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City of Tillamook v. Kennedy Jenks Consultants, Inc.

United States District Court, D. Oregon

April 16, 2019

CITY OF TILLAMOOK OREGON, Plaintiff,
v.
KENNEDY JENKS CONSULTANTS, INC., a California corporation doing business in the State of Oregon, Defendant.

          ROGER A. LENNEBERG DARREN B. CARPENTER Jordan Ramis, P.C. Attorneys for Plaintiff.

          LAURA C. CALDERA Bullivant Houser Bailey, PC Attorneys for Defendant.

          OPINION AND ORDER

          ANNA J. BROWN, UNITED STATES SENIOR DISTRICT JUDGE

         This matter comes before the Court on Defendant's Motion (#4) to Strike Pursuant to Fed.R.Civ.P. 12(f). For the reasons that follow, the Court DENIES Defendant's Motion.

         BACKGROUND

         The following facts are taken from the Complaint and the parties' filings related to Defendant's Motion to Strike.

         On February 12, 2001, Plaintiff City of Tillamook and Defendant Kennedy Jenks Corporation entered into a contract for the planning, design, contract administration, and construction of the City of Tillamook Wastewater Treatment Improvements Project. Plaintiff alleges in its Complaint that Defendant served as Plaintiff's “planner, design engineer and project manager, owner's representative[, ] and owner's professional wastewater system consultant on the Project.” Compl. at ¶ 6. Plaintiff alleges Defendant

prepared the plans and specifications for the Project, prepared the Contract documents, evaluated contractor bids, served as the onsite construction manager/owner's agent, received and responded to information requests, change orders and payment applications from the Project contractor . . . and made recommendations to the City. Under the Contract defendant was responsible for evaluating and ruling on any claim by [the Project contractor] and advised the City regarding all aspects of the Project.

Compl. at ¶ 6.

         On June 29, 2007, Plaintiff entered into a construction contract for the Project with Big River Construction, Inc., [1]after “the defendant evaluated and ranked all bids.” Compl. at ¶ 7.

         Plaintiff alleges in its Complaint that during construction “numerous design errors were discovered by the contractor and the defendant was required to make post bid changes to the Project specifications, resulting in additional cost.” Compl. at ¶ 9. According to Plaintiff, it discovered “over the course of the project . . . that portions of the original plans and specifications were either missing or inadequate to meet [Plaintiff's] intended . . . requirements as a well [sic], and the regulatory and performance criteria.” Compl. at ¶ 9.

         At various times from March 2009 to October 2009 Big River “sought additional contract time through [some of] its monthly schedule updates.” Compl. at ¶ 25. In addition, on March 3, 2010, “Big River submitted a claim requesting an equitable adjustment of $2, 249, 916 plus interest”; on March 9, 2010, “Big River submitted a claim seeking payment under [various] pay applications . . . in the amount of $207, 340, plus interest”; on March 22, 2010, “Big River . . . claimed it was entitled to $135, 000 under [certain] deductive change orders”; and on July 1, 2010, “Big River submitted a claim related to quality control expenses in the amount of $54, 581.75, plus interest.” Compl. at ¶¶ 21-24. Plaintiff alleges Defendant advised Plaintiff “not to pay the final pay application in the amount of $220, 000, not to release the retention in the amount of $185, 000, and to deny all claims for additional compensation and time. Relying on the defendant's advice, the City refused to make any further payments or grant a time extension.” Compl. at ¶ 26.

         Plaintiff alleges the completion of the Project was delayed because of various design deficiencies and multiple changes proposed by Big River. The Project was completed in January 2010.

         On April 16, 2010, Big River filed an action against Plaintiff in Tillamook County Circuit Court, Big River Construction v. City of Tillamook (the State Action), “for breach of contract and breach of the implied warranty of the specifications produced by Defendant.” Compl. at ¶ 27.

         On March 20, 2012, a jury entered a verdict in favor of Big River in the State Action.

         On July 10, 2012, the Tillamook County Circuit Court entered a judgment in favor of Big River and against Plaintiff in the amount of $1, 527, 907. On June 4, 2013, the Tillamook County Circuit Court entered a supplemental judgment for $590, 239.

         On November 27, 2018, Plaintiff filed an action in this Court against Defendant alleging claims for breach of contract, professional negligence, and breach of fiduciary duty in connection with the Project and the State Action.

         On January 28, 2019, Defendant filed a Motion (#4) to Strike Pursuant to Fed. R. Civ. P 12(f) in which it seeks an order striking certain factual allegations in Plaintiff's Complaint. The Court took Defendant's Motion under advisement on March 13, 2019.

