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Procedural Posture

Procedural Posture

By: SMITH THOMPSON

Appellant insurance broker challenged a judgment of the Superior Court of San Francisco County, California, which sustained a demurrer to its cross-complaint against respondent medical group for comparative indemnity without leave to amend. The broker filed the cross-complaint after it was sued for breach of contract and negligence by an insured that had retained its services. The parties were counseled by a corporate attorney for the civil litigation.

Overview

The insured alleged that the group had submitted timely information to the broker about a patient’s renal failure claim, but that the broker failed to prepare the form for reporting it in a timely fashion. The court found that the cross-complaint did not allege vicarious or strict liability, nor an implied contractual obligation for the group to indemnify the broker. The question was whether, with respect to the claims analysis, the group owed the insured a duty of care sounding in tort. Despite the cross-complaint’s use of negligence terminology, the alleged misconduct by the group described, at most, a breach of contract, not a breach of a legal duty of care. It was an improper attempt to recast a breach of contract cause of action as a tort claim. Nor was there any social policy that would demand resort to tort remedies. Without any action sounding in tort, there was no basis for a finding of potential joint and several liability on the part of the group, thereby precluding a claim for equitable indemnity. Because negligent performance of a contract gave rise to contract damages only, such alleged negligence would not support a claim for equitable indemnity.

Outcome

The court affirmed the trial court’s judgment.

Procedural Posture

Plaintiff claimant sought review of a judgment from the Court of Appeal, Third Appellate District (California), which issued a writ of mandate directing that the trial court sustain defendant city’s demurrer to the claimant’s contract suit.

Overview

The claimant alleged that the city breached redevelopment contracts and gave its plans to another developer. The claimant did not present a claim before filing suit. After the trial court overruled a demurrer, the city filed a cross-complaint. The court of appeal found the demurrer meritorious and ruled that the claimant could file a cross-complaint asserting defensive claims. The court held that the claims presentation requirements of Gov. Code, §§ 905, 911.2, 945.4, applied to contract causes of action and that the claimant’s failure to comply barred its suit. Gov. Code, § 814, pertained only to immunity and had no effect on the claims requirements. The court stated that “Government Claims Act” was a more appropriate short title for Gov. Code, § 810 et seq., than “Tort Claims Act.” Because the claimant sought money or damages, the specific property exception to Gov. Code, § 905, did not apply. Nothing in the city’s conduct gave rise to estoppel or to waiver under Gov. Code, §§ 910.8, 911. Pursuant to Code Civ. Proc., § 432.10, the claimant could raise affirmative defenses in its answer to the cross-complaint, but Code Civ. Proc., § 431.30, subd. (c), precluded affirmative relief.

Outcome

The court affirmed the judgment of the court of appeal as modified to include directions to order the trial court to grant the claimant leave to amend the second amended complaint, should the claimant seek to do so, and to omit the directions that the claimant be allowed to file a cross-complaint.

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