Judge: Gregory Keosian, Case: 20STCV10953, Date: 2023-08-09 Tentative Ruling

Case Number: 20STCV10953    Hearing Date: March 19, 2024    Dept: 61

Plaintiffs and Cross-Defendants CV Communities, LLC and City Ventures LLC’s Motion for Summary Adjudication is GRANTED. Defendant and Cross-Complainant City of Palmdale is granted leave to amend the first cause of action in its first amended cross-complaint to state a claim based on paragraph 12.1 of the Final Conditions of Approval.

Plaintiffs CV Communities, LLC and City Ventures LLC’s Motions to Compel Further Responses to Requests for Admission and Form Interrogatories from Defendant and Cross-Complainant City of Palmdale are GRANTED as to Requests for Admission No. 18–26, DENIED as to Requests for Admission No. 27–29, and GRANTED as to Form Interrogatory No. 17.1. Sanctions are awarded against Palmdale and its counsel in the amount of $2,300.

Plaintiffs to provide notice.

I.                   SUMMARY JUDGMENT

A party may move for summary judgment “if it is contended that the action has no merit or that there is no defense to the action or proceeding.”  (Code Civ. Proc. § 437c, subd. (a).) “[I]f all the evidence submitted, and all inferences reasonably deducible from the evidence and uncontradicted by other inferences or evidence, show that there is no triable issue as to any material fact and that the moving party is entitled to judgment as a matter of law,” the moving party will be entitled to summary judgment.  (Adler v. Manor Healthcare Corp. (1992) 7 Cal.App.4th 1110, 1119.) 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.  (Code Civ. Proc. § 437c, subd. (f)(2).)

The moving party bears an initial burden of production to make a prima facie showing of the nonexistence of any triable issue of material fact, and if he does so, the burden shifts to the opposing party to make a prima facie showing of the existence of a triable issue of material fact.  (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850; accord Code Civ. Proc. § 437c, subd. (p)(2).)

Once the defendant has met that burden, the burden shifts to the plaintiff to show that a triable issue of one or more material facts exists as to that cause of action or a defense thereto.  (Aguilar, supra, 25 Cal.4th at 850.)  The plaintiff may not rely upon the mere 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 that cause of action or a defense thereto.  (Ibid.)  To establish a triable issue of material fact, the party opposing the motion must produce substantial responsive evidence.  (Sangster v. Paetkau (1998) 68 Cal.App.4th 151, 166.)

Plaintiffs and Cross-Defendants CV Communities, LLC and City Ventures LLC (Plaintiffs) move for summary adjudication on Defendant and Cross-Complainant City of Palmdale’s (Palmdale) first cause of action for contractual indemnity contained in their First Amended Cross-Complaint (FAXC). Plaintiffs argue that paragraph 12 of the 2015 Final Conditions of Approval, which forms the basis for Palmdale’s indemnity claim, allows indemnity to Palmdale only for actions to contest conditions and approvals brought under the Subdivision Map Act, brought within 90 days of the condition or approval under Government Code § 66499.37, while the present action was not brought within the prescribed period. (Motion at pp. 16–20.) Plaintiffs also argue that paragraph 12 makes no provision for first-party applications to claims by Plaintiffs, and by ordinary rules of interpretation can only be construed to apply to third-party claims. (Motion at pp. 21–24.) Plaintiffs finally argue that paragraph 12 only applies to actions attacking an “approval” or a “condition of approval,” while Plaintiffs’ claims target the Joint Community Facilities District Agreement (JCFA), which is not an approval or a condition of approval. (Motion at pp. 24–25.)

Palmdale in opposition contends that its claims are not based merely on paragraph 12 of the Final Conditions of Approval, but also paragraph 12.1, which Plaintiffs do not target in this motion. (Motion at p. 5.) Palmdale relies on arguments embraced by this court in ruling on Plaintiffs’ two prior demurrers to the same claim to argue that paragraph 12’s 90-day limitations period apples only to actions against approvals or conditions of approval brought through the Subdivision Map Act, not to claims like those brought by Plaintiffs here. (Opposition at pp. 7–10.) Palmdale also argues that paragraph 12 applies to first-party claims brought by Plaintiffs, based on its custom and practice, attested to by former employee Chuck Hefferman. (Opposition at pp. 10–12.) Palmdale finally argues that Plaintiffs’ challenge to the JCFA constitutes an action on an approval or condition of approval, based on the numerous municipal actions and approvals that were necessary to effectuate the JCFA. (Opposition at pp. 12–18.)

