Case Number: BC602205 Hearing Date: August 22, 2017 Dept: O

Garcia v. Tricoast Builders, Inc., et al. (BC602205)

Cross-Defendant Val Construction, Inc.’s DEMURRER TO SECOND AMENDED CROSS-COMPLAINT

Respondent: Cross-Complainant Markei Contractors, Inc.

TENTATIVE RULING

The court is inclined to OVERRULE the demurrer, but will hear from the parties regarding the issue of Lab. Code 3864.

Cross-Defendant Val Construction, Inc. (“Val”) demurs to the Breach of Contract cause of action on the ground that it fails to state facts sufficient to constitute a cause of action.

1st CAUSE OF ACTION:

BREACH OF CONTRACT:

The elements for a breach of contract cause of action are: (1) the contract; (2) plaintiff’s performance or excuse for nonperformance; (3) defendant’s breach; and (4) resulting damages. (Reichert v. General Ins. Co. (1968) 68 Cal.2d 822, 830.) In alleging a breach of contract cause of action, it is necessary to specify whether the contract is written, oral or implied by conduct. (CCP 430.10(g).) In order to plead a written contract (the first element listed above), a plaintiff must, in addition to alleging the making of the contract, do one of the following: (1) set forth the contract in haec verba; or (2) plead the contract’s legal effect by alleging the substance of its relevant terms. (4 Witkin, California Procedure 4th Edition, 479-481.) In order to plead an oral contract, a plaintiff must plead its legal effect, i.e., allege the substance of the contractual terms. (Id., at 483.)

The court critically notes that Val has again demurred on the ground that the contract is uncertain. This court previously overruled Val’s demurrer on this ground. The court finds that the allegations and documents support the allegation that a contract was formed. Markei’s letter to the subcontractor contained insurance and licensing requirements. Val’s Proposal, “Based on information submitted by [Val]” can be construed as an acceptance of Markei’s terms. Val’s further act of adding Markei onto its insurance policy is additional evidence of acceptance. Finally, Val’s execution of an Unconditional Waiver and Release Upon Final Payment indicates that Val had been paid in full for its labor and services. (SAXC, Par. 13.)

Par. 11 alleges that Val agreed in writing “to obtain general liability coverage with certain minimum amounts, and to have Markei named as an additional insured… as follows: … $1,000,000 minimum General Liability coverage per occurrence and $2,000,000 aggregate… MarKei Contractors is to be named as additional insured on all General Liability policies. A copy of the ‘additional insured endorsement should be attached to your insurance certificate.’”

Par. 12 alleges that Val provided a Certificate of Liability Insurance indicating it had obtained from Scottscale Insurance Company (“Scottsdale”) the required insurance in the amounts requested and that Markei was named as an additional insured. (SAXC; Ex. B.) However, Val failed to “provide the additional insured endorsement, as required by the written agreement.” (SAXC, Par. 12.)

Plaintiff explains in Par. 12 that a “certificate of insurance” is often issued by an insurance broker and such is not evidence that additional insured status has actually been secured from the insurance carrier. Therefore, the written agreement requested a copy of the “additional insured endorsement.”

Pars. 14-15 allege that Scottsdale did not respond to Markei’s tender of a defense and indemnity because “Markei is not a named insured under the policy.”

The court finds that the SAXC sufficiently alleges a contract claim against Val.

The court will hear from the parties regarding whether Lab. Code 3864 is applicable to Markei’s cross-complaint.

Lab. Code 3864 provides:

“If an action as provided in this chapter prosecuted by the employee, the employer, or both jointly against the third person results in judgment against such third person, or settlement by such third person, the employer shall have no liability to reimburse or hold such third person harmless on such judgment or settlement in absence of a written agreement so to do executed prior to the injury.”

Here, the employee, Plaintiff Garcia, brought an action against Tricoast Builders, Inc., alleging injury when he fell through the roof at Pomona Auto Center where his employer, Val, was performing construction services. Markei was named in a cross-action, and Markei has brought its own cross-complaint against Val.

Val contends that Lab. Code 3864 restricts its “employer” liability to reimburse or hold “third party” Markei harmless absent an express indemnity contract.

Val cites CJL Construction, Inc. v. Universal Plumbing (1993) 18 Cal.App.4th 376, Chase Chemical Co. v. Hartford (1984) 159 Cal.App.3d 229 and Alameda Tank Co. v. Starkist Foods, Inc. (1980) 103 Cal.App.3d 428. However, all three cases deal with implied indemnity or contribution in some shape or form. CJL dealt with a declaratory relief claim seeking a Witt v. Jackson offset for concurrent employer liability. In Alameda, the court stated that “The arguments in the trial court, and in the briefs here, center primarily on… the one for implied indemnity.” Chase Chemical involved a cross-complaint for “indemnity, comparative contribution, and an offset of workers’ compensation benefits.”

Unlike CJL, Chase Chemical, and Alameda, Markei is not seeking contribution or implied indemnity for any of Val’s concurrent liability for Plaintiff Garcia’s injury. Instead, Markei’s damages are grounded in Val’s failure to have Markei named as an additional insured and appear to fall outside the scope of Lab. Code 3864. Val’s liability to Markei is based on its costs and damages with not being accorded “additional insured status” under Val’s policy.

Neither party has cited legal authority that is sufficiently on point. The court will hear from the parties.