This case was last updated from Los Angeles County Superior Courts on 07/15/2020 at 07:35:48 (UTC).

LIBERTY SURPLUS INSURANCE CORPORATION VS LTD CONSTRUCTION

Case Summary

On 02/16/2016 LIBERTY SURPLUS INSURANCE CORPORATION filed a Contract - Insurance lawsuit against LTD CONSTRUCTION. This case was filed in Los Angeles County Superior Courts, Stanley Mosk Courthouse located in Los Angeles, California. The Judges overseeing this case are ELIZABETH ALLEN WHITE and LAURA A. SEIGLE. The case status is Pending - Other Pending.

Case Details Parties Documents Dockets

 

Case Details

  • Case Number:

    ****9793

  • Filing Date:

    02/16/2016

  • Case Status:

    Pending - Other Pending

  • Case Type:

    Contract - Insurance

  • Court:

    Los Angeles County Superior Courts

  • Courthouse:

    Stanley Mosk Courthouse

  • County, State:

    Los Angeles, California

Judge Details

Presiding Judges

ELIZABETH ALLEN WHITE

LAURA A. SEIGLE

 

Party Details

Plaintiff, Petitioner, Respondent and Cross Defendant

LIBERTY SURPLUS INSURANCE CORPORATION

Defendants, Respondents, Cross Plaintiffs, Cross Defendants and Appellants

BERENDOS L.P.

A COMMUNITY OF FRIENDS

235 BERENDO L.P.

LTD CONSTRUCTION SERVICES GP

WALTON CONSTRUCTION SERVICES

ROCKHILL INSURANCE COMPANY

AXIS SURPLUS INSURANCE COMPANY

DOES 1 TO 200

PHILADELPHIA INDEMNITY INSURANCE CO.(DOE1

235 BERENDO LP

PHILADELPHIA INDEMNITY INSURANCE CO.

LTD CONSTRUCTION SERVICES GP DBA WALTON CONSTRUCTION SERVICES A GENERAL PARTNERSHIP

TOKIO MARINE SPECIALTY INSURANCE CO.

LIBERTY SURPLUS INSURANCE CORPORATION

INTERSTATE RESTORATION CALIFORNIA LP

SURPLUS INSURANCE COMPANY

TOKIO MARINE SPECIALITY INSURANCE COMPANY

17 More Parties Available

Attorney/Law Firm Details

Cross Defendant and Plaintiff Attorneys

PALUMBO DIANE O.

PALUMBO BERSTROM LLP

PALUMBO BERGSTROM LLP

HOVE DAWN

Plaintiff and Petitioner Attorneys

PALUMBO BERSTROM LLP

PALUMBO BERGSTROM LLP

Defendant, Respondent and Cross Plaintiff Attorneys

MASTERS JEFFREY D.

WOLKIN BRANDT L. ESQ.

DENNISON ROBERT D.

HARRIS & GREEN PC

LOUREIRO KARL R.

GRANT MERYN C.N.

WOLKIN BRANDT L.

PALLARES WILLIAM EDWARD

ARNOLD LARRY M. P.C.

YEGAZARIAN NONA

BROWN ETHAN J.

Defendant and Cross Defendant Attorneys

WOLKIN BRANDT L.

PALLARES WILLIAM EDWARD

BROWN ETHAN J.

MIGLIETTA MARGARET R.

PALUMBO DIANE O.

LAES SCOTT

 

Court Documents

Motion to Quash - MOTION TO QUASH SERVICE OF SUBPOENA AND/OR FOR A PROTECTIVE ORDER

8/29/2019: Motion to Quash - MOTION TO QUASH SERVICE OF SUBPOENA AND/OR FOR A PROTECTIVE ORDER

Declaration - DECLARATION DECLARATION RE: GOOD FAITH SETTLEMENT

10/15/2019: Declaration - DECLARATION DECLARATION RE: GOOD FAITH SETTLEMENT

Opposition - OPPOSITION BERENDO, L.P. , 235 BERENDO, L.P., AND A COMMUNITY OF FRIENDS OPPOSITION TO TOKIO MARINE SPECIALTY INSURANCE COMPANYS DEMURRER TO THE SECOND AMENDED COMPLAINT

11/4/2019: Opposition - OPPOSITION BERENDO, L.P. , 235 BERENDO, L.P., AND A COMMUNITY OF FRIENDS OPPOSITION TO TOKIO MARINE SPECIALTY INSURANCE COMPANYS DEMURRER TO THE SECOND AMENDED COMPLAINT

Reply - REPLY TO LIBERTY OPPOSITION TO MOTION FOR LEAVE TO FILE CROSS-COMPLAINT

12/13/2019: Reply - REPLY TO LIBERTY OPPOSITION TO MOTION FOR LEAVE TO FILE CROSS-COMPLAINT

NOTICE OF DISASSOCIATION OF COUNSEL

4/4/2018: NOTICE OF DISASSOCIATION OF COUNSEL

NOTICE PR EX PARTE

8/8/2018: NOTICE PR EX PARTE

PHILADELPHIA INDEMNITY INSURANCE COMPANY AND TOKIO MARINE SPECIALTY INSURANCE COMPANY'S UNDISPUTED MATERIAL FACTS IN SUPPORT OF REPLY TO LSIC'S RESPONSE ETC

8/10/2018: PHILADELPHIA INDEMNITY INSURANCE COMPANY AND TOKIO MARINE SPECIALTY INSURANCE COMPANY'S UNDISPUTED MATERIAL FACTS IN SUPPORT OF REPLY TO LSIC'S RESPONSE ETC

Proof of Service -

8/10/2018: Proof of Service -

DECLARATION OF DIANE 0. PALUMBO IN SUPPORT OF LIBERTY SURPLUS INSURANCE CORPORATION'S REPLY TO PHILADELPHIA INDEMNITY INSURANCE COMPANY AND; ETC.

8/10/2018: DECLARATION OF DIANE 0. PALUMBO IN SUPPORT OF LIBERTY SURPLUS INSURANCE CORPORATION'S REPLY TO PHILADELPHIA INDEMNITY INSURANCE COMPANY AND; ETC.

LIBERTY SURPLUS INSURANCE CORPORATION'S OBJECTION TO AND MOTION TO STRIKE JOHN NIEMEYER'S DECLARATION FILED IN SUPPORT OF BERENDOS ENTITIES OPPOSITION TO LIBERTY'S MOTION FOR SUMMARY ADJUDICATION

8/10/2018: LIBERTY SURPLUS INSURANCE CORPORATION'S OBJECTION TO AND MOTION TO STRIKE JOHN NIEMEYER'S DECLARATION FILED IN SUPPORT OF BERENDOS ENTITIES OPPOSITION TO LIBERTY'S MOTION FOR SUMMARY ADJUDICATION

Declaration - Declaration Of David Corona In support of ACOF's Motion In Limine No. 4

10/31/2018: Declaration - Declaration Of David Corona In support of ACOF's Motion In Limine No. 4

Witness List - (Proposed) Joint Witness List

11/13/2018: Witness List - (Proposed) Joint Witness List

Declaration - Declaration of Diane Palumbo

12/13/2018: Declaration - Declaration of Diane Palumbo

Brief - BRIEF A COMMUNITY OF FRIEND'S REPLY BRIEF IN SUPPORT OF ITS MOTION TO SET ASIDE THE JURY'S ADVISORY VERDICT DENYING THE AFFIRMATIVE DEFENSE OF UNCLEAN HANDS

3/8/2019: Brief - BRIEF A COMMUNITY OF FRIEND'S REPLY BRIEF IN SUPPORT OF ITS MOTION TO SET ASIDE THE JURY'S ADVISORY VERDICT DENYING THE AFFIRMATIVE DEFENSE OF UNCLEAN HANDS

Opposition - OPPOSITION INTERSTATE RESTORATION CALIFORNIA, LPS OPPOSITION TO DEFENDANT BERENDOS, LP AND A COMMUNITY OF FRIENDS MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT

4/8/2019: Opposition - OPPOSITION INTERSTATE RESTORATION CALIFORNIA, LPS OPPOSITION TO DEFENDANT BERENDOS, LP AND A COMMUNITY OF FRIENDS MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT

