IRA HEFFLER v. JACK N. KALAYDJIAN, et al.

MOTION FOR SUMMARY ADJUDICATION

BACKGROUND

A. Allegations of the Complaint

Plaintiff Ira Heffler alleges that on December 30, 2017, he was on the strip mall premises owned by Defendant Jack N. Kalaydjian (“Kalaydjian”) at 11705 Ventura Blvd. in Studio City. He alleges he was a customer of Defendant Perennial Holistic Wellness Center, Inc.’s store (“Perennial”), which is a tenant of Kalaydjian. He alleges that as he was exiting the store, he could not appreciate or see an elevation change, which caused him to lose his balance and fall to the ground. He alleges that Defendants maintained the property in a negligent manner and failed to warn customers of the change in elevation.

The complaint, filed April 4, 2019, alleges causes of action for: (1) premises liability; and (2) negligence.

On July 24, 2019 and August 13, 2019, Plaintiff filed requests for dismissal without prejudice of the complaint as to Kalaydjian in his individual capacity only. The Court entered the orders on September 5, 2019 and September 10, 2019, respectively.

On February 10, 2020, Plaintiff filed an Amendment to Complaint naming Charles Dunn Company Real Estate Management Services as Doe 1.

B. Allegations of the Cross-Complaint

On June 3, 2020, Kalaydjian, in his individual and representative capacity as trustee of the Jack N. and Maro J. Kalaydjian Family Trust Dated October 12, 1983 (“Trustee”) and Charles Dunn Real Estate Services Inc. (“Charles Dunn”) filed a First Amended Cross-Complaint (“FACC”) against Roes 1-100 for: (1) implied indemnity; (2) express indemnity; (3) contribution; and (4) declaratory relief.

On April 3, 2020, Cross-Defendants named Perennial as Roe 1.

C. Motion on Calendar

On July 15, 2020, Defendants/Cross-Complainants Trustee Kalaydjian and Charles Dunn move for summary adjudication on the FACC as it relates to Cross-Defendant Perennial on the following issues:

• 1. Perennial owes a contractual duty to defend Trustee and Charles Dunn on the 1^st and 2^nd causes of action of the FACC, and costs and attorney’s fees from the date of Trustee and Charles Dunn’s tender of defense to Perennial.
• 2. Trustee and Charles Dunn are entitled to judgment on the 1 ^st and 2^nd causes of action in the FACC on the sole issue of the obligation to defend since Perennial has failed to provide a defense to them as required by the Lease Agreement.
• 3. Trustee and Charles Dunn are entitled to a declaration on the 4 ^th cause of action in the FACC on the issues of the indemnification and the duty to the defend.

On December 1, 2020, Perennial filed its opposition.

On December 4, 2020, Cross-Complainants filed their reply.

DISCUSSION

A. Relevant Law

“Indemnity is a contract by which one engages to save another from a legal consequence of the conduct of one of the parties, or of some other person.” (Civ. Code, § 2772.) “The elements of a cause of action for 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 contractually or equitably responsible.” ( Expressions at Rancho Niguel Ass’n v. Ahmanson Developments, Inc. (2001) 86 Cal.App.4th 1135, 1139.) “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.” ( Prince v. Pacific Gas & Electric Co. (2009) 45 Cal.4th 1151, 1158 [internal quotation marks omitted].) With regard to construction contracts, indemnity provisions are void and unenforceable to the extent the claims arise out of, pertain to, or relate to the active negligence or willful misconduct of the promise. (Civ. Code, § 2782.05(a).)

Equitable indemnity does not require a contractual relationship between an indemnitor and an indemnitee, but is rather premised on a joint legal obligation to another for damages. ( Prince v. Pac. Gas & Elec. Co. (2009) 45 Cal.4th 1151, 1158.) “Equitable indemnity principles govern the allocation of loss or damages among multiple tortfeasors whose liability for the underlying injury is joint and several.” ( Expressions at Rancho Niguel Ass’n v. Ahmanson Developments, Inc. (2001) 86 Cal.App.4th 1135, 1139.)

