Judge Kerry Bensinger, Case Number: 22STCV10067, Date: 2024-05-08 Tentative Ruling

MOVING PARTIES: Cross-Defendants Douglas Elliman of California, Inc. and Tracy Tudor

RESPONDING PARTIES: Defendants and Cross-Complainants Dream Team Real Estate Consultants Inc. dba Keller Williams Realty Encino – Sherman Oaks and Andrew Dinksy

This is a construction defect case. David Bilfeld (“Bilfeld”) and his company, 1978, LLC, were in the business of developing and building residential homes. In 2018, Plaintiff Cathy Arkley (“Plaintiff”) entered into an agreement to purchase a residential property located at 462 N. Croft Avenue, Los Angeles, California 90048 (the “Subject Property”) from Bilfeld and his company. Douglas Elliman of California, Inc. (“Elliman”) and Tracy Tudor (“Tudor”) were Plaintiff’s real estate broker and agent, respectively. Dream Team Real Estate Consultants Inc. dba Keller Williams Realty Encino – Sherman Oaks (“Keller Williams”) and Andrew Dinksy (“Dinsky”) were Bifeld and 1978, LLC’s agent in the transaction. At closing, inspections uncovered undisclosed defects in the Subject Property. Bilfeld and 1978, LLC promised to repair the defects but failed to do so. Plaintiff discovered additional undisclosed defects after moving into the Subject Property. Further, when Plaintiff attempted to resell the Subject Property, her real estate broker and agent discovered that the square footage of the Subject Property had been misrepresented in the property listing. This suit followed.

On March 23, 2022, Plaintiff filed a Complaint against Bilfeld and 1978, LLC for (1) Violations of Building Standards as outlined in Cal. Civ. Code § 896, (2) Breach of Contract, (3) Breach of Express and Implied Warranty, (4) Fraud, and (5) Strict Liability.

On May 12, 2023, Bilfeld and 1978, LLC filed a cross-complaint against Dinsky, Keller Williams, and PLG Estates, Inc. aka Peter Lorimer Group Estates, Inc., for indemnity and contribution. The operative cross-complaint was filed on June 8, 2023.

On July 14, 2023, Dinsky and Keller Williams (hereafter, “Cross-Complainants”) filed a Cross-Complaint against Bilfeld; 1978, LLC; Elliman; and Tudor, alleging causes of action for (1) Indemnity, (2) Contribution, and (3) Declaratory Relief. The First Amended Cross-Complaint (“FACC”), which is the operative pleading, was filed on December 14, 2023.

On February 14, 2024, Elliman and Tudor (hereafter, “Cross-Defendants”) filed this Demurrer to FACC.

A demurrer tests the legal sufficiency of the pleadings and will be sustained only where the pleading is defective on its face.¿ (City of Atascadero v. Merrill Lynch, Pierce, Fenner & Smith, Inc. (1998) 68 Cal.App.4th 445, 459.)¿ “We treat the demurrer as admitting all material facts properly pleaded but not contentions, deductions or conclusions of fact or law.¿ We accept the factual allegations of the complaint as true and also consider matters which may be judicially noticed.¿ [Citation.]”¿ (Mitchell v. California Department of Public Health (2016) 1 Cal.App.5th 1000, 1007; Del E. Webb Corp. v. Structural Materials Co. (1981) 123 Cal.App.3d 593, 604 [“the facts alleged in the pleading are deemed to be true, however improbable they may be”].) Allegations are to be liberally construed.¿ (Code Civ. Proc., § 452.)¿ In construing the allegations, the court is to give effect to specific factual allegations that may modify or limit inconsistent general or conclusory allegations.¿ (Financial Corporation of America v. Wilburn (1987) 189 Cal.App.3d 764, 769.)¿¿¿¿

A demurrer may be brought if insufficient facts are stated to support the cause of action asserted.¿(Code Civ. Proc., § 430.10, subd. (e).)¿“A demurrer for uncertainty is strictly construed, even where a complaint is in some respects uncertain, because ambiguities can be clarified under modern discovery procedures.”¿(Khoury v. Maly’s of California, Inc. (1993) 14 Cal.App.4th 612, 616.)¿¿¿¿

Where the complaint contains substantial factual allegations sufficiently apprising defendant of the issues it is being asked to meet, a demurrer for uncertainty will be overruled or plaintiff will be given leave to amend.¿ (Williams v. Beechnut Nutrition Corp. (1986) 185 Cal.App.3d 135, 139, fn. 2.)¿ Leave to amend must be allowed where there is a reasonable possibility of successful amendment.¿ (Goodman v. Kennedy (1976) 18 Cal.3d 335, 348.)¿ The burden is on the complainant to show the court that a pleading can be amended successfully. (Ibid.)¿

“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.”¿ (Code Civ. Proc., § 430.41(a).)¿

Here, Cross-Defendants have not made a sufficient showing that they made efforts to meet and confer prior to filing this Demurrer. (See Declaration of Ari Markow, ¶ 2.) However, “[a] determination by the court that the meet and confer process was insufficient shall not be grounds to overrule or sustain a demurrer.” (Code Civ. Proc., § 430.41(a)(4).)¿ Accordingly, the court exercises its discretion to consider the Demurrer.¿¿¿

Cross-Defendants argue the FACC fails to allege facts sufficient to state a cause of action for indemnity, contribution, or declaratory relief. The court addresses each in turn.