Motion for Order - MOTION FOR ORDER REGARDING SPECIAL INTERROGATORIES

5/17/2019: Motion for Order - MOTION FOR ORDER REGARDING SPECIAL INTERROGATORIES

SUMMONS -

2/16/2016: SUMMONS -

DEFENDANT PHILADELPHIA INDEMNITY INSURANCE COMPANY'S ANSWER TO COMPLAINT

6/6/2016: DEFENDANT PHILADELPHIA INDEMNITY INSURANCE COMPANY'S ANSWER TO COMPLAINT

989 More Documents Available

 

Docket Entries

  • 07/31/2020
  • Hearing07/31/2020 at 08:30 AM in Department 48 at 111 North Hill Street, Los Angeles, CA 90012; Trial Setting Conference

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  • 07/31/2020
  • Hearing07/31/2020 at 08:30 AM in Department 48 at 111 North Hill Street, Los Angeles, CA 90012; Status Conference

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  • 07/31/2020
  • Hearing07/31/2020 at 08:30 AM in Department 48 at 111 North Hill Street, Los Angeles, CA 90012; Conference Re: MSC Setting

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  • 07/31/2020
  • Hearing07/31/2020 at 08:30 AM in Department 48 at 111 North Hill Street, Los Angeles, CA 90012; Conference (Re: MSJ/MSA Setting)

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  • 06/29/2020
  • DocketAppeal - Ntc Designating Record of Appeal APP-003/010/103; Filed by Berendos, L.P. (Appellant); 235 Berendo, L.P. (Appellant); A Community of Friends (Appellant)

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  • 06/18/2020
  • DocketNotice of Filing of Notice of Appeal (Unlimited Civil) (NOA:6/17/20); Filed by Clerk

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  • 06/17/2020
  • DocketAppeal - Notice of Appeal/Cross Appeal Filed; Filed by Berendos, L.P. (Appellant); 235 Berendo, L.P. (Appellant); A Community of Friends (Appellant)

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  • 06/10/2020
  • DocketNotice (of Reassignment and Order); Filed by Liberty Surplus Insurance Corporation (Plaintiff)

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  • 06/02/2020
  • Docketat 08:30 AM in Department 48, Laura A. Seigle, Presiding; Hearing on Motion to Compel Further Discovery Responses - Not Held - Rescheduled by Party

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  • 06/02/2020
  • Docketat 08:30 AM in Department 48, Laura A. Seigle, Presiding; Conference ((ReMSJ/MSA Setting)) - Not Held - Rescheduled by Court

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1,621 More Docket Entries
  • 03/25/2016
  • DocketProof-Service/Summons; Filed by Liberty Surplus Insurance Corporation (Plaintiff)

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  • 03/04/2016
  • DocketNOTICE OF CASE MANAGEMENT CONFERENCE

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  • 03/04/2016
  • DocketNotice of Case Management Conference; Filed by Clerk

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  • 03/01/2016
  • DocketSUMMONS

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  • 03/01/2016
  • DocketSummons; Filed by Liberty Surplus Insurance Corporation (Plaintiff)

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  • 02/26/2016
  • DocketNotice; Filed by Liberty Surplus Insurance Corporation (Plaintiff)

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  • 02/26/2016
  • DocketNOTICE OF ERRATA REGARDING SUMMONS AND COMPLAINT

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  • 02/16/2016
  • DocketSUMMONS

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  • 02/16/2016
  • DocketCOMPLAINT FOR: (1) DECLARATORY JUDGMENT DUTY TO INDEMNIFY; ETC

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  • 02/16/2016
  • DocketComplaint; Filed by Liberty Surplus Insurance Corporation (Plaintiff)

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Tentative Rulings

Case Number: BC609793    Hearing Date: September 24, 2020    Dept: 48

[TENTATIVE] ORDER RE: MOTION FOR SUMMARY ADJUDICATION

On August 22, 2019, Cross-Complainants Berendos L.P., 235 Berendo L.P., and A Community of Friends (collectively, “Berendos”) filed a second amended cross-complaint (“SACC”) against Cross-Defendants Liberty Surplus Insurance Corporation; LTD Construction Services, GP dba Walton Construction Services (“Walton”); Interstate Restoration - California LP (“Interstate”); Philadelphia Indemnity Insurance Company; and Tokio Marine Specialty Insurance Company. On January 8, 2020, Berendos moved for summary adjudication against Walton.

EVIDENTIARY OBJECTIONS

The Court did not rely on the portions of the Declaration of Dora Leong Gallo to which Walton objected.

FACTUAL BACKGROUND

In 2014, Berendos began renovating two apartment buildings located at 226 and 235 South Berendo Street, and in July 2014, Berendos hired Walton. (Undisputed Material Facts “UMF” 1-2.) The parties entered into an agreement based on AIA forms that the parties modified, and Walton initialed every page. (UMF 3-4, 23.)

The agreement states in Section 3.3.2 that Walton “shall be responsible to [Berendos] for acts and omissions of [Walton’s] employees, Subcontractors and their agents or employees, and other persons or entities performing portions of work for, or on behalf of, [Walton] or any of its Subcontractors, and for any damages, losses, costs, expenses, including, but not limited to, reasonable attorneys’ fees resulting from such acts or omissions.” (UMF 6.) Section 3.18.1 states, “To the fullest extent permitted by law [Walton] shall indemnify and hold harmless [Berendos] (and its officers, directors, employees, agents, affiliates, and partners or members) . . . from and against claims, damages, losses and expenses, including but not limited to attorneys’ fees, arising out of the or resulting from performance of the Work, provided that such claim, damage, loss or expense is attributable to bodily injury, sickness, disease or death, or to injury to or destruction of tangible property, but only to the extent caused by the negligent acts or omissions of the Contractor . . . .” (UMF 8.)

Under the agreement, “[i]n no event shall the owner have control over, charge of, or any responsibility for construction means, methods, techniques, sequences, or procedures for safety precautions and programs in connection with the work.” (UMF 14.) Walton “shall be solely responsible for, and have control over, construction means, methods, techniques, sequences and procedures and for coordinating all portions of the Work under the Contract, unless the Contract Documents give other specific instructions concerning these matters.” (UMF 15.)

Section 10.2.1(2) states that Walton had a duty to “take reasonable precautions for safety of, and shall provide reasonable protection to prevent damage, injury or loss to the Work and materials and equipment to be incorporated therein, whether in storage on or off the site, under care, custody or control of the Contractor or the Contractor’s Subcontractors or Sub-subcontractors.” (UMF 16.) Section 10.2.7 states that Walton “shall not permit any part of the construction or site to be loaded so as to cause damage or create an unsafe condition. When all or a portion of the Work is suspended for any reason, the Contractor shall securely fasten down all coverings and protect the Work, as necessary, from injury by any cause.” (UMF 10.) Berendos “shall have no liability or responsibility for the safety of the site or any improvements located on the site until acceptance of the Work by the Owner.” (UMF 17.)

During the renovation, Walton removed the roofs from both buildings. (UMF 24.) On September 14, 2015, Walton became aware of forecasts of rain, and it covered the buildings with Visqueen plastic sheets. (UMF 26, 31.) These efforts did not prevent all rainwater from entering the buildings. (UMF 32.)

On September 21, 2015, Berendos’ Managing General Partner emailed Walton’s President stating that the flooding “resulted from Walton Construction’s failure to adequately cover and protect the roof of each building.” (UMF 34-35.) She stated that Berendos expected that Walton would “return the buildings to their former state prior to this flooding event wholly at [Walton’s] expense. Furthermore, all other costs associated beyond normal daily building operations will be borne by Walton . . . .” (UMF 36.) Four days later, Walton’s President replied confirming that those “expectations are correct, and be assured that [Walton] has been and will continue to be diligent in restoring the Berendos to their former state.” (UMF 38.)

Berendos hired American Technologies, Inc. (“ATI”) and Interstate to perform remediation after the storm, and it hired Anderson Environmental to direct the remediation. (UMF 43, 49.) Walton paid for the work that ATI and Anderson Environmental performed, as well as Berendos’ associated labor and personnel costs beyond normal daily operations during remediation. (UMF 48, 50, 57.) Walston and its primary insurer also paid some of the costs towards relocating tenants, storing their property, per diems, and damages to personal property. (UMF 52-55.) Interstate’s work cost $6,191,047.48, and Walton refused to pay for the remediation. (UMF 60-61.)

