Roberts v. Eberhard Roofing

Filed 3/8/07 Roberts v. Eberhard Roofing CA2/5

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION FIVE

APPEAL from a judgment of the Superior Court of Los Angeles County.

Holly Kendig, Judge. Affirmed.

Monteleone & McCrory, LLP, Andrew W. Hawthorne, and William R. Baerg; Law Offices of Stanley H. Kimmel and Stanley H. Kimmel for Cross-complainant and Appellant.

Gaines & Stacey, LLP, Lisa A. Weinberg, and Alicia B. Bartley for Cross-defendant and Respondent.

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Judy Roberts appeals the dismissal of her cross-complaint for declaratory relief based on equitable indemnity against Eberhard Roofing, Inc. We find that Roberts cannot state a cause of action for equitable indemnity, and so affirm.

FACTUAL AND PROCEDURAL BACKGROUND

In the early 1990s, Eberhard Roofing agreed to convey to Wayne and Chemainh Keene (the "Keenes") certain real property rights and interests consisting of a lot line adjustment and easement with respect to land it owned in Chatsworth. In 1997, Eberhard Roofing sold a parcel of real property to Roberts which included some of the land over which Eberhard Roofing had previously conveyed rights to the Keenes.

Due to the conflicting land interests, the Keenes filed a quiet title action against Roberts. As we explained in a prior appeal (Roberts v. Eberhard Roofing, Inc. (B169886, filed August 12, 2004 (the "prior appeal")): "The Keenes' second amended complaint against Roberts seeks: a declaration of the parties' rights and duties with respect to the lot line adjustment, including whether Roberts must execute documents to complete the transfer; an order of specific performance of the lot line adjustment agreement compelling Roberts to deliver a deed conveying the property subject to the lot line adjustment; an order quieting title to the lot line adjustment property; a declaration as to whether the Keenes have an exclusive right to use the easement area; an order quieting title to the easement that states the Keenes have the right to exclude Roberts from the easement area; damages caused by Roberts's installation of the fence on the disputed property in July 2000; an injunction to prevent Roberts from trespassing on the Keenes' property or interfering with the Keenes' use of the easement; an order expunging the erroneous quitclaim deed filed by the Keenes' attorney and a declaration of the parties' rights and duties concerning the erroneous quitclaim deed." (Slip opn., at p. 9.) Roberts cross-complained to quiet title.

Roberts also filed a cross-complaint against Eberhard Roofing: "In Roberts's amended cross-complaint against Eberhard Roofing, Roberts based her request for declaratory relief on equitable indemnity and implied contractual indemnity. She requested a declaration of Eberhard Roofing's responsibility for indemnifying her for any losses or sums she might incur as a result of litigation with the Keenes. Roberts's cause of action for breach of implied warranty alleged that Eberhard warranted at the time of conveyance to Roberts that the property was free of encumbrances. Eberhard breached the implied warranty, because he had previously executed an application for a lot line adjustment extending 35 to 38 feet south of the boundary line. Roberts's cause of action for breach of contract alleged that Eberhard breached their property agreement by failing to convey the property free of encumbrances, executing the easement grant deed in favor of the Keenes and the lot line adjustment application. As a result of the breaches of implied warranty and contract, Roberts has incurred delays and damages in connection with the sale and improvement of the property, property taxes, weed abatement costs, additional carrying costs, attorney fees and costs. Roberts's cause of action for specific performance sought to require Eberhard Roofing to construct [a] debris basin and take all steps necessary for Roberts to possess title free of encumbrances. Roberts's cause of action for fraud alleged that Eberhard represented to her that the property was free of encumbrances with knowledge of the true facts. The cause of action for negligent misrepresentation alleged that Eberhard made misrepresentations to Roberts, should have known the representations were false and if not, should have discovered the true facts through a reasonable inquiry and diligence." (Slip opn., at pp. 9-10.)

Eberhard Roofing demurred to the amended cross-complaint on statute of limitations grounds. The trial court sustained the demurrer without leave to amend, and entered a judgment of dismissal. On appeal, this court agreed that Roberts's causes of action against Eberhard Roofing for breach of implied warranty, breach of contract, specific performance, fraud and negligent representation were time-barred, but held that the cross-complaint stated a cause of action for declaratory relief based on equitable indemnity. (Slip opn., at pp. 10-11.)

