Judge: David A. Hoffer, Case: 30-2019-01087810, Date: 2023-06-12 Tentative Ruling
Defendants/Cross-Complainants Restaurant Depot, LLC, and JRD Unico, Inc.’s (“Defendants”) Motion for Summary Adjudication is DENIED.
Defendants request summary adjudication as to causes of action (“COA”) No. 2 – Express Indemnity, and COA No. 3 – Declaratory Relief – Duty to Defend from Defendant’s Cross-Complaint.
1) COA No. 2 – Express Indemnity
To indemnify is, “[t]o reimburse (another) for a loss suffered because of a third party's or one's own act or default.” (INDEMNIFY, Black's Law Dictionary (11th ed. 2019).)
“Express indemnity refers to an obligation that arises “ ‘by virtue of express contractual language establishing a duty in one party to save another harmless upon the occurrence of specified circumstances.’ ” [Citation.] Express indemnity generally is not subject to equitable considerations or a joint legal obligation to the injured party; rather, it is enforced in accordance with the terms of the contracting parties' agreement. [Citation.] In the context of noninsurance indemnity agreements, if a party seeks to be indemnified for its own active negligence, or regardless of the indemnitor's fault, the contractual language on the point “must be particularly clear and explicit, and will be construed strictly against the indemnitee.” [Citations.] In this sense, express indemnity allows contracting parties “great freedom to allocate [indemnification] responsibilities as they see fit,” and to agree to “protections beyond those afforded by the doctrines of implied or equitable indemnity.” [Emphasis added.] (Prince v. Pac. Gas & Elec. Co. (2009) 45 Cal. 4th 1151, 1158 (“Prince”).)
Here, Defendants demand that MLC indemnify Defendants for costs and expenses incurred in defending this action. They base this claim on terms in the purported membership contract between Defendants and MLC. To the extent that contract might be valid and enforceable against MLC, the clause in question is:
“To the fullest extent permitted by law, You agree to defend, indemnify and hold Us harmless from any and all claims, suits, proceedings, damages, liabilities, including attorneys' fees, costs, court costs, expenses and disbursements related to any alleged death, bodily injuries, property damage (including loss of use thereof) or other harm or damage arising in any way out of Your negligent or reckless acts or omissions or Your intentional misconduct associated in any way with Your membership. You shall have no obligation to defend or indemnify Us for Our negligent or reckless acts or omissions, or Our intentional misconduct.” [Emphasis added.] (DSS Nos. 3, 10, 12, 46, 53, 55.)
Most of the cases cited by Defendants are construction cases, wherein the contracts all contain clauses that 1) specifically require the subcontractor to indemnify and defend the contractor/developer for any and all claims that arise from the subcontractor’s work, 2) specifically state that all risk is that of the subcontractor, and/or 3) leave no doubt as to the intent of the parties. The “interpretation [of the clauses] was consistent with the commercial setting, and also met requirements of public policy (Civ. Code, §§ 1668, 2773, 2782, 2784.5).” (Centex Golden Const. Co. v. Dale Tile Co. (2000) 78 Cal. App. 4th 992, 999 (“Dale”).)
In those cases, “[t]he language of the agreement leaves no doubt the parties intended [the subcontractor] should indemnify [the general contractor] irrespective of whether [the general contractor's] loss arose by reason of [the subcontractor's] negligence or for any other reason except for the sole negligence or willful misconduct of [the general contractor]. [Citation.]” Thus the court found that the contract, like the one here, excluded indemnity only if the claim was caused by the sole negligence or willful misconduct of the general contractor.” (Dale, supra, 78 Cal. App. 4th at 997.) “Because under the terms of the agreement indemnity only arises with respect to work covered by the contract, there must be some connection between the subcontractor's work and the claim. For instance, [subcontractor] would not be required to indemnify [contractor] simply because a plaintiff was standing on tile Dale had laid when another part of the building fell on the plaintiff.” (Id., at 999.)
