Regan Roofing Co. v. Superior Court

• Decision Date: 25 April 1994
• Docket Number: No. D020098,D020098
• Citation: 24 Cal.App.4th 425,29 Cal.Rptr.2d 413
• Court: California Court of Appeals Court of Appeals
• Parties: REGAN ROOFING COMPANY, INC. et al., Petitioners, v. The SUPERIOR COURT of San Diego County, Respondent; PACIFIC SCENE et al., Real Parties in Interest.

Page 413

29 Cal.Rptr.2d 413

24 Cal.App.4th 425

REGAN ROOFING COMPANY, INC. et al., Petitioners, v. The SUPERIOR COURT of San Diego County, Respondent;

PACIFIC SCENE et al., Real Parties in Interest.

No. D020098.

Court of Appeal, Fourth District, Division 1, California.

April 25, 1994.

Review Denied July 14, 1994.

McInnis, Fitzgerald, Rees & Sharkey, Timothy S. Thomas, Jeff G. Harmeyer, Stutz, Gallagher, Artiano, Shinoff & Holtz, Daniel R. Shinoff, Robert R. Templeton, Jr., and Richard C. Thomas, San Diego, for petitioners.

No appearance for respondent.

HUFFMAN, Associate Justice.

Lorber, Volk, Greenfield & Blick, Bruce W. Lorber, M. Bart Beddoe, Jeffrey A. Garofalo; Epsten & Grinnell and Duane E. Shinnick for Real Parties in Interest.

Petitioner Regan Roofing Company, Inc. (Regan Roofing), joined by New Continental Tile and Marble Company, Inc. (New Continental), brings this petition for writ of mandate to challenge the order of the trial court summarily adjudicating certain issues in this cross-action for contractual indemnity and related theories brought by Pacific Scene et al. (collectively, Pacific Scene), the developer of the Pacific Ridge condominium project, which is claimed to suffer construction defects. (Code Civ.Proc., § 437c, subd. (f).) ¹ Regan Roofing and New Continental, among others, were subcontractors in various trades who worked on the construction of the project, pursuant to subcontracts which each contained an indemnity provision in favor of Pacific Scene. In its ruling, the trial court summarily adjudicated the issue that the indemnity provision contained in the exemplar subcontract agreement was a "specific" or type I indemnity agreement, which would cover the general contractor's, Pacific Scene's, own negligence in the construction of the project. (See MacDonald and Kruse, Inc. v. San Jose Steel Co. (1972) 29 Cal.App.3d 413, 419-421, 105 Cal.Rptr. 725.) The trial court also ruled that the subcontractor cross-defendants had a current duty to defend Pacific Scene regardless of any determination of their duty to indemnify it under the subcontracts.

Regan Roofing ² makes both procedural and substantive arguments that this ruling was improper. It first claims this ruling was not a proper subject of summary adjudication under section 437c, subdivision (f), because it does not completely dispose of any cause of action or defense of the cross-complaint, nor is it a proper adjudication of an issue of duty owed by cross-defendants to the cross-complainants, as allowed by the statute. In its substantive attack on the ruling, Regan claims the trial court improperly equated contractual indemnitors, such as these subcontractors, with insurance companies, thus improperly expanding the duty to defend; Regan Roofing also claims the trial court incorrectly construed this indemnity clause as providing specific indemnity. We decline to reach these substantive arguments, as this petition for writ of mandate is properly disposed of on the procedural grounds asserted. We explain.

FACTUAL AND PROCEDURAL BACKGROUND

As pled in the petition, Pacific Ridge Condominium Association (the Association) brought suit against Pacific Scene for breach of implied warranties, strict liability, and negligence arising out of construction defects at the project. Pacific Scene filed a cross-complaint for express indemnity, breach of contract, implied indemnity, equitable indemnity, contribution, and declaratory relief against a number of subcontractors who worked at the project, each of which had agreed to a contractual indemnity clause as part of its subcontract. Pacific Scene then brought a motion for summary adjudication

under section 437c, subdivision (f), specifying the following two issues for resolution:

"1. ISSUE: WHETHER THE INDEMNITY PROVISION INCLUDED WITHIN THE CONSTRUCTION SUBCONTRACT AGREEMENT ENTERED INTO BETWEEN [PACIFIC SCENE] AND SUBCONTRACTOR/CROSS - DEFENDANTS IS A 'TYPE I' OR A 'SPECIFIC' INDEMNITY AGREEMENT OF WHICH PACIFIC SCENE IS A BENEFICIARY.

"2. ISSUE: WHETHER CONTRACTOR/CROSS-DEFENDANTS OWE PACIFIC SCENE THE DUTY OF DEFENSE, PURSUANT TO THE CONSTRUCTION SUBCONTRACT ENTERED INTO, BY AND BETWEEN, [PACIFIC SCENE], AND SUBCONTRACTORS/CROSS-DEFENDANTS." (Original italics.)

