Judge: Martha K. Gooding, Case: 2020-01154481, Date: 2022-08-29 Tentative Ruling

1) Motion for Attorney Fees

2) Motion for Leave to Amend (continued from 8/22/22)

Motion for Leave to Amend

The Motion by Plaintiff and Cross-Defendant Chaz Mangan (“Plaintiff/Cross-Defendant”) for leave to file a first amended answer to the Cross-Complaint of Defendant and Cross-Complainant Safe Harbor Treatment Center for Women is DENIED.  

Cross-Complainant’s request for sanctions is DENIED. 

Cross-Defendant’s evidentiary objection is OVERRULED as part of the objected-to paragraph is in fact admissible.

The court may, in furtherance of justice, and on any terms as may be proper, allow a party to amend any pleading or proceeding by adding or striking out the name of any party, or by correcting a mistake in the name of a party, or a mistake in any other respect; and may, upon like terms, enlarge the time for answer or demurrer.  Code Civ. Proc. § 473(a) (1).  The court may likewise, in its discretion, after notice to the adverse party, allow, upon any terms as may be just, an amendment to any pleading or proceeding in other particulars; and may upon like terms allow an answer to be made after the time limited by this code.  Code of Civ. Proc. § 473(a) (1).  Additionally, any judge, at any time before or after commencement of trial, in the furtherance of justice, and upon such terms as may be proper, may allow the amendment of any pleading or pretrial conference order.  Code of Civ. Proc. § 576.

A motion to amend a pleading before trial must:  (1) include a copy of the proposed amendment or amended pleading; (2) state what allegations in the previous pleading are proposed to be deleted, if any, and where, by page, paragraph, and line number, the deleted allegations are located; and (3) state what allegations are proposed to be added to the previous pleading, if any, by page, paragraph, and line number, the additional allegations are located.  CRC 3.1324(a).  A separate declaration must accompany the motion and must specify: (1) the effect of the amendment; (2) why the amendment is necessary and proper; (3) when the facts giving rise to the amended allegations were discovered; and (4) the reasons why the request for amendment was not made earlier.  CRC 3.1324(b).

Plaintiff/Cross-Defendant has submitted its proposed amended answer.  [Cooper Decl., Ex. B.] Further, counsel’s declaration and an attached exhibit with a red-line version of the proposed answer show the proposed changes.  [Id., ¶¶ 3, 11, 12 and Ex. A.]

However, the only explanation of the very belated timing of the request to amend is that counsel looked more closely at the answer and affirmative defenses after reviewing the Court’s Statement of Decision on the Phase 1 trial of Plaintiff’s Ninth Cause of Action.  Counsel provides no explanation for the belated attempt to add the attorneys’ fee prayer.

California courts generally allow great liberality, at all stages of the proceeding, in permitting the amendment of pleadings in order to resolve cases on their merits.  IMO Development Corp. v. Dow Corning (1982) 135 Cal. App. 3d 451, 461.  Because the policy favoring amendment is so strong, “it is a rare case in which a court will be justified in refusing a party leave to amend his pleadings so that he may properly present his case.”  Morgan v. Superior Court (1959) 172 Cal. App. 2d 527, 530 (internal quotations omitted).  This is particularly true for amendment of answers, as a defendant denied leave to amend is permanently deprived of a defense.  Hulsey v. Koehler (1990) 218 Cal. App. 3d 1150, 1159.

This liberality only applies, however, so long as there is no prejudice to the opposing party.  Higgins v. Del Faro (1981) 123 Cal. App. 3d 558, 564.  Denial of leave to amend is appropriate where inexcusable delay and probable prejudice to the opposing party is shown.  This may happen where a proposed amendment opens up an entirely new field of inquiry without any satisfactory explanation as to why the major change in point of attack had not been made long before trial.  Estate of Murphy v. Gulf Ins. Co. (1978) 82 Cal. App. 3d 304, 311. 

