Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_03-cv-00949/USCOURTS-caed-2_03-cv-00949-24/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1441 Petition for Removal

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UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

EL DORADO IRRIGATION DISTRICT,

a political subdivision of the

State of California,

NO. CIV. S-03-949 LKK/GGH

Plaintiff,

v. O R D E R

TRAYLOR BROS., INC., an 

Indiana corporation,

Defendant.

 /

AND RELATED COUNTER-CLAIMS.

 /

Defendant seeks to have this court reconsider its denial of

their motion for summary judgment on the fraud cause of action. 

Following oral argument on the motion to reconsider, the court

requested that plaintiff submit evidence of the potential for

personal injury resulting from TBI’s faulty construction of the

Mill-Bull tunnel. Having reviewed the additional briefs, the court

denies the motion. 

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I.

STANDARDS

“Under the ‘law of the case’ doctrine a court is generally

precluded from reconsidering an issue that has already been decided

by the same court, or a higher court in the identical case.” 

United States v. Alexander, 106 F.3d 874, 876 (9th Cir. 1997)

(citing Thomas v. Bible, 983 F.2d 153, 154 (9th Cir.), cert.

denied, 508 U.S. 951 (1993)). Although motions to reconsider are

directed to the sound discretion of the court, see Kern-Tulare

Water Dist. v. City of Bakersfield, 634 F. Supp. 656, 665 (E.D.

Cal. 1986), aff’d in part and rev’d in part on other grounds, 824

F.2d 514 (9th Cir. 1987), cert. denied, 486 U.S. 1015 (1988),

considerations of judicial economy weigh heavily in the process.

Thus, Local Rule 78-230(k) requires that a party seeking

reconsideration of a district court’s order must brief the “new or

different facts or circumstances . . . which . . . were not shown

upon such prior motion, or what other grounds exist for the

motion.” Generally speaking, before reconsideration may be granted

there must be a change in the controlling law or facts, the need

to correct a clear error, or the need to prevent manifest

injustice. See Alexander, 106 F.3d at 876. 

As with motions to alter or amend a judgment made pursuant to

Fed. R. Civ. P. 59(a), motions to reconsider are not vehicles

permitting the unsuccessful party to “rehash” arguments previously

presented. See Costello v. United States Government, 765 F. Supp.

1003, 1009 (C.D. Cal. 1991). Nor is a motion to reconsider

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justified on the basis of new evidence available prior to the

court’s ruling. See Fay Corp. v. BAT Holdings One, Inc., 651 F.

Supp. 307, 309 (W.D. Wash. 1987), aff’d, 896 F.2d 1227 (9th Cir.

1990). Finally, “after thoughts” or “shifting of ground” do not

constitute an appropriate basis for reconsideration. See id.

These relatively restrictive standards “reflect[] district courts’

concern for preserving dwindling resources and promoting judicial

efficiency.” Costello, 765 F. Supp. at 1009.

II.

ANALYSIS

The motion to reconsider the previous order briefs, for the

first time, the fraud issue which the parties failed to

sufficiently address in their cross-motions for summary judgment

heard in September of 2005. See Order filed Oct. 7, 2005. Then

defendant sought judgment on the fraud cause of action on the

grounds that there was no false statement in the payment

applications. Plaintiff sought to have the court grant summary

judgment on the first two elements of the fraud claim:

misrepresentation and knowledge of falsity. 

In their briefs in support of the motions for summary

judgment, neither party bothered to provided any examination of the

general law on fraud or to explain why the court would assume that

it should apply the same analysis for that cause of action as it

did for the False Claims Act claims. In order to determine whether

the standards were the same, the court provided a brief explanation

of the recent California Supreme Court case, Robinson Helicopter

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Company, Inc. v. Dana Corporation, 34 Cal.4th 979 (2004). Order

filed Oct. 7, 2005 at 33. TBI now seeks to have this court

reconsider the order because it claims that this court’s reading

of Robinson was erroneous. 

