C.W. HOWE PARTNERS INC. et al., Cross-complainants and Respondents, v. GREG MOORADIAN et al., Cross-defendants and Appellants.
B290665
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA SECOND APPELLATE DISTRICT DIVISION SEVEN
Filed 12/19/19
CERTIFIED FOR PUBLICATION
Howard L. Halm, Judge
APPEAL from an order of the Superior Court of Los Angeles County, Howard L. Halm, Judge. Affirmed.
Clark Hill, Richard H. Nakamura Jr., Mehrdad Farivar and Christopher Menjou for Cross-complainants and Respondents.
Greg Mooradian and Debra A. Mooradian appeal from the order denying their special motion to strike under
FACTUAL AND PROCEDURAL BACKGROUND
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
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’ –
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.”
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. The Litigation
On May 26, 2017 the Mooradians filed a complaint and on August 8, 2017 a first amended complaint against Ingjaldsdottir, Thorsteinsson, Minarc, MNM, the Howes, Core Construction and others. The operative first amended complaint generally alleged the defendants participated in a joint enterprise designed to facilitate a variety of unlawful practices, including the practice of architecture by persons who were not licensed architects and the manufacture, sale and installation of building materials without necessary City approvals. In its factual background section it
also alleged deficiencies in the Howes’ civil engineering services and failures in the Howes’ construction supervision.
Three causes of action—fraud, negligent breach of contract, and restitution and injunctive relief for unfair business practices—were asserted against the Howes. For the fraud cause of action and, by its reference to the fraud allegations, the unfair business practices cause of action, the Mooradians alleged the Howes claimed in or about 2012 to have engineered the EPS panels that have since been used in other residential structures constructed by its coconspirators; knew Ingjaldsdottir, Thorsteinsson, Minarc and MNM regularly incorporated into their designs for residential steel-framed structures the MNM-branded C-stud framed EPS panels that were manufactured by
panels included materials not approved for use in residential construction within the City.5
On December 22, 2017 the Howes filed a cross-complaint against the Mooradians for express indemnity, equitable indemnity, contribution and declaratory relief. In its general allegations the cross-complaint set forth verbatim sections 4(a) and 4(b) of the Howe agreement and asserted the Howes’ structural design under the Howe agreement was to be based on information and drawings provided by the Mooradians’ designer Minarc; the Mooradians, or Minarc as the Mooradians’ representative, had provided the Howes an architectural design using elements labeled “EPS Panels“; and the selection of EPS panels had been solely by the Mooradians and/or Minarc. It also referred to the Mooradians’ filing of their first amended complaint, alleging the Mooradians in their first amended complaint admitted the EPS panels had been specified in plans prepared by Minarc, manufactured by an entity owned by Minarc‘s owners and featured as the subject of various representations by the Minarc‘s owners and of Minarc‘s and MNM‘s website postings that the Mooradians had reviewed.
For the express indemnity claim, the Howes alleged the Mooradians had agreed to the indemnification provisions of the Howe agreement, which obligated them to indemnify, defend and
hold harmless the Howes for any liability arising from the use of the EPS panels as asserted in the Mooradians’ first amended complaint, but breached the agreement by failing and refusing to comply with their indemnification obligations.
For the equitable indemnity claim, the Howes denied liability for the events described in the Mooradians’ first amended complaint arising from the Mooradians’ and/or Minarc‘s decision to use the EPS panels. The Howes
The contribution claim alleged the Howes were entitled to contribution from the Mooradians because of any judgment against Howe as a result of the Mooradians’ first amended complaint. By their declaratory relief claim, the Howes sought a declaration of the Mooradians’ obligation to indemnify the Howes, their duty to pay the Howes’ costs of defense and their comparative liability for any damages claimed in the first amended complaint.
5. The Mooradians’ Special Motion To Strike
The Mooradians responded to the Howes’ cross-complaint by filing a
Howes could not establish a probability of prevailing on their claims.
