Judge: Colin Leis, Case: 24STCV33498, Date: 2025-06-03 Tentative Ruling
Case Number: 24STCV33498 Hearing Date: June 3, 2025 Dept: 74
Westlake
Services, LLC v. AutoNation, Inc. et al.
Defendants AutoNation, Inc and
Carlisle Motors, LLC’s Demurrer
BACKGROUND
This
motion arises from a contractual indemnification action.
Plaintiff
Westlake Services, LLC (Plaintiff) filed a complaint for contractual
indemnification, equitable indemnification and breach of contract against
defendants AutoNation, Inc. (AutoNation) and Carlisle Motors, LLC (Carlisle)
(collectively Defendants).
Defendants
demur to the Complaint.
JUDICIAL NOTICE
The
Court grants Defendants’ Request for Judicial Notice for the limited purpose of
showing the existence of such documents.
(Evid. Code § 452, subd. (d).)
DISCUSSION
Defendants demur to the Complaint on the
grounds that each cause of action fails to state facts sufficient to constitute
a cause of action. Plaintiff alleges
causes of action for Contractual Indemnification, Equitable Indemnification,
and two causes of action for Breach of Contract. At the center of this dispute are the
agreements between Plaintiff and Defendants and an underlying debt-collection
action in Florida.
The
parties entered into contracts, The Master Dealer Agreement and Associated
Agreements (Agreements), to allow AutoNation to sell retail sales contract for
vehicles. (Complaint ¶ 8.) AutoNation works with dealerships, such as
Carlisle Motors. (Complaint ¶ 9.) Parties do not dispute that they are all
bound to the Agreements. The Agreements
include an indemnification clause.
“Dealer agrees to assume the defense and indemnify Westlake
against any third-party claims, lawsuits, arbitration, administrative claims,
or other proceedings in which Westlake is named as a party or potential party
relating solely to Dealer’s failure to comply with the provisions of this
Agreement… Dealer’s obligation to defend and indemnify Westlake under this
paragraph will apply regardless of whether the third-party claim arises in
contract, tort, negligence, strict liability or otherwise, except for third
party claims that allege the fault or negligence of Westlake.”
(Complaint ¶ 17.)
On
October 10, 2022, Henry Harb (Harb) attempted to finance a vehicle from
Carlisle Motors, but the vehicle needed repairs before Harb could take
possession. (Complaint ¶¶ 19, 22.) Harb never took possession of the vehicle,
but Carlisle Motors assigned his contract to Plaintiff. (Complaint ¶ 20.) Harb sued Plaintiff in Florida for
Plaintiff’s attempts to collect on the financing contract, despite Carlisle
Motor’s attempt to rescind the contract.
(Complaint ¶¶ 21, 25, 26.) Harb
alleges that Plaintiff violated the Florida Consumer Collection Practices Act
by attempting to collect on a debt Plaintiff knew was illegitimate. (Complaint ¶ 33; RJN Ex. A.)
The
complaint alleges that since Carlisle Motors had assigned the contract to
Plaintiff, Carlisle could not rescind the contract. (Complaint ¶ 26.) Moreover, Carlisle Motors failed to inform
Westlake that Carlisle Motors had rescinded the contract. (Complaint ¶ 27.) Finally, Carlisle didn’t ‘buyback’ the
contract until March 21, 2023.
(Complaint ¶ 28.) Plaintiff only
requests indemnity for Herb’s Florida Consumer Collection Practices Act. (Complaint ¶ 41-51.)
Contractual Indemnity
The
elements of a cause of action for express indemnity are (1) a contract defining
the obligation for one party to make good as to a loss another party incurred
and (2) occurrence of loss the other party incurred or of some other legal consequences
of conduct of another party. (Rossmoor Sanitation, Inc. v. Pylon, Inc. (1975) 13
Cal.3d 622, 628.)
Here,
the contract states that Defendants are required to indemnify Plaintiff
relating to Defendants’ failure to comply with the provisions of the Agreement but
excludes third-party claims that “allege the fault or negligence of
Westlake.” (Complaint ¶ 17.) Plaintiff’s Complaint does not provide
additional guidance about the nature of the underlying Florida action. The
Court takes judicial notice that a Motion for Summary Judgment exists in the
Florida action but not of the truth of any matters asserted in that motion. (Rossmoor Sanitation, supra, 13 Cal.3d at pp.
628.) The Court overrules the demurrer
to the first cause of action.
Equitable
Indemnity
The
elements of a cause of action for equitable indemnity are (1) the harm for
which claimant may be held liable (2) is properly attributable wholly or partly
to defendant or cross-defendant. (Platt v. Coldwell Banker Residential Real Estate Services (1990) 217
Cal.App.3d 1439, 1445, fn.7.)
Here,
Plaintiff alleges that its attempt to enforce Harb’s installment contract is
attributable to (1) Defendant’s failure to repair and deliver the car and (2)
subsequent failure to notify Plaintiff of the rescission of the contract. Therefore, Plaintiff alleges sufficient facts
to support an equitable indemnity cause of action. The Court overrules the demurrer to the second
cause of action.
Breach of Contract
Plaintiff
alleges a breach of contract cause of action against each defendant based on
the same contract and allegations outlined above. The elements of a breach of contract cause of
action are (1) the existence of a contract, (2) plaintiff’s performance or
excuse for nonperformance, (3) defendant’s breach and (4) resulting
damages. (Wall Street
Network, Ltd. v. N. Y. Times Co. (2008) 164 Cal.App.4th 1171, 1178.) Plaintiff alleges that a contract existed
between the parties, that Plaintiff performed by accepting the assignment of
Harb’s installment contract, that Defendants breached the contract by failing
to provide Harb a working vehicle and that Plaintiff was damaged by Harb’s
underlying action. (Complaint ¶¶ 53-61.) The Court finds this sufficient to state a
cause of action against both Defendants.
Therefore, the Court overrules the demurrer to the third and fourth
causes of action.
CONCLUSION
The
Court overrules Defendants’ demurrer.
Defendants’
answers to the complaint are due within 10 days.
Defendants
to give notice.