2014-00172996-CU-BC

Robert Winger vs. Edward Winger

Nature of Proceeding: Hearing on Demurrer to the Cross-Complaint

Filed By: Wright, Brandon T.

** If any party requests oral argument, then at the time the request is made, the requesting party shall inform the court and opposing counsel of the specific issue(s) on which oral argument is sought. **

The demurrer of Cross-Defendant Robert Winger, by and through the Personal Representative of his Estate, to the Cross-Complaint of Allan Owen, Special Administrator of the Estate of Mark Whisler, is OVERRULED.

The court refers to Robert Winger, now deceased, as well as the personal representative of his estate, as “Robert.” Likewise, the court refers to deceased Plaintiff and Cross-Defendant Mark Whisler dba Whisler Land Company, as well as the Special Administrator of Mr. Whisler’s Estate, as “Whisler.”

The parties’ requests for judicial notice of court documents and the calculation of a 90-day period are GRANTED.

On its own motion, the court takes judicial notice of the fact that Robert died on 2/03/17. (See Wright Decl., Exh. 2.)

The Wright Declaration submitted with the reply is STRICKEN. The court may not consider evidence on demurrer.

Overview

Robert and Whisler commenced this action in December 2014. The sole defendant is Edward Winger (Edward), Robert’s brother.

In the operative first amended complaint (FAC), Robert and Whisler allege that they entered into contracts to manage several properties that Edward owns. They further allege that in December 2013, when Edward terminated the contracts and hired a new property manager, Edward owed approximately $103,000 under the contracts as well as $169,000 for other amounts he had promised to reimburse. The FAC contains causes of action against Edward for breach of contract and common counts.

Edward filed a cross-complaint against Robert and Whisler in May 2015. In his cross-complaint, Edward alleges that Robert and Whisler mismanaged his properties and misappropriated funds to which he was entitled. Edward’s cross-complaint is not currently at issue.

In July 2018, and over Whisler’s objection, the court entered an order finding Robert’s settlement with Edward to be in good faith. (See CCP § 877.6.) Thus, the dispute between Robert and Edward has been resolved, and related, equitable cross-complaints for indemnity against Robert are barred. Whisler is still litigating with Edward.

On 8/01/18, Whisler filed the cross-complaint currently at issue. The cross-complaint contains a single cause of action against Robert for express indemnity. Generally speaking, Whisler’s theory is that the property management contracts he is litigating with Edward include Robert’s express promises to indemnify Whisler for damages and costs incurred in connection with the contracts. Robert now demurs on grounds Whisler’s cross-complaint fails to state a valid cause of action. In Robert’s view, the promises of express indemnity are void, and the cause of action for express indemnity is time-barred. Whisler opposes.

Discussion

Statutes of Limitations

First, Robert argues the demurrer should be sustained because Whisler’s cross-complaint is time-barred. CCP § 366.2(a) establishes a one-year limit on civil actions against decedents, and it supplants limitations periods that would apply if the decedents were still living:

If a person against whom an action may be brought on a liability of the person, whether arising in contract, tort, or otherwise, and whether accrued or not accrued, dies before the expiration of the applicable limitations period, and the cause of action survives, an action may be commenced within one year after the date of death, and the limitations period that would have been applicable does not apply. (Emphasis added.)

Subdivision (b) further provides, in relevant part:

The limitations period provided in this section for commencement of an action shall not be tolled or extended for any reason except as provided in any of the following, where applicable:

[¶]

(2) Part 4 (commencing with Section 9000) of Division 7 of the Probate Code claims in administration of estates of decedents).

Robert died on 2/03/17. (See Wright Decl., Exh. 2.) Whisler did not file the cross-complaint for express indemnity until 8/01/18, which is more than one year later. Hence, unless the one-year period under § 366.2(a) was tolled, the cross-complaint is time-barred.

On 12/15/17–before the one-year period expired–the trustee of the Mark Whisler Trust filed a creditor’s claim for the indemnity on behalf of Whisler’s estate. (See RJN, Exh. B.) The trustee noted that he had not been appointed executor of Whisler’s estate but anticipated being appointed to that position. (See id., Exh. B.) On 4/16/18, Robert’s Estate served notice that the claim had been rejected. (See id., Exh. C.)

Although the period between the filing of a creditor’s claim and the rejection of the claim is excluded from the one-year calculation under CCP § 366.2, (see Probate Code § 9352(a)), Whisler does not argue that this period is long enough to render the cross-complaint timely under CCP § 366.2. Instead, the parties dispute whether a different section of the Probate Code, § 9353, has tolled the one-year period and has rendered the cross-complaint timely. Section 9353(a) reads:

(a) Regardless of whether the statute of limitations otherwise applicable to a claim will expire before or after the following times, a claim rejected in whole or in part is barred as to the part rejected unless, within the following times, the creditor commences an action on the claim…:

(1) If the claim is due at the time the notice of rejection is given, 90 days after the notice is given.

