Judge Stephen P. Pfahler, Case Number: 21STCV02526, Date: 2024-03-22 Tentative Ruling

Judge: Stephen P. Pfahler, Case: 21STCV02526, Date: 2024-03-22 Tentative Ruling

Case Number: 21STCV02526 Hearing Date: March 22, 2024 Dept: 68

Dept. 68

Date: 3-22-24

Case 21STCV02526

Trial Date: 4-2-24

SUMMARY JUDGMENT

MOVING PARTY: Defendant, Independence LLC dba Warner Associates RESPONDING PARTY: Plaintiffs, Remodeling Guys, Inc., et al.

RELIEF REQUESTED

Motion for Summary Judgment/Summary Adjudication on the Third Amended Complaint

· 1st Cause of Action: Negligence

· 2nd Cause of Action: Breach of Contract

· 3rd Cause of Action: Premises Liability

SUMMARY OF ACTION

Plaintiffs Remodeling Guys, Inc. and Fred Akhtar entered into a lease agreement in the Warner Associates Shopping Center located at 20940 Victory Blvd., Woodland Hills with defendant Independence LLC dba Warner Associates. Defendant Mark Lawrence and Dee Dee Lawrence dba Trophyman also leased premises in the subject shopping center. On June 14, 2019, a fire broke out in the Trophyman premises, which subsequently spread to Plaintiffs’ business premises and destroyed all property.

On January 21, 2021, and April 1, 2021, Plaintiff filed a complaint, and first amended complaint for Negligence, Breach of Contract, and Premises Liability. On June 10, 2021, the court sustained the demurrer of Independence LLC dba Warner Associates, et al. to the first and third causes of action with leave to amend. On July 6, 201, Plaintiff filed a second amended complaint Negligence, Breach of Contract, and Premises Liability.

On August 31, 2021, the court sustained the demurrer of Independence LLC dba Warner Associates with leave to amend. On September 14, 2021, Plaintiff filed a third amended complaint for Negligence, Breach of Contract, and Premises Liability. Mark Lawrence and Dee Dee Lawrence dba Trophyman answered the third amended complaint on October 27, 2021. On October 29, 2021, Independence LLC dba Warner Associates answered the third amended complaint, and filed a cross-complaint against Mark Lawrence and Dee Dee Lawrence dba Trophyman for Breach of Contract to Indemnify, Breach Of Contract To Defend, Breach of Contract to Obtain Insurance, Equitable Comparative Indemnity Apportionment of Fault, Total Equitable Indemnity Equitable Implied Indemnity, and Declaratory Relief. Mark Lawrence and Dee Dee Lawrence dba Trophyman answered the cross-complaint on November 15, 2021.

On August 24, 2022, the court deemed the subject case related to an action in the Van Nuys Superior Court, Midvale Indemnity Company v. Independence Enterprises, LLC, et al. (22VECV00805).

On November 2, 2022, the court granted the unopposed motion for summary adjudication on the cross-complaint brought by Independence Enterprises against Mark Lawrence and Dee Dee Lawrence dba Trophyman.

On December 20, 2022, the court ordered the related cases consolidated pursuant to the stipulation of the parties. On June 6, 2022, the court entered judgment following the motion for summary adjudication on the cross-complaint. On December 5, 2023, Midvale Indemnity Company dismissed the consolidated action with prejudice.

RULING: Denied.

Defendant Independence LLC dba Warner Associates (Independence) moves for summary judgment, or alternatively summary adjudication, on grounds that the Mutual Release and Waiver provision in the lease bars any right of recovery. Defendant also cites to the provision requiring the tenant to carry commercial liability insurance.

Plaintiffs Remodeling Guys, Inc. and Fred Akhtar in opposition represents the recited stipulation at the end of Defendant’s deposition whereby Defendant(s) accept(s) liability, thereby rendering the action as a determination of damages. Even if the court still considered the merits of the action, Plaintiffs challenges any enforcement of the exculpatory clause due to purported contribution of Defendant in not sufficiently constructing a sheer wall for protection from fire spread. Plaintiff alternatively requests a continuance for further discovery, if the court remains inclined to grant the motion.

Defendant in reply seeks to “clarify” the deposition stipulation: only defendant Mark Lawrence dba Trophyman admitted to liability. Independence LLC dba Warner Associates denies any claimed admission to liability. Defendant proceeds to reiterate the arguments under the lease terms.