Cross-Defendants demur to the First Cause of Action on two grounds: (1) there are no facts alleged in Plaintiff’s complaint or the Cross-Complainants’ FACC that give rise to Cross-Defendants’ liability and (2) Cross-Defendants improperly seek equitably indemnity for Plaintiff’s breach of contract action. Cross-Defendants’ arguments have merit.

First, there is no alleged liability against Cross-Defendants. The elements of a cause of action for indemnity are (1) a showing of fault on the part of the indemnitor and (2) resulting damages to the indemnitee for which the indemnitor is contractually or equitably responsible.” (Expressions at Rancho Niguel Ass’n v. Ahmanson Developments, Inc. (2001) 86 Cal.App.4th 1135, 1139 (italics in original).) “[T]there can be no indemnity without liability.” (Prince v. Pac. Gas & Elec. Co. (2009) 45 Cal.4th 1151, 1156.)

Here, Plaintiff alleges that Cross-Complainants made intentional misrepresentations about the condition and square footage of the Subject Property and concealed defects. Plaintiffs also argue that such information was completely within Cross-Complainants’ control. (See FAC ¶¶ 18-21,24,76-91.) The FACC does not allege any additional facts to the contrary. (See FACC, ¶¶ 7-11.) In other words, there are no allegations showing that Cross-Defendants have any liability for Plaintiff’s injury.

Second, Plaintiff’s claim against Cross-Complainants is based in contract. (See FAC, ¶¶ 7, 40, 41, 52-70.) Yet, Cross-Complainants seek comparative equitable indemnity. (See FACC, ¶ 11.) Equitable indemnity is not available to apportion damages arising from a breach of contract claim. (Stop Loss Ins. Brokers, Inc. v. Brown & Toland Med. Grp. (2006) 143 Cal.App.4th 1036, 1054-55 (Pollack, J., concurring) [“Nonetheless, there are conceptual problems in imposing equitable indemnity on a party whose liability is based on breach of contract that do not exist in applying equitable indemnity between two tortfeasors. The measure of damages in most tort cases is all loss proximately caused by the wrongdoing, whether anticipated or not. However, the measure of contract damages remains very much the same as articulated in Hadley v. Baxendale (1884 Ex.) 156 Eng.Rep. 145—those damages that the parties could reasonably have anticipated when they entered the contract. [Citation.] Thus, apportionment between parties who have breached different contracts entered at different times would in theory require the use of different measures of damages, as would apportionment as between a party liable in tort and a party liable for breach of contract. [Citation.] This would, at a minimum, complicate the apportionment formula.”].) Cross-Complainants’ indemnity claim fails for this additional reason. Cross-Complainants do not offer any argument or authority to the contrary.

Equitable contribution is the right to recover from a co-obligor who shares liability with the party seeking contribution. (Fireman’s Fund Ins. Co. v. Md. Cas. Co. (1998) 65 Cal.App.4th 1279, 1293.) A right of contribution requires: 1) two or more parties jointly at fault; 2) common liability between or among those parties because of that fault; and 3) one party paying an unequal portion of the common liability. (4 Restatement (Second) of Torts § 886A. Rev. 191, 240.) Contribution requires a joint obligation. (Civ. Code, § 1432.) “An action to enforce the right of contribution is governed by equitable principles. (Overholser v. Glynn (1968) 267 Cal.App.2d 800, 807; Jans v. Nelson (2000) 83 Cal.App.4th 848, 855.) Contribution presupposes a common liability which is shared by joint tortfeasors on a pro rata basis. (Rollins v. State of California (1971) 14 Cal.App.3d 160, 165.)

Like an indemnity cause of action, a contribution claim requires a share of liability. Because the court has found there are no allegations demonstrating Cross-Complainants’ liability liability, the Second Cause of Action likewise fails. Cross-Complainants do not present any argument or authority directing a different conclusion.

“To qualify for declaratory relief, a party would have to demonstrate its action presented two essential elements: (1) a proper subject of declaratory relief, and (2) an actual controversy involving justiciable questions relating to the party’s rights or obligations.”¿ (Jolley v. Chase Home Finance, LLC (2013) 213 Cal.App.4th 872, 909, [cleaned up].) A demurrer to a declaratory relief cause of action may lie where it is wholly derivative of a claim that is invalid as a matter of law. (See Ball v. FleetBoston Fin. Corp. (2008) 164 Cal.App.4th 794, 800 [sustaining demurrer to declaratory relief claim which was wholly derivative of a statutory claim].)

Here, Cross-Complainants seek “a declaration that it is entitled to total indemnity and contribution or, in the alternative, to partial indemnity from Cross-Defendants, in the event Cross-Complainants are determined to be held liable to Plaintiff for any damages alleged in the Complaint.” (FAC, ¶ 16.) As alleged, the Third Cause of Action is wholly derivative of the indemnity and contribution claims. The Third Cause of Action is deficient.

Based on the foregoing, the Demurrer is SUSTAINED. Leave to amend is GRANTED as to the Second Cause of Action only.

Defendants and Cross-Complainants Dream Team Real Estate Consultants Inc. dba Keller Williams Realty Encino – Sherman Oaks and Andrew Dinksy are to file and serve the Second Amended Cross-Complaint within 20 days of this order.

Kerry Bensinger

Judge of the Superior Court