Here, it is unnecessary to revisit paragraph 12’s relationship to the Subdivision Map Act, as Plaintiffs have shown that paragraph 12 applies only to third party claims, not claims by the “applicant” referred to in the Final Conditions of Approval.

Generally, an indemnification provision allows one party to recover costs incurred defending actions by third parties, not attorney fees incurred in an action between the parties to the contract. Courts look to several indicators to distinguish third party indemnification provisions from provisions for the award of attorney fees incurred in litigation between the parties to the contract. The key indicator is an express reference to indemnification. A clause that contains the words “indemnify” and “hold harmless” generally obligates the indemnitor to reimburse the indemnitee for any damages the indemnitee becomes obligated to pay third persons—that is, it relates to third party claims, not attorney fees incurred in a breach of contract action between the parties to the indemnity agreement itself.

(Alki Partners, LP v. DB Fund Services, LLC (2016) 4 Cal.App.5th 574, 600.)

Paragraph 12 of the Final Conditions of Approval states:

The applicant shall defend, indemnify, and hold harmless the City of Palmdale its elected and appointed officials, officers, employees, and agents from and against any claim, action, or proceeding against the City of Palmdale, its elected and appointed officials, officers, employees, or agents to attack, set aside, void, or annul any approval or condition of approval of the City of Palmdale concerning this subdivision, including but not limited to any approval or condition of approval of the City Council, Planning Commission, or Planning Director, which action is brought within the time period provided for in Government Code Section 66499.37. The City shall promptly notify the applicant of any claim, action, or proceeding concerning the subdivision and the City shall cooperate fully in the defense of the matter. The City reserves the right, at its own option, to choose its own attorney to represent the City, its elected and appointed officials, officers, employees, and agents in the defense of the matter.

(FAXC Exh. C, ¶ 12.) This provision’s use of terms such as “indemnify” and “hold harmless,” and the absence of any express reference to first-party indemnification for claims by Plaintiffs, indicates that it is intended to reach only third-party claims. This inference is further bolstered by the requirement that Palmdale “promptly nonify the applicant [i.e. Plaintiffs] of any claim, action, or proceeding concerning the subdivision, and the City shall cooperate fully in the defense of the matter.” (Ibid.) Plaintiffs would have no need of notice of a claim brought by themselves, and if they brought such a claim, it would not behoove Palmdale to “cooperate fully” with them in preparing its defense. Such provisions only make sense in the third-party context.

Palmdale argues that similar provisions have been held to apply to first-party claims, but its authority is inapposite. It cites Wilshire-Doheny Associates Ltd. v. Shapiro (2000) 83 Cal.App.4th 1380, 1387, which held that corporate officers could seek attorney fees in an action brought against them by the corporation, based upon many indemnity provisions contained in an agreement to which the corporation was a party, including one broadly worded  requirement that the company ”hold . . . [the officers] harmless against any and all claims . . . or other liabilities of whatsoever kind or nature arising out of or related to actions taken by the Indemnitees on behalf of” the corporation. (Id. at p. 1387.) Palmdale neglects, however, that another indemnity clause in that case specifically applied to an “action or suit by or in the right of the corporation to procure a judgment in its favor.” (Id. at p. 1395, 1396 [“In fact, paragraph (2) of article IX of the articles of incorporation specifically applies to an ‘action or suit by or in the right of the corporation to procure a judgment in its favor.’”].) This authority is therefore of no help to Palmdale, because it specifically provided for indemnity for first-party claims.

Palmdale presents the declaration of Chuck Hefferman, who testifies as follows. Based on his years of experience as an engineer employed in various municipal capacities, including as Palmdale’s Assistant Director of Public Works from 2009 to 2013 and Director of Development Services from 2013 to 2014 (Hefferman Decl. ¶¶ 13–14), that “Palmdale customarily secure broad indemnity agreements from real estate developers covering all claims brought against Palmdale with regard to real estate developments, by third parties and by the developer itself. (Hefferman Decl. ¶ 16.) Hefferman claims that Palmdale “knows how” to limit indemnification to third-party claims, referring to a 2014 Indemnity Agreement executed by Plaintiffs and Palmdale on another issue. (Hefferman Decl. ¶ 16, Exh. 1.) This agreement contains a recital stating that “Indemnitee has requested that Indemnitor provide an indemnity to the City against any third party claims” relating to tract maps controlled by Palmdale. (Hefferman Decl. Exh. 1.) Thus Palmdale claims that the absence of express third-party language in paragraph 12 indicates the potential for first-party liability.

