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Paragon Real Estate Group of San Francisco, Inc. v. Hansen

October 7, 2009

PARAGON REAL ESTATE GROUP OF SAN FRANCISCO, INC. ET AL., CROSS-COMPLAINANTS AND APPELLANTS,
v.
PETER HANSEN ET AL., CROSS-DEFENDANTS AND RESPONDENTS.



(Alameda County Super. Ct. No. RG05243941) Trial Court: Alameda County Superior Court Trial Judge: Hon. Lawrence James Appel.

The opinion of the court was delivered by: Ruvolo, P. J.

CERTIFIED FOR PUBLICATION

I. INTRODUCTION

Over 30 years ago, our Supreme Court announced that where joint tortfeasors are liable for a plaintiff's injuries, they are entitled to have their liability apportioned among themselves on the basis of their comparative fault. (American Motorcycle Assn. v. Superior Court (1978) 20 Cal.3d 578, 598 (American Motorcycle). As a procedural matter, the court held that an equitable apportionment of liability among joint tortfeasors could be accomplished through the filing of a cross-complaint seeking equitable indemnity. (Id. at p. 584.)

In this case, defendants Paragon Real Estate Group of San Francisco, Inc. and two of its principals, Linda Harrison and Ellen Anderson (collectively referred to in the singular as ―Paragon‖), filed a first amended cross-complaint for equitable indemnity (cross-complaint) against co-defendants Peter Hansen and Peter Hansen & Co. (collectively referred to in the singular as ―Hansen‖). However, the trial court entered a judgment of dismissal after it sustained Hansen's demurrer to Paragon's cross-complaint without leave to amend. The trial court concluded that the cross-complaintwas unnecessary because both Paragon and Hansen were named as defendants in theaction, and an allocation of fault would occur anyway in the course of adjudicating the plaintiff's claim.

We disagree with the trial court's conclusion that, because Paragon and Hansen were named defendants, Paragon was precluded from filing a cross-complaint seeking equitable indemnity. In reversing the judgment, we also hold that the circumstances of this case do not bring it within the limited exception barring the assertion of a cross-complaint where to do so would operate inequitably or in derogation of public policy. (See Western Steamship Lines, Inc. v. San Pedro Peninsula Hospital (1994) 8 Cal.4th 100, 109-110 (Western Steamship).)

II. FACTUAL AND PROCEDURAL BACKGROUNDS

Plaintiff Karen S. Park (Park) filed an action in the Alameda County Superior Court arising out of her purchase of real property located at 5 Oak Street Path in Berkeley, California (the Park property). Park sought damages allegedly resulting from the failure to disclose the existence of an easement which burdened the Park property in favor of an adjoining parcel of land owned by Sara Lee and Michael Tripp. The easement holders sued Park (the Lee action) for which Park also sought indemnity against all defendants. Among the named defendants were appellant Paragon and respondent Hansen. Paragon acted as real estate broker for Park in the purchase of the Park property, and Hansen represented the sellers.

Park's complaint against Paragon asserted causes of action for negligence, breach of contract, and equitable indemnity. Park alleged that Paragon failed to advise her properly on how to protect her interests against the potential (and then actualized) easement claims by Lee. Park alleged that she had a right to equitable indemnity against Paragon because she has had to incur attorney fees and costs in defense of the Lee action.

Park's complaint against Hansen asserted causes of action for nondisclosure, negligent misrepresentation, violation of Civil Code section 1710, subdivision 2., and equitable indemnity. In essence, Park alleged that Hansen (1) failed to disclose all material facts concerning Lee's easement claim, (2) misrepresented the effect of a letter concerning the validity of Lee's easement claim, and (3) breached an oral agreement to obtain adequate assurancesthat Leewould not assert an easement claim against the property. Park also alleged a right to equitable indemnity against Hansen to recover the attorney fees and costs that she has incurred in defending the Lee action.

A cross-complaint was filed in due course by Paragon against Hansen and the sellers of the Park property seeking ―equitable implied indemnity, comparative indemnity, comparative contribution, total equitable indemnity, implied contractual indemnity and declaratory relief.‖ Hansen filed a demurrer to that cross-complaint, which was sustained with leave to amend.

Thereafter, Paragon filed the cross-complaint at issue in this appeal, alleging a single cause of action for ―equitable indemnity based on comparative fault‖ against Hansen, the sellers of the Park property, and others. Hansen filed another demurrer, contending that the cross-complaint failed to state facts sufficient to constitute a cause of action, or alternatively, that the cross-complaint was vague and uncertain.

Essentially, Hansen claimed that our Supreme Court's holding in American Motorcycle, supra, 20 Cal.3d 578, only sanctioned a cross-complaint for equitable indemnity on the basis of comparative fault against an alleged third-party joint tortfeasor not already named as a defendant by the plaintiff. Hansen argued that because it had already been named as a defendant in this action, a ―determination of liability of comparative fault will be part of the Plaintiff's judgment‖; therefore, Paragon's cross-complaint was ―improper and unnecessary.‖ In opposition, Paragon contended that Hansen's reading of American Motorcycle was ―plainly wrong‖ and that this decision provided ―specific, express authority‖ for its cross-complaint against Hansen.

After hearing oral argument, the trial court issued an order sustaining Hansen's demurrer to the cross-complaint without leave to amend. By way of explanation, the court stated: ―Equitable indemnity is properly denied where the same relief is available in the underlying action. (See Leko v. Cornerstone B[ldg.] Inspection Service (2001) 86 Cal.App.4th 1109, 1118 [Leko].) Hansen and Paragon are already both Defendants in the underlying action by Park. Paragon cannot state an independent cause of action for equitable indemnity against this joint tortfeasor.‖ As a result, the cross-complaint was ordered dismissed as to Hansen. This timely appeal followed.*fn1

III. LEGAL DISCUSSION

A. Standard of ...


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