         STANDARDS

         Federal Rule of Civil Procedure 12(f) allows the court to strike any “redundant, immaterial, impertinent, or scandalous material.” To be impertinent or immaterial, the allegations must not have any possible bearing on the controversy. Emp'rs Ins. of Wausau v. Musick, Peeler, & Garrett, 871 F.Supp. 381, 391 (S.D. Cal. 1994), opin. amended on reconsideration, 948 F.Supp. 942 (S.D. Cal. 1995). The “function of Rule 12(f) is not served when . . . the motion would require the court to resolve ‘disputed and substantial factual or legal issues.'” Am. Gen. Life Ins. Co. v. James, No. C-14-04242 DMR, 2015 WL 730010, at *3 (N.D. Cal. Feb. 19, 2015)(quoting Whittlestone, Inc. v. Handi-Craft Co., 618 F.3d 970, 973-75 (9th Cir. 2010)).

         District courts in the Ninth Circuit are split as to whether a motion to strike is the proper vehicle to object to allegations relating to settlement negotiations, but the majority of courts that have addressed the question have concluded Rule 12(f) motions to strike may be used to address allegations relating to settlement negotiations. See, e.g., Reddy v. Morrissey, 3:18-cv-00938-YY, 2018 WL 4407248, at *1 (D. Or. Sept. 17, 2018)(District courts “have acknowledged, FRCP 12(f) may be used to strike allegations from complaints that detail settlement negotiations.”); McCrary v. Elations Co., LLC, No. EDCV 13-0242 JGB OPX, 2013 WL 6403073, at *5 (C.D. Cal. July 12, 2013) (granting the defendant's motion to strike allegations in the plaintiff's second amended complaint that contained information about offers to compromise and statements in pursuit of settlement noting “numerous [c]ourts have used Rule 12(f) to strike allegations from complaints that detail settlement negotiations within the ambit of Rule 408.”); Jones v. Metro Life Ins. Co., No. C-08-03971-JW (DMR), 2010 WL 4055928, at *14 (N.D. Cal. Oct. 15, 2010)(“[U]nder [FRCP] 12(f), courts have granted motions to strike references to settlement negotiations even at the pleadings stage of a case, on the basis that the contents of settlement discussions would otherwise be inadmissible under Federal Rule of Evidence 408 and are therefore immaterial and potentially prejudicial.”). But see Baroness Small Estates, Inc. v. BJ's Restaurants, Inc., No. SACV 11-468-JST, 2011 WL 13228020, at *2 (C.D. Cal. Sept. 15, 2011)(denying the plaintiff's 12(f) motion to strike portions of the defendant's counterclaims and noting the plaintiff “objects to [the defendant's] allegations on the ground that evidence of settlement discussions is inadmissible under Federal Rule of Evidence 408. Such an objection is properly raised either as an objection to the consideration of evidence on a motion for summary judgment, or as a motion in limine before trial, when the Court may fully consider the specific evidence, the purpose for which the evidence is proffered, and the mitigating effect of a limiting instruction.”).

         Motions to strike “are disfavored and infrequently granted.” Liberty Nat. Prods., Inc. v. Hoffman, 3:13-cv-00886-BR, 2017 WL 4855404, at *4 (D. Or. Oct. 26, 2017). See also Servo v. Junginger, 3:13-cv-00702-PK, 2014 WL 3891751, at *3 (D. Or. Aug. 6, 2014)(same). “This is because they are ‘often used as delaying tactics, and because of the limited importance of pleadings in federal practice.'” Baroness Small Estates, 2011 WL 13228020, at *1 (quoting Bureerong v. Uvawas, 922 F.Supp. 1450, 1478 (C.D. Cal. 1996)).

         When considering a motion to strike “the court must view the pleadings in the light most favorable to the nonmoving party.” Liberty Nat., 2017 WL 4855404, at *4. See also In re 2TheMart.com Secs. Litig., 114 F.Supp.2d 955, 965 (C.D. Cal. 2000)(same). The disposition of a motion to strike is within the discretion of the district court. Federal Sav. & Loan Ins. Corp. v. Gemini Mgmt, 921 F.2d 241, 244 (9th Cir. 1990). See also Reddy, 2018 WL 4407248, at *2 (same).

         DISCUSSION

         Defendant moves to strike the second sentence of Paragraph 37 and all of paragraphs 38-41 and 43-44 of Plaintiff's Complaint on the ground that they contain inadmissible settlement communications pursuant to Federal Rule of Evidence 408 and/or inadmissible mediation communications pursuant to Oregon Revised Statutes § 36.222.

         Plaintiff, however, asserts the disputed material does not contain allegations of communications made during a settlement ...


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