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Mountain View Hospital, L.L.C., An Idaho Limited Liability Company v. Sahara

September 30, 2011

MOUNTAIN VIEW HOSPITAL, L.L.C., AN IDAHO LIMITED LIABILITY COMPANY, PLAINTIFF,
v.
SAHARA, INC., A UTAH CORPORATION; DAVIS JUDGMENT MOTIONS PARTNERSHIP, P.C., A COLORADO CORPORATION; JOHN DOES 1-10, DEFENDANTS.
SAHARA, INC., A UTAH CORPORATION, CROSS CLAIM PLAINTIFF AND COUNTERCLAIM DEFENDANT,
v.
DAVIS PARTNERSHIP, P.C., A COLORADO CORPORATION, CROSS CLAIM DEFENDANT AND COUNTERCLAIM PLAINTIFF.
SAHARA, INC., A UTAH CORPORATION, THIRD-PARTY PLAINTIFF,
v.
THE BALLARD GROUP, A COLORADO CORPORATION, UNITED TEAM MECHANICAL, LLC, A UTAH LIMITED LIABILITY COMPANY, E.K. BAILEY CONSTRUCTION, INC., A UTAH CORPORATION, AND ENCOMPASS SERVICES CORPORATION, A UTAH CORPORATION, THIRD-PARTY DEFENDANTS.
UNITED TEAM MECHANICAL, LLC, A UTAH LIMITED LIABILITY COMPANY, COUNTERCLAIM DEFENDANT AND THIRD-PARTY PLAINTIFF,
v.
BINGHAM MECHANICAL, INC., AN IDAHO CORPORATION; DIAMOND TEST & BALANCE, INC., A UTAH CORPORATION; AND SIEMENS, AN IDAHO CORPORATION, THIRD-PARTY DEFENDANTS.



The opinion of the court was delivered by: B. Lynn Winmill Chief Judge United States District Court

ORDER ON SUMMARY

Before the Court are: Motions for Summary Judgment by Defendant Encompass Services Corporation (Encompass) (Dkt. 159), Third-Party Defendant The Ballard Group (Ballard) (Dkt. 162), Third-Party Defendant Bingham Mechanical, Inc. (Bingham) (Dkt. 163), Third-Party Defendant E.K. Bailey Construction, Inc. (E.K. Bailey) (Dkt. 169), Defendant Sahara, Inc. (Sahara) (Dkt. 225), Defendant Siemens Industry, Inc. (Siemens) (Dkt. 257), Defendant United Team Mechanical, LLC (UTM) (Dkt. 292), and Defendant Davis Partnership, P.C. (Davis) (Dkt. 297); Motions for Partial Summary Judgment by Ballard (Dkt. 298), and Plaintiff Mountain View Hospital, LLC (Mountain View) (Dkt. 299); Motions to Strike by Encompass (Dkts. 280, 390), and Mountain View (Dkt. 352); and a Motion to Supplement (Dkt. 331) by Siemens. The matters are fully briefed and at issue, and the Court heard oral argument on May 24, 2011.

The Court is aware of efforts by the parties to settle this matter, including a settlement conference that was set for September 26, 2011, as memorialized in a Notice entered by the Court on August 23, 2011 (Dkt. 396). It is unclear whether the conference took place as scheduled. The Court understands that the parties' ability to effectively mediate their disputes has undoubtedly been hindered by the lack of a decision from the Court on the ten pending motions for summary judgment, and that the mediation process will be aided by a decision on those motions. Unfortunately, the complexity of the issues raised, the magnitude of the record, and the extent of the briefing, have combined with the Court's busy calendar and heavy docket to make it impossible to issue a decision within the Court's usual time standards for issuing its decisions. And, the Court's calendar over the next week make it unlikely that a comprehensive decision can be issued for at least two more weeks.

Accordingly, the Court has decided that it will provide this order, ruling on the motions before it but with limited explanation as to the basis for the Court's decision. In issuing this order, the Court has seriously and carefully considered each of the issues raised by counsel. A more comprehensive Memorandum Decision and Order with the Court's detailed analysis of the issues will follow by October 17, 2011. If the Memorandum Decision is not issued by this date, the Court will advise the parties of the status of the decision by docket entry each Monday until the Memorandum Decision and Order is entered.

SUMMARY OF DECISION BY ISSUE

The Court makes the following findings that will be more fully expressed in a Memorandum Decision to follow:

1. Assignment of Design-Build Contract

a. The Design-Build contract was validly assigned to Mountain View; in any event, Sahara is estopped from asserting otherwise. Accordingly, summary judgment will be granted to Mountain View and denied to Sahara on this issue.

b. Mountain View is not precluded form recovering attorney fees provided by the contract. Sahara's motion for summary judgment on this issue will be denied.

2. Indemnification of Encompass by UTM

a. Under Encompass's valid and unambiguous Contract Assumption Agreement with UTM, UTM must fully indemnify Encompass. Summary judgment will therefore be granted to Encompass and denied to UTM on this issue.

b. The Bankruptcy Court's Orders were not inconsistent with the Contract Assumption Agreement. Summary judgment on this issue will be granted to Encompass and denied to UTM.

c. UTM assumes Encompass's defenses as well as its liabilities. UTM's motion for summary judgment on this issue will be granted.

d. Sahara is not precluded from bringing claims for indemnification and breach of warranty against Encompass. Thus, Encompass's motion to dismiss Sahara's claims will be denied. However, as noted below, those claims were discharged in bankruptcy.

e. The Court did not find it necessary to consider the Van Taylor Affidavit. The motion to strike that affidavit will therefore be denied as moot.

3. Discharge of Claims Due to Encompass's Bankruptcy a. Sahara was not a known creditor, thus notice of Encompass's bankruptcy to Sahara by publication was sufficient, and Sahara's claims against Encompass were discharged in bankruptcy. Encompass's motion for summary judgment on this issue will be granted; Sahara's claims against Encompass will be dismissed.

b. However, UTM's indemnification obligations, and its liability under Encompass's contracts, were not affected by Encompass's discharge because they were expressly approved by the Bankruptcy Court in the reorganization plan and therefore survived Encompass's discharge in bankruptcy. Thus UTM's motion for summary judgment on this issue will be denied.

2. Economic Loss Rule a. The economic loss rule applies to Sahara's negligence claims against E.K. Bailey. The motion for summary judgment by E.K. Bailey will be granted on this issue.

b. The special relationship exception to the economic loss rule does not apply to Sahara, thus the economic loss rule applies to Mountain View's negligence claims against Encompass, Sahara, and Siemens, and those claims will be dismissed. Motions for summary judgment by Sahara, Encompass, and Siemens will be granted on this issue.

c. The Court did not find it necessary to consider declarations by Vincent or Erickson. The motion to strike those ...


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