Energy Corp. v. American Pipe & Tubing, Inc.
Filed
3/25/13 Salinas Energy Corp. v. American
Pipe & Tubing, Inc. CA5
NOT
TO BE PUBLISHED IN THE OFFICIAL REPORTS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opinion has not been certified for publication or ordered published for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
FIFTH APPELLATE DISTRICT
SALINAS ENERGY CORPORATION,
Defendant,
Cross-Complainant and Appellant,
v.
AMERICAN PIPE & TUBING,
INC.,
Cross-Defendant
and Respondent.
F063636,
F064071
(Super.
Ct. No. CV-268189)
APPEALS
from a judgment and order of the Superior Court of
Sidney P. Chapin, Judge.
Murchison
& Cumming, Edward G. Farrell III, for Cross-Complainant and Appellant.
Acker &
Whipple, Jerri L. Johnson and Erin M. Lahey for Cross-Defendant and Respondent.
-ooOoo-
Plaintiffs
Darrell and Susan Wilson (collectively the Wilsons)
Energy Corporation (Salinas) for injuries Darrell Wilson sustained while
attempting to repair a positive displacement pump on an oil lease Salinas
owned. Salinas filed a cross-complaint
against cross-defendant American Pipe & Tubing, Inc. (APT) for comparative
judgment motion on the cross-complaint.
APT thereafter filed a motion for attorney fees under Code of Civil
Procedure section 1038,
name="_ftnref3" title="">[3] which the trial court granted. Salinas separately appealed from the judgment
entered after the summary judgment motion was granted, and the amended judgment
entered after the attorney fees motion was granted; at the parties’ request, we
consolidated the two appeals.
On appeal,
Salinas argues (1) there are triable issues of material fact that prevent the
grant of summary judgment, and (2) the
post judgment order awarding attorney fees must be reversed because the motion
was untimely and Salinas had reasonable cause to bring and maintain the
cross-complaint against APT. As we shall
explain, we affirm the judgment but reverse a portion of the attorney fees
order.
FACTUAL AND PROCEDURAL BACKGROUND
Salinas has
an oil lease in San Ardo, California, on which are two water disposal wells,
#7-27 and #16-27, each powered by a centrifugal or “jockey†pump that pushes
the water into the ground. In September
2008, when one of the pumps malfunctioned, Salinas looked for a positive
displacement pump, which pumps groundwater back into the ground via the water
disposal well, to replace it until the faulty jockey pump could be repaired.
Salinas
contacted APT, a small company that buys and sells used oil field equipment,
for help finding a pump to lease. APT
was able to locate a pump, which Salinas agreed to lease from APT and ACES
Enterprises, Inc. (ACES). According to
Salinas, the pump was “sold†as part of a package that, in addition to the pump
itself, included an electric motor and a “skid†or base. No piping or tubing, however, arrived with
the pump, and there were no valves or pipes attached to it. APT was not asked to install the pump or to
supply any apparatus, including a pressure relief device. APT did not know or control how Salinas would
install the pump, and was not responsible for installing it.
Salinas
hired Pacific Trucking, a Paso Robles construction company, to install the pump
on well #7-27 on September 30 and October 1, 2008. Installing a positive displacement pump
involves connecting the pump to the wellhead with the necessary piping, tubing
and valves as the owner or pump installer sees fit. Positive displacement pump systems generally
have a pressure relief device, a safety valve that prevents the pump system
from over-pressurizing by relieving the pressure at a set point, and which is
necessary to assure safe and efficient functioning. During this installation, Salinas’s senior
operator Bren Randolph noted a pressure relief device was not installed on the
pump system and recognized its absence was a safety concern.
In
mid-November 2008, Pacific Trucking, under the supervision of Salinas’s
supervisor Frankie Strange, disconnected the pump from well #7-27 and installed
it on well #16-27, although Salinas never operated the pump on that well. About one month later, Salinas instructed
Pacific Trucking to remove the pump from well #16-27, and took the pump off the
lease.
On June 17,
2009, Salinas brought the pump back to the lease and instructed Pacific
Trucking to install it on well #7-27. On
June 23, Salinas’s operations manager Jon Harding met with Keith Morris of ACES
and Steve Brown of APT to discuss a vibration problem with the pump. After this meeting, Morris contacted Darrell,
an experienced pump mechanic, who agreed to repair the pump. Morris hired him as an independent
contractor.
On the
morning of June 26, 2009, Darrell arrived at the Salinas lease, turned on the
pump and observed the vibration issue.
He took readings on both disposal wells, changed the valves in the pump
and then tested the pump to see if it was running correctly. Later that afternoon, Salinas’s production
foreman Jerry Burwick saw Darrell receive a call on his cell phone, which
Burwick believed was from Morris. When
Darrell finished the call, he told Burwick the person on the phone suggested
closing, or partially closing, the master valve to put “back pressure†on the
pump to test it further. Burwick saw
Darrell partially close the master valve on the wellhead and then have a second
conversation on his cell phone. Darrell
told Burwick that Morris instructed him to partially close the master valve and
chain it in place while simultaneously increasing the back pressure on the
pump. Burwick told Darrell that such a
procedure would be unsafe because the system might explode if the back pressure
increased with the master valve partially closed.
At
Darrell’s request, Burwick drove over to well #16-27, about 150 yards away, and
shut down the charge pump powering that well to see if that made any difference
to well #7-27. As he was driving back,
Burwick heard a loud explosion and saw Darrell fall to the ground; Darrell had
been seriously injured by a ball valve that had flown off the wellhead and
struck him in the abdomen.
In mid-July
2009, Salinas hired safety consultant Terri Judkins to investigate the
incident, determine the cause and prepare a report of her findings (the Judkins
report). Judkins found the incident was
partly due to Salinas’s failure to abide by its safety policies, particularly
the “stop work†policy that requires any person on the lease who witnesses an
unsafe practice to stop lease operations.
Judkins also attributed the incident to a failure to install a pressure
relief device on the discharge side of the pump system. Greg Wagner, Salinas’s resident manager/vice
president, sent the report to Salinas’s headquarters in Perth, Australia.