The pleadings frame the issues for motions, “since it is those allegations to which the motion must respond. (Citation.)” (Scolinos v. Kolts (1995) 37 Cal. App. 4th 635, 640-641; FPI Development, Inc. v. Nakashima (1991) 231 Cal.App.3d 367, 382-383; Jordan-Lyon Prods., LTD. v. Cineplex Odeon Corp. (1994) 29 Cal.App.4th 1459, 1472.) The purpose of a motion for summary judgment or summary adjudication “is to provide courts with a mechanism to cut through the parties’ pleadings in order to determine whether, despite their allegations, trial is in fact necessary to resolve their dispute.” (Aguilar v. Atl. Richfield Co. (2001) 25 Cal.4th 826, 843.) “Code of Civil Procedure section 437c, subdivision (c), requires the trial judge to grant summary judgment if all the evidence submitted, and ‘all inferences reasonably deducible from the evidence’ and uncontradicted by other inferences or evidence, show that there is no triable issue as to any material fact and that the moving party is entitled to judgment as a matter of law.” (Adler v. Manor Healthcare Corp. (1992) 7 Cal.App.4th 1110, 1119.)

“On a motion for summary judgment, the initial burden is always on the moving party to make a prima facie showing that there are no triable issues of material fact.” (Scalf v. D.B. Log Homes, Inc. (2005) 128 Cal.App.4th 1510, 1519.) A defendant moving for

summary judgment “has met his or her burden of showing that a cause of action has no merit if the party has shown that one or more elements of the cause of action . . . cannot be established.” (Code Civ. Proc., § 437c, subd. (p)(2).) “Once the defendant . . . has met that burden, the burden shifts to the plaintiff . . . to show that a triable issue of one or more material facts exists as to the cause of action or a defense thereto.” (Ibid.)

“When deciding whether to grant summary judgment, the court must consider all of the evidence set forth in the papers (except evidence to which the court has sustained an objection), as well as all reasonable inference that may be drawn form that evidence, in the light most favorable to the party opposing summary judgment.” (Avivi v. Centro Medico Urgente Medical Center (2008) 159 Cal.App.4th 463, 467; see also Code Civ. Proc., § 437c, subd. (c).) “An issue of fact can only be created by a conflict in the evidence. It is not created by speculation, conjecture, imagination or guesswork.” (Lyons v. Security Pacific National Bank (1995) 40 Cal.App.4th 1001, 1041 (citation omitted).)

The court finds the stipulation for the admission of liability by Mark and Dee Lawrence in no way binds Independence to said terms. [Declaration of Jeffrey Hacker, Ex. A.] The stipulation remains consistent with the November 2, 2022, order for summary adjudication on the cross-complaint brought by Independence Enterprises against Mark Lawrence and Dee Dee Lawrence dba Trophyman.

Independence challenges any claim of liability on grounds of the mutual release and commercial insurance clauses in the lease. [Declaration of Michael T. Novick, Ex. A.] Plaintiff concedes the facts are undisputed, but challenges enforcement of the waiver and exculpatory provisions relied upon by Independence.

The court considers the operative terms of the contract under the standard. “Interpretation of a written instrument becomes solely a judicial function only when it is based on the words of the instrument alone, when there is no conflict in the extrinsic evidence, or when a determination was made based on incompetent evidence.” (City of Hope National Medical Center v. Genentech, Inc. (2008) 43 Cal.4th 375, 395.) The contract will be interpreted under the “intent and scope of the agreement by focusing on the usual and ordinary meaning of the language used and the circumstances under which the agreement was made.” (Lloyd's Underwriters v. Craig & Rush, Inc. (1994) 26 Cal.App.4th 1194, 1197–1198.)

Independence first addresses the waiver sections of the agreement presented by Independence.