In support of its motion, Pacific Scene submitted an exemplar construction subcontract, containing an indemnity clause as follows:

"Q. Indemnity--Subcontractor shall at all times indemnify and hold Contractor harmless as follows:

"(i) Subcontractor shall indemnify and hold harmless Contractor against all liability for claims or liens for labor performed, or materials used or furnished to be used on the job by or through Subcontractor;

"(ii) Subcontractor shall indemnify and hold harmless Contractor against any other liability, cost or expense of any nature or kind arising out of or in any way connected with Subcontractor's performance of this Subcontract, save and except only such liability, cost or expense caused by Contractor's sole negligence or sole willful misconduct.

"Pursuant to each of the foregoing, Subcontractor shall indemnify and hold harmless Contractor from any costs and expenses for attorney's fees and all incidental and consequential damages resulting to Contractor from such claims or liens. In the event any suit on any claim is brought against Contractor, subject to the provision, Subcontractor shall defend said suit at Subcontractor's own cost and expense and will pay and satisfy any such lien or judgment as may be established by the decision of the Court in such suit...." (Italics added.)"

Pacific Scene also supplied the court with an exemplar tender of defense letter to one of the subcontractors, requesting it to defend and indemnify Pacific Scene for any loss resulting from the Association's lawsuit. Pacific Scene represented that to date the subcontractors had all rejected this demand for defense and indemnification.

There were 24 subcontractors/cross-defendants named in the motion; the exhibits to the petition show that 12 of those filed opposition. These were A-Built Raingutters; Kenwall Fireplaces; Sunwood Co.; Aero-Crete, Inc.; Jim Best Construction; Ty's Plumbing Co.; Alcala Co.; American Best Distributors, Inc.; New Continental Tile & Marble, Inc.; S.C. Insulation; Regan Roofing and Pacific Structural Concrete. The opposition generally argued that the motion did not dispose of any complete cause of action or defense and, further, that triable issues of material fact existed as to the stated issues. Mike Regan, a principal of Regan Roofing, submitted a declaration asserting that during contract negotiations, the indemnity provision had not been brought to his attention, nor did he understand it or have an opportunity to negotiate its terms. Another subcontractor, S.C. Insulation, asserted that the exemplar subcontract did not apply to it, as it had never signed it, nor had it received the exemplar tender letter.

Pacific Scene filed reply papers asking the court to rule that the exemplar indemnity provision was type I, allowing Pacific Scene indemnity and defense from the subcontractors as a matter of law, covering its own negligence if any.

At oral argument, the court expressed its opinion that the contract of indemnity was the functional equivalent of a contract of insurance, that the duty to defend was independent of any eventual determination of the duty to indemnify, and that the indemnitors might have to pay defense costs whether or not they were ultimately found liable for their own negligence. The court then issued "Motion for Summary Adjudication by defendants, Pacific Scene et al. granted in part and denied in part.

its ruling, summarized by Pacific Scene in its notice of ruling as follows:

"As a matter of law, the indemnity provision, Subsection Q, contained in the exemplar contract attached as Exhibit 1 is a specific or 'Type I' indemnity provision as it expressly refers to the negligence of the contractor. See the case of C.I. Engineers & Constructors v. Johnson & Turner Painting (1983) 140 CA3d 1011, 1014 .

"However, since defendants have not provided credible evidence that this exact contract was executed by each and every one of the named subcontractors, the Court is not adjudicating the duties, rights and/or liability as it pertains to each individual subcontractor.

"Further, the Court finds that the motion is premature as to the duty to indemnify as Pacific Scene would not be entitled to recover under any indemnity provisions until becoming liable and/or suffering an actual loss by being compelled to pay a claim. See Civil Code Section 2778(1) and (2). There is no evidence that Pacific Scene has suffered a compensable loss.

"The Court does find that there is a duty to defend under Civil Code Section 2778. Section 2778(3) provides that an indemnity against claims, demands or liability embraces the cost of defense. Pursuant to Civil Code Section 2778(4), the indemnitors [the subcontractors] are bound, on request of the indemnitee [Pacific Scene], to defend actions brought against the indemnitee in respect to matters embraced by the indemnity clause. The Court finds that the exemplar subcontract allegedly entered into between each of the named subcontractors and [Pacific Scene] contains an indemnity clause at Paragraph Q which embraces the costs of defense.... Further, this action, which includes a claim for damages arising from work performed by the subcontractors pursuant to the subcontract, is embraced by that indemnity clause....

"Finally, adjudication of the issue regarding primary carriers is denied as improper under CCP 437c(f). Further, there is no argument or evidence presented to support adjudication of this issue." ³

This writ petition followed and we issued an order to show cause and an order staying the trial date.

DISCUSSION

Regan Roofing has raised a number of interesting substantive questions concerning the scope of a duty to defend arising from a...