DISCUSSION

A plaintiff moving for summary adjudication must satisfy the initial burden of proof by proving each element of a cause of action. (Code Civ. Proc., § 437c, subd. (p)(1).) Then the burden shifts to the defendant to show that a triable issue of material fact exists as to the cause of action or a defense. (Code Civ. Proc., § 437c, subd. (p)(2).) To establish a triable issue of material fact, the party opposing the motion must produce “substantial responsive evidence.” (Sangster v. Paetkau (1998) 68 Cal.App.4th 151, 162-163.) A motion for summary adjudication may be made only as to a cause of action, affirmative defense, claim for damages or issue of duty. (Code Civ. Proc., § 437c, subd. (f)(1).)

According to the notice of motion states, Berendos seeks “an order stating that Walton has a contractual duty to indemnify the Berendos Entities for the damages sustained by two apartment buildings during the course of renovation work,” “an order establishing that Walton must indemnify the Berendos Entities for the cost of the remediation and related expenses, without regard to Walton’s negligence,” and “an order stating that to the extent that the Court concludes the indemnification provisions require a showing of negligence on the part of Walton, there is no dispute of material fact with regard to any question of comparative fault on the part of the Berendos Entities, and therefore Walton’s indemnity extends to the full extent of any damage for which Walton is found negligent without regard to any alleged comparative fault.”

These requested orders go beyond simply the adjudication of whether “ ‘one or more defendants either owed or did not owe a duty to the plaintiff or plaintiffs.’” (Paramount Petroleum Corp. v. Superior Court (2014) 227 Cal.App.4th 226, 243-244.) In Paramount, the plaintiff had sought summary adjudication of the issue of the defendant’s liability for breach of contract but not the issue of damages. (Id. at p. 229.) The court explained that “there is no statutory basis for summary adjudication on the issue of breach,” and that a plaintiff cannot turn a summary adjudication motion into a partial adjudication of a cause of action. (Id. at pp. 243-244.) That is what Berendos is trying to do, at least in part, with its request for orders that Berendos is not at fault and Walton must pay the “full extent of any damage,” which seems to mean the full amount that Berendos owes Interstate. Those issues go beyond the issue of whether Walton owes a contractual duty to Berendos.

As for the issue of a contractual duty, Berendos argues that Walton is required to pay it for the amounts it incurred in remedying the water damage based on two sections of the agreement.

Section 3.3.2

Under Section 3.3.2, Walton agreed that it would bear full responsibility for “any damages, losses, costs, expenses, including, but not limited to, reasonable attorneys’ fees resulting from” the acts and omissions of its “employees, Subcontractors and their agents and employees, and other persons or entities performing portions of the Work for, or on behalf of, [Walton] or any of its Subcontractors.” (UMF 6.) Berendos contends that Walton “is obligated to fully indemnify” Berendos because the losses the buildings sustained were the result of Walton’s acts or omissions as Walton was the only party responsible for the construction and protection of the buildings. (Motion at pp. 10-11.) In opposition, Walton contends that Section 3.3.2 is not an indemnity provision, but instead is a respondeat superior provision through which Walton merely accepted responsibility for the acts and omissions of its employees, subcontractors, and their agents and employees. (Opposition at pp. 10-11.)

Regardless of whether Section 3.3.2 can be considered an indemnity provision, and even if the purpose of the section was to make Walton responsible for the acts and omissions of its employees, it is those acts and omissions of Walton’s employees that are at issue here. By the plain language of Section 3.3.2, Walton is responsible for losses to Berendos resulting from the acts and omissions of Walton’s employees. This reading of Section 3.3.2 does not conflict with Section 3.18.1. Section 3.18.1 specifically states that the indemnification obligation in Section 3.18.1 “shall not be construed to negate, abridge, or reduce other rights or obligations of indemnity which would otherwise exist as to a party or person described in this Section 3.18.” Therefore, Section 3.18.1 does not reduce the rights Berendos has, or the obligations Walton has, under Section 3.3.2.

But that is not the end of the discussion because Berendos has not shown by undisputed facts that a duty under Section 3.3.2 exists here. Section 3.3.2 states that Walton “shall be responsible to [Berendos] for acts and omissions of [Walton’s] employees . . . and for any damages, losses, costs, expenses, . . . resulting from such acts or omissions.” (Emphasis added.) Thus, Walton’s duty is limited to those losses resulting from its acts or omissions; it does not encompass any and all losses Berendos suffered. There must be a causal connection, regardless of whether Walton’s alleged failure to prevent the water damage is considered a breach of contract or a tort. (Civ. Code § 3300 [damage must be “proximately caused” by, or “in the ordinary course of things, would be likely to result” from, “the breach of an obligation arising from contract”]; State Dept. of State Hospitals v. Superior Court (2015) 61 Cal.4th 339, 352, fn.11 [“Proximate cause is also a necessary element of plaintiff’s negligence claims”].) Usually “proximate cause is a question of fact.” (State Dept. of State Hospitals, supra, 61 Cal.4th at p. 353.)

The facts are disputed concerning whether the losses Berendos is seeking to recover resulted from Walton’s acts or omissions. For example, Berendos submits UMF 24: “The sequencing and timing of roof removal was decided by Walton.” Walton disputes that fact, arguing that Walton was not responsible for Berendos’ delay in responding to a request for information or for the city inspector’s decision that roof parapets needed to be repointed, and that Berendos’ delay pushed the roof project from the summer when it is usually dry into September when rain occasionally occurs. (Response to UMF 24; Norris Decl., ¶¶ 6-9.) Walton also submits evidence that unexpected wind caused the damages. The weather forecast was for drizzle or light rain, but high winds entailed. (Quintero Decl., ¶¶ 4, 9; Norris Decl., ¶¶ 12, 14.)

Due to the disputed facts about causation, the Court cannot conclude as a matter of law that all of Berendos’ claimed losses resulted from acts or omissions of Walton and that Walton has a contractual duty to pay for all of the losses Berendos allegedly sustained in remedying the water damage.

Section 3.18.1

In the alternative, Berendos argues that Walston is required to indemnify it under Section 3.18.1, which provides that “[t]o the fullest extent permitted by law [Walton] shall indemnify and hold harmless [Berendos]. . . from and against claims, damages, losses and expenses, including but not limited to attorneys’ fees, arising out of the or resulting from performance of the Work . . . but only to the extent caused by the negligent acts or omissions of the Contractor . . . .” (UMF 8.) Berendos contends that Walton, not Berendos, was in control of the construction work, and therefore Berendos bears no comparative fault. (Motion at pp. 18-19.)

However, Berendos’ argument as to its lack of comparative fault first requires a finding of Walton’s negligence. Berendos failed to meet its burden of showing that Walton was negligent. The agreement imposes a duty on Walton to “take reasonable precautions for safety of, [and] provide reasonable protection to prevent damage, injury or loss to the Work and materials and equipment to be incorporated therein, whether in storage on or off the site, under care or custody or control of the Contractor or the Contractor’s Subcontractors or Sub-subcontractors.” (UMF 16.) In anticipation of the rainstorm, Walton covered the buildings with Visqueen plastic sheets. (UMF 31.) Although this did not prevent rain from entering the building, Berendos has not established that Walton’s actions were not “reasonable precautions” and did not provide “reasonable protection to prevent damage.” Also, as discussed above, there are disputed facts concerning the causation of the water damage and resulting losses.

Accordingly, summary adjudication is not appropriate on this ground.

