Judge: Mark E. Windham, Case: 24STLC02577, Date: 2024-07-15 Tentative Ruling
Case Number: 24STLC02577 Hearing Date: July 15, 2024 Dept: 26
DEMURRER;
MOTION TO STRIKE
(CCP §§ 430.31,
et seq., 435, et seq.)
TENTATIVE RULING:
Defendant Acme
Freight Services, Corp.’s Demurrer to the Complaint is OVERRULED AS TO THE
FIRST CAUSE OF ACTION AND SUSTAINED WITHOUT LEAVE TO AMEND AS TO THE SECOND
CAUSE OF ACTION.
Defendant Acme
Freight Services, Corp.’s Motion to Strike is GRANTED WITHOUT LEAVE TO AMEND
SOLELY AS TO THE DEMAND FOR ATTORNEY’S FEES.
ANALYSIS:
Plaintiff New
York Marine and General Insurance Company (“Plaintiff”) filed the instant
action against Defendant Acme Freight Services, Corp. (“Defendant”) on December
2, 2022. The Complaint alleges causes of action for (1) equitable
indemnification; and (2) contribution.
Defendant filed
the instant Demurrer to, and Motion to Strike Portions of, the Complaint on June
12, 2024. Plaintiff filed an opposition on July 2, 2024 and Defendant replied
on July 10, 2024. Although Plaintiff filed and served its opposition one day
late, as pointed out in the reply, the Court finds this is not sufficient
grounds to disregard it. Defendant was able to timely file and serve a
substantive reply.
Discussion
Allegations in the Complaint
Plaintiff is the subrogee of Paxton, Shreve & Hayes, Inc. (“Paxton”).
(Compl., ¶1.) On April 20, 2022, Plaintiff agreed to pay Lee Johnson, as
assignee of Care + 1, LLC, $23,000.00 for damages caused by Defendant. (Id.
at ¶¶11, 16.) The agreement followed the filing of a first amended complaint by
Johnson against Paxton. (Id. at ¶11.) The damages to Johnson were caused
by Defendant issuing inadequate arrival notices and bills of lading, delaying
U.S. Customs clearances of eight cargo containers. (Id. at ¶¶11-15.)
Defendant is in some manner legally liable for the damages alleged in Johnson’s
action. (Id. at ¶15.) Plaintiff demanded that Defendant contribute to
the damages paid to Johnson but Defendant has refused to respond. (Id.
at ¶¶17-18.)
Demurrer to Complaint
Defendant demurs to both causes of action on grounds of failure to
allege facts sufficient to state a cause of action. (Citing Code Civ. Proc., §
430.10, subd. (e).) The Demurrer is
accompanied by a meet and confer declaration that complies with Code of Civil
Procedure section 430.41. (Demurrer, Nomura Decl., ¶¶3-5.)
“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 . . .
equitably responsible.” (Bailey v. Safeway, Inc. (2011) 199Cal.App.4th
206, 217.) Defendant argues that the Complaint does not state sufficient facts
regarding its liability for indemnity because the aforementioned allegations
are contentions, deductions or conclusions of fact or law. The Court disagrees.
The Complaint alleges the ultimate facts that Defendant issued inadequate arrival notices and bills of
lading (fault), which delayed the clearance of the subject cargo containers
through U.S. Customs (resulting damages). The law does not require that the
pleadings allege the specific manner in which the bills of lading or arrival
notices were inadequate. (Krug v. Meehan (1952) 109 Cal.App.2d 274, 277
[“The complaint must allege ultimate facts, not evidentiary facts or
conclusions of law. The line of demarcation between a conclusion of fact and a
conclusion of law is not easy to draw in all cases. The allegation of an
ultimate fact usually, if not always, involves one or more conclusions. The
rule which requires allegations of facts where undue influence is the issue
does not require the allegation of evidentiary facts but only that ultimate
facts be pleaded; it does not exclude conclusions of fact but only conclusions
of law.”]) The Demurrer to the first cause of action, therefore, is overruled.