“Indemnity agreements are construed under the same rules which govern the interpretation of other contracts. [Citation.] Accordingly, the contract must be interpreted so as to give effect to the mutual intention of the parties. (Civ. Code, § 1636.) The intention of the parties is to be ascertained from the “clear and explicit” language of the contract. (Civ. Code, §§ 1638-1639.) And, unless given some special meaning by the parties, the words of a contract are to be understood in their “ordinary and popular sense. (Civ. Code § 1644.) [¶] In interpreting an express indemnity agreement, the courts look first to the words of the contract to determine the intended scope of the indemnity agreement.” ‘ ” (Cont'l Heller Corp. v. Amtech Mech. Servs., Inc. (1997) 53 Cal. App. 4th 500, 504 (“Heller”).)
“In noninsurance contexts . . . it is the indemnitee who may often have the superior bargaining power, and who may use this power unfairly to shift to another a disproportionate share of the financial consequences of its own legal fault.” [Emphasis added.] (Id.) “This public policy concern influences to some degree the manner in which noninsurance indemnity agreements are construed. For example, it has been said that if one seeks, in a noninsurance agreement, to be indemnified for his or her own active negligence, or regardless of the indemnitor's fault—protections beyond those afforded by the doctrines of implied or equitable indemnity—language on the point must be particularly clear and explicit, and will be construed strictly against the indemnitee.” [Emphasis added.] (Id.) “One can only indemnify against “claims for damages” that have been resolved against the indemnitee, i.e., those as to which the indemnitee has actually sustained liability or paid damages. Indemnification, after all, is the act of saving another from the legal consequence of an act. (§ 2772.)” (Id., at 559.)
“[A]n indemnitee seeking to recover on an agreement for indemnification must allege the parties' contractual relationship, the indemnitee's performance of that portion of the contract which gives rise to the indemnification claim, the facts showing a loss within the meaning of the parties' indemnification agreement, and the amount of damages sustained.” [Emphasis added.] (Four Star Elec., Inc. v. F & H Constr. (1992) 7 Cal. App. 4th 1375, 1379-80 (“Four Star”.)
In the present matter, the parties did not negotiate or knowingly bargain over the terms of the indemnity clause, but rather MLC was required to acquiesce to the terms as part of the membership. As this is a noninsurance context, the language of the clause must be particularly clear and explicit, and will be construed strictly against the indemnitee [Defendants]. (Crawford, supra, 44 Cal. 4th at 551-52.)
The language of the clause here specifically states, “[MLC] shall have no obligation to defend or indemnify [Defendants] for [Defendants’] negligent or reckless acts or omissions, or [Defendants’] intentional misconduct.” The allegations of the complaint pertain to Defendants’ negligence in maintaining their premises, not MLC’s [or Plaintiff’s] negligence. As the clause specifically carves out the requirement for MLC not to have to defend or indemnify Defendants’ negligence, and as the allegations in the Complaint only allege negligence on the part of Defendants, Defendants will need to prove that they are not negligent before the requirement to indemnify and duty to defend are ripe. As the clause specifically states MLC does is not required to indemnify in instances of Defendants’ negligence, Defendants cannot simply point to the clause as a whole and demand indemnification, but will need to prove Plaintiff’s injuries fall under the indemnity clause.
To determine if the indemnification and duty to defend are required, the court looks to both the facts embraced by the indemnity agreement and by the allegations of the Plaintiff. “The duty to defend was not a question of fact for the jury; the trial court was compelled to determine as a matter of law that Wagener's claim was embraced by the indemnity agreement.” “Crawford suggests that the obligation to defend may not continue “if the promisor ... conclusively established that the claims were not among those ‘embraced by the indemnity.” ‘ “ (Centex Homes v. R-Help Construction Co., Inc. (2019) 32 Cal.App.5th 1230, 1236-37 (“R-Help”).) “[W]here the plaintiff's complaint alleges facts embraced by the indemnity agreement, the indemnitor has a duty to defend throughout the underlying tort action unless it can conclusively show by undisputed facts that plaintiff's action is not covered by the agreement.” [Emphasis added.] (Id.)
