Opinion
NOT TO BE PUBLISHED
APPEAL from an order of the Superior Court of Los Angeles County. Valerie Baker, Judge. Super. Ct. No. TC017448
Duane Morris, William J. Baron, Kathryn C. Ashton and Edward M. Cramp for Cross-Complainant and Appellant.
Gordon & Rees, Stephan Waimey, Stephanie Alexander; Lee, Hong, Degerman, Kang & Schmadeka, Larry Schmadeka and Soo Hong for Cross-Defendant and Respondent.
JOHNSON, Acting P.J.
Starpoint USA, Inc. dba Daewoo Motor America, Inc. (Starpoint) appeals from an order sustaining Daewoo Motor Company Ltd.’s (DWMC) demurrer without leave to amend and dismissing Starpoint’s first amended cross-complaint. Because we conclude Starpoint has stated a valid cause of action for express contractual indemnity, we reverse the order of dismissal and remand the matter for further proceedings.
FACTS AND PROCEEDINGS BELOW
In October 2003, Starpoint (then known as Daewoo Motor America, Inc.) and DWMC both were sued in a personal injury action arising from an October 10, 2002 accident involving a Daewoo automobile. The plaintiff in that action, Michelle Bandy, asserted causes of action for strict products liability, negligence and breach of express and implied warranties. In May 2005, Starpoint filed a cross-complaint against DWMC asserting causes of action for express contractual indemnity, equitable indemnity and declaratory relief. In July 2005, DWMC agreed to pay the plaintiff a sum of money to settle the personal injury action in exchange for a dismissal of the action with prejudice as to DWMC, Starpoint and another defendant. On July 25, 2005, the trial court granted DWMC’s motion for determination of good faith settlement.
Despite the settlement and dismissal of the personal injury action, Starpoint continued to pursue its cross-action for indemnification against DWMC. After DWMC demurred to the original cross-complaint, Starpoint filed a first amended cross-complaint, which is the operative pleading on appeal. The allegations of the first amended cross-complaint which are relevant to the issues on appeal are set forth below.
Starpoint alleges, on or about April 18, 2001, it entered into a written contract with DWMC under which DWMC “agreed to indemnify and hold harmless [Starpoint] from any claim, demand or legal proceeding (including legal fees, costs and expenses related thereto) involving allegations of breach of any DWMC warranty related to DWMC products, bodily injury or property damage allegedly caused by a defect in design, manufacture or assembly of DWMC products or components thereof.” Starpoint attached a copy of the alleged written contract to the first amended cross-complaint.
In its first cause of action for express contractual indemnity, Starpoint alleges the April 18, 2001 written contract described above requires DWMC to indemnify Starpoint “for the losses suffered in defending the [personal injury] lawsuit [arising from the October 10, 2002 accident], including but not limited to its attorneys’ fees.” Starpoint requested DWMC defend and indemnify it in the personal injury action, but DWMC refused. Starpoint alleges it “has performed all the conditions and obligations to be performed on its part under” the April 18, 2001 written agreement with DWMC. In its second cause of action for declaratory relief, Starpoint seeks “a judicial determination of the respective rights and duties of Starpoint and [DWMC] with respect to the costs incurred in defending [the above-described personal injury] action.”
DWMC demurred to the first amended cross-complaint on several grounds relevant to the issues raised on appeal. First, DWMC argued Starpoint cannot enforce the alleged written indemnification agreement because Starpoint (then known as Daewoo Motor America, Inc.) did not assume this “executory contract” in the bankruptcy action Daewoo Motor America, Inc. filed in May 2002. DWMC asked the trial court to take judicial notice of certain documents filed in the bankruptcy action. Second, DWMC argued the April 18, 2001 letter Starpoint alleges is a written indemnification agreement is not a valid contract because, although signed by both parties, “it lacks any consideration on the part of [Starpoint].” DWMC asserted the presumption of consideration “for formal legal documents” does not apply to informal writings like the letter at issue here. Finally, DWMC argued, even if the alleged indemnification agreement constitutes a valid contract, it does not apply to the personal injury action filed October 8, 2003. Daewoo Motor America, Inc. (now Starpoint) prepared the April 18, 2001 letter, which both parties signed, in connection with an audit of its financial statements for the year ended December 31, 2000. Therefore, DWMC asserted any claims not known and included on the financial statements as of December 31, 2000 are outside the scope of the indemnification agreement contained in the April 18, 2001 letter.
