Bard Water District v. James Davey & Associates, Inc. , 671 F. App'x 506 ( 2016 )


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  •                                                                             FILED
    NOT FOR PUBLICATION
    DEC 05 2016
    UNITED STATES COURT OF APPEALS                       MOLLY C. DWYER, CLERK
    U.S. COURT OF APPEALS
    FOR THE NINTH CIRCUIT
    BARD WATER DISTRICT,                             No.   14-56943
    Plaintiff-Appellant,               D.C. No.
    3:13-cv-02727-JM-PCL
    v.
    JAMES DAVEY AND ASSOCIATES,                      MEMORANDUM*
    INC., an Arizona Corporation; et al.,
    Defendants-Appellees.
    Appeal from the United States District Court
    for the Southern District of California
    Jeffrey T. Miller, District Judge, Presiding
    Argued and Submitted November 8, 2016
    Pasadena, California
    Before: WARDLAW and BYBEE, Circuit Judges, and BELL,** District Judge.
    Bard Water District (Bard) appeals the Rule 12(b)(6) dismissal of its claims
    against James Davey and Associates (Davey) for breach of contract and breach of
    fiduciary duty. We have jurisdiction pursuant to 28 U.S.C. § 1291. We affirm the
    *
    This disposition is not appropriate for publication and is not precedent
    except as provided by Ninth Circuit Rule 36-3.
    **
    The Honorable Robert Holmes Bell, United States District Judge for
    the Western District of Michigan, sitting by designation.
    dismissal of Bard’s breach of contract claim but reverse the dismissal of its breach
    of fiduciary claim.
    1.     The district court determined that “the project document was not, on
    its face, a contract between the parties.” Finding that “there was no language in the
    document suggesting a contractual relationship between Plaintiff and Defendants,”
    the district court properly concluded that, because there was no contract between
    the parties, Bard failed to state a claim for breach of contract.
    2.     The district court further found that Bard “adequately alleged the
    existence of a fiduciary relationship,” but nevertheless dismissed the claim because
    it concluded the claim was “based solely on Defendants’ alleged failure to comply
    with the specific duties of the project engineer as described in the project
    document,” the same allegations underlying the breach of contract claim. But,
    under California law, a fiduciary relationship, such as agent to principal, can exist
    separate and apart from a contractual relationship. See, e.g., Stephenson v. Drever,
    
    16 Cal. 4th 1167
    , 1179 (1997). The district court incorrectly concluded that,
    because the project document was not a contract, Bard failed to state a claim for
    breach of fiduciary duty. Bard’s fiduciary breach allegations are sufficient to
    survive a Rule 12(b)(6) motion.
    2
    3.     Davey argues on appeal that both of Bard’s claims are barred by its
    failure to comply with California’s certificate of merit requirements. See Cal.
    Code Civ. P. § 411.35. In federal diversity cases, only substantive state law
    applies to state claims; procedural state law does not. See Erie R.R. Co. v.
    Tompkins, 
    304 U.S. 64
    , 78 (1938). Because the certification required by Cal. Code
    Civ. P. § 411.35 is procedural in nature, it is inapplicable here. See Apex
    Directional Drilling, LLC v. SHN Consulting Eng’rs & Geologists, Inc., 119 F.
    Supp. 3d 1117, 1128–30 (N.D. Cal. 2015) (finding that the statute is not outcome
    determinative, and is therefore procedural); Rafael Town Ctr. Investors v. Weitz
    Co., No. C 06-6633 SI, 
    2007 WL 1577886
    , at *4 (N.D. Cal. May 31, 2007)
    (finding that Cal. Code Civ. P. § 411.35 does not contain substantive elements of a
    professional negligence claim, does not limit recovery in any way, and is
    “somewhat similar” to other procedural state laws, and is therefore procedural).
    4.     Davey further argues on appeal that Bard’s claims are barred by the
    statute of limitations. In California, courts look to the “gravamen” of the
    complaint to determine which statute of limitations applies. Hensler v. City of
    Glendale, 
    8 Cal. 4th 1
    , 22 (1994). The gravamen of Bard’s complaint is breach of
    fiduciary duty. California’s Code of Civil Procedure establishes a four-year statute
    of limitations for most written agreements. Cal. Code Civ. P. § 337. It does not
    3
    specify a statute of limitations for breach of fiduciary duty, so the residual four-
    year statute of limitations governs such claims. Cal. Code Civ. P. § 343. The
    parties agree that the statute of limitations began to run on November 15, 2009,
    when Bard claims that it discovered the alleged breaches of contract and fiduciary
    duty. Bard filed its first complaint on November 13, 2013, within the four-year
    period. Thus, its claims are not time-barred.
    AFFIRMED IN PART, REVERSED IN PART; REMANDED.
    4
    

Document Info

Docket Number: 14-56943

Citation Numbers: 671 F. App'x 506

Judges: Wardlaw, Bybee, Bell

Filed Date: 12/5/2016

Precedential Status: Non-Precedential

Modified Date: 11/6/2024