Judge: Michelle Williams Court, Case: 21STCV39744, Date: 2022-09-27 Tentative Ruling

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Case Number: 21STCV39744    Hearing Date: September 27, 2022    Dept: 74

21STCV39744            PHILIP YUAN, M.D. vs SMITH-CO CONSTRUCTION, INC.

Uponor, Inc.’s Demurrer to Smith-Co Construction, Inc.’s Cross-Complaint

TENTATIVE RULING:  Uponor, Inc.’s Demurrer to Smith-Co Construction, Inc.’s Cross-Complaint is MOOT as to the seventh cause of action, OVERRULED as to the second cause of action, SUSTAINED without leave to amend as to the first, third, and ninth causes of action, and SUSTAINED with leave to amend as to the tenth cause of action.

Background

On October 28, 2021, Plaintiffs Philip Yuan, M.D., Ruth Yuan, and the Philip and Ruth Yuan Family Trust filed this action against Smith-Co Construction, Inc. arising out of residential construction on real property located at 1481 Bryant Dr. E, Long Beach, CA 90815. The complaint asserts causes of action for: (1) breach of contract; (2) breach of express warranty; (3) breach of implied warranty; (4) negligence; and (5) strict product liability.

On December 29, 2021, Smith-Co Construction filed a cross-complaint against ROES 1-500 asserting causes of action for: (1) total indemnity; (2) equitable indemnity; (3) implied indemnity; (4) contractual indemnity; (5) breach of contract – AI; (6) breach of contract – defense; (7) breach of implied warranty; (8) breach of express warranty; (9) declaratory relief; and (10) negligence.

On January 14, 2022, Smith-Co substituted seventeen parties as ROE Cross-Defendants, including Uponor, Inc. as Roe 17. Smith-Co has subsequently added and dismissed additional parties. Mark Beamish Waterproofing, Inc., Richmond Plastering, Inc., Custom Steele Sheet Metal, Inc., as well as Jeannette Architects, Inc. and Jeffrey S. Jeannette filed their own separate cross-complaints.

As relevant here, on August 18, 2022, the clerk entered Smith-Co’s August 12, 2022 request to dismiss “WITHOUT prejudice [] the following causes of action as to ROE 17 UPONOR, INC. ONLY: Fourth (4) Contractual Indemnity; Fifth (5) Breach of Contract – AI; Sixth (6) Breach of Contract – Defense; and Eighth (8) Breach of Express Warranty.” On September 20, 2022, the clerk entered Smith-Co’s September 13, 2022 request to dismiss “WITHOUT prejudice [] the following cause of action as to ROE 17 UPONOR, INC. ONLY: Seven (7) Breach of Implied Warranty.”

Demurrer

On August 17, 2022, Uponor, Inc. filed its demurrer to Smith-Co’s cross-complaint arguing the cross-complaint fails to adequately allege facts to support the first, second, third, seventh, and ninth, and tenth causes action asserted against it.

As noted above, Smith-Co. dismissed the seventh cause of action against Uponor. Therefore, the demurrer is MOOT as to the seventh cause of action.

Opposition

In opposition, Smith-Co argues the additional information sought by Uponor is properly found in discovery, the total indemnity and equitable indemnity claims are not duplicative, the implied indemnity and equitable indemnity claims are not duplicative, the equitable indemnity claim is ripe, and the cross-complaint adequately states a claim for negligence as well as declaratory relief.

Reply

In reply, Uponor reiterates its arguments made in the initial moving papers.

Meet and Confer

Cross-Defendant submitted the declaration of Mathew Ladner, which satisfies the requirements of Code of Civil Procedure section 430.41.

Demurrer

Standard

A demurrer for sufficiency tests whether the complaint states a cause of action. (Hahn v. Mirda (2007) 147 Cal.App.4th 740, 747.) When considering demurrers, courts read the allegations liberally and in context. In a demurrer proceeding, the defects must be apparent on the face of the pleading or via proper judicial notice. (Donabedian v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968, 994.) “A demurrer tests the pleadings alone and not the evidence or other extrinsic matters. Therefore, it lies only where the defects appear on the face of the pleading or are judicially noticed. (Code Civ. Proc., §§ 430.30, 430.70.) At the pleading stage, a plaintiff need only allege ultimate facts sufficient to apprise the defendant of the factual basis for the claim against him. (Semole v. Sansoucie (1972) 28 Cal. App. 3d 714, 721.) A complaint need not allege evidentiary facts noting plaintiff’s proof. (C.A. v. William S. Hart Union High School Dist. (2012) 53 Cal.4th 861, 872.) A “demurrer does not, however, admit contentions, deductions or conclusions of fact or law alleged in the pleading, or the construction of instruments pleaded, or facts impossible in law.” (S. Shore Land Co. v. Petersen (1964) 226 Cal.App.2d 725, 732.)

