PG&E Corporation v. AECOM Technical Services, Inc..

District Court, N.D. California·Decided May 28, 2022·No. 4:20-cv-05381·Unknown

Opinion

1 2 3 6 7 JH KELLY, LLC, Case No. 20-cv-05381-HSG

8 Plaintiff, ORDER GRANTING IN PART AND DENYING IN PART JH KELLY'S 9 v. MOTION FOR SUMMARY JUDGMENT Re: Dkt. No. 211 11 Defendant.

12 13 Before the Court is JH Kelly LLC’s (“JH Kelly”) motion for partial summary judgment 14 against Defendant and Counter-Claimant AECOM Technical Services, Inc. (“AECOM”). Dkt. 15 No. 211 (“Mot.”). The motion is fully briefed. See Dkt. Nos. 226 (“Opp.”) and 228 (“Reply”). 16 The Court finds this matter appropriate for disposition without oral argument and the matter is 17 deemed submitted. See Civil L.R. 7-1(b). For the following reasons, the motion is GRANTED 18 IN PART and DENIED IN PART. 20 This construction dispute arises out of the Burney K2 Replacement Project (“Project”), 21 which involved the replacement of a natural gas compressor unit and various upgrades at a 22 compressor station near Burney, California. Dkt. No. 102 (JH Kelly’s Second Amended 23 Complaint or “SAC”) ¶ 1. The Burney Compressor Station is part of Pacific Gas & Electric 24 Company’s (“PG&E”) natural gas distribution system. Id. ¶ 11. That system supplies natural gas 25 to the surrounding area and allows compressed gas to travel through pipelines from Oregon to 26 consumers in California. Id. In all, PG&E’s natural gas distribution system provides service to 27 around 4.2 million customers from Bakersfield, California to the Oregon border. Id. 1 PG&E for the Project. Id. ¶ 19. Under the EPC Agreement, AECOM agreed to act as the design- 2 builder and prime contractor for the Project. Id. On October 21, 2016, AECOM and Kelly 3 entered into an agreement (the “Subcontract”) for the construction portion of the work. Id. ¶¶ 25- 4 27. 5 Various issues on the Project led to disputes between JH Kelly, AECOM and PG&E. 6 Relevant here, JH Kelly contends that the Project was changed from what it bid and agreed to 7 perform, and that these changes imposed significant additional work and more difficult working 8 conditions. See Dkt. No. 162. JH Kelly also asserts that AECOM repeatedly ignored the 9 Subcontract’s change-order requirements to pay JH Kelly for the changed work. Id. AECOM 10 denies each of those claims and counterclaims that JH Kelly breached the Subcontract. Id. 11 JH Kelly filed the First Amended Complaint on January 2021. Dkt. No. 18. AECOM and 12 PG&E reached a settlement in October 2021 and ultimately agreed to dismiss their claims against 13 one another with prejudice. See Dkt. Nos. 93, 127. JH Kelly then filed the operative complaint, 14 which AECOM moved to dismiss in part. Dkt. No. 102. AECOM’s motion was granted in part 15 and denied in part. Dkt. No. 179. JH Kelly now moves for partial summary judgment. 17 Summary judgment is proper when a “movant shows that there is no genuine dispute as to 18 any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). 19 A fact is “material” if it “might affect the outcome of the suit under the governing law.” Anderson 20 v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). And a dispute is “genuine” if there is evidence 21 in the record sufficient for a reasonable trier of fact to decide in favor of the nonmoving party. Id. 22 The Court views the inferences reasonably drawn from the materials in the record in the light most 23 favorable to the nonmoving party, Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 24 574, 587–88 (1986), and “may not weigh the evidence or make credibility determinations,” 25 Freeman v. Arpaio, 125 F.3d 732, 735 (9th Cir. 1997), overruled on other grounds by Shakur v. 26 Schriro, 514 F.3d 878, 884–85 (9th Cir. 2008). 27 The moving party bears both the ultimate burden of persuasion and the initial burden of 1 genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Where the 2 moving party will not bear the burden of proof on an issue at trial, it “must either produce 3 evidence negating an essential element of the nonmoving party's claim or defense or show that the 4 nonmoving party does not have enough evidence of an essential element to carry its ultimate 5 burden of persuasion at trial.” Nissan Fire & Marine Ins. Co. v. Fritz Cos., 210 F.3d 1099, 1102 6 (9th Cir. 2000). Where the moving party will bear the burden of proof on an issue at trial, it must 7 also show that no reasonable trier of fact could not find in its favor. Celotex Corp., 477 U.S. at 8 325. In either case, the movant “may not require the nonmoving party to produce evidence 9 supporting its claim or defense simply by saying that the nonmoving party has no such evidence.” 10 Nissan Fire & Marine Ins. Co., 210 F.3d at 1105. “If a moving party fails to carry its initial 11 burden of production, the nonmoving party has no obligation to produce anything, even if the 12 nonmoving party would have the ultimate burden of persuasion at trial.” Id. at 1102–03. 13 “If, however, a moving party carries its burden of production, the nonmoving party must 14 produce evidence to support its claim or defense.” Id. at 1103. In doing so, the nonmoving party 15 “must do more than simply show that there is some metaphysical doubt as to the material facts.” 16 Matsushita Elec. Indus. Co., 475 U.S. at 586. A nonmoving party must also “identify with 17 reasonable particularity the evidence that precludes summary judgment.” Keenan v. Allan, 91 18 F.3d 1275, 1279 (9th Cir. 1996). If a nonmoving party fails to produce evidence that supports its 19 claim or defense, courts enter summary judgment in favor of the movant. Celotex Corp., 477 U.S. 20 at 323. 22 JH Kelly contends that it is entitled to partial summary judgment on three different 23 categories of claims. First, it argues that AECOM waived its claims arising from damage to the 24 V-35 valve, leaks to the GOV-2 valve, and repairs for the POV-166 valve (“Property Damage 25 Claims”) and cannot prove that it suffered damages from them. Mot. at 2. Second, JH Kelly 26 contends that two of AECOM’s implied-in-law claims for equitable indemnity and breach of the 27 implied covenant of good faith and fair dealing are superfluous and must be dismissed. Id. And 1 3287(a), but asks to reserve for trial the determination of the amount of interest to which it is 2 entitled. Id. 3 A. AECOM’s Property Damage Claims 4 AECOM alleges that a fuel truck operated by one of JH Kelly’s suppliers negligently 5 struck and damaged a pressurized valve at the Project site. See Dkt. No. 65 (or “AECOM SAC”) ¶ 6 91. PG&E withheld payments from AECOM and alleged additional costs related to the valve 7 strike and for other “incomplete, deficient or defective work” performed by JH Kelly. Id. ¶ 208. 8 Relevant here, PG&E also alleged that significant construction debris was left in the gas pipelines 9 at the Project, which damaged two other valves and caused them to leak. Id. AECOM and PG&E 10 agreed to a settlement in December 2021, under which AECOM received a lump-sum payment in 11 exchange for PG&E and AECOM mutually releasing all claims against each other. See Dkt. No. 12 93; Mot. at 9. 13 AECOM now seeks $4,883,851 from JH Kelly for the Property Damage Claims. See Dkt. 14 No. 211-1, Declaration of Eric A. Grasberger ISO Motion for Partial Summary Judgment 15 (“Grasberger Decl.”), Ex. 1 (“Gonzalez Report”) at 63. JH Kelly argues that AECOM (1) waived 16 those claims by agreeing to the Subcontract’s subrogation waiver and (2) cannot show that it 17 suffered any damage from those claims.

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