E. L. White, Inc. v. City of Huntington Beach

Decision Date31 May 1978
Docket NumberNo. 30866,30866
Citation146 Cal.Rptr. 614,21 Cal.3d 497,579 P.2d 505
CourtCalifornia Supreme Court
Parties, 579 P.2d 505 E. L. WHITE, INC., et al., Plaintiffs and Appellants, v. The CITY OF HUNTINGTON BEACH, Defendant and Respondent. L. A.

Dryden, Harrington & Swartz and Peter Abrahams, Los Angeles, for plaintiffs and appellants.

Kinkle, Rodiger & Spriggs and Michael J. Logan, Santa Ana, for defendant and respondent.

Harry S. Fenton, Sacramento, John P. Horgan, Robert J. DeFea and Kenneth G. Nellis, San Francisco, as amici curiae on behalf of defendant and respondent.

MANUEL, Justice.

Plaintiff E. L. White, Inc. (White) and its insurance carrier appeal from a judgment of dismissal entered following an order sustaining, without leave to amend, the demurrer of defendant City of Huntington Beach (City) to its first amended complaint in an action for "indemnity and equitable contribution." We reverse the judgment.

The complaint here at issue, together with certain documents attached to City's demurrer of which the trial court properly took judicial notice (see Code Civ.Proc., §§ 430.30, 430.70), discloses the following pertinent facts: In 1970 City entered into a contract with White for the construction of certain public improvements which included a deep storm drain. The contract contained a provision requiring that White "indemnify and save harmless (City) from any suits, claims, or actions brought by any person or persons for or on account of any injuries or damages sustained because of or arising out of the performance of the work contemplated or in consequence thereof." The contract also provided that White was to provide public liability insurance, naming City as insured, with bodily injury limits of not less than $250,000 for each person and $500,000 for each accident.

White subcontracted with the firm of Barnett and Thomas (B & T) for the storm drain portion of the work, which apparently required the cutting of a sewer line to allow the installation of the storm drain which passed beneath and at right angles to the sewer line. The work was completed and the necessary excavation filled, but some five months later the sewer system began to malfunction in the area where the sewer line had been cut to allow for installation of the storm drain. City, which had previously accepted the work as completed, contacted White and B & T and arranged to have the latter make repairs, the understanding being that if the malfunction were found to be the result of faulty work previously done by B & T the repairs would be at no cost to City.

In order to reach the sewer line it was necessary that a 14-foot trench be dug. This was done, but apparently the walls of the trench were neither shored nor sloped in compliance with applicable California construction safety orders. Nevertheless two B & T employees, Ellett and Butcher, descended into the trench to perform the necessary inspection and work. While they were so engaged City's chief construction inspector and its chief construction engineer visited the site several times, and although they noticed the indicated safety order violation they took no action to compel compliance before the work continued. Later the same day, while Ellett and Butcher were continuing their work in the trench, one of its walls collapsed upon them. Ellett was killed, and Butcher was injured.

It was later found that the malfunctioning of the sewer line had been the result of faulty work by B & T in its installation of the storm drain.

Separate actions by Butcher and by Ellett's heirs were consolidated for trial and resulted in verdicts of $9,500 and $240,000 respectively against City and White. The judgments on those verdicts were affirmed on appeal, and a hearing was denied by this court.

Before the foregoing actions went to trial City and its liability carrier had filed a separate action against White and its liability carrier, B & T, and others, seeking, as here relevant (1) a declaration of the rights, duties, and obligations of the parties as the same pertained to the insurance policies issued in favor of City by White's carrier pursuant to the 1970 contract, (2) a judgment requiring the said carrier "to provide, by way of insurance coverage, a defense for, indemnity of, and to hold harmless (City) on the basis that said insurance coverage is primary, or alternatively, is pro-rata insurance," (3) a judgment that City and its carrier be reimbursed for expenses incurred, (4) a declaration that none of the parties defendant was entitled to recover for any payments made for death benefits, medical expenses and/or unemployment disability benefits, (5) a judgment in favor of City and its carrier for breach of contract, and (6) costs of suit and other appropriate relief. White and its carrier answered the complaint with a general denial (see Code Civ.Proc., § 431.30) and asserted as an affirmative defense that the complaint failed to state a cause of action. The action proceeded to trial and a judgment resulted in favor of White and its carrier, the trial court finding that City had been actively negligent and concluding that therefore indemnity under the general indemnity clause of the construction contract was precluded. (See Rossmoor Sanitation, Inc. v. Pylon, Inc. (1975) 13 Cal.3d 622, 628, 119 Cal.Rptr. 449, 532 P.2d 97, and cases there cited.) The judgment was affirmed on appeal.