A special demurrer to a complaint is appropriate when the grounds of the pleading are uncertain, ambiguous, or unintelligible. (Code Civ. Proc. § 430.10(f); Beresford Neighborhood Assn. v. City of San Mateo (1989) 207 Cal.App.3d 1180, 1191.) Courts typically disfavor demurrers based on uncertainty, which the court strictly construes even when the pleading is uncertain in some respects. (Khoury v. Maly’s of California, Inc. (1993) 14 Cal.App.4th 612, 616.)

Total Indemnity – First Cause of Action

Uponor argues the “total indemnity” is not a legally cognizable cause of action and its duplicative of a claim for equitable indemnity. (Dem. at 4:15-23.) While Smith-Co attempts to distinguish the cases relied upon by Uponor, it does not cite any authority supporting the propriety of a separately stated claim for total indemnity. Under California law, “there are only two basic types of indemnity: express indemnity and equitable indemnity.” (Prince v. Pacific Gas & Electric Co. (2009) 45 Cal.4th 1151, 1157.) Thus, “comparative equitable indemnity includes the entire range of possible apportionments, from no right to any indemnity to a right of complete indemnity. Total indemnification is just one end of the spectrum of comparative indemnification.” (Gentry Construction Co. v. Superior Court (1989) 212 Cal.App.3d 177, 183.) The separately stated “total indemnity” claim adds nothing to the cross-complaint as it is merely one possible outcome on the scale of indemnification.

The demurrer is SUSTAINED as to the first cause of action without leave to amend. (See e.g. Rodrigues v. Campbell Industries (1978) 87 Cal.App.3d 494, 501 (upholding demurrer to claim that “adds nothing to the complaint by way of fact or theory of recovery.”); Award Metals, Inc. v. Superior Court (1991) 228 Cal.App.3d 1128, 1135 (“stating them in two causes of action, as real party has done, is merely duplicative pleading which adds nothing to the complaint by way of fact or theory. For that reason, the demurrer should have been sustained as to this cause of action.”).)

Equitable Indemnity – Second Cause of Action

As to the second cause of action, Uponor argues the cross-complaint does not contain “any allegation that Smith has actually made a payment in satisfaction of a judgment or pursuant to a settlement related to the Property” and therefore Smith-Co is limited to a claim for declaratory relief. (Dem. at 5:8-17.) The Court does not find this argument persuasive.

Uponor cites Christian v. County of Los Angeles (1986) 176 Cal.App.3d 466, which stated “[a]lthough a defendant may cross-complaint for equitable indemnity against even a previously unnamed third party . . . that cross-complaint properly takes the form of an action for declaratory relief.” (Id. at 471 citing Valley Circle Estates v. VTN Consolidated, Inc. (1983) 33 Cal.3d 604, 612.) The court in Christian solely addressed the question: “Where codefendant tortfeasors settle with the plaintiff, but thereby suffer no loss through payment, can their cross-actions against another concurrent tortfeasor for equitable indemnity be maintained by the plaintiff as assignee of their claims?” (Id. at 470.)

The Court in Valley Circle stated “a cross-complaint for indemnity properly takes the form, adopted by defendant in the present case, of an action for declaratory relief.” (Valley Circle, supra, 33 Cal.3d at 612 citing Babb v. Superior Court (1971) 3 Cal.3d 841, 849 n.5.) The cited footnote in Babb stated “[a]s a valid cross-complaint, the indemnity cross-action may properly take the form of a request for declaratory relief.” (Babb, supra, 3 Cal.3d at 849 n.5.) None of these cases stand for the proposition that a cross-complainant is limited to filing a cross-complaint that asserts a single cause of action captioned as a claim for declaratory relief as Uponor contends or that demurrer may be properly sustained to an equitable indemnity claim on this basis. (Reply at 5:14-15 (“at best – Smith is limited to a single declaratory relief cause of action for indemnity.”).) Court declines to impose the exclusive pleading standard advanced by Uponor.

Uponor also contends the cross-complaint fails to allege sufficient facts to support the equitable indemnity claim. (Dem. at 5:18-6:2; Reply at 3:19-4:27.) “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.)

