Opinion
Civil No. 99-1691-AS
December 17, 2001
FINDINGS AND RECOMMENDATION
The matters before the court are Plaintiff Brusco Tug and Barge's ("Plaintiff") motion (#15) for summary judgment; motion (#33) to strike; and motion (#46) to strike affidavits against Defendants Coastal Dredging and Marine Inc. ("Coastal"), and First National Insurance Company of America ("First National").
FACTS
Plaintiff is a Washington corporation that owns, operates, and charters tugs and barges. Defendant Coastal is a California corporation employed as a general contractor to dredge a portion of the Los Angeles River estuary in early 1999 by the U.S. Army Corps of Engineers. Defendant First National is a Washington corporation authorized as a surety business in California.
In April 1999 Coastal contacted Plaintiff about leasing the COLUMBIA for dredging work. At the end of the bareboat charter, Coastal was obligated to return the COLUMBIA to Plaintiff in the same condition as when it was chartered, minus ordinary wear and tear. The COLUMBIA is an ocean-going barge equipped with a boom often used to maneuver a large digging bucket for removing dredge material from the water. Representatives for Coastal and Plaintiff, including the Plaintiff's CEO, Bo Brusco, toured and inspected the COLUMBIA prior to the bareboat charter. Bo Brusco informed Coastal during the inspection that Plaintiff was planning on making repairs to the COLUMBIA that might take two to three weeks to complete.
Bo Brusco then faxed Coastal a draft of the Bareboat Charter. Coastal reviewed the agreement, crossed out several provisions, signed it and faxed it back to Bo Brusco, who also signed it and sent it back to Coastal. The agreement quoted the bareboat charter price to be $4,000 per day. Plaintiff then delivered the COLUMBIA to Coastal at the project site on May 3, 1999.
On April 27, 1999, Plaintiff entered into a towage agreement with Coastal to utilize services to tow the COLUMBIA and dump scows from the project site to the disposal site. The towage agreement quoted $3,600 per day for services.
Coastal also agreed to pay mobilization and demobilization fees of $25,000 each way, totaling $50,000. Plaintiff alleges that the total amount owed by Defendants with interest is $313,792.10. Defendants deny that the charges are accurate or owed. Defendants have not paid the total of all invoices submitted to Coastal by Plaintiff.
On or about July 18, 1999, Plaintiff's employee, Daniel Neal, telephoned Coastal's vice-president, Marty Jones, regarding the failure to pay the amounts owed. Two weeks later, Neal called Jones at Coastal to inquire again about the payment. On December 2, 1999, Plaintiff filed this action against Coastal on the agreements and against First National on the bond.
STANDARD OF LAW
Federal Rule of Civil Procedure 56(c) authorizes the granting of summary judgment where no genuine issue exists regarding any material fact and the moving party is entitled to judgment as a matter of law. Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986); See also Anthes v. Transworld Systems, Inc., 765 F. Supp. 162, 165 (D.Del. 1991). The moving party has the initial burden of showing the absence of a genuine issue of material fact essential to the nonmovant's case. Celotex, at 165. Once the moving party has met this burden, the burden shifts to the nonmovant to establish that there is a genuine issue of material fact. Id. at 324.
An issue is material if, under the substantive law of the case, resolution of the factual dispute could affect the outcome of the case. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986). The evidence is to be viewed in a light most favorable to the nonmoving party, and all justifiable inferences are also to be drawn in the nonmovant's favor. Id. at 255. No genuine issue of material fact exists for trial where the record as a whole could no lead the trier of fact to find for the non-moving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). However, if after the court has drawn all justifiable inferences in the nonmovant's favor, "the evidence is merely colorable, or is not significantly probative, summary judgment may be granted." Id. at 249-50.
