482 F.Supp.3d 1177
D. Utah2020Background
- Salt Lake City hired Southwest Pipeline to rehabilitate a sewer line using Sekisui liners and HydraTech joint seals; testing in Nov. 2012 revealed a significant leak and city gave Southwest notice on Dec. 17, 2012.
- Southwest made attempted repairs and planning through 2015, then declined further repairs; litigation followed: Salt Lake City sued Sekisui (May 2017) and later added Southwest and HydraTech; Southwest crossclaimed against Sekisui and HydraTech (Dec. 2018).
- Southwest’s crossclaims: breach of contract (sections 9.2 and 13.1 of a licensing agreement), apportionment of fault under the LRA, and equitable indemnification.
- The court previously dismissed Salt Lake City’s claims against Sekisui and HydraTech as time-barred; it also earlier dismissed Southwest’s apportionment claim and part of its breach claim (section 13.1).
- Motions now: HydraTech moved to dismiss Southwest’s crossclaims against it; Sekisui moved for judgment on the pleadings as to Southwest’s remaining crossclaims. The court granted HydraTech’s motion in full (with prejudice), granted Sekisui’s motion in part (indemnity), denied it in part (breach section 9.2), and reinstated the section 13.1 breach claim for discovery.
Issues
| Issue | Plaintiff's Argument (Southwest) | Defendant's Argument | Held |
|---|---|---|---|
| 1) Timeliness of Southwest's breach claim vs. HydraTech (which SOL applies and when accrual occurred) | 6‑year improvements statute should apply or, at least, accrual is disputed because completion date is unclear | 4‑year UCC statute applies and accrued on notice of the leak (Dec. 17, 2012) | UCC 4‑year period applies; accrual on notice; claim time‑barred and dismissed with prejudice |
| 2) Apportionment of fault under Utah Liability Reform Act (LRA) against HydraTech | Seek allocation of fault to component supplier | LRA applies only to torts, not contract claims | LRA does not permit apportionment of Southwest’s contract claims; apportionment claim dismissed with prejudice |
| 3) Equitable indemnification against HydraTech and Sekisui (requirement that indemnitor be liable to the third party) | Indemnity should lie if indemnitor owed a duty to the third party even if third‑party claim is time‑barred | Equitable indemnity requires the prospective indemnitor also be liable to the third party | Indemnity requires indemnitor liability to the third party; because third‑party claims against HydraTech/Sekisui were time‑barred, indemnity dismissed with prejudice |
| 4) Proper statute of limitations for Sekisui breach claims and appropriateness of judgment on pleadings (one‑law/predominant purpose vs. gravamen) | Gravamen/partial UCC approach or factual dispute prevents resolution; section 9.2 (services) is within 6‑year period | Licensing agreement predominately for goods so UCC 4‑year should govern entire contract | Court adopts predominant‑purpose (one‑law) approach but finds factual inquiry required; denies judgment on the pleadings for section 9.2, reinstates section 13.1 breach claim, and allows discovery |
Key Cases Cited
- Utah Local Government Trust v. Wheeler Machine Co., 199 P.3d 949 (Utah 2008) (adopts predominant‑purpose test for hybrid goods/services contracts)
- Perry v. Pioneer Wholesale Supply Co., 681 P.2d 214 (Utah 1984) (three elements required for equitable indemnity)
- Graves v. N. E. Servs., Inc., 345 P.3d 619 (Utah 2015) (LRA applies to torts and not to contract or statutory breach claims)
- Brigham Young Univ. v. Paulsen Constr. Co., 744 P.2d 1370 (Utah 1987) (general accrual rule for construction claims — discussed and distinguished)
- Macris v. Sculptured Software, Inc., 24 P.3d 984 (Utah 2001) (notice triggers duty to investigate; statute of limitations may be triggered by information putting plaintiff on inquiry)
- Berneau v. Martino, 223 P.3d 1128 (Utah 2009) (tolling requires initial showing that plaintiff did not and could not reasonably know the facts)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (pleading must state a plausible claim)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (plausibility standard for pleadings)
- Neilson Bus. Equip. Ctr. v. Monteleone, 524 A.2d 1172 (Del. 1987) (influential precedent on predominant‑purpose analysis)
- Foster v. Colorado Radio Corp., 381 F.2d 222 (10th Cir. 1967) (gravamen approach applying UCC only to goods portions of hybrid contracts)