This evidence does not suggest what Palmdale claims. The “third party claims” language that Hefferman cites is not found in the provisions of the contract outlining Plaintiffs’ indemnity obligations, but in a recital identifying what Palmdale “has requested.” (Hefferman Decl. Exh. 1.) The provision of the contract that actually outlines Plaintiffs’ indemnity obligations contains no express mention of third parties, and in its guarantee to “protect, indemnify, defend and hold harmless Indemnitee from and against any and all liability, costs, damages and expenses suffered by such Indemnitee,”  only confirms the general rule that such language implicitly applies to third parties only. Moreover, paragraph 12.1 of the Final Conditions of Approval —which Palmdale belatedly advances as an alternative basis for indemnity in this case —  also cuts against its interpretation of paragraph 12. If it was indeed Palmdale’s practice, against the general rules of contract interpretation, to use “indemnification” as a shorthand for both third- and first-party claims, then there would be no need for the language in paragraph 12.1 specifying that indemnification under that provision “includ[es] claims or actions by the Applicant.” (FAXC Exh. C, ¶ 12.1.) That such language is included in the same document as paragraph 12 is testament to the limitation of paragraph 12 to third-party claims. Thus the evidence that Palmdale submits to contradict Plaintiffs’ interpretation only lends it further support.

Palmdale argues that, even if paragraph 12 does not furnish a basis for express indemnity, an alternative basis for indemnity may be found in paragraph 12.1. (Opposition at p. 2.) This provision states:

In addition to the indemnification set forth in Condition #12, prior to the effective date of this Modification, Applicant shall sign an indemnification agreement, in form and content as approved by the City attorney, indemnifying the City from all claims and actions regarding this subdivision, regarding the procedures, approvals and extensions approved by the City, regarding prescriptive or other easements across the property, regarding the design and construction of the infrastructure, and including claims or actions by the Applicant, by its assignees, and successors in interest and by adjacent property owners or members of the public.

(FAXC Exh. C, ¶ 12.1.) Palmdale argues that this provision is included in the Final Conditions of Approval and incorporated by reference into its operative complaint, and that Plaintiffs have made no arguments against its applicability. (Opposition at p. 6.)

It is no surprise that Plaintiffs’ motion does not take paragraph 12.1 as one of its targets, because until Palmdale filed its opposition, none of its papers filed before the court had sought any relief based on that provision. “The pleadings define the issues to be considered on a motion for summary judgment.” (Allyson v. Department of Transportation (1997) 53 Cal.App.4th 1304, 1316.) Neither Palmdale’s original complaint or its operative FAXC make any mention of that provision. Although it is true that the provision is included in the Final Conditions of Approval attached and incorporated into the FAXC, the body of Palmdale’s pleadings contain no claim for relief based on paragraph 12.1. The incorporation of the conditions is insufficient. Palmdale’s incorporated conditions include not just paragraph 12.1 but more than 150 other paragraphs (not including those listed under sub-decimals) across 38 pages (FAXC Exh. C), and this is in addition to the hundreds of pages of other exhibits also attached and incorporated into the pleadings. The pleadings offer no more basis to believe paragraph 12.1 is at issue in this case than any other provision contained in any of the other documents attached to Palmdale’s complaints. None of Palmdale’s theories based on paragraph 12.1 are included in its FAXC, and Plaintiffs were not obliged to rebut them in moving for summary judgment. (Bostrom v. County of San Bernardino (1995) 35 Cal.App.4th 1654, 1663 [“[S]ummary judgment cannot be denied on a ground not raised by the pleadings.”].)

The motion is therefore properly GRANTED as to the first cause of action for express indemnity.

Palmdale asks leave to amend. (Opposition at p. 3.) It may seek such leave, and indeed must seek it, if it is to possess any claim for express indemnity after the hearing on this motion:

If either party wishes the trial court to consider a previously unpleaded issue in connection with a motion for summary judgment, it may request leave to amend.  Such requests are routinely and liberally granted. However, [I]n the absence of some request for amendment there is no occasion to inquire about possible issues not raised by the pleadings. Declarations in opposition to a motion for summary judgment are no substitute for amended pleadings. If the motion for summary judgment presents evidence sufficient to disprove the plaintiff's claims, as opposed to merely attacking the sufficiency of the complaint, the plaintiff forfeits an opportunity to amend to state new claims by failing to request it.

(Bostrom v. County of San Bernardino (1995) 35 Cal.App.4th 1654, 1663–1664, internal citations and quotation marks omitted.)