“15.1.1 Tenant's Liability Insurance: Tenant shall, at all times during the Term of this Lease, at Tenant's sole expense, procure and maintain in full force commercial general liability insurance utilizing the standard ISO Occurrence Form CG00011093, or equivalent, insuring against liability for bodily injury and property damage (i) occurring on the Premises and any portion of the Common Area subject to Tenant's exclusive control, and (ii) in any way arising out of any assumed liabilities or the use of, or the operations in, the Shopping Center by Tenant, and its agents, contractors, guests, invitees,

and customers. This insurance shall include, but not be limited to, coverages known as personal and advertising injury, products and completed operations liability and contractual liability with a single limit per occurrence of not less than One Million and 00/100 Dollars ($1,000,000.00) for all bodily injury and property damage liability claims and an annual aggregate of not less than Two Million and 00/100 dollars ($2,000,000.00) for all claims and shall include the following endorsements (i) deleting any employee exclusion on personal injury coverage; (ii) including coverage for injuries to or caused by employees; (iii) providing for blanket contractual liability coverage (including Tenant's indemnity obligations contained in this Lease); and (iv) a cross liability endorsement. All such insurance: (i) shall be primary and non-contributory; (ii) shall provide for severability of interests; (iii) shall provide that an act or omission of one of the insureds shall not reduce or void coverage to any other insureds; and (iv) shall afford coverage for all claims based on acts, omissions, injury or damage which occurred or arose (or the onset of which occurred or arose) in whole or in part during the policy period.”

“15.1.4 Tenant’s Property Insurance: Tenant shall, at all times during the Term of this Lease, at its sole expense, procure and maintain in full force, property insurance covering Tenant's furniture, fixtures, equipment, and other personal property in, upon or about the Premises Tenant Improvements, and Alterations to the Premises made by Tenant in an amount equal to one hundred percent (100%) of the insurable replacement cost of the insured property. Tenant shall obtain endorsements to such insurance for (i) all building glass within the Premises, (ii) loss of business income, (iii) extra expense in such amounts as will reimburse Tenant for direct or indirect loss of earnings and incurred costs attributable to the perils commonly covered by Tenant's property insurance, and (iv) loss caused by mechanical or electrical equipment breakdown (commonly referred to as boiler and machinery). Coverage must be provided on the Special Extended Coverage form utilizing ISO Form CP1030 or equivalent and shall include a sprinkler leakage endorsement and shall be for replacement value of all covered property without deduction for depreciation of the covered items. The proceeds of such insurance shall, so long as this Lease is in effect, be used for the repair or replacement of the furniture, fixtures, equipment and other property so insured.”

“15.2.1 Landlord’s Property and Other Insurance: Landlord shall, during the Term of this Lease, procure and maintain in full force and effect a policy or policies of fire insurance covering the 6100 Telegraph Rd. building within the Shopping Center, with standard extended coverage, vandalism, malicious mischief and sprinkler leakage endorsements, loss of rent insurance (also known as rent continuation insurance) if Landlord so determines, and earthquake and/or flood coverage only if available at commercially reasonably premiums or required by Landlord's lender, and such other insurance in such amounts and covering such other perils or hazards deemed appropriate by Landlord in its sole discretion. The amount and scope of coverage of Landlord's insurance hereunder shall be determined by Landlord from time to time in its sole discretion and shall be subject to such deductible amounts as Landlord may elect. Landlord shall have the right to reduce or terminate any insurance or coverage called for by this Section 15.2 to the extent that any such coverage is not reasonably available in the commercial insurance industry from recognized carriers or not available at a cost which is in Landlord's

judgment commercially reasonable under the circumstances. All insurance proceeds payable under Landlord's casualty insurance carried hereunder shall be payable solely to Landlord, and Tenant shall have no interest therein.’

“15.4 Mutual Release and Waiver of Subrogation: Landlord and Tenant each waives its right of recovery against the other on account of any and all claims Landlord or Tenant may have against the other, whether in contract or tort, with respect to any risk which could be insured against by insurance required to be carried hereunder or otherwise carried (whether or not the party suffering the loss or damage actually carries such insurance, recovers under such insurance or self-insures the loss or damage) or which right of recovery arises from loss of earnings or rents resulting from loss or damage caused by such a risk. Each insurance policy carried by Landlord or Tenant hereunder, or which either may obtain with respect to the Premises or the Shopping Center independent of the obligations hereunder, shall provide that the insurer waives all rights of recovery by way of subrogation against Landlord or Tenant in connection with all matters included within the scope of the waiver of recovery contained in this Section 15.4.”

