Judge Daniel M. Crowley, Case Number: 23STCV05272, Date: 2024-06-06 Tentative Ruling

Cross-Defendant JH Plumbing Corporation, Inc.’s unopposed demurrer to Cross-Complainants The I. Grace Company’s, Commissioned Private Residences, Inc.’s, and Sierra Towers 17 Property, LLC’s cross-complaint is sustained with 20 days leave to amend as to the 2nd and 5th causes of action and overruled as to the 1st, 7th, and 8th causes of action

Cross-Defendant JH Plumbing Corporation, Inc. (“JH Plumbing”) (“Cross-Defendant”) demurs unopposed to the 1st, 2nd, 5th, 7th, and 8th causes of action in Cross-Complainants The I. Grace Company’s (“I. Grace”), Commissioned Private Residences, Inc.’s (“Commissioned”), and Sierra Towers 17 Property, LLC’s (“Sierra Towers”) (collectively, “Cross-Complainants”) cross-complaint (“CC”) on the following bases: (1) the 1st cause of action for implied indemnity fails to state facts because no tort can be alleged by Cross-Complainants against JH Plumbing and Cross-Complainants do not plead additional acts not covered by the express indemnity allegation; (2) the 2nd cause of action for equitable indemnity fails to state facts because no tort can be alleged by Cross-Complainants against JH Plumbing and Cross-Complainants do not plead additional acts not covered by the express indemnity allegation; (3) the 5th cause of action for premises liability- negligence fails to state facts because Cross-Complainants only plead economic damages, precluded in a negligence action; (4) the 7th cause of action for declaratory relief- duty to indemnify fails to state facts because the cause of action is anticipatory and not ripe and Cross- Complainants do not plead any future rights which need to be adjudicated; and (5) the 8th cause of action for declaratory relief- duty to defend fails to state facts because this cause of action is anticipatory and not ripe and Cross-Complainants do not plead any future rights which need to be adjudicated. (Notice of Demurrer, pgs. 2-3; C.C.P. §430.10(e).)

Cross-Complainants filed the operative CC against Cross-Defendant on May 23, 2023, alleging eight causes of action: (1) implied indemnity; (2) equitable indemnity; (3) express indemnity; (4) breach of contract; (5) premises liability- negligence; (6) breach of warranties; (7) declaratory relief- duty to indemnify; and (8) declaratory relief- duty to defend.

Cross-Complainants’ CC arises from an alleged pipe bursting on or about March 12, 2021, at or within the confines of Unit 1702 at Sierra Towers and caused damage to the property located within Sierra Towers, Unit 1402 (“Subject Property”). (See CC ¶5.)

On October 24, 2023, Cross-Defendant filed the instant demurrer. As of the date of this hearing no opposition was filed.

Before filing a demurrer pursuant to this chapter, the demurring party shall meet and confer in person, by telephone, or by video conference with the party who filed the pleading that is subject to demurrer for the purpose of determining whether an agreement can be reached that would resolve the objections to be raised in the demurrer. (C.C.P. §430.41(a), emphasis added.) A declaration must be filed with a demurrer regarding the results of the meet and confer process. (C.C.P. §430.41(a)(3).)

Cross-Defendant’s counsel declares he met and conferred telephonically with Cross-Complainants’ counsel on October 16, 2023. (Decl. of Scroggins ¶3.) Cross-Defendant’s counsel declares the parties did not reach an agreement resolving the objections raised in the instant demurrer. (Decl. of Scroggins ¶5.) Cross-Defendant’s counsel’s declaration is sufficient under C.C.P. §430.41(a). Accordingly, the Court will consider the instant demurrer.