With their Motion, Defendants are in essence asking the court to adjudicate who is negligent in regard to this incident. If MLC is negligent, then there would be an requirement to indemnify. However, if Defendants are negligent, then there is no requirement to indemnify. In order to make that determination, the court must review the facts and evidence.
Defendants have the affirmative duty, both when claiming indemnification and in moving for summary adjudication, to put forth facts and evidence that MLC is required to indemnify Defendants. Whether the protection allegedly afforded by the clause should be issued requires an inquiry into the circumstances of the damage and the facts of the case. (Dale, supra, 78 Cal. App. 4th at 996; Four Star, supra,.7 Cal. App. 4th at 1379-80.) Defendants’ Motion put forth no such facts or supporting evidence that would enable to court to make an inquiry into circumstances of the injury and whether indemnification by MLC is required. Defendants did not produce any evidence that MLC was negligent or that anything MLC did caused or contributed to the incident. Defendants did not produce any evidence Plaintiff was negligent or that anything Plaintiff did caused or contributed to the incident. As Defendants did not produce any evidence supporting which portion of the clause applies in this case, Defendants have failed to meet their initial burden on summary adjudication. (Civ. Proc. Code § 437c(p)(1).)
Since Defendants have failed to meet their initial burden on this COA, the motion fails as to this COA.
2) COA No. 3 – Declaratory Relief – Duty to Defend
“To qualify for declaratory relief, [a party] would have to demonstrate its action presented two essential elements: ‘(1) a proper subject of declaratory relief, and (2) an actual controversy involving justiciable questions relating to [the party's] rights or obligations.’ ”” (Jolley v. Chase Home Fin., LLC (2013) 213 Cal. App. 4th 872, 909.) “Declaratory relief generally operates prospectively to declare future rights, rather than to redress past wrongs.” [Emphasis added.] Id. “A complaint for declaratory relief is legally sufficient if it sets forth facts showing the existence of an actual controversy relating to the legal rights and duties of the respective parties under a written instrument and requests that these rights and duties be adjudged by the court.” (Maguire v. Hibernia Sav. & Loan Soc. (1944) 23 Cal. 2d 719, 728.) “The purpose of a declaratory judgment is “to serve some practical end in quieting or stabilizing an uncertain or disputed jural relation.”’” (Id., at 729.)
“[D]eclaratory procedure operates prospectively, and not merely for the redress of past wrongs. It serves to set controversies at rest before they lead to repudiation of obligations, invasion of rights or commission of wrongs; in short, the remedy is to be used in the interests of preventive justice, to declare rights rather than execute them.” (Babb v. Superior Ct. (1971) 3 Cal. 3d 841, 848.)
Unlike each of the construction cases cited by Defendants, the indemnity clause here does not require MLC to indemnify Defendants for “any and all” claims against Defendants in relation to work performed by MLC. The clause specifically carves out the duty to defend if the injuries are caused by Defendants’ negligence. To the extent that the clause might be valid (an issue more properly under COA No. 1 – Breach of Contract), the terms of the clause were not actually negotiated between the parties and therefore will be strictly construed against Defendants. The allegations of the Complaint are for negligent property management on the part of Defendants. Defendants’ Motion contained no evidence suggesting any negligence on the part of MLC or plaintiff that might have otherwise required a duty to defend should the clause be determined to be valid. As the court must strictly construe the terms of the clause, as there is no duty to defend in instances of Defendants’ negligence, and as Defendants produced no evidence that Plaintiff’s claims are the kind and type covered by the clause requiring MLC to defend, Defendants have not met their initial burden. To the extent that Defendants argue the duty to defend is a question of law for the court to decide, Defendants have again produced no evidence supporting that the court should determine a duty to defend arises in this instance.
Since Defendants have failed to meet their initial burden on summary adjudication, the motion fails as to this COA.
MLC is ordered to give notice of this ruling.