The Pleadings
On August 24, 2009, Darrell and his
wife, Susan, filed a complaint to recover damages for Darrell’s injuries and
Susan’s loss of consortium, naming Salinas as the sole defendant. The complaint contained four causes of
action: (1) negligence, (2) negligence
per se, (3) strict products liability, and (4) negligent design, manufacture
and assembly. In the first cause of
action for negligence, the Wilsons alleged that Salinas negligently created and
concealed a dangerous condition on its premises, and failed to warn persons
working on the jobsite “that the wellhead, pump(s), pipeline and piping were
not equipped with pressure gauges and/or pressure relief valves and/or properly
maintained, calibrated and set pressure gauges and/or pressure relief
valves.†The second cause of action for
negligence per se was based on Salinas’s negligent failure to “employ, install,
maintain, calibrate and set pressure gauges and/or pressure relief devices and
valves on the wellhead, pump(s)[,] pipeline and piping[,]†in violation of
California Code of Regulations, title 8, section 6634. The third cause of action for strict products
liability alleged Salinas designed, manufactured, assembled, supplied and sold
defective oilfield products, including oilfield wellheads, pumps, pipelines,
piping, valves and other products intended for use by the general public,
without inspecting for defects. Finally,
the fourth cause of action for negligent design alleged that Salinas
negligently designed, manufactured and assembled oilfield wellheads, pumps,
pipelines, piping and valves, which were not equipped with pressure gauges or
pressure relief devices.
On November
5, 2009, Salinas filed its answer to the complaint, as well as a
cross-complaint containing three causes of action, which named as
cross-defendants APT, ACES, IEQ Industries and Keith Morris. The first cause of action, for full equitable
indemnity, was asserted only against IEQ Industries. The second and third causes of action, for
comparative equitable indemnity and declaratory relief, were asserted against
all defendants. In the comparative
equitable indemnity claim, Salinas alleged that if the Wilsons obtained
judgment against Salinas, its liability must be reduced to the extent its
proportionate degree of culpability bears to the total fault of the
cross-defendants. In the declaratory
relief claim, Salinas requested a determination of its right to receive a
reduction, offset, apportionment, contribution or indemnification from the
cross-defendants. On March 18, 2010, APT
filed its answer to the cross-complaint.
In January
2011, Salinas brought a motion for summary judgment or, in the alternative,
summary adjudication on the complaint. A
hearing on the motion was held on April 7, 2011, and the trial court’s minute
order filed on April 12, 2011. The
trial court denied summary adjudication as to the first and second causes of
action for negligence and negligence per se, but granted summary adjudication
on the third and fourth causes of action for strict products liability and
negligent design. The trial court found
that California Code of Regulations, title 8, section 6634, imposed a
non-delegable duty on operators of positive displacement pumps to equip them
with a pressure relief device, and it was uncontroverted that the pump at
issue, which Salinas owned and operated, was not so equipped, thereby raising a
triable issue of fact as to whether Salinas affirmatively contributed to
Darrell’s injuries. The trial court also
found a triable issue of fact regarding Salinas’s direct participation based on
Burwick’s retained control. The trial
court noted the Wilsons had conceded the motion directed to the third and
fourth causes of action, as they did not dispute any of the facts in Salinas’s
separate statement.
On April
22, 2011, APT filed a motion for summary judgment on the cross-complaint. APT asserted it was not legally obligated to
indemnify Salinas for the Wilsons’ claims in the complaint because it could not
be liable for (1) negligence, as Darrell and Salinas were both
sophisticated users of the pump, and operating the pump without a pressure
relief device was an obvious danger, and (2) negligence per se, as APT had
no duty under California Code of Regulations, title 8, section 6634, to employ,
install, maintain, calibrate or set the pressure relief valve, and the trial
court previously found Salinas had a non-delegable duty under this regulation
to equip the pump system with a pressure relief valve. APT also contended it did not negligently
create or conceal a dangerous condition on Salinas’s premises, as it did not
have control over Salinas’s lease or the pump once Salinas took possession of
the pump. Finally, APT asserted that
Salinas’s own internal investigation report by Judkins, which was only
discovered when Wagner was deposed on March 25, 2011, did not attribute any
fault to APT arising from the incident and, despite this, Salinas
cross-complained against APT.
In its
opposition, Salinas argued that the issue of installation was irrelevant and a
“red herring[,]†as “the pertinent issue [was] APT’s liability as a seller, not
as an installer.†Salinas asserted APT
had a duty, as the seller of the pump, to warn Salinas that a pressure relief
device was necessary for the pump’s safe operation. In support, Salinas offered the expert
declaration of Edward J. McKenna, Jr., the president of a corporation engaged
in the business of selling process equipment for handling air, gas, liquids and
dry bulk solids, in which he stated that (1) the pump required “some sort
of pressure protection†which may be a relief valve mounted directly on the
pump, an inline pressure relief valve, a torque limiting device, a rupture disk
or other device; (2) the standard of care in the industry requires the
seller to warn or at least discuss with the customer the need for a pressure
relief device, regardless of the customer’s sophistication; (3) the warning
could be given by way of a technical service manual or an operations and
maintenance manual from the manufacturer; and (4) APT did not provide any such
warnings in connection with the sale of the pump. Salinas argued McKenna’s declaration
established APT’s fault and precluded summary judgment. Salinas also argued the motion should be
denied because APT’s obvious danger and sophisticated user defenses were
“riddled with disputed facts.â€
In its
reply brief, APT argued it did not have a duty to warn Salinas about the need
for a pressure relief valve or, alternatively, there was no causal relationship
between the failure to warn and Wilson’s injury, because Salinas already had
actual and constructive notice that a pressure relief valve was necessary. APT contended Salinas was judicially estopped
from asserting strict products liability as a basis for indemnity because
Salinas successfully argued in its own motion for summary judgment that the
strict products liability cause of action failed as a matter of law in part
because the Wilsons could not present evidence that the pump was defective.