The instant action was filed in 1975, after judgment in the aforesaid action but prior to the determination of the appeal. Here the parties are reversed. White and its carrier seeking a judgment for "indemnity and equitable contribution" against City for sums paid by them in satisfaction of the Ellett and Butcher judgments or, alternatively, for "damages . . . to compensate plaintiffs for that portion of the damages suffered by the Elletts and Butcher and paid by plaintiffs that was caused by defendant's active negligence." City's demurrer, as here relevant, advanced two essential grounds. These were (1) that plaintiffs' action was barred in its entirety by reason of the provisions of Code of Civil Procedure section 426.30, dealing with compulsory cross-complaints, and (2) that no cause of action was stated. 1 Attached to the demurrer, as indicated above, were a number of exhibits, of which the trial court was requested to take judicial notice. These included the pleadings in the Ellett and Butcher actions, the complaint and answer in City's action against White, the contract between White and City, and the bidding documents relating thereto. After hearing argument on the matter, the trial court entered an order indicating that it had taken judicial notice of the requested matters and sustained City's demurrer without leave to amend. White and its carrier appeal from the ensuing judgment of dismissal.

A judgment of dismissal entered after the trial court has sustained a demurrer without leave to amend 2 will be affirmed on appeal if any of the grounds stated in the demurrer is well taken. (See Stowe v. Fritzie Hotels, Inc. (1955) 44 Cal.2d 416, 424-425, 282 P.2d 890, and cases there discussed.) Accordingly, we proceed to consider each of the two major grounds advanced by defendant City in its demurrer and supporting documents below.

2. The court's failure to specify the grounds on which its order sustaining the demurrer was based constituted error. (See Code Civ.Proc., § 472d; Mack v. Hugh W. Comstock Associates (1964) 225 Cal.App.2d 583, 590, 37 Cal.Rptr. 466.) The record does not indicate, however, that appellants called this irregularity to the attention of the trial court, and they make no mention of it here. They must therefore be held to have waived the protections of the section. (Mack v. Hugh W. Comstock, supra, at p. 590, 37 Cal.Rptr. 466.) In any event it is clear that the requirement of section 472d has no effect on the scope of appellate review. "While section 472d imposes procedural requirements which undoubtedly assist reviewing courts, it prescribes no rule regulating the reviewing process. Nowhere does it provide . . . that the order must be tested only according to the reasons given by the trial court. . . . (I)t is the validity of the court's action, and not of the reason for its action, which is reviewable." (Weinstock v. Eissler (1964) 224 Cal.App.2d 212, 225, 36 Cal.Rptr. 537, 546.)

As indicated above, the first ground of defendant's demurrer was that the instant action was barred by reason of the rule of compulsory cross-complaints set forth in section 426.30 of the Code of Civil Procedure. As here relevant that section provides: "Except as otherwise provided by statute, if a party against whom a complaint has been filed and served fails to allege in a cross-complaint any related cause of action which (at the time of serving his answer to the complaint) he has against the plaintiff, such party may not thereafter in any other action assert against the plaintiff the related cause of action not pleaded."

White and its carrier contend that the bar of section 426.30 is here inapplicable both by its own terms and by specific statutory exemption. In the first place, they urge their causes of action against City did not arise until July 30, 1975, more than two years after the filing of their answer to City's complaint, when they made payment to Butcher and the Ellett heirs following affirmance of the casualty judgment on appeal. 3 Thus, they reason, the causes of action they now seek to assert, even if "related" to any of those stated in City's prior action, were not causes "which (at the time of serving (their) answer to the complaint) (they had) against the plaintiff." Moreover, they point out, the provisions of section 426.60, subdivision (c) of the Code of Civil Procedure expressly exempt from the operation of the compulsory cross-complaint rule actions in which "the only relief sought is a declaration of the rights and duties of the respective parties in an action for...

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