Case Number: BC541085    Hearing Date: July 10, 2014    Dept: 34

Moving Party: Defendant Los Angeles Unified School District (“defendant” or “LAUSD”)

Resp. Party: Plaintiff Suffolk Construction Company Inc. (“plaintiff”)

Defendant’s demurrer to the first and second causes of action is OVERRULED. Defendant’s demurrer to the third cause of action is SUSTAINED without leave to amend.

The Court GRANTS defendant’s Request for Judicial Notice. (See Evid. Code, § 452(d), (h); Ascherman v. General Reinsurance Corp. (1986) 183 Cal.App.3d 307, 310 [when a contract relates to a complaint, the court may take judicial notice of the contract in ruling on a demurrer].)

PRELIMINARY COMMENTS:

The Court would appreciate counsel complying with Cal. Rules of Court, Rule 3.1110(f) by separating exhibits with hard tabs.

The court also notes that defendant filed a similar demurrer in the related case of Suffolk Construction Company v. Los Angeles Unified School District, BC 536482. (The demurrer in that case was filed before the cases were related.) On May 12, 2014, Judge Barbara Scheper arrived at the same conclusion that this court comes to in the instant demurrer. Defendant is certainly correct that Judge Scheper’s order is not precedent for this court. (See Reply, p. 1, fn. 1; Budrow v. Dave & Buster’s of California (2009) 171 Cal.App.4th 875, 885 [“A written trial court ruling in another case has no precedential value.”].) Nonetheless, given the identity of issues, the parties might have saved themselves and the court substantial time had they taken up the Court’s suggestion to have scheduled an informal conference to resolve these issues prior to filing this demurrer. (See, Dept. 34 Orders, ¶ IV, available at http://www.lasuperiorcourt.org/courtroominformation/ui/resultpopup.aspx?value=LAM/34.)

BACKGROUND:

Plaintiff commenced this action on 4/1/14 against defendant for breach of contract, implied contractual indemnity, and declaratory relief. On 9/13/11, plaintiff, as general contractor, entered into a contract with defendant pertaining to a construction project. (Compl., ¶ 7.) In connection with the project, plaintiff entered into subcontract agreements with several subcontractors. (Id., ¶ 8.) Following completion of their work, certain subcontractors commenced actions against plaintiff and its sureties seeking payment for amounts that plaintiff submitted to and are due from defendant. (Id., ¶ 10.)

ANALYSIS:

Defendant demurs to the entire complaint and the three causes of action contained therein on the grounds of uncertainty and failure to allege sufficient facts.

First Cause of Action for Breach of Contract

Defendant first argues that this cause of action fails because plaintiff fails to allege compliance with a contractual claim procedure. (See RJN, Exh. B, Arts. 12.3-12.6, 16.) This argument is not well taken. Plaintiff alleges that the contractual claims presentation procedure does not expressly require the presentation of a claim; however, though not required to do so, plaintiff timely submitted a claim in compliance with the Government Code and those claims were rejected by defendant. (Compl., ¶ 13, Exh. B.) To the extent that the contractual claim procedure constitutes a requirement under the contract, plaintiff alleges that it has “performed or satisfied all conditions, requirements, covenants and promises required of it under the Prime Contract or otherwise by law, except those conditions, requirements, covenants and promises which Plaintiff had been prevented from performing or satisfying, or from which it has been excused, or those for which the District has waived or is otherwise estopped from asserting.” (Id., ¶ 14.) This allegation is sufficient, at the pleadings stage, to allege compliance with the claims presentation procedure.

Defendant also argues that plaintiff’s allegations are uncertain. Demurrers for uncertainty are strictly construed, because discovery can be used for clarification, and apply where defendants cannot reasonably determine what issues or claims are stated. (Khoury v. Maly’s of Cal., Inc. (1993) 14 Cal.App.4th 612, 616; Weil & Brown, Civ. Pro. Before Trial (The Rutter Group 2013) ¶ 7:85.) “Demurrer for uncertainty will be sustained only where the complaint is so bad that the defendant cannot reasonably respond; i.e., he or she cannot reasonably determine what issues must be admitted or denied, or what counts or claims are directed against him or her.” (Weil & Brown, ¶ 7:85 [citing Khoury, 14 Cal.App.4th at p. 616].)

Here, the allegations are not so unclear that defendant cannot reasonably respond. Plaintiff has alleged that it complied with the requirements of the contract, except to the extent that it was prevented from doing so or that defendant waived requirements. (Compl., ¶ 14.) This is sufficient at the pleadings stage. To the extent that defendant wishes to obtain more information about the breach of contract claim or plaintiff’s compliance with the contractual claim procedure, such information may be sought during the discovery process.