After oral
argument, the trial court took the matter under submission. On July 15, 2011, it issued a minute order
granting the motion. The trial court
noted that APT’s motion was on all of the claims asserted against it in the
cross-complaint, namely comparative equitable indemnity and declaratory relief,
and the only claims that remained in the complaint were negligence and
negligence per se. Noting that the
“obvious danger†and “sophisticated user†defenses asserted in APT’s motion
must be pled as affirmative defenses in APT’s answer, and that APT failed to
plead them, the trial court denied APT’s motion for summary adjudication as to
the second and third causes of action in the cross-complaint with respect to
the complaint’s negligence claim on these theories.
The trial
court found, however, that APT had met its burden of showing that Salinas could
not satisfy an element of the negligence cause of action, namely that APT had a
duty to install the pressure relief valve or warn of its absence, and Salinas
failed to raise a triable issue of fact on this issue. The trial court explained that the
complaint’s first cause of action alleged that Salinas did not install a
pressure relief valve on the well and did not warn Darrell of its absence,
therefore, through the cross-complaint and Salinas’s answer to the complaint,
Salinas sought comparative indemnity from APT for its failure to install the
valve and to warn Darrell of the valve’s absence, rather than for APT’s alleged
failures against Salinas. The trial
court found APT had shown Salinas could not meet an element of the first cause
of action – that APT owed Darrell any duty – because APT was not responsible
for installing a pressure relief valve and did not install the pump. The trial court further found that Salinas
failed to raise a triable issue of material fact regarding APT’s duty, as it
was undisputed the pump was not sold with a pressure relief device and Salinas
did not present any evidence that the pump should have come with a pressure
relief device. While Salinas asserted
such a device could be installed on the pump, that was irrelevant to the issue
of whether APT had a duty to install it or warn Darrell of its absence. The trial court acknowledged Salinas offered
additional facts through McKenna’s declaration that APT had a duty to warn
Salinas, however it found this evidence irrelevant to whether APT owed Darrell
a duty to install, or warn about the absence of, a pressure relief device.
The trial court rejected Salinas’s
argument that APT had a duty to warn Salinas that a device was needed on the
pump since (1) that issue was not alleged in the cross-complaint or the
complaint, (2) the complaint only concerned the existence of a pressure relief
valve on the well and the failure to warn of its absence, and (3) Salinas
failed to show how APT’s failure to warn Salinas caused or contributed to the
incident, since it was Salinas’s duty,
under California Code of Regulations, title 8, section 6634, to install the
device even if APT failed to provide a warning.
With respect to the complaint’s
negligence per se claim, the trial court found Salinas did not dispute that APT
was not the operator of the positive displacement pump and Salinas offered no
facts or argument with regard to this claim.
Accordingly, the trial court found there was no triable issue of fact on
the second and third causes of action in the cross-complaint with respect to
the complaint’s second cause of action for negligence per se.
APT
prepared a written order granting the motion, which the trial court signed and
filed on July 28, 2011. Judgment in
APT’s favor was entered that same day, which awarded costs to APT.
On August
12, 2011, APT filed a motion for attorney fees under section 1038, on the
grounds that Salinas brought and maintained its cross-complaint against APT
without reasonable cause and without a good faith belief there was a justifiable
controversy under the facts and law. APT
sought to recover a total of $172,791.29, comprised of $139,150.30 in attorney
fees and $33,640.99 in expert witness fees.
APT asserted its motion was timely under section 1038 and California
Rule of Court, rule 3.1702(1).
On the merits, APT argued that
Salinas did not bring or maintain its cross-complaint against APT in good faith
as it knew from the Judkins report that a pressure relief device was not
installed on the pump system; according to the trial court’s April 12, 2011
ruling on Salinas’s summary judgment motion, Salinas had a non-delegable duty
to install the pressure relief device; and there was no indication APT played
any part in the incident or had an affirmative duty to install the device, as the
Judkins report did not attribute any blame to APT. APT further asserted that Salinas’s bad faith
was shown by its failure to produce the Judkins report during discovery despite
numerous requests for all incident reports; APT first learned about the report’s
existence on March 25, 2011, during Wagner’s deposition.
APT asserted Salinas did not have
reasonable cause to bring or maintain the cross-complaint because Darrell was
injured due to the lack of a pressure relief device, and the facts and
testimony by Salinas’s employees overwhelmingly showed it was Salinas’s failure
to install the device that directly caused the incident. APT attached deposition testimony of
Salinas’s employee Randolph and Pacific Trucking owner Gary Ritchie. Randolph testified he did not know if Burwick
understood the importance of having a safety device on the pump system; before
the pump was installed he recommended to Burwick that a pressure safety valve
also be installed; Burwick did not think one was needed because the well was a
low pressure well; and Randolph also told Harding his recommendation and
Burwick’s response, adding that if something should fail, there was no
protection and something would “blow up†or break. Ritchie testified that when Harding asked him
if a pressure relief valve was needed, Ritchie responded it would not be a bad
idea, and Harding said he was wondering because Randolph had mentioned it to
him. Ritchie also testified he looked in
the parts room to see if there was a pressure relief valve, but he could not
find one, and he told Harding they did not have a valve.
Salinas opposed the motion, arguing
the cross-complaint was brought and maintained in good faith and with
reasonable cause as it raised legitimate legal issues. Salinas asserted it filed the cross-complaint
for equitable indemnity against APT because APT, as the pump’s seller, was in
the chain of distribution, thereby making APT potentially liable for the
Wilsons’ injuries under theories of negligence or strict products liability. Salinas argued the Judkins report did not
establish bad faith because it did not state that it was Salinas’s legal
responsibility to install a pressure relief device, which was a legal
determination not made until the trial court ruled on Salinas’s summary judgment
motion on April 12, 2011. Salinas
further argued it thereafter maintained the cross-complaint in good faith and
with reasonable cause because, even if APT did not have a duty to install the
pressure relief valve, it arguably owed the Wilsons a duty to warn about the
need for a pressure relief device, yet failed to so warn. Salinas asserted that entry of judgment in
its favor on the Wilsons’ products liability and negligent design claims did
not render maintenance of the action on the cross-complaint unreasonable, as
these causes of action were dismissed on narrow grounds inapplicable to
APT. With respect to the amount of fees
APT requested, Salinas contended they were unreasonable as patently excessive
and unnecessary to the conduct of the litigation.
