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Salt Lake City Corp. v. Sekisui SPR Americas, LLC

United States District Court, D. Utah

November 16, 2018

SALT LAKE CITY CORPORATION; Plaintiff;
v.
SEKISUI SPR AMERICAS, LLC; SEKISUI RIB LOC AUSTRALIA PTY LTD.; SOUTHWEST PIPELINE AND TRENCHLESS CORP.; SAFECO INSURANCE COMPANY OF AMERICA, INC.; HYDRATECH ENGINEERED PRODUCTS, LLC; and DOES 1-10; Defendants.

          MEMORANDUM DECISION AND ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS SOUTHWEST'S CROSSCLAIMS

          JILL N. PARRISH UNITED STATES DISTRICT COURT JUDGE

         Before the court is a motion to dismiss Southwest Pipeline and Trenchless Corp.'s crossclaims against Sekisui SPR Americas, LLC (Sekisui Americas) and Sekisui Rib Loc Australia Pty Ltd. (Sekisui Australia). [Docket 62.] The court GRANTS IN PART AND DENIES IN PART the motion.

         BACKGROUND

         Salt Lake City requested bids to rehabilitate a sewer line by installing a liner within the existing sewer pipe. Southwest won the bid. Either Sekisui Americas or Sekisui Australia[1]provided its proprietary liner product to Southwest for use in the project.

         Sometime before November 7, 2012, Southwest finished the sewer line rehabilitation project. In October 2015, Salt Lake City sent a letter to Sekisui Americas and Sekisui Australia alleging that an inspection of the rehabilitated sewer line revealed numerous defects in the liner materials the two companies supplied for the project.

         On May 10, 2017, Salt Lake City sued Sekisui Americas and Sekisui Australia. On November 8, 2017, the city filed an amended complaint that added claims against Southwest. The amended complaint alleges that Sekisui Americas, Sekisui Australia, and Southwest are liable to it for their failure to supply or install a watertight liner for the sewer line.

         On May 4, 2018, Southwest answered the amended complaint and asserted three crossclaims against Sekisui Americas and Sekisui Australia: (1) breach of contract and breach of warranty (breach of contract/warranty claim), (2) apportionment of fault, and (3) indemnification.

         ANALYSIS

         Sekisui Americas and Sekisui Australia (collectively, the Sekisui defendants) move to dismiss portions of Southwest's crossclaims against them for five reasons. First, Sekisui Australia moves to dismiss the claims against it under Rule 12(b)(2) for lack of personal jurisdiction. Second, the Sekisui defendants move to dismiss the breach of contract/warranty claim, arguing that it is barred by the statute of limitations.[2] Third, the Sekisui defendants move to dismiss the breach of contract/warranty cause of action for failure to state a plausible claim. Fourth, the Sekisui defendants move to dismiss the indemnification claim, arguing that a contract between the parties requires Southwest to indemnify Sekisui Americas and Sekisui Australia. And Fifth, the Sekisui defendants move to dismiss the apportionment of fault claim, asserting that Utah's apportionment statute does not apply to warranty and contract claims. The court addresses each of these arguments in turn.

         I. PERSONAL JURISDICTION

         In a previous motion, Sekisui Australia argued that Salt Lake City's claims against it should be dismissed under Rule 12(b)(2) because the city failed to establish that this court had personal jurisdiction over it. [Docket 29.] In an order issued on September 28, 2018, the court found that it had specific personal jurisdiction over Sekisui Australia and denied its Rule 12(b)(2) motion. [Docket 71.]

         Sekisui Australia raises almost identical arguments in the present motion. It also attaches the same affidavits that it presented in its prior motion to dismiss for lack of personal jurisdiction. Southwest likewise proffers the same affidavit of Justin Duchaineau that Salt Lake City presented in the prior motion. Because the same arguments and the same jurisdictional facts that were at issue in Sekisui Australia's prior motion to dismiss for lack of personal jurisdiction are at issue in this motion, the court adopts it analysis of this issue found in the September 28, 2018 Order. The court concludes that it has specific personal jurisdiction over Sekisui Australia and denies the motion to dismiss the crossclaims against it.

         II. STATUTE OF LIMITATIONS

         Next, the Sekisui defendants argue that Southwest's crossclaim for breach of contract/warranty is barred by the statute of limitations. Although Southwest pleads a single cause of action, it effectively asserts two distinct claims. First, it asserts that the Sekisui defendants breached a warranty that the liner product would perform properly for the Salt Lake City project. Second, Southwest alleges that the Sekisui defendants breached an agreement “to provide to Southwest appropriate and accurate training, instruction, [and] oversight services regarding installation of the . . . liner products and materials purchased from Sekisui.” The court addresses the warranty crossclaim and the contract crossclaim separately.

         A. Warranty Crossclaim

         The parties dispute which statute of limitations applies to Southwest's breach of warranty crossclaim. Thus, the court first determines the appropriate statute of limitations for this claim. The court then addresses whether the allegations of the crossclaim establish that the Sekisui defendants are entitled to dismissal of this claim on statute of limitations grounds.

         1) The Applicable Limitations Period

         To determine which statutes of limitations should be applied to the breach of warranty crossclaim, the court first looks to Utah Code section 78B-2-225, which provides the limitations periods for actions related to improvements to real property (improvements to real property statute). This statute applies to any action that asserts a claim for relief “for acts, errors, omissions, or breach of duty arising out of or related to the design, construction, or installation of an improvement, whether based in tort, contract, warranty, strict liability, indemnity, contribution, or other source of law.” Utah Code § 78B-2-225(1)(b). The term “improvement” is defined to mean “any building, structure, infrastructure, road, utility, or other similar man-made change, addition, modification, or alteration to real property.” Id. § 78B-2-225(1)(d) (emphasis added).

         The conditions for applying this statute have been satisfied in this case. Because a sewer line is a utility, the project to rehabilitate the line was an “improvement to real property.” And Southwest's crossclaim for breach of warranty “aris[es] out of or relate[s] to the design, construction, or installation of” this improvement because the crossclaim involves allegations that the liner used to rehabilitate the sewer line was defective. When these statutory prerequisites have been fulfilled, courts must apply limitations provisions established by the improvements to real property statute. Craftsman Builder's Supply, Inc. v. Butler Mfg. Co., 974 P.2d 1194, 1203 (Utah 1999).

         The improvements to real property statute provides that an “action by or against a provider [any legal entity contributing to the construction of an improvement] based in contract or warranty shall be commenced within six years of the date of completion of the improvement or abandonment of construction.” Utah Code § 78B-2-225(3)(a). This six-year limitations period is a statute of repose, not a statute of limitations. Willis v. DeWitt, 350 P.3d 250, 253 (Utah Ct. App. 2015); see also Berry ex rel. Berry v. Beech Aircraft Corp., 717 P.2d 670, 672 (Utah 1985). And given that the improvements to real property statute explicitly states that this statute of repose “does not extend the ...


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