Correspondence

Berendos argues that correspondence in September 2015 and Walton’s payment of other damages are evidence that Walton agreed to indemnify Berendos. (Motion at p. 15.) Berendos’ Managing General Partner emailed Walton’s President stating that Berendos expected that Walton would “return the buildings to their former state prior to this flooding event wholly at [Walton’s] expense. Furthermore, all other costs associated beyond normal daily building operations will be borne by Walton . . . .” (UMF 36.) Walton’s President replied that those “expectations are correct, and be assured that [Walton] has been and will continue to be diligent in restoring the Berendos to their former state.” (UMF 38.) This exchange shows an agreement that Walton would be diligent in restoring the buildings, but does not expressly state that as part of that diligence, Walton agreed to pay any and all costs Berendos incurred in hiring a third party to perform restoration work. And Walton’s and its insurer’s payments for other costs after the storm and rain damages—including tenant relocation, tenant property storage, tenant per diems, and tenant personal property—do not clearly reflect an agreement by Walton to pay all costs of third party restoration services.

CONCLUSION

The motion for summary adjudication is DENIED.

Moving party to give notice.

Parties who intend to submit on this tentative must send an email to the Court at SMCDEPT48@lacourt.org indicating intention to submit. Parties intending to appear are STRONGLY encouraged to appear remotely.

Case Number: BC609793    Hearing Date: September 11, 2020    Dept: 48

[TENTATIVE] ORDER RE: CROSS-COMPLAINANTS’ MOTION FOR SUMMARY ADJUDICATION RE: BREACH OF CONTRACT, NEGLIGENCE, AND DECLARATORY RELIEF

On April 2, 2019, Cross-Complainant LTD Construction Services, GP d/b/a Walton Construction Services (“Walton”) filed its second amended cross-complaint (“SACC”) against Cross-Defendant Berendos L.P. (“Berendos”). On January 6, 2020, Berendos moved for summary adjudication of Walton’s causes of action for breach of contract, negligence, and declaratory relief. The notice of motion states that 235 Berendos L.P. and A Community of Friends also bring this motion for summary adjudication, but Walton’s SACC does not name those two entities as cross-defendants.

EVIDENTIARY OBJECTIONS

The Court did not rely on the Declaration of Robert Begland.

FACTUAL BACKGROUND

In 2014, Berendos began renovating two apartment buildings located at 226 and 235 South Berendo Street, and in July 2014, Berendos hired Walton. (Undisputed Material Facts “UMF” 1-2.) The parties entered into an agreement based on AIA forms that the parties modified, Walton had an opportunity to review the agreement, and Walton executed the agreement and initialed every page. (UMF 3, 5-6.)

Berendos was required to hire a licensed architect for the renovation project. (UMF 17.) The agreement provided a mechanism for Walton to report issues to Berendo and the architect through requests for information (“RFI”). (Additional Material Facts “AMF” 5.) The architect was required to respond in writing to RFIs within a reasonable time, not more than seven days. (UMF 18-19; AMF 6.) Berendos was also required to approve information in a timely manner and with reasonable promptness. (AMF 7-8.) The agreement provides, in Section 8.3.3, that an extension of the contract time “shall be the sole remedy of the Contractor for any (1) delay in the commencement, prosecution, or completion of the Work, (2) hindrance [or] obstruction in the performance of the Work, (3) loss of productivity, or (4) other similar claims . . . whether or not such Delays are foreseeable. The Contractor shall not be entitled to any compensation or recovery of any damages in connection with any Delay, including, without limitation, consequential damages, lost opportunity costs, impact damages, or other similar remuneration.” (UMF 21.)

Berendos were permitted to perform construction or operations and to award separate contracts in connection with other portions of the project, during which Berendos was required to supervise and direct the work “using [Berendos’] best skill and attention.” (UMF 35-36.) The agreement also required Berendos to purchase and maintain a builder’s risk “all-risk” policy with certain mandatory coverage provisions. (UMF 38-29.)

During the renovation, Walton removed the roofs from both buildings. (UMF 8.) After removal of the roof at 235 South Berendo, a city inspector expressed concern about the structural integrity of the parapet walls surrounding the roof and directed Walton to stop work. (AMF 3.) If the parapets needed reinforcement with new mortar (known as repointing), this work had to be performed before the new roof membrane could be installed. (AMF 4.) Walton submitted RFI No. 74, regarding the city inspector’s concerns, on August 6, 2015. (AMF 9.) Berendos’ structural engineer provided instructions on September 3, 2015. (AMF 12.) Berendos approved Walton’s chose of subcontractor, and they began the repointing work on September 10, 2015. (AMF 13.)

On September 14, 2015, Walton became aware of forecasts of rain, and it covered the buildings with Visqueen plastic sheets. (UMF 10-11.) These efforts did not prevent all rainwater from entering the buildings. (UMF 12.) Berendos hired American Technologies, Inc. and Interstate Restoration California LP (“Interstate”) to perform remediation after the storm. (UMF 13.)

A dispute arose between Berendos, Walton, Interstate, and various insurers regarding the scope of work performed, charges billed, and liability. (UMF 15.) The Court bifurcated this action into two phases. (UMF 15.) In Phase One, the jury returned a verdict in favor of Interstate and against Berendos and A Community of Friends for breach of contract and goods and services rendered.

LEGAL STANDARD

For each claim in the complaint, a plaintiff moving for summary adjudication must satisfy the initial burden of proof by proving each element of the cause of action. (Code Civ. Proc., § 437c, subd. (p)(1).) Then the burden shifts to the defendant to show that a triable issue of material fact exists as to the cause of action or a defense. (Code Civ. Proc., § 437c, subd. (p)(2).) To establish a triable issue of material fact, the party opposing the motion must produce “substantial responsive evidence.” (Sangster v. Paetkau (1998) 68 Cal.App.4th 151, 162-163.)

DISCUSSION

Twelfth Cause of Action – Breach of Contract

Walton alleges that Berendos breached their contract by “failing to furnish, in a timely manner and with reasonable promptness, information required by [Walton] in RFI #74.” (SACC ¶ 115.) According to Walton, the delay in providing the information caused the repointing work for the parapets to be delayed until September 10, 2015. (See SACC ¶ 13.) The work was scheduled to be completed on September 15, but rain in the early morning caused water damage. (Id. at ¶¶ 13-15.) As a result of the water damage, Walton paid a total of $3,825,494.57 related to restoration work, relocating displaced tenants, and storing tenants’ belonging during the remediation and restoration work. (Id. at ¶ 19.) Walton seeks at least $3,800,000 for Berendos’ alleged breach of contract. (Id. at ¶ 116.)

Berendos contends that Walton’s twelfth cause of action for breach of contract fails as a matter of law because the parties’ contract does not entitle Walton to recover damages caused by delay. (Motion at p. 8.) Berendos relies on the language of section 8.3.3, which states that “an extension in the Contract Time, to the extent permitted under Subparagraph 8.3.1 shall be the sole remedy of the Contractor for any (1) delay in the commencement, prosecution, or completion of the Work, (2) hindrance [or] obstruction in the performance of the Work, (3) loss of productivity, or (4) other similar claims . . . whether or not such Delays are foreseeable. The Contractor shall not be entitled to any compensation or recovery of any damages in connection with any Delay, including, without limitation, consequential damages, lost opportunity costs, impact damages, or other similar remuneration.” (UMF 21.) Based on these provisions, Berendos contends the sole remedy was an extension of time. Because the renovation project was fully completed at the time that Walton filed the SACC (Gallo Decl. ¶ 4), Berendos contends this cause of action is moot.

Walton argues it is not seeking damages attributable to delay, but rather is seeking reimbursement of subcontractor restoration costs and tenant losses paid by Walton. (Opposition at p. 9.) But the SACC expressly states that Berendos “breached the Contract by, among other things, failing to furnish, in a timely manner and with reasonable promptness” the required information. (SACC, ¶ 115.) In listing the relevant contract provisions, Walton’s opposition emphasizes the terms requiring promptness and timeliness. (Opposition at pp. 9-10.) The opposition sums up Walton’s argument, “In other words, if Berendos had complied with its contractual obligation to respond to RFI No. 74 within 7 days (or even 21 days), no water loss would have ever occurred.” (Opposition at p. 12.) Thus, the SACC and the opposition all emphasize delay as the cause of the losses and the basis of Berendos’ breach.

Walton contends that “even if there had not been a delay to the construction schedule, Walton would still be pursuing a claim against Berendos for the restoration costs and tenant losses.” (Opposition at p. 9.) But Walton does not explain the contractual basis for any such reimbursement claim. Walton does not point to any contract provision upon which it would make such a claim not based on delay and does not identify any contract provision Berendos breached apart from the provisions requiring promptness and timeliness.