In support of its opposition,
Salinas attached a copy of its notice of motion and memorandum of points and
authorities on its motion for summary
judgment, which show that Salinas brought the motion on the Wilsons’ claims
for products liability and negligent design on the grounds that (1) Salinas was
not engaged in the business of designing, manufacturing and assembling the
pump, wellhead, piping system and valves at issue, (2) Salinas did not place
those items into the stream of commerce for use by a consumer and, in any
event, Darrell was not a consumer, and (3) the Wilsons could not show the
products were defective, as the absence of a pressure relief device did not
render the pump, wellhead or piping system defective.
In reply, APT argued Salinas knew
when it filed the cross-complaint that owners and operators of positive
displacement pumps were required to install pressure relief devices, as
Randolph admitted having such knowledge, the regulation had been in existence
since its enactment in 1959, and from the Judkins report, Salinas knew the
absence of a pressure relief device caused or contributed to the incident. APT further argued Salinas did not maintain
the cross-complaint in good faith and with reasonable cause as the evidence
adduced during discovery all pointed to Salinas as the party responsible for
installing pressure relief devices on its pump systems, and no evidence emerged
to suggest wrongdoing by APT that could support a negligence claim or that the
pump was defective to support a products liability claim.
Finally, APT asserted that, at a
minimum, Salinas should have dismissed its cross-complaint against APT
immediately upon the court’s April 12, 2011 ruling dismissing the complaint’s
strict liability and negligent design claims, as Salinas thereafter could not
reasonably believe the strict products liability claim survived against APT and
Salinas did not bring a separate cause of action for strict products liability. APT pointed out that it had asked Salinas
twice to dismiss it from the cross-complaint in exchange for a waiver of costs;
first on April 12, 2011, after it received the Judkins report, and second on
April 19, 2011, based on the summary judgment ruling.
At the hearing on the motion, the
trial court began by announcing its tentative decision to grant the motion from
July 24, 2009, the date of the Judkins report, “finding lack of reasonable
basis upon which to bring the cross complaint.â€
The court explained that the state of the information known to Salinas
was that responsible individuals within Salinas’s operations considered whether
to install a pressure relief valve and decided against it, the pump was the
only product APT provided and it was not responsible for providing the pressure
relief valve, Salinas had a non-delegable duty to install the pressure relief
valve according to the regulation, and the state of information at the time was
that there was no pressure relief valve which was a system, not a pump, item. The court asked the parties to focus comments
on the issue, “in terms of the subjective state of mind,†when it became
unreasonable to maintain the action, considering Randolph’s deposition in
February 2011 and the April 2011 decision on the summary judgment motion.
Salinas’s attorney asserted that
Salinas’s theory of APT’s liability in the case was that, as the seller of the
pump, APT owed a duty to the plaintiffs to warn Salinas, the purchaser of the
pump, that the pump was dangerous and should be equipped with a pressure relief
device. Salinas’s attorney argued
Salinas did not sue APT for an improper purpose; its theory was supported by
the law and expert testimony.
The court asked APT’s attorney
whether the unreasonable cause began at the inception of the case or later. APT’s attorney responded it was at inception,
since Salinas had a duty to perform a cursory investigation and review the
Judkins report, and had it done so it would have found that the pressure relief
device goes on the system, not the pump, and the incident happened because of
the lack of a pressure relief device.
Following oral argument, the trial court took the matter under
submission.
On August
15, 2011, APT filed a memorandum of costs.
On September 1, 2011, Salinas filed a motion to tax costs, which APT
opposed. Oral argument on the motion was
held on October 4, 2011, after which the court took the matter under
submission.
On November 3, 2011, the trial
court issued a minute order granting APT’s motion for attorney fees and denying
Salinas’s motion to tax costs, both without explanation. An amended judgment was filed, which awarded
APT costs of $66,891.51 and attorney fees of $139,150.30. Salinas timely appealed from the original
judgment and the orders granting the motion for attorney fees and denying the
motion to tax costs.
Motion for Summary
Judgment
We review
an order granting summary judgment de novo.
(Aguilar v. Atlantic Richfield Co.
(2001) 25 Cal.4th 826, 860 (Aguilar).) We independently review the record and apply
the same rules and standards as the trial court. (Zavala
v. Arce (1997) 58 Cal.App.4th 915, 925.)
The trial court must grant the motion if “all the papers submitted show
that there is no triable issue as to any material fact and that the moving
party is entitled to a judgment as a matter of law.†(§ 437c, subd. (c).) “There is a triable issue of material fact
if, and only if, the evidence would allow a reasonable trier of fact to find
the underlying fact in favor of the party opposing the motion in accordance
with the applicable standard of proof.â€
(Aguilar, supra, 25 Cal.4th at p. 850.)
We view the facts in the light most favorable to the nonmoving party and
assume that, for purposes of our analysis, its version of all disputed facts is
correct. (Sheffield v. Los Angeles County Dept. of Social Services (2003) 109
Cal.App.4th 153, 159.) A moving
defendant can establish its entitlement to summary judgment by either (1)
demonstrating that an essential element of the plaintiff’s case cannot be
established, or (2) establishing a complete defense. (§ 437c, subd. (o).)
Salinas contends the trial court
erroneously granted APT’s motion for summary judgment on the cross-complaint’s
second cause of action for equitable indemnity premised on the Wilsons’
negligence claim. Significantly, Salinas
does not challenge the trial court’s granting of summary adjudication on the
claim of negligence per se; neither does it challenge the trial court’s finding
that APT did not owe Darrell a duty to install the pump or directly warn him of
its absence. Instead, Salinas repeats
virtually verbatim the argument it made below, namely that its claim for
equitable indemnity survives because McKenna’s declaration creates a triable
issue of fact on whether APT breached its duty as the pump’s seller to warn
Salinas that a pressure relief device was needed.
“[T]he doctrine of comparative equitable indemnity is designed to do
equity among defendants. Under the
equitable indemnity doctrine, defendants are entitled to seek apportionment of
loss between the wrongdoers in proportion to their relative culpability so
there will be ‘equitable sharing of loss between multiple tortfeasors.’â€
(GEM Developers v. Hallcraft Homes of San Diego, Inc. (1989) 213
Cal.App.3d 419, 426 (GEM Developers).) A condition of equitable indemnity is that
“there must be some basis for tort liability against the proposed indemnitor,â€
usually involving breach of a duty owed to the underlying plaintiff. (BFGC Architects Planners, Inc. v.
