Judge: David J. Cowan, Case: 19STCV01820, Date: 2023-05-15 Tentative Ruling
Case Number: 19STCV01820 Hearing Date: May 15, 2023 Dept: 200
LOS ANGELES SUPERIOR COURT – WEST DISTRICT
BEVERLY HILLS COURTHOUSE – DEPT. 200
JUDGE DAVID J. COWAN
TENTATIVE RULING ON OSC RE: BIFURCATION OF INDEMNITY ISSUES AT TRIAL
Edna Beteta v. LNR Partners, et al., Case No. 19STCV01820
Hearing Date: May 15, 2023, 8:30 p.m.
BACKGROUND
On January 18, 2019, Plaintiff Edna Beteta (“Plaintiff”) filed a complaint against LNR Partners (subsequently dismissed), Gabriel Hernandez, dba Prime Construction Services (“General Contractor”), U.S. Fire Protection, Inc. (“Sub-Contractor”) and DOES arising from an accident where Plaintiff alleges a head injury from debris falling on her when she was entering her dentist’s office at the mall where construction work was ongoing.
On August 22, 2019, Plaintiff named Doe 1 as WBCMT 2007-C31 Nordhoff Street Limited Partnership (“Owner”).
On September 19, 2019, General Contractor filed a cross-complaint for equitable indemnity, partial indemnity, contribution, apportionment and declaratory relief against Sub-Contractor.
On September 24, 2019, Owner filed a cross-complaint for declaratory relief, equitable indemnity, contribution and express indemnity against General Contractor and Sub-Contractor.
On September 17, 2020, Plaintiff named Doe 2 as G & E Real Estate Management Services, Inc., dba Newmark Grubb Knight Frank (“Management Company”).
On November 6, 2020, Management Company filed a cross-complaint for declaratory relief, equitable indemnity, contribution and express indemnity against General Contractor and Sub-Contractor.
On July 2, 2021, Judge Stephen P. Pfahler denied the motion of Owner for summary judgment on the complaint, finding that merely because it had an agreement with General Contractor to perform improvements to the property did not necessarily means that it had no duty to Plaintiff where the construction work involved was inherently dangerous and it might have had some obligation to secure non-construction areas free from potentially falling debris by not closing the mall during the construction. (Privette v. Sup. Ct. (1993) 5 Cal.4th 689, 694) In the same ruling, Judge Pfahler denied the motion of Sub-Contractor for summary judgment that it had no duty to Plaintiff where the Owner had delegated duties of the safety of the construction site to the General Contractor and there was no agreement by the Sub-Contractor to ensure that safety. The Court found Sub-Contractor may still have a duty to Plaintiff irrespective of any agreement based on its employees’ obligation to exercise due care. The Court did not make any rulings concerning indemnity obligations.
On March 30, 2023, this case was assigned to the undersigned for long cause trial.
On April 17, 2023, at the trial setting conference, after review of the parties’ trial briefs, and hearing oral argument, the Court issued an OSC why the equitable issues in the cross-complaints should not be bifurcated for trial by the Court in advance of the jury trial on the complaint.
On April 27, 2023, Plaintiff, General Contractor, Sub-Contractor, Owner, and Management Company each filed a brief.
On May 5, 2023, all parties each filed a Reply brief.
The parties’ positions are in summary as follows:
Owner and Management Company agree to bifurcation.
Plaintiff agrees generally subject to a concern that her complaint not in any way be impacted (which it would not be).
General Contractor (with Sub-Contractor in agreement), however, raises the following concerns: Whether such separate trial can occur prior to any jury trial where Owner and Management Company are also sued independent of alleged negligence of General Contractor and or Sub-Contractor (and as Judge Pfahler found can proceed forward to trial). They argue that the indemnification provision in the agreement between Owner and General Contractor (paragraph 3.18) is contingent on whether the jury finds the injury was caused in whole or in part by General Contractor or Sub-Contractor. They argue that the jury may not make that finding and hence any indemnification obligation on its part is premature. They point out also that unlike an insurance policy which imposes on an insurer a duty to provide a defense of an action against its insured, an indemnity agreement is contingent on a loss that is covered by the agreement – or “until it is determined that the proceeding against the indemnitee is ‘embraced by the indemnity.’” (Heppler v. J.M. Peters Co. (1999) 73 Cal.App.4th 1265, 1282)
By contrast, Owner and Management Company read sec. 3.18 differently and contend that General Contractor is required to indemnify them for claims or losses, including attorney’s fees, arising from performance of work by General Contractor regardless of whether such claim or loss was caused in part by them.
DISCUSSION
General Contractor is correct that an indemnity agreement is not the same as an insurance policy. The former does not create a duty to defend. Dua v. Stillwater Ins. Co. (ordered published May 5, 2023;
citation not yet available) On the other hand, here, sec. 3.18 of the indemnity agreement provides for a duty to pay attorney’s fees. One legal issue for the Court to decide will be when that obligation arises. This itself may be significant where Owner and Management Company will have to continue to defend this case through a long jury trial.
