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C.W. Howe Partners Inc. v. Mooradian

California Court of Appeals, Second District, Seventh Division

December 19, 2019

C.W. HOWE PARTNERS INC. et al., Cross-complainants and Respondents,
GREG MOORADIAN et al., Cross-defendants and Appellants.

          APPEAL from an order of the Superior Court of Los Angeles County, No. BC662798, Howard L. Halm, Judge.

          Pitre & Teunisse and Randall J. Pitre for Cross-defendants and Appellants.

          Clark Hill, Richard H. Nakamura Jr., Mehrdad Farivar and Christopher Menjou for Cross-complainants and Respondents.

          PERLUSS, P.J.

         Greg Mooradian and Debra A. Mooradian appeal from the order denying their special motion to strike under Code of Civil Procedure section 425.16[1] directed to the cross-complaint filed against them by C.W. Howe Partners Inc. and its principal Carl William Howe (collectively the Howes) for express indemnity, equitable indemnity, contribution and declaratory relief. The trial court ruled none of the Howes' claims arose from protected speech or petitioning activity within the meaning of section 425.16. Although a claim of loss or potential loss is an essential prerequisite to any indemnification obligation, whether express or equitable, the Howes' cross-complaint did not arise from the filing of the Mooradians' lawsuit, but from the alleged breach of their agreement to indemnify the Howes for any liability attributable to information provided by the Mooradians or the Mooradians' representatives and the Mooradians' underlying fault with regard to their decisionmaking. Accordingly, we affirm.


         1. The Mooradian Residence Construction Project

         The Mooradians, a married couple, were interested in remodeling or reconstructing their existing Los Angeles residence. Although they had no prior design or construction experience, they discovered in 2014 the work of Erla Dogg Ingjaldsdottir and Tryggvi Thorsteinsson of Minarc, Inc. profiled in a book featuring cutting-edge homes that were environmentally conscious, energy efficient and built with major components prefabricated offsite. The Mooradians were particularly drawn to a house located in Venice, California, which the book attributed to the following: “Minarc” as architect, “Core Construction” as builder, “mnm.MOD” as manufacturer and “C.W. Howe” as engineer. The home was constructed entirely from factory-made parts using a “patented panelized system, ” with structural components of metal and panels containing expanded polystyrene (EPS) insulation.

         The Mooradians met with Ingjaldsdottir and Thorsteinsson, who represented that MNM Mod Corp., also known as MNMmod and mnmMOD, was one of their companies. MNM would custom manufacture offsite, in accordance with a design Ingjaldsdottir and Thorsteinsson created specifically for the Mooradians, metal-framed EPS panels using the patented panelized system. Thorsteinsson sent the Mooradians a proposed agreement pursuant to which Minarc would provide design and other services for the construction of a new single-family dwelling at the site of the Mooradians' existing residence.[2]

         After the Mooradians signed the Minarc agreement, Thorsteinsson advised hiring a structural engineer and recommended Carl Howe. He explained Howe had worked with Minarc on other residential projects. Howe provided a proposal to Thorsteinsson and then, after being told the proposal was accepted, submitted an August 18, 2014 letter agreement addressed to the Mooradians, printed on the letterhead of C.W. Howe Partners and signed by Howe as its principal (the Howe agreement).

         2. The Agreement Between the Mooradians and C.W. Howe Partners

         Howe is a civil engineer licensed in California, and C.W. Howe Partners is in the business of providing structural design services for single-family homes and other building types. Structural design typically entails designing the foundation and structural framework for a building with specified materials to allow the building to withstand a variety of forces.

         The August 18, 2014 Howe agreement stated on the subject line, “Contract for Structural Engineering Services: Mooradian Residence - ‘MnM mod' - Light Gage Steel Stud House, Green Roof Deck, Concrete Wall Front Elevation Elements.”[3] The first line of the agreement indicated the C.W. Howe Partners's engineering fee for the project was “[i]n accordance with our review of drawings produced by your Minarc.” Howe understood Minarc to be the designer of the Mooradian project.

         Pursuant to the Howe agreement, the scope of services to be provided by C.W. Howe Partners included preparing a preliminary structural design, structural engineering calculations and structural construction documents. The agreement listed services that were specifically excluded from the work to be performed by C.W. Howe Partners, including permit acquisition; construction means and methods or sequences; design and detailing of any nonstructural element; and coordination with architectural plans, which was instead to be performed by the “Designer, ” who was to be responsible for coordination of structural plans with all other professional disciplines.

         Section 4 of the Howe agreement contained the heading “Client's Responsibilities, ” which was underlined, capitalized and in bold font. Section 4(a), titled “Information Provided by Client” in bold font, stated, “Client or Client's representative shall provide Engineer with all necessary information for performance of Engineer's work on a timely basis. Engineer shall be entitled to rely upon information provided by Client and Client's representative, and shall not be held responsible for accuracy or completeness of such information; or omission of pertinent information.”

         Section 4(b), titled “Indemnity - Client Provided Information” in bold font, provided, “Client agrees to indemnify, defend and hold harmless Engineer, [its] principals, agents and employees and subcontractors from and against all costs or liability, including but not limited to attorney fees and expert fees and costs; arising in whole or in part from errors, omissions or inaccuracies in any Project related information or documents provided by, or through Client, or any other person or entity, acting on Client's behalf; including but not limited to recommendations as to the type of foundation by Client's soils engineer. Engineer has no duty to defend the Client or any party claiming through the Client.”

         Greg Mooradian signed the Howe agreement on August 18, 2014 on behalf of the Mooradians, the “Client.”

         3. Construction of the New House

         In the last quarter of 2014 the Mooradians' existing house was demolished to prepare for the construction of their new residence. Ingjaldsdottir, Thorsteinsson, Minarc and the Howes submitted architectural and structural drawings and specifications for approval by various departments and divisions of the City of Los Angeles, and the City issued a building permit in March 2015.

         In April 2016 Core Construction and Development Inc., the general contractor the Mooradians hired at Ingjaldsdottir and Thorsteinsson's recommendation, discovered a permit for the roof deck could not be obtained because the deck railing exceeded the height limit of the applicable zoning ordinance. The Mooradians then learned Ingjaldsdottir, Thorsteinsson and Minarc were not California licensed architects and promptly terminated the relationship. Claiming substantial construction errors, the Mooradians also subsequently fired Core Construction and hired a completion contractor to finish the work.

         4. Th ...

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