DISCUSSION
Plaintiff's Motion to Strike
Plaintiff moves to strike Defendants' Amended Answer, Affirmative Defenses and Counterclaims ("Answer") pursuant to FRCP 12(e). Plaintiff asserts that Defendants may not allege that they were fraudulently induced into the Bareboat Charter Agreement (the "Bareboat Charter") between Coastal and Plaintiff because the Bareboat Charter was executed and performed. FRCP 12(e) allows a court to strike from any pleading any insufficient defense, or any redundant, immaterial, impertinent or scandalous matter. Plaintiff asserts that paragraphs 33-39 of the Answer relates to Defendants' Request for Production of Documents and should be stricken as immaterial and impertinent to Defendants' claims. Plaintiff contends that Defendants' counterclaim of fraudulent inducement implies only that allegations of conduct prior to execution of the Bareboat Charter can be material to the counterclaim and, therefore, delayed responses to discovery requests could not have induced Defendants into executing the Bareboat Charter.
Paragraph 39 of Defendants' Answer states "Plaintiff intentionally withheld and concealed documents during the discovery phase of this lawsuit as a means of concealing information that would support [d]efendants' counterclaim for fraudulent inducement." The court does not agree with Plaintiff's interpretation of this paragraph as suggesting that Plaintiff's withholding of documents during discovery in any way supports the counterclaim. Rather, the court reads this paragraph as alleging that the documents withheld by Plaintiff were supportive themselves of Defendants' counterclaim. Therefore, Plaintiff's motion to strike these allegations should be denied.
Plaintiff's Motion to Strike Affidavits
Plaintiff contends that the affidavits in support of Defendants' Memorandum in Opposition to Plaintiff's Motion for Summary Judgment ("Opposition") contain objectionable testimony because the testimony is not consistent with the affiant's earlier deposition testimony. Plaintiff asserts that prior sworn statements cannot be contradicted by a subsequent affidavit. See Jurado v. Eleven-Fifty Corp., 813 F.2d 1406, 1410 (9th Cir. 1987). Plaintiff contends that the affidavits of Martin Jones, Mark Tanti and James Anderson all contain objectionable testimony on this basis. In addition, Plaintiff contends that these affidavits contain testimony that is not based on the affiant's personal knowledge.
The general rule in this circuit is that a party cannot create an issue of fact by an affidavit contradicting his prior deposition testimony. Kennedy v. Allied Mut. Ins. Co., 952 F.2d 262, 266 (9th Cir. 1991); Foster v. Arcata Assoc., 772 F.2d 1453, 1462 (9th Cir. 1985); Radobenko v. Automated Equip. Corp., 520 F.2d 540, 543-44 (9th Cir 1975). However, in Kennedy, the court determined the Foster-Radobenko rule does not automatically dispose of every case in which a contradictory affidavit is introduced to explain portions of earlier deposition testimony. Kennedy, at 266-67. The court must first make a determination that the contradiction was actually a sham. Id.
Minor inconsistencies that result from an honest discrepancy, a mistake or newly discovered evidence do not amount to a sham affidavit. The court finds that a great majority of the portions of the questionable affidavits fall into this category. Therefore, the court should deny Plaintiff's motion to strike with regards to: paragraph 3 and the second sentence of paragraph 22 of the Jones affidavit; paragraph 7 of the Tanti affidavit; and paragraphs 3 and 7 of the Anderson affidavit. Affidavits are required under FRCP 56(e) to be made based upon personal knowledge, setting forth facts that would be admissible as evidence and showing that the affiant is competent to testify to the matters stated within the affidavit. Conclusory, non-specific statements in affidavits are generally not sufficient and a court will not presume missing facts. Lujan v. National Wildlife Federation, 497 U.S. 871, 889 (1990).