(2) If the claim is not due at the time the notice of rejection is given, 90 days after the claim becomes due. (Emphasis added.)

Robert argues that Whisler’s indemnity claim submitted in probate was “due” when it was rejected in April 2018. Because Whisler did not file his cross-complaint within 90 days after the rejection, Robert argues that the cross-complaint is barred under § 9353 (a)(1).

Whisler opposes and argues that the indemnity claim was not due when it was rejected. Hence, Whisler argues that § 9353, subd. (a)(2) governs the outcome and allows the cross-complaint to advance.

To support his argument that Whisler’s probate claim was “due” when rejected, Robert relies heavily on Bradley v. Breen (1999) 73 Cal.App.4th 798. The court in that case decided that CCP § 366.2 barred a cross-complaint for equitable indemnity because the section applies regardless whether a legal claim has “accrued.” But Bradley did not involve the question whether an indemnity claim was “due” under Probate Code § 9353(a) and thus sheds little if any light on the current inquiry.

Whisler relies on Dacey v. Taraday (2011) 196 Cal.App.4th 962. That case, though, raised the issue whether CCP § 366.2 applied at all, not whether the one-year limitations period was tolled under Probate Code § 9353(a)(2) because a probate claim was not then due.

Somewhat more helpful is another case that Whisler cites, Fox v. Dehn (1974) 42 Cal.App.3d 165. Construing a predecessor to § 9353, the Fox court wrote that “the interpretation of the word ‘due’ should reflect the earliest instance at which a claim matures.” (42 Cal.App.3d, p. 170.) It also noted that “claims which have been treated as ‘not due’…have been for the most part contingent in nature.” (Id.)

Claims of express contractual indemnity are predicated on the indemnitee’s payment of money. (See Valley Crest Landscape Development, Inc. v. Mission Pools of Escondido, Inc. (2015) 238 Cal.App.4th 468, 481.) Because no cause of action against Whisler has reached disposition in this case, Whisler has not paid any damages triggering a claim of express indemnity against Robert. Consequently, Whisler’s probate claim for indemnity was not “due” when it was rejected, and the cross-complaint is not time-barred under CCP §§ 366.2 or Probate Code § 9353(a).

Because CCP § 366.2 and Probate Code § 9353 do not bar Whisler’s cross-complaint, the court does not address Whisler’s arguments that, assuming his probate claim was otherwise due when rejected in April 2018, there are equitable reasons the demurrer should be overruled.

Voidness

Robert argues next that the cross-complaint is defective because it tenders a theory of indemnity that is unlawful. Robert predicates this argument on Whisler’s allegations that he and Robert occupied a relationship of real estate broker (Whisler) and real estate licensee (Robert). (See X-Compl., ¶¶ 2, 3.) Citing Gipson v. Davis Realty (1963) 215 Cal.App.2d 190, 207, Robert argues that the pair could not have agreed to relieve Whisler of its vicarious liability to third parties for Robert’s misconduct. After concluding that a real estate licensee was the broker’s “agent” as a matter of law, the Gipson court held that any contract purporting to alter the agency relationship to one involving an independent contractor was invalid. (See 15 Cal.App.2d, pp. 206-207.) Yet, Gipson does not hold that a real estate license is barred from agreeing to indemnify the broker.

Robert also cites Horlike v. Coldwell Banker Residential Brokerage Company (2016) 1 Cal.5th 1024, 1036. Horlike presented the “single, narrow question…whether [an] associate [real estate] licensee owed to the buyer a duty to learn and disclose all information materially affecting the value or desirability of the property [sold], including

[a] discrepancy between the square footage of the residence’s living area as advertised and as reflected in publicly recorded documents.” (1 Cal.5th, p. 1029.) In the course of deciding that the licensee, like the supervising broker, owed such a duty, the court noted that real estate brokers must supervise agents operating under their licenses or risk discipline and/or liability. (See id., pp. 1036-1037.) Again, however, there is no reference to indemnity generally or the enforceability vel non of indemnity agreements governing real estate agents and their brokers.

In Robert’s view, the cases and statutes governing real estate professionals reflect a policy precluding real estate brokers from avoiding vicarious liability through indemnity

agreements with their licensees. Robert, however, does not cite any statute, regulation or judicial decision establishing or acknowledging such a policy. This court declines to break new ground and rejects Robert’s position.

Disposition

The demurrer is overruled.

Robert is directed to file and serve his answer to Whisler’s cross-complaint no later than 10/15/18.

The minute order is effective immediately. No formal order pursuant to CRC 3.1312 or further notice is required.