Judge: Gail Killefer, Case: 19STCV01626, Date: 2024-11-20 Tentative Ruling

Case Number: 19STCV01626    Hearing Date: November 20, 2024    Dept: 37

HEARING DATE:                 November 20, 2024

CASE NUMBER:                   19STCV01626

CASE NAME:                        Jacqueline Johnson v. Otis Elevator Company, et al.

MOVING PARTY:                 Cross-Defendant, Universal Protection Service, LP dba Allied Universal Security Services, erroneously sued as Allied Universal Protection Services, LLP dba Allied Universal Security Services  

OPPOSING PARTIES:          Cross-Complainant, 350 South Grand Avenue (LA) Owner, LLC                                                    (erroneously sued as CIM Group, LLC)

Defendant/Cross-Defendant, Otis Elevator Company

TRIAL DATE:                        None set.

PROOF OF SERVICE:           OK

PROCEEDING:                      Cross-Defendant’s Demurrer to First Amended Cross-Complaint  

OPPOSITION:                        Cross-Complainant, 350 South Grand Avenue: November 1, 2024

Defendant/Cross-Defendant, Otis Elevator Company: November 6, 2024

REPLY:                                  None as of November 15, 2024.

TENTATIVE:                         Universal’s demurrer is sustained. 350 S Grand is granted 30 days leave to amend. Universal is to give notice.

Background

This action arises out of Plaintiff Jacqueline Johnson’s (“Plaintiff”) employment as an elevator operator for 2 California Plaza, 350 South Grand Avenue, Los Angeles, California from June 3, 2017, to September 8, 2017. Plaintiff alleges that during these dates, freight elevators #24 and #25 repeatedly malfunctioned such that Plaintiff was trapped in the elevator while it free fell or due to the doors being unable to open, resulting in Plaintiff suffering injuries.

Plaintiff’s Complaint alleges the following causes of action: (1) negligence against Otis Elevator Company (“Otis”) and 350 South Grand Avenue (LA) Owner, LLC, erroneously sued as CIM Group, L.P (“350 S Grand”), (2) premises liability against 350 S Grand, (3) product liability against Otis.

On March 25, 2019, 350 S Grand filed a Cross-Complaint against Otis for equitable indemnity, comparative fault, express indemnity and declaratory relief.

On April 9, 2020, 350 S Grand filed a prior motion for summary adjudication regarding Otis’s duty to defend 350 S Grand.

On January 15, 2021, the court denied 350 S Grand’s first motion for summary adjudication.

On December 14, 2021, 350 S Grand filed a renewed motion for summary adjudication on the same issue regarding Otis’s duty to defend 350 S Grand.

On April 13, 2022, the court denied 350 S Grand’s renewed motion for summary adjudication.

On August 22, 2024, 350 S Grand filed the operative First Amended Cross-Complaint (“FACC”) against Universal Protection Service, LP dba Allied Universal Security Services, erroneously sued as Allied Universal Protection Services, LLP dba Allied Universal Security Services (“Universal”). Universal was Plaintiff’s employer. 350 S Grand’s FACC alleges that Universal contractually agreed to indemnify it and defend it against Plaintiff’s claims. The FACC alleges the following causes of action: (1) express indemnity, (2) breach of contract, and (3) declaratory relief.

Universal now demurs to all causes of action in the FACC. 350 S Grand opposes the demurrer. Defendant/Cross-Defendant Otis filed a joinder and opposition to the demurrer.

Discussion

I.                Meet and Confer Efforts

“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.” (CCP § 430.41.)