The basis for Walton’s breach of contract cause of action is Berendos’ delay in responding to RFI No. 74, which hindered its ability to continue work on the project and caused the project to be incomplete during the September 15, 2015 rainstorm. The damages Walton seeks are consequential damages of Berendos’ breach. Section 8.3.3 of the agreement states Walton “shall not be entitled to any compensation or recovery of any damages in connection with any Delay, including, without limitation, consequential damages . . . .” Under the contract, Walton is not entitled to damages caused by Berendos’ breach of the provisions requiring prompt and timely action.

Accordingly, the Court grants summary adjudication on the twelfth cause of action for breach of contract.

Thirteenth Cause of Action – Negligence

The thirteenth cause of action alleges that Berendos was negligent in failing to obtain an appropriate builder’s risk policy without a rain exclusion and in failing to exercise reasonable care in hiring and supervising Interstate such that the costs of remediation were too high. (SACC ¶¶ 118-128.) Berendos argues that Walton improperly attempts to convert breach of contract claims into tort claims. (Motion at p. 10.) “A person may not ordinarily recover in tort for the breach of duties that merely restate contractual obligations.” (Aas v. Superior Court (2000) 24 Cal.4th 627, 643.) However, “conduct amounting to a breach of contract becomes tortious when it also violates a duty independent of the contract arising from principles of tort law.” (Ibid.) Generally, “the duty that gives rise to tort liability is either completely independent of the contract or arises from conduct which is both intentional and intended to harm.” (Erlich v. Menezes (1999) 21 Cal.4th 543, 552.)

Regarding the first act of alleged negligence, the parties’ contract stated that Berendo was to purchase and maintain a builder’s risk insurance policy in the same amount as the total value for the entire project. (UMF 38.) The policy was to be an “all-risk” policy and to include coverage for fire and physical loss or damage including theft, vandalism, malicious mischief, collapse, flood (if the site was in a flood zone), windstorm, falsework, testing and startup, temporary buildings and debris removal including demolition occasioned by enforcement of any applicable legal requirements. (UMF 39.) Walton alleges that Berendos negligently failed to state on its application for the policy that the roof would be replaced, and that this failure resulted in a “unsuitable” policy without a rain exclusion. (SACC ¶¶ 120-121.)

In other words, Walton alleges that Berendos acted negligently in trying to comply with the contract provision that required a builder’s risk insurance policy, and due to Berendos’ negligence, the policy was inadequate. Such allegations do not give rise to a completely independent tort and do not allege “conduct which is both intentional and intended to harm.” (Erlich, 21 Cal.4th at p. 552.) If a negligent act, which resulted in a breach of contract, also constituted a negligence cause of action, many more breaches of contracts would also be torts. That is contrary to the law. “[T]he mere negligent breach of a contract” is not sufficient. (Ibid.) Therefore, summary adjudication of the negligence cause of action based on the failure to obtain an adequate policy is granted.

Regarding the allegations that Berendos acted negligently in hiring and supervising Interstate, Berendos also argues Walton improperly turns a breach of contract claim into a negligence claim. The SACC alleges Berendos had a duty to exercise reasonable care in hiring and supervising Interstate and breached that duty by failing to exercise restraint of Interstate and the extent of its work, which caused Interstate to run up the remediation costs. (SACC ¶¶ 125-128.)

Berendos argues these allegations are nothing more than a claim for breach of the parties’ contract. Section 6.1.4 states that when Berendos performs construction work with its own forces, Berendos is subject to the same obligations and rights that apply to Walton under various articles of the contract, including Article 3. Section 3.3.1 states, “The Contractor shall supervise and direct the Work, including the work of all Subcontractors, using the Contractor’s best skill and attention.” Walton agrees that Berendos was responsible for the supervision of Interstate under the contract. (Opposition at pp. 13-14.)

Walton does not address why its allegations that Berendos failed to exercise restraint of Interstate and the extent of its work do not merely allege a breach of section 3.3.1, which required Berendos to supervise and direct Interstate’s work using Berendos’ best skill and attention. Tort damages are not available for negligent breach of a construction contract, which is what the negligence claim amounts to here. (Erlich, 21 Cal.4th at p. 558; see also Aas, supra, 24 Cal.4th at p. 636 [“the difference between price paid and value received . . . [is] primarily the domain of contract and warranty law or the law of fraud, rather than of negligence”]; Sands v. Walnut Gardens Condominium Assn. Inc. 35 Cal.App.5th 174, 177.) Walton cites no legal authority allowing a negligence cause of action for failure to supervise subcontractors as required by a construction contract.

Accordingly, summary adjudication is granted on the thirteenth cause of action.

Ninth Cause of Action – Declaratory Relief

The ninth cause of action for declaratory relief seeks a judicial declaration of the rights and duties of the parties regarding (a) whether Walton is responsible to defend, indemnify, and hold Berendos harmless from damages and claims arising from the September 15, 2015 storm; (b) whether Berendos breached its contractual obligation to timely provide information in response to RFI No. 74; (c) whether Berendos breached its contractual obligation to provide appropriate builder’s risk insurance; and (d) whether Berendos breached its contractual obligation to supervise Interstate. (SACC ¶ 97.) Twice in its opposition, Walton states that it has “three affirmative claims for declaratory relief, each of which is based on breach of contract,” specifically requests (b), (c) and (d). (Opposition at pp. 15-16, 21.) Walton apparently is not pursuing the request for declaratory relief (a).

Berendos contends that there is no basis for declaratory request (b) because this request is duplicative of the breach of contract cause of action. (Motion at p. 17.) That is correct. But the requests for declaratory relief (c) and (d) are not duplicative of the breach of contract cause of action.

“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.” (Jolley v. Chase Home Finance, LLC (2013) 213 Cal.App.4th 872, 909.) When there is a controversy about past conduct and money damages would be an adequate remedy, declaratory relief is not appropriate. (Ibid.) When a party “has a fully matured cause of action for money, he must seek damages, and not pursue a declaratory relief claim.” (Ibid.)

The requests for declaratory relief (b)-(d) are all about past conduct – past breaches of contract – not about future rights, and they are the type of claims where money damages would be an adequate remedy. Therefore, declaratory relief is not proper. The motion for summary adjudication is granted on the ninth cause of action.

CONCLUSION

The motion for summary adjudication is GRANTED.

Moving party to give notice.

Parties who intend to submit on this tentative must send an email to the Court at SMCDEPT48@lacourt.org indicating intention to submit. Parties intending to appear are STRONGLY encouraged to appear remotely.

Case Number: BC609793    Hearing Date: December 20, 2019    Dept: 48

(1) MOTION FOR DETERMINATION OF GOOD FAITH SETTLEMENT;

(2) MOTION FOR LEAVE TO FILE CROSS-COMPLAINT;

(3) MOTION TO TAX COSTS

MOVING PARTY: (1) Defendants/Cross-Complainants/Cross-Defendants Berendos, L.P., and Defendants/Cross-Complainants 235 Berendo, L.P., A Community of Friends and Cross-Defendant Interstate Restoration California;

(2) Defendant/Cross-Complainant Philadelphia Indemnity Insurance Company;

(3) Defendants/Cross-Complainants/Cross-Defendants Berendos, L.P., and Defendants/Cross-Complainants 235 Berendo, L.P., A Community of Friends

RESPONDING PARTY(S): (1) Defendant/Cross-Complainant/Cross-Defendant Ltd Construction Services, GP d/b/a Walton Construction Services; Plaintiff/Cross-Defendant Liberty Surplus Insurance Corporation;

(2) Defendant/Cross-Complainant/Cross-Defendant Ltd Construction Services, GP d/b/a Walton Construction Services; Plaintiff/Cross-Defendant Liberty Surplus Insurance Corporation;

(3) Plaintiff/Cross-Defendant Liberty Surplus Insurance Company

PROOF OF SERVICE:

ANALYSIS

Motion for Good Faith Settlement

Joinder

Plaintiff/Cross-Defendant Liberty Surplus Insurance Corporation’s notice of joinder in the opposition filed by LTD Construction Services, GP dba Walton Construction Services is GRANTED as timely.

