Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_13-cv-02727/USCOURTS-casd-3_13-cv-02727-4/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

BARD WATER DISTRICT,

Plaintiff,

v.

JAMES DAVEY AND ASSOCIATES, 

INC., an Arizona corporation; JAMES 

DAVEY; and DOES 1 through 50,

Defendants.

Case No.: 13cv2727 JM (PCL)

ORDER DENYING MOTION TO 

DISMISS THIRD-PARTY 

COMPLAINT

JAMES DAVEY AND ASSOCIATES, 

INC., an Arizona corporation,

Third-Party Plaintiff,

v.

GEORGE CAIRO ENGINEERING, 

INC., an Arizona corporation; and ROES 

1 through 10, inclusive,

Third-Party Defendants.

Third-Party Defendant George Cairo Engineering, Inc. (“GCE”) moves the court to 

dismiss the third-party complaint of Third-Party Plaintiff James Davey and Associates, Inc. 

(“JDA”) pursuant to Federal Rule of Civil Procedure 12(b)(6). (Doc. No. 65.) JDA 

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opposes the motion. (Doc. No. 66.) The court finds the matter suitable for decision without 

oral argument pursuant to Civil Local Rule 7.1(d)(1) and, for the following reasons, denies

GCE’s motion.

BACKGROUND

On November 13, 2013, Plaintiff Bard Water District (“Plaintiff”) filed suit against 

JDA. (Doc. No. 1.) The remaining claim at issue from Plaintiff’s operative third amended 

complaint (“TAC”) is for breach of fiduciary duty. (Doc. No. 26.) The cause of action 

arose from JDA’s work as engineer for Plaintiff on a canal-improvement construction 

project in Imperial County (“Canal Project”). Specifically, Plaintiff alleges:

29. [JDA] breached their fiduciary duty owed to Plaintiff, as 

their principal, to act with utmost good faith and in the best 

interests of Plaintiff by failing to perform duties, responsibilities 

and obligations of Project Engineer memorialized in the Contract 

for the Canal Project; namely, by failing to ensure that the 

general contractor complied with its requirements by unilaterally 

waiving, without plaintiff’s knowledge or consent, necessary 

testing and inspection requirements, including necessary 

inspections and tests to ensure that the beds of the irrigation 

ditches were properly compacted and otherwise prepared to 

receive concrete ditch lining.

30. Thereafter, [JDA] failed to disclose and concealed form 

Plaintiff the fact of such breaches until, at the earliest, the week 

commencing November 15, 2009.

(Doc. No. 26 ¶¶ 29–30.) 

On August 4, 2017, JDA filed a third-party complaint against GCE and ROES 1 

through 10, inclusive. (Doc. No. 63.) In its complaint, JDA asserts one cause of action for 

equitable indemnity. JDA alleges that GCE is the successor entity to Davey Cairo 

Engineering, Inc. (“DCE”). JDA further alleges that DCE acted as the civil engineer of 

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record on the Canal Project, and that “Plaintiff’s damages as alleged in its [TAC] were 

proximately caused by” GCE. In sum, JDA argues that “[i]f Plaintiff can prove its claims, 

then some or all of these claims ultimately arise from the actions, inactions, breach of duty, 

work, materials, or services of Third-Party Defendants.” 

GCE filed the instant motion to dismiss on September 20, 2017. (Doc. No. 65.) 

LEGAL STANDARDS

A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) challenges the 

legal sufficiency of the pleadings. To overcome such a motion, the complaint must contain 

“enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. 

Twombly, 550 U.S. 544, 570 (2007). “A claim has facial plausibility when the plaintiff 

pleads factual content that allows the court to draw the reasonable inference that 

the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 

(2009). Facts merely consistent with a defendant’s liability are insufficient to survive a

motion to dismiss because they establish only that the allegations are possible rather than 

plausible. Id. at 678–79. The court must accept as true the facts alleged in a well-pled 

complaint, but mere legal conclusions are not entitled to an assumption of truth. Id. The 

court must construe the pleading in the light most favorable to the non-moving 

party. Concha v. London, 62 F.3d 1493, 1500 (9th Cir. 1995).

DISCUSSION

GCE argues that JDA cannot indemnify GCE for Plaintiff’s claim for breach of 

fiduciary duty and, even if JDA were entitled to indemnify GCE, its claim is premature. 

The court addresses each argument in turn. 

I. Plaintiff’s Breach of Fiduciary Duty Claim Does Not Preclude Equitable 

Indemnity

GCE argues that JDA’s indemnity claim fails as a matter of law because the 

underlying allegations against JDA “arise from an intentional act or tort.” (Doc. No. 65 at 

5.) The court disagrees for two reasons. 

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First, the underlying allegations in Plaintiff’s claim against JDA for breach of 

fiduciary duty do not necessarily arise from an intentional tort. While Plaintiff does claim 

that JDA “failed to disclose and concealed from Plaintiff the fact of such breaches,” those 

breaches are for allegedly failing to perform certain Project Engineer obligations and 

failing to ensure that the general contractor complied with its requirements. (Doc. No. 26 

¶¶ 29–30.) Because the breaches alleged by Plaintiff are not solely for fraudulent 

concealment, JDA is not precluded from seeking equitable indemnity from GCE. 

Second, even if Plaintiff’s claim against JDA includes intentional concealment, JDA 

would still be able to seek equitable indemnity for any damages attributable to negligent or 

willful misconduct. See Allen v. Sundean, 137 Cal. App. 3d 216, 227 (1982) (concluding 

that a defendant was entitled to equitable indemnity for damages attributable to its willful 

misconduct, but not for damages attributable to its fraudulent concealment). Furthermore, 

as GCE notes in its reply, while an “intentional tortfeasor is barred from seeking partial 

indemnity from a negligent tortfeasor,” an “intentional tortfeasor is entitled to seek 

indemnity from a concurrent intentional tortfeasor.” Res-Care Inc. v. Roto-Rooter Servs. 

Co., 753 F. Supp. 2d 970, 978 (N.D. Cal. 2010) (citing Allen v. Sundean, 137 Cal. App. 3d 

at 227; Baird v. Jones, 21 Cal. App. 4th 684, 688 (1993)) (emphasis added).

II. JDA’s Claim for Equitable Indemnity Is Not Premature 

GCE also argues that JDA’s claim for equitable indemnity is premature because JDA 

has not yet suffered loss through payment of the underlying claim. However, the cases 

cited by GCE to support its argument address when a cause of action for equitable 

indemnity accrues for statute of limitation purposes, not when a party may bring an 

equitable indemnity claim against a third party. California law recognizes that “a tort 

defendant may file a cross-complaint against a third party when the defendant properly 

alleges entitlement to indemnity from such a party, should the plaintiff prevail on the 

original complaint.” Postley v. Harvey, 153 Cal. App. 3d 280, 285 (1984) (citations 

omitted); see also People ex rel. Dep’t of Transportation v. Superior Court, 26 Cal. 3d 744, 

759 (1980) (“the fact that a defendant is permitted under a third party procedure to bring a 

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declaratory cross-complaint in the original tort action does not alter the general rule that, 

for statute of limitations purposes, the defendant’s indemnity action does not accrue until 

he has suffered actual loss through payment.”). In sum, JDA may assert a claim for 

equitable indemnity against GCE even though the cause of action for that claim has not yet 

accrued. JDA’s claim for equitable indemnity is not premature. 

CONCLUSION

For the foregoing reasons, the court denies GCE’s motion to dismiss JDA’s thirdparty complaint. 

IT IS SO ORDERED.

DATED: November 30, 2017 

JEFFREY T. MILLER

United States District Judge

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