Universal submits the declaration of its counsel, Steven J. Renick (“Renick”) to demonstrate compliance with statutory meet and confer requirements. Renick attests that on September 19, 2024, he e-mailed a two-page letter to the attorneys for 350 S Grand advising them of Universal’s intention to file the instant demurrer as to all causes of action in the FACC and explaining the anticipated grounds. (Renick Decl. ¶ 2.) Michael Sabongui, one of 350 S Grand’s attorneys, responded to the e-mail that “[t]he Amended XC is clearly sufficient for the pleadings stage.” (Id. ¶ 3.) Renick responded via e-mail that he was happy to discuss further but absent a change, Universal would be filing the demurrer. (Id. ¶ 4.)  Renick did not receive a response. (Id.) The Renick Declaration is insufficient for purposes of CCP § 430.41 because the parties did not meet in person, by telephone, or by video conference. (CCP § 430.41.) The court admonishes Universal for failing to comply with the meet and confer requirement but will exercise its discretion to decide the motion on the merits.

II.              Legal Standard

A demurrer is an objection to a pleading, the grounds for which are apparent from either the face of the complaint or a matter of which the court may take judicial notice.  (CCP § 430.30, subd. (a); see also Blank v. Kirwan (1985) 39 Cal.3d 311, 318.)  The purpose of a demurrer is to challenge the sufficiency of a pleading “by raising questions of law.”  (Postley v. Harvey (1984) 153 Cal.App.3d 280, 286.)  The court “treat[s] the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law. . . .”  (Berkley v. Dowds (2007) 152 Cal.App.4th 518, 525.)  “In the construction of a pleading, for the purpose of determining its effect, its allegations must be liberally construed, with a view to substantial justice between the parties.”  (CCP § 452; see also Stevens v. Sup. Ct. (1999) 75 Cal.App.4th 594, 601.)  “When a court evaluates a complaint, the plaintiff is entitled to reasonable inferences from the facts pled.”  (Duval v. Board of Trustees (2001) 93 Cal.App.4th 902, 906.)   

The general rule is that the plaintiff need only allege ultimate facts, not evidentiary facts.  (Doe v. City of Los Angeles (2007) 42 Cal.4th 531, 550.)  “All that is required of a plaintiff, as a matter of pleading, even as against a special demurrer, is that his complaint set forth the essential facts of the case with reasonable precision and with sufficient particularity to acquaint the defendant with the nature, source and extent of his cause of action.”  (Rannard v. Lockheed Aircraft Corp. (1945) 26 Cal.2d 149, 156-157.)  “[D]emurrers for uncertainty are disfavored and are granted only if the pleading is so incomprehensible that a defendant cannot reasonably respond.”  (Mahan v. Charles W. Chan Ins. Agency, Inc. (2017) 14 Cal.App.5th 841, 848, fn. 3, citing Lickiss v. Fin. Indus. Regulatory Auth. (2012) 208 Cal.App.4th 1125, 1135.)  In addition, even where a complaint is in some respects uncertain, courts strictly construe a demurrer for uncertainty “because ambiguities can be clarified under modern discovery procedures.”  (Khoury v. Maly’s of California, Inc. (1993) 14 Cal.App.4th 612, 616.) 

Demurrers do not lie as to only parts of causes of action where some valid claim is alleged but “must dispose of an entire cause of action to be sustained.”  (Poizner v. Fremont General Corp. (2007) 148 Cal.App.4th 97, 119.)  “Generally it is an abuse of discretion to sustain a demurrer without leave to amend if there is any reasonable possibility that the defect can be cured by amendment.”  (Goodman v. Kennedy (1976) 18 Cal.3d 335, 349.) 

III.            Analysis

A.    First Cause of Action: Express Indemnity

“An indemnitee seeking to recover on an agreement for indemnification must allege (1) the parties’ contractual relationship, (2) the indemnitee’s performance of that portion of the contract which gives rise to the indemnification claim, (3) the facts showing a loss within the meaning of the parties’ indemnification agreement, and (4) the amount of damages sustained.” (Four Star Electric, Inc. v. F & H Construction (1992) 7 Cal.App.4th 1375, 1380.)

