Judge David A. Rosen, Case Number: 21GDCV01033, Date: 2023-09-08 Tentative Ruling

Judge: David A. Rosen, Case: 21GDCV01033, Date: 2023-09-08 Tentative Ruling

Case Number: 21GDCV01033 Hearing Date: September 8, 2023 Dept: E

Hearing Date: 09/08/2023 – 2:00pm

Case No: 21GDCV01033
Trial Date: 05/13/2024

Case Name: 846 E. VALLEY BLVD. LLC v. 860 E & A LLC, et al.

[CROSS-COMPLAINANT’S MOTION FOR SUMMARY ADJUDICATION]

I. RELIEF REQUESTED

Defendant and Cross-Complainant, Thornton Tomasetti, Inc. (TT) moves the Court for an order summarily adjudicating the second cause of action in its Cross-Complaint for Declaratory Relief, Duty to Defend against Defendant and Cross-Defendant Je Tsu Kao, on the basis that Kao owes a contractual duty to defend TT against the claims by Plaintiff 846 E. Valley Blvd. LLC against TT in this action.

This motion is made pursuant to CCP §437c and CRC 3.1350.

For the reasons set out below, the Court will grant TT’s motion.

II. BACKGROUND

Plaintiff, 846 E. Valley Blvd. LLC, a California limited liability company filed its First Amended Complaint (FAC) alleging two causes of action: (1) Removal of Lateral Support, and (2) Negligence. In the FAC, Plaintiff alleged both causes of action all Defendants, and the named Defendants in the FAC appear to be: (1) 860 E & A LLC (860 LLC); (2) Povac Investments, Inc., dba Adept Building and Construction; (3) B.L. Price Co., Inc.; (4) Constructure, Inc.; (5) EGL Associates, Inc.; (6) Thornton Tomasetti, Inc.; and (7) Environmental Geotechnology Laboratory, Inc.

Plaintiff alleges it is the owner of Property 1. (FAC ¶15.) Plaintiff alleges that Defendant 860 LLC owns Property 2. (FAC ¶16.) Plaintiff alleges that the building on Lot 17 and 18 of Property 1 abut the common property line with the west boundary of Property 2. (FAC ¶16.) The general allegations of Plaintiff’s FAC allege that construction occurring on Property 2 damaged Property 1.

On 01/18/2023, Thornton Tomasetti, Inc. filed a Cross-Complaint alleging three causes of action: (1) Express Indemnity – Against Kao; (2) Declaratory Relief – Duty to Defend – Against Kao; and (3) Equitable Indemnity – Against All Cross-Defendants. The two named Cross-Defendants are Je Tsu Kao, an individual, and Povac Investments, Inc. dba Adept Building and Construction. TT alleges that Kao is developer of 860 LLC. (CC ¶2.) TT also alleges that Kao is the owner of the corporation who owns the property on which the construction project on Property 2 took place. (See CC ¶8.)

III. Moving Arguments

Cross-Complainant, TT, argues that Cross-Defendant, Kao, has an immediate duty to defend it against Plaintiff’s FAC because Plaintiff alleges that other parties, including general contractor Povac, damaged its property. TT bases its argument on the written contract between itself and Kao in which TT alleges Kao agreed to defend TT for claims arising at least in part from any other contractor’s negligence.

TT cites to Crawford v. Weather Shield Mfg., Inc. (2008) 44 Cal. 4th 541 to argue that the duty to defend is triggered by the mere allegation of facts that would give rise to indemnity and upon tender of defense by the indemnitee.

TT submitted the Declaration of Chukwuma Ekwueme who is a principal at TT. (Decl. Ekwueme ¶1.) Ekwueme alleges he has personal knowledge of the facts set forth in his declaration, and that on or about May 17, 2017, TT entered into an agreement (Agreement) with Je Tsu Kao for the performance of structural engineering services. (Decl. Ekwueme ¶¶2-3.) In Exhibit A of the Ekwueme Declaration, the Agreement is attached. (Decl. Ekwueme ¶3.) In the Declaration at ¶5, Ekwueme cites the relevant portion of the Agreement pertaining to indemnity/duty to defend. Further, TT submitted the Declaration of Zachary Law. In Law’s declaration, he attests that his office sent a letter to counsel for Kao tendering the defense of Plaintiff’s claims pursuant to their Agreement and that to date, Kao has not provided a defense pursuant to the Agreement. (Law Decl. ¶¶7-8.)