Cross-Defendant demurs to the CC on the following bases: (1) the 1st cause of action for implied indemnity fails to state facts because no tort can be alleged by Cross-Complainants against JH Plumbing and Cross-Complainants do not plead additional acts not covered by the express indemnity allegation; (2) the 2nd cause of action for equitable indemnity fails to state facts because no tort can be alleged by Cross-Complainants against JH Plumbing and Cross-Complainants do not plead additional acts not covered by the express indemnity allegation; (3) the 5th cause of action for premises liability- negligence fails to state facts because Cross-Complainants only plead economic damages, precluded in a negligence action; (4) the 7th cause of action for declaratory relief- duty to indemnify fails to state facts because the cause of action is anticipatory and not ripe and Cross- Complainants do not plead any future rights which need to be adjudicated; and (5) the 8th cause of action for declaratory relief- duty to defend fails to state facts because this cause of action is anticipatory and not ripe and Cross-Complainants do not plead any future rights which need to be adjudicated. (Notice of Demurrer, pgs. 4-10; C.C.P. §430.10(e).)

“[A] demurrer tests the legal sufficiency of the allegations in a complaint.” (Lewis v. Safeway, Inc. (2015) 235 Cal.App.4th 385, 388.) A demurrer can be used only to challenge defects that appear on the face of the pleading under attack or from matters outside the pleading that are judicially noticeable. (See Donabedian v. Mercury Insurance Co. (2004) 116 Cal.App.4th 968, 994 [in ruling on a demurrer, a court may not consider declarations, matters not subject to judicial notice, or documents not accepted for the truth of their contents].) For purposes of ruling on a demurrer, all facts pleaded in a complaint are assumed to be true, but the reviewing court does not assume the truth of conclusions of law. (Aubry v. Tri-City Hospital District (1992) 2 Cal.4th 962, 967.)

“In general, indemnity refers to ‘the obligation resting on one party to make good a loss or damage another party has incurred.’ Historically, the obligation of indemnity took three forms: (1) indemnity expressly provided for by contract (express indemnity); (2) indemnity implied from a contract not specifically mentioning indemnity (implied contractual indemnity); and (3) indemnity arising from the equities of particular circumstances (traditional equitable indemnity). [¶] Although the foregoing categories of indemnity were once regarded as distinct, we now recognize there are only two basic types of indemnity: express indemnity and equitable indemnity. Though not extinguished, implied contractual indemnity is now viewed simply as ‘a form of equitable indemnity.’” (Prince v. Pacific Gas & Electric Co. (2009) 45 Cal.4th 1151, 1157, internal citations omitted.)

“The right to implied contractual indemnity is predicated upon the indemnitor’s breach of contract, ‘the rationale . . . being that a contract under which the indemnitor undertook to do work or perform services necessarily implied an obligation to do the work involved in a proper manner and to discharge foreseeable damages resulting from improper performance absent any participation by the indemnitee in the wrongful act precluding recovery.’ . . . ‘An action for implied contractual indemnity is not a claim for contribution from a joint tortfeasor; it is not founded upon a tort or upon any duty which the indemnitor owes to the injured third party. It is grounded upon the indemnitor’s breach of duty owing to the indemnitee to properly perform its contractual duties.’” (West v. Superior Court (1994) 27 Cal.App.4th 1625, 1633, internal citations omitted.)

“[A]n implied contractual indemnity claim, like a traditional equitable indemnity claim, is subject to the American Motorcycle rule that a party’s liability for equitable indemnity is based on its proportional share of responsibility for the damages to the injured party.” (Prince, 45 Cal.4th at pg. 1165.)

Cross-Complainant alleges on information and belief that Cross-Defendants, and each of them, entered into written, oral and/or implied agreements to provide plumbing supplies, labor, work, services, repair, maintenance and/or renovation services at the Project. (CC ¶11.) Cross-Complainant alleges on information and belief that Cross-Defendants, and each of them, knew or should have foreseen with reasonable certainty that if its plumbing and/or other renovation work was not properly and adequately performed, supervised, overseen, controlled, monitored, modified, installed, inspected, surveyed, supplied, approved, repaired and/or maintained, the Project and/or the adjacent units at Sierra Towers would incur substantial property, economic, and/or other damages arising from such failures and deficiencies. (CC ¶12.) Cross-Complainant alleges Cross-Defendants, and each of them, knew or should have foreseen with reasonable certainty that Plaintiff would sue Cross-Complainants for any damages arising from such alleged negligent acts, omissions and/or breaches on the part of said Cross-Defendants, and that Cross-Complainants would incur costs and expenses as a result of such litigation including, but not limited to, attorneys’ fees and costs to defend against Plaintiff’s claims. (CC ¶12.)