In the non-insurance context, parties to a contract, including a construction contract, may define their duties toward one another in the event of a third-party claim against one or both arising out of their relationship. (Crawford v. Weather Shield Mfg., Inc. (2008) 44 Cal.4th 541, 551.) Terms of this kind may require one party to indemnify the other under specified circumstances, as well as assign one party responsibility for the other’s legal defense when a third-party claim is made against the latter. (Id.) They may also agree that the promisor’s indemnity and/or defense obligations will only apply if a promisor was negligent, or, conversely, even if the promisor was not negligent. (Id.) A contractual promise to “defend” another connotes an obligation of active responsibility from the outset for the promisee’s defense against such claims and where the indemnitor has breached this obligation, an indemnitee who was thereby forced to defend itself is entitled to reimbursement of the costs of doing so. (Id. at 554-555, 557-558.) “[E]ven if the indemnity obligation is triggered only by an ultimate finding of the indemnitor’s fault, the defense obligation applies before, and thus regardless of, any finding to be made in the course of the litigation for which a defense is owed.” (Id. at 561.)

“Any person interested under a written instrument … or under a contract, or … in, over or upon property… may in cases of actual controversy relating to the legal rights and duties of the respective parties, bring an original action or cross-complaint … for a declaration of his or her rights and duties in the premises, including a determination of any question of construction or validity arising under the instrument or contract.” (CCP § 1060.) Declaratory relief is allowed if the seeking party presents two essential elements: “(1) a proper subject of declaratory relief, and (2) an actual controversy involving justiciable questions relating to [the party’s] rights or obligations.” ( Jolley v. Chase Home Finance, LLC (2013) 213 Cal.App.4th 872, 909.) “Declaratory relief generally operates prospectively to declare future rights, rather than to redress past wrongs” and is a remedy in the interests of “… preventative justice, to declare rights rather than execute them.” (Id.; Babb v. Superior Court (1971) 3 Cal.3d 841, 848.)

B. Discussion

Cross-Complainants state that this motion presents a single question of whether Perennial owes a duty to indemnify and hold harmless Trustee from any loss, claim, damage, liability, or expense caused by the acts or omissions of Perennial based on section 8.7 of the Lease Agreement entered between Perennial and Trustee. (Mot. at p.5, lines 18-21.) In the reply brief, Cross-Complainants argue that the motion’s primary issue is whether Perennial owes Trustee a duty to defend. (Reply at p.2, lines 12-14.) According to the notice of motion, Cross-Complainants move for summary adjudication on the 1^st and 2^nd causes of action for implied and express indemnity regarding the sole issue of whether Perennial owes them a duty to defend as required under the Lease Agreement. They also move for summary adjudication on the 4th cause of action for declaratory relief on the issues of indemnification and the duty to defend.

In support of the motion, Cross-Complainants provide the following facts. On April 4, 2019, Plaintiff filed the complaint, alleging premises liability and negligence claims against Trustee and Charles Dunn. (Cross-Complainants’ Fact [“CCF”], 3.) Plaintiff alleges he was lawfully on the premises as Perennial’s customer and that on December 30, 2017, he sustained injuries due to the presence of a “sudden step off and change in elevation” when he was exiting the store and could not appreciate the elevation change. (Id. at 5.) Plaintiff claims that Defendants knowingly and negligently owned, operated, maintained, repaired, etc. the unsafe condition and failed to properly warn, caution, correct, etc. the steps to prevent creating a trip hazard for customers. (Id.) On June 3, 2020, [1] Trustee filed the FACC for implied and express indemnity, contribution, and declaratory relief. (Id. at 4.)

Perennial is a tenant of the subject property located at 11705 Ventura Blvd., which is owned by Trustee Kalaydjian. (Id. at 1.) Charles Dunn was hired by Trustee to manage the subject property. (Id. at 2.) Trustee entered into a written AIR Commercial Real Estate Association Standard Multi-Tenant Shopping Center Lease – Net (“Lease Agreement”) on July 20, 2017 with Perennial. (Id. at 6-7; FACC, Ex. A; CC Ex. A [Kalaydjian Depo. at Ex. 6].) The Lease Agreement provided, in relevant part:

1.2 Premises: That certain portion of the Shopping Center (as defined below), including all improvements therein or to be provided by Lessor [Trustee] under the terms of this Lease, commonly known by the street address of 11701, 11703 & 11705 Ventura Boulevard located in the City of Studio City, County of Los Angeles, State of California, with zip code 91604 , as outlined on Exhibit A attached hereto (“Premises”) and generally described as (describe briefly the nature of the Premises): Multi-tenant retail center, Holistic Wellness Center.

