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

Opinion

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

8 Plaintiff, ORDER DENYING MOTION FOR LEAVE TO FILE A MOTION FOR 9 v. RECONSIDERATION

10 AECOM TECHNICAL SERVICES, INC., Re: Dkt. No. 234 11 Defendant.

12 13 JH Kelly, LLC (“JH Kelly”) asks the Court for leave to file a motion to reconsider its 14 Order granting AECOM’s Motion for Partial Summary Judgment. Dkt. Nos. 229 (“Order”), 234 15 (“Mot.”). Civil Local Rule 7-9(b)(3) allows a party to seek reconsideration of an order if the court 16 manifestly failed to consider material facts or dispositive legal arguments. JH Kelly contends that 17 the Court did so when it granted summary judgment on JH Kelly’s claims for labor and material 18 furnished through September 12, 2018. See Order at 10-15. The Court largely disagrees and 19 DENIES JH Kelly’s motion, except for the limited issue identified below. 20 The Court will not repeat the full underlying facts and procedural posture of this motion 21 and instead refers the parties to its previous Order. Basically, the Court found that JH Kelly 22 waived all its claims for labor and material furnished through September 12, 2018 by executing a 23 document that said “[T]his document will become effective to release and relinquish pro tanto any 24 and all claims and lien rights [JH Kelly] may have for and in connection with the above-referenced 25 project for said labor performed and materials furnished through such date.” See Order at 10-15. 26 JH Kelly claims that, in so holding, the Order “failed to consider” four categories of arguments. 27 The Court will briefly address JH Kelly’s contentions below, but the short of it is that JH Kelly 1 reconsideration. See Campbell v. City of Milpitas, No. 13-CV-03817-BLF, 2015 WL 3396809, at 2 *5 (N.D. Cal. May 22, 2015) (“At the end of the day, Plaintiffs simply disagree with the Court’s 3 legal analysis, which is not an appropriate basis for seeking reconsideration.”). 4 JH Kelly first argues that the Court “failed to consider the Conditional Partial Lien Waiver 5 as a whole, including the title (‘Conditional Partial Lien Waiver’) and the use of the term ‘Lien 6 Waiver’ in the first sentence.” Mot. at 4. This is wrong. The Court was aware of the document’s 7 title and repeatedly referred to it as a either a “lien waiver” or a “partial lien waiver.” See, e.g., 8 Order at 11 (“Instead of using the form lien waivers required by California law, however, JH Kelly 9 repeatedly sent its own lien waivers along with its invoices.”); id. at 13 (“JH Kelly makes two 10 attempts to limit the effect of its partial lien waivers.”). To the extent JH Kelly contends that a 11 document titled a lien waiver cannot release claims other than lien claims, the Court disagrees, and 12 the Order cited authority to the contrary. See id. at 12, n.7. 13 Second, JH Kelly argues that the Court “failed to consider extrinsic evidence 14 demonstrating that the parties did not intend or understand the Conditional Partial Lien Waiver to 15 constitute a release of all claims for labor and materials furnished through September 12, 2018.” 16 Mot. at 4. But to begin, the Court was not required to consider extrinsic evidence because, as 17 shown below, it made a finding based on the clear and plain language of the Conditional Partial 18 Lien Waiver: 19 This Court concurs and finds as a matter of law that the clear and plain 20 language of JH Kelly’s waiver releases “any and all claims” for labor and materials through the release date. This outcome is consistent 21 with California law, under which written contracts are generally governed by their plain terms, and written release agreements bar any 22 claim covered by the release’s terms, absent evidence of fraud, deception, misrepresentation, duress, or undue influence. 23 24 Order at 12. Again, this finding is consistent with California’s “objective theory of contracts,” 25 under which “it is the objective intent, as evidenced by the words of the contract, rather than the 26 subjective intent of one of the parties, that controls interpretation,” and under which “[t]he parties’ 27 undisclosed intent or understanding is irrelevant to contract interpretation.” Reilly v. Inquest 1 Tech., Inc., 218 Cal. App. 4th 536, 554, 160 Cal. Rptr. 3d 236, 249 (2013) (cleaned up).1 2 And in any event, it is unclear what “extrinsic evidence” JH Kelly thinks the Court should 3 have considered but failed to. Its present motion argues that the Order “gives only passing 4 consideration to AECOM’s January 3, 2022 payment of $11,000,439.28, more than $10 million of 5 which was for amounts presumably waived based on the Court’s interpretation of the September 6 19, 2018 Conditional Partial Lien Waiver.” Mot. at 4. This argument acknowledges that the 7 Court considered the impact of AECOM’s untimely payment. But unlike JH Kelly, the Court 8 found it dispositive that “nothing in the waivers or the Subcontract says that untimely payment 9 renders JH Kelly’s waivers unenforceable.” Order at 13. JH Kelly did not present any other 10 “extrinsic evidence” in its Opposition and certainly cannot do so now on reconsideration. See 11 Iglesia Ni Cristo v. Cayabyab, No. 18-CV-00561-BLF, 2020 WL 3833281, at *4 (N.D. Cal. July 12 8, 2020) (“And, because the asserted judicial admissions were not brought to the Court’s attention 13 previously, there was no ‘manifest failure’ to consider them, as required under Rule 7-9(b)(3 ).”) 14 (N.D. Cal. July 8, 2020). 15 Of course, JH Kelly may disagree with the Court’s ruling, and its position is preserved for 16 appeal. But nothing in its motion persuades this Court to revisit this issue. See Rupert v. Bond, 17 No. 12-CV-05292-BLF, 2015 WL 78739, at *2 (N.D. Cal. Jan. 6, 2015), aff'd, 771 F. App'x 777 18 (9th Cir. 2019) (“A manifest error of law is not merely one in which the party disagrees with the 19 Court, but instead is the wholesale disregard, misapplication, or failure to recognize controlling 20 precedent on the part of the court.”) (citations omitted). 21 Third, JH Kelly argues that the Order “also acknowledged that the ‘pro tanto’ language in 22 the Conditional Partial Lien Waiver was ambiguous on its face, but it failed to undertake any 23 analysis to resolve the ambiguity.” Mot. at 4. This is also wrong. The Court did not find the “pro 24 tanto” language to be ambiguous. It instead explained, as the Halbert's Lumber court did, that the 25