More significantly, however, as referenced above, there may be an ambiguity in the indemnification provision of the agreement to the extent these parties read it in wholly opposite ways. This legal issue (for the Court to decide under Code of Civil Procedure (“CCP”) sec. 591 and Evidence Code sec. 310) should be the focus of a bifurcated trial prior to a jury trial in order that the parties know what is at stake and can better evaluate proceeding forward. (See Heppler, supra, 73 Cal.App.4th at 1275-1276) Issues of law should be tried before issues of fact. (CCP sec. 592)
Heppler, supra, provides guidance related to issues involved in interpreting an indemnity agreement: The Court indicates there will need to be “an inquiry into the circumstances of the damages or injury and the language of the contract” (citing Rosmoor Sanitation v. Pylon (1975) 13 Cal.3d 622, 633) where “[t]he parties may establish a duty in the indemnitor to save the indemnitee harmless from the results of his or her active negligence – provided the language is sufficiently specific and clear to evidence this intent…[or] the parties may require negligence by the indemnitor as a condition to indemnification…or they may establish a duty in the indemnitor to save the indemnitee harmless even if the indemnitor is not negligent…” (Id., 73 Cal.App.4th at 1276-1277)
Deciding this legal issue may allow the parties to now find out who would be ultimately responsible for any liability of Owner or Management Company: If General Contractor knows it will be responsible for Owner and Management Company regardless, this may change its position. Conversely, if Owner and Management Company know that they will not necessarily be indemnified, depending on what cause(s) the jury finds for the accident, this may change their position. See Crawford v. Weather
Shield Mfg. (2008) 44 Cal.4th 541, 551 (parties may have rights to know their relevant duties under indemnity agreement in the event of a third-party claim, notwithstanding that no liability had yet been decided)
CCP sec 598 permits the court to bifurcate an issue when to do would promote the efficient handling of litigation.) Prior determination of this legal issue may potentially significantly shorten the length of the jury trial if it becomes irrelevant which of these defendants may have been the cause of the accident in the event there was a controlling indemnity that would make General Contractor responsible. Reaching this issue first may thereby further the goal of judicial economy and efficiency: It will also possibly avoid calling numerous witnesses related to the different theories as to the reasons(s) for the accident. it may also prevent potential prejudice in the jury hearing about an indemnity agreement in terms of its deciding liability. In turn, the jurors would not have to go through a special verdict form that addresses most of the causation issues. Finally, determining this issue now may avoid extra sets of attorneys’ fees for each defendant for this long trial – all consistent with CCP sec. 1048(b).
The foregoing interpretation issue does not depend on what a jury might find at trial. Therefore, bifurcation here is consistent with the requirement of CCP sec. 1048(b) for bifurcation to preserve the right of a trial by jury. See similar ordering of trial in Arntz Contracting v. St Paul Fire & Marine Ins. Co. (1996) 47 Cal.App.4th 464 as between a surety and contractor concerning contractual indemnification obligations), as well as Heppler, supra, noting “the trial court properly carved out the legal issues involving interpretation of the contractual indemnity provisions for its own determination and had the jury decide the disputed factual issues. This was proper as a court has wide discretion in controlling the manner in which evidence is presented.” (Id., 73 Cal.App.4th at 1285)
This separate trial will be solely to adjudicate the foregoing issue of interpretation under this express indemnity agreement as between General Contractor and Owner (and Management Company
as alleged third party-beneficiary.) The Court will not address issues of equitable indemnity or contribution as between General Contractor and Sub-Contractor that will be decided after the jury trial, if necessary. (Martin v. County of Los Angeles (1996) 51 Cal.App.4th 688)
On this OSC, the Court is merely determining whether to bifurcate the foregoing issue. It is not deciding the outcome or suggesting that General Contractor does or does not now have an obligation to indemnify Owner and or Management Company.
The Court is likewise not finding that Plaintiff cannot continue to bring her complaint against Owner and Management Company. They will remain as defendants irrespective of what the Court may determine. The different potential causes of the accident may, however, have less significance if General Contractor were responsible for events caused by Owner and or Management Company.
The Court seeks input from the parties at the hearing on this OSC as to their views as to how this bifurcated trial will proceed and for how long, including concerning whether the Court will need to hear any extrinsic evidence related to interpreting the agreement. (See Parsons v. Bristol Dev. Co. (1965) 62 Cal.2d 861, 865 (generally as to trial over interpretation of agreements) and Gribaldo v. Agrippina Versicherunges A.G. (1970) 3 Cal.3d 434 (as to interpretation of an indemnity agreement)) In this regard, the Court may need to address (1) whether there was “active” or “passive” negligence in determining whether there is indemnity (see Heppler, supra, 73 Cal.App.4th at 1280) and (2) the consequence of any decision(s) as to closing of the businesses during construction to the extent this might impact whether Plaintiff’s claim is covered by the agreement.
CONCLUSION
For these reasons, the Court finds good cause to bifurcate the causes of action for express indemnity on the two cross-complaints seeking that relief, as described above, and try those prior to
conducting the jury trial of the complaint or other equitable indemnity or contribution issues that are dependent on the outcome of the jury trial.
As Plaintiff requested, at the hearing, the court will also schedule a hearing on key motions in limine.