Case Name: Joseph Lovering et al., v. Robert Schuster, et al.
Case No.: 17CV316694

I. Background

This case brought by Joseph Daniel Lovering and Jessica Lovering (“Plaintiffs”) against Robert C. Schuster, Matha A. Schuster (collectively “Sellers”), NRT West, Inc. dba Coldwell Bank (“Coldwell”), Mike Uhri, Keller Williams Reality (“Keller Williams”), Chris Alston (“Alston”), and Homeguard, Inc. (“Homeguard”) arises from a transaction for the purchase of real property.

According to the allegations of Keller Williams and Alston’s Cross-Complaint (“Cross-Complaint”), Plaintiffs purchased residential real property from Sellers. Alston was the Plaintiffs’ agent, and does business under the brokerage license of Keller Williams. Mike Uhri (“Uhri”) was the listing agent and Seller’s agent, and does business under the brokerage license of Coldwell.

As part of the sale a home inspection report was produced by Homeguard. This report stated that the home contained copper wiring. After the purchase, Plaintiffs discovered that contrary to the report the home was wired with aluminum wiring, and that various work had been done without proper permits. Plaintiffs sued defendants for breach of contract, fraud and deceit, intentional/negligent misrepresentation, negligence, and violation of Business and Professions Code section 17200, et seq. All causes of action were asserted against all defendants, including Keller Williams and Alston, with the exception of the breach of contract claim.

Keller Williams and Alston (collectively “Cross-Complainants”) filed Cross-Complaint against Sellers, Homeguard, Coldwell and Uhri. The Cross Complaint alleges (1) Implied and Equitable Indemnity; (2) Partial Implied and Equitable Indemnity; (3) Comparative Fault; (4) Express Indemnity – Third Party Beneficiary; and (5) Declaratory Relief. Each cause of action is asserted as to all cross-defendants, except for the first, which is asserted only against Sellers. Cross-Complainants seek to recover from Homeguard attorneys’ fees expended in defense of the underlying action and in pursuing the Cross-Complaint.

Presently before the Court is Homeguard’s motion to strike language regarding attorneys’ fees from the Cross-Complaint and a request for costs.

II. Request for Costs

In its notice of motion, Homeguard requests that if the Court grants this motion, it award costs to Homeguard and against Keller Williams pursuant to Code Civil Procedure section 1032, subdivision (b). That subdivision states: “[e]xcept as otherwise expressly provided by statute, a prevailing party is entitled as a matter of right to recover costs in any action or proceeding.” (Code Civ. Proc., § 1032, subd. (b).) A prevailing party is defined to include “the party with a net monetary recovery, a defendant in whose favor a dismissal is entered, a defendant where neither plaintiff nor defendant obtains any relief, and a defendant as against those plaintiffs who do not recover any relief against that defendant.” (Code Civ. Proc., § 1032, subd. (a)(4).) Where other than monetary relief is awarded, the Court has discretion as to whether or not to allow costs. (Ibid.)

While it is true that Code of Civil Procedure, section 1032 does entitle a prevailing party to costs, Homeguard’s request is procedurally improper for three reasons. In the first instance, this request is not mentioned in Homeguard’s points and authorities. A memorandum of points and authorities must contain “a concise statement a concise statement of the law, evidence and arguments relied on, and a discussion of the statutes, cases, and textbooks cited in support of the position advanced.” (Cal. Rules of Court, rule 3.1113.) Furthermore, even if Homeguard prevails in this motion and Cross-Complainants do not recover attorneys’ fees from Homeguard, they could still recover some other monies from it. Thus, this motion will not determine whether Homeguard is a prevailing party. Additionally, the California Rules of Court, which provide the procedure for awarding costs, contemplate doing so after judgment or dismissal. (See Cal. Rules of Court, rule 3.1700(a)(1) [“A prevailing party who claims costs must serve and file a memorandum of costs within 15 days after the date of mailing of the notice of entry of judgment or dismissal by the clerk under Code of Civil Procedure section 664.5 or the date of service of written notice of entry of judgment or dismissal, or within 180 days after entry of judgment, whichever is first.”] [emphasis added]; see also Fries v. Rite Aid Corp. (2009) 173 Cal.App.4th 182, 186 [indicating that entry of judgment or dismissal is a predicate to a costs award].) Neither judgment nor dismissal has been entered here. Therefore, the case has not yet advanced to the point where awarding costs is proper.

Accordingly, the request for costs is DENIED.