Universal contends that the first cause of action is insufficiently pled because the FACC does not allege facts that show a loss within the meaning of the parties’ indemnification agreement. (Demurrer, 9-10.) Per the FACC, the parties’ indemnification agreement (“the Agreement”) states the following:

5. Indemnification: "To the fullest extent permitted by law, and in addition to all other indemnities provided at law, in equity, or in this Agreement or the Exhibits attached hereto, Contractor shall indemnify, defend and hold harmless Owner its lender, and respective parents, subsidiaries, shareholders, partners, members, affiliates, affiliated agencies, officers, directors, agents, and employees at ever tier, and all their respective heirs, executors, Successors and assigns ("Indemnities") from and against all obligations, liens, claims, liabilities, costs (including, but not limited, to all attorneys' fees and expenses and similar defense costs), actions and causes of action, (collectively, "Claims"), including any third party's claims of ownership of any copyright or other intellectual property, to the extent caused by the negligent acts, errors, omissions or willful misconduct of Contractor, a subcontractor of Contractor, anyone directly or indirectly employed by them or anyone for whose acts they may be liable, regardless of whether or not such Claim was caused in part by an indemnitee, except to the extent a Claim was caused by the active negligence or willful misconduct of the Indemnitee seeking indemnity. The provisions of this Section 5 shall survive the termination of the Agreement and, except as expressly provided herein, shall not be limited in any way by the amount or type of insurance, including, without limitation, benefits payable by or for Contractor under any worker's compensation act, disability benefit acts, or other employee benefit acts."

(FACC, 4, italics added.)

The FACC alleges that Universal’s failure “to inform Cross-Complainant and other parties to this action” of “issues, problems, safety concerns, elevator malfunctions or known problems” caused the injuries Plaintiff suffered. (FACC, 4.) Universal argues that 350 S Grand alleges no “specific” facts that establish what specific “issues, problems, safety concerns, elevator malfunctions or known problems” Allied was supposed to “inform Cross-Complainant and other parties to this action” about. (Demurrer, 10.) Further, Universal argues that 350 S Grand has failed to allege any facts supporting its entirely conclusory allegation that this supposed failure to inform caused the plaintiff’s injuries. (Id.) Universal does not cite to any cases to support this argument.

Universal also argues that they are not required to indemnify 350 S Grand where the claim at issue “was caused by the active negligence or willful misconduct” of the cross-complainant. (FACC, 4.) Plaintiff’s Complaint alleged that 350 S Grand, the building owner, “negligently owned, maintained, managed and operated the described premises” and that “the acts of defendants were the legal (proximate) cause of damages to plaintiff.” (Complaint, 5.) Accordingly, Universal argues that the first cause of action lacks facts that would support a conclusion that Plaintiff’s injuries were not caused by 350 S Grand’s active negligence or willful misconduct, such that they are not required to indemnify it under the Agreement. (Demurrer, 11.) Universal does not cite to any cases to support this argument.

In opposition, 350 S Grand and Otis contend that the first cause of action is sufficiently pled because the FACC alleges that Universal was obliged, pursuant to the additional terms of the Contract, to inform 350 S Grand and other parties to this action (including Defendant Otis) of any issues, problems, safety concerns, elevator malfunctions or known problems during the timeframe in the Contract, and failed to do so. (Opposition, 8.) 350 S Grand does not cite to any cases to support this argument.

The court finds that 350 S Grand has not alleged sufficient facts that show a loss within the meaning of the parties’ indemnification agreement. Under the Agreement quoted in the FACC, Universal shall indemnify 350 S Grand to the extent caused by Universal’s negligent acts, errors, omissions or willful misconduct. (FACC, 4-5.)  The FACC alleges that Universal’s failure to inform 350 S Grand and other parties to this action of issues, problems, safety concerns, elevator malfunctions or known problems constitutes negligent acts, errors, omissions or willful misconduct. (FACC, 4.) However, the first cause of action does not allege any facts establishing such a requirement that Universal must inform 350 S Grand or other parties of any issues, problems, safety concerns, elevator malfunctions or known problems. 350 S Grand merely states that Universal “therefore was obliged to inform Cross-Complainant and other parties to this action of any issues, problems, safety concerns, elevator malfunctions or known problems during the timeframe in the Contract” but fails to allege any other facts to establish this obligation. (FACC, 4.)