“26.1 Tenant's Indemnity: Except in the case of Landlord's sole gross negligence or willful misconduct, Tenant shall defend (using counsel acceptable to Landlord) and indemnify Landlord and its partners and their respective officers, agents, servants, employees, and independent contractors against, and hold them harmless from, any liens, claims, expenses, losses, damages, or liabilities, including all costs of defense, from or connected with (i) the operation of Tenant's business on the Premises or any portion of the Common Area which is under the exclusive control of Tenant, (ii) the use or occupancy of, and any other cause in or about Tenant's Premises, (iii) any default on the part of Tenant in the performance of any of its covenants under this Lease, (iv) the violation of or noncompliance with any governmental requirements or insurance requirements, (v) damage connected with burglary, theft or other illegal act on the Premises, (vi) Tenant's generation, use, disposal or storage of Hazardous Materials in the Premises or the Shopping Center or (vi) any acts or omissions of Tenant, its subtenants and assigns or any other person upon the Premises by license or invitation of Tenant. Tenant's indemnity shall survive the expiration or earlier termination of the Lease.”

“26.3 Waiver: All property within the Premises shall be kept there at Tenant's sole risk. Landlord and its partners and their respective officers, agents, servants, employees, and independent contractors shall not be liable to Tenant, and Tenant waives all claims against all of the foregoing persons and entities, for damages to property sustained by Tenant whether or not caused by Landlord or through the acts or omissions of any persons present in the Shopping Center or renting or occupying any part of the Shopping Center. Landlord shall not be liable for loss or damages to Tenant or its property from burst, stopped or leaking sewers, pipes, conduits, or plumbing fixtures, or for interruption of any utility services, or from any failure of or defect in any electric line, circuit or facility, roof or any type of improvement or service on or furnished to the Premises, or resulting from any accident in or about the Premises.”

Independence relies on a finding of a valid, enforceable term, while Plaintiffs counter the clause violates public policy due to fraud and/or statutory violations. Following an extensive summary of the law, Plaintiffs characterizes the agreement as one for indemnity with public policy violation due to the omission of any fire hazard risk language. Plaintiffs also generally cite to the fraud standard, but it remains unclear as to the basis of this argument. (Food Safety Net Services v. Eco Safe Systems USA, Inc. (2012) 209 Cal.App.4th 1118, 1126.)

“All contracts which have for their object, directly or indirectly, to exempt anyone from responsibility for his own fraud, or willful injury to the person or property of another, or violation of law, whether willful or negligent, are against the policy of the law.” (Civ. Code, § 1668.) The foundational case interpreting the subject matter of public policy states in relevant part:

“In placing particular contracts within or without the category of those affected with a public interest, the courts have revealed a rough outline of that type of transaction in which exculpatory provisions will be held invalid. Thus the attempted but invalid exemption involves a transaction which exhibits some or all of the following characteristics. It concerns a business of a type generally thought suitable for public regulation.[] The party seeking exculpation is engaged in performing a service of great importance to the public,[]0 which is often a matter of practical necessity for some members of the public.[] The party holds himself out as willing to perform this service for any member of the public who seeks it, or at least for any member coming within certain established standards.[] As a result of the essential nature of the service, in the economic setting of the transaction, the party invoking exculpation possesses a decisive advantage of bargaining strength against any member of the public who seeks his services.[] In exercising a superior bargaining power the party confronts the public with a standardized adhesion contract of exculpation,[] and makes no provision whereby a purchaser may pay additional reasonable fees and obtain protection against negligence.[] Finally, as a result of the transaction, the person or property of the purchaser is placed under the control of the seller,16 subject to the risk of carelessness by the seller or his agents.” (Tunkl v. Regents of University of Cal. (1963) 60 Cal.2d 92, 98–101 (Tunkl.)

The purpose of the rule is to limit the release from future torts, within the public interest as introduced in Tunkl. (City of Santa Barbara v. Superior Court (2007) 41 Cal.4th 747, 754-756.) A review of subsequent cases evolved to allow for waiver of “future ordinary negligence” compared to a claim of “gross negligence.” (Id. at pp. 757-758.)

While an argument can be made for residential housing, courts specifically decline to impose public policy standards on commercial leases. “A [commercial] lease is a matter of private contract between the lessor and the lessee with which the general public is not concerned.” (Burnett v. Chimney Sweep (2004) 123 Cal.App.4th 1057, 1066 [internal quotation marks omitted].) Still, an exculpatory clause in a commercial contract must still reflect the reasonable expectations of the parties.