In their opposition the Howes disputed their cross-claims arose from actions in furtherance of a right of petition.6 They contended their cross-complaint did not allege the Mooradians’ wrongful act was the filing of the complaint, which constituted arguably protected activity, but rather the breach of the obligation to indemnify the Howes for any liability attributable to information provided by the Mooradians or the Mooradians’ representatives.
In his declaration supporting the opposition Howe stated, in preparing structural designs, C.W. Howe Partners relies on information provided by others, including architects, designers and other consultants, who are typically hired directly by the property owner. Because the services of C.W. Howe Partners are intertwined with services others provide, C.W. Howe Partners typically includes the provisions set forth in sections 4(a) and 4(b) of the Howe agreement. For the Mooradian residence, C.W. Howe Partners based the structural design from the set of plans by the Mooradians’ designers, with whom C.W. Howe Partners did not have a contractual relationship. Howe further explained C.W. Howe Partners had no role in the selection of the insulation material, a nonstructural item, used in the Mooradian project.
The trial court heard the Mooradians’ special motion to strike on April 18, 2018. After taking the matter under submission, the court later that same day denied the motion, ruling the Mooradians had failed to establish the Howes’ cross-complaint arose from an act in furtherance of the Mooradians’ right of petition or free speech. The court, however, denied the Howes’ request for attorney fees, finding the arguments advanced by the Mooradians “were not completely and totally without merit.” The Mooradians filed a timely notice of appeal. (
DISCUSSION
1. Section 425.16, the Anti-SLAPP Statute,8 and the “Arising From” Requirement
public issue shall be subject to a special motion to strike, unless the court determines that the plaintiff has established that there is a probability that the plaintiff will prevail on the claim.” (
Pursuant to
In ruling on a motion under
29 Cal.4th 82, 89 (Navellier), italics omitted.) If the moving party fails to demonstrate that any of the challenged claims for relief arise from protected activity, the court properly denies the motion to strike without addressing the second step (probability of success). (City of Cotati v. Cashman (2002) 29 Cal.4th 69, 80-81; Trilogy at Glen Ivy Maintenance Assn. v Shea Homes, Inc. (2015) 235 Cal.App.4th 361, 367.)
“A claim arises from protected activity when that activity underlies or forms the basis for the claim.” (Park v. Board of Trustees of California State University (2017) 2 Cal.5th 1057, 1062-1063 (Park).) Thus, “[t]he defendant‘s first-step burden is to identify the activity each challenged claim rests on and demonstrate that that activity is protected by the anti-SLAPP statute. A ‘claim may be struck only if the speech or petitioning activity itself is the wrong complained of, and not just evidence of liability or a step leading to some different act for which liability is asserted.‘” (Wilson v. Cable News Network, Inc. (2019) 7 Cal.5th 871, 884 (Wilson); accord, Park, at p. 1060.) “‘[T]he mere fact that an action [or claim] was filed after protected activity took place does not mean the action [or claim] arose from that activity for the purposes of the anti-SLAPP statute.‘” (Park, at pp. 1062-1063; see Rand Resources, LLC v. City of Carson (2019) 6 Cal.5th 610, 621 [“a claim does not ‘arise from’ protected activity simply because it was filed after, or because of, protected activity, or when protected activity merely provides evidentiary support or context for the claim“].) “To determine whether a claim arises from protected activity, courts must ‘consider the elements of the challenged claim and what actions by the defendant supply those elements and consequently form the basis for liability.‘” (Wilson, at p. 884; accord, Park, at p. 1063.)
