Judge Randolph M. Hammock, Case Number: 22STCV32887, Date: 2025-05-23 Tentative Ruling

Plaintiff Wong Properties Limited Partnership owns a 44-unit apartment building at 3320 Rowena Avenue, Los Angeles, CA. Plaintiff alleges it contracted with Defendants Drake Real Estate Group and Christopher Charles Drake whereby Defendants would manage the property. Plaintiff alleges that Defendants presented a plan for interior renovations of the apartments. Defendants, however, allegedly failed to disclose that the renovations involved a full-scale electrical upgrade. Defendants retained Defendant AAG Services, Inc. as subcontractor to conduct the electrical work. Plaintiff alleges Defendants failed to finalize permits for the electrical work, and that the work was substandard. The Los Angeles Housing and Community Investment Department (“HCID”) later found that the electrical work violated the Los Angeles Municipal Code, resulting in a “lockout.” Plaintiff contends that remedying the electrical work is estimated to cost over $1 million. Plaintiffs brings causes of action against Drake Real Estate Group and Drake for (1) breach of management agreement, (2) negligence, (4) negligent misrepresentation, and (5) indemnification, and against AAG for (3) negligence.

Defendant Drake Real Estate Group has filed a First Amended Cross-Complaint alleging that the damages incurred by Plaintiff, if any, were solely caused by the negligent acts of Wong Properties and AAG Services. Plaintiff asserts Cross-claims against Wong Properties for (1) indemnity and (2) breach of contract, and against AAG Services for (3) equitable indemnity and (4) contribution.

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. (Taylor v. City of Los Angeles Dept. of Water and Power (2006) 144 Cal. App. 4th 1216, 1228.) In a demurrer proceeding, the defects must be apparent on the face of the pleading or by proper judicial notice. (CCP § 430.30(a).) A demurrer tests the pleadings alone and not the evidence or other extrinsic matters. (SKF Farms v. Superior Court (1984) 153 Cal. App. 3d 902, 905.) Therefore, it lies only where the defects appear on the face of the pleading or are judicially noticed. (Id.) The only issue involved in a demurrer hearing is whether the complaint, as it stands, unconnected with extraneous matters, states a cause of action. (Hahn, 147 Cal.App.4th at 747.)

In the underlying First Amended Complaint, Plaintiff WPLP, the owner of an apartment complex, alleges that DREG, the property manager, was negligent in remodeling the property. (See FAC, generally.) DREG has Cross-Complained for WPLP for indemnity and breach of contract. DREG’s First Cause of Action for Contractual Indemnity against WPLP alleges that WPLP is obligated to indemnify DREG pursuant to Sections 10, 12, and 14 of the parties’ Management Agreement. (FACC ¶ 27.) Similarly, DREG’s Second Cause of Action alleges that WPLP breached the Management Agreement by “refusing to indemnify DREG for its litigation expenses.” (FACC ¶ 34.)

In support of its demurrer, WPLP argues these causes of action fail because “there is no requirement in the Management Agreement that WPLP indemnify DREG for its litigation expenses in the instant lawsuit.” (Dem. 4: 15-16.) WPLP contends that the Management Agreement requires indemnification only for third-party claims (i.e. those between DREG and third-parties), but not intra-party claims (i.e. those between WPLP and DREG).

Except for Manager's (a) willful and/or gross misconduct, (b) negligence, (c) breach of express obligations or warranties under this agreement, and/or (d) breach of any legal requirement applicable to Manager, Owner shall indemnify, protect, defend and hold harmless the Manager from and against any and all claims, damages, costs, liens, judgments, penalties, attorneys' fees, accountants' fees, expenses and/or liabilities arising out of, involving, or in connection with claims for personal injuries and property damages incurred or occurring on the Premises.

Except for Manager's willful and/or gross negligence and/or breach of express warranties and/or breach of legal requirements, Owner shall pay all expenses incurred by Manager in connection with the operations of the Premises, including, but not limited to, reasonable attorneys' fees and Manager's costs and time, and any liability, fines, penalties or the like, in connection with any claim, proceeding, or suit involving an alleged violation by Owner or Manager, or both, of any law pertaining to fair employment, fair credit reporting, environmental protection, rent control, taxes, or fair housing, including, but not limited to, any law prohibiting or making illegal discrimination on the basis of race, sex, creed, color, religion, national origin, or mental or physical handicap. Nothing contained in this Agreement shall obligate Manager to employ legal counsel to represent Owner in any such proceeding or suit. In the event of any litigation, manager shall immediately notify Owner in writing.

Owner represents that to the best of Owner's knowledge the Premises and all such equipment comply with all requirements of any building codes or with any statute, ordinance, law, or regulation of any governmental body or any public authority or official thereof having authority. The Owner authorizes Manager to disclose the ownership of the Premises to any such officials and agrees to indemnify and hold Manager, its representatives, servants, and employees, harmless of and from all loss, cost, expense, and liability whatsoever which may be imposed by reason of any present or future violation or alleged violation of such laws, ordinances, statutes or regulations; except for Manager's (a) willful and /or gross misconduct, (b) negligence, (c) breach of express obligations or warranties under this agreement, and/or (d) breach of any legal requirement applicable to manager.