26 1 See also Cal. Civ. Code § 1639 (“When a contract is reduced to writing, the intention of the parties is to be ascertained from the writing alone, if possible[.]”); Appling v. State Farm Mut. 27 Auto. Ins. Co., 340 F.3d 769, 777 (9th Cir. 2003) (“If the court finds that the contract is not 1 “pro tanto” language was not particularly relevant to the question at hand, which was what, if 2 anything, limited the scope of JH Kelly’s waivers: 3 Contrary to JH Kelly’s view, the Court does not find the “pro tanto” 4 language in the waivers to be very helpful. Pro tanto is a Latin phrase that means “only to that extent,” or more colloquially, “as far as it 5 goes.” Halbert's Lumber, Inc. v. Lucky Stores, Inc., 6 Cal. App. 4th 1233, 1247, 8 Cal. Rptr. 2d 298, 306 (1992). So when a waiver 6 releases claims pro tanto, to emphasize the words “pro tanto” is simply to beg the question: “For so much as what? For as much as 7 what may be? As far as what goes?” Id. 8 Order at 14, n.9. The Court reviewed the waivers and found “that the scope of JH Kelly’s 9 releases, by their plain terms, are only limited by the effective date, not by the amount of 10 corresponding payment.” Order at 13-14. Here again, nothing in JH Kelly’s motion persuades the 11 Court to revisit this issue. 12 Relatedly, JH Kelly claims that the Order failed to consider Supreme Foodservice GmbH v. 13 Fluor Intercontinental, Inc., No. 2:11-CV-08803-SVW-FFM, 2013 WL 12122579 (C.D. Cal. Jan. 14 15, 2013), in which a district court held that a waiver that released pro tanto both lien claims and 15 non-lien claims was effective to release the non-lien claims only to the extent of payment. Mot. at 16 5. But JH Kelly cites no authority for the proposition that a district court’s decision not to 17 consider an unpublished, non-binding decision from another district court warrants the 18 “extraordinary remedy” of reconsideration, and the Court is aware of none. See Kona Enters. v. 19 Estate of Bishop, 229 F.3d 877, 890 (9th Cir. 2000). 20 Fourth, JH Kelly argues that the Order “incorrectly concluded that AECOM’s January 3, 21 2022 payment of the September 19, 2018 invoice (which was only partially paid, considering the 22 accrued interest) was only four days late,” when the payment “was actually more than three years 23 past due under the Subcontract, which required AECOM to pay Kelly no later than 30 days of the 24 invoice date.” Mot. at 6. JH Kelly also argues that the Order “disregarded that the lengthy delay 25 in payment also violated California’s prohibition on pay-if-paid provisions or pay-when-paid 26 provisions that unreasonably delay payment.” Id. 27 To begin with, the first point mischaracterizes what the Order actually said. The Order 1 argument that that payment “also was likely not timely under Subcontract section 7.2.1, which 2 requires payment within seven days after AECOM was paid by PG&E.” Dkt. No. 226 at 15 3 (emphasis added). JH Kelly then explained the following: 4 On January 14, 2022, AECOM’s counsel stated that AECOM 5 received payment from PG&E on or around December 24, 2021. Kelly, on the other hand, did not receive payment from AECOM until 6 January 3, 2022. Based on this timeline, more than seven days passed between when AECOM received payment from PG&E and when it 7 paid Kelly.

