United States District Court, D. Arizona
REPORT AND RECOMMENDATION
J. Markovich United States Magistrate Judge
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
FACTUAL AND PROCEDURAL BACKGROUND
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).
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. Mankel and Iron subsequently filed the
motions to dismiss now pending before the Court.
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.
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.