Forcum/Mackey Construction, Inc. (2004) 119 Cal.App.4th 848, 852.) The doctrine applies only among defendants
who are jointly and severally liable to the plaintiff. (Ibid.)
To state a cause of action for indemnity, the indemnitee, here Salinas,
must plead that the indemnitor, here APT, is jointly at fault for plaintiff’s
injury and the indemnitee (Salinas) has or will incur damages for which the
indemnitor (APT) is responsible. (
Ahmanson Developments, Inc. (2001) 86 Cal.App.4th 1135, 1139.) Since an indemnity action is premised upon a
joint legal obligation to another for damages, the “indemnitor may invoke any
substantive defense to liability that is available against the injured partyâ€
as against the indemnitee. (
45 Cal.App.4th 1780, 1787 (Children’s
Hospital).) The right to indemnity
does not depend on the indemnitor having been named by the plaintiff. (GEM
Developers, supra, 213 Cal.App.3d
at p. 428.) Nor does that right depend
on the facts pled in the underlying complaint, as an action for indemnity may
“seek apportionment of the loss on any theory that was available to the
plaintiff upon which the plaintiff would have been successful.†(Id.
at p. 430.)
By its cross-complaint, Salinas sought equitable indemnity from APT
based on the complaint’s allegations. At
the time of APT’s summary judgment motion, those allegations included only
negligence to the Wilsons for failing to install a pressure relief valve on the
pump system and failing to warn Darrell of the valve’s absence. That Salinas was seeking comparative fault
against APT only for the negligence alleged in the complaint is confirmed by
Salinas’s answer in which it asserted as an affirmative defense that “third
parties were careless and negligent in and about the matters alleged in the
complaint.†Salinas did not seek to
recover for third party negligence toward itself.
Salinas contends that APT is jointly and severally liable to the
Wilsons because APT did not warn Salinas of the danger of using the pump
without a pressure relief valve. This
contention assumes APT owed a duty to the Wilsons to give such a warning to
Salinas. The authority Salinas cites to
support this contention is Pike v. Frank
G. Hough Co. (1970) 2 Cal.3d 465 (Pike),
which concerned the negligent design of a manufacturer’s total product. In Pike,
our Supreme Court held that a manufacturer has a duty to install safety devices
to protect against even an obvious danger and there can be strict liability in
tort for unreasonably dangerous design, including products that are
unreasonably dangerous because they are designed without necessary safety
devices and those that are supplied without a suitable warning. (Pike,
supra, at pp. 473-474, 476-477.) From this, Salinas asserts the Wilsons could
have brought an action against APT for failing to warn Salinas of the need for
a pressure relief device.
Salinas, however, never alleged this theory of liability in its
cross-complaint. Moreover, since
judgment had been granted in Salinas’s favor on the complaint’s products
liability causes of action, no such theory remained in the complaint. It is the cross-complaint’s allegations that
delimit the scope of the issues on summary judgment. (Couch
v. San Juan Unified School Dist. (1995) 33 Cal.App.4th 1491, 1499.) The reviewing court need not address theories
that were not raised in the pleadings. (
(1999) 72 Cal.App.4th 722, 738), and a plaintiff may not defeat a summary
judgment motion by producing evidence to support claims outside the issues
framed by the pleadings. (
Court (1992) 8 Cal.App.4th 633, 639.)
As Salinas never pled it was entitled to equitable indemnity because APT
owed a duty to the Wilsons to warn Salinas of the need for a pressure relief
device, it could not avoid summary judgment be claiming this theory was
available to it.
In addition, Salinas ignores the fact that the Wilsons did bring such a
claim when they sued Salinas for strict products liability and negligent
design. Judgment in favor of Salinas was
entered on these causes of action in part because Salinas asserted there was no
evidence the pump was defective. To now
assert that the Wilsons could have claimed that the pump was defective flies in
the face of Salinas’s prior position that the pump was not defective. (See, e.g., Phillips v. Sprint PCS (2012) 209 Cal.App.4th 758, 767 [“a party
may be judicially estopped ‘“‘from asserting a position in a legal proceeding
that is contrary to a position previously taken in the same or some earlier
proceeding.’â€â€™â€].)
In any event, in rejecting Salinas’s argument on this point, the trial
court also found there was no evidence that APT’s failure to warn Salinas
caused or contributed to the incident, as Salinas had a non-delegable duty to
install the device. (See
(2010) 188 Cal.App.4th 1586, 1604 [to be liable under a strict liability theory
based on failure to warn, the plaintiff must prove the defendant’s failure to
warn was a substantial factor in causing his or her injury; there is no
liability if the injury would have occurred even if adequate warnings had been
given].) Salinas makes no argument in
its appellate briefs pertaining to this reason for dismissing this claim. Accordingly, even if we assume APT owed a
duty to the Wilsons to warn Salinas about the need for a pressure relief
device, we would nonetheless be compelled to affirm the order granting summary
judgment. “‘A judgment or order of the
lower court is presumed correct. All intendments and presumptions are
indulged to support it on matters as to which the record is silent, and error
must be affirmatively shown. This is not
only a general principle of appellate practice but an ingredient of the
constitutional doctrine of reversible error.’†(Denham v. Superior Court
(1970) 2 Cal.3d 557, 564.)
Here, Salinas failed to address how the trial court erred in concluding
legal grounds separate from the issue of the duty to warn Salinas supported
summary judgment. “When a point is
asserted without argument and authority for the proposition, ‘it is deemed to
be without foundation and requires no discussion by the reviewing court.’ (Atchley
v. City of Fresno [(1984)] 151 Cal.App.3d [635,] 647; accord, Berger v.
Godden [(1985)] 163 Cal.App.3d [1113,] 1117 [‘failure of appellant to
advance any pertinent or intelligible legal argument ... constitute[s] an
abandonment of the [claim of error’].)â€
(In re S.C. (2006) 138 Cal.App.4th 396, 408.) Salinas also argues there are triable issues
of fact regarding the obvious danger and sophisticated user defenses APT raised
in its summary judgment motion. We do
not address this issue, however, because the trial court denied the motion on
those grounds.