III. Merits of the Motion to Strike

The portions of the Cross-Complaint at issue are:
• Paragraph 18: “…reasonable attorneys’ fees expended for attorneys’ services to enforce this right of indemnification…”;
• Paragraph 21: “…and reasonable attorneys’ fees…”;
• Paragraph 24: “…and reasonable attorneys’ fees…”;
• Paragraph 31: “…and attorneys’ fees…”;
• Paragraph 33: “Therefore, KELLER WILLIAMS is entitled to recovery of all attorneys’ fees incurred in defending against Plaintiffs’ claims and in prosecuting this Cross-Complaint, as a result of KELLER WILLIAMS’ right of indemnification and based upon the tort of another doctrine.”
• Paragraph 33: “…and attorneys’ fees…”;

In addition, several portions of the prayer for relief are at issue:
• Paragraph 2: “…and reasonable attorneys’ fees…”;
• Paragraph 4: “…legal fees…”; and
• Paragraph 5: “For reasonable attorneys’ fees…”

As a preliminary matter, the Court notes the ground that a matter is not drawn in conformity with the law is not an appropriate basis for challenging the sufficiency of a claim for attorneys’ fees. (See Ferraro v. Camarlinghi (2008) 161 Cal.App.4th 509, 528 [ground that a pleading is not drawn or filed in conformity with the law properly used to challenge pleadings filed in violation of a deadline, court order, or requirement of prior leave of court].) Instead, a motion to strike relief not supported by the allegations of the complaint may be made on the ground that a court may strike out “any irrelevant, false, or improper matter inserted in a pleading.” (Code Civ. Proc., §§ 431.10, subds. (b)-(c), 436, subd. (a); see also Weil and Brown, Cal. Practice Guide: Civ. Proc. Before Trial (The Rutter Group 2017), §§ 7:177-7:185.2.)

Here, Homeguard states in its notice of motion “[t]his Motion is made on the grounds that under CCP § 436, the Cross-Complaint contains irrelevant, false, or improper matter, and the portions of the pleading to be stricken are not drawn or filed in conformity with the laws of California.” (Notice of MTS, p. 2:20-22.) Since the first ground (“irrelevant, false, or improper matter”) is proper, the Court will address the merits of the motion. (Code Civ. Proc., § 436, subd. (a).) Homeguard is admonished to be more careful in the future when identifying the grounds for its motions.

Homeguard presents two arguments in support of its motion to strike the request for attorneys’ fees. First, Homeguard asserts that attorneys’ fees are recoverable only as permitted by statute or contract, neither of which is alleged in the Cross-Complaint. Next, Homeguard argues the tort of another doctrine does not apply in cases involving multiple co-defendants.

A. Attorneys’ Fees In General

Parties must bear their own attorneys’ fees, absent some agreement or statutory exception. (Code Civ. Proc., § 1021; Musaelian v. Adams (2009) 45 Cal.4th 512, 516; In re Marriage of Reyes (1979) 97 Cal.App.3d 876, 879.) Homeguard asserts, correctly, that the Cross-Complaint does not discuss any statutory or contractual basis for shifting attorneys’ fees. Cross-Complainants do not address this point in their opposition, apparently conceding they cannot identify any statutory or contractual basis.

B. The Tort of Another Doctrine

Cross-Complainants rely upon the “tort of another” doctrine as its basis for attorneys’ fees. As a preliminary matter, Homeguard contends that attorneys’ fees under the tort of another doctrine are not properly plead as damages, but instead should be sought through a post-trial motion pursuant to Code of Civil Procedure, section 1021.6. This section states, in relevant part, “[u]pon motion, a court after reviewing the evidence in the principal case may award attorney’s fees to a person who prevails on a claim for implied indemnity if…” three conditions are met. (Code Civ. Proc., § 1021.6.) Homeguard’s argument seems to be based upon the word “prevails,” as it underlined in the memorandum in support of the motion. (MTS, p. 7:8-9.) Homeguard provides no cases supporting this procedural argument, apparently relying wholly upon its interpretation of the text of the statute.

Case law is directly contrary to Homeguard’s interpretation. “Unless the parties stipulate otherwise, a claim for attorney fees under the ‘tort of another’ doctrine may not be asserted by post-trial motion but rather must be pleaded and proved to the trier of fact.” (Hsu v. Abbara (1995) 9 Cal.4th 863, 869, fn. 4; Gorman v. Tassajara Development Corp. (2009) 178 Cal.App.4th 44, 79 [quoting Hsu v. Abbara].) Nothing in the Cross-Complaint indicates the parties have stipulated that attorneys’ fees will be handled in a post-trial motion. Accordingly, this procedural argument is not a basis for striking attorneys’ fees from the Cross-Complaint.

