Case Number: BC504083    Hearing Date: September 03, 2014    Dept: 91

The (4) Alternative Motions for Summary Adjudication by Cross-Defendant, Edward Murachanian, DDS on the Cross-Complaint filed by MCD Arcade Lane, LLC (“Arcade”); MMV Properties, LLC (“MMV); Morlin Management Corporation (“Morlin”); and Morlin Asset Management LP (Morlin Asset”) are GRANTED in part and DENIED in part as set forth below.

All four Cross-Complaints at issue allege:
1. Indemnity based on the fact that Cross-Defendants caused injury (equitable indemnity).
2. Apportionment of Fault based on comparative fault.
3. Declaratory Relief for a declaration that Landlord Entities are entitled to be indemnified
4. Express Indemnity against Tenant based on the indemnity provision in the parties’ lease agreement that requires Lessee (Tenant) to indemnify Lessors against all claims involving the use and or occupancy of the “Premises.” The 4th cause of action alleges Tenant breached the lease agreement by failing to defend and indemnify Arcade and failing to procure the required insurance policy naming Arcade as an additional insured.

Note that all Cross-Complaints filed in this action by Landlords (Arcade, MMV, Morlin and Morlin Asset) contain the same causes of action. This tentative ruling collectively addresses the identical issues raised in each motion.

Contrary to Lessors’ argument, Tenant may properly adjudicate the issues raised in the motions. Tenant can seek adjudication of “one or more causes of action within an action.” The statute is not limited to adjudicating only “claims for damages.” The motion addresses all three causes of action alleged (1st, 2nd and 4th). CCP § 437c(f)(1).

Landlords may also adjudicate “issues of duty.” Cal Code Civ Procedure § 437c(f)(1). The 3rd cause of action for declaratory relief is based solely on Landlords’ allegation that they are “entitled to be indemnified by Cross-Defendants,” Cross-Complaints, ¶ 13. To that extent, the declaratory relief claim is derivative of the 4th cause of action for Express Indemnity. Cross-Complainants are properly on notice of the issue to be adjudicated – namely whether or not they are entitled to indemnification by Tenant.

In construing the provisions at issue, the general rules of contract interpretation apply. Crawford v. Weather Shield Mfg., Inc., 44 Cal. 4th 541, 552 (Cal. 2008)

All Cross-Complaints allege:
1. Indemnity based on the fact that Cross-Defendants caused injury (equitable indemnity).
2. Apportionment of Fault based on comparative fault.
3. Declaratory Relief for a declaration that Landlord Entities are entitled to be indemnified
4. Express Indemnity against Tenant based on the indemnity provision in the parties’ lease agreement that requires Lessee (Tenant) to indemnity Lessor (Arcade) against all claims involving with use and or occupancy of the “Premises.” The 4th cause of action alleges Tenant breached the lease agreement by failing to defend and indemnify Arcade and failing to procure the required insurance policy naming Arcade as an additional insured.

Note that all Cross-Complaints filed in this action by Landlords (Arcade, MMV, Morlin and Morlin Asset) contain the same causes of action.

Contrary to Arcade’s argument, Tenant may properly adjudicate the issues raised in the motion. Tenant can seek adjudication of “one or more causes of action within an action.” The statute is not limited to adjudicating only “claims for damages.” The motion addresses all three causes of action alleged (1st, 2nd and 4th).

“A party may move for summary adjudication as to one or more causes of action within an action, one or more affirmative defenses, one or more claims for damages, or one or more issues of duty, if that party contends that the cause of action has no merit or that there is no affirmative defense thereto, or that there is no merit to an affirmative defense as to any cause of action, or both, or that there is no merit to a claim for damages, as specified in Section 3294 of the Civil Code, or that one or more defendants either owed or did not owe a duty to the plaintiff or plaintiffs. A motion for summary adjudication shall be granted only if it completely disposes of a cause of action, an affirmative defense, a claim for damages, or an issue of duty.” CCP § 437c(f)(1).

Landlords may also adjudicate “issues of duty.” Cal Code Civ Procedure § 437c(f)(1). The 3rd cause of action for declaratory relief is based solely on Landlords’ allegation that they are “entitled to be indemnified by Cross-Defendants,” Cross-Complaints, ¶ 13. To that extent, the declaratory relief claim is derivative of the 4th cause of action for Express Indemnity. Cross-Complainants are properly on notice of the issue to be adjudicated – namely whether or not they are entitled to indemnification by Tenant.

In construing the provisions at issue, the general rules of contract interpretation apply. Crawford v. Weather Shield Mfg., Inc., 44 Cal. 4th 541, 552 (Cal. 2008)

1) 4th cause of action for Express Indemnity and derivatively, the 3rd cause of action for Declaratory Relief, both of which are based on the same issue sought to be adjudicated – GRANT.
The 4th cause of action alleges breach of two distinct obligations: (1) the duty to indemnify Arcade and (2) the duty to add Arcade as an additional insured. Motion, Ex. B, Cross-Complaint, 6:4-8. The 3rd cause of action for Declaratory Relief asserts Landlords are entitled to a declaration that Tenant owes them a duty of indemnification. Cross-Complaints, ¶ 13.