If the property contains a unit which is not "legal" according to property records maintained by local government Owner further agrees in connection with the rental and management of the property, to indemnify and hold Manager harmless from any suits, claims, or actions brought by any person(s) for or on account of any injuries or damages sustained or arising from the illegality of the rental unit or consequences thereof, including but not limited to: failure of the property to conform to building codes, life/safety standards, and building permit, parking, and zoning requirements. Owner further acknowledges that in any action in a court of law or any other governmental agency, Owner may suffer serious economic penalties as a result of taking rent for illegal or substandard rental units and Owner may be asked by the Bureau of Building Inspection (or counterpart governmental agency) to dismantle any improvements deemed by same to be illegal. Rental of "illegal" units is entirely at the discretion of the Owner and against the advice of Manager.

“The fundamental goal of contractual interpretation is to give effect to the mutual intention of the parties.” (Bank of the West v. Superior Court (1992) 2 Cal.4th 1254, 1264.) If possible, that intent is inferred “solely from the written provisions of the contract. [Citation.] The ‘clear and explicit’ meaning of these provisions, interpreted in their ‘ordinary and popular sense,’ unless ‘used by the parties in a technical sense or a special meaning is given to them by usage’ [citation], controls judicial interpretation. [Citation.] Thus, if the meaning a layperson would ascribe to contract language is not ambiguous, we apply that meaning.” ” (AIU Ins. Co. v. Superior Court (1990) 51 Cal.3d 807, 821–822.)

“[I]f a party seeks, in a noninsurance agreement, to be indemnified for protections beyond those afforded by the doctrines of implied or equitable indemnity—for his or her own active negligence, or regardless of the indemnitor's fault—the language on the point must be particularly clear and explicit and will be construed strictly against the indemnitee. [Citation]. [¶] This rule applies when the indemnitee seeks to be indemnified for claims made by the other party to the contract—the indemnitor—itself. ‘[A] clause which contains the words ‘indemnify’ and ‘hold harmless’ is an indemnity clause which generally obligates the indemnitor to reimburse the indemnitee for any damages the indemnitee becomes obligated to pay third persons. [Citation.] Indemnification agreements ordinarily relate to third party claims.’ [Citation]. ‘An indemnity agreement may provide for indemnification against an indemnitee's own negligence, but such an agreement must be clear and explicit and is strictly construed against the indemnitee’.” (City of Bell v. Superior Ct. (2013) 220 Cal. App. 4th 236, 250; see also Queen Villas Homeowners Assn. v. TCB Prop. Mgmt. (2007) 149 Cal. App. 4th 1, 7 [no indemnity between parties to a contract where there was no language “beyond the usual context of third party indemnification”].)

Here, these sections of the Management Agreement do not contain “clear and explicit” language for indemnity of intra-party claims. (City of Bell, supra, 220 Cal. App. 4th at 250.) Indeed, as noted by WPLP, there is actually “limiting language” indicating a contrary intent. That is, the Management Agreement specifically precludes indemnity for DREG’s “willful and /or gross misconduct, (b) negligence, (c) breach of express obligations or warranties under this agreement, and/or (d) breach of any legal requirement applicable to manager.” (Compl., Exh. A, 10, 12, 14.1). This precludes indemnification for any claims WPLP could conceivably bring against DREG.

The authorities discussed by DREG in its opposition—Wilshire-Doheny and Zalkind—precede City of Bell. And in any event, there is no indication the contract provisions in those cases contained the type of limiting language that is present here. These provisions, after all, must be “strictly construed against” DREG, the indemnitee. (City of Bell, supra, 220 Cal. App. 4th at 250.)

Thus, because there is no language “beyond the usual context of third party indemnification,” this court concludes that the Management Agreement contemplates indemnity for only general third-party claims. (Queen Villas Homeowners Assn., supra, 149 Cal. App. 4th at 7.) This means the intra-party indemnity sought by DREG in the First Amended Cross-Complaint is unavailable.

Accordingly, Cross-Defendant’s Demurrer to the First Amended Cross-Complaint is SUSTAINED. Generally speaking, leave to amend must be allowed where there is a reasonable possibility of successful amendment. (Goodman v. Kennedy (1976) 18 Cal.3d 335, 348.) Here, because it appears there exists no reasonably possibility of successful amendment, and because DREG has not requested leave to amend in its opposition, no leave to amend is given.

Any party may submit on the tentative ruling by contacting the courtroom via email at Smcdept49@lacourt.org by no later than 4:00 p.m. the day before the hearing. All interested parties must be copied on the email. It should be noted that if you submit on a tentative ruling the court will still conduct a hearing if any party appears. By submitting on the tentative you have, in essence, waived your right to be present at the hearing, and you should be aware that the court may not adopt the tentative, and may issue an order which modifies the tentative ruling in whole or in part.