Cross-Complainants allege as part of the performance of their respective services/work and/or supply of materials, and at all times mentioned herein, Cross-Defendants owed a duty of care to Plaintiff, as owner and resident of an adjacent unit at Sierra Towers, to perform their respective services and/or work with that degree of reasonable care, skill, diligence, prudence, and competence ordinarily possessed and exercised by other members of their respective professions and/or trades, or otherwise to avoid reasonably foreseeable injury to the owner and user, including Plaintiff. (CC ¶13.) Cross-Complainants allege Cross-Defendants knew or, with reasonable certainty, should have known or foreseen, that Plaintiff, as owner and resident of an adjacent unit at Sierra Towers, would suffer damages as alleged if said Cross-Defendants failed to perform their respective professional services, work and/or trades in accordance with the applicable standards of care. (CC ¶13.)

Cross-Complainants allege on information and belief that if Plaintiff’s allegations are true and Plaintiff, in fact, sustained certain losses as alleged, then said Cross-Complainants allege upon information and belief that the losses, if any, for which Cross-Complainants are being sued by Plaintiff were legally, directly, proximately, solely and/or substantially caused by the concurrent, successive, joint and/or several acts, omissions, conduct, breaches of applicable standards of care, breaches of duties, contractual or otherwise, negligence, professional negligence and other tortious conduct of Cross-Defendants, thereby entitling Cross-Complainants to have the quantum of legally responsible conduct of said Cross-Defendants determined by this Court. (CC ¶14.)

Cross-Complainants allege that if said Cross-Complainants are held liable, which liability is specifically denied, then Cross-Defendants are primarily and actively responsible and negligent or otherwise responsible in causing and bringing about the alleged injuries to Plaintiff. (CC ¶15.) Cross-Complainants allege any liability of Cross-Complainants will be imputed on the basis of vicarious or secondary liability and not as a result of any active negligence or any other acts on the part of Cross-Complainants. (CC ¶15.)

Cross-Complainants allege they are entitled to be indemnified by Cross-Defendants for any sums paid to Plaintiff by way of settlement or, in the alternative, for any and all recovery that Plaintiff may realize against Cross-Complainants in the underlying action based upon Plaintiff’s Complaint. (CC ¶16.)

Cross-Complainants allege as a direct, legal and proximate result of the acts/omissions/conduct, breaches of applicable standards of care, breaches of duties, negligence, professional negligence and other tortious conduct by Cross-Defendants, Cross-Complainants have incurred and continue to incur substantial damages including, but not limited to, attorneys’ fees and costs, expert witness fees and costs, investigation expenses, litigation expenses, and costs of suit associated with the defense against Plaintiff’s action, as well as, the prosecution of this cross-action. (CC ¶17.)

Cross-Defendant’s demurrer does not address implied contractual indemnity. Cross-Defendant only addresses equitable indemnity. (Demurrer, pgs. 6-7.) Further, Cross-Complainant sufficiently alleges the elements of a cause of action for implied contractual indemnity. (CC ¶¶11-14.)

Accordingly, Cross-Defendant’s demurrer to Cross-Complainant’s 1st cause of action is overruled.

“The elements of a cause of action for 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.” (Bailey v. Safeway, Inc. (2011) 199 Cal.App.4th 206, 217.)

Breach of contract is not a cognizable claim on which to base equitable indemnity. (BFGC Architects Planners, Inc. v. Forcum/Mackey Construction, Inc. (2004) 119 Cal.App.4th 848, 852-853.) In order for the doctrine of equitable indemnity to apply, the proposed indemnitee must plead some basis for tort liability against the proposed indemnitor, which generally is based on a legal duty owed by the proposed indemnitor to the underlying injured party. (Id.)

