Demurrer to Second Amended Cross-Complaint filed by Cross-Defendants RSG Insurance Services, LLC and R-T Specialty Insurance Services, LLC
ANALYSIS:
- Cross-defendants’ request for judicial notice
Cross-defendants requests judicial notice of:
(1) this court’s April 11, 2019 tentative ruling (Exhibit 1);
(2) a letter/quote issued by cross-defendants to cross-complainants that was discussed in the Second Amended Cross-Complaint (Exhibit 2);
(3) cross-complainants’ opposition to cross-defendants’ demurrer to the cross-complaint (Exhibit 3); and
(4) this court’s October 17, 2019 tentative ruling on cross-defendants’ demurrer to the cross-complaint (Exhibit 4).
This court will take judicial notice of its tentative rulings and documents filed in this litigation (Exhibits 1, 3-4). (Evid. Code, § 452, subd. (d).)
The court denies judicial notice of the letter/quote (Exhibit 2).
Evidence Code section 452, subdivision (h) provides that judicial notice may be taken 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.” The opposition papers do not expressly concede that this document is the true and correct copy of the letter/quote. Nor is this document “not reasonably subject to dispute” and “capable of immediate and accurate determination by resort to sources of reasonably indisputable accuracy.” The proper method to submit this exhibit would be by way of a declaration that establishes the foundation for the document.
- Cross-defendants’ demurrer to the 1st cause of action for implied equitable indemnity
First, cross-defendants contend that Bowermaster’s sole negligence precludes equitable indemnity. Cross-defendants submit a copy of the alleged quote (Request for Judicial Notice, Exhibit 2). They contend the quote establishes that Bowermaster was informed of the change in terms of the policy. Cross-defendants contend that they should not be held liable for “Bowermaster’s own professional negligence and failure to advise Bowermaster’s client, despite having knowledge of the premium calculation change.” (Demurrer, at p. 16.) .
“A demurrer tests the sufficiency of the complaint as a matter of law. .. The reviewing court gives the complaint a reasonable interpretation, and treats the demurrer as admitting all facts properly pleaded.” (Lewis v. Safeway, Inc. (2015) 235 Cal.App.4th 385, 391.) “We also consider matters which may be judicially noticed.” (Adelman v. Associated Intern. Ins. Co. (2001) 90 Cal.App.4th 352, 359.) “In considering the merits of a demurrer, however, ‘the facts alleged in the pleading are deemed to be true, however improbable they may be.’ [Citations.]” (Hacker v. Homeward Residential, Inc. (2018) 26 Cal.App.5th 270, 280.)
In the present case, Exhibit 2 is not attached to the underlying Complaint and cannot be “read as part of the of the SACC’s allegations” as asserted in the demurrer. (Demurrer, at p. 23.) Therefore, we must accept the factual allegations in the Second Amended Cross-Complaint as true. (Hacker v. Homeward Residential, Inc., supra, 26 Cal.App.5th at p. 280.)
The Second Amended Cross-Complaint alleges that cross-complainants relied on the quote provided by cross-defendants when it prepared a written insurance proposal for Progressive, and the quote provided by cross-defendants did not mention the unilateral change. (SAXC, at ¶ 13.) Therefore, cross-defendants’ first contention fails.
Second, cross-defendants contend “there is no judgment or settlement giving rise to equitable indemnity.” They contend that this claim does not accrue until payment of a judgment or settlement is made, and as such, this claim should be dismissed.
For pleading purposes, the law is well settled that “a defendant whose negligence is alleged to have caused an accident may file a cross-complaint for equitable indemnity against concurrent tortfeasors.” (Santa Barbara Channelkeeper v. City of San Buenaventura (2018) 19 Cal.App.5th 1176, 1187; see Herrero v. Atkinson (1964) 227 Cal.Ap.2d 69, 78-79.) Generally, “defendants may cross-complaint against any person from whom they seek equitable indemnity. Defendants need only allege that the harm for which they are being sued is attributable, at least in part, to the cross-defendant.” (Weil & Brown, Cal. Practice Guide: Civil Procedure Before Trial (The Rutter Group 2019) ¶ 6:529.)
Third, cross-defendants contend the complaint sounds in contract, there are no factual allegations against cross-defendant RSG in support of tort liability, and therefore the cross-complaint is beyond equitable relief.
To establish a claim for equitable indemnity, cross-complainants must allege: (1) that cross-defendants were negligent/engaged in a tortious conduct; and (2) that cross-defendants’ negligence/tortious conduct contributed as a substantial factor in causing plaintiff’s harm. (CACI No. 3800.)
“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.) Generally, “there must be some basis for tort liability against the proposed indemnitor” to apply the principles of equitable indemnity. (BFGC Architects Planners, Inc. v. Forcum/Mackey Construction, Inc. (2004) 119 Cal.App.4th 848, 852.) “‘A person may not ordinarily recover in tort for the breach of duties that merely restate contractual obligations. Instead, ‘“[c]ourts will generally enforce the breach of a contractual promise through contract law, except when the actions that constitute the breach violate a social policy that merits the imposition of tort remedies.”’” (Id. at p. 853.)
Progressive asserts a negligence cause of action against Bowermaster and Rose, and a negligent misrepresentation cause of action against Bowermaster, in the First Amended Complaint. Bowermaster and Rose contend that cross-defendants are their insurance brokers who also provide them with “comprehensive wholesale brokerage and underwriting management services.” (SAXC, at ¶¶ 7-8.) They assert that cross-defendants procured a renewal of the insurance policy, cross-defendants provided a written quote for the 2017-2018 policy, the renewed terms included a unilateral change in terms, and cross-defendants failed to inform them of the change in terms. (SAXC, at ¶ 13.) Cross-defendants’ equitable indemnity claim is based on the alleged wrongful conduct of cross-defendants that does not “sound in contract.” (SAXC, at ¶ 21.) Therefore, this contention fails.