Discussion

Defendants/Cross-Complainants/Cross-Defendants Berendos, L.P., and Defendants/Cross-Complainants 235 Berendo, L.P., A Community of Friends and Cross-Defendant Interstate Restoration California brings a motion for determination of good faith settlement.

Opposing parties have objected on the ground that the written settlement agreement has not been provided for their review. It appears that on a contested motion for application of good faith settlement, the contesting party is entitled to see a copy of the written settlement agreement:

Relying on City of Grand Terrace v. Superior Court (1987) 192 Cal. App. 3d 1251 [238 Cal. Rptr. 119], the developer argued the court does not need to review the written agreement since it may approve a settlement under section 877.6 based on a "barebones" declaration describing the general terms. Rejecting the argument and issuing the writ, the First District explained: "Developer overstates the impact of Grand Terrace. The court there merely suggested that because many settlements are uncontested the settlor's initial papers need only 'set forth the ground of good faith accompanied by a declaration which sets forth a brief background of the case.' . . . This does not excuse settlors in a contested case from making available to nonsettlors and the court the details of the settlement. We note that a party may not both seek confirmation of a settlement agreement and withhold it from nonsettling defendants on the grounds of confidentiality. . . . , , ,

Nor are we persuaded by Lawco's argument that parties may withhold the written agreement as long as they have revealed the important terms. That may be true absent an objection to the settlement as suggested in Grand Terrace, but that is not the case on a contested motion. (Alcal Roofing & Insulation v. Superior Court, supra, 8 Cal. App. 4th at p. 1127.)

Mediplex of California, Inc. v. Superior Court (1995) 34 Cal.App.4th 748, 752-753 (italics in original, bold emphasis and underlining added).

Accordingly, the hearing on the motion for determination of good faith settlement is CONTINUED to February 20, 2020. A copy of the written settlement agreement is to be provided to the parties which file opposition briefs, i.e., Walton and Liberty, by January 6, 2020. Further oppositions are due January 31, 2020. Further reply is due February 14, 2020.

Motion for Leave to File Cross-Complaint

Request for Judicial Notice

Philadelphia and Tokio Marine’s request that the Court take judicial notice of the various cross-complaints filed in this action and the Court’s tentative ruling on the Berendos’ entities’ motion for leave to file a second amended complaint is GRANTED per Evid. Code § 452(d)(court records).

Discussion

Defendant/Cross-Complainant Philadelphia Indemnity Insurance Company moves for leave to file a cross-complaint pursuant to CCP § 428.50.

A motion to file a cross-complaint at any time during the course of the action must be granted unless bad faith of the moving party is demonstrated where forfeiture would otherwise result. Factors such as oversight, inadvertence, neglect, mistake or other cause, are insufficient grounds to deny the motion unless accompanied by bad faith.” Silver Orgs. v. Frank (1990) 217 Cal.App.3d 94, 99 (bold emphasis and underlining added).

For purposes of CCP § 426.50, bad faith means:

actual or constructive fraud, or a design to mislead or deceive another, or a neglect or refusal to fulfill some duty or some contractual obligation, not prompted by an honest mistake . . ., but by some interested or sinister motive[,] . . . not simply bad judgment or negligence, but rather . . . the conscious doing of a wrong because of dishonest purpose or moral obliquity; . . . it contemplates a state of mind affirmatively operating with furtive design or ill will. (Citations omitted.)”

Silver Orgs, supra, 217 Cal.App.3d at 100 (bold emphasis added).

“[The] principle of liberality requires that a strong showing of bad faith be made in order to support a denial of the right to file a cross-complaint under this section.” Foot's Transfer & Storage Co. v. Superior Court (1980) 114 Cal.App.3d 897, 902 (bold emphasis added).

Here, the opposing parties have failed to demonstrate the requisite bad faith sufficient to preclude the filing of a cross-complaint, as there is an insufficient showing that the delayed cross-complaint would work a substantial injustice to the opposing parties and would prejudice their position in some way. Id. at 114 Cal.App.3d at 903-04. The Court notes that Philadelphia’s cross-claims arise out of the same series of transactions and occurrences as are already the subject of the various cross-complaints. A copy of the proposed Cross-Complaint is attached as Exhibit A to the Declaration of Margaret Miglietta.

The Court finds that leave to file the proposed Cross-Complaint is proper.

The motion for leave to file a cross-complaint is GRANTED. A stand-alone copy of the cross-complaint is to be filed today and is deemed to be served as of the date of this order.

Motion to Tax Costs

Defendants/Cross-Complainants/Cross-Defendants Berendos, L.P., and Defendants/Cross-Complainants 235 Berendo, L.P., A Community of Friends (hereinafter referred to as “ACOF”) move to tax costs sought by Liberty Surplus Ins. Corp.

Moving parties’ argument that awarding costs at this stage is premature because there may be an offset based on the outcome of Liberty’s claims against the ACOF asserted in the operative complaint. Liberty prevailed as to ACOF”s cross-claims asserted against Liberty in the 2AXC. See September 20, 2019 minute order. Judgment of dismissal was entered in favor of Liberty and against ACOF as to ACOF’s 2AXC.

A cross-complaint is treated as a separate action. Bertero v. National General Corp. (1974) 13 Cal.3d 43, 51-52; Lori, Ltd. v. Wolfe (1948) 85 Cal.App.2d 54, 61. Accordingly, Liberty is the prevailing party in whose favor a dismissal was entered. CCP § 1032(a)(4). Accordingly, Liberty is entitled to recover costs. CCP § 1032(b).

ACOF’s attempt to limit Liberty’s recovery of costs to those incurred in defending against the 2AXC is misplaced. Liberty is entitled to recover all costs incurred in defending against ACOF’s cross-claims from the date the original cross-complaint was filed on August 17, 2016.

In this regard, the attachment to the Memorandum of Costs Worksheet (Errata) reflects that costs being sought pertain to Berendos/ACOF’s cross-complaint and to the underlying facts pertaining to remediation, which are relevant the coverage issues. In general, Liberty is entitled to recover such costs without apportionment as to the remaining parties.

¿ Item 1: Filing and Motion Fees.

ACOF argues that $901 in fees for filing predominately predate the 2AXC. As noted above, the Court rejects this proffered limitation on recovery of costs.

The motion to tax Item No. 1 – Filing and Motion Fees is DENIED in its entirety.

¿ Item 2: Jury Fees.

This $150 in jury fees was paid for Liberty’s own claims against remaining parties. The Court agrees that these fees are not recoverable as against ACOF based upon dismissal of the 2AXC.

The motion to tax item No. 2 – Jury Fees is GRANTED in the amount of $150.00.

¿ Item 4: Deposition Costs.

As noted, the attachment to the Memorandum of Costs Worksheet (Errata) reflects that costs being sought pertain to Berendos/ACOF’s cross-complaint and to the underlying facts pertaining to remediation, which are relevant the coverage issues. In general, Liberty is entitled to recover such costs without apportionment as to the remaining parties. The Court finds such deposition costs to have been reasonably necessary in preparation for defense of the Cross-Complaint; such costs are recoverable in the Court’s discretion. Chaaban v. Wet Seal, Inc. (2012) 203 Cal.App.4th 49, 57; Moss v. Underwriters' Report, Inc. (1938) 12 Cal.2d 266, 275-276.

The motion to tax Item No. 4 – Deposition Costs is DENIED in its entirety.

¿ Item 5: Service of Process.

As noted, the attachment to the Memorandum of Costs Worksheet (Errata) reflects that costs being sought pertain to Berendos/ACOF’s cross-complaint and to the underlying facts pertaining to remediation, which are relevant the coverage issues. Even if subpoenas were eventually quashed, the prevailing party is entitled to an award of costs incurred as to unsuccessful aspects of the litigation. Michell v. Olick (1996) 49 Cal.App.4th 1194, 1199-1201.

The motion to tax Item No. 5 – Service of Process is DENIED in its entirety.

¿ Item 14: Electronic Filing or Service.