If the party seeking the amendment has been dilatory, and the delay has prejudiced the opposing party, the judge has discretion to deny leave to amend. Hirsa v. Sup.Ct. (Vickers) (1981) 118 Cal. App. 3d 486, 490; Melican v. Regents of Univ. of Calif. (2007) 151 Cal. App. 4th 168, 176; Fisher v. Larsen (1982) 138 Cal. App. 3d 627, 649 (where plaintiff knew for over five months that certain claims had not been properly pleaded, and took no action to amend until after a summary judgment had been granted against it, it was not an abuse of discretion to deny leave to amend the complaint); Hulsey v. Koehler (1990) 218 Cal. App. 3d 1150.

Ordinarily, the court does not consider the validity of the proposed amended pleading in deciding whether to grant leave to amend.  Kittredge Sports Co. v. Superior Court (Marker, U.S.A.) (1989) 213 Cal. App. 3d 1045, 1048

Here, the primary issue with Cross-Defendant’s Motion to Amend is that he is seeking to add defenses to the release he signed after he already lost a trial about the enforceability of that release.  Cross-Defendant’s effort is essentially to undo or evade the Court’s prior adjudication. 

The Court previously denied Cross-Defendant’s request to add a claim for “rescission” during the phase 1 trial based on violation of “Civil Code section 1550 (lack of consideration).”  Now, Cross-Defendant seeks to bring lack of consideration in under the description “Failure to Perform.”  The substance, however, is no different.

Beyond this, Cross-Defendant does not explain the delay between the filing of his original answer and the filing of the motion to amend – other than that Cross-Defendant lost at the Phase 1 trial. There is nothing about the defenses themselves (or the attorneys’ fee prayer) that could not have been figured out earlier – and alleged earlier

The Court finds Cross-Defendant has not been diligent; to the contrary, it unreasonably and inexcusably delayed seeking amendment.  The Court further finds that Cross-Complainant would be prejudiced by the proposed amendments, including re-opening of the issues already adjudicated in its favor by the Court.

Finally, the Court denies Cross-Complainant’s request for sanctions.  Cross-Complainant seeks sanctions under CCP section 1008(d) on the ground that the motion to amend is an improper motion for reconsideration.   The Court finds the motion less an attempt to seek “reconsideration” and more an attempt to find a way to end-run the prior rulings.   In either event, the Court denies sanctions.

Cross-Complainant Safe Harbor Treatment Center is ordered to give notice of the ruling on this motion for leave to amend.

Motion for Attorneys Fees

The Motion by Defendant Safe Harbor Treatment Center for Women, Inc. for attorneys’ fees is DENIED.

Safe Harbor points to the indemnity provision in the Agreement – under which Plaintiff agreed to indemnify Safe Harbor for losses arising from various kinds of conduct by Plaintiff – as a basis for an award of attorneys’ fees against Plaintiff.

Generally, the inclusion of attorney fees as an item of loss in a third-party claim-indemnity provision does not constitute a provision for the award of attorney fees in an action on the contract which is required to trigger Civil Code section 1717. Silverado Modjeska Recreation and Parks Dist. v. County of Orange (2011) 197 Cal.App.4th 282, 310 n. 21.  Contract language that a contractor will indemnify an owner from claims or losses including attorney fees that arise out of the performance of the work are generally indemnity provisions.  Carr Business Enterprises, Inc. v. City of Chowchilla (2008) 166 Cal.App.4th 14, 19.  Agreements to “indemnify” a person, and “hold harmless” are indicative of indemnity clauses.  Id. at 20-21; Southern Pacific Thrift & Loan Assn. v. Savings Assn. Mortgage Co. (1999) 70 Cal.App.4th 634, 642.

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.

As explained in Alki Partners, LP v. DB Fund Services, LLC (2016) 4 Cal.App.5th 574, 600:  “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. (See Carr, supra, 166 Cal.App.4th at p. 20, 82 Cal.Rptr.3d 128.)”

