Ryan Kaufman vs Apeel Technology Inc
Case No: 17CV03060
Hearing Date: Wed Mar 20, 2019 9:30

Nature of Proceedings: Demurrer to Cross-Complaint

TENTATIVE RULING: The demurrer is sustained, with leave to amend on or before April 3, 2019.

Background: On July 12, 2017, plaintiff Ryan Kaufman (Kaufman) filed his original complaint against defendants Apeel Services, Inc. (Apeel), Sothern California Edison, and Allergan, Inc. (Allergan). The complaint alleges that Kaufman was working on premises owned, maintained, managed, and operated by defendants when he was burned by a high voltage cable explosion.

On November 14, 2017, plaintiff filed an amendment to the complaint identifying defendant Daketta Los Carneros, LLC (Daketta) as defendant Doe 2. On December 13, 2017, plaintiff filed an amendment to the complaint identifying Los Carneros Opportunity, LP (Opportunity) as defendant Doe 6.

After the demurrer by defendants Daketta and Opportunity was overruled by the court on May 2, 2018, they answered plaintiff’s complaint on May 10, 2018. Daketta Pacific answered on September 5, 2018.

After the demurrer of another party to Kaufman’s complaint was sustained on November 14, 2018, Kaufman filed his FAC on November 16, 2018. Daketta, Opportunity, and Daketta Pacific answered plaintiff’s FAC on December 20, 2018, and Daketta and Opportunity filed a cross-complaint for express indemnity, equitable indemnity, apportionment of fault, and declaratory relief, naming as cross-defendants Allergan, Apeel, and Roe defendants.

The cross-complaint alleges that on 11/15/99, Los Carneros Business Park, LP, as successor in interest to Rockber Partners, LLC, and Allergan, as successor in interest by way of merger to McGhan Medical Corporation, entered into a lease agreement for the subject premises. The terms and conditions set forth in Section 7.7 and 7.8 of the Lease Agreement contain an express indemnity provision and an exception from liability provision. On May 17, 2017, Los Carneros Business Park, LP assigned all of its rights under the Lease Agreement to cross-complainants through an Assignment and Assumption of Lease, which is attached as Exhibit C.

Exhibit C to the cross-complaint, entitled “Assignment and Assumption of Lease,” specifies that the assignment is made between Los Carneros Business Park LP as assignor, and Los Carneros Opportunity, LP as assignee. The assignment was signed on behalf of Los Carneros Opportunity by Kip Bradley and Sep Wolf, managers of Daketta Los Carneros, LLC, in its capacity as the General Partner of Los Carneros Opportunity LP.

Demurrer: Allergan demurred to the first and second causes of action of the cross-complaint. With respect to the cause of action for equitable indemnity, Allergan contends that it is duplicative of the first cause of action. Because a demurrer to the equitable indemnity cause of action in a cross-complaint filed by Los Carneros Business Park LP on an identical ground was overruled, the Court is informed that Allergan has withdrawn its demurrer to this cause of action.

With respect to the cause of action for express indemnity, Allergan contends that Daketta lacks legal standing to sue Allergan based on its alleged obligations arising from the Lease Agreement at 712 South Los Carneros Road, in Goleta. Allergan contends that under its terms, the assignment was entered into only between Los Carneros Business Park LP and Opportunity. Daketta was not a party to the assignment agreement, and is therefore not a party to the lease containing the indemnity provision.

Daketta opposes the demurrer, contending that because it executed the assignment as the general partner of Opportunity, it is a party to the lease and can enforce its express indemnity provisions.

ANALYSIS: The demurrer is sustained, with leave to amend on or before April 3, 2019.

The cross-complaint was filed on behalf of both Daketta and Opportunity. While it alleges that the lease agreement between Los Carneros Business Park, L.P. and Allergan contained an express indemnity provision and an exception from liability provision, under which Allergan agreed to defend, indemnity, and hold harmless “cross-complainants” [sic—because “cross-complainants” at that time had no interest in the premises, the provisions could only have referred to Los Carneros Business Park, L.P.] from and against all claims arising from Allergan’s use of the premises. (Cross-complaint @ ¶ 11.) The cross-complaint further alleges that on May 17, 2017, Los Carneros Business Park, L.P. assigned all of its rights under the Lease Agreement “to Cross-Complainants” through an Assignment and Assumption of Lease. A copy of that document is attached to the cross-complaint. (Cross-complaint @ ¶¶ 17-18, and Exhibit C.) Exhibit C, however, expressly notes that the Assignment and Assumption of the Lease is being entered into between Los Carneros Business Park, L.P. as “Assignor” and Opportunity as “Assignee.” It contains no mention of Daketta as a party to the agreement. Certainly, it was signed by two managers of Daketta. However, that was solely in Daketta’s capacity as General Partner of Opportunity.

Allergan’s demurrer contends that Daketta has no standing to assert any claim for express indemnity, because it is not a party to the Assignment and Assumption of the Lease. Daketta argues, in opposition to the demurrer, that the Court must accept as correct its allegations as to the meaning of the agreement, citing Marzec v. Public Employees’ Retirement Systems (2015) 236 Cal.App.4th 889, 909, and therefore the Court must accept as true its allegation that it is a party to the Assignment and Assumption of Lease.

Daketta’s position ignores the principle that facts appearing in exhibits attached to the complaint (or cross-complaint) are given precedence over inconsistent allegations in the complaint. (Moran v. Prime Healthcare Management, Inc. (2016) 3 Cal.App.5th 1131, 1145-1146; Stella v. Asset Management consultants, Inc. (2017) 8 Cal.App.5th 181, 193-194.) In Dodd v. Citizens Bank of Costa Mesa (1990) 222 Cal.App.3d 1624, 1627, the plaintiff had alleged that the Bank allowed improper withdrawals from his account. The complaint attached the signature card for the account, which showed that it was plaintiff’s corporation, and not plaintiff individually, who was the customer. The Court found that the demurrer to the complaint was properly sustained.

Similarly, the Assignment and Assumption of Lease attached to Daketta’s cross-complaint clearly identifies Opportunity as the sole “Assignee” under the agreement. The only mention of Daketta in the entire document was in the execution of the document by two managers of Daketta, in Daketta’s capacity as General Partner of Opportunity. As general partner of Opportunity, it is Daketta that has the authority to bind Opportunity, a limited partnership, to a contract. (See Corp. Code, § 15904.02, subd. (a).) However, Daketta cited no authority to support its conclusion that its mere signature on the Assignment and Assumption of Lease, in its capacity as General Partner of Opportunity, makes it a separate party to the contract with standing to enforce the lease’s express indemnity provisions against Allergan.

Without the allegation of facts or the citation of legal authority to support the conclusion that Daketta is a party to the Assignment and Assumption of Lease merely because it executed the document on Opportunity’s behalf in its capacity as General Partner of Opportunity, the terms of the document stating that Opportunity was the “Assignee” under the document prevail over the cross-complaint’s allegations that the lease containing the express indemnity provisions was assigned to “Cross-Complainants” (i.e., Daketta and Opportunity), and not just to Opportunity.

As a result, the first cause of action fails to allege facts which would support a cause of action by Daketta against Allergan. Consequently, the demurrer is sustained.

The Court has no information whether Daketta is in possession of the facts and/or authority necessary to cure this defect. As a result, it will allow Daketta and Opportunity leave to amend their cross-complaint to attempt to allege a viable cause of action for express indemnity on behalf of both cross-complainants. Any such amended cross-complaint shall be filed on or before April 3, 2019.