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Quasar Energy Group LLC v. WOF SW GGP 1 LLC

United States District Court, D. Arizona

December 9, 2019

Quasar Energy Group LLC, Plaintiff,
v.
WOF SW GGP 1 LLC, Defendant.

          REPORT AND RECOMMENDATION

          Eric J. Markovich United States Magistrate Judge

         Pending before the Court are two motions to dismiss filed by third-party defendants Iron Dynamics, Inc. (“Iron”) and Mankel Mechanical, LLC (“Mankel”). (Docs. 48 and 98). Defendants argue for dismissal of Plaintiff's third-party complaint for failure to comply with Ariz. Rev. Stat. § 12-2602. Plaintiff filed responses to both motions and Mankel filed a reply in support of its motion. (Docs. 51, 53, and 108). For the reasons stated below, the Magistrate Judge recommends that the District Court enter an ordering denying the motions to dismiss.

         I. FACTUAL AND PROCEDURAL BACKGROUND

         Plaintiff quasar energy group, llc (“quasar”) filed this action on July 23, 2018 alleging claims against Defendant WOF SW GGP 1 LLC (“WOF”) for breach of contract, breach of the implied covenant of good faith and fair dealing, promissory estoppel, and unjust enrichment. (Doc. 1). The basis of the parties' dispute concerns two contracts: a Design-Build Agreement and General Conditions Between Owner and Design-Builder (“Design-Build Agreement”), whereby WOF would pay quasar to construct an anaerobic digestion facility, and an Operations and Maintenance Management Services Agreement (“O&M Agreement”), whereby WOF would pay quasar to manage and operate the project. (Doc. 1 at 3-4).[1]

         On February 8, 2019 WOF filed an Answer and Counterclaim against quasar alleging claims for breach of contract, breach of warranty, breach of good faith and fair dealing, and declaratory relief. (Doc. 35 at 18-21). quasar then filed a third-party complaint against its subcontractors, including third-party defendants Mankel and Iron, alleging indemnity claims. (Doc. 46 at 14, 25). Both claims contain substantially the same language:

56. WOF has asserted various claims against quasar in connection with the Project, including claims for delay and/or defective work that relate directly to the work that was performed by Iron Dynamics under the Iron Dynamics Subcontract with quasar.
57. Iron Dynamics had a duty to quasar to perform its work on the Project in a good, timely, and workmanlike manner.
58. To the extent that WOF's allegations are proven, all allegations now being specifically denied, and WOF is found to be entitled to damages from quasar for breach of the duties that Iron Dynamics agreed to perform, then the same would constitute a breach of the Iron Dynamics Subcontract and would entitle quasar to damages from Iron Dynamics in an amount that shall be proven at trial.
59. Further, and if quasar is held liable to WOF, all liability now being specifically denied, then quasar should be indemnified by Iron Dynamics to the extent that the liability of quasar is attributable to or in any way connected with Iron Dynamics performance under the Iron Dynamics Subcontract, in an amount to be proven at trial.

Id. at 15; see also Id. at 25-26.[2] Mankel and Iron subsequently filed the motions to dismiss now pending before the Court.

         II. DISCUSSION

         Mankel and Iron are represented by the same counsel and filed substantially identical motions to dismiss based on Ariz. Rev. Stat. § 12-2602. Defendants argue that pursuant to the statute, quasar was required to file a written statement certifying whether its claims against Mankel and Iron will require expert testimony to prove the standard of care. Mankel and Iron state that because they are licensed contractors, quasar cannot establish that their work fell below the requisite standard of care without expert testimony. Therefore, Mankel and Iron request that the Court dismiss quasar's third-party complaint against them, or in the alternative, require quasar to provide the certification and a preliminary expert opinion.

         In its responses, quasar contends that § 12-2602 does not apply here because quasar asserts indemnification claims and the statute specifically applies to claims based on breach of contract, negligence, misconduct, and errors or omissions in rendering professional services. quasar further states that even if the statute does apply to its indemnification claims, the appropriate remedy is for the Court to order quasar to comply with the statute, not to dismiss its claims against Mankel and Iron.

         A. ...


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