Courts also examine the context in which the language appears. Generally, if the surrounding provisions describe third party liability, the clause will be construed as a standard third-party indemnification provision. The court will not infer that the parties intended an indemnification provision to cover attorney fees between the parties if the provision “ ‘does not specifically provide for attorney's fees in an action on the contract[.]” Alki Partners LP v. DB Fund Services, LLC (2016), 4 Cal.App.5^th 574, 600–01 (internal citations omitted) (emphasis added).

The indemnification provision at issue here contains the words “indemnify” and “hold harmless.”  It does not, however, have surrounding provisions that describe third-party liability.  Finally, the provision does not specifically provide for attorneys’ fees and costs in an action on the contract between the parties to the contract, which weighs against interpreting the provision at issue as covering attorneys’ fees and costs in this action.

“While paragraph 13 of the contract provides for attorneys' fees in certain situations, it does not specifically provide for attorney's fees in an action on the contract as is required to trigger operation of section 1717 of the Civil Code. Reading the entire paragraph 13 is helpful in interpreting the provision for attorney's fees. Since the heading reads ‘SUBCONTRACTOR'S LIABILITY INSURANCE, INDEMNITY,’ and since the first paragraph deals with tort claims of third parties, the reasonable and logical interpretation of the second paragraph is that it provides for attorney's fees in third[-]party tort actions (Civ.Code, § 1643). Reading the second paragraph of paragraph 13 as covering ‘actions on the contract; would render it inconsistent with the balance of paragraph 13.’ ” (Meininger v. Larwin–Northern California, Inc., supra, 63 Cal.App.3d at p. 85, 135 Cal.Rptr. 1, italics in original.)

Myers Building Industries, Ltd. v. Interface Technology, Inc. (1993) 13 Cal.App.4th 949, 970.

For an indemnification provision to be interpreted as covering attorneys’ fees and costs in an action on a contract between the parties, there must be language in the contract that “reasonably can be interpreted as addressing the issue of an action between the parties on the contract.” Alki, 4 Cal.App.5^th at 601, 209 (citation and internal quotation marks omitted) (emphasis supplied). For example, attorneys’ fees and costs are recoverable in an action between the parties where the indemnity provision includes “express language for attorney's fees incurred in enforcing [the] indemnity agreement.” Id. at 602 (citations omitted) (emphasis supplied); see also Baldwin Builders v. Coast Plastering Corp., 125 Cal. App. 4th 1339, 1342, 24 Cal.Rptr.3d 9 (2005) (holding that an indemnity provision authorized the recovery of attorneys’ fees on an action on the contract between the parties because it included express language that “[s]ubcontractor shall pay all costs, including attorney's fees, incurred in enforcing this indemnity agreement’ ” (emphasis supplied)).

Safe Harbor cites to Wilshire–Doheny, (2000) 83 Cal.App.4th 1380, to support its argument that the indemnity provision in the Agreement gives it a right to recover attorneys’ fees here.  In Wilshire–Doheny, the court considered whether particular indemnity provisions were limited to third party claims. In that case, a corporation agreed to indemnify two of its corporate officers with respect to any claims or action brought against them in their capacity as corporate officers. Id. at 1387, 1394–1395. The corporation sued the two officers arising out of their conduct as corporate officers. Id. at 1385–1386. The indemnity provision specifically applied to an “ ‘action or suit by or in the right of the corporation to procure a judgment in its favor.’ ” Id. at 1395. Noting this language in particular, the Wilshire–Doheny court held the provision afforded a right to attorney fees in an action on the contract. Id. at 1396–1397.  The language in the Agreement here contains no similar language.

In light of the use of indemnification language, and the absence of express language including a suit by Plaintiff, the Court finds that Safe Harbor has not shown that it is entitled to recover attorneys’ fees and costs from Plaintiff under paragraph 13 of the Agreement.

Plaintiff is ordered to give notice of the ruling on this motion for an award of attorneys fees.