The first sentence of Paragraph 22 of the Jones affidavit is not based on personal knowledge and is, therefore, inadmissable hearsay. Jones testifies in his deposition that he was told by a Brusco employee that the barge had hit a jetty and that another employee mentioned that the barge had to swerve to avoid a ship. See Affidavit of Daniel Duyck, Exhibit 1, 9:14-23. However, the second sentence of paragraph 22 of the Jones affidavit is admissible. Jones testified in his deposition that he personally performed an investigation of the vessel's logs, compared track lines and analyzed the computer for the vessel to make his own conclusion that the HAROLD M struck a submerged portion of the breakwater and sustained damage to its underwater hull. See Affidavit of Daniel Duyck. Exhibit 1, 10:13-22. Therefore, the court should grant Plaintiff's motion to strike with regard to the first sentence of paragraph 22 of the Jones affidavit, and should deny the motion with regard to the second sentence of paragraph 22, as the court discussed previously. Paragraph 8 of the Tanti affidavit is also not based on personal knowledge, but rather on information he learned from another individual, Jim Anderson. This testimony would be inadmissible hearsay and, therefore, the court should also grant Plaintiff's motion to strike with regards to paragraph 8 of the Tanti affidavit.
Plaintiff's Motion for Summary Judgment On Plaintiff's Claims
A. Breach of Contract by Defendant Coastal
Plaintiff first contends that no issue of fact exists as to Coastal's breach of the contract with Plaintiff. Plaintiff asserts that summary judgment is appropriate when the contract terms are clear and unambiguous. U.S. v. King Features Entertainment, Inc., 843 F.2d 394 (9th Cir. 1988). Plaintiff asserts that Coastal does not dispute that it entered into the Bareboat Charter and towage agreement or that the amounts set forth in the agreements are accurate. Plaintiff further asserts that Coastal does not allege that the agreements were ambiguous or unclear. Plaintiff contends that there is no issue of fact existing that would entitle Coastal to prevail on Plaintiff's claims and the fact that Coastal lost money in the project is insufficient to excuse its obligations under the contract.
Defendants counter that because Plaintiff made disclosures, as Larry Reeves testified, during the discussion on board the COLUMBIA prior to finalizing the bareboat charter, Plaintiff was legally obligated to make full disclosure. See Heise, et. ux v. Pilot Rock Lbr. Co., 352 P.2d 1072 (1960). Reeves testified that:
We looked at the hook rollers and we told him that they were worn and they needed some repair, it would take two to three weeks to do that. We looked at the bucket, told him it needed some welding. We looked at the rig, and it was a mess. We told him we'd clean it up. We told him that we would check the machine for operation and make sure that everything worked.
Defendants contend that summary judgment would be improper because there are genuine issues of material fact as to whether Plaintiff induced Coastal to enter into the Bareboat Charter without fully disclosing its knowledge about the condition of the vessel. Defendants assert that the testimony of Marty Jones and Mark Tanti raises genuine issues of fact concerning the express representations about Plaintiff's intent and ability to go over the COLUMBIA with a "fine tooth comb." See Affidavit of Mark Tanti, ¶ 4; Affidavit of Martin Jones, ¶ 8.
B. "As Is" Clause of the Bareboat Charter Paragraph 10 of the Bareboat Charter states in capital lettering:
CHARTERER ACCEPTS THE VESSEL AND ITS EQUIPMENT "AS IS." OWNER MAKES NO REPRESENTATION OR WARRANTY WHATSOEVER AS TO ITS CONDITION, SEAWORTHINESS, AND/OR FITNESS FOR ANY PURPOSE WHATSOEVER.
Paragraph 10 continues on to say:
The acceptance of the vessel [COLUMBIA] by Charterer [Coastal] shall constitute an admission of full performance by the parties of all of their contractual obligations under this clause 10, and thereafter Charter shall not be entitled to make or assert any claim against the Owner [Plaintiff] on account of any agreement, representation or warranty, either express, implied, with respect to the condition, seaworthiness, fitness, carrying capability, or deadweight capacity of the vessel.
