Case Name: J. Cyril Johnson Family L.P. v. Merlone Geier IX, LLC, et al.
Case No.: 18CV328188

This case arises from a dispute over the development of a shopping center.

J. Cyril Johnson Family Limited Partnership (the “Johnson Family Partnership”) initiated the action, filing a complaint against various defendants involved in the development of a shopping center.

According to the allegations of the complaint, the owners of 13 contiguous parcels of real property executed and recorded a Reciprocal Parking Agreement (the “RPA”) for the purpose of developing a shopping center (“Center”) in Mountain View, California. The Johnson Family Partnership owned parcel 13 and had the right to review and consent to proposed changes to the design and composition of the Center.

In 2011, a real estate developer that had acquired several of the parcels—Merlone Geier Partners—began the process of obtaining zoning and building approval from the City of Mountain View to redevelop the Center. During this process, and as required by the City of Mountain View, Merlone Geier Partners and the defendants procured and recorded three separate amendments to the RPA. These amendments were made without the Johnson Family Partnership’s knowledge or consent and deprived it of its right to review and consent to any proposed redevelopment. Therein, the defendants falsely represented that the Johnson Family Partnership no longer held interest in the Center, was no longer an approving party, and that FR San Antonio Center, LLC was the ground lessor of parcel 13.

The Johnson Family Partnership asserts causes of action against the defendants for quiet title, declaratory relief, injunctive relief, slander of title, breach of contract, fraud, contractual interference, and negligence.

In turn, defendant Machado-San Antonio Partners, LLC (“Machado”) filed a cross-complaint against defendant MGP IX REIT, LLC (“MGP”) for equitable indemnity and declaratory relief. This pleading largely reiterates facts alleged in the complaint. It additionally alleges MGP drafted the First Amendment to the RPA, which Machado executed as a part and parcel of the Third Amendment to Agreement of Purchase and Sale and Joint Escrow Instructions (the “PSA 3rd Amendment”). Machado further pleads that MGP was contractually required to execute the First Amendment to the RPA under the terms of the PSA 3rd Amendment.

Machado claims MGP is therefore liable to defend and indemnify it for all damages claimed by the Johnson Family Partnership because Machado reasonably expected MGP to (1) correctly identify each owner of property in the Center; (2) not unilaterally modify the names in the RPA and First Amendment; and (3) to know that it would have no reason to suspect MGP intentionally or negligently identified an incorrect party as the ground lessor, or negligently stated the Johnson Family Partnership was no longer an approving party under the RPA.

Machado asserts the following causes of action in the cross-complaint: (1) implied contractual indemnity, (2) equitable indemnity, (3) comparative indemnity, and (4) declaratory relief.

MGP presently demurs to each cause of action, and filed an accompanying request for judicial notice. Machado opposes the demurrer.

I. Request for Judicial Notice

In support of its demurrer, MGP requests judicial notice of the following documents: (1) Agreement of Purchase and Sale and Joint Escrow Instructions between Machado and MGP (the “PSA”); and (2) the PSA 3rd Amendment between Machado and MGP.

“Judicial notice is the recognition and acceptance by the court, for use by the trier of fact or by the court, of the existence of a matter of law or fact that is relevant to an issue in the action without requiring formal proof of the matter.” (Poseidon Development, Inc. v. Woodland Lane Estates, LLC (2007) 152 Cal.App.4th 1106, 1117.)

MGP asserts judicial notice is appropriate under Evidence Code section 452, subdivision (h), which permits judicial notice of “[f]acts and propositions that are not reasonably subject to dispute and are capable of immediate and accurate determination by resort to sources of reasonably indisputable accuracy.” (Evid. Code, § 452, subd. (h).) It asserts judicial notice of documents is properly under this provision where the existence of the documents is not reasonably subject to dispute.

A contract between private parties is generally not subject to judicial notice. (Gould v. Maryland Sound Industries, Inc. (1995) 31 Cal.App.4th 1137, 1145 [“[T]he existence of a contract between private parties cannot be established by judicial notice under Evidence Code section 452, subdivision (h).”].) However, judicial notice of a contract is allowed where there is no dispute regarding the document’s authenticity and enforceability. (See Ascherman v. Gen. Reinsurance Corp. (1986) 183 Cal.App.3d 307, 310-311; see also StorMedia Inc. v. Superior Court (1999) 20 Cal.4th 449, 457, fn. 9.)

Here, there is no dispute regarding the authenticity and enforceability of the contracts. Further, the PSA and PSA 3rd Amendment are relevant to issues raised on the demurrer. The contracts are therefore subject to judicial notice and Machado does not object.

Therefore, MGP’s request for judicial notice in support of its demurrer is GRANTED.

II. Merits of Demurrer

MGP demurs to each cause of action on the ground of failure to state sufficient facts to constitute a cause of action. (See Code Civ. Proc., § 430.10, subd. (e).)

MGP advances one argument as to all causes of action and a separate argument pertinent solely to the first cause of action.