A motion for summary adjudication can address one or both distinct obligations alleged, although they are combined in one cause of action. Edward Fineman Co. v. Superior Court, 66 Cal. App. 4th 1110, 1118 (Cal. App. 2d Dist. 1998).

Issue 1: The court GRANTS adjudication of Issue 1 as to ALL Cross-Complaints (4th cause of action asserting breach for failure to indemnify) as there is no triable issue that the material provision of the lease agreement obligates Tenant to indemnify Landlords against claims involving the Premises, which has a limited definition and does not include “stairwells.” It is undisputed that Plaintiff was injured on the stairwells. It is undisputed that “stairwells” fall within the definition of “Common Areas.”

The parties do not dispute the essential material facts all of which are identically proffered by each Landlord entity. The only difference is each Landlord entity is separately identified.

• Plaintiff alleges that he tripped on stairways, which constituted a dangerous condition. UF 3 There is no dispute that Cross-Defendant Tenant leased the premises from the Landlords. UF 5. Landlords dispute that the lease agreement says what Tenant represents, but Landlords do not proffer evidence of contrary language or interpretation.

• The language of the material portions of the Lease Agreement, including the indemnity provisions are not in dispute. The lease defines “Premises” as Suite 204. Motion, Ex. C, 1.2 (a). UF 6. Landlords point out that Tenant also has non-exclusive rights to the Common Areas, but this does not controvert the limited definition of Premises which is confined to Tenant’s suite.

• Section 2.7 defines “Common Areas” as “all areas and facilities outside the PREMISES” including “common entrances, lobbies, corridors, and stairwells.” UF 7. Landlords do not dispute that the lease “so states.”

• Landlords do not dispute that the Lease expressly reserves to the Lessor the control and management of the Common Areas. UF 9.

• Landlords cite to the indemnity provision at issue in AF50. That provision requires Tenant (Lessee) to indemnify Landlords for claims arising from “use and occupancy of the PREMISES by the lessee.”

“Section 8.7 of the LEASE, under the heading “Indemnity,” states that “Except for Lessor’s gross negligence or willful misconduct, Lessee shall indemnify, protect, defend and hold harmless the PREMISES, Lessor and its agents, Lessor’s master or ground lessor, partners, and Lenders, from and against any and all claims, loss of rents and/or damages, liens, judgments, penalties, attorneys’ and consultants fees, expenses and/or liabilities arising out of, involving, or in connection with, the use and/or occupancy of the PREMISES by Lessee. If any action or proceeding is brought against Lessor by reason of any of the foregoing matters, Lessee shall upon notice defend the same at Lessee’s expense by counsel reasonably satisfactory to Lessor and Lessor shall cooperate with Lessee in such defense. Lessor need not have first paid any such claim in order to be defended or indemnified.” AF 50. This material fact is undisputed.

Landlords cite to Section 8.8 of the lease “Exemption of Lessor from Liability.” AF 52.

“Section 8.8 of the LEASE, under the heading “Exemption of Lessor from Liability,” states that Lessor shall not be liable for injury or damage to the person or goods, wares, merchandise or other property of Lessee, Lessee’s employees, contractors, invitees, customers, or any other person in or about the PREMISES, whether such damage or injury is caused by or results from fire …or from any other cause, whether the said injury or damages results from conditions arising upon the PREMISES or upon other portions of the BUILDING, or from other sources or places.” AF 52.

However, the language of Section 8.8 does not impact Tenant’s indemnity obligations nor does it dispute that Tenant’s obligation to indemnify is limited to claims involving the PREMISES and not the Common Areas.
2) Issue 3: 4th cause of action to the extent it alleges Tenant breached his separate obligation to add Landlords as additional insureds.

A. As against Cross-Complainants MCD Arcade Lane and MMV Properties, LLC, the motion is DENIED.
• Tenant asserts that he has “continuously named” the lessor entities as additional insureds on his liability policy. However, the evidence submitted does not identify these particular Landlord/Owner entities. Motion, Ex. B, Endorsement attached to the Cross-Complaint.

• Ex. E to the Motion proffers the same declarations page that does not identify these entities.

• Therefore, Fact 23 remains in dispute. Arcade and MMV do not address this issue in Reply.
B. As against Cross-Complainants Morlin and Morlin Asset, the motion is GRANTED. Landlords do not dispute that these identities are identified in the additional insured endorsement. UF 23. Landlords argue that types of coverage are not specified. But this does not controvert the fact that they are additional insureds.