Plaintiff contends that Coastal's claim that the COLUMBIA or its equipment were defective or unsuitable fails because by signing the Bareboat Charter, they waived the right to bring such claims against Plaintiff. Plaintiff asserts that bareboat charters are seen as an outright transfer of ownership and, therefore, most bareboat charterers take the vessel "as is" and without any warranties or representations regarding condition performance or suitability. Marr Enterprises, Inc. v. Lewis Refrigeration Co., 556 F.2d 951 (9th Cir. 1977).
Plaintiff asserts that courts have prevented charterers from making claims against owners when there is an "as is" clause provision. See Zidell, Inc. v. Cargo Freight, and Subfreight of the Barge ZPC 404, 661 F. Supp. 960 (W.D.Wash. 1987). Plaintiff asserts that Coastal did not modify paragraph 10 although it did other language of the contract and, therefore, the Bareboat Charter may not be seen as a contract of adhesion either. Plaintiff asserts also that the court should honor the decision of allocation of risk that these businesses agreed upon and enforce the Bareboat Charter as written.
Defendants contend that there is ambiguity in the Bareboat Charter, specifically in relation to the "as is" clause. Defendants assert that there is evidence to show that Defendants reasonably believed that the "as is" clause was to incorporate the repairs to be completed before delivery.
C. Parol Evidence Rule
Plaintiff contends that Coastal may not introduce statements alleged to be made prior to the execution of the Bareboat Charter regarding the condition of the COLUMBIA and its equipment to support a breach of contract claim. Plaintiff asserts that the parol evidence rule prevents introduction of prior or contemporaneous statements that directly contradict the final expression of the parties' agreement. Abercrombie v. Hayden Corp., 883 P.2d 845, 849 (Or. 1999). Plaintiff contends that the Bareboat Charter is integrated as a final expression of the agreement between Defendants and Plaintiff. Plaintiff cites paragraph 21(a) of the Bareboat Charter:
This Charter contains the entire agreement of the parties relating to matters set forth herein. All prior discussions, representations, or understanding, if any, are superceded by and fully integrated into this Charter.
Parol evidence does prohibit oral evidence that contradicts the final expression of a parties' agreement where there is an integrated writing. ORS 41.740 states:
When the terms of an agreement have been reduced to writing by the parties, it is to be considered as containing all those terms . . . . no evidence of the terms of the agreement, other than the contents of the writing, except where a mistake or imperfection of the writing is put in issue by the pleadings or where the validity of the agreement is the fact in dispute.
Defendants contend that the parol evidence rule is inapplicable in this circumstance. Defendants assert that the rule expressly does not exclude evidence of the circumstances under which the Bareboat Charter was made, or to establish illegality or fraud. Defendants further contend that the rule cannot apply to either the towage or mobilization agreements because neither was integrated. Defendants assert that there is evidence creating a genuine issue of material fact concerning fraudulent inducement, citing Meade for support. In Meade, the court reversed summary judgment for the Defendants based on issues of fact "as to whether the Defendants made false representations and whether Plaintiffs justifiably relied on those representations." Meade v. Cedarrapids, Inc., 164 F.3d 1218, 1223 (9th Cir. 1999). The court went on to state that "the extent to which a representation is misleading, and, therefore, imposes a duty of disclosure, is a question on fact." Id., at 1221-22.
The Court's Analysis
With regard to Plaintiff's claim for breach of contract and interpretation of the "as is" clause against Defendants, the court finds there are issues remaining concerning disclosure of facts by Plaintiff and Defendants' contentions of fraudulent inducement and misrepresentation. There are surveyors' reports by Admiralty Marine Surveyors, Inc., extensively explaining the equipment and engine problems, and the poor condition of the COLUMBIA as a result of the charterer practices by Soli-Flo immediately preceding Coastal's charter of the vessel. See Affidavit of Darsee Staley, Exhibit 5-8.