IV. Opposition Arguments

Kao argus that TT’s motion fails for four reasons: (1) Defendant Thornton failed to shift the burden to Defendant Kao; (2) triable issues of material fact exist as to whether any named defendants were negligent, or even if Plaintiff 846 suffered damages; (3) the parties’ Contract limits the duty to defend based on whether other parties were negligent and/ or whether Defendant Thornton’s negligence, if any, was the sole cause of Plaintiff 846’s damages (if any); and (4) Crawford’s immediate duty to defend is triggered only by unqualified language to indemnify and/ or defend.

Kao argues that TT omitted the full text of the indemnity provision which limits Kao’s duty to defend by excluding claims caused by TT’s sole negligence or breach of the standard of care.

Kao also argues that the indemnity provision limits Kao’s duty to defend based on whether another party was negligent.

Kao argues that under Crawford, the Court held that there is an immediate duty to defend unless the indemnity agreement states otherwise. Kao argues that the Agreement states otherwise, therefore, Kao’s duty to defend turns on the determination of Plaintiff 846’s negligence cause of action asserted against all named defendants, including Kao and TT, among several others.

Kao further argues that discovery responses by Plaintiff 846 and TT show that Plaintiff 846’s alleged damages relate to TT’s scope of work. Kao argues that the certificate of merit filed in support of Plaintiff 846’s Complaint against Defendant Thornton establishes that according to a qualified expert in the field, the claim against Defendant Thornton is based on Defendant Thornton, itself, falling below the standard of care for a design professional – not on the negligence of any other party. Kao argues that certificate alone serves as a basis to deny this motion.

Kao also argues Kao is not a construction company; therefore, TT is not entitled to an immediate defense. Kao argues it obviously did not perform work here, but rather is an induvial principal of an entity involved in the project development, “who for whatever reason entered the engineering contract in her own name.” (Oppo. p. 4.)

V. Reply Arguments

In Reply, TT argues that Kao misinterprets Crawford and that the duty to defend is immediate and does not depend on the facts proved at trial.

The Reply points out how the indemnity provision limits Kao’s duty to indemnify TT, but it does not say anything about limiting Kao’s duty to defend TT.

The Reply also argues that Kao fails to follow California Rules of Court, Rule 3.1350(f)(2) when disputing material facts set forth in TT’s Separate Statement. Reply also argues that the material facts cited by Kao in her separate statement are unsupported by admissible evidence, irrelevant, or improperly cited.

VI. LEGAL STANDARD

The function of a motion for summary judgment or adjudication is to allow a determination as to whether an opposing party cannot show evidentiary support for a pleading or claim and to enable an order of summary dismissal without the need for trial. (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 843.) “The function of the pleadings in a motion for summary judgment is to delimit the scope of the issues; the function of the affidavits or declarations is to disclose whether there is any triable issue of fact within the issues delimited by the pleadings.” (Juge v. County of Sacramento (1993) 12 Cal.App.4th 59, 67, citing FPI Development, Inc. v. Nakashima (1991) 231 Cal. App. 3d 367, 381-382.)

CCP §437c(f)(1) states:

A party may move for summary adjudication as to one or more causes of action within an action, one or more affirmative defenses, one or more claims for damages, or one or more issues of duty, if the party contends that the cause of action has no merit, that there is no affirmative defense to the cause of action, that there is no merit to an affirmative defense as to any cause of action, that there is no merit to a claim for damages, as specified in Section 3294 of the Civil Code, or that one or more defendants either owed or did not owe a duty to the plaintiff or plaintiffs. A motion for summary adjudication shall be granted only if it completely disposes of a cause of action, an affirmative defense, a claim for damages, or an issue of duty.

(CCP §437c(f)(1).)

Further, CCP §437c(f)(2) provides:

A motion for summary adjudication may be made by itself or as an alternative to a motion for summary judgment and shall proceed in all procedural respects as a motion for summary judgment. A party shall not move for summary judgment based on issues asserted in a prior motion for summary adjudication and denied by the court unless that party establishes, to the satisfaction of the court, newly discovered facts or circumstances or a change of law supporting the issues reasserted in the summary judgment motion.

(CCP §437c(f)(2).