Cross-Complainant alleges in equity and good conscience, if Plaintiff recovers against Cross-Complainants, then Cross-Complainants are entitled to equitable indemnity, apportionment of liability, and contribution from Cross-Defendants, and each of them, according to their respective fault, for the injuries and damages allegedly sustained by Plaintiff, if any, by way of sums paid by settlement or judgments rendered against Cross-Complainants in the underlying action arising from the operative Complaint. (CC ¶19.)

Cross-Complainant fails to allege a tort by Cross-Defendant because only economic damages exist. Under the economic loss rule, there is no tort recovery for economic loss alone. (See Seely v. White Motor Co. (1996) 63 Cal.2d 9; see also North American Chemical Co. v. Superior Court (1997) 59 Cal.App.4th 764.)

The damages claimed by Cross-Complainants in their cause of action for negligence consist of compensatory damages arising from Cross-Complainants defending against the claims within Plaintiff’s Complaint. (CC ¶¶19, 42.) Therefore, the only damages for which Cross-Complainants complain of are economic damages, which is barred by the economic loss rule.

Accordingly, Cross-Defendant’s demurrer to Cross-Complainant’s 2nd cause of action is sustained with 20 days leave to amend.

“The elements of a negligence claim and a premises liability claim are the same: a legal duty of care, breach of that duty, and proximate cause resulting in injury. Premises liability ‘“is grounded in the possession of the premises and the attendant right to control and manage the premises”’; accordingly, ‘“mere possession with its attendant right to control conditions on the premises is a sufficient basis for the imposition of an affirmative duty to act.”’ But the duty arising from possession and control of property is adherence to the same standard of care that applies in negligence cases. In determining whether a premises owner owes a duty to persons on its property, we apply the [Rowland v. Christian (1968) 69 Cal.2d 108] factors. Indeed, Rowland itself involved premises liability.” (Kesner v. Superior Court (2016) 1 Cal.5th 1132, 1159, internal citations omitted.)

“The owner of premises is under a duty to exercise ordinary care in the management of such premises in order to avoid exposing persons to an unreasonable risk of harm. A failure to fulfill this duty is negligence.” (Brooks v. Eugene Burger Management Corp. (1989) 215 Cal.App.3d 1611, 1619.)

Cross-Complainant alleges on information and belief that Cross-Defendants, and each of them, owed a duty of care to Cross-Complainants to perform work which does not fall below the standard of care in the industry. (CC ¶37.)

Cross-Complainants allege on information and belief that Cross-Defendants breached said duty of care by performing work which fell below the applicable standard of care in the industry. (CC ¶38.)

Cross-Complainants alleges on information and belief that Cross-Defendants negligently, carelessly and wrongfully failed to use reasonable care in the supply of materials, installation, supervision, inspection and/or construction of the plumbing system that caused the damages alleged in Plaintiff’s Complaint. (CC ¶39.)

Cross-Complainants allege on information and belief that Cross-Defendants negligently and carelessly failed to exercise reasonable care and diligence to avoid loss and to minimize and mitigate damages which could have been prevented by reasonable efforts on the part of said Cross-Defendants or by expenditures which should have been made in the exercise of due care. (CC ¶40.)

Cross-Complainants allege on information and belief that Cross-Defendants that the failures and damages alleged by Plaintiff occurred because of the negligence of Cross-Defendants. (CC ¶41.)

Cross-Complainants allege as a direct and proximate result of the negligence of Cross-Defendants, Cross-Complainants have incurred and continue to incur costs and expenses including, but not limited to, litigation costs, attorneys’ fees and consultants’ fees to inspect, repair and mitigate damages arising out of said alleged negligent conduct, and to defend against Plaintiff’s action herein, as well as the prosecution of this cross-action. (CC ¶42.)