Coastal shareholders, Martin Jones and Mark Tanti, both testify that Brusco failed to disclose its knowledge of Soli-flo's abuse of the vessel or its knowledge that the vessel needed nearly $200,000 in repairs. See Affidavit of Jones, ¶¶ 7-9; Affidavit of Tanti, ¶ 5. Because Coastal's shareholders knew that Soli-flo had problems with the vessel, Coastal specifically sought assurances from Plaintiff, and shareholder Tanti testifies that Bo Brusco then stated that Plaintiff would go through the COLUMBIA with a "fine tooth comb." Affidavit of Tanti, ¶ 4.
The mere non-disclosure of material facts can be a form of misrepresentation where the defendant has concealed know facts material to a transaction, or there is representations that would be misleading without full disclosure. Meade v. Cedarrapids, Inc., 164 F.3d 1218, 1222 (9th Cir. 1999); See also Millikin v. Green, 583 P.2d 548, 550 (1978); Felonenko v. Siomka, 637 P.2d 1338, 1340 (1981). Even where there is express language about promises and disclosure, an action for fraud in the inducement of a contract is possible. Meade, at 1223. Fraud is a question of fact to be determined at trial.
Plaintiff's Motion for Summary Judgment against Defendants' Counterclaims
Plaintiff has asserted that it is also entitled to summary judgment on Defendants' counterclaims for fraudulent inducement, breach of the mobilization agreement, negligent repair advice, unjust enrichment, and damages to HAROLD M.
A. Fraudulent Inducement
Defendants reassert much of the same arguments made in response to Plaintiff's contentions regarding the breach of contract claim and the "as is" clause of the Bareboat Charter between Plaintiff and Defendants. Defendants contend that the "as is" clause must be read in light of the facts and situation of the parties at the time. See ORS 42.220. Defendants assert that there were promises made to Defendants regarding putting the vessel in good working order prior to delivery, and that there was not disclosure of problems with the COLUMBIA, whether the problems were caused by a prior customer or not.
The Court's Analysis
The Defendants have raised in their counterclaims and supporting affidavits contentions and a question of fact sufficient to overcome summary judgment on the fraudulent inducement claim, as the Court discussed in considering Plaintiff's claim for breach of contract above.
B. Negligent Repair Advice
Defendants contend that the evidence provided shows that Plaintiff's representatives, Jeff Hedlund and Larry Reeves, offered advice to Coastal regarding repairs. Hedlund told Coastal that the Tag Master worked but needed routine maintenance. Affidavit of Staley, Exhibit 9, 26:3-13. Reeves insisted on reassembling the air cam, placed it back in service, and after it failed again, concluded that it had to be replaced. Affidavit of Anderson, ¶¶ 13-14. Defendants contend that Plaintiff acted to assist with repairs of the COLUMBIA, and that Plaintiff's conduct was negligent and caused damages in lost time and production to Coastal. Defendants further assert that but for Hedlund and Reeves' assurances that the Tag Master would perform satisfactorily with proper operation and maintenance, Coastal would have replaced the Tag Master with the Rud-A-Matic much sooner and saved considerable time and production. Affidavit of Anderson, ¶¶ 19-20. Plaintiff contends that Coastal cannot claim that Plaintiff's efforts to assist with repairs to the COLUMBIA constituted a breach of contract by Plaintiff. Plaintiff asserts that, because Coastal took the COLUMBIA "as is" and without warranties, Plaintiff was not under obligation to assist with repairs.
The Court's Analysis
The court finds that issues concerning negligence generally present questions for the jury and, therefore, survive summary judgment. Hunt v. United States, 432 F.2d 208, 209 (9th Cir. 1970); Merritt Chapman Scott Corp. v. Fredin, 307 F.2d 370, 372-73 (9th Cir. 1962). Defendants have provided testimony of Plaintiff's representatives that they offered advice on repairing the Tag Master, and even undertook to assist with repairs to the boom hoist cylinder. Affidavit of Staley, Exhibit 9, 26:3-13, and Exhibit, 97-100. Reeves also testified that, after Coastal had already taken out the cylinder, Reeves told them to put it back in because he could find no visible problem, and after they did so, discovered that it was indeed faulty and ordered them to again remove it. Affidavit of Staley, Exhibit 1, 97-100. Although tenuous, the Defendants have put forth enough evidence of negligence to present a question for the fact finder.