Following the issuance of our opinion in August of 2004, the parties resumed litigation. By July 2005, the Keenes and Roberts reached a settlement of their claims, including the Keenes' trespass allegations against Roberts. The settlement provided that the Keenes would pay Roberts the sum of $350,000, and another cross-defendant would pay Roberts $15,000, for a total of $365,000. The agreement further provided that Roberts would convey title to the lot line adjustment property to the Keenes, and would refrain from building on a portion of her property so long as the Keenes maintained their principal resident on the adjoining land. The agreement did not provide for Roberts's payment to the Keenes of any sum to compensate them for her trespass. Following a motion for a judicial determination that the settlement was made in good faith pursuant to Code of Civil Procedure section 877.6, the settlement was approved on August 4, 2005. Eberhard Roofing did not participate in the settlement, except to oppose the good faith settlement motion.

On December 6, 2005, Eberhard Roofing moved for judgment on the pleadings. The trial court granted that motion, and Roberts timely appealed.

CONTENTIONS

Roberts maintains on appeal that her "cross-complaint sufficiently states a cause of action for declaratory relief for indemnification," and so the trial court erred in granting Eberhard Roofing's motion for judgment on the pleadings. She also contends that the trial court abused its discretion in refusing to grant her leave to amend her cross-complaint to allege additional facts regarding the settlement which she believes establish her right to indemnification from Eberhard Roofing.

DISCUSSION

A right to equitable indemnity arises when one party (the victim) suffers a loss which the law requires another party (the indemnitee) to pay, but principles of equity require that yet another party (the indemnitor) ultimately bear the loss. Here, in order for Roberts to have an equitable indemnity claim against Eberhard Roofing, the Keenes must have suffered a loss for which Roberts actually compensated them. (Bay Development, Ltd. v. Superior Court (1990) 50 Cal.3d 1012, 1029; see generally 5 Witkin, Summary of Cal. Law (10th ed. 2005) Torts, 115, p. 212)

In the prior appeal, we determined that, in the event the Keenes were awarded damages for Roberts's trespass, Roberts would be entitled to pursue a claim for indemnity against Eberhard Roofing. Roberts had two potentially viable indemnity theories, implied equitable indemnity and implied contractual indemnity, and two potential categories of indemnity damages, trespass damages paid to the Keenes and attorney fees incurred in connection with those trespass damages. (Slip opn., p. 14.)

The Keene litigation did not result in any monetary award to the Keenes for Roberts's trespass. Thus, the Keenes did not suffer the type of loss which is a prerequisite to Roberts's equitable indemnity claim.

Roberts contends that the trial court took too narrow a few of indemnity: "Indemnity is the obligation resting on one party to make good a loss or damage another party has incurred. [Citations omitted.] In this case, Roberts has incurred a loss as a result of Eberhard having sold the same land rights twice. The loss consists not only of over $720,000 in attorney's fees to defend the lawsuit filed by the Keenes, but it also consists of the loss of value she incurred in the Settlement Agreement with the Keenes in the sum of not less than $740,000. These are actual and existing losses incurred by Roberts."

Equitable indemnity has as its starting point a loss suffered by a third party, here the Keenes. While Roberts identifies the losses which she has suffered on account of Eberhard's actions, she has not identified the loss which the Keenes suffered, and which she was required to pay, on account of those actions. "The implied promise of indemnity and reimbursement applies only to the actual loss and not to the liability incurred. [Citations.] Thus the cause of action does not arise until the agent has actually paid the obligation." (Sunset-Sternau Food Co. v. Bonzi (1964) 60 Cal.2d 834, 843, fn. omitted; accord E.L. White, Inc. v. City of Huntington Beach (1978) 21 Cal.3d 497, 506 ["It is well settled that a cause of action for implied indemnity does not accrue or come into existence until the indemnitee has suffered actual loss through payment."] )

In short, the Keenes did not suffer a loss for which Roberts compensated them. Consequently, Roberts' only recourse to recoup the losses she suffered on account of Eberhard's conduct was to sue Eberhard in contract and tort, which she did. It was finally determined in the prior appeal that those claims are time-barred. They cannot now be resurrected under the guise of equitable indemnity.

Moreover, Roberts's claim for attorney fees required as a prerequisite that Roberts be entitled to equitable indemnity. As we have seen, she cannot state a cause of action against Eberhard Roofing for equitable indemnity, and thus her claim for attorney fees fails.

Roberts complains that the trial court erred in refusing her leave to amend her cross-complaint to allege additional facts. However, Roberts can allege no additional facts which would state a cause of action, for she cannot allege that the Keene lawsuit resulted in her compensating the Keenes for a loss that they suffered on account of Roberts's trespass. And as we held in the prior appeal, that is the only category of damages upon which an indemnity claim may be based.

DISPOSITION

The judgment is affirmed.

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

ARMSTRONG, J.

We concur:

TURNER, P. J.

KRIEGLER, J.

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