In sum, Salinas has failed to show
the trial court erred in granting the summary judgment motion.
Motion for Attorney Fees
The trial
court awarded APT its attorney and expert witness fees for this case pursuant
to section 1038. Salinas contends the
order must be reversed because the motion for the award was untimely made, in
violation of the statute. Salinas also
contends that the trial court erred in awarding the fees because it brought and
maintained its cross-complaint against APT in good faith and with reasonable
cause.
Section
1038, subdivision (a) provides, in pertinent part, that in any proceeding for
express or implied indemnity in a civil action, “the court, upon motion of the
defendant or cross-defendant, shall, at the time of the granting of any summary
judgment, . . . dismissing the moving party other than the . . .
cross-complainant . . . or at a later time set forth by rule of the Judicial
Council adopted under Section 1034, determine whether or not the . . .
cross-complainant . . . brought the proceeding with reasonable cause and in the
good faith belief that there was a justifiable controversy under the facts and
law which warranted the filing of the . . . cross-complaint . . . . If the court should determine that the
proceeding was not brought in good faith and with reasonable cause, an
additional issue shall be decided as to the defense costs reasonably and
necessarily incurred by the party . . . opposing the proceeding, and the court
shall render judgment in favor of that party in the amount of all reasonable
and necessary defense costs, in addition to those costs normally awarded to the
prevailing party. An award of defense
costs under this section shall not be made except on notice contained in a
party’s papers and an opportunity to be heard.â€
Section 1038, subdivision (b)
defines “‘defense costs’†to include attorney fees and expert witness fees
“where reasonably and necessarily incurred in defending the proceeding.†Section 1038, subdivision (c) provides that
the section is applicable “only on motion made prior to the discharge of the
jury or entry of judgment, and any party requesting the relief pursuant to this
section waives any right to seek damages for malicious prosecution. Failure to make the motion shall not be
deemed a waiver of the right to pursue a malicious prosecution action.â€
We begin with the timeliness
issue. Here, the order granting summary
judgment was issued on July 15, 2011; judgment was entered on July 28, 2011;
and the motion for attorney fees filed on August 12, 2011. Although APT raised the issue of timeliness
in its moving papers below by arguing the motion was timely, Salinas did not
challenge the timeliness of the motion in the trial court and instead addressed
only the motion’s merits. Salinas raises
this issue for the first time on appeal.
APT contends that by failing to object, Salinas has forfeited its right
to argue the motion’s timeliness on appeal.
We agree.
“‘An appellate court will not
consider procedural defects or erroneous rulings where an objection could have
been, but was not, raised in the court below.’â€
(Children’s Hospital and Medical
Center v. Bonta (2002) 97 Cal.App.4th 740, 776.) Salinas, however, contends we must consider
this issue because the time limits set forth in section 1038 are both mandatory
and jurisdictional. Section 1038
certainly expresses a mandatory time within which the motion must be filed, as
it provides that the section “shall be applicable only on motion made prior to
the discharge of the jury or entry of judgment.†(§ 1038, subd. (c).) One appellate court has construed this
section to mean that a motion for costs should be filed at the earliest
practical time before discharge of the jury or entry of judgment. (Gamble
v. Los Angeles Dept. of Water and Power (2002) 97 Cal.App.4th 253, 259 (
That the time for filing the motion
is mandatory, however, does not mean that the trial court loses jurisdiction to
consider an untimely motion. Salinas
does not cite any authority that supports its assertion that the trial court
here lacked jurisdiction to hear the motion.
While the court in Gamble addressed
the issue of when a motion to recover defense costs under section 1038 must be
made, it did not address whether the trial court loses jurisdiction to decide
an untimely motion and nothing in the language of section 1038 suggests a trial
court loses jurisdiction in such a situation.
Comparing section 1038 to the
filing of a memorandum of costs,
Salinas points out that the time provisions relating to the filing of a
memorandum of costs are mandatory, though not jurisdictional. (Hydratec,
Inc. v. Sun Valley 260 Orchard & Vineyard Co. (1990) 223 Cal.App.3d
924, 929.) Salinas assumes that means
that a party may not forfeit a timeliness issue with respect to a cost
memorandum. Salinas is wrong. Since the time provisions relating to the
filing of a memorandum of costs are not jurisdictional, there is no
jurisdictional defect in the trial court’s award of costs on an untimely memorandum. (See Gunlock
Corp. v. Walk on Water, Inc. (1993) 15 Cal.App.4th 1301, 1304 [noting that
because time limitation is not jurisdictional, a trial court has broad
discretion in allowing relief from a late filed memorandum of costs where there
is an absence of a showing of prejudice to the opposing party]; see also Douglas v. Willis (1994) 27 Cal.App.4th 287, 289 [the failure
to file a motion to tax costs constitutes a waiver of the right to object]; Santos
v. Civil Service Bd. (1987) 193 Cal.App.3d 1442, 1447 [“it was Santos’s
obligation to file a motion to tax costs in the instant action. The city did not have an obligation to file a
motion before it sent its cost bill to Santos.
Santos’s failure to file a motion to tax costs constitutes a waiver of
the right to object.â€].)
Thus, where a memorandum of costs is untimely filed, it is incumbent on
the opposing party to file a motion to tax costs raising such an objection,
otherwise the objection is forfeited. Applying
that logic here, the trial court did not lose jurisdiction to decide the
section 1038 motion merely because it was untimely. Instead, it was Salinas’s duty to object on
that basis. By failing to do so, Salinas
forfeits any challenge to the untimeliness of the motion on appeal. We recognize we have discretion to consider
issues of law as applied to undisputed facts, even if not raised in the trial
court. (Waller v. Truck Ins. Exchange, Inc. (1995) 11 Cal.4th 1, 24.) We decline to do so here, however, where APT
presented the issue below and Salinas failed to challenge it. (See Resolution
Trust Corp. v. Winslow (1992) 9 Cal.App.4th 1799, 1810 [whether to consider
an issue raised for first time on appeal “‘is largely a question of the
appellate court’s discretion’â€].)