“‘[T]he law does not look with favor upon attempts to avoid liability or secure exemption for one's own negligence, and such provisions are strictly construed against the person relying upon them. [Citations.]’” (Citation.) The general rule is as follows: ‘For an agreement to be construed as precluding liability for ‘active’ or ‘affirmative’ negligence, there must be express and unequivocal language in the agreement which precludes such liability. [Citations.] An agreement which seeks to limit generally without mentioning negligence is construed to shield a party only for passive negligence, not for active negligence. [Citations.]’ (Citation.) But the ‘active-passive dichotomy’ is not ‘wholly dispositive’ of the issue. (Citation.) Whether an exculpatory clause ‘covers a given case turns primarily on contractual interpretation, and it is the intent of the parties as expressed in the agreement that should control. When the parties knowingly bargain for the protection at issue, the protection should be afforded. This requires an inquiry into the circumstances of the damage or injury and the language of the contract; of necessity, each case will turn on its own facts.’” (Id. at p. 1066; see Pelletier v. Alameda Yacht Harbor (1986) 188 Cal.App.3d 1551, 1557; Butt v. Bertola (1952) 110 Cal.App.2d 128, 138.)

“Past cases have held that 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. (Citation.) If an indemnity clause does not address itself to the issue of an indemnitee's negligence, it is referred to as a ‘general’ indemnity clause. (Citations.) While such clauses may be construed to provide indemnity for a loss resulting in part from an indemnitee's Passive negligence, they will not be interpreted to provide indemnity if an indemnitee has been Actively negligent.” (Rossmoor Sanitation, Inc. v. Pylon, Inc. (1975) 13 Cal.3d 622, 628.)

“Passive negligence is found in mere nonfeasance, such as the failure to discover a dangerous condition or to perform a duty imposed by law. (Citations.) Active negligence, on the other hand, is found if an indemnitee has personally participated in an affirmative act of negligence, was connected with negligent acts or omissions by knowledge or acquiescence, or has failed to perform a precise duty which the indemnitee had agreed to perform. (Citations.) ‘The crux of the inquiry is to determine whether there is participation in some manner by the person seeking indemnity in the conduct or omission which caused the injury beyond the mere failure to perform a duty imposed upon him by law.’” [¶] “Whether conduct constitutes active or passive negligence depends upon the circumstances of a given case and is ordinarily a question for the trier of fact; active negligence may be determined as a matter of law, however, when the evidence is so clear and undisputed that reasonable persons could not disagree.” (Id. at p. 629.)

The court finds the agreement presents a “general” indemnity clause. While said terms allows for exemption under passive negligence as a matter of law, Plaintiff maintains the lack of specific address for spreading fire damage as a result of the conduct of a co-tenant and/or the condition of the premises effectively constitutes an “active negligence” situation.

Section 15.4 lacks any defined negligence terms and instead exclusively relies on the existence of the insurance policy clause(s) and presumed subrogation rights. Section 26.3

provides referenced examples however, including, “burst, stopped or leaking sewers, pipes, conduits, or plumbing fixtures, or for interruption of any utility services, or from any failure of or defect in any electric line, circuit or facility, roof or any type of improvement or service on or furnished to the Premises, or resulting from any accident in or about the Premises.” As addressed in the opposition, “fire” is not an identified risk.

Even if an argument were made that “fire” constitutes a subsumed risk within one of the identified categories, nothing in the pleadings actually present any facts as to the cause and spread of the fire itself. The only stipulated fact is the acceptance of liability for the origin of the fire in the Trophyman rental space, but no specific evidence regarding the circumstances of the fire, such as a failure to discover a dangerous condition (passive) or contributing factors to the spread of the fire (potentially active negligence).

The parties’ reliance on the terms of the lease itself without specific discussion of the spread of the fire precludes any finding as to the basis of the negligence claim for purposes of making a determination as a matter of law. The court therefore finds triable issues of material fact on the basis of the cause of the spread of the fire, and therefore whether the exculpatory clause remains enforceable as a matter of law or requires additional factual consideration as to the scope of the parties’ understanding to the agreement. [Lease; Declaration of Fred Akhtar.] The motion for summary judgment and motions for summary adjudication are therefore denied.

FSC remains set for March 22, 2024.

Independence LLC dba Warner Associates to give notice to all parties.