ACOF argues that $178.62 in electronic filing fees are not directly related to the 2AXC. As noted above, the Court rejects this proffered limitation on recovery of costs.

The motion to tax Item No. 14 – Electronic Filing or Service is DENIED in its entirety.

¿ Item 16: Other.

Moving parties seek to tax costs incurred for attorney service calls, court call fees and photocopies for trial exhibit fees unrelated to ACOF’s claims against Liberty. The Court finds moving parties’ argument to be persuasive. Any such costs were “merely convenient or beneficial” to the preparation of litigation and/or were not “reasonably necessary to the conduct of the litigation” pertaining to ACOF’s cross-claims. CCP § 1033.5(c)(2).

Accordingly, the motion to tax Item 16 – Other is GRANTED in the amount of $15,478.39.

Case Number: BC609793    Hearing Date: December 06, 2019    Dept: 48

(1) MOTION TO SEVER LIABILITY CLAIMS, COVERAGE CLAIMS AND CLAIMS OF BREACH OF COVENANT OF GOOD FAITH AND FAIR DEALING;

(2) DEMURRER TO SECOND AMENDED CROSS-COMPLAINT

MOVING PARTY: (1) Plaintiff/Cross-Defendant Liberty Surplus Insurance Corporation;

(2) Cross-Defendant LTD Construction Services, GP d/b/a Walton Construction Services

RESPONDING PARTY(S) (1) Defendant LTD Construction Services, GP d/b/a Walton Construction Services; Defendants/Cross-Defendants Berendos, L.P., 235 Berendos, L.P. and A Community of Friends; Defendant/Cross-Defendant Philadelphia Indemnity Insurance Company and Cross-Defendant Tokio Marine Specialty Insurance Company

(2) Defendant/Cross-Complainant Berendos L.P. and Defendants/Cross-Complainants 235 Berendos, L.P. and A Community of Friends

PROOF OF SERVICE:

Plaintiff/Cross-Defendant Liberty Surplus Insurance Corporation moves to sever ate the Phase II trial based upon three broad but distinct issues: (1) liability/cause of the loss; (2) coverage based upon the cause of the loss including priority of coverage and contribution issues; and (3) breach of the duty of good faith if any duty of coverage is found.

The Court does not find a persuasive reason why the convenience of witnesses, the ends of justice, avoidance of prejudice, or expedition and economy would be served by the proposed severance of Phase II into three separate phases.

The Court finds the various arguments in opposition to be persuasive. Most significantly, Philadelphia and Tokio Marine’s argument that a finding that Walton was not liable or negligent would not necessary resolve the Philadelphia and Tokio Marine coverage issues, as the quality of Walton’s workmanship would still need to be tried. This, in turn, will lead to a duplication of witnesses and evidence in the second phase of the proposed severed trials.

Accordingly, the motion to sever is DENIED.

Demurrer

1. First Cause of Action (Breach of Contract).

The first cause of action is based upon two alleged agreements: (1) the written contract attached as Exhibit 3 to the 2AXC, allegedly made for the benefit of each of the Berendos’ Entities as third party beneficiaries; (2) a separately agreement to pay for the remediation necessary to cure the damage resulting from the September 15, 2015 rain storm. 2AXC, ¶¶ 78, 79.

¶ 17 alleges that the Berendos contract with Walton contains an express indemnity provision (without specifying the particular section of the contract).

Cross-Defendant calls the Court’s attention to § 3.18—Indemnification in the General Contract (2AXC, Exhibit 3, Page 077):

§ 13.18.1 To the fullest extent permitted by law the Contractor shall indemnify and hold harmless the Owner (and its officers, directors, employees, agents, affiliates, and partners or members), Architect, Architect's consultants, and agents and employees of any of them from and against claims, damages, losses and expenses, including but not limited to attorneys' fees, arising out of or resulting from performance of the Work, provided that such claim, damage, loss or expense is attributable to bodily injury, sickness, disease or death, or to injury to or destruction of tangible property, but only to the extent caused by the negligent acts or omissions of the Contractor, a Subcontractor, anyone directly or indirectly employed by them or anyone for whose acts they may be liable, regardless of whether or not such claim, damage, loss or expense is caused in part by a party indemnified hereunder. Such obligation shall not be construed to negate, abridge, or reduce other rights or obligations of indemnity which would otherwise exist as to a party or person described in this Section 3.18.

. . .

§ 3.18.3 The Contractor's indemnity obligations under this Paragraph 3.18 shall also specifically include, to the extent caused by the negligent acts or omissions of the Contractor, without limitation, all fines, penalties, damages, liability, costs, expenses (including, without limitation, reasonable attorneys' fees), and punitive damages (if any) arising out of or in connection with any (i) violation of or failure to comply with any Applicable Requirements that bears upon the performance of the Work by the Contractor, a Subcontractor, or any person or entity from whom either is responsible, (ii) means, methods, procedures, techniques, or sequences of execution or performance of the Work, and (iii) failure to secure and pay for permits, fees, approvals, licenses, and inspections as required under the Contract Documents, or any violation of any permit or other approval of a public authority applicable to the Work, by the Contractor, a Subcontractor, or any person or entity for whom either is responsible.

§ 3.18.4 The Contractor shall defend the Owner and the Owner's affiliates, employees, and successors in any and all actions brought by the Subcontractors or material suppliers against the Owner to foreclose a mechanic's lien on the real property of the Work, to enforce any stop notice against the Work or for common counts or any other claim arising out of the Work, except if such actions or claims are caused solely by the Owner's failure to pay the Contractor in breach of its obligation under the terms of this Contract. The Contractor shall indemnify the Owner and its affiliates and employees and successors with respect to such actions or claims, including, but not limited to, reasonable attorneys' fees, and for amounts paid by the Owner in good faith settlement of mechanic's lien foreclosure, stop notice and common counts actions against the real property of the Work.

§ 3.18.5 The Contractor shall indemnify and hold harmless all of the persons or entities to be indemnified pursuant to Paragraph 3.18 from and against any costs and expenses (including reasonable attorney's fees) incurred by any of the indemnitees in enforcing any of the Contractor's defense, indemnity and hold harmless obligations under this Contract.

(Bold emphasis and underlining added).

Interpretation of an insurance policy is a question of law and follows the general rules of contract interpretation. ( Waller v. Truck Ins. Exchange, Inc. (1995) 11 Cal.4th 1, 18 [44 Cal. Rptr. 2d 370, 900 P.2d 619] (Waller).) “The fundamental rules of contract interpretation are based on the premise that the interpretation of a contract must give effect to the ‘mutual intention’ of the parties. ‘Under statutory rules of contract interpretation, the mutual intention of the parties at the time the contract is formed governs interpretation. (Civ. Code, § 1636.) Such intent is to be inferred, if possible, solely from the written provisions of the contract. (Id., § 1639.) The “clear and explicit” meaning of these  [*648]  provisions, interpreted in their “ordinary and popular sense,” unless “used by the parties in a technical sense or a special meaning is given to them by usage” (id., § 1644), controls judicial interpretation. (Id., § 1638.)’ [Citations.] A policy provision will be considered ambiguous when it is capable of two or more constructions, both of which are reasonable. [Citation.] But language in a contract must be interpreted as a whole, and in the circumstances of the case, and cannot be found to be ambiguous in the abstract.” ( Waller, supra 11 Cal.4th at p. 18.)

MacKinnon v. Truck Ins. Exchange (2003) 31 Cal.4th 635, 647-48 (bold emphasis added).

Here, the Court agrees with demurring Cross-Defendant’s argument. The Court finds that a reasonable interpretation of the contract language as a whole is that Cross-Defendant’s indemnity obligations under § 3.18 et seq. only arise upon either an admission of negligently causing injury/destruction, or a court finding the existence of negligently caused injury/destruction. Negligence is not a concept that is capable of objectively being determined among lay persons; it requires a court’s determination in that regard (absent an admission of fault for falling below the standard of care). Indeed, § 3.18.3 refers to the Contractor’s (i.e., Walton’s) liability for punitive damages caused by its negligent acts or omissions—damages which can only exist after a court trial.