C. Unjust Enrichment
Plaintiff contends that Defendants cannot prevail on the counterclaim for unjust enrichment because Coastal was contractually required to make repairs to the COLUMBIA as the owner under the Bareboat Charter. Plaintiff further contends that Defendants made the conscious decision not to pay Plaintiff and gave no notice of Coastal's intent to seek reimbursement or avoid hire. Plaintiff asserts that unjust enrichment is an equitable claim subject to defenses such as laches. Plaintiff contends that Coastal had full knowledge of all relevant facts because repairs were made at the beginning of the bareboat charter and that rather than put Plaintiff on notice that it expected to be reimbursed for the repairs it made, it did not assert any claims until it made the counterclaim in this suit. See Angelini v. Delaney, 966 P.2d 223 (1998). Plaintiff contends that this caused Plaintiff prejudice and that the equities do not weigh in favor of Defendants.
Defendants assert that in order to receive restitution for unjust enrichment it only must show that: it conferred a benefit on Plaintiff; Plaintiff knew of the benefit conferred; and, under all the circumstances, it would be unfair to allow Plaintiff to retain the benefit without compensation to Coastal. See Jagua v. Nike, Inc., 865 P.2d 442 (1993). Defendants contend that the repairs all inured to provided a benefit to Plaintiff; and Plaintiff knew about the repairs but did not assume responsibility for payment. Defendants contend that, because Plaintiff promised to deliver the Columbia in good working order, Plaintiff should be required to reimburse Defendants for the repairs completed by Defendants to the COLUMBIA.
The Court's Analysis
The court finds that a material issue of fact exists as to Plaintiff's unjust enrichment subsequent repairs made by Defendants. Defendants have produced evidence that they had to repair spuds, the boom, the air cam and the gantry, benefitting Plaintiff. Plaintiff also instructed Coastal to use a certain welding company for repairs to the boom and gantry. There is testimony by Plaintiff's representative Reeves that there were existing problems with the COLUMBIA that would have normally been inspected and corrected by Plaintiff had Coastal's shareholder Jones not allegedly declined the work. Affidavit of Staley, Exhibit 1, 23-24.
D. Damages to HAROLD M.
HAROLD M is the dump scow used on the project to dredge material to the dump site. As part of the towage agreement between Plaintiff and Coastal, Plaintiff's tugs were to tow the HAROLD M. The HAROLD M was damaged while under Plaintiff's tow when the tug swerved to avoid hitting another ship. Plaintiff contends that the towage agreement defeats Coastal's claim that it is entitled to damages arising from the accident. Plaintiff asserts that Coastal agreed to name Plaintiff as another insured, and to release and waive subrogation against Plaintiff. Plaintiff asserts that Coastal cannot make a claim for damages to the HAROLD M. against Plaintiff for something that is covered by insurance required under the towage agreement.
Defendants claim that Plaintiff materially breached the towage agreement by failing to take responsibility for the damages to the HAROLD M. Defendants assert that, under the towage agreement, Plaintiff retained full responsibility for the operation of the tugs. The towage agreement requires Plaintiff:
* * * to indemnify and hold harmless [Coastal], and the owner and operator of any vessel used in the performance of service hereunder, with respect to any and all claims, demands and/or liabilities, whether for loss of or damage to property or for injury to or death of any person or persons, which are in whole or in part based upon any negligence or the fault whatsoever on the part of Owner of any of its other customers or any of its agents or servants, or which arise in whole or in part from failure of Owner to carry out any or all of its obligations under this agreement in a prudent and workmanlike manner.
Defendants contend that, because Plaintiff believes that this issue is controlled by Section 6 of the towage agreement and Coastal relies on the express language of the agreement in Section 9 and 12, there is a genuine issue of material fact as to which section controls.