This is a motion to reconsider, and therefore defendant must

show that the court committed “clear error” or that “manifest

injustice” will result. Alexander, 106 F.3d at 876. They have

shown neither. Before addressing whether the court’s initial

reading of Robinson was incorrect, the court’s original conclusion

is recapitulated in its entirety:

A recent decision by the California Supreme Court guides

review of the instant fraud claim. In Robinson

Helicopter Co., Inc. v. Dana Corp., the Court reviewed

a breach of contract case in which intentional and

negligent misrepresentation claims were also brought. 34

Cal.4th 979, 991-92 (2004). The Court explained that

ordinarily under California's public policy tort causes

of action should be disallowed where there is an

available contract remedy. “Courts will generally

enforce the breach of a contractual promise through

contract law, except when the actions that constitute

the breach violate a social policy that merits the

imposition of tort remedies." Id. (internal quotations

omitted). The court concluded, however, that fraud

allegations in contract cases present a different issue

since they deal with intentional misrepresentations

constituting an extra layer of blameworthiness Id.

Order filed Oct. 7, 2005 at 33. 

The order went on to note that “in order to show a

misrepresentation it need not be express but may be implied by or

inferred from the circumstances” but “the misrepresentation must

be a material and knowingly false representation of fact.” Id. at

33 (citing Universal By-Products, Inc. v. City of Modesto, 43

Cal.App.3d 145, 151 (1974); Orient Handel v. United States Fid. &

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1 These statements may have been “affirmative

misrepresentations.”

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Guar. Co., 192 Cal.App.3d 684, 693 (2d. Dist. 1987)). This court

found that the payment applications did not contain anything untrue

on their face, although they may have implied that the work was

being done in accordance with the contract documents. Based upon

this, and more importantly on the factual dispute regarding the

June 11th meeting minutes, the court found that there was a triable

issue of fact regarding what the June 11, 2002 meeting minutes

meant,1 and a dispute about whether the applications for payment

on their own were fraudulent and thus denied summary judgment as

to both parties. 

TBI now seeks to have this court reconsider its order on the

basis that Robinson Helicopter holds that only “affirmative

misrepresentations of contract are actionable;” and only where they

expose the plaintiff to the risk of personal injury liability. The

court’s reading of Robinson Helicopter is less demanding. 

In Robinson Helicopter, plaintiff manufactured helicopters

using sprag clutches (a safety mechanism) produced by Dana. 

Robinson was required to produce its helicopters within the exact

specifications of the “type certificate” issued by the Federal

Aviation Administration (FAA), and any proposed changes in design

would have to be approved by the FAA. One element of the type

certificate was the exact grinding tolerances for the sprag

clutches. For a period of years Robinson purchased many sprag

clutches from Dana that were ground to the proper specifications.

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However, at some point Dana changed the grinding process but did

not notify Robinson or the FAA. Nonetheless, Dada “continued to

provide written certificates to Robinson with each delivery of

clutches that the clutches had been manufactured in conformance

with Robinson’s written specifications (which specifications

prohibited unapproved changes in Dana’s manufacturing process).”

Dana later switched back to the required specifications, again

without notifying Robinson. Robinson Helicopter, 34 Cal.4th at

985-86.

The sprag clutches manufactured during the period when Dana

was not following the specifications experienced a higher failure

rate than those properly manufactured. Although the increased

failure in the clutches thankfully did not result in any accidents,

injuries, or damage to the helicopters, Robinson was forced to

recall the helicopters to replace the clutches. In order to

recover the cost of replacement, Robinson sued, alleging causes of

action for breach of contract, breach of warranty and negligent and

intentional misrepresentations. The jury found that Dana “had made

false misrepresentations of fact and had knowingly misrepresented

or concealed material facts with the intent to defraud.” The

California Court of Appeal, however, applied the economic loss rule

and found that Robinson could not recover in tort. Id. at 986-88.

