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Glacier Northwest, Inc. v. Cementaid International Marketing, Ltd.

United States District Court, W.D. Washington, Seattle

April 9, 2019

GLACIER NORTHWEST, INC., Plaintiff,
v.
CEMENTAID INTERNATIONAL MARKETING, LTD., Defendant.

          ORDER

          Thomas S. Zilly United States District Judge

         THIS MATTER comes before the Court on defendant Cementaid International Marketing, Ltd.'s motion to dismiss, docket no. 15. Having reviewed all papers filed in support of, and in opposition to, the motion, [1] the Court enters the following order.

         Background

         Plaintiff Glacier Northwest, Inc. (“Glacier” or “GNW”) is a Washington corporation that is in the business of distributing concrete-related products, including “Caltite, ” which is a waterproofing additive. Am. Compl. at ¶¶ 3 & 5 (docket no. 8). “Caltite” is manufactured by defendant Cementaid International Marketing, Ltd. (“Cementaid” or “CAIM”), a Hong Kong company. See id. at ¶¶ 4-5. Effective December 31, 2001, Glacier and Cementaid entered into a “Marketing and Material Supply Agreement, ” pursuant to which Glacier has served as the exclusive distributor of certain Cementaid products, including “Caltite, ” within a specific geographic area, including California. Id. at ¶ 5. The parties have not provided a copy of the “Marketing and Material Supply Agreement, ” but counsel for Glacier has declared under oath that the contract contains the following provision:

CAIM hereby agrees to defend, indemnify and [sic] GNW harmless from and against any and all claims, actions, damages, liabilities, and expenses (including reasonable attorney's fees) arising from or occasioned by any of the following: (a) product liability related to the Schedule Products; (b) the negligence or intentional conduct of CAIM; or (c) infringement of any third-party's intellectual property rights in connection with the manufacture and sale of the Schedule Products.

Brower Decl. at ¶ 3 (docket no. 20).

         Glacier sold “Caltite” to Central Concrete Supply Co., Inc. (“Central Concrete”), a Texas corporation, which supplied materials for two construction projects in California, one known as the “Millennium Tower, ” a luxury condominium on Mission Street in San Francisco, and the other known as “Axis, ” an upscale residential complex in San Jose. See Am. Compl. at ¶ 6; Exs. 1-4 to Def.'s Req. for Judicial Notice (docket nos. 15-3 - 15-6). The homeowners associations (“HOAs”) for the Millennium Tower and Axis have brought legal actions in San Francisco County Superior Court and Santa Clara Superior Court, respectively, against various entities, including the general contractor for both projects, namely Webcor Construction LP, the surviving entity following a merger with Webcor Construction, Inc., doing business as Webcor Builders (“Webcor”), a California entity. See Exs. 1 & 3 to Def.'s Req. for Judicial Notice (docket nos. 15-3 & 15-5). In their respective lawsuits, the HOAs assert several claims related to alleged design and/or construction defects in the buildings. See id.

         In the litigation concerning the Millennium Tower, Webcor has impleaded Glacier and Central Concrete, as well as Cementaid, see Ex. 2 to Def.'s Req. for Judicial Notice (docket no. 15-4); Ex. 6 to Pla.'s Req. for Judicial Notice (docket no. 21), and in the proceedings regarding Axis, Webcor has impleaded only Glacier and Central Concrete, see Ex. 4 to Def.'s Req. for Judicial Notice (docket no. 15-6). In its pleadings, Webcor has asserted that, if it is liable to the HOAs, then Glacier, Central Concrete, and/or Cementaid is/are liable to it, on theories of equitable indemnification and/or contribution. See Exs. 2 & 4 to Def.'s Req. for Judicial Notice (docket nos. 15-4 & 15-6).

         In this case, Glacier brings claims under the Declaratory Judgment Act (“DJA”), seeking a ruling that, pursuant to the “Marketing and Material Supply Agreement, ” Cementaid owes it a duty to defend and indemnify as to Webcor's claims against Glacier. Am. Compl. at ¶¶ 20 & 26 (docket no. 8). Glacier also asserts that Cementaid is in breach of contract by failing to tender a defense. Id. at ¶¶ 22 & 28. Cementaid moves to dismiss this action on the ground that the claims asserted by the HOAs and/or Webcor in the underlying actions are not premised on product liability, Cementaid's negligence or intentional conduct, or infringement of intellectual property rights, and therefore do not fall within the scope of the indemnity provision at issue.

         Discussion

         A. Applicable Standards and Law

         In ruling on Cementaid's Rule 12(b)(6) motion, the Court must assume the truth of Glacier's allegations and draw all reasonable inferences in Glacier's favor. See Usher v. City of Los Angeles, 828 F.2d 556, 561 (9th Cir. 1987). The question for the Court is whether the facts in the operative pleading sufficiently state a “plausible” ground for relief. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). The parties have not provided any analysis concerning what law governs with respect to their dispute, but both sides have cited Washington authorities. The Court will therefore assume that Washington law should be applied.

         In the insurance context, Washington courts recognize that the duty to indemnify is narrower than the duty to defend. See Am. Best Food, Inc. v. Alea London, Ltd., 168 Wn.2d 398, 404, 229 P.3d 693 (2010). Although the duty to indemnify arises only if the policy “actually covers” the insured's liability, the duty to defend is triggered if the policy “conceivably covers” the allegations in the underlying complaint. Id. (emphasis in original). In evaluating whether an insurer owes a duty to defend, the Court must ordinarily look within the “eight corners” of the insurance contract and the underlying complaint, which it must “construe liberally, ” to determine whether the alleged facts could, if proven, impose liability on the insured that would be covered under the policy. See Expedia, Inc. v. Steadfast Ins. Co., 180 Wn.2d 793, 802-04, 329 P.3d 59 (2014); see also Am. Best Food, 168 Wn.2d at 404-05 (citing Truck Ins. Exch. v. VanPort Homes, Inc., 147 Wn.2d 751, 760, 58 P.3d 276 (2002)). The parties provide no reason why the Court should not apply the “eight corners” doctrine to their dispute concerning indemnification as opposed to insurance.

         Whether an indemnitor has a duty to defend must be determined from the facts known at the time the indemnitee requests a defense. See Knipschield v. C-J Recreation, Inc., 74 Wn.App. 212, 216, 872 P.2d 1102 (1994). To establish a duty to defend, the facts must show that “liability would eventually fall upon the indemnitor, thereby placing it under a duty to defend.” Id. (quoting George Sollitt Corp. v. Howard Chapman Plumbing & Heating, Inc., 67 Wn.App. 468, 472, 836 P.2d 851 (1992)). In contrast, the duty to indemnify is not triggered ...


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