2. The Howes’ Cross-complaint Does Not Arise from the Mooradians’ Protected Petitioning Activity
The Howes’ causes of action for express and equitable indemnity constitute the essence of their cross-complaint.9 “Express indemnity refers to an obligation that arises ‘“by virtue of express contractual language establishing a duty in one party to save another harmless upon the occurrence of specified circumstances“‘” and “is enforced in accordance with the terms of the contracting parties’ agreement.” (Prince v. Pacific Gas &
Electric Co. (2009) 45 Cal.4th 1151, 1158 (Prince); see Valley Crest Landscape Development, Inc. v. Mission Pools of Escondido, Inc. (2015) 238 Cal.App.4th 468, 481 [applying four-year statute of limitations for breach of written contract to express indemnity claim because, by bringing claim for express indemnity under subcontract, “Valley Crest was, in effect, suing . . . for breach of contract“]; Ranchwood Communities Limited Partnership v. Jim Beat Construction Co. (1996) 49 Cal.App.4th 1397, 1417 [“we must treat the cross-complaints’ causes of action for express indemnity as contract based“].) “[T]he elements of a cause of action for breach of contract are (1) the existence of the contract, (2) plaintiff‘s performance or excuse for nonperformance, (3) defendant‘s breach, and (4) the resulting damages to the plaintiff.” (Oasis West Realty, LLC v. Goldman (2011) 51 Cal.4th 811, 821; accord, Professional Collection Consultants v. Lujan (2018) 23 Cal.App.5th 685, 690; see Four Star Electric, Inc. v. F & H Construction (1992) 7 Cal.App.4th 1375, 1380 [“[a]n indemnitee seeking to recover on an agreement for indemnification must allege the parties’ contractual relationship, the indemnitee‘s performance of that portion of the contract
Equitable indemnity, which “requires no contractual relationship,” “‘is premised on a joint legal obligation to another for damages‘“; it is “subject to allocation of fault principles and comparative equitable apportionment of loss.” (Prince, supra, 45 Cal.4th at p. 1158.) “‘The elements of a cause of action for [equitable] indemnity are (1) a showing of fault on the part of the indemnitor and (2) resulting damages to the indemnitee for
which the indemnitor is . . . equitably responsible.‘” (Bailey v. Safeway, Inc. (2011) 199 Cal.App.4th 206, 217.)
The Mooradians contend the existence of a claim of loss to be indemnified is a necessary prerequisite to any indemnification obligation and argue the filing of their first amended complaint supplies an essential element of the Howes’ cross-claims for indemnity. The element of “fault,” they contend, connotes responsibility for a claim of loss; the element of “resulting damages” refers to damages arising from a claim of loss. They assert there would be no claim of loss without the filing of their first amended complaint.
To be sure, a cause of action arising from the defendant‘s (or, as applicable here, cross-defendant‘s) litigation activity directly implicates the right to petition and is subject to a special motion to strike. (Rusheen v. Cohen (2006) 37 Cal.4th 1048, 1056 [“‘[a] cause of action “arising from” defendant‘s litigation activity may appropriately be the subject of a
But to satisfy the first prong, the Mooradians had to establish the Howes’ causes of action “arise from” the Mooradians’ litigation activity; and they misunderstand the analysis employed to determine whether a claim arises from protected conduct. The “elements” analysis as articulated by the Supreme Court in Park, supra, 2 Cal.5th at page 1063 and adopted in Wilson, supra, 7 Cal.5th at page 884 does not mean any allegation of protected activity supporting an element of a cause of action subjects that cause of action to a challenge under
The filing of the Mooradians’ first amended complaint is not the wrongful act forming the basis for the Mooradians’ liability as alleged in the Howes’ cross-claims. Rather, the alleged wrongful act that forms the basis for the express indemnity cause of action is the Mooradians’ failure to indemnify, defend and hold harmless the Howes in breach of section 4(b) of the Howe agreement, including to indemnify the Howes from any liability arising from the use of the EPS panels selected by the Mooradians or the Mooradians’ representative Minarc. Similarly, the alleged wrongful act supporting the equitable indemnity cause of action—the alleged “fault” for which they should be held equitably responsible for any damages suffered by the Howes—is the decision they or their representative Minarc made to use the EPS panels.10
Navellier, supra, 29 Cal.4th 82 illustrates the difference. In Navellier the Supreme Court held a claim for breach of a release clause in a contract was subject to
Similarly, in Moss Bros. Toy, Inc. v. Ruiz (2018) 27 Cal.App.5th 424 the petitioning activity itself constituted the alleged breach. In that case an employer filed a breach of contract action against an employee alleging the employee had breached two arbitration agreements by failing to submit his employment-related disputes to arbitration, instead filing a putative class action complaint in superior court against the employer. The trial court granted the employee‘s special motion to strike. (Id. at pp. 430-432.) In affirming, the court of appeal relied, among other cases, on Vivian v. Labrucherie (2013) 214 Cal.App.4th 267, where a motion pursuant to
protected activity of making statements to internal affairs investigators and in family court papers . . . . Because the plaintiff was seeking to impose liability on the defendant for her acts of making protected statements, the plaintiff‘s action was based on protected activity.” (Moss Bros. Toy, at pp. 438-439.) Unlike the plaintiffs in Navellier and Moss Bros. Toy, the Howes did not allege in their cross-complaint that by filing their lawsuit the Mooradians had breached the Howe agreement or otherwise engaged in wrongful activity.