Turning to the merits, under section 1038, “defendants may recover
defense costs . . . if the trial court finds the plaintiffs
lacked either reasonable cause or good faith in filing and maintaining
the lawsuit.†(Kobzoff v. Los Angeles
County Harbor/UCLA Medical Center (1998)
19 Cal.4th 851, 853 (Kobzoff).) In other words, “before denying a section
1038 motion, a court must find the plaintiff brought or maintained an action in
the good faith belief in the action’s justifiability and with objective
reasonable cause.†(Kobzoff, supra,
19 Cal.4th at p. 862, italics added.)
“The ‘good faith’ and ‘reasonable cause’ requirements pertain not only
to the action’s initiation, but also its continued maintenance.†(Id.
at p. 853, fn. 1.) Put another way,
“[s]ection 1038 applies not only to initiation of the action but also to steps
to pursue it after it has been filed.†(
Cal.App.4th 918, 931, disapproved on another ground by Reid v. Google, Inc. (2010) 50 Cal.4th 512, 532, fn. 7.)
“‘Good faith, or its absence, involves a factual inquiry into
the plaintiff’s subjective state of mind [citations] . . . . [T]he question on
appeal [is] whether the evidence of record was sufficient to sustain the trial
court’s finding. [¶] Reasonable cause is to be determined
objectively, as a matter of law, on the basis of the facts known to the
plaintiff when he or she filed or maintained the action. Once what the plaintiff (or his or her
attorney) knew has been determined, or found to be undisputed, it is for the court
to decide “‘whether any reasonable attorney would have thought the claim
tenable. . . .’†[Citations.] . . . [R]easonable cause is
subject to de novo review on appeal.’†(Clark
v. Optical Coating Laboratory, Inc. (2008) 165 Cal.App.4th 150, 183.) A cross-defendant may not recover section
1038 costs simply because it won a summary judgment motion; “victory does not
per se indicate lack of reasonable cause.â€
(Kobzoff, supra, 19 Cal.4th at p. 856.)
Here, the record is not clear as to the basis for the trial court’s
granting of the motion, as it did not issue a written explanation of its
ruling. It appears from the court’s
tentative ruling at oral argument on the motion, however, that it was
considering only whether there was reasonable cause to bring and maintain the
cross-complaint. In any event, as we
shall explain, we conclude that Salinas had objective reasonable cause to bring
the cross-complaint against APT, and there is no evidence Salinas did not do so
in good faith. Once summary adjudication
was granted to Salinas on the products liability claims, however, Salinas did
not have reasonable cause to maintain the cross-complaint.
Salinas argues that when it filed its cross-complaint against APT in
November 2009, it had a reasonable, good faith belief that APT, as the pump’s
seller, could be liable for the Wilsons’ injuries under theories of strict or
negligent products liability – claims which were alleged in the complaint. “Under the strict products liability
doctrine, ‘[a] manufacturer is strictly liable in tort when an article he
places on the market, knowing that it is to be used without inspection for
defects, proves to have a defect that causes injury to a human being.’ [Citation.]
Such liability insures ‘that the costs of injuries resulting from
defective products are borne by the manufacturers that put such products on the
market rather than by the injured persons who are powerless to protect
themselves.’†(Arriaga v. CitiCapital Commercial Corp. (2008) 167 Cal.App.4th
1527, 1534 (Arriaga).)
In addition to manufacturers, “anyone identifiable as ‘an integral part
of the overall producing and marketing enterprise’ is subject to strict
liability[,]†including retailers engaged in the business of distributing goods
to the public. (Arriaga, supra, 167 Cal.App.4th at p. 1534.) Strict products liability
can also extend to others involved in the vertical distribution of consumer
goods, such as lessors of personal property, wholesale and retail distributors,
and licensors, who, though not necessarily involved in the final product’s
manufacture or design, are responsible for passing the product down the line to
the consumer. (Id. at 1534-1535; see also
Cal.4th 548, 560 [observing that a manufacturer, distributor or retailer is
liable in tort if a manufacturing or design defect of its product causes injury
while the product is being used in a reasonably foreseeable way].) Moreover, a manufacturer or seller of a
product has a duty to exercise reasonable care in its design so its
buyer/consumer can safely use the product as intended; the duty of care extends
to all persons within the range of potential danger. (Williams
v. Beechnut Nutrition Corp. (1986) 185 Cal.App.3d 135, 141.)
Salinas asserts that because APT was in the pump’s chain of
distribution, it potentially was liable to the Wilsons for strict or negligent
products liability and therefore Salinas had reasonable cause to bring the
cross-complaint against APT for equitable indemnity. We agree.
The complaint’s third cause of action for strict products liability
specifically alleged that Salinas and unnamed defendants “supplied and sold
defective oilfield products†including “oilfield wellheads, pumps, pipelines,
piping, valves and other products†which were intended for the general public’s
use without inspection for defects, and that Darrell “was severely injured
while performing pipeline maintenance work on the defective and dangerous
wellhead, pipeline, piping, valve and other products†when the pipeline
exploded. Based on these allegations,
which included an allegation that the pump was defective, the knowledge that
APT was the seller of the pump, and the law regarding the reach of strict
products liability to suppliers of defective products, a reasonable attorney
could well have included APT as a cross-defendant in Salinas’s cross-complaint
for equitable indemnity on the basis that the pump was itself defective and
contributed to the incident that caused Darrell’s injuries.
APT asserts the cross-complaint was
not brought in good faith or with reasonable cause because (1) before it filed
the cross-complaint, Salinas was aware of its legal obligation to install a
pressure relief device on the positive displacement pump system, yet failed to
install one; (2) the Judkins report showed the lack of a pressure relief device
on the pump system contributed to the incident and stated, as a future
corrective measure, a pressure relief device should be installed at critical
locations; (3) the Judkins report did not mention or place any responsibility
for the incident on the pump’s seller; and (3) there was no defect in the
pump, which was “never the issue in this case.â€
Even if Salinas was aware of its
obligation to install a pressure relief device and that one was never
installed, and it knew that the absence of the device contributed to the
incident, it was still reasonable to bring a cross-complaint against APT since
the complaint alleged the pump was defective.