The cross-complaint alleges “ROES 1 through 500 were architects, engineers, designers, contractors, subcontractors, and codevelopers involved in and participating in the construction of the real property and improvements that are the subject matter of Plaintiffs’ Complaint located at 1481 Bryant Dr. E, Long Beach, California 90815.” (Cross-Compl. ¶ 4.) The cross-complaint further alleges any damages claimed by Plaintiffs “was primarily and ultimately caused by the acts and omissions of the Cross-Defendants herein, and each of them, in doing or failing to do the acts relevant to the design, development, manufacture, construction, inspection, supervision, testing, maintenance, management, and observation of the Subject Property and its components, whereas the acts of the Cross-Complainant herein, if any, were secondary, passive, and derivative in nature only.” (Cross-Compl. ¶ 8.) Accordingly, “[i]n equity and in good conscience, if Cross-Complainant should be found liable to any party, then Cross-Complainant is entitled to equitable indemnity, apportionment of liability, and contribution among and from the Cross-Defendants, and each of them, according to their respective fault, for the injuries and damages allegedly sustained by any party complaining or cross-complaining against this Cross-Complainant, if any, by way of sums paid by way of defense, settlement or judgment rendered against Cross-Complainant in this action.” (Cross-Compl. ¶ 11.) 

The cross-complaint incorporates the allegations of Plaintiffs’ complaint. (Cross-Compl. ¶ 2.) The complaint filed by Plaintiffs alleges “SMITH-CO hired and contracted subcontractors, defendant Does 1 through 100, and each of them, to construct, install and supply products, goods and services required by the CONTRACT, including subcontractor(s), who SMITH-CO specifically subcontracted to design, install and supply the radiant heating system throughout the SUBJECT HOME . . . SMITH-CO was and is in the chain of distribution of defective products, including but not limited to, the radiant heating system, including, but not limited to, all couplings, PEX tubing, manifolds, and/or other component parts as part of the CONTRACT. (Compl. ¶¶ 12-13.) A coupling failed twice, causing significant damage to the home. (Compl. ¶¶ 15-18, 20.) The complaint enumerates numerous defects and damages for which Plaintiffs seek relief. (Compl. ¶ 22.)

The allegations in the cross-complaint are not akin to those found insufficient in Bailey v. Safeway, Inc. (2011) 199 Cal.App.4th 206, cited by Uponor. In Bailey, prior litigation barred the plaintiff’s claim and therefore the pleading did not state sufficient facts to state a claim for indemnity. (Id. at 217-218 (“Nowhere in Bailey's complaint does he allege actual “fault” on the part of Safeway or state why Safeway should, in equity, be responsible for part of the damages. As we have already discussed in detail, the determination that Safeway's liability was based only on a finding that the bottle was defectively designed, and not on an independent fault basis, prevented Bailey from pleading a cause of action for equitable indemnity based on negligence.”).) The Court finds the allegations in the cross-complaint, when read in conjunction with Plaintiffs’ complaint, sufficiently state a cause of action for equitable indemnity. The allegations “are sufficiently clear to apprise the defendant of the issues he is to meet,” such that Uponor’s uncertainty arguments, (Dem. at 10:23-11:13), are insufficient to sustain the demurer. (Smith v. Williams (1961) 55 Cal.2d 617, 619.)

The demurrer to the second cause of action is OVERRULED.

Implied Indemnity – Third Cause of Action

Uponor also argues the third cause of action for implied contractual indemnity is either duplicative of the second cause of action or is based upon a contract that has not been adequately identified. (Dem. at 4:24-5:7.) Under the third cause of action, the cross-complaint asserts the implied indemnity claim on all possible grounds. (Cross-Compl. ¶ 13 (“Based upon the relationships between Cross-Complainant and Cross-Defendants, and based upon contract, tort, and statutory grounds, Cross-Complainant is entitled to implied indemnity from Cross-Defendants, and each of them.”).)

“In Cahill Bros., Inc. v. Clementina Co. (1962) 208 Cal.App.2d 367, 25 Cal.Rptr. 301, the Court of Appeal summarized the basic principles of ‘implied’ indemnity, now commonly referred to as ‘equitable’ indemnity, as follows. ‘The right to implied indemnity, while relatively recent in the law of California, is now well established. [Citations.] The distilled essence of these cases is that where each of two persons is made responsible by law to an injured party the one to whom the right of indemnity inures is entitled to shift the entire liability for the loss to the other party. Accordingly, a right of implied indemnification may arise as a result of contract or equitable considerations.’” (Prince v. Pacific Gas & Electric Co. (2009) 45 Cal.4th 1151, 1163.) “Though not extinguished, implied contractual indemnity is now viewed simply as a form of equitable indemnity.” (Id. at 1157. See also Jocer Enterprises, Inc. v. Price (2010) 183 Cal.App.4th 559, 573 (“equitable indemnity, . . . embraces ‘traditional equitable indemnity’ and implied contractual indemnity.”).)

As with the first cause of action, the separately stated “implied indemnity” cause of action adds nothing to the cross-complaint. The demurrer to the third cause of action is SUSTAINED without leave to amend.