Plaintiffs in reply argue that paragraph 12.1 furnishes no basis for an indemnity claim, because by its terms it is not a claim for an indemnity, but an expression of the parties intent to later form an indemnity agreement. (Reply at pp. 9–10.) However, the fact that paragraph 12.1 contemplates a further writing memorializing the parties’ indemnity agreement is not necessarily a barrier to its enforcement. “[W]hen parties agree on the material terms of a contract with the intention to later reduce it to a formal writing, failure to complete the formal writing does not negate the existence of the initial contract.” (CSAA Ins. Exchange v. Hodroj (2021) 72 Cal.App.5th 272, 276.)

Leave to amend is therefore GRANTED.

II.                MOTION TO COMPEL FURTHER RESPONSES

“Any party may obtain discovery . . . by propounding to any other party to the action written interrogatories to be answered under oath.” (Code Civ. Proc. § 2030.010, subd. (a).) A propounding party may move for an order compelling further responses if the party believes the answers are incomplete, evasive, or the objections are without merit. (See Cal. Code Civ. Proc. § 2030.300, subd. (d).)

“On receipt of a response to requests for admissions, the party requesting admissions may move for an order compelling a further response,” if they contend the response is incomplete or that an objection is without merit. (Code Civ. Proc. § 2033.290, subd. (a).)

The party filing a motion must submit a meet-and-confer declaration. (Code Civ. Proc. § 2030.300, subd. (b).).

Plaintiffs move to compel further responses to Requests for Admission No. 18–29, and to Form Interrogatory No. 17.1 as it relates to those requests for admission. These requests sought the following admissions:

18.  That there was no claim or action against Palmdale against any approval related to the Joshua Ranch subdivision brought within 90 days of that approval;

19.  The same, but as to actions against conditions of approval;

20.  That Palmdale’s FAXC does not allege any such action as to any approval within 90 days;

21.  The same, but that the FAXC does not allege any action against conditions of approval;

22.  That Palmdale seeks no indemnity based on any such action against an approval filed within 90 days;

23.  The same, as to conditions of approval;

24.  That the 2015 Final Conditions of Approval do not require Plaintiffs to obtain water rights for the Joshua Ranch Development;

25.  That the 2015 Conditions do not require Plaintiffs to obtain a contracted water supply for the same development;

26.  That the 2015 Conditions do not require Plaintiffs to establish a financial mechanism to pay for the water supply to the development;

27.  That Palmdale never prepared an indemnity agreement under paragraph 12.1 of the conditions;

28.  That Palmdale never provided such an agreement to Plaintiffs;

29.  That Palmdale never asked Plaintiffs to sign such an agreement.

Palmdale offered different kinds of responses to Requests No. 18–23, Requests No. 24–26, and Requests No. 27–29. To requests asking into the existence of an action on an approval or condition of approval brought within 90 days of that approval or condition (Requests No. 18–23), Palmdale offered objections and a lengthy denial, arguing that the request “misstate[s] the relevant time frames and condition,” arguing that the 90-day time-limitation of Government Code § 66499.37 did not apply, and that Palmdale could bring no action for indemnity until an action was filed against it, meaning that its own present action was timely. (Separate Statement.)

As to those requests asking into the Conditions’ prescriptions for water rights (Requests No. 24–26), Palmdale responded with a denial stating that paragraph 12 of the Conditions required Plaintiffs to indemnify them for this action brought on the JCFA. (Separate Statement at pp. 18–21.) And as to those requests regarding the preparation or propounding of an indemnity agreement under paragraph 12.1 (Requests No. 27–29), Palmdale responded, “After diligent search and reasonable inquiry, Responding Party lacks sufficient information to admit or deny this Request and on that basis denies it.” (Separate Statement at pp. 23–25.)

Palmdale’s responses are insufficient. Its denials to Requests No. 18–23 were denials in name only, operating effectively as objections based solely on its legal position that paragraph 12 does not limit the indemnification obligations of Plaintiffs to challenges to conditions of approval or approvals subject to Government Code § 66499.37. These requests did not ask for Palmdale’s legal position, but rather for its admission or denial as to the existence of actions against approvals brought within the given time period. Palmdale’s responses were non-responsive.

The same is true as to Requests No. 24–26. Asked about the 2015 Conditions’ requirements as to water rights, Palmdale responded only by reference to the paragraph 12 indemnification provision. Again, though framed as a denial, this response was non-responsive, and operated solely as a defective objection to the requests.