The California Supreme Court found that, while contract law

should generally govern breach of contract cases, certain egregious

acts favor allowing tort remedies. The court found that tort

damages have been allowed in contract cases “where a breach of duty

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directly causes physical injury; for breach of the covenant of good

faith and fair dealing in insurance contracts; for wrongful

discharge in violation of fundamental public policy; or where the

contract was fraudulently induced.” Robinson Helicopter Co., Inc.,

34 Cal.4th at 989-90 (quoting Erlich v. Menezes, 21 Cal.4th 543,

551 (1999))(emphasis added). The court cited Harris v. Atlantic

Richfield Co. which held that “when one party commits a fraud

during the contract formation or performance, the injured party may

recover in contract and tort.” 14 Cal.App.4th 70, 78 (1993)

(emphasis added) (Harris did not involve personal injury). Again

citing Erlich v. Menezes, the court concluded that a tortious

breach of conduct may be found when: 

(1) the breach is accompanied by a traditional common

law tort, such as fraud or conversion; (2) the means

used to breach the contract are tortious, involving

deceit or undue coercion; or (3) one party intentionally

breaches the contract intending or knowing that such a

breach will cause severe, unmitigable harm in the form

of mental anguish, personal hardship, or substantial

consequential damages. 

34 Cal.4th at 990. Further, the court explained that “[f]ocusing

on intentional conduct gives substance to the proposition that a

breach of contract is tortious only when some independent duty

arising from tort law is violated.” Id.

The Robinson court noted that Dana had committed “affirmative

misrepresentations” that caused Robinson to incur costs associated

with replacing the faulty parts and that “Dana’s provision of

faulty clutches exposed Robinson to liability for personal damages

if a helicopter crashed and to disciplinary action by the FAA.”

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2 TBI responds by arguing that EID is immune from personal

injury liability and thus even if there was risk of personal

injury, EID would not be exposed to liability as a result of TBI’s

allegedly fraudulent conduct. Given the court’s disposition of the

motion, I need not resolve this claim.

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Id. at 990-91. Therefore, the court held that “the economic loss

rule does not bar Robinson’s fraud and intentional

misrepresentation claims because they were independent of Dana’s

breach of contract.” Id. The court also engaged in a lengthy

discussion of why this rule was good public policy, never

mentioning a personal injury requirement in that analysis. Id. at

991-93.

Finally, the court stated that “[o]ur holding today is narrow

in scope and limited to a defendant's affirmative

misrepresentations on which a plaintiff relies and which expose a

plaintiff to liability for personal damages independent of the

plaintiff's economic loss.” Id. at 993. Although the court

clearly found the possibility of serious personal injury to be a

persuasive factor, the decision cannot be read as limiting

liability to instances of personal injury. Rather, the California

Supreme Court’s opinion focuses on the independent reasons why tort

damages may be allowed in cases where there is fraud in the

creation or performance of a contract. 

EID does claim that the faulty construction could result in

personal injuries.2 The court has reviewed the additional evidence

submitted by EID in support of its assertion. While it does seem

that it could be possible for some foolish person to be injured by

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3 Indeed, it may be that there is an issue of fact concerning

personal injury despite EID’s precautions. 

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the tunnel if it was left open, the preventative measures that have

been put in place appear to nearly entirely foreclose that

possibility. In any event, being convinced that the Robinson court

did not limit recovery to where there was personal injury, this

court will not rest its decision on the somewhat weak possibility

that injury might occur. 

Finally, with regards to the character of the purported

misrepresentations, plaintiff has alleged affirmative

misrepresentations with regard to the June 11th statements. The

court’s previous order specifically held summary judgment

inappropriate because there were still significant disputed facts

about the nature of those purported misrepresentations. 

Since the court is satisfied that Robinson does not limit tort

recovery to fraud involving potential person injury and there

appears to be issues of fact about whether there were affirmative

misrepresentations in the June 11th statements, the motion for

summary judgment must be denied.3

The motion to reconsider is DENIED.

IT IS SO ORDERED. 

DATED: February 7, 2006.

/s/Lawrence K. Karlton 

LAWRENCE K. KARLTON

SENIOR JUDGE

UNITED STATES DISTRICT COURT

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