Declaratory Relief – Ninth Cause of Action

Uponor argues the declaratory relief cause of action is entirely derivative and duplicative of Smith-Co’s other claims. (Dem. at 8:17-9:4.) The declaratory relief claim in the cross-complaint incorporates all the prior allegations, (Cross-Compl. ¶ 46), and contends there is a dispute regarding whether Smith-Co is “entitled to total indemnity, equitable indemnity, implied indemnity, contractual defense and indemnity, apportionment, and/or contribution,” (id. ¶ 47), as well as whether Smith-Co is a named insured or additional insured. (Id. ¶ 48.) These allegations correspond with each of the other causes of action asserted by Smith-Co. “The declaratory relief statute should not be used for the purpose of anticipating and determining an issue which can be determined in the main action. The object of the statute is to afford a new form of relief where needed and not to furnish a litigant with a second cause of action for the determination of identical issues.” (General of America Ins. Co. v. Lilly (1968) 258 Cal.App.2d 465, 470.)

Accordingly, the declaratory relief cause of action is duplicative and the demurer is properly SUSTAINED without leave to amend. (See Mendoza v. JPMorgan Chase Bank, N.A. (2016) 6 Cal.App.5th 802, 821 (upholding demurrer to declaratory relief cause of action that was “merely duplicative” of wrongful foreclosure cause of action); Award Metals, supra, 228 Cal.App.3d at 1135 (“But stating them in two causes of action, as real party has done, is merely duplicative pleading which adds nothing to the complaint by way of fact or theory. For that reason, the demurrer should have been sustained as to this cause of action insofar as it affects petitioner.”).)

Negligence – Tenth Cause of Action

The elements of a negligence cause of action are “duty, breach of duty, proximate cause, and damages.” (Paz v. State of California (2000) 22 Cal.4th 550, 559.) 

The tenth cause of action alleges “Cross-Defendants, and each of them, negligently, carelessly, and wrongfully failed to use reasonable care in designing, constructing, manufacturing, cutting, compacting, filling, grading, testing, inspecting, and building the Subject Property, to the extent described in Plaintiffs’ Cross-Complaint.” [sic] (Cross-Compl. ¶ 51.) Additionally, the Cross-Defendants allegedly “negligently and carelessly managed, maintained, monitored, inspected, and repaired the Subject Property,” “negligently and carelessly failed to exercise reasonable care and diligence to avoid loss and to minimize and mitigate damages which could have been prevented by reasonable efforts on the part of said Cross-Defendants, or by expenditures which should have been

made in the exercise of due care.” (Id. ¶¶ 52-53.) As a result, Smith-Co “has incurred and continues to incur costs and expenses, including, but not limited to, litigation costs, contractors’ fees, attorneys’ fees, and consultants’ fees to inspect, repair, and mitigate damages arising out of said negligence, and to defend against this action as well as such liability as Cross-Complainant may incur to Plaintiffs by virtue of Plaintiffs’ claims.” (Id. ¶ 54.)

Uponor contends the negligence claim is barred by the economic loss rule. (Dem. at 9:12-28; Reply at 5:18-6:21.) “[T]here is generally no duty to prevent economic loss to third parties in negligence actions at common law.” (Greystone Homes, Inc. v. Midtec, Inc. (2008) 168 Cal.App.4th 1194, 1215.) Smith-Co’s contention that Greystone is limited to a negligence per se claim, (Opp. at 12-17), is unpersuasive as it was only one of two theories rejected by the court. (Greystone Homes, supra, 168 Cal.App.4th at 1226 (“Greystone argues that it may pursue its negligence claim against Midtec, without regard to the economic loss rule, under two separate theories. Greystone first contends that Midtec's negligent violation of the standards contained in the Right to Repair Act constitutes negligence per se, and that Greystone may recover its economic losses caused by such negligence by way of a direct claim for negligence. Greystone also argues that, in the wake of the enactment of the Right to Repair Act, it may now pursue a negligence cause of action in which it may recover economic losses, pursuant to the ‘special relationship’ theory of negligence liability . . . We reject both arguments.”).) Smith-Co must allege additional facts to demonstrate the economic loss rule does not bar its negligence claim.

Additionally, the cross-complaint does not allege any facts demonstrating Uponor owed Smith-Co a duty of care to prevent the alleged harm suffered. The cross-complaint merely states the legal conclusion that the Cross-Defendants acted negligently. “In order to state a cause of action for negligence, the complaint must allege facts sufficient to show a legal duty on the part of the defendant to use due care, a breach of such legal duty, and the breach as the proximate or legal cause of the resulting injury. (3) The duty of care is always related to some circumstance of time, place and person.” (Bellah v. Greenson (1978) 81 Cal.App.3d 614, 619.) Smith-Co must allege additional facts to demonstrate the existence of a duty of care.

The demurrer is SUSTAINED with 20 days leave to amend as to the tenth cause of action for negligence cause of action.