1.3 Term: Two (2) years and Zero (0) months (“Original Terms”) commencing August 1, 2017 (“Commencement Date”) and ending July 31, 2019. (“Expiration Date”).

…

1.10 Agreed Use: Dispensary, Holistic Wellness Center

…

2.7 Common Areas – Definition. The term “Common Areas” is defined as all areas and facilities outside the Premises and within the exterior boundary line of the Shopping Center and interior utility raceways and Installations within the Premises that are provided and designated by the Lessor [Trustee] from time to time for the general non-exclusive use of Lessor, Lessee [Perennial] and other tenants of the Shopping Center and their respective employees, suppliers, shippers, customers, contractors and Invitees, including parking areas, loading and unloading areas, trash areas, roadways, walkways, driveways and landscaped areas.

2.8 Common Areas – Lessee’s Rights. Lessor grants to Lessee, for the benefit of Lessee and its employees, suppliers, shippers, contractors, customers and invitees, during the term of this Lease, the non-exclusive right to use, in common with others entitled to such use, the Common Areas as they exist from time to time, subject to any rights, powers, and privileges reserved by Lessor under the terms hereof or under the terms of any rules and regulations or restrictions governing the use of the Shopping Center. Under no circumstances shall the right herein granted to use the Common Areas be deemed to include the right to store any property, temporarily or permanently, in the Common Areas, nor the right to display merchandise or conduct sales in the Common Areas. Any such storage, display or sales shall be permitted only by the prior written consent of Lessor or Lessor’s designated agent, as exercised in Lessor’s sole discretion, which consent may be revoked at any time. In the event that any unauthorized storage or displays shall occur then Lessor shall have the right, without notice, in addition to such other rights and remedies that it may have, to remove the property and charge the cost to Lessee, which cost shall be immediately payable upon demand by Lessor.

2.9 Common Areas – Rules and Regulations. Lessor or such other person(s) as Lessor may appoint shall have the exclusive control and management of the Common Areas and shall have the right, from time to time, to establish, modify, amend and enforce reasonable rules and regulations (“Rules and Regulations”) for the management, safety, care, and cleanliness of the grounds, the parking and unloading of vehicles and the preservation of good order, as well as for the convenience of other occupants or tenants of the Building and the Shopping Center and their invitees. Lessee agrees to abide by and conform to all such Rules and Regulations, and shall use its best efforts to cause its employees, suppliers, shippers, customers, contractors and invitees to so abide and conform. Lessor shall not be responsible to Lessee for the non-compliance with said Rules and Regulations by other tenants of the Shopping Center.

…

6.1 Use.

(a) Agreed Use; Agreed Trade Name. Lessee shall use and occupy the Premises only for the Agreed Use, and for no other purpose, and Lessee shall operate at the Premises only under the Agreed Trade Name and under no other trade name. Lessee shall not use or permit the use of the Premises in a manner that is unlawful, creates damage, waste or a nuisance, or that disturbs occupants of or causes damage to neighboring premises or properties. …

…

8.2 Liability Insurance.

(a) Carried by Lessee. Lessee shall obtain and keep in force a Commercial General Liability policy of insurance protecting Lessee and Lessor as an additional insured against claims for bodily injury, personal injury and property damage based upon or arising out of the ownership, use, occupancy or maintenance of the Premises and all areas appurtenant thereto. Such insurance shall be on an occurrence basis providing single limit coverage in an amount not less than $1,000,000 per occurrence with an annual aggregate of not less than $2,000,000. Lessee shall add Lessor as an additional insured by means of an endorsement at least as broad as the Insurance Services Organization’s “Additional Insured-Managers or Lessors of Premises” Endorsement. The policy shall not contain any intra-insured exclusions as between insured persons or organizations, but shall include coverage for liability assumed under this Lease as an “insured contract” for the performance of Lessee’s Indemnity obligations under this Lease. The limits of said insurance shall not, however, limit the liability of Lessee nor relieve Lessee of any obligation hereunder. Lessee shall provide an endorsement on its liability policy(ies) which provides that its insurance shall be primary to and not contributory with any similar insurance carried by Lessor, whose insurance shall be considered excess insurance only. Lessee shall add Lessor, Charles Dunn Real Estate Services, Inc. and their managers or agents as additional insured parties.