The Court's Analysis
There are genuine issues of material fact concerning the alleged damage resulting to the HAROLD M, which section of the towage agreement applies to liability for any alleged damage to the HAROLD M and whether there was integration of the towage agreement. Coastal shareholder Jones has testified that a personal investigation of the HAROLD M concluded that damage was caused while Coastal was using the scow: "There was a video inspection when the barges arrived before they were put into use that didn't show any damage. [S]ubsequent to the inspection which showed damage to the bottom, I reviewed the logs . . ." Affidavit of Duyck, 9-10. Plaintiff asserts that section 6 of the towage agreement which includes the"name and waive" clause applies in this situation, naming Plaintiff as another insured. Defendants assert that section 9 and 12 of the towage agreement apply which provide that Plaintiff was to indemnify and hold harmless Coastal for any negligence on the part of the Plaintiff for failure to carry out its obligations in a prudent and workmanlike manner.
F. Breach of the Mobilization Agreement
Defendants contend that Plaintiff may not seek enforcement of the alleged oral mobilization agreement if the Bareboat Charter is an integrated contract. Defendants assert that all evidence of a "side agreement" for additional payments, related directly to the subject matter of the contract, is inadmissible if the integration clause is effective.
Defendants contend that there is also a genuine issue as to whether Plaintiff's promise to inspect and repair the COLUMBIA before delivery to Coastal is actionable as part of the oral mobilization agreement. Defendants assert that if the integration clause, or the "as is" clause, preclude enforcement of that promise through the Bareboat Charter, Coastal is entitled to prove to the jury that the parties intended the mobilization agreement to reflect Plaintiff's obligation to inspect and repair the vessel.
The Court's Analysis
The court finds that the applicability of the mobilization agreement also raises genuine issues for the trier of fact. There is testimony by Coastal's shareholder Jones that Plaintiff made a general promise and representation to take care of the COLUMBIA's repair needs that could also be attributable to the parties mobilization agreement if it cannot be attributed to the Bareboat Charter. Affidavit of Staley, Exhibit 11, 132:10-21.
Summary Judgment against Defendant First National
Defendant First National is the surety which issued the Bond covering Defendants' project. Federal law requires any contractor awarded a federal contract to work on a federal public works project to obtain a payment bond to protect parties who provide labor and materials if they are not paid. Plaintiff asserts that Coastal admits Plaintiff "is a person as the term is defined in the Bond at 40 U.S.C. § 270b(a) and is entitled to pursue this action against the Bond." Defendants' Answer, ¶ 7.
Plaintiff contends that summary judgment is appropriate against First National as the surety because it issued the Bond and Plaintiff has not been paid. Plaintiff contends that since no issue of fact exists as to Coastal's liability under the agreements, First National is liable to Plaintiff in the same amount. Plaintiff asserts that judgment against a principal conclusively establishes against a surety the fact of, and amount of, the principal's liability, as long as the surety had notice of the proceeding against the principal. United States v. Fireman's Fund Ins. Co., 832 F.2d 1150, 1153 (9th Cir. 1987). Plaintiff also asserts that First National is obviously aware of the proceedings against Coastal as they have filed a joint answer with Coastal.
Summary judgment is inappropriate against First National based on the same findings of the court made with regard to Defendant Coastal.
FINDINGS AND RECOMMENDATION
Based on the foregoing, Plaintiff's motion (#15) for summary judgment should be DENIED. Plaintiff's motion (#33) to strike should be DENIED. Plaintiff's motion (#46) to strike affidavits should be DENIED with regard to: paragraph 3 and the second sentence of paragraph 22 of the Jones affidavit; paragraph 7 of the Tanti affidavit; and paragraphs 3 and 7 of the Anderson affidavit; and should be GRANTED with regard to: the first sentence of paragraph 22 of the Jones affidavit; and paragraph 8 of the Tanti affidavit.