Defendant’s demurrer to the first cause of action is OVERRULED.

Second Cause of Action for Implied Contractual Indemnity

To the extent that defendant is arguing that a public entity cannot be bound by an implied contract, this argument is not well taken. The court in San Mateo Union High School District v. County of San Mateo (2013) 213 Cal.App.4th 418 recognized ” ‘that a county may be bound by an implied contract under California law if there is no legislative prohibition against such arrangements, such as a statute or ordinance.’ [Citation.]” (Id. at p. 439.) Defendant does not point to a legislative prohibition against implied contracts with defendant.

In Sehulster Tunnels/Pre Con v. Traylor Brothers, Inc./Obayashi Corp. (2003) 111 Cal.App.4th 1328 [hereinafter “Sehulster”], a general contractor (TBO) brought a cross-complaint against the city of San Diego for equitable indemnity and implied contractual indemnity. (Id. at p. 1335.) The court noted that a claim for implied contractual indemnity is based on the indemnitor’s breach of the subject contract. (Id. at p. 1350.) “An implied contractual indemnity action does not amount to a claim for contribution from a joint tortfeasor because it is founded neither in tort nor on any duty that the indemnitor owes to the injured party. Rather, it is predicated on the indemnitor’s breach of duty owing to the indemnitee to properly perform its contractual responsibilities.” (Id. at p. 1351.) The court held that TBO could not maintain its claim for implied contractual indemnity because San Diego did not breach any provision of the underlying contract or any duty owed to TBO to perform its contractual responsibilities. (Id. at p. 1351.) The court did not address the issue of whether San Diego could have been liable for such claims had it breached the contract, and expressly declined to consider whether the implied contractual indemnity claim would implicate public policy considerations underlying competitive bidding statutes. (See id. at p. 1352, fn. 22.)
(Interestsingly, the Court appeared to imply that, had San Diego breached the Prime Contract, it could be liable for implied indemnity. See id., at p. 1351 [“The parties’ briefing and analysis of the jury’s findings persuade us the jury’s indemnity award was predicated on a determination that City breached the Prime Contract. Therefore, City was liable to TBO for Sehulster’s cost overruns. . .”].)

Here, plaintiff has alleged that defendant breached the underlying contract. (See Compl., ¶¶ 12-16.) Therefore, Sehulster is inapplicable.

Defendant argues that the second cause of action is barred because the parties’ contract includes express contractual indemnity provisions, and that they preempt any implied contractual indemnity. Where parties expressly have contracted with respect to the defendant’s duty to indemnify the plaintiff, “the extent of that duty must be determined from the respective contractual provisions and not from the independent doctrine of equitable indemnity.” (City of Los Angeles v. Japan Air Lines Co., Ltd. (1974) 41 Cal.App.3d 416.) “The application of this rule, however, necessarily depends upon whether the contract, construed as a whole, was intended to convey indemnification rights with respect to the particular occurrence at issue.” (People ex rel. Dept. Pub. Wks. v. Daly City Scavenger Co. (1971) 19 Cal.App.3d 277, 280-281.)

In its opposition, plaintiff cites to E. L. White, Inc. v. City of Huntington Beach (1978) 21 Cal.3d 497 [hereinafter “White”]. In White, the plaintiff entered into a contract with the defendant city for a construction project. (Id. at p. 502.) The contract contained a provision for the plaintiff to indemnify the defendant from actions brought on account of injuries or damages sustained from the performance of the work. (Ibid.) The plaintiff brought an action against the defendant for indemnity. (Id. at p. 503.) The defendant argued that the plaintiff failed to state a cause of action because “the parties, by agreeing to the quoted indemnification provision, thereby memorialized the entire agreement between them regarding indemnity inter se, and by excluding from their agreement any language indicating a right of indemnity in [plaintiff] against [defendant], they indicated their intention that no such right should exist or be implied under any circumstances in favor of [plaintiff].” (Id. at p. 506.) The court recognized the difference between express indemnity and implied or equitable indemnity:

Each of these two basic forms of indemnity is subject to its own distinctive legal rules and limitations. Those governing so-called “express” indemnity reflect its contractual nature, permitting great freedom of action to the parties in the establishment of the indemnity arrangements while at the same time subjecting the resulting contractual language to established rules of construction. [footnote omitted] Thus, whereas the parties to an express indemnity provision may, by the use of sufficiently specific language, establish a duty in the indemnitor to save the indemnitee harmless from the results of even active [footnote omitted] negligence on the part of the latter [citations], in the absence of this a provision will be construed to provide indemnity to the indemnitee only if he has been no more than passively negligent. [Citation.]