Further, for purposes of motions for summary judgment and summary adjudication:

A plaintiff or cross-complainant has met his or her burden of showing that there is no defense to a cause of action if that party has proved each element of the cause of action entitling the party to judgment on the cause of action. Once the plaintiff or cross-complainant has met that burden, the burden shifts to the defendant or cross-defendant to show that a triable issue of one or more material facts exists as to the cause of action or a defense thereto. The defendant or cross-defendant shall not rely upon the allegations or denials of its pleadings to show that a triable issue of material fact exists but, instead, shall set forth the specific facts showing that a triable issue of material fact exists as to the cause of action or a defense thereto.

(CCP §437c(p)(1).)

VII. ANALYSIS

Cross-Complainant, TT, moves for summary adjudication as to the second cause of action in its Cross-Complaint titled “Declaratory Relief- Duty to Defend – Against Kao.”

A. Declaratory Relief – Duty to Defend

The case of Crawford v. Weather Shield Mfg., Inc. (2008) 44 Cal.4th 541 (Crawford) helps explain the concept of indemnity as follows:

Parties to a contract, including a construction contract, may define therein their duties toward one another in the event of a third party claim against one or both arising out of their relationship. Terms of this kind may require one party to indemnify the other, under specified circumstances, for moneys paid or expenses incurred by the latter as a result of such claims. (See Civ.Code, § 2772 [“Indemnity is a contract by which one engages to save another from a legal consequence of the conduct of one of the parties, or of some other person.”].) They may also assign one party, pursuant to the contract's language, responsibility for the other's legal defense when a third party claim is made against the latter. (See Mel Clayton Ford v. Ford Motor Co. (2002) 104 Cal.App.4th 46, 49, 55, 127 Cal.Rptr.2d 759 (Mel Clayton Ford ).)…

…In general, such an agreement is construed under the same rules as govern the interpretation of other contracts. Effect is to be given to the parties' mutual intent (§ 1636), as ascertained from the contract's language if it is clear and explicit (§ 1638). Unless the parties have indicated a special meaning, the contract's words are to be understood in their ordinary and popular sense. (§ 1644; Continental Heller, supra, 53 Cal.App.4th 500, 504, 61 Cal.Rptr.2d 668; accord, Centex Golden Construction Co. v. Dale Tile Co. (2000) 78 Cal.App.4th 992, 996–997, 93 Cal.Rptr.2d 259 (Centex Golden ).)

(Crawford v. Weather Shield Mfg., Inc. (2008) 44 Cal.4th 541, 551-52.)

B. The Agreement

TT submits the Agreement between Kao and TT which contains the alleged indemnity provision. (Ekwueme Decl. ¶3, Ex. A.) Cross-Defendant, Kao, alleges it also submitted the agreement between Kao and TT as Exhibit 1 in its Notice of Lodgment. Problematic with Kao’s Notice of Lodgment is that she did not actually lodge any of the exhibits mentioned in the Notice of Lodgment. Either way, the parties do not appear to dispute the existence and language of the indemnity provision in the Agreement. The parties appear to dispute the interpretation of the indemnity provision in the Agreement.

The indemnity provision in the Agreement between Kao and TT states as follows:

To the fullest extent permitted by law, the Client shall hold harmless, defend and indemnify TT and its consultants, and each of their owners, directors, officers and employees and any of their heirs, successors and assigns (collectively “TT Parties”), from and against any and all claims, suits, demands, damages, losses, judgments, payments, awards, costs and expenses (including attorneys’ fees and other costs of investigation and defense) (collectively “Claims”) arising, in whole or in part, out of: i) the negligence of Client or any of its partners or employees in connection with the Project; ii) any contractor(s)' negligence or breach of contract in connection with the Project or performing any work and/or supplying any materials; or iii) the negligence of any other party relative to the Project, except that, TT shall not be indemnified with respect to damages, losses, judgments and/or expenses to the extent they are caused solely by the negligence of, or breach of the Standard of Care by, TT or its consultants or any of their owners, directors, officers or employees. In addition, the Client shall hold harmless, defend and indemnify TT Parties, from and against any and all Claims arising, in whole or in part, out of: i) the use of the “fast-track” delivery method for the Project; and/or ii) the discovery, presence, handling, removal or disposal of, or exposure of persons to, any hazardous materials in any form at the Project site, including, but not limited to, asbestos,

asbestos products, polychlorinated biphenyl (PCB), bacteria, mold, fungi, lead based paints or other similar materials or other toxic substances, infectious materials, or contaminants.

(Decl. Ekwueme, Ex. A, p.3 ¶13 of “Standard Conditions”.)