While the Judkins report states that the “root cause analysis†included
the absence of the pressure relief valve on the discharge side of the pump, and
the report does not mention any concerns about the pump’s seller, it does not
appear that Judkins’s investigation included looking into whether there were
any defects in the components of the pump system, including the pump. As Wagner testified at his deposition, the
report’s purpose was to investigate the root cause of the incident, such as
where Salinas’s policies failed, rather than to investigate the mechanical
issues. Since the Judkins report was not
a comprehensive one intended to discover all causes of the incident, it was not
unreasonable for Salinas to sue APT on the cross-complaint for equitable
indemnity based on the possibility that the pump itself was defective. Although APT asserts there was never an issue
regarding whether the pump was defective, the complaint placed that in issue by
alleging its defectiveness.
For these reasons, we conclude that
Salinas had reasonable cause to bring the cross-complaint against APT. In addition, there is no evidence that
Salinas lacked a good faith belief that it was justified in doing so, as it
reasonably could believe that a defect in the pump may have contributed to the
incident.
The issue remains whether Salinas
had reasonable cause to maintain the cross-complaint after the trial court’s
April 12, 2011 rulings (1) denying summary adjudication to Salinas on the
Wilsons’ negligence claims after finding Salinas had a non-delegable duty to
install the pump, and (2) granting summary adjudication to Salinas on the
complaint’s causes of action for strict products liability and negligent
design. Salinas asserts that even if it
had a non-delegable duty to install the pump, APT had concurrent, joint and
several liability as the pump’s seller for failing to warn Salinas of the need
for a pressure relief device. Salinas
asserts APT owed this duty to the Wilsons independent of Salinas’s duty to
install the device.
The only support Salinas cites for
this theory is case law concerning strict and negligent liability for defective
products, such as Pike,
(1990) 217 Cal.App.3d 168. Salinas also
asserts its theory is supported by the undisputed fact that APT did not warn
Salinas of the need for a pressure relief device and by its expert, McKenna,
who stated in his declaration opposing APT’s summary judgment motion that the
standard of care in the industry requires a pump seller to warn or discuss with
the customer a need for a pressure relief device regardless of the customer’s
sophistication. Salinas asserts it could
maintain this claim even after the complaint’s products liability claims were
dismissed because it moved for summary adjudication of these claims on “narrow
grounds not applicable†to APT, and the complaint still alleged in the first
cause of action for negligence that Salinas and the unnamed defendants
“negligently failed to warn persons working on the subject job site[,]â€
including Darrell, that the wellhead, pump, pipeline and piping were not
equipped with a pressure relief device.
Even on de novo review, we presume
the judgment is correct and it is Salinas’s burden to show error. (Jones
v. Department of Corrections and Rehabilitation (2007) 152 Cal.App.4th
1367, 1376.) Salinas has failed to
convince us it had reasonable cause to continue to maintain its equitable
indemnity claim against APT after Salinas was granted summary adjudication in
April 2011 on the complaint’s products liability claims. Salinas’s grounds for the summary
adjudication motion on the products liability claims were: (1) Salinas was
itself a consumer of the allegedly defective products, rather than an entity
that placed the products in the stream of commerce, (2) Darrell was not a
consumer or ultimate user, as he did not purchase the pump or piping system,
and (3) even if the Wilsons could establish Salinas placed the pump or other
products into the stream of commerce, they could not show that any of these
items were defective, as the mere fact that the pump or piping system were not
equipped with a pressure relief device does not mean they were defective. The Wilsons did not present any facts to
contradict these assertions, thereby conceding Salinas’s entitlement to summary
adjudication on these causes of action.
After Salinas’s summary
adjudication motion was granted, there were no remaining allegations in the
complaint or cross-complaint that APT breached a duty it owed either to the
Wilsons, or to Salinas, to warn Salinas of the need for a pressure relief
device. While Salinas asserts the
complaint’s first cause of action for negligence contains such an allegation,
it alleges that Salinas negligently failed to warn Darrell of the
that the pump was defective because there was a failure to warn that such a
device was needed on the pump.
Salinas could not reasonably take
the position that APT could still be liable to the Wilsons on a products
liability claim based on APT’s failure to warn Salinas of the need for a
pressure relief device because: (1) Salinas obtained summary adjudication on
the products liability claims in part because it asserted the pump was not
defective; (2) Salinas did not bring a separate cause of action against APT
for failing to warn it of the absence of the pressure relief device; and
(3) there were no remaining products liability claims in the
complaint. Salinas does not explain how
the Wilsons could have maintained such a claim against APT given the procedural
posture of this case. Accordingly, we
conclude that Salinas failed to satisfy its burden of showing error in the
trial court’s implied ruling that it did not have probable cause to continue
its action against APT after the trial court’s April 12, 2011 ruling on
Salinas’s summary judgment motion.
We therefore reverse the trial
court’s order granting APT’s motion for attorney fees from the beginning of
APT’s involvement in the case through the April 12, 2011 trial court order
which denied summary judgment to Salinas on the complaint, granted Salinas
summary adjudication on the third and fourth causes of action in the complaint
and denied Salinas summary adjudication on the first and second causes of
action in the complaint. We affirm the
trial court’s order granting APT’s motion for attorney fees for fees APT
incurred after the April 12, 2011 order.
Since we will need to remand the matter to the trial court to determine
the amount of fees to which APT is entitled, we do not reach the issue of
whether the amount of fees awarded was reasonable. Instead, Salinas may address this issue with
the trial court on remand as appropriate.
DISPOSITION
The judgment is affirmed. The order granting APT’s motion for attorney
fees is reversed to the extent it awarded fees up to April 12, 2011. The order granting APT’s motion for attorney
fees is affirmed to the extent it awarded fees after April 12, 2011.
The case is remanded for the trial court to determine the
amount of fees to which APT is entitled.
The parties shall bear their own costs on appeal.
_____________________
Gomes, J.
WE CONCUR:
_____________________
Levy, Acting P.J.
_____________________
Franson, J.
names, not out of disrespect, but to avoid any confusion to the reader.
who are not parties to the judgment or this appeal.
