Nacimiento Water Co. v. International Fidelity Insurance Co.
696 F. App'x 187
| 9th Cir. | 2017Background
- Nacimiento Water Co. sued surety International Fidelity Insurance Co. (IFIC) seeking indemnification under a surety bond; IFIC moved for summary judgment.
- The district court granted summary judgment for IFIC, concluding Nacimiento’s claim was barred by California Code of Civil Procedure § 359.5.
- Section 359.5 bars actions against a surety if the limitations period for the principal’s underlying obligation has expired, unless the bond’s terms provide otherwise.
- Nacimiento and IFIC entered a mutual tolling agreement after the limitations period had begun to run; the Kings (the principals) were not party to that tolling agreement.
- Nacimiento argued IFIC waived the § 359.5 defense by agreeing to toll; IFIC argued it could not waive a statutory protection that benefits the principal without the principal’s consent.
- The Ninth Circuit vacated and remanded, holding a triable issue exists whether the tolling agreement manifested an intent by IFIC to waive the § 359.5 protection as to Nacimiento’s claim.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether IFIC’s mutual tolling agreement waived the § 359.5 defense | Tolling agreement shows IFIC agreed to extend limitations and thus waived § 359.5 | IFIC cannot waive a statutory defense that exists to protect the principal without the principal’s consent | Triable issue exists; summary judgment improper — vacated and remanded |
| Whether § 359.5 automatically bars suit against surety despite tolling between claimant and surety | Tolling can operate to extend claim against surety if parties so intended | § 359.5 requires extension only if bond or principal consents; absent principal’s consent, defense stands | Court: intent of parties to toll/waive is a factual question for trial |
| Whether tolling agreement must include principal as party to alter § 359.5 | Nacimiento: not necessarily if parties intended waiver as to surety | IFIC: principal’s consent required because statute protects principal | Court: factual inquiry whether tolling agreement functionally included a waiver; cannot resolve on summary judgment |
| Whether summary judgment for IFIC was proper | Nacimiento: no, material fact issue about intent | IFIC: yes, statute bars claim as matter of law | Court: reversed summary judgment and remanded |
Key Cases Cited
- Saavedra v. Donovan, 700 F.2d 496 (9th Cir. 1983) (tolling agreements treated as contracts and evaluated under contract principles)