Judge: Richard Y. Lee, Case: 30-2021-01209007, Date: 2022-09-29 Tentative Ruling
Defendant/Cross-Defendant/Cross-Complainant CarMax Auto Superstores California, LLC (“CarMax”) demurs to the First Amended Cross-Complaint (“FAXC”) of Defendant/Cross-Complainant Ford Motor Company (“Ford”) on the ground that all three causes of action fail to state sufficient facts and the FAXC is uncertain.
As an initial matter, the Court notes that CarMax’s Reply was filed and served untimely. The Court declines to consider all new points, arguments, and evidence presented for the first time on reply, including CarMax’s arguments related to its duty to investigate the subject vehicle’s title. (See Balboa Ins. Co. v. Aguirre (1983) 149 Cal.App.3d 1002, 1010; Jay v. Mahaffey (2013) 218 Cal.App.4th 1522, 1537-1538.)
Uncertainty
CarMax argues the FAXC is uncertain because it does not state the indemnity theory under which Ford is proceeding such that CarMax has no way of knowing which indemnity theory it should defend.
Ford argues that it is clear it intended to allege a cause of action based on equitable indemnity because no contract is alleged to exist between CarMax and Ford.
Demurrers for uncertainty “are granted only if the pleading is so incomprehensible that a defendant cannot reasonably respond.” (Lickiss v. Fin. Indus. Regulatory Auth. (2012) 208 Cal.App.4th 1125, 1135.)
Here, Ford is correct that the FAXC does not allege any contractual relationship between itself and CarMax. Therefore, the first cause of action necessarily must be one for equitable indemnity, rather than express indemnity. (See Kruss v. Booth (2010) 185 Cal.App.4th 699, 727 [on demurrer, reasonable inferences must be drawn in favor of the complaint].) That the FAXC does not expressly state this cause of action is for equitable indemnity does not render the FAXC so uncertain that CarMax cannot determine the charges against it. The Court therefore OVERRULES the Demurrer on the ground of uncertainty.
First Cause of Action for Indemnity
CarMax argues this cause of action fails because there is no joint legal obligation between CarMax and Ford to make equitable indemnity available to Ford, there is no contractual relationship alleged to make express indemnity available to Ford, and Ford has failed to state sufficient facts to support this cause of action because CarMax was at an information disadvantage when it purchased the vehicle and should therefore not be required to indemnify Ford.
Ford contends that equitable indemnity is expansive and does not apply only to joint tortfeasors who acted in concert and CarMax’s argument that requiring it to indemnify Ford would be inequitable is not a proper ground for a demurrer.
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) 199 Cal.App.4th 206, 212.) Equitable indemnity requires no contractual relationship and is premised on a joint legal obligation to another for damages. (C.W. Howe Partners Inc. v. Mooradian (2019) 43 Cal.App.5th 688, 700.)
The FAXC alleges that Ford complied with all laws and regulations when it reacquired the subject vehicle in December 2019 and requested that the certificate of title and registration certificate be marked as lemon law buyback. (FAXC, ¶ 11.) Ford then sold the vehicle at an auction and the vehicle was sold again to CarMax in July 2020. (FAXC, ¶¶ 12-14.) CarMax allegedly knew or should have known that the vehicle had previously been bought back by Ford because a report for the vehicle stated it was sold at an auction as “MANUFACTURER VEHICLE.” (FAXC., ¶ 16.) Ford alleges that, despite this, CarMax failed to provide Plaintiff Christopher Anthony Fraser (“Plaintiff”) the required disclosures that must accompany the sale of a lemon law buyback. (FAXC, ¶ 17.)
Ford alleges that its responsibility to Plaintiff, if any, would be based solely upon a derivative form of liability not resulting from Ford’s conduct, such that Ford would be entitled to complete indemnity from CarMax. (FAXC, ¶ 23.) Ford further alleges that CarMax is obligated to fully indemnify it for any sums that it may be compelled to pay as the result of any damages, judgment, or other awards recovered by Plaintiff. (FAXC, ¶ 24.)
Ford has adequately alleged fault on the part of CarMax: the failure to provide Plaintiff with the required disclosures at the time of sale despite knowing, or having constructive knowledge, that the vehicle was a lemon law buyback. This satisfies the first element of the cause of action.
Ford has also adequately alleged that CarMax is equitably responsible for any resulting damages to Ford, i.e., that CarMax is responsible for any sum Ford might be compelled to pay to Plaintiff as a result of this action. This satisfies the second element of the cause of action.
CarMax cites to Platt v. Coldwell Banker Residential Real Estate Services (1990) 217 Cal.App.3d 1439, which states that a cause of action for equitable indemnity will not stand where it would operate unfairly. (Id., at p. 1448.) The court further pointed out, however, that “the fact liability will be apportioned in the underlying action is not enough” to determine a cross-complaint would operate unfairly. (Id., at p. 1450.) CarMax has not pointed to any way the FAXC may operate unfairly other than the fact that liability to Plaintiff may be apportioned between Ford and CarMax.
Thus, the Court OVERRULES the Demurrer to the First Cause of Action for Indemnity.
Second and Third Causes of Action for Apportionment of Fault and Declaratory Relief
CarMax demurs to these causes of action on the ground that they are not distinguishable from Ford’s Indemnity cause of action and fail as a matter of law for the same reason that they would operate inequitably against CarMax.
Equitable apportionment is based on the same principles as equitable indemnity, and likewise, is premised on a “joint legal obligation to another for damages.” (C.W. Howe Partners Inc. v. Mooradian (2019) 43 Cal.App.5th 688, 699–700.)
A cause of action for declaratory relief is sufficient if it sets forth facts showing the existence of an actual controversy relating to the parties’ legal rights and duties and requests the court to adjudge these rights and duties. (Ludgate Ins. Co. v. Lockheed Martin Corp. (2000) 82 Cal.App.4th 592, 606.)
The FAXC alleges that CarMax was responsible, in whole or in part, for any damages suffered by Plaintiff and it should be required to pay a share of Plaintiff’s judgment or award in proportion to its comparative fault and reimburse Ford for any payments made to Plaintiff in excess of Ford’s proportional share of fault. (FAXC, ¶¶ 26-27.) For the Third Cause of Action, the FAXC alleges that there is a dispute between Ford and CarMax regarding the responsibility for damages claimed by Plaintiff, that CarMax is obligated to fully indemnify Ford or contribute to any sums Ford may be compelled to pay to Plaintiff, and Ford desires a judicial determination of the respective rights and duties of the parties. (FAXC, ¶¶ 29-30.)
Plaintiff cites no authority in support of its argument that these causes of action fail because they would operate inequitably against CarMax. The allegations in the FAXC are sufficient to demonstrate a joint obligation to Plaintiff by CarMax and Ford for the damages claimed by Plaintiff. They are also sufficient to state an actual controversy relating to the rights and duties of CarMax and Ford with respect to the damages claimed by Plaintiff. Thus, the Second and Third Causes of Action for Apportionment of Fault and Declaratory Relief are sufficiently pled.
Thus, the Court OVERRULES the Demurrer to the Second and Third Causes of Action for Apportionment of Fault and Declaratory Relief.
CarMax to answer the FAXC within 20 days.
CarMax to give notice.