Judge Bruce G. Iwasaki, Case Number: 24AVCV00419, Date: 2025-01-29 Tentative Ruling

Tentative Ruling: The Demurrer to the Cross-Complaint is overruled as to the first and second causes of action and sustained as to the third cause of action.

This underlying related case (22STCV39168) arises out of an alleged breach of an oral joint venture agreement to jointly purchase real estate. Plaintiffs Morad Ben Neman and Lancaster Eagle, LLC (Plaintiffs) filed suit against Defendants Payam Bahari, Freydoon “Fred” Bahari Moghadam, Haim Bahari, Tal Bahari, and three entities: (1) 114 Grand Cypress, LLC, (2) Cavalini, Inc., and (3) Caster Modelo, LLC.

In this action, Plaintiff Oscar Cruz filed a Complaint for (1.) breach of contract, (2.) quatum meruit, (3.) open book account, a (4.) account stated, and (5.) common counts. The pleadings allege Caster Modelo LLC, Alameda & 15th, LLC, Payam Bahari and Fred Bahari (Defendants) hired Plaintiff for services relating to plumbing, security maintenance and landscaping at the property commonly known as 42933 Business Center Parkway, Lancaster CA 93535. The Complaint further alleges that Defendants have failed to pay Plaintiff for his services and now owe $48,200.16. An amended complaint was filed on November 21, 2024.

On May 13, 2024, Defendants/Cross-Complaints Caster Modelo, LLC, Alameda & 15^th LLC, and Payam Bahari, and Fred Bahari filed a cross-complaint for (1.) implied contractual indemnity, (2.) equitable indemnity, (3.) express indemnity, and (4.) disgorgement under Business and Professor Code section 7031, subdivision (b) against Cross-Defendants Morad Ben Neman, Lancaster Eagle, LLC, and Neman Real Estate Investments, LLC.

On August 19, 2024, Defendants/Cross-Complainants Morad Ben Neman, Lancaster Eagle, LLC, and Neman Real Estate Investments, LLC (Neman Cross-Complainants) filed a cross-complaint for (1.) implied contractual indemnity, (2.) equitable indemnity, (3.) express indemnity against Cross-Defendants Caster Modelo, LLC, Alameda & 15^th LLC, Payam Bahari, and Fred Bahari (Bahari Cross-Defendants). This is the pleading challenged here.

On October 15, 2024, Bahari Cross-Defendants demurred Neman Cross-Complaint. Neman Cross-Complainants filed an opposition; Bahari Cross-Defendants replied.

A demurrer is an objection to a pleading, the grounds for which are apparent from either the face of the complaint or a matter of which the court may take judicial notice. (Code Civ. Proc., § 430.30, subd. (a); see also Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) The purpose of a demurrer is to challenge the sufficiency of a pleading “by raising questions of law.” (Postley v. Harvey (1984) 153 Cal.App.3d 280, 286.) “In the construction of a pleading, for the purpose of determining its effect, its allegations must be liberally construed, with a view to substantial justice between the parties.” (Code Civ. Proc., § 452.) The court “ ‘ “treat[s] the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law . . ..” ’ ” (Berkley v. Dowds (2007) 152 Cal.App.4th 518, 525.)

Bahari Cross-Defendants demur to the first cause of action for implied contractual indemnity on the grounds that it fails to state a claim.

Generally, “indemnity refers to ‘the obligation resting on one party to make good a loss or damage another party has incurred.’ ” (Prince v. Pacific Gas & Electric Co. (2009) 45 Cal.4th 1151, 1157.) “There are two basic types of indemnity: express indemnity, which relies on an express contract term providing for indemnification, and equitable indemnity, which embraces “traditional equitable indemnity” and implied contractual indemnity.” (Jocer Enterprises, Inc. v. Price (2010) 183 Cal.App.4th 559, 573 [citing Prince, at pp. 1157–1159].)

“Implied contractual indemnity is a form of equitable indemnity, arising from equitable considerations either by contractual language not specifically dealing with indemnification or by the equities of the specific matter.” (Sehulster Tunnels/Pre-Con v. Traylor Brothers, Inc./Obayashi Corp. (2003) 111 Cal.App.4th 1328, 1350.) “The right to implied contractual indemnity is predicated [on] the indemnitor's breach of contract....” (West v. Superior Court (1994) 27 Cal.App.4th 1625, 1633; see Cahill Bros., Inc. v. Clementina Co. (1962) 208 Cal.App.2d 367, 379.)

“Implied contractual indemnity is applied to contract parties and is designed to apportion loss among contract parties based on the concept that one who enters a contract agrees to perform the work carefully and to discharge foreseeable damages resulting from that breach. [Citation.]” (Smoketree–Lake Murray, Ltd. v. Mills Concrete Construction Co. (1991) 234 Cal.App.3d 1724, 1736.)

Cross-Defendants argue that a claim cannot be stated because “the only claims made against Cross-Complainants in this matter are those made by the Cross-Defendants.” (Dem., 1:28-2:1.) Cross-Defendants cite no legal authority to support their argument.

In any case, the Cross-Complaint states a claim for implied contractual indemnity. On
April 9, 2024, Plaintiff Oscar Cruz sued Defendants/Cross-Complainants Caster Modelo, Alameda & 15th LLC, Payam Bahari, And Fred Bahari for breach of contract, quantum meruit, open book account, account stated, and goods and services rendered for nonpayment of services relating to plumbing, security maintenance and landscaping at the real property located at 42933 Business Center Parkway, Lancaster CA 93535 (Property). (Compl., ¶ 13.)

The Neman Cross-Complaint alleges that Cross-Defendants Caster Modelo and Cross-Complainant Lancaster Eagle entered into a written Tenancy in Common Agreement (TIC) in relation to the Property. (XC ¶¶ 1-5.) The TIC states -- under Section 2(c) -- “Except for management activities as authorized herein, Neither [sic] Co-Tenant shall be liable in its capacity as a Co-Tenant for the debts or obligations incurred by the other Co-Tenant if not authorized by such first Co-Tenant with respect to the Property, and neither Co Tenant shall have any authority, other than as provided herein, to act on behalf of the other Co-Tenant or to impose any obligation with respect to the Property.” (XC ¶ 13.) Here, Cross-Complainant Lancaster Eagle was to manage of the Property (XC ¶ 14.) Cross-Complainants alleges Plaintiff Cruz is entitled to his payment for services performed with respect to the Property. (XC ¶ 11.) However, Bahari Cross-Defendants interfered with payments to Plaintiff Cruz – exposing Cross-Complainants to liability under Plaintiff’s Complaint. (XC ¶¶ 15-16.)

The Neman Cross-Complaint states a claim for implied contractual indemnity arising from the TIC for Cross-Defendants’ actions. The demurrer to this cause of action is overruled.

Bahari Cross-Defendants also demur to the second cause of action for equitable indemnity on the grounds the claim is not based on any claimed joint tort liability or any alleged tort liability against Cross-Defendants.

Equitable indemnity, which “requires no contractual relationship,” “ ‘is premised on a joint legal obligation to another for damages’ ”; it is “subject to allocation of fault principles and comparative equitable apportionment of loss.” (Prince, supra, 45 Cal.4th at p. 1158.) The equitable indemnity cause of action enables a defendant “ ‘to bring in other tortfeasors who are allegedly responsible for plaintiff's action through a cross-complaint ... for equitable indemnification’ ” (Platt v. Coldwell Banker Residential Real Estate Services (1990) 217 Cal.App.3rd 1439, 1444.)

‘ “The elements of a cause of action for [equitable] indemnity are (1) a showing of fault on the part of the indemnitor and (2) resulting damages to the indemnitee for which the indemnitor is ... equitably responsible.” ’ ” (C.W. Howe Partners Inc. v. Mooradian (2019) 43 Cal.App.5th 688, 700.)

For the reasons discussed in the ruling on the first cause of action, the Cross-Complaint sufficiently alleges facts showing that Bahari Cross-Defendants are liable for the Plaintiff’s claim brought against Neman Cross-Complainants. The demurrer to this cause of action is overruled.

An obligation to indemnify “may arise by virtue of express contractual language establishing a duty in one party to save another harmless upon the occurrence of specified circumstances.” (Smoketree-Lake Murray, Ltd. v. Mills Concrete Construction Co. (1991) 234 Cal.App.3d 1724, 1735–1736.)

With express indemnity, the scope of the indemnity obligation is governed by the contractual language, not by equitable considerations. (Smoketree-Lake Murray, Ltd. v. Mills Concrete Construction Co., supra, 234 Cal.App.3d at p. 1737.) “Express indemnity reflects ‘its contractual nature, permitting great freedom of action to the parties in the establishment of the indemnity arrangements while at the same time subjecting the resulting contractual language to established rules of construction.’ [Citation.]” (Id. at p. 1736.) For instance, the parties are free to require that one indemnify another even for losses caused by acts outside the control of the indemnitor. (Continental Heller Corp. v. Amtech Mechanical Services, Inc. (1997) 53 Cal.App.4th 500, 505.)

Here, the Cross-Complaint alleges that Cross-Defendant Caster Modelo breached its obligations under the TIC Agreement and caused Plaintiff Cruz not to be paid sums he was entitled to be paid. (XC ¶ 34.) The Cross-Complaint, however, does not allege a specific and express contractual duty to indemnify arising from these allegations. The third cause of action is vague regarding what constitutes a basis for express indemnity. It fails to plead any part of the TIC that Neman Cross-Complainants rely on for their theory. Absent express language involving the duty to indemnify, the Cross-Complaint does not allege facts showing an express duty to indemnify against Cross-Defendants.

The demurrer to the Cross-Complaint is overruled as to the first and second causes of action and sustained as to the third cause of action. Cross-Complainants shall have leave to amend the third cause of action. An amended pleading shall be filed on or before February 28, 2025.