Acadian Steel, Inc. v. American Contractors Indemnity Company

• Court: Court of Appeals for the Ninth Circuit
• Decided: October 25, 2023
• Docket: 23-15048
• Status: Unpublished

Opinion

NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS OCT 25 2023 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT

ACADIAN STEEL, INC., No. 23-15048

Plaintiff-counter-claim- D.C. No. defendant-Appellant, 1:21-cv-00131-DKW-KJM

v. MEMORANDUM* AMERICAN CONTRACTORS INDEMNITY COMPANY,

Defendant-counter-claim- 3rd-party-plaintiff- Appellee,

v.

JARVAN L. PIPER; et al.,

Third-party-defendants- Appellants.

Appeal from the United States District Court for the District of Hawaii Derrick Kahala Watson, Chief District Judge, Presiding

Argued and Submitted October 6, 2023 Honolulu, Hawaii

Before: BERZON, MILLER, and VANDYKE, Circuit Judges.

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. Acadian Steel, Inc., Jarvan L. Piper, Colette Piper, and Acadian Steel

Erectors, Inc. (collectively, Acadian) appeal from the district court’s order granting

summary judgment to American Contractors Indemnity Company (ACIC) on its

claim for breach of contract. We have jurisdiction under 28 U.S.C. § 1291, and we

affirm.

“We review de novo the district court’s grant of summary judgment.”

Christian v. Umpqua Bank, 984 F.3d 801, 808 (9th Cir. 2020). “A district court’s

refusal to continue a hearing on summary judgment pending further discovery is

reviewed for an abuse of discretion.” Swoger v. Rare Coin Wholesalers, 803 F.3d

1045, 1047 (9th Cir. 2015).

1. Acadian breached the terms of its General Indemnity Agreement (GIA)

with ACIC by refusing to indemnify ACIC for payment that ACIC made to the

general contractor, Nan, Inc. (Nan). Under the GIA, Acadian agreed that it would

be “liable for . . . any and all payments made by [ACIC] in the good faith belief

that: (1) [Acadian] is or has been in default [on its subcontract with Nan] . . . ; (2)

[ACIC] was or might be liable for a claim asserted against a Bond, whether or not

such liability actually existed; or (3) such payments were or are necessary or

expedient to protect any of [ACIC’s] rights or interests or to avoid or lessen

[ACIC’s] actual or alleged liability.” On October 10, 2018, Nan terminated

Acadian for allegedly defaulting on Acadian’s subcontract. Nan then made a claim

2 on the performance bond that had been issued by ACIC. On April 1, 2021, ACIC

settled with Nan for $4,075,450.73. Under the plain terms of the GIA, Acadian

must indemnify ACIC for that payment.

Acadian argues that it is not contractually required to indemnify ACIC

because ACIC made the payment to Nan in bad faith. But in the GIA, Acadian

agreed that it could challenge ACIC’s good faith only if it “deposit[ed] with

[ACIC] cash, securities or other collateral, in form and amount acceptable to

[ACIC], in its sole and absolute discretion, to completely cover [ACIC’s] exposure

or perceived exposure” resulting from Nan’s claim on the bond. The GIA was

unambiguous on this point, stating that Acadian’s posting of collateral was “an

absolute condition precedent to the right of [Acadian] to challenge [ACIC’s] good

faith with respect to settlement of any claims asserted against [ACIC].” Acadian

failed to post the collateral requested by ACIC, thereby forfeiting its right to

challenge ACIC’s good faith in settling Nan’s claim.

Acadian argues that the provision of the GIA conditioning Acadian’s right to

challenge ACIC’s good faith is inconsistent with statements elsewhere in the GIA

that Acadian is liable only for payments made by ACIC in good faith. But, as the

district court explained, there is no inconsistency: The GIA “simply imposes a

limitation on Acadian’s ability to enforce ACIC’s good faith—that is, by

complying with its own obligations . . . and posting collateral.”

3 Acadian also argues that this limitation “render[s] the indemnification

agreement an unenforceable contract of adhesion.” A contract is adhesive if “it is

drafted or otherwise proffered by the stronger of the contracting parties on a ‘take

it or leave it’ basis.” Brown v. KFC Nat’l Mgmt. Co., 921 P.2d 146, 167 (Haw.

1996). Such a contract “is unenforceable if two conditions are present: (1) the

contract is the result of coercive bargaining between parties of unequal bargaining

strength; and (2) the contract unfairly limits the obligations and liabilities of, or

otherwise unfairly advantages, the stronger party.” Id. Acadian points to no

evidence that the GIA was the result of coercive bargaining or that it was offered

on a “take it or leave it” basis. There is thus no genuine dispute that the GIA is

enforceable, and ACIC is entitled to summary judgment on its breach-of-contract

claim.

2. The district court did not abuse its discretion in denying Acadian’s request

to stay summary judgment proceedings pending further discovery. Acadian argues

that additional discovery was needed to determine whether ACIC paid Nan in good

faith. But Acadian forfeited its bad-faith defense when it failed to post collateral.

Acadian therefore could not “explain how additional facts would preclude

summary judgment.” SEC v. Stein, 906 F.3d 823, 833 (9th Cir. 2018).

AFFIRMED.