Judge Michael Shultz, Case Number: 23CMCV00774, Date: 2023-10-17 Tentative Ruling

23CMCV00774 Los Angeles Unified School District v. Watts Learning Center Foundation, Inc. and ASCIP of Schools for Cooperative Insurance Programs

[TENTATIVE] ORDER OVERRULING DEMURRER BY ALLIANCE OF SCHOOLS FOR COOPERATIVE INSURANCE PROGRAM TO THE FIRST AMENDED COMPLAINT

I. BACKGROUND

The first amended complaint alleges that Defendant Watts Learning Center Foundation, Inc. (“Watts”) breached an obligation set forth in its Charter Petition to provide liability insurance covering Plaintiff, Los Angeles Unified School District (“LAUSD”), as an additional insured. Watts obtained coverage from Alliance of Schools for Cooperative Insurance Program (“ASCIP”) to defend, indemnify, and hold LAUSD harmless against any claims for damages arising out of the Charter Petition. LAUSD alleges claims for breach of contract, express indemnity, and declaratory relief against Watts.

Additionally, LAUSD alleges claims for breach of contract and for declaratory relief against ASCIP for breaching its contractual duty to defend LAUSD in the personal injury action filed by Plaintiff M.R. in the related lawsuit (20STCV22476 Veronica Hamid, et al v. LAUSD, et al. “M.R. Lawsuit”).

Defendant ASCIP demurs to the sixth cause through eighth causes of action on grounds LAUSD failed to timely present a claim pursuant to the Government Claims Act (“GCA”) prior to filing this lawsuit. ASCIP argues it is a public entity formed pursuant to the Joint Exercise of Powers Act. LAUSD’s letter tendering defense to ASCIP cannot satisfy the claims filing requirements since LAUSD delivered its tender letters before Plaintiff filed the complaint. Therefore, Plaintiff’s claims are barred for failure to file a government claim within one year of accrual.

In opposition, LAUSD argues that a public entity is not required to present a claim to another public entity before filing suit. Regardless, Plaintiff argues that its tender letters delivered to ASCIP satisfies the claims filing requirements. ASCIP waived any defense of the claims filing requirement since ASCIP did not give statutory notice in its letter rejecting tender of defense. The indemnity claims do not accrue until the indemnitee has suffered a loss through payment of M.R.’s damage claim. Claims filing requirements do not apply to claims for declaratory relief. Alternatively, LAUSD asks for leave to amend.

ASCIP did not file a reply brief by February 27, 2025 (five court days before the hearing). (Code Civ. Proc., § 1005 subd. (b).)

III. LEGAL STANDARDS

A demurrer tests the sufficiency of the pleading as a matter of law and raises only questions of law. (Schmidt v. Foundation Health (1995) 35 Cal.App.4th 1702, 1706.) In testing its sufficiency, the court must assume the truth of (1) the properly pleaded factual allegations; (2) facts that can be reasonably inferred from those expressly pleaded; and (3) judicially noticed matters. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) The court may not consider contentions, deductions, or conclusions of fact or law. (Moore v. Conliffe (1994) 7 Cal.4th 634, 638.) The plaintiff must show that the pleading alleges facts sufficient to establish every element of each cause of action. (Rakestraw v. California Physicians Service (2000) 81 Cal.App.4th 39, 43.) Where the pleading fails to state facts sufficient to constitute a cause of action, courts should sustain the demurrer. (Code Civ. Proc., § 430.10(e); Zelig v. County of Los Angeles (2002) 27 Cal.4th 1112, 1126.)

IV. DISCUSSION

No suit may be brought against a public entity until a written claim has been presented and acted upon by the public entity. (Gov. Code, § 945.4.) A “public entity” “includes the state, the Regents of the University of California, the Trustees of the California State University and the California State University, a county, city, district, public authority, public agency, and any other political subdivision or public corporation in the State.” (Gov. Code, § 811.2.)

The FAC alleges on information and belief that defendant ASCIP is a California joint powers authority (“JPA”) that provides liability insurance coverage to member public agencies, including Watts and LAUSD. (FAC, ¶ 3.) Plaintiff alleges that ASCIP is a separate and independent legal entity from LAUSD. (Id.)

Although Plaintiff did not allege it, ASCIP represents it qualifies as a public entity for purposes of the GTA, requiring LAUSD to file a government claim. In its demurrer to the original complaint, ASCIP argued that a public agency includes “any joint powers authority formed pursuant to this article” by any state or county, (among other entities). (Gov. Code, § 6500.) Additionally, “the agency is a public entity separate from the parties to the agreement.” (Gov. Code, § 6507.)

Accepting ASCIP’s position that it is a public entity, LAUSD, also a public entity, is not required to present a government claim to another local public entity ." (Gov. Code, § 905 subd (i); [1] City of Ontario v. Superior Court (1993) 12 Cal.App.4th 894, 898 [“Pertinent here is subdivision (i), which similarly exempts ‘claims by the State or by a state department or agency or by another public entity.’ Thus, under section 905, the State's claim against the City could be pressed directly through litigation, without the precedent filing of a claim. The same is true of the other categories of claims described in that statute.”].)

Based on the foregoing, ASCIP’s demurrer to the first amended complaint is OVERRULED. ASCIP is ordered to file its answer within 10 days.

[1] "There shall be presented, in accordance with [Government Code, sections 900 and 910] all claims for money or damages against local public entities except any of the following: … (i) Claims by the state or by a state department or agency or by another local public entity or by a judicial branch entity." (Gov. Code, § 905 subd (i).)