, 2005, Young

Do had over three months to conduct discovery on Catalina’s new

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claims. Moreover, any potential prejudice to Young Do is minimized

because at least some of the discovery on the new claims overlaps

with discovery on the original claims. And in any case, Young Do

can later move the court to reopen discovery if it has good cause

to do so.

Finally, Young Do’s problem with Catalina’s

misrepresentation claim relates more to the form of the proposed

amended pleading rather than with the merits of Catalina’s claim. 

Because Catalina is only moving for leave to amend its third-party

complaint rather than actually filing the amended pleading, Young

Do’s concerns with the form of the pleading would be better

addressed on a motion to dismiss rather than in opposing the

present motion for leave to amend.

In short, the court finds that Young Do has not shown any

serious prejudice to mitigate FRCP 15(a)’s otherwise liberal stance

toward granting motions to amend, particularly when only new claims

and not new parties are being added. Accordingly, the court GRANTS

Catalina’s motion for leave to amend its third-party complaint.

B

Western also seeks leave to amend its answer by adding

third-party claims against both Young Do and Catalina for implied

indemnity and comparative indemnity and contribution, and

additional claims against Catalina for express indemnity, breach of

implied warranty and negligent misrepresentation. Doc #104; #105,

Ex B. Western notes the proposed third-party claims arise out of

the same transaction or occurrence as the currently pending claims

and that the motion is part of “a good faith effort to ensure a

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full and final resolution of all claims among the existing

parties.” Doc #104 at 6.

In opposition, Young Do repeats the argument, which the

court has already rejected, that it is too late in discovery to

grant leave to amend. Doc #110 at 7. Relying on the privity of

contract and economic loss doctrines, Young Do also argues that

“[Western] cannot bring any tort claims against [Young Do]” and

that “[Western] has no contract claims and no contract with [Young

Do]” and hence there “exists no independent grounds of liability on

the part of [Young Do].” Id at 9. See also id at 7-10. But Young

Do’s argument is beside the point because Western does not contend

that Young Do is directly liable to Western; rather Western’s

proposed claims against Young Do only seek indemnity and

contribution. Hence, the privity of contract and economic loss

doctrines would at best preclude direct liability claims against

Young Do that Western does not seek to assert here. Moreover,

because it is unclear whether these doctrines bar Braden’s claims

against Western, the court cannot conclude that Western’s thirdparty claims against Young Do are futile.

Nonetheless, the court notes that Western’s claims for

contribution against Catalina and Young Do are unripe. “A right of

contribution can come into existence only after rendition of a

judgment declaring more than one defendant jointly liable to the

plaintiff.” Coca-Coca Bottling Co v Lucky Stores, Inc, 11 Cal App

4th 1372, 1378, 14 Cal Rptr 2d 673 (1992) (citing Cal Code Civ Pro

§ 875(c)). Because no judgment has been entered against Western on

Braden’s counterclaims, Western cannot yet assert a contribution

claim against either Catalina or Young Do.

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Accordingly, because Western’s contribution claims are

unripe, the court DENIES Western’s motion for leave to amend to add

these third-party claims against Young Do and Catalina. The court

GRANTS Western’s motion to add the implied indemnity and

comparative indemnity claims against Young Do and Catalina and the

express indemnity, breach of implied warranty and negligent

misrepresentation claims against Catalina.

C

Finally, Braden moved under FRCP 13 and 15 for leave to

file cross-claims against Catalina and Young Do for a tort of

another. Doc ##107; 108, Ex 1. Braden contends that it is filing

this motion “[b]ecause both Western and Catalina are adding tort

claims against Catalina Cylinders and Young Do * * *.” Id at 5. 

Accordingly, Braden asserts that because of Catalina’s alleged

negligent misrepresentation to Western and Young Do’s alleged

negligent misrepresentation to Catalina, Braden is entitled to sue

Catalina and Young Do “to recover compensation fo[r] the reasonable

necessary loss of time, attorney’s fees, and other expenditures

incurred thereby.” Id at 6.

Catalina did not oppose Braden’s motion, but Young Do

did, asserting yet again the already-rejected argument that it is

too late in the discovery period for Braden to file its crossclaims. Doc #111 at 3. Additionally, Young Do contends that

parties must generally bear their own attorneys fees and costs, and

that Braden is seeking compensation that is rarely granted. Id at

4-5. But even if Young Do is correct, Young Do has not shown that

Braden is precluded, as a matter of law, from recovering on its

claim. Moreover, the primary case that Young Do cites —— Davis v

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Air Technical Industries, Inc, 22 Cal 3d 1, 582 P2d 1010 (1978),

which held that attorneys fees could not be awarded in products

liability cases —— has been superseded by statute. Cal Code Civ

Pro § 1021.6; Uniroyal Chemical Co, Inc v American Vanguard Corp,

203 Cal App 3d 285, 297, 249 Cal Rptr 787 (1988) (“The legislative

history of section 1021.6 shows the only reason for its enactment

was to correct the injustice created by the Davis decision.”). 

Hence, given the liberal stance of the FRCP 15(a) toward motions to

amend, the court GRANTS Braden’s motion for leave to file crossclaims.

V

Accordingly, the court GRANTS Catalina’s motion for

summary judgment and GRANTS Young Do’s motion for summary judgment. 

The court GRANTS Catalina’s motion for leave to amend its thirdparty complaint, GRANTS IN PART AND DENIES IN PART Western’s motion

for leave to amend its answer and GRANTS Braden’s motion for leave

to file cross-claims. The parties must file any new claims by

August 25, 2006, and any answers or responsive pleadings to those

claims by September 8, 2006. Additionally, the parties are

instructed to appear for a case management conference on October 3,

2006, at 9:00 AM.

IT IS SO ORDERED.

 

VAUGHN R WALKER

United States District Chief Judge

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