Accordingly, the Court finds that the 2AXC fails to state a cause of action for breach of contract. The Court notes that this ruling does not leave Cross-Complainant without a remedy: the third cause of action for declaratory relief against Walton will address whether Walton’s indemnity obligation is triggered by its negligence.

The demurrer to the first cause of action is SUSTAINED without leave to amend.

Case Number: BC609793    Hearing Date: November 18, 2019    Dept: 48

(1) DEMURRER TO SECOND AMENDED CROSS-COMPLAINT;

(2) MOTION TO STRIKE RE: SECOND AMENDED CROSS-COMPLAINT

MOVING PARTY: (1) Cross-Defendant Tokio Marine Specialty Insurance Company;

(2) Cross-Defendant Philadelphia Indemnity Insurance Company

RESPONDING PARTY(S): (1) & (2) Defendants/Cross-Complainants/Cross-Defendants Berendos, L.P., and Defendants/Cross-Complainants 235 Berendo, L.P., and A Community of Friends;

ANALYSIS

Cross-Defendant Tokio Marine Specialty Insurance Company’s Demurrer

Request for Judicial Notice

Defendant’s request that the Court take judicial notice of court records filed in this case is GRANTED per Evid. Code § 452(d)(court records).

Analysis

The notice of demurrer identifies Tokio Marine Specialty Insurance Company as the sole demurring party. This demurrer will be treated as such.

Fifth Cause of Action (Declaratory Relief); Ninth Cause of Action (Breach of Contract).

Having considered, the relevant Tokio Marine insurance policy, which is attached as Exhibit 9 to the Berendos entities’ 2AXC, the Court finds that the 2AXC on its face demonstrates that Cross-Complainant Berendos Entities has pled fact sufficient to constitute causes of action for declaratory relief and breach of contract against Tokio Marine.

The fifth cause of action seeks a declaration as to whether Tokio Marines owes the Berendos Entities a duty to indemnity and/or defend. 2AXC, ¶ 97. The ninth cause of action for breach of contract alleges that Tokio Marine has refused to honor its obligation to pay the Berendos Entities’ claims, including certain fees and costs of defense, as required by the terms of the policy. 2AXC, ¶ 118.

Liberty’s 1AC filed on February 16, 2017 alleges that the rainfall event caused rainwater to infiltrate the buildings, causing approximately 50 apartment units to be flooded, and causing damage to the tenants’ personal property from mold. Liberty 1AC, ¶ 25. These damages are part of what Liberty refers to as the “Claim.” Id. at ¶ 28. Liberty alleges that, subject to a reservation of rights, it has agreed to pay certain expenses related to the Claim, which are subject to reimbursement by the Defendants. Id. at ¶ 32.

Liberty brings claims for subrogation, equitable indemnification, equitable contribution and reimbursement against the Berendos Entities. Liberty 1AC, second through fifth causes of action. Notably, these bases of recovery against the Berendos Entities are, at least in part, equity-based (i.e., not pursuant to an express contractual assumption).

Looking at the Tokio Marine policy attached as Exhibit 9 to the Berendos Entities’ 2AXC, the language therein expressly recognizes that Tokio Marine has a duty to defend against any suit seeking damages because of “property damage” to which the insurance policy applies. (“COMMERCIAL GENERAL LIABILITY COVERAGE FORM” Section I – Coverages [Page 1 of 16])

Accordingly, Tokio Marine has a duty to defend because Liberty’s claims in its 1AC, i.e., a “suit,” against the Berendos Entities suggest a claim potentially covered by the Tokio Marine policy to recover for amounts paid by Liberty to tenants for mold damage to their personal property which amounts Liberty seeks to recover from the Berendos Entities.

Accordingly, the fifth cause of action for declaratory relief and the ninth cause of action for breach of contract are sufficiently pled.

The demurrer to the fifth and ninth causes of action is OVERRULED.

Cross-Defendant Tokio Marine to answer the 2AXC within 10 days.

Cross-Defendant Philadelphia Indemnity Insurance Company’s Motion to Strike

The motion to strike is DENIED in its entirety because it is in fact a demurrer.

Preliminarily, we note a motion to strike is generally used to reach defects in a pleading which are not subject to demurrer. A motion to strike does not lie to attack a complaint for insufficiency of allegations to justify relief; that is a ground for general demurrer.

Pierson v. Sharp Mem'l Hosp. (1989) 216 Cal.App.3d 340, 342.

To the extent Philadelphia would seek to bring a motion for judgment on the pleadings following this ruling, Philadelphia is to consider whether it would be successful in light of the above analysis re: Tokio’s demurrer and the fact that the relevant language in the Philadelphia policy (attached as Exh. 5 to the 2AXC) is identical to that found in the Tokio Marine policy (Exh. 9 to the 2AXC).

Cross-Defendant Philadelphia Indemnity Insurance Company is ordered to answer the 2AXC within 10 days

Case Number: BC609793    Hearing Date: November 15, 2019    Dept: 48

MOTION TO QUASH BUSINESS RECORDS SUBPOENA AND/OR FOR A PROTECTIVE ORDER

MOVING PARTY: Defendants/Cross-Complainants/Cross-Defendants Berendos, L.P, 235 Berendos, L.P. A Community of Friends

RESPONDING PARTY(S): Plaintiff/Cross-Defendant Liberty Surplus Insurance Corporation

PROOF OF SERVICE:

ANALYSIS

Motion to Quash/Protective Order

Defendants/Cross-Complainants/Cross-Defendants Berendos, L.P, 235 Berendos, L.P. A Community of Friends moves to quash the subpoena duces tecum for production of records served upon third party Barker Management Inc. and/or for a protective order excusing compliance with the subpoena.

The business records subpoena issued to Barker Management Inc. by Liberty Surplus seeks production of the following documents:

For the period January l, 1995 to the present date, any and all documents and records pertaining to the PROPERTY addresses, including but not limited to:

a) Any and all DOCUMENTS which embody agreements, contracts, subcontracts, addenda, purchase orders, bids, proposals, change orders, extensions, releases, and settlement agreements RELATING TO the PROPERTIES;

b) Any and all correspondence, memorandum, meeting minutes, emails, notices, logs, journals, databases, request for information and/or schedules RELATING TO the PROPERTIES.

c) Any and all photographs, images, recordings and/or videos RELATING TO the PROPERTIES;

d) Any and all budgets, ledgers, accounting records, pay requests, statements, invoices, and/or bids RELATING TO the PROPERTIES;

e) Any and all warranties, request for repairs, instruction manuals, maintenance manuals, maintenance schedules, inspection schedules, repairs, customer service requests and/or logs, repairs to common areas/property, and repair work orders RELATING TO the

PROPERTIES;

f) Any and all DOCUMENTS regarding invoices for work or material supplied RELATING TO the PROPERTIES;

g) Any and all DOCUMENTS regarding or referring to the scheduling of work RELATING TO the PROPERTIES.

In the opposition, Liberty has demonstrated good cause only as to documents pertaining to repair and maintenance to address water intrusions, water leaks and mold remediation. Liberty is entitled to production of these particular documents for the period January 1, 1995 up until the date the subject mold remediation was billed, but not to the present. Even though the storm which caused the loss occurred on September 15, 2015, subsequent remediation of the damage caused by that loss is relevant to compare to areas of prior incidences of water intrusion, water leaks and mold remediation. Once that damage was repaired/remediated, subsequent incidents are not relevant to the condition of the property as of September 15, 2015.

Note that even if responsive documents have already been produced, this does not excuse compliance with the subpoena:

A party is permitted to use multiple methods of obtaining discovery and the fact that information was disclosed under one method is not, standing alone, a proper basis for refusing to provide discovery under another method. ( Coy v. Superior Court (1962) 58 Cal.2d 210, 218-219 [23 Cal.Rptr. 393, 373 P.2d 457].) 

Irvington-Moore, Inc. v. Superior Court (1993) 14 Cal.App.4th 733, 739.

Accordingly, although the motion to quash the subpoena and alternative motion for a protective order is DENIED, the Court orders the subpoena modified as follows: The only documents to be produced are those pertaining to repair and maintenance to address water intrusions, water leaks and mold remediation for the period January 1, 1995 up until the date the subject mold remediation was billed, but not to the present.