While 350 S Grand attaches a document entitled “Property Management Service Contract” to the FACC as Exhibit 1, 350 S Grand does not identify where in Exhibit 1 this obligation arises, and the court could not locate such a clause. (FACC, Ex. 1.) Further, the portion of Exhibit 1 entitled “Exhibit B” is largely unintelligible due to apparent scanning issues. Thus, 350 S Grand fails to plead sufficient facts to show a loss within the meaning of the parties’ indemnification agreement, namely that Universal was negligent or engaged in willful misconduct which would entitle 350 S Grand to indemnification for Plaintiff’s claims.

Therefore, Universal's demurrer to the first cause of action is sustained.

B.    Second Cause of Action: Breach of Contract

To state a cause of action for breach of contract, Plaintiff must be able to establish “(1) the existence of the contract, (2) plaintiff’s performance or excuse for nonperformance, (3) defendant’s breach, and (4) the resulting damages to the plaintiff.” (Oasis West Realty, LLC v. Goldman (2011) 51 Cal.4th 811, 821.)

If a breach of contract claim “is based on alleged breach of a written contract, the terms must be set out verbatim in the body of the complaint or a copy of the written agreement must be attached and incorporated by reference.” (Harris v. Rudin, Richman & Appel (1999) 74 Cal.App.4th 299, 307.) In some circumstances, a plaintiff may also “plead the legal effect of the contract rather than its precise language.” (Construction Protective Services, Inc. v. TIG Specialty Ins. Co. (2002) 29 Cal.4th 189, 198-199.)

“If an action as provided in this chapter prosecuted by the employee, the employer, or both jointly against the third person results in judgment against such third person, or settlement by such third person, the employer shall have no liability to reimburse or hold such third person harmless on such judgment or settlement in absence of a written agreement so to do executed prior to the injury.” (Labor Code § 3864.)

Universal contends that Labor Code § 3864, the “workers’ compensation exclusivity rule,” bars the second cause of action. Universal cites to C.J.L. Constr., Inc. v. Universal Plumbing (1993) 18 Cal.App.4th 376, 385, to support its contention. C.J.L. states as follows:

For example, in a third party action, section 3864 has been construed to prohibit the third party tortfeasor from suing the employer: ‘(1) for breach of contract; (2) for breach of express and implied warranties; (3) for implied equitable indemnity; (4) for fraud; (5) for negligent misrepresentation; (6) for equitable estoppel; (7) for waiver; and (8) for declaratory relief.’

(C.J.L Constr., Inc., supra, 18 Cal.App.4th at 385, citing Alameda Tank Co. v. Starkist Foods, Inc. (1980) 103 Cal.App.3d 428, 431.)

Universal argues that regardless of the workers’ compensation exclusivity rule’s exception allowing employer liability when there is a written agreement for reimbursement, such as the indemnity clause here, the second cause of action is still barred as it is duplicative. Universal contends that the second cause of action is based on the express indemnity provision of the contract, such that it is duplicative of the first cause of action for express indemnity.

In opposition, 350 S Grand and Otis contend that the second cause of action is not barred by the workers’ compensation exclusivity rule because there is an express indemnification agreement. (Opposition, 11.) 350 S Grand and Otis also argue that the second cause of action is not duplicative of the first as it not only alleges breach of the indemnification clause, but also breach of Universal’s duty to defend the lawsuit and failure to comply with the terms and conditions of the contract, for which 350 S Grand seeks attorney’s fees. (Id.) 350 S Grand alleges that Universal breached the contract by failing to inform 350 S Grand or other parties of any issues, problems, safety concerns, elevator malfunctions or known problems, and by failing to defend 350 S Grand against Plaintiff’s claims. (Id., 7.)