The seminal case on the tort of another doctrine is Prentice v. North Am. Title Guaranty Corp., Alameda Division (1963) 59 Cal.2d 618 (“Prentice”), where the California Supreme Court held that in contrast to the general rule on attorneys’ fees “[a] person who through the tort of another has been required to act in the protection of his interests by bringing or defending an action against a third person is entitled to recover compensation for the reasonably necessary loss of time, attorney’s fees, and other expenditures thereby suffered or incurred.” (Prentice, supra, 59 Cal.2d at 620.) In Prentice, real property sellers were forced to bring an action to quiet title as a result of an escrow holder’s negligence. (Prentice, supra, 59 Cal.2d at 619-20.) The California Supreme Court held the sellers could recover attorney’s fees incurred in their litigation with third parties from the escrow holder. (Id. at p. 621.)

Homeguard asserts that Prentice and the exception it describes are inapplicable where, as here, multiple tortfeasors are sued as co-defendants. Homeguard presents three cases in support of this argument: Vaco Industries, Inc. v. Van Den Berg (1992) 5 Cal.App.4th 34 (“Vaco”), Schneider v. Friedman, Collard, Poswall & Virga (1991) 232 Cal.App.3d 1276 (“Schneider”), and Gorman v. Tassajara Development Corp. (2009) 178 Cal.App.4th 44 (“Gorman”).

In Vaco, several ex-employees of a company used trade secrets to operate a competing business. (Vacco, supra, 5 Cal.App.4th at 43-44.) Plaintiff company sued ex-employee Van Den Berg and his co-defendants for violation of a noncompetition agreement and misappropriation of trade secrets. (Id. at p. 45.) Van Den Berg brought a cross-claim for wrongful termination. (Ibid.) After jury trial, the plaintiff company brought a motion for attorneys’ fees against Van Den Berg under two theories, one of which was tort of another pursuant to Prentice. The trial court granted the motion based upon Prentice, but the court of appeal overruled.

The court of appeal stated the case was still in essence a two party lawsuit, to which the general rule of paying one’s own attorneys’ fees applied: “Van Den Berg and his two co-defendants jointly engaged in tortious misconduct …[t]here is no justification for the application of the third party tortfeasor doctrine as a basis for awarding attorney’s fees to plaintiffs.” (Vacco, supra, 5 Cal.App.4th at 43-57.) The court stated “Prentice was not intended to apply to one of several joint tortfeasors in order to justify additional attorney’s fee damages.” (Ibid.) The court cautioned that if Prentice did apply on these facts, “…there is no reason why it could not be applied in every multiple tortfeasor case with the plaintiff simply choosing the one with the deepest pocket … Such a result would be a total emasculation of Code of Civil Procedure section 1021 in tort cases.” (Ibid.)

In Schneider, a family sought attorneys’ fees from their former attorneys for the cost of defending a prior lawsuit brought by the former attorneys. (Schneider, supra, 232 Cal.App.3d at 1281.) The court of appeal held that the fees were incurred in prior litigation between these same two parties, thus the former attorney was not a third party, and Prentice did not apply. (Id. at p. 1281-1282.)

Finally, in Gorman, plaintiffs sued a general contractor and subcontractors for defective construction of a residence. (Gorman, supra, 178 Cal.App.4th at 52.) The court of appeal reversed the trial court’s award of attorneys’ fees to the plaintiffs against the general contractor for several reasons, and cited Vaco for the proposition “the tort of another doctrine does not apply to the situation where a plaintiff has been damaged by the joint negligence of codefendants.” (Id. p. at 80.) The court repeated the concern raised in Vaco that letting a plaintiff pick the defendant with the deepest pockets would undercut Code of Civil Procedure section 1021. (Id. at p. 81.)

Homeguard argues the present facts are “analogous to Gorman” in that “Plaintiffs sued Homeguard, the sellers, and the parties’ agents/brokers (including Keller Williams) because of each party’s own purported tortious misconduct… As Keller Williams’ claimed damages are a result of the alleged joint misconduct of multiple co-defendants and cross-defendants, including plaintiffs, sellers, sellers’ agents/broker and Homeguard, under Gorman, the doctrine of tort of another is inapplicable…” (P&A ISO MTS, p. 6: 9-16, [emphasis in original].) Homeguard is correct that the cited cases limit Prentice, and state it does not apply to the opposing party in a previous two party lawsuit, or one of the opposing parties in a multiparty suit.

In their opposition, Cross-Complainants contend the cases cited by Homeguard are distinguishable from the present facts because while this case involves a co-defendant seeking attorneys’ fees from another co-defendant, “these cases involved the court denying plaintiffs their request for attorneys’ fees against joint tortfeasor co-defendants in the affirmative action.” (Opp., p. 6:12-13.) Cross-Complainants aptly identify a distinction between the cited cases and the present facts, but they do not explain why this distinction is significant. The concern underlying the cases cited by Homeguard is that a broad application of the tort of another doctrine would run over into ordinary two party or multi-party litigation, and subsume the general rule that parties pay their own fees. Cross-Complainants do not present law supporting the conclusion that this concern would apply with less force between co-defendants than between a plaintiff and a co-defendant.

