DEMURRER-FIRST AMENDED COMPLAINT
Defendants have demurred to the First Amended Complaint (“FAC”). The FAC alleges five causes of action: (1) Equitable Indemnity Regarding Federal Taxes; (2) Equitable Indemnity Regarding California Taxes; (3) Contractual Indemnity Regarding Federal Taxes; (4) Contractual Indemnity Regarding California Taxes; and (4) Declaratory Relief.

Defendants contend this court does not have jurisdiction over the Federal Tax claims alleged in the FAC. Defendants further argue that the Federal tax claims are barred by the statute of limitations that govern how far back the IRS may look to impose tax obligations. Defendants further contend that the Plaintiff has waived the claims it now brings by way of a settlement agreement between the Plaintiff, Carolina Stollenwerk, and O’Hagin, signed July 31, 2007—which purports to include a full waiver of any claims between the parties. Defendants also contend the FAC is premature in that no taxing authority, state or federal, has initiated any audit or action for the payment of taxes. Finally, defendants contend that the FAC presents no actual controversy for which the court may provide declaratory relief.

Plaintiff has partially opposed the demurrer, arguing that case law supports a preemptive action to declare the plaintiff’s entitlement to indemnity—even absent any action from the taxing authorities. (Citing Roberts v. Reynolds (1963) 212 Cal.App.2d 818.) Plaintiff contends the viability of the claims under the statute of limitations cannot be determined from the allegations of the FAC and further that the tax code provides several explicitly enumerated exceptions to the three year limitations period. Plaintiff further contends that defendants’ waiver argument is unavailable on demurrer because it would require the court to interpret the language of the waiver. Plaintiff has conceded that the third and fourth causes of action require amendment.

Plaintiff has failed to allege facts necessary to support its causes of action against the Defendants. Plaintiff’s reliance on Roberts v. Reynolds, supra, is misplaced. There, the court explicitly found that: “The Director of Internal Revenue has made demand upon the plaintiffs as responsible officers of the corporation for ‘certain delinquent employment taxes’ for the fourth quarter of 1957 and for the first quarter of 1958 in the total amount of $5,001.15 and has threatened to assess further sums as penalties and interest if the claim is not paid forthwith.” (Roberts v. Reynolds, supra, 212 Cal.App.2d at 820 [emphasis added].) Plaintiff’s FAC does not allege that any taxing authority has made any demands.

Plaintiff asserts that “ ‘the elements of a cause of action for equitable 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 contractually or equitably responsible.’” (Plt. Oppo. 8:11-13 citing Expressions at Rancho Niguel Ass’n v. Ahmanson Developments, Inc. (2001) 86 Cal.App.4th 1135, 1139.) The court notes that the plaintiff has misquoted Expressions. The actual quote reads: “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 contractually or equitably responsible.” (Expressions, supra, at 1139.) As that court further held: “The right to indemnity flows from payment of a joint legal obligation on another’s behalf.” (Id.) Expressions explains further that: “Equitable indemnity principles govern the allocation of loss or damages among multiple tortfeasors whose liability for the underlying injury is joint and several. [Citations]. Such principles are designed, generally, to do equity among defendants who are legally responsible for an indivisible injury by providing a basis on which liability for damage will be borne by each joint tortfeasor in direct proportion to [its] respective fault.” (Id. [internal citations and quotation marks omitted; emphasis added].)

Applying the test announced in Expressions, theFAC does not allege a cause of action for indemnity against the Defendants because the FAC does not allege that Plaintiff has suffered damages; it only alleges the potential for damages. (See FAC ¶ 30 [“…in the event Plaintiff is found liable….”].)

The fifth cause of action similarly fails, in that it would require this court to determine: (1) whether there is a tax liability; and (2) who was responsible for that liability. As discussed above, there is no allegation of a current controversy between the Plaintiff and the taxing authorities. As pointed out by the defendants, this court is without jurisdiction to determine a party’s tax liability. For these reasons declaratory relief is not available under the facts alleged.

Based on the foregoing reasons, defendants’ demurrer to the first amended complaint is sustained with leave to amend. The Defendants are to submit an order consistent with this ruling.

MOTION TO QUASH – CROSS-COMPLAINT

Cross-complainant Harry O’Hagin (HOH) moves to quash certain subpoenas issued by Cross-defendant William Daniels, II (Daniels). The subpoenas seek documents related to the UBS AG and HSBC accounts of Defendant/Cross-Complainant Harry O’Hagin, and Defendants Bradley Patterson, Bryan Gaggs, Charter Star, and Jalerm Industries. HOH contends that the subpoenas should be quashed because jurisdiction has not been established over defendants Charter Star and Jalerm, and there is no good cause for Cross-defendant Daniels to seek the financial information of these parties. The moving parties argue that the information sought is completely irrelevant to the claim against Daniels—namely that he fraudulently transferred the assets of O’Hagin’s Inc. to keep Harry O’Hagin from executing on his judgment. Further, the moving parties argue that the documents sought by the subpoena are subject to a privacy objection.

Daniels contends that it is permissible to conduct limited discovery into whether Charter Star and Jalerm are subject to the court’s jurisdiction. Further, Daniels argues that the documents sought are relevant to determine whether Harry O’Hagin paid taxes on the payments he received from O’Hagin’s Inc. Daniels further argues that as a cross-defendant he is allowed broad discovery rights.

Daniels further requests judicial notice of certain documents. The moving parties have objected to the request for judicial notice. The court will sustained the objections to the extent that Daniels is asking this court to take judicial notice of the contents or truth of the documents. (See e.g. AL Holding Co. v. O’Brien & Hicks, Inc. (1999) 89 Cal.Rptr.2d 918, 75 Cal.App.4th 1310, review denied.)

Here, the issued subpoenas are not relevant to the cross-action between Harry O’Hagin and Daniels. Unless otherwise limited by order of the court … any party may obtain discovery regarding any matter, not privileged, that is relevant to the subject matter involved … if the matter either is itself admissible in evidence or appears reasonably calculated to lead to the discovery of admissible evidence … ” (CCP § 2017.010.) Cross-complaints are treated as independent actions. (See Bertero v. National General Corp. (1974) 13 Cal.3d 43, 51–52; Ohio Cas. Ins. Group v. Sup. Ct. (Butte Valley School Dist.) (1994) 30 Cal.App.4th 444, 448–449.) The issue in the cross-complaint is whether Daniels fraudulently transferred the assets of O’Hagin’s, Inc. to various other entities—it has nothing whatsoever to do with the moving parties’ finances or the parties’ respective tax obligations. In fact, any discovery that Daniels might obtain from the moving parties is not necessarily binding on them in the main action. (See Shepard & Morgan v. Lee & Daniel, Inc. (1982) 31 Cal.3d 256, 259–260.)

Daniels further argues that he is entitled to the information to determine whether Charter Star and Jalerm come within the jurisdiction of the court. Daniels has not been sued by Charter Star and Jalerm, nor has he sued those entities. Accordingly, he is not entitled to conduct this discovery.