A. All Causes of Action

The causes of action for implied contractual indemnity, equitable indemnity, comparative indemnity, and declaratory relief fundamentally allege MGP should indemnify and hold Machado harmless, either fully or partially, for liability sought to be imposed by the Johnson Family Partnership’s complaint.

Indemnity is “the obligation resting on one party to make good a loss or damage another party has incurred.” (Rossmoor Sanitation, Inc. v. Pylon, Inc. (1975) 13 Cal.3d 622, 627.) “There are two basic types of indemnity: express indemnity, which relies on an express contract term providing for indemnification, and equitable indemnity, which embraces ‘traditional equitable indemnity’ and implied contractual indemnity.” (Jocer Enterprises, Inc. v. Price (2010) 183 Cal.App.4th 559, 573; see also Prince v. Pacific Gas & Electric Co. (2009) 45 Cal.4th 1151, 1157.)

MGP argues Machado’s equitable indemnity claims fail because there are express indemnity clauses in the PSA setting forth the sole basis for indemnity it owes to Machado. In opposition, Machado acknowledges the existence of the express indemnity clauses in the PSA, but argues they are inapplicable to the particular factual setting before the court and cannot be grounds for attack on the pleadings.

“[W]hen parties by express contractual provision establish a duty in one party to indemnify another, the extent of that duty must be determined from the contract and not from the independent doctrine of equitable indemnity. When, however, the duty established by contract is by the terms and conditions of its creation inapplicable to the particular factual setting before the court, the equitable principles of implied indemnity may indeed come into play.” (E. L. White, Inc. v. City of Huntington Beach (1978) 21 Cal.3d 497, 508.)

Machado’s argument is well taken. Here, the PSA does indeed contain express indemnity clauses. The Court agrees with Machado that they do not appear to be implicated here. As Machado asserts, the express indemnity clauses in the PSA are limited to three specific scenarios: “(i) claims arising from injury to persons or damage to property and any liens or claims of liens against Machado’s property (that was being sold to MGP) or any portions thereof, arising from entry of MGP’s agents, investigators, testers or inspectors for testing or investigation concerning the Machado property; (ii) claims for brokers’ fee, finder’s fee, commission or other similar compensation in compensation in connection with the sale of the Machado property and (iii) claims brought by Ross Stores, Inc. against Machado under particular circumstances.” (Opp., p. 7:12-18.) These clauses are not applicable to the particular factual setting before the Court, and MGP has therefore not persuasively argued how Machado is precluded from asserting its equitable indemnity claims. For this reason, MGP’s demurrer is not sustainable.
Accordingly, the demurrer to each cause of action on the ground of failure to state sufficient facts is OVERRULED.

B. First Cause of Action for Implied Contractual Indemnity

The first cause of action for implied contractual indemnity alleges that, if Machado is liable for all or any portion of the claimed damages claimed by the Johnson Family Partnership, such damages are the legal responsibility of MGP who impliedly agreed to indemnify and hold it harmless.

Implied contractual indemnity is a form of equitable indemnity based “on the contractual relationship between the parties and a breach of the contract between them.” (Garlock Sealing Techs., LLC v. NAK Sealing Techs. Corp. (2007) 148 Cal.App.4th 937, 973.) “ ‘The court is concerned only with the obligations flowing between the indemnitor and the indemnitee, and whether the indemnitor breached an obligation which foreseeably resulted in the indemnitee being made liable for damages to the third party.’ ” (Ibid., quoting Bear Creek Planning Com. v. Title Ins. & Trust Co. (1985) 164 Cal.App.3d 1227, 1240.)

MGP argues Machado’s claim for implied contractual indemnity fails because it lacks any factual support. It contends the allegation that it impliedly agreed to indemnify Machado and hold it harmless is conclusory. MGP asserts Machado fails to identify when the “agreement took place, in what manner MGP ‘impliedly agreed’ to indemnify Machado, or to what extent the indemnity purportedly agreed to by MGP includes the claims at issue in this case.” (Dem., p. 5:2-3.) MGP concludes this claim must be dismissed.

MGP’s contention lacks merit. Implied contractual indemnity requires a contractual relationship between the parties and breach of a contractual obligation (Garlock Sealing Techs., LLC v. NAK Sealing Techs. Corp., supra, 148 Cal.App.4th 937, 973), both of which have been alleged by Machado. The cross-complaint alleges a contract exists between the parties whereby MGP agreed to draft the First Amendment to the RPA that Machado executed as a part and parcel of the PSA 3rd Amendment. In so doing, MGP failed to correctly identify each owner of property in the Center and named an incorrect party as the ground lessor of parcel 13. As a result, Machado has been sued by the Johnson Family Partnership. Machado has therefore sufficiently alleged a contractual relationship existed between it and MGP, and that MGP breached its contractual obligation. MGP has provided no authority, and the Court is unaware of any, to support its contention that more than this amount of detail is required when asserting a claim for implied contractual indemnity. Accordingly, its argument is unsubstantiated.

For these reasons, the demurrer to the first cause of action on the ground of failure to state sufficient facts is OVERRULED.