…

8.7 Indemnity. Except for Lessors gross negligence or willful misconduct, Lessee shall indemnify, protect, defend and hold harmless the Premises, Lesser and its agents, Lessor’s master or ground lessor, partners end Lenders, from and against any and all claims, loss of rents and/or damages, liens, judgments, penalties, attorneys’ and consultants’ fees, expenses and/or liabilities arising out of, involving, or in connection with, the use and/or occupancy of the Premises by Lessee. If any action or proceeding brought against Lessor by reason of any of the foregoing matters, Lessee shall upon notice defend the same at Lessee’s expense by counsel reasonably satisfactory to Lessor and Lessor shall cooperate with Lessee in such defense. Lessor need not have first paid any such claim in order to be defended or indemnified. The obligations set forth in this Paragraph 8.7 shall survive the expiration or termination of this Lease.

(CCF 8-12; Lease Agreement at §§ 1.2, 1.3, 1.10, 2.7, 2.8, 2.9, 6.1, 8.2, 8.7.)

Cross-Complainants state Trustee, through its insurer Travelers Property Casualty Company of America (“Travelers”), tendered letters to Perennial requesting indemnity and defense on March 13, 2018 and April 3, 2018. (CCF 13; Mot., Ex. C [3/13/18 Letter and 4/3/18 “2^nd Request” Letter].) To date, Jacqueline Bouche (Cross-Complainants’ counsel) states that she has not received any response to the tender letters from Perennial. (CFF 14; Bouche Decl., ¶5.) Cross-Complainants argue that to the extent the insurance policy procured by Perennial did not comply with the Lease Agreement and supported the denial of the tender, Perennial breached the Lease Agreement. (CCF 15.)

In opposition, Perennial argues that Plaintiff fell after exiting Perennial’s store while stepping down from the sidewalk into the parking lot, such that the allegedly dangerous condition was located on the “Common Area,” which was under the landlord’s exclusive control and not on Perennial’s leased premises. (Perennial Additional Material Fact [“PAMF”] 17-20; Notice of Lodgment of Digital Recording [2] .) Section 2.7 of the Lease Agreement defines “Common Area” to include parking lots, roadways, and walkways. (PAMF 24.) The Lease Agreement further states that that the Lessor (Trustee) has the exclusive control and management of the Common Areas and that the Lessor has the right in its sole discretion to make changes, temporarily use and close the Common Areas, designate boundaries, etc. (Id. at 25; Lease Agreement, §§ 2.9–2.10.) Section 7.1 states that Perennial was required to maintain in good order the premises that it leased, as well as the gas and electricity utility installations. (PAMF 26.) Kalaydjian testified in his deposition that he (as lessor) never appointed anyone else, including Perennial, to have control of the Common Areas other than Charles Dunn; tenants had no authority to make changes to Common Areas; and tenants did not own or have the right to control the sidewalk or parking lot. (Id. at 27-30; Kumar Decl., Ex. 2 [Kalaydjian Depo. at pp.123-126].)

In determining whether summary adjudication is proper, the Court considers all of the papers submitted to determine whether there are no triable issues of material fact. (CCP §437c(c).) Here, the Court does not find that Cross-Complainants have upheld their initial burden in showing that Plaintiff’s claims of injury fall within the scope of the indemnity and defense provision of the Lease Agreement. The underlying facts of the case are essentially not disputed. Cross-Complainants cite to Plaintiff’s complaint that his injury occurred due to the presence of a sudden step off and change in elevation. (CCF 5; Compl., ¶7.) The complaint more fully alleges that Plaintiff was injured “within a couple of steps of exiting” Perennial’s store due to a “sudden step off and change in elevation which was camouflaged and difficult to detect for patrons walking out of certain stores leading to the parking lot.” (Compl., ¶7.) Further, the video recording provided Perennial is not objected to by Cross-Complainants, which shows that Plaintiff fell where the sidewalk ends and the parking lot begins. Thus, the Court does not find there are any triable issues of material fact regarding the underlying facts of this case and how/where Plaintiff fell.

