County of Los Angeles v. Superior Court

• Decision Date: 14 May 1984
• Court: California Court of Appeals Court of Appeals
• Parties: COUNTY OF LOS ANGELES, a political subdivision of the State of California, Petitioner, v. SUPERIOR COURT of the State of California, County of Los Angeles, Respondent. T.G.I. CONSTRUCTION CORP., a corporation, Welton Becket Associates, a corporation, The Luckman Partnership Inc., a corporation, Levine & McCann (aka Syska & Hennessy), a corporation, Olive View Medical Center Architects & Engineers, a Joint Venture, Golden Bear Concrete Company, a corporation, American Fidelity Fire Ins. Co., a corporation, Real Parties in Interest. B 002260.

Page 444

202 Cal.Rptr. 444

155 Cal.App.3d 798

COUNTY OF LOS ANGELES, a political subdivision of the State of California, Petitioner, v. SUPERIOR COURT of the State of California, County of Los Angeles, Respondent.

T.G.I. CONSTRUCTION CORP., a corporation, Welton Becket Associates, a corporation, The Luckman Partnership Inc., a corporation, Levine & McCann (aka Syska & Hennessy), a corporation, Olive View Medical Center Architects & Engineers, a Joint Venture, Golden Bear Concrete Company, a corporation, American Fidelity Fire Ins. Co., a corporation, Real Parties in Interest.

B 002260.

Court of Appeal, Second District, Division 2, California.

May 14, 1984.

Hearing Denied Aug. 8, 1984.

Coleman & Farrell by John P. Farrell, Los Angeles, for petitioner.

No appearance for respondent.

Monteleone & McCrory by Philip C. Putnam, Los Angeles, for real party in interest T.G.I. Const. Corp.

Elser, Edelman & Dicker by Patrick M. Kelly, Robert M. Young, Harry W.R. Chamberlain, II, Otis D. Wright, II, Los Angeles, for real party in interest Welton Becket Associates.

Kirtland & Packard by Karl A. Keener, Los Angeles, for real party in interest The Luckman Partnership, Inc.

Allen, Matkins, Leck, Gamble & Mallory by George J. McDowell, Los Angeles, for real party in interest Levine & McCann (Syska & Hennessy).

COMPTON, Associate Justice.

The County of Los Angeles (County) by a petition for a writ of mandate seeks a determination that Code of Civil Procedure sections 877 and 877.6 ¹ do not operate to bar its action for indemnity. We grant the petition.

The County contracted with a group of business entities and individuals operating as a joint venture (hereafter known as Architect) ² to provide architectual and engineering services for the design and construction of a medical center.

County thereafter utilized Architect's plans to solicit bids for the construction work. Eventually the County hired TGI Construction, Corporation (hereafter known as TGI) to perform the initial foundational and structural work according to Architect's plans.

In doing the work TGI encountered difficulties which resulted in unanticipated costs and a delay in completing the job. TGI filed suit against, inter alia, County and Architect seeking approximately $2,300,000 in damages, for breach of contract. The breach of contract allegedly consisted of the County's furnishing inaccurate and defective plans and failing to timely act upon TGI's requests for change orders.

TGI in its action against Architect alleged that Architect was negligent in preparation of the plans upon which TGI had predicated its successful bid. Additionally, TGI named as a defendant, a subcontractor, Golden Bear Concrete, whose failure to perform its work cost TGI approximately $260,000.

County cross-complained against Architect alleging that under the contract Architect had "warranted to perform [its] services in a non-negligent manner and in accordance with the standards of the architectural and engineering professions." County averred that to the extent that TGI had suffered damages as a result of its reliance on Architect's plans, those damages were the result of Architect's negligence and breach of contract.

County's cross-complaint alleged that its contract with Architect had created a special relationship between the two parties and that any damages suffered by TGI were "... due to the active negligence of [Architect] arising out of [its] failure to adequately and responsibly carry out [its] duties under [its] contract with the County. Any acts or omissions by [County], however, were in reliance on the [Architect's] performance of [its] duties and were passive in nature." (Emphasis added.)

Golden Bear Concrete cross-complained against all of the parties seeking $115,000 damages. That cross-complaint charged Architect with negligence and the County with negligence and breach of contract.

Subsequently TGI, Architect and Golden Bear consummated a settlement under which Architect paid TGI $225,000 and Golden Bear Concrete $20,000.

Citing sections 877 and 877.6, Architect then moved the trial court to find that the settlement was in good faith, to dismiss County's cross-complaint for indemnity, and to bar any further claims for indemnity or contribution.

Those cited code sections simply provide that one or more of several joint tortfeasors may, in good faith, settle with the injured party and obtain a release from liability free from demands by the remaining tortfeasors for indemnification or contribution.

County's opposition to the motion was based primarily on the contention that the provisions of sections 877 and 877.6 could not apply to bar its claim for indemnity against Architect since TGI's action against County was solely for breach of contract. County also made a brief argument that the settlement was not in good faith.

Following a hearing at which all sides presented argument, the trial court held that for the purposes of Sections 877 and 877.6, Architect and County were "joint and concurrent tortfeasors." It found the proposed settlement to be in good faith and accordingly, dismissed County's cross-complaint for indemnity. The court further discharged Architect from any duty to make contribution to the County.

County thereafter moved for reconsideration seeking to vacate the previous order and to obtain permission to amend its cross-complaint. The proposed amendment would have added a cause of action against Architect for breach of contract praying for damages in the amount of any award which TGI might recover against the County. That motion was denied.

In these proceedings, County does not challenge the good faith nature of the settlement, but instead focuses its attack on the applicability of sections 877 and 877.6, as a bar to its claim for indemnification. This attack is premised on the fact that TGI's action against County is grounded in contract rather than tort and that County's cross-complaint against Architect is also based on contract.

Indemnity is the obligation of a party to make good a loss or damage another party has suffered. (Kramer v. Cedu Foundation, Inc. (1979) 93 Cal.App.3d 1, 9, 155 Cal.Rptr. 552.) That obligation may arise from one of two general sources: "First, it may arise by virtue of express contractual langauge establishing a duty in one party to save another harmless upon the occurrence of specified circumstances. Second, it may find its source...