In opposition to the demurrer, Starpoint argued it has a right to enforce the April 18, 2001 indemnification agreement because it “is clearly a component of the Automobile Distribution Agreement” between Starpoint (then Daewoo Motor America, Inc.) and DWMC, and Daewoo Motor America, Inc. assumed the Automobile Distribution Agreement in the bankruptcy action. According to Starpoint, the indemnification agreement “concerns coverage for liability and litigation expenses that may arise from [Starpoint]’s distribution of DWMC’s automobiles.” Starpoint also argued the indemnification agreement satisfies all of the elements of a valid written contract. Citing Civil Code section 1614, Starpoint asserted “consideration is presumed for written contracts” and, notwithstanding that, Starpoint can amend its cross-complaint “to allege the consideration exchanged.” Finally, Starpoint argued the indemnification agreement “does not contain an explicit limitation with regard to whether the agreement applies to future claims. In the absence of such a limitation, the parties’ performance must be examined in order to determine their intent.” Starpoint claimed DWMC raised factual issues which cannot be determined on demurrer.
On November 4, 2005, the trial court heard oral argument on DWMC’s demurrer to Starpoint’s first amended cross-complaint. The court sustained the demurrer without leave to amend on the ground “the bankruptcy proceeding and documents filed in that proceeding, of which the court can take judicial notice, prohibit [Starpoint] from going forward with this first amended cross-complaint.” The court found the April 18, 2001 indemnification agreement was not assumed in the bankruptcy action and Starpoint therefore had no legal right to enforce it. On December 6, 2005, the trial court issued its written order sustaining the demurrer without leave to amend and dismissing Starpoint’s first amended cross-complaint. On December 13, 2005, DWMC filed its notice of entry of order.
On or about December 15, 2005, Starpoint filed a motion for reconsideration of the trial court’s order sustaining DWMC’s demurrer without leave to amend. Asserting its was providing the court with new facts and law to consider, Starpoint argued it had a right to enforce the April 18, 2001 indemnification agreement because it was not an executory contract and therefore did not need to be assumed in the bankruptcy action in order to be enforceable. Defining an executory contract “as one in which performance is due to some extent on both sides,” Starpoint claimed the indemnification agreement was not executory because Starpoint had performed all of its obligations under the agreement before the bankruptcy action was filed. DWMC raised several arguments in opposition to the motion for reconsideration, including (1) the trial court had no jurisdiction to hear the motion for reconsideration after the order of dismissal was filed and (2) the alleged indemnification agreement “is executory by its own terms” and therefore unenforceable absent assumption in the bankruptcy action.
On January 20, 2006, the trial court heard oral argument on Starpoint’s motion for reconsideration and issued a minute order granting it. The court vacated its ruling sustaining the demurrer without leave to amend and issued a new order overruling the demurrer. The court stated it could not “determine from the face of the complaint and the matters as to which the court can take judicial notice . . . that the cross-complaint is barred by virtue of any procedure or ruling in the bankruptcy court.” For example, the court stated it could not decide at the pleading stage whether the indemnification agreement at issue is or is not an executory contract.
DWMC filed a petition for writ of mandate in this court challenging the trial court’s January 20, 2006 order granting Starpoint’s motion for reconsideration and overruling DWMC’s demurrer to the first amended cross-complaint. DWMC contended the trial court lacked jurisdiction to grant reconsideration after it entered an order of dismissal sustaining the demurrer without leave to amend. This court agreed with DWMC’s position. On April 10, 2006, this court issued a peremptory writ of mandate directing the trial court to vacate its January 20, 2006 order.
Daewoo Motor Co., Ltd. v. Superior Court (April 10, 2006, B189505) [order for peremptory writ of mandate].
On April 13, 2006, the trial court issued a minute order vacating its January 20, 2006 order granting Starpoint’s motion for reconsideration and overruling DWMC’s demurrer to the first amended cross-complaint. On April 17, 2006, Starpoint filed its notice of appeal from the trial court’s order sustaining the demurrer without leave to amend and dismissing the first amended cross-complaint.
DISCUSSION
I. STARPOINT’S APPEAL WAS TIMELY.
DWMC has moved to dismiss this appeal contending Starpoint did not file its notice of appeal in a timely manner. Citing California Rules of Court, rules 8.104 and 8.108, DWMC asserts Starpoint had until 60 days after the December 13, 2005 notice of entry of order of dismissal to file its notice of appeal (or February 14, 2006, given the 60 days fell on the Saturday before a Monday court holiday). Based on the particular facts and circumstances of this case, we disagree.
On January 20, 2006, 38 days after the notice of entry of order of dismissal, the trial court granted Starpoint’s motion for reconsideration and vacated its ruling sustaining DWMC’s demurrer without leave to amend and dismissing Starpoint’s first amended cross-complaint. At that point, Starpoint no longer was an aggrieved party and there no longer was an order of dismissal from which Starpoint could have appealed. Within seven days after this court issued its peremptory writ of mandate ordering the trial court to vacate its order granting reconsideration, Starpoint filed its notice of appeal from the reinstated order sustaining DWMC’s demurrer without leave to amend