3) Issue 2, Equitable Indemnity and Apportionment of Fault (1st and 2nd causes of action) should be GRANTED as to ALL Cross-Complaints

A. Both equitable indemnity and apportionment claims require a finding of comparative fault. Tenant asserts that he did not cause or contribute to Plaintiff’s injuries. Fireman’s Fund Ins. Co. v. Haslam, 29 Cal. App. 4th 1347, 1353-1354 (Cal. App. 1st Dist. 1994).

• It is undisputed that control and management of the Common Areas were reserved to the Lessor (Arcade). UF 16.
• There is no dispute that the Lease does not require Tenant to maintain or repair any portion of the Common Areas. UF 18.
• Tenant did not exercise any control or maintenance over the Common Areas, including the stairwells. UF 19.

B. Landlords arguments to these facts do not create a triable issue. Landlords argue that Tenant created the dangerous condition, since he hired Plaintiff to clean carpets, and the evidence supports that Plaintiff spilled the water that he slipped on. Therefore, Landlords argue that Plaintiff, as Tenant’s agent, created the dangerous condition (the water), for which Tenant is responsible.
Landlords cite no applicable authority indicating that Tenant, as hirer of an independent contractor, is vicariously liable for injuries to the contractor’s employees. [While the parties do not raise it, Privette and its progeny precludes a finding of liability against the hirer [“In Privette v. Superior Court (1993) 5 Cal. 4th 689 [21 Cal. Rptr. 2d 72, 854 P.2d 721] (Privette) and Toland v. Sunland Housing Group, Inc. (1998) 18 Cal. 4th 253 [74 Cal. Rptr. 2d 878, 955 P.2d 504] (Toland), we held that an employee of a contractor may not sue the hirer of the contractor under either of the alternative versions of the peculiar risk doctrine set forth in sections 413 and 416.” Hooker v. Department of Transportation, 27 Cal. 4th 198, 200-201 (Cal. 2002)].
C. Instead, Landlords rely on an agency theory. This theory is not cogently or persuasively articulated, as generally speaking, principals are liable for the torts of their agents [“A principal is liable for the torts of his agent conducted within the scope of his authority.”] Housewright v. Pacific Far East Line, Inc., 229 Cal. App. 2d 259, 268 (Cal. App. 1st Dist. 1964). There are no allegations in the Cross-Complaints contending that Plaintiff committed a tort causing injury to another for which liability is sought against Tenant.
Notwithstanding the foregoing, Landlords proffered facts do not support the existence of an agency relationship. Landlords admit, and it is undisputed that Tenant hired Arax Carpet Co., to clean carpets in Tenant’s suite. AF 27. It is undisputed that Plaintiff was an employee of Arax. AF 28. These facts support the existence of an independent contractor relationship.

“An independent contractor is one who renders service in the course of an independent employment or occupation, following his employer’s desires only as to the results of the work, and not as to the means whereby it is to be accomplished [citations omitted]. The most important factor of an agency or employee relationship, as distinguished from that of independent contractor, is the right to control the manner and means of accomplishing the result desired. Strong evidence of the employer’s control is his right to discharge at will, without cause.” Housewright v. Pacific Far East Line, Inc., 229 Cal. App. 2d 259, 265-266 (Cal. App. 1st Dist. 1964).

Landlords further admit that the Building Engineer, Ivan Bell requested notification if carpets were to be cleaned so that Bell could make sure the hoses were routed properly. AF 41. This infers that control over the work was asserted and employed by the building’s employees, not Tenant.

Landlords also admit that Morland Asset requested that Tenant call the building “whenever any outside vendors would be working in Tenant’s suite.” AF 42.

Accordingly, Landlords additional facts contravene their theory of an agency relationship as Tenant did not control the manner and means of the work.

UF 21 is also undisputed. Arcade’s discovery responses establish that Arcade does not contend that Tenant failed to maintain the project or the premises in any way that would have led to the subject accident. Landlords make the same argument that Tenant remains liable since Plaintiff was his agent, and through his agent, created the dangerous condition.

Landlords cite cases involving owners or occupiers of land. Here it is undisputed that Landlords controlled the Common Areas as required by the lease, and the duty to maintain or repair those areas where not required of Tenant. UF 16, 18 and 19.

Landlords object to Tenant’s use of Arcade’s discovery responses as an admission by the other Cross-Defendants. These objections should be SUSTAINED. However, preclusion of this evidence does not affect the outcome.

The tentative ruling is summarized as follows:

Motion as to All Cross-Complaints:

GRANT as to Issue 1 – the Claim for Express Indemnity has no merit.
GRANT as to Issue 2 – the Equitable Indemnity and Apportionment claims have no merit.

As to Issue 3 – Breach of the Lease Agreement

As against Cross-Complainants MCD Arcade Lane and MMV Properties, LLC, the motion is DENIED. Fact 23 remains in dispute.

As against Cross-Complainants Morlin and Morlin Asset, the motion is GRANTED. Fact 23 as it applies to these entities are UNDISPUTED.