Palmdale in opposition argues that it is statutorily entitled to qualify its responses to requests for admission. (Opposition at p. 7.) But Palmdale is not entitled to qualify its responses as it pleases. An answer to a request for admission may admit responses “as reasonably and clearly qualified by the responding party.” (Code Civ. Proc. § 2033.220, subd. (b)(1).) Palmdale’s responses to these requests are neither reasonable nor clear.

But Palmdale’s responses to Requests No. 27–29 are code-compliant as written. Asked concerning the preparation and offering of an indemnity agreement under paragraph 12.1, Palmdale responded that after a diligent inquiry it lacked information sufficient to admit or deny the truth of the request. A responding party may “[s]pecify so much of the matter involved in the request as to the truth of which the responding party lacks sufficient information or knowledge.” (Code Civ. Proc. § 2033.220, subd. (b)(3).) If this option is elected, “that party shall state in the answer that a reasonable inquiry concerning the matter in the particular request has been made, and that the information known or readily obtainable is insufficient to enable that party to admit the matter.” (Code Civ. Proc. § 2033.220, subd. (c).) Palmdale’s responses to these requests comply with the code.

Plaintiffs argue that the answers are implausible, as no one would know better than Palmdale concerning the indemnity agreement that its own conditions call for. (Separate Statement at p. 23.) Plaintiffs also note that in response to a request for production concerning such an agreement, Palmdale responded by stating that it would “produce all additional documents not already produced in this action.” (Mircheff Decl. Exh. D, Request No. 70.) Yet this vague response[1] does not indicate what information it possesses, or if the information to be produced would allow a positive or negative answer to the question. No further request for admission need be provided as to Requests for Admission No. 27–29.

However, Palmdale cannot avoid providing an explanation for its lack of knowledge in response to Form Interrogatory No. 17.1. Asked to state the facts and evidence in support of its responses to Requests No. 27–29, Palmdale responded only, “Responding Party’s denial is based on lack of information,” offering only the words “Not Applicable” to those spaces allotted to documents and witnesses supporting its contention. (Separate Statement at pp. 11–12.) These responses are not sufficient. Palmdale may indeed lack information sufficient to respond to Requests No. 27–29. But “[i]f only partial answers [to an interrogatory] can be supplied, the answers should reveal all information then available to the party. If a person cannot furnish details, he should set forth the efforts made to secure the information.” (Deyo v. Kilbourne (1978) 84 Cal.App.3d 771, 782.) Palmdale owes Plaintiffs such efforts here.[2]

Palmdale’s other responses to Form Interrogatory No. 17.1 are deficient as well. Its responses to the interrogatory as it relates to Requests No. 18–26 mimic the deficiencies of its answers to the requests themselves, outlined above, with the addition of the phrase “Not Applicable” to the subpart of the response reserved for the identification of witnesses. (Separate Statement at pp. 2–10.)

Finally, Palmdale’s response as to Request for Admission No. 30 is also deficient. This request asked Palmdale to admit that paragraph 12.1 from the conditions of approval was not ambiguous, which Palmdale denied. In response to Interrogatory No. 17.1, Palmdale stated that the only facts supporting its contention were “the language of Paragraph 12.1.” (Separate Statement at p. 12.) This conclusory response is insufficient.

Palmdale argues that Plaintiffs’ separate statement does not contain the text of the requests for admission at issue. (Opposition at pp. 6–8.) The text of these admissions are the subject of another motion set for  hearing on the same day and are discussed above. There being no prejudice resulting from this violation, it furnishes no basis to deny the motion.

The motions are therefore GRANTED as to Requests for Admission No. 18–26, DENIED as to Requests for Admission No. 27–29, and GRANTED as to Form Interrogatory No. 17.1.

III. SANCTIONS

Statute provides that the court shall impose sanctions upon a party who unsuccessfully makes or opposes a motion to compel further response to interrogatories, requests for production of documents, or requests for admission, absent substantial justification otherwise. (Code Civ. Proc. §§ 2030.300, subd. (d); 2031.310, subd. (h); 2033.290, subd. (d).)

Plaintiffs ask for $3,950.00 in connection with the admissions motion, representing two hours of attorney work at $600 per hour plus five hours at $550 per hour. (Mircheff Decl. ¶¶ 13–15.) Plaintiffs seek $3,400.00 in connection with the interrogatories motion, representing two hours at $600 and four hours at $550 per hour. (Mircheff Decl. ¶¶ 10–12.) Plaintiffs thus request a total sanctions award of $$7,300.00, against Palmdale and its counsel of record.

Sanctions are awarded against Palmdale and its counsel in the amount of $2,300.