The court finds that the second cause of action for breach of contract is barred by the workers’ compensation exclusivity rule and is duplicative to the extent that it relies on the indemnity clause under the written agreement exception to the rule. As section 3864 prohibits 350 S Grand from suing Universal, Plaintiff’s employer, for breach of contract, the second cause of action must necessarily be based on the express indemnity provision of the contract to survive this bar. (“[T]he employer shall have no liability to reimburse or hold such third person harmless on such judgment or settlement in absence of a written agreement so to do executed prior to the injury.” (Labor Code § 3864, italics added.) However, if the second cause of action survives the bar by relying on the indemnification agreement, it is duplicative of the first cause of action for express indemnity and subject to demurrer on this ground. “The cause of action for breach of governing documents appears to be duplicative of the cause of action for breach of fiduciary duty. This court has recognized this as a basis for sustaining a demurrer.” (Palm Springs Villas II Homeowners Assn., Inc. v. Parth (2016) 248 Cal. App. 4th 268, 290.)

While 350 S Grand and Otis argue that the second cause of action is not duplicative because it alleges that Universal breached the contract by failing to inform 350 S Grand or other parties of any issues, problems, safety concerns, elevator malfunctions or known problems, the second cause of action does not allege any facts establishing such a requirement. Again, 350 S Grand merely states that Universal “therefore was obliged to inform Cross-Complainant and other parties to this action of any issues, problems, safety concerns, elevator malfunctions or known problems during the timeframe in the Contract.” (FACC, 7.) The FACC fails to set out the terms “verbatim in the body of the complaint” or attach and incorporate by reference “a copy of the written agreement” that is legible as required when a breach of contract claim is based on alleged breach of a written contract per Harris. 350 S Grand attaches a document entitled “Property Management Service Contract” to the FACC as Exhibit 1, but 350 S Grand does not identify where in Exhibit 1 this obligation arises, and the court could not locate such a clause. (FACC, Ex. 1.) Further, the portion of Exhibit 1 entitled “Exhibit B” is largely unintelligible due to apparent scanning issues. Thus, 350 S Grand fails to plead sufficient facts to establish breach of contract, and if they did, such a claim would be barred by the workers’ compensation exclusivity rule.

Thus, the second cause of action is barred by the workers’ compensation exclusivity rule as plead and 350 S Grand fails to plead sufficient facts to establish breach of contract. To the extent that the second cause of action relies on the written agreement, it is duplicative.

Therefore, Universal's demurrer to the second cause of action is sustained.

C.    Third Cause of Action: Declaratory Relief

California Courts have recognized that “[t]he existence of an ‘actual controversy relating to the legal rights and duties of the respective parties,’ suffices to maintain an action for declaratory relief.”  (Ludgate Ins. Co. v. Lockheed Martin Corp. (2000) 82 Cal.App.4th 592, 605 (Ludgate).)  “Any person interested under a written instrument, ... or under a contract, or who desires a declaration of his or her rights or duties with respect to another, or in respect to, in, over or upon property,  ... may, in cases of actual controversy relating to the legal rights and duties of the respective parties, bring an original action or cross-complaint in the superior court ... for a declaration of his or her rights and duties in the premises, including a determination of any question of construction or validity arising under the instrument or contract."  (Id., quoting CCP § 1060.)    

Universal contends, as above, that the workers’ compensation exclusivity rule bars the third cause of action on the same bases. The court agrees for the same reasons discussed above.

Further, having found that the FACC’s first and second causes of action are insufficiently pled, the court now finds that the FACC’s third cause of action is insufficiently pled.

Conclusion

Universal’s demurrer is sustained. 350 S Grand is granted 30 days leave to amend. Universal is to give notice.