1.CROSS – DEFENDANT’S DEMURRER TO CROSS-COMPLAINT
2.CROSS- DEFENDANT’S DEMURRER TO CROSS-COMPLAINT

3.CMC

(2) Demurrers to Original Cross-Complaint

Cross-Defendants LUKE V. McCARTHY and EVERGREEN REALTY ADVISORS INC. demur to all 3 causes of action in the Original Cross-Complaint filed by Defendant AMERICAN SPECTRUM REALTY MANAGEMENT LLC (ASRM) on 9/04/13.

On or before Thursday Feb. 27, 2014, ASRM may file a First Amended Cross-Complaint that cures the defects noted below. All new allegations therein shall be set forth in boldface type.

The demurrer by Cross-Defendants NEW WEST REALTY INC. and MICHAEL PALMER is moot because on 1/30/14 ASRM filed a request to dismiss with prejudice of the cross-complaint against New West and Palmer.

Demurrer by McCarthy and Evergreen

1st COA: Contractual Indemnity

SUSTAINED with leave to amend.

An indemnitee seeking to recover on an indemnity agreement must allege the parties’ contractual relationship, the indemnitee’s performance of that portion of the contract that gives rise to the indemnity claim, the facts showing a loss within the meaning of the parties’ agreement, and the amount of damages sustained. (Four Star Electric Inc. v. F&H Construction (1992) 7 Cal.App.4th 1375, 1380.)

Cross-Defendants McCarthy and Evergreen argue correctly that Defendant ASRM fails to allege facts sufficient to state a claim for breach of contractual indemnity. In particular, ASRM fails to allege what misconduct by ASRM or Evergreen gave rise to the indemnity claim. ASRM fails to allege that it performed under the contract. And ASRM fails to show that the alleged misconduct triggers indemnity within the terms of the indemnity provision.

The indemnification provision, at Section 8.1 (b) of the Purchase Agreement provides that:

“The American Spectrum Parties, jointly and severally, and the Evergreen Parties, jointly and severally, (an ‘Indemnifying Person’) agree to indemnify, defend and hold the other and their respective partners, members, affiliates, offices, directors, employees, representatives and agents (such other party and each of the foregoing persons or entities is hereinafter referred to individually as an ‘Indemnified Person’ and collectively as ‘Indemnified Persons’) harmless from any and all Damages which an Indemnified Person may at any time suffer or incur, or become subject to, as a result or in connection with:

(i) any breach of any representation or warranty of Indemnifying Person for such period of survival as provided in Section 8.1 (a) and

(ii) the nonfulfillment of any unwaived covenant or agreement of Indemnifying Persons contained in this Agreement or in any document or other writing delivered by an Indemnifying Person pursuant to this Agreement.

No Indemnified Person shall have the right to assert any right of indemnification pursuant to clause (i) or (ii) of this Section 8.1 (b) after the survival date set forth in Section 8.1 (a).”

2nd COA: Equitable Indemnity

SUSTAINED with leave to amend.

It is well-settled in California that equitable indemnity is only available among tortfeasors who are jointly and severally liable for the Plaintiff’s injury. (Stop Loss Ins. Brokers Inc. v. Brown & Toland Medical Group (2006) 143 Cal.App. 4th 1036, 1040.) With limited exception, there must be some basis for tort liability against the proposed indemnitor. Generally, it is based on a duty owed to the underlying Plaintiff, although vicarious liability and strict liability also may sustain application of equitable indemnity. (Ibid.)

Cross-Defendants argue correctly that the Cross-Complaint fails to properly allege a claim for equitable indemnity. The second cause of action fails to allege facts sufficient to show that ASRM, Evergreen, and McCarthy are joint tortfeasors who are jointly and severally liable to Plaintiffs.

3rd COA: Equitable Contribution

To SUSTAIN with leave to amend.

Cross-Defendants note that under CCP 875 (d), “There shall be no right of contribution in favor of any tortfeasor who has intentionally injured the injured person.” An intentional tortfeasor is entitled to seek indemnity from a concurrent tortfeasor, but is barred from seeking partial indemnity from a negligent tortfeasor. (Res-Care Inc. v. Roto-Rooter Services Co. (2010) 753 F. Supp. 2d 970.)

Cross-Defendants argue correctly that the claim is not properly pled because it fails to allege that ASRM does not allege intentional misconduct by Evergreen and McCarthy.