C. Premature/Limiting Duty to Defend

Kao argues that this MSA regarding Kao’s duty to defend is premature because the Agreement limits the duty to defend because the duty to defend turns on the determination of Plaintiff 846 LLC’s negligence cause of action asserted against all named Defendants, including Kao, TT, and several others. Kao argues the provision in the Agreement limits Kao’s duty to defend based on whether another party was negligent, the issue of negligence is disputed in this litigation, and under Crawford the court held there is an immediate duty to defend unless the indemnity agreement states otherwise. Kao argues that since the Agreement here states otherwise, the duty to defend depends on the determination of Plaintiff’s negligence cause of action against all named Defendants.

The Court does not find Kao’s arguments availing based on both the law in Crawford and based on the language of the Agreement.

With respect to Kao’s argument that the duty to defend is premature because it depends on other parties’ negligence, Crawford does not support that argument:

Implicit in this understanding of the duty to defend an indemnitee against all claims “embraced by the indemnity,” as specified in subdivision 4 of section 2778, is that the duty arises immediately upon a proper tender of defense by the indemnitee, and thus before the litigation to be defended has determined whether indemnity is actually owed. This duty, as described in the statute, therefore cannot depend on the outcome of that litigation. It follows that, under subdivision 4 of section 2778, claims “embraced by the indemnity,” as to which the duty to defend is owed, include those which, at the time of tender, allege facts that would give rise to a duty of indemnity. Unless the indemnity agreement states otherwise, the statutorily described duty “to defend” the indemnitee upon tender of the defense thus extends to all such claims.

(Crawford v. Weather Shield Mfg., Inc. (2008) 44 Cal.4th 541, 558.)

As to Kao’s argument that the Agreement expressly includes an exclusion that precludes a duty to defend when the lawsuit raises claims arising out of the sole negligence of, or breach of the standard of care by TT, the Court finds that the Agreement does not support Kao’s interpretation.

Kao bolds and underlines the relevant portion of the Agreement it believes precludes a duty to defend as follows:

(Decl. Ekwueme, Ex. A, p.3 ¶13 of “Standard Conditions”; emph added. by Kao)

Here, the Court does not find that the Agreement supports Kao’s interpretation. The “except” portion that Kao bolded stated that TT shall not be indemnified with respect to damages, losses, judgments and/or expenses to the extent they are causes solely by the negligence of, or breach of the Standard of Care by, TT or its consultants or any of their owners, directors, officers or employees. The portion bolded by Kao did not mention the duty to defend, as the Agreement did in the portion of the Agreement preceding i, ii, and iii. Therefore, the duty to defend, appears to apply to i, ii, and iii. However, TT shall not be indemnified, in the circumstances that the Agreement enumerates. The Agreement states nothing about when a duty to defend is precluded.

Although Kao argues that TT did not shift its burden, the Court finds that TT did.

TT submitted the declaration of its counsel Zachary Law, wherein Law stated his office sent a letter to counsel for Kao tendering the defense of Plaintiff’s claims pursuant to their Agreement and that to date, Kao has not provided a defense pursuant to the Agreement. (Decl. Law ¶¶7-8.) Kao’s separate statement did not dispute that TT sent a letter to Kao tendering the defense pursuant to the Agreement.

Further, it appears as if TT triggered either section ii or iii of the Agreement because ii mentions any contractor(s)’ negligence and iii mentions the negligence of any other party relative to the project. It appears as if TT submitted proof of this as indicated in UMF 2 “Defendant Povac Investments, Inc. was the general contractor for the Project,” which went undisputed by Kao. Here, Povac is a Defendant in the FAC which alleges negligence against Povac, amongst others, and Kao does not dispute that Povac was the general contractor for the project.

As to Kao disputing UMF 4 in the Separate Statement, the Court does not find this of any significance, as the indemnity provision in the Agreement does not mention that TT has to perform all of its obligations under its contract with Kao in order for the duty to defend to apply.

As to Kao’s arguments that discovery responses and reports showing that Thornton’s scope of work is at issue, the Court does not find these arguments on point or availing.

VIII. TENTATIVE RULING

TT’s motion for summary adjudication as to the second cause of action for Declaratory Relief – Duty to Defend alleged against Kao is GRANTED.

The Court finds that Kao owes a contractual duty to defend TT against claims made by Plaintiff against Defendant TT in the FAC.

The Court SUSTAINS TT’s objections to Kao’s notice of lodgment. TT objected to Exhibit 2, 3, and 4. None of those Exhibits were lodged by Kao. Therefore, TT’s objections to those exhibits are sustained.