Regarding the cause of action for contribution, it appears that Plaintiff
is actually alleging equitable subrogation. The elements of insurance equitable
subrogation are:
“(1) The insured has suffered a loss for which the party to be charged is
liable, either because the latter is a wrongdoer whose act or omission caused
the loss or because he is legally responsible to the insured for the loss
caused by the wrongdoer; (2) the insurer, in whole or in part, has compensated
the insured for the same loss for which the party to be charged is liable; (3)
the insured has an existing, assignable cause of action against the party to be
charged, which action the insured could have asserted for his own benefit had
he not been compensated for his loss by the insurer; (4) the insurer has
suffered damages caused by the act or omission upon which the liability of the
party to be charged depends; (5) justice requires that the loss should be
entirely shifted from the insurer to the party to be charged, whose equitable
position is inferior to that of the insurer; and (6) the insurer's damages are
in a stated sum, usually the amount it has paid to its insured, assuming the
payment was not voluntary and was reasonable.”
(AMCO Ins. Co. v. All Solutions Ins. Agency, LLC (2016) 244
Cal.App.4th 883, 897-898 [citing Patent Scaffolding Co. v. William Simpson
Constr. Co. (1967) 256 Cal.App.2d 506, 512].) The Complaint alleges
Plaintiff, as the insurer for Paxton, paid Johnson for a loss for which
Defendant is liable based on Defendant’s wrongdoing. However, Plaintiff does
not allege it compensated Paxton for the loss caused by Defendant. Instead, the
Complaint alleges that Plaintiff agreed to pay Johnson. (Compl., ¶16.)
Regarding the third element, the Complaint also does not allege that Plaintiff
has paid Johnson yet, only that it has agreed to do so. (Id. at ¶¶16,
22.) Finally, as Defendant points out, the Complaint does not allege a stated
sum of damages incurred by Plaintiff as required for the sixth element of
equitable subrogation. Plaintiff alleges damages of $23,000.00 plus attorney’s
fees, court costs, and related expenses in an unstated amount. (Id. at
¶¶25-26.) The Complaint does not allege facts sufficient to state a cause of
action for equitable subrogation and the Demurrer to the second cause of action
is sustained.
Motion to Strike Portions of Complaint
Defendant also moves to strike Plaintiff’s demand for “a judgment against
the Defendants for the attorneys’ fees, court costs, expenses, and damages Plaintiff
has paid or incurred in defending against Johnson’s complaint, filing of this
Complaint, and other costs of suit Plaintiff has paid or incurred.” (Compl.,
Prayer, ¶3.) The basis of the Motion to Strike is that the request for
attorney’s fees as unsupported by any basis in contract, law or statute. (See
Code Civ. Proc., §§ 1021, 1033.5, subd. (a)(10).) Plaintiff’s opposition argues
that the Motion to Strike is procedurally improper because it was included with
the Demurrer instead of filed separately. As with the untimely opposition, the
Court declines to find this procedural error grounds to disregard the Motion to
Strike. Indeed, Plaintiff’s joint opposition to the Demurrer and Motion to
Strike is likewise procedurally improper.
Code of Civil Procedure section 1021 is a codification of the American
rule, “which provides that each party to a lawsuit must ordinarily pay his own
attorney fees.” (Trope v. Katz (1995) 11 Cal.4th 274, 278.) Neither
Plaintiff’s Complaint nor opposition demonstrate that the attorney’s sought in
the prayer should be excepted from this rule. However, Defendant’s Motion to
Strike, does not explain why the remainder of the demand, for “court costs,
expenses, and damages Plaintiff has paid or incurred in defending against
Johnson’s complaint, filing of this Complaint, and other costs of suit” should
be struck. Code of Civil Procedure section 1021 states that “parties to actions
or proceedings are entitled to their costs, as hereinafter provided.” The
Motion to Strike is granted solely as to the demand for attorney’s fees.
Leave to Amend
Leave to amend must be allowed
where there is a reasonable possibility of successful amendment, however, the
burden is on the complainant to show the Court that a pleading can be amended
successfully. (Goodman v. Kennedy (1976) 18 Cal.3d 335, 348.) Plaintiff
has not shown through its opposition to the Demurrer and Motion to Strike the
possibility of successfully alleging equitable subrogation or attorney’s fees.
Therefore, leave to amend is denied.
Conclusion
Defendant Acme
Freight Services, Corp.’s Demurrer to the Complaint is OVERRULED AS TO THE
FIRST CAUSE OF ACTION AND SUSTAINED WITHOUT LEAVE TO AMEND AS TO THE SECOND
CAUSE OF ACTION.
Defendant Acme Freight Services,
Corp.’s Motion to Strike is GRANTED WITHOUT LEAVE TO AMEND SOLELY AS TO THE
DEMAND FOR ATTORNEY’S FEES.
Moving party to give notice.