8 Id. at 15, n.10. To summarize, JH Kelly argued that AECOM’s payment was more than seven 9 days late because AECOM was paid on December 24, 2021 but did not pay JH Kelly until January 10 3, 2022. Id. Seven days from December 24, 2021 would have been December 31, 2021. 11 AECOM paid JH Kelly on January 3, 2022. From and including Friday, December 31, 2021 to, 12 but not including Monday, January 3, 2022 is three days. The Court included both Friday and 13 Monday and arrived at four days. But in any event, nothing about this distinction affected the 14 Order’s reasoning. Again, the Court considered the full impact of AECOM’s untimely payment 15 and found it dispositive that “nothing in the waivers or the Subcontract says that untimely payment 16 renders JH Kelly’s waivers unenforceable.” Order at 13. 17 Finally, JH Kelly contends that “it is unclear from the Court’s Order whether the Court 18 intended for its ruling to apply to Kelly’s quantum meruit/abandonment claim, which is a claim in 19 equity seeking the reasonable value of Kelly’s services and the avoidance of unjust enrichment of 20 AECOM.” Mot. at 5. In response, AECOM says that JH Kelly failed to argue that the 21 Conditional Partial Lien Waiver cannot be a bar to JH Kelly’s quantum meruit/abandonment claim 22 because JH Kelly submitted it as a requirement of the Subcontract and cannot do so for the first 23 time now. Dkt. No. 238 at 11. 24 The Court agrees that JH Kelly did not raise this specific argument in its original brief, and 25 that alone would be enough to deny JH Kelly’s request to raise it now. See Arteaga v. Asset 26 Acceptance, LLC, 733 F. Supp. 2d 1218, 1236 (E.D. Cal. 2010) (“Motions for reconsideration are 27 not the place for parties to make new arguments not raised in their original briefs.”) (citing 1 Northwest Acceptance Corp. v. Lynnwood Equip., Inc., 841 F.2d 918, 925–6 (9th Cir. 1988)); 2 Gray v. Golden Gate Nat. Recreational Area, 866 F. Supp. 2d 1129, 1132 (N.D. Cal. 2011) 3 (same). But JH Kelly did make the broader argument (in another context) that a waiver in a 4 provision of the Subcontract cannot bar JH Kelly from recovering damages as part of its 5 abandonment claim, and then included the following footnote that applies that argument to any 6 other provision of the Subcontract: 7 This same argument applies to AECOM’s other motions that are 8 premised on provisions in the Subcontract. Those provisions are not applicable to Kelly’s abandonment claim. To avoid redundancy, 9 Kelly hereby incorporates this argument into its responses to the other motions. 10 11 Dkt. No. 226 at 5, n.5. Read in the light most charitable to JH Kelly, the Court finds that this 12 broad argument arguably (if obliquely) preserved JH Kelly’s present distinction between its legal 13 and quantum meruit claims and was not addressed by the Order. 14 AECOM argues that, in any event, JH Kelly’s argument does not apply to JH Kelly’s 15 claims for labor and materials because JH Kelly waived those claims as part of the lien waivers, 16 which were not premised on provisions of the Subcontract. Dkt. No. 238 at 11. The Court will 17 not resolve this issue in the first instance on a motion for leave to file a motion for reconsideration. 18 The Court accordingly DIRECTS both parties to submit by 3:00 p.m. on May 30, 2022, 19 simultaneous supplemental briefs of no more than five pages addressing only whether JH Kelly’s 20 Conditional Partial Lien Waiver also released JH Kelly’s quantum meruit/abandonment claim, 21 accepting the Court’s prior analysis of that Waiver. The briefs must not repeat arguments made in 22 the parties’ prior filings. No further responsive briefs are permitted, and the matter will stand 23 submitted once the parties file their simultaneous briefs. 24 Other than as to this limited issue (and only barely), JH Kelly’s motion plainly seeks leave 25 to “ask the Court to rethink what it has already thought.” Gray, 866 F. Supp. 2d at 1132 (citations 26 omitted). This is improper, and JH Kelly’s request is DENIED, except for the question identified 27 above. JH Kelly’s other arguments are preserved for appeal, but the Court has ruled on them and 1 3 Dated: May 29, 2022 4 . □ HAYWOOD S. GILLIAM, JR. 5 United States District Judge 6 7 8 9 10 11 a 12

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