Taking the Lease Agreement’s provisions as a whole, the indemnity provision states that Perennial owes a duty to indemnify and defend Lessor and its agents for claims arising out of, involving, or in connection with the use and/or occupancy of the Premises by Perennial. (Lease Agreement, § 8.7.) The “Premises” is distinct from the “Common Areas” in the shopping complex as defined in the Lease Agreement—the “Premises” is defined as 11701, 11703, and 11705 Ventura Boulevard, while the “Common Areas” is defined as “all areas and facilities outside the Premises and within the exterior boundary line of the shopping Center.” (See id., §§ 1.2, 2.7.) Based on the terms of the Lease Agreement and where Plaintiff fell in the shopping center, the Court does not find that Cross-Complainants have upheld their initial burden in showing that Plaintiff’s claims occurred on the Premises as opposed to the Common Areas. Therefore, they have not shown that Perennial owes them a duty to indemnify and defend them in this action. (See Morlin Asset Management LP v. Murachanian (2016) 2 Cal.App.5th 184, 193.) [3] While the defense obligation applies before and regardless of an ultimate finding of liability, “where the plaintiff’s complaint alleges facts embraced by the indemnity agreement, the indemnitor has a duty to defend throughout the underlying tort action unless it can conclusively show by undisputed facts that plaintiff’s action is not covered by the agreement.” ( Centex Homes v. R-Help Construction Co., Inc. (2019) 32 Cal.App.5th 1230, 1237 [emphasis added].) The question of the duty to defend is not a question of fact for the jury, but is an issue of law for the court. (Id. at 1235-36.) As discussed above, evidence submitted shows that Plaintiff’s fall occurred in the Common Areas, and not on the Premises of Perennial’s store. Moreover, with regard to whether the duty to indemnify is appropriate, there are still questions regarding liability outstanding because the case is still at issue and there is no trial date; thus, the issue of whether indemnity is proper is premature at this time.

Lastly, in opposition, Perennial argues that Cross-Complainants actually rely on the wrong indemnity provision. Perennial cites to a July 20, 2017 Addendum between Kaladyjian (Trustee, Lessor) and Perennial (Lessee) stating that in the event of any conflict between the Addendum and the Lease Agreement, the Addendum controls. (Kumar Decl., Ex. 1 [Addendum at Bates Stamp TRU000154-155].) The Lessee Indemnification provision in the Addendum states:

55. Section 6.2(d) Lessee Indemnification

Lessee shall indemnify, defend, and hold harmless Lessor, its agents, employees, representatives, lenders and assigns, from and against any action brought by any City, State, or Federal agency or officer, or by any third party arising from, related to or in connection with, this Lease or Lessee’s use of the Premises. Lessee may select, with Lessor’s prior written consent, the attorney to handle the defense of any such claim. Lessee will pay all costs associated therewith. Lessee shall notify Lessor within seven (7) days in writing with a copy of any complaint, letter or adverse action by any City, State or Federal agency or officer, or by any third party against the Lessor arising from, related to or in connection with, this Lease or Lessee’s use of the Premises. Failure by Lessee to provide such written notice within seven (7) days of Lessee’s receipt of any such complaint or action will constitute a breach of this Lease. If there is any action taken against Lessee by any City, State or Federal agency or officer, or by any third party, Lessor or Lessee may elect to either: (a) terminate this Lease upon notification of any such action brought against Lessee, and Lessee shall immediately cease and desist any activities alleged in such action against Lessee as illegal or violating any laws, regulations or ordinances; or (b) subject to Lessor’s prior written consent, Lessee may appeal, at Lessee’s sole cost and expense, such determination and condition under the Lease pending an appellate review of the matter.

(Addendum to Lease Agreement at § 55; PAMF 35.) With respect this motion, the Court notes that irrespective of which provision applies, the Addendum’s indemnity provision is consistent with the language in the Lease Agreement, which provides that Perennial’s duty to indemnify and defend the lessor for claims arising from, related to, or in connection with the lease or Perennial’s use of the Premises (which is defined in the Lease Agreement).

For the reasons stated above, the motion for summary adjudication regarding Perennial’s alleged duty to indemnify and defend Cross-Complainants in this action is denied.

CONCLUSION AND ORDER

Trustee Kalaydjian and Charles Dunn’s motion for summary adjudication is denied.

Trustee and Charles Dunn shall provide notice of this order.