The economic loss rule limits recovery in contract for purely economic losses due to disappointed expectations, unless a plaintiff can demonstrate harm above and beyond a broken contractual promise. (Robinson Helicopter Co., Inc. v. Dana Corp. (2004) 34 Cal.4th 979, 988.) Cross-Complainants have failed to plead any facts establishing that they have suffered more than just purported economic loss.

Accordingly, Cross-Defendant’s demurrer to Cross-Complainant’s 5th cause of action is sustained with 20 days leave to amend.

To state a cause of action for declaratory relief, C.C.P. §1060 requires “an actual controversy relating to the legal rights and duties of the respective parties,” not an abstract or academic dispute. (See Connerly v. Schwarzenegger (2007) 146 Cal.App.4th 729, 746-747.) “It must be a real and substantial controversy admitting of specific relief through a decree of a conclusive character, as distinguished from an opinion advising what the law would be upon a hypothetical state of facts. (Centex Homes v. St. Paul Fire & Marine Insurance Co. (2015) 237 Cal.App.4th 23, 29; Alameda County Land Use Association v. City of Hayward (1995) 38 Cal.App.4th 1716, 1722.)

Cross-Complainants allege a claim within the meaning of the subject indemnity agreement has arisen by virtue of the fact that the Plaintiff filed a Complaint against Cross-Complainants claiming damages which is the subject matter of this litigation and that the damages alleged in Plaintiff’s Complaint pertain to, arise out of, or result from (i) the performance of the work, services, supply/use of materials under the written subcontract agreement by Cross-Defendants; (ii) the breach of Cross-Defendants’ obligations under the written subcontract agreement; and/or (iii) the negligent acts or omissions with respect to the performance of the work, services, supply/use of materials by Cross-Defendants. (CC ¶53.)

Cross-Complainants allege a dispute has arisen and an actual controversy now exists between Cross-Complainants and Cross-Defendants, inasmuch as Cross-Complainants contend that they are entitled to express indemnity, and Cross-Defendants ignore such obligations. (CC ¶54.)

Cross-Complainants allege a claim within the meaning of the indemnity and defense agreement has arisen by virtue of the fact that the Plaintiff filed a Complaint against Cross-Complainants claiming damages which is the subject matter of this litigation and that the damages alleged in Plaintiff’s Complaint pertain to, arise out of, or result from (i) the performance of the work, services, supply/use of materials under the written subcontract agreement by Cross-Defendants; (ii) the breach of Cross-Defendants’ obligations under the written subcontract agreement; and/or (iii) the negligent acts or omissions with respect to the performance of the work, services, supply/use of materials by Cross-Defendants. (CC ¶59.)

Cross-Complainants allege a dispute has arisen and an actual controversy now exists between Cross-Complainants and Cross-Defendants, in that Cross-Complainants contend that they are entitled to a present defense from Cross-Defendants, while Cross-Defendants continue to ignore such obligation under the written subcontract agreements. (CC ¶62.)

Cross-Complainants allege they seek a Declaration by the Court as to its respective rights and Cross-Defendants’ duties and obligations as to the present and immediate duty to defend Cross-Complainants in connection with the matters herein alleged. (CC ¶63.) Cross-Complainants allege they further seek a judgment in their favor as to any duties and obligations Cross-Defendants owe to Cross-Complainants as they pertain to Cross-Defendants’ duty to defend against claims in this litigation. (CC ¶63.)

Cross-Complainants sufficiently allege causes of action for declaratory relief for declarations of their rights under the express indemnity provision of their contract with Cross-Defendant.

Accordingly, Cross-Defendants’ demurrer to Cross-Complainants’ 7th and 8th causes of action is overruled.

Cross-Defendants’ demurrer to Cross-Complainant’s Cross-Complaint is sustained with 20 days leave to amend as to the 2nd and 5th causes of action and overruled as to the 1st, 7th, and 8th causes of action.

Hon. Daniel M. Crowley

Judge of the Superior Court