Homeguard directs the Court to a case undercutting the distinction drawn by Cross-Complainants. (See Watson v. Department of Transportation (1998) 68 Cal.App.4th 885, 893 (“Watson”).) In Watson, two vehicles collided in an intersection when the California Department of Transportation (“Caltrans”) reset a traffic stoplight. (Watson, supra, 68 Cal.App.4th 885, 888-889.) One driver, Huffman, sued Caltrans and the other driver, Watson, for personal injury. (Ibid.) The trial court found Huffman was 10% responsible, and Caltrans 90% responsible for the collision. (Ibid.) Watson was not found to be at fault. (Ibid.) Watson filed a cross-complaint against Caltrans, arguing “he is a person who, because of the tort of another, Caltrans, has been required to act in the protection of his interests by defending an action against a third person, Huffman.” (Id. at 893.) The trial court awarded him attorneys’ fees, but the court of appeal reversed.

The court of appeal quoted a footnote in Davis v. Air Technical Industries, Inc. (1978) 22 Cal.3d 1 where the California Supreme Court stated: “ ‘[T]he Prentice language cited by respondent … could be read to entitle exonerated defendants in commonplace, multiparty tort actions to recover their attorney’s fees from unrelated codefendants who were held liable. Such a rule was not intended by this court.’ [Citation.]” (Watson, supra, 68 Cal.App.4th 885, 893-894.) Moreover, the Watson court cautioned that such a broad reading of Prentice would “go a long way towards the abrogation of the American rule that each party to a lawsuit must pay his own attorney’s fees.” (Id. at p. 894.) Thus, the very same reason a plaintiff cannot assert Prentice against one of several defendants in multi-party tort actions also prevents co-defendants from using Prentice against one another. In sum, the tort of another doctrine simply does not apply between two co-defendants, and thus the motion to strike is meritorious.

The Court observes Cross-Complainants assert as a matter of law they will not be held liable in the underlying action. Assuming for sake of argument that Cross-Complaints are correct in that assessment, Watson nevertheless prevents an award of Prentice attorneys’ fees. The court in Watson determined that the party seeking attorneys’ fees was not liable for in the underlying suit. Thus, Watson was in precisely the situation Cross-Complainants assert they will be in once the case is litigated. Yet, the court ruled Watson could not use the “tort of another” doctrine to obtain attorneys’ fees from the co-defendant, who had been found 90% liable. Accordingly, it is of little import to the tort of another doctrine whether Homeguard is eventually found liable or Cross-Complainants are exonerated of any wrongdoing.

The Court makes one change to the language to be stricken. In paragraph 5 of the prayer for relief, the words “reasonable attorneys’ fees and” are stricken, as opposed to the “For reasonable attorneys’ fees…” requested by Homeguard. This slight alteration preserves clarity and readability in the remaining Cross-Complaint while still removing the attorneys fees which are the target of the instant motion. The remainder of the motion to strike is GRANTED, in its entirety.

Homeguard requests that the motion to strike be granted without leave to amend. The case relied upon for this point dealt with a demurrer, and sustained the demurrer without leave to amend because the allegations “cannot give rise to a cause of action.” (Mercury Casualty Co. v. Superior Court (1986) 179 Cal.App.3d 1027, 1035.) The instant case involves a motion to strike, not a demurrer. Nevertheless, the standard for granting a motion to strike without leave to amend is analogous to the standard for a demurrer. (Vaccaro v. Kaiman (1998) 63 Cal.App.4th 761, 768.) If there is a reasonable possibility that the defect can be cured, leave to amend should be granted. (Ibid.) The burden is generally on the plaintiff to show how a pleading may be amended and that amendment will change the legal effect of a pleading. (Goodman v. Kennedy (1976) 18 Cal.3d 335, 349.)

Here, Cross-Complainants request leave to amend “to add factual claims to show that Homeguard, Inc. and the other cross-defendants are entirely liable to Plaintiffs.” (Opp., p. 7:1-3.) Cross-Complainants sole argument for leave to amend is therefore predicated on their ability to allege additional facts showing Homeguard and other parties are “entirely” liable to Plaintiffs, and implicitly that Cross-Complainants are not liable to Plaintiffs at all. As Watson demonstrates, even assuming the cross-defendants are at fault to various degrees and Cross-Complainants are completely exonerated, the tort of another doctrine would still not allow Cross-Complainants to collect attorneys’ fees from cross-defendants. Therefore, Cross-Complainants have not met their burden of showing how they can amend the pleading to cure the defect at issue in the motion to strike.

Accordingly, the motion to strike is GRANTED, without leave to amend.