Neither Lennar Homes of California, Inc. v. Stephens (2014) 232 Cal.App.4th 673 (Lennar Homes) nor the recent case from Division Four of this court, Long Beach Unified School Dist. v. Margaret Williams, LLC (Dec. 9, 2019, B290069) __ Cal.App.5th __ [2019 Cal.App. Lexis 1228] (Williams), which affirmed trial court orders granting special motions to strike first party contractual indemnity causes of action, provides persuasive support for the Mooradians’ motion.
In Lennar Homes defendants Stella Stephens and Timothy and Melissa Young, a married couple, purchased homes from builder Lennar Homes of California, Inc., entering into agreements that required the homebuyers to indemnify and defend Lennar from any costs and liabilities arising from claims the homebuyers might make based on the builder‘s nondisclosure or incomplete disclosure of various items. Stella Stephens and Timothy Young, but not Melissa Young, were named plaintiffs in a federal class action lawsuit asserting claims of fraudulent nondisclosure and misrepresentation against Lennar. After dismissal of the federal action, Lennar sued all three homebuyers for express contractual indemnity to recover its attorney fees and costs in defending the federal action. The trial court granted the
homebuyers’
Selectively quoting from Navellier, supra, 29 Cal.4th 82, Lennar Homes relied on a facile “but for” analysis to conclude Lennar‘s claim against Melissa Young arose from protected activity because, but for the federal litigation, Lennar‘s indemnification claim would have no basis. (Lennar Homes,
supra, 232 Cal.App.4th at pp. 684-685.) The Lennar Homes court, which decided the case several years before the Supreme Court‘s clarification of proper
Williams, supra, __ Cal.App.5th __ involved a first party contractual indemnity claim filed by the Long Beach Unified School District as a cross-complaint in a lawsuit by Margaret Williams and Margaret Williams, LLC alleging the District had wrongfully terminated the LLC‘s contract to perform construction management and environmental compliance work for the District and unlawfully caused Williams‘s arsenic poisoning.13 (Id. at p. __ [2019 Cal.App. Lexis 1228, *1-2].) Relying on the truncated first prong reasoning in Lennar Homes, the Williams court concluded, “Here, the District‘s cross-claims for defense and
indemnity likewise would have no basis without the Underlying Action in which it seeks to be defended and indemnified.” (Id. at p. __ [2019 Cal.App. Lexis 1228, *17].) However, implicitly recognizing the flaw inherent in utilizing a simple “but for” analysis, rather than considering the elements of the challenged claims to determine what actions form the basis for liability, as required by Park, supra, 2 Cal.5th at page 1063, the Williams court went on to conclude, even if the District‘s cross-complaint for indemnity did not arise from the underlying action, it nonetheless arose from protected activity within the meaning of
In sum, the trial court properly determined the Mooradians failed to establish the Howes’ cross-claims arose from protected activity.
DISPOSITION
The order denying the Mooradians’ special motion to strike is affirmed. The Howes are to recover their costs on appeal.
PERLUSS, P. J.
We concur:
ZELON, J.
SEGAL, J.