Fourth, cross-defendants contend the implied equitable indemnity cause of action is “rendered uncertain, unintelligible, vague and ambiguous” because: (1) it fails to allege any facts that could make cross-defendant RSG liable for Bowermaster’s failure to tell Progressive what Bowermaster knew about the rate calculation change; and (2) it fails to allege any basis for liability or indemnity against cross-defendant RSG. The memorandum of points and authorities for the demurrer fails to provide a concise statement of the law and a discussion of the authority relied on. (See California Rules of Court, rule 3.1113(b) [“The memorandum must contain a statement of facts, a concise statement of the law, evidence and arguments relied on, and a discussion of the statutes, cases, and textbooks cited in support of the position advanced.”].) Additionally, a demurrer based on uncertainty will be sustained only where the complaint is so bad that cross-defendants cannot reasonably respond. (See Khoury v. Maly’s of Calif., Inc. (1993) 14 Cal.App.4th 612, 616.) Here, the Second Amended Cross-Complaint is not so bad that cross-defendants cannot reasonably respond to the pleading.
- Cross-defendants’ demurrer to the 2nd cause of action for contribution
First, cross-defendants contend a claim for contribution requires the allegation of shared liability. They contend “[t]here is no shared liability to Progressive for Bowermaster’s failure to read the policy.” (Demurrer, at p. 21.) Cross-defendants contend there is no basis to make them liable for “Progressive’s sole negligence.” (Ibid.)
Equitable contribution for obligations “is the right to recover, not from the party primarily liable for the loss, but from a co-obligor who shares such liability with the party seeking contribution.” (Fireman’s Fund Ins. Co. v. Maryland Cas. Co. (1998) 65 Cal.App.4th 1279, 1293.) This right is codified in Civil Code section 1432. (Id. at p. 1293 fn. 3.) Contribution may also be apportioned among tortfeasors pursuant to Civil Code section 875. (Coca-Cola Bottling Co. v. Lucky Stores, Inc. (1992) 11 Cal.App.4th 1372, 1378 fn. 6.)
In the present case, cross-defendants’ contention relies on the same assertion for the 1st cause of action, i.e., that Bowermaster’s sole negligence precludes equitable indemnity. As discussed above, this contention fails because we must accept the factual allegations in the Second Amended Cross-Complaint that the quote provided by cross-defendants to cross-complainants did not mention the unilateral change. Therefore, based on the asserted contentions, the demurrer is overruled.
Second, cross-defendants “incorporates by reference” all the arguments discussed above including the special demurrer.
- Cross-defendants’ demurrer to the 3rd cause of action for declaratory relief
General authority for declaratory relief
The existence of an “actual controversy relating to the legal rights and duties of the respective parties,” suffices to maintain an action for declaratory relief. (Code Civ. Proc., § 1060.) “Any person…who desires a declaration of his or her rights or duties with respect to another…may, in cases of actual controversy relating to the legal rights and duties of the respective parties, bring an original action or cross-complaint in the superior court for a declaration of his or her rights…” (Code Civ. Proc., § 1060.)
“‘“The fundamental basis of declaratory relief is the existence of an actual, present controversy over a proper subject.”’ [Citation.]” (American Way Cellular, Inc. v. Travelers Property Casualty Co. of America (2013) 216 Cal.App.4th 1040, 1054.) “‘[A]n actual, present controversy must be pleaded specifically.’ … [Citations.]” (City of Cotati v. Cashman (2002) 29 Cal.4th 69, 80.) “‘The controversy must be definite and concrete, touching the legal relations of parties having adverse legal interests. [Citation.] It must be a real and substantial controversy admitting of specific relief through a decree of a conclusive character….’ ” (Pacific Legal Foundation v. California Coastal Com (1982) 33 Cal.3d 158, 170–171.) “The court may sustain a demurrer on the ground that the complaint fails to allege an actual or present controversy, or that it is not ‘justiciable.’” (DeLaura v. Beckett (2006) 137 Cal.App.4th 542, 545.)
“‘[W]e have found no authority for the proposition that declaratory relief is proper procedure when the rights of the complaining party have crystallized into a cause of action for past wrongs, all relationship between the parties has ceased to exist and there is no conduct of the parties subject to regulation by the court.’ [Citation.] ‘There is unanimity of authority to the effect that the declaratory procedure operates prospectively, and not merely for the redress of past wrongs….’ [Citation.]” (Osseous Technologies of America, Inc. v. DiscoveryOrtho Partners LLC (2010) 191 Cal.App.4th 357, 367.)
“Declaratory relief generally operates prospectively to declare future rights, rather than to redress past wrongs. [Citations.] It serves to set controversies at rest before they lead to repudiation of obligations, invasion of rights or commission of wrongs. In short, the remedy is to be used in the interests of preventive justice, to declare rights rather than execute them. [Citation.]” (Jolley v. Chase Home Finance, LLC (2013) 213 Cal.App.4th 872, 909.) Accordingly, J.R. has not stated facts sufficient to constitute a cause of action for declaratory relief.
RULING: Cross-Defendants RSG Insurance Services, LLC and R-T Specialty Insurance Services’ demurrer to the Second Amended Cross-Complaint is OVERRULED, with 10-days to Answer.
Prevailing party is to give notice.