Within the limitations of the language used, however, an express indemnity clause is accorded a certain preemptive effect, displacing any implied rights which might otherwise arise within the scope of its operation. Thus … when 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.” [Citation.] 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.

(Id. at pp. 507-508 [italics in original].) The court discussed Daly City Scavenger Co., where the express indemnity provision pertained to injuries for persons using a particular section of a highway, but not for persons using the subject portion of the highway. (Id. at p. 509.) Because the injury at issue occurred outside of the particular section described in the contract, the express provision was inapplicable to the injury and was therefore without preemptive effect as to the rights of implied equitable indemnity. (Ibid.) The court in White found that the scope of the express indemnity clause did not extend to the circumstances that led to liability on the part of the plaintiff. (Id. at p. 509.) “This being so, any preemptive effect … which the clause might have had in circumstances not involving active negligence on [the defendant]’s part did not extend to the instant situation. Accordingly, the principles of implied equitable indemnity must be held to have come into play.” (Id. at p. 510.)

Under White, an express indemnity provision only preempts implied indemnification if it is applicable to the particular facts underlying the indemnity claim. Where the alleged injuries are outside of the express provisions, the principals of implied indemnity come into play.

Defendant here fails to point to an express indemnification provision that applies to the facts underlying plaintiff’s claims. Plaintiff is seeking indemnity from its subcontractor’s claims for payment. Defendant points to several express provisions, including defendant’s agreement to indemnify plaintiff for property taxes, claims by persons who negotiated the lease, and claims against plaintiff for work performed in areas affected by hazardous materials. (See RJN Exh. A, § 1G, addendum Article XVIII; RJN Exh. B, ¶ 4.7.) These provisions are clearly inapplicable to plaintiff’s claims.

Defendant also points out that the general conditions of the contract provide that plaintiff is to indemnify defendant for injuries sustained in connection with performance under the contract. (See RJN Exh. B, Art. 6.57.) Regardless of whether the subcontractor’s claims constitute “injuries” sustained in connection with the performance of the contract, the Court notes that this provision is similar to the provision in White. In that case, the contract contained a provision requiring the plaintiff to “indemnify and save harmless [the defendant] from any suits, claims, or actions brought by any person or persons for or on account of any injuries or damages sustained because of or arising out of the performance of the work contemplated or in consequence thereof.” (White, 21 Cal.3d at p. 502.) The plaintiff sought indemnity from the defendant after people were harmed as a result of a subcontractor’s negligence during the project. (Id. at pp. 502-503.) Defendant’s argument here is essentially the same as that presented in White. (See id. at p. 506.) The Court rejects the argument for the reasons stated in that case: any preemptive effect of the above quoted provision on circumstances not involving defendant’s misconduct does not extend to the instant situation. (See id. at p. 510.)

Defendant’s demurrer to the second cause of action is OVERRULED.

Third Cause of Action for Declaratory Relief

There are two essential elements for declaratory relief: “(1) a proper subject of declaratory relief, and (2) an actual controversy involving justiciable questions relating to [plaintiff’s] rights or obligations.” (Brownfield v. Daniel Freeman Marina Hospital (1989) 208 Cal.App.3d 405, 410.) Declaratory relief is not an independent cause of action, but a form of equitable relief. (See Batt v. City and County of San Francisco (2007) 155 Cal.App.4th 65, 82.)

Plaintiff is seeking a declaration that defendant is impliedly and equitably obligated to indemnify, defend, and hold plaintiff harmless for any costs and damages resulting from the subcontractor claims. (Compl., ¶¶ 28, 30.) Because such indemnification is sought in the first and second causes of action, the declaratory relief claim appears to be superfluous. “The declaratory relief statute should not be used for the purpose of anticipating and determining an issue which can be determined in the main action. The object of the statute is to afford a new form of relief where needed and not to furnish a litigant with a second cause of action for the determination of identical issues.” (Hood v. Superior Court (1995) 33 Cal.App.4th 319, 324 [citations and internal quotations omitted].) Nothing in the complaint establishes that a declaration of rights will add anything to plaintiff’s claims. (See ibid.)

Defendant’s demurrer to the third cause of action is SUSTAINED without leave to amend.

Defendant to answer within 10 days.