Judge Elaine W. Mandel, Case 20SMCV01427 2023-02-01 Tentative Ruling

Judge: Elaine W. Mandel, Case: 20SMCV01427, Date: 2023-02-01 Tentative Ruling

Case Number: 20SMCV01427 Hearing Date: February 1, 2023 Dept: P

Tentative Ruling

Chuang et al. v. Bestland Inc., Case No. 20SMCV01427

Hearing Date February 1, 2023

Cross-Complainant Oh’s Motion for Summary Adjudication

Defendant Oh, sole manager and member of defendant Ekoh Investments, Inc., contracted with defendant Bestland to renovate and remodel a single family residence. Oh sold the property to plaintiffs Chuang, who sue Oh, Ekoh, and Bestland for construction defects.

Oh cross-complained against Bestland, alleging a contractual duty to defend, indemnify and hold harmless and moves for summary judgment, arguing Bestland failed to defend.

Bestland’s contract with Oh obligates it to “defend, indemnify and hold harmless Owner from and against any claims, allegations, damages, awards, judgments and expenses of any kind or character . . . which may arise out of or result from in whole or in part from Contractor, Contractor’s subcontractors, material suppliers, or their employees, agents, or representative’s performance of the work, except to the extent caused by the sole negligence or willful misconduct of the indemnified parties. Contractor’s obligation to defend Indemnified Parties shall be immediate upon notice by Owner to Contractor and Contractor shall, if requested by Owner, defend Indemnified Parties using counsel approved by Owner in its sole discretion.” Oh Separate Statement No. 8, Exhibit 1.

Oh tendered to Bestland, which accepted the tender. Oh separate statement 24, 25, exhibits 7 and 8. Despite accepting the tender, Oh alleges, Bestland did not provide a defense and later revoked its acceptance without justification. Id. 26, 27. Oh sent a follow-up letter for indemnity in October 2022, and Bestland refused to accept the second request. Id. 34, 35. This is sufficient to establish a right to a defense under the parties’ indemnity agreement. The burden shifts to Bestland to show a triable issue of fact.

Bestland argues the indemnity agreement is limited, and Oh is not entitled to a defense if the damages are caused by Oh’s negligence or misconduct. Bestland argues evidence shows Oh willfully misrepresented the status of the home as new construction. It argues Oh represented the home was subject to protections under Cal. Civ. Code §895, and the trustees relied on that representation. To support this argument, Bestland presents the sales agreement between Oh and the Chuangs, which contains a “New Construction Addendum,” implying the property was new construction subject to §985 protections.

Bestland provides its construction proposal agreement with Oh, which indicates the property was not new construction. Additional Material Facts No. 5. Bestland provides a Notice to Builder under §895 et seq. from plaintiffs, addressed to Bestland. This suggests the buyers believed the property was new construction when they purchased it from Oh and relied upon that belief. Id. 4.

This is sufficient to create a triable issue of fact as to whether, because of Oh’s misrepresentation, Bestland is excused from its contractual duties to defend and indemnify.

In reply, Oh argues Bestland’s evidence regarding misrepresentation should be disregarded because the Chuangs’ FAC does not explicitly allege misrepresentation. This is accurate as to the current allegations, but the initial complaint alleged misrepresentation. Additionally, Oh provides no authority that the absence of misrepresentation allegations in the FAC bars Bestland from raising misrepresentation as a defense to the cross-complaint.

Bestland argues Oh is seeking a defense, not indemnification, and the duty to defend is activated as soon as a tender is made, regardless of whether the duty to indemnify applies. The duty to defend is expressly limited by the requirement of the owner’s negligence or willful misconduct. If Bestland were to prove the Chuangs’ damages were solely caused by Oh’s misconduct or misrepresentation, there would be no obligation to defend.

Bestland has shown a triable issue of fact as to whether Oh caused the trustees’ damages by misrepresenting the status of the property as new construction. Bestland Opposition to Separate Statement No. 2, Seely Declaration ¶6, Exhibit A. There is a question of fact as to whether Oh committed willful misconduct, and whether that misconduct released Bestland from its duty to defend and/or indemnify. DENIED.