Judge: Cherol J. Nellon, Case: 22STCV15691, Date: 2024-01-24 Tentative Ruling

Case Number: 22STCV15691    Hearing Date: January 24, 2024    Dept: 14

La Maison de Fashion vs. MRO Elliott Management

Case Background

Plaintiff alleges that their landlord negligently failed to repair a water leak, which led to a plumbing failure and a flood.

Complaint

            On May 11, 2022, Plaintiffs filed their form Complaint for (1) Negligence and (2) Breach of Contract against Defendants MRO Elliot Management, Inc (“MRO”), Sean Healy Presents, Inc. (“Healy”), and DOES 1-50.

            On March 8, 2023, Defendant MRO filed its Answer.

            On April 5, 2023, Defendant Healy filed its Answer.

MRO Cross-Complaint

            On March 8, 2023, Defendant MRO filed its Cross-Complaint for (1) Implied Indemnity, (2) Contribution, and (3) Declaratory Relief against ROES 1-100.

            On August 7, 2023, Cross-Complainant MRO filed two “Amendments to Complaint” substituting Cross-Defendants Healy and Midvale Indemnity Co. (“Midvale”) in lieu of ROES 1-2, respectively.

            On September 5, 2023, Cross-Defendant Healy filed its Answer.

Healy Cross-Complaint

            On April 5, 2023, Defendant Healy filed its Cross-Complaint for (1) Equitable Indemnity, (2) Contribution, and (3) Declaratory Relief against Cross-Defendant MRO and MOES 1-50.

            On May 8, 2023, Cross-Defendant MRO filed its Answer.

            Jury Trial is currently set for September 9, 2024.

Instant Pleading

            Cross-Defendant Midvale now demurs to the complaint, on the ground that it cannot be sued in the same action as its insured.

Decision

            The demurrer is SUSTAINED, with 10 days leave to amend.

Discussion

            Insurance Code § 11580(b)(2) authorizes a judgment creditor to recover a debt by bringing a separate action against the judgment debtor’s insurer. Such an action can only be brought after the judgment becomes “final” – meaning after any appeals have been concluded or the time to appeal has passed. McKee v. National Union Fire Ins. Co. (1993) 15 Cal.App.4^th 282, 285.

            Cross-Defendant Midvale argues that this rule prevents anyone from suing an insurer if their insured is already part of the same lawsuit. But neither the statute nor McKee announce such a broad rule. And neither the statute nor McKee facially apply to this situation.

            Cross-Complainant MRO says that it has sued Midvale because it has a contract with Midvale in which Midvale agrees to pay for any claims that Plaintiff may bring against MRO. Neither Section 11580 nor McKee bar the insured from filing a breach of contract claim against its own insurer.

            The real problem here is that the Cross-Complaint does not contain any specific pleading of the indemnity contract, or any specific discussion of Midvale. This is not uncommon when parties are added by Roe Amendment, but it is still a defect that needs to be remedied. Cross-Complainant MRO has added two defendants now by way of Roe Amendment; it is time for MRO to update its Cross-Complaint and explain specifically why these two named defendants are here.

            The demurrer and reply express some concerns about prejudice that may occur if all the claims in this case are tried at the same time to the same jury. Those issues are best addressed in a motion to bifurcate, which the court would hear at the final status conference pursuant to Local Rule 3.25(f)(2).

Conclusion

            Because the two named Cross-Defendants were brought in via Roe Amendment, Cross-Complainant MRO needs to plead facts showing why each of them specifically is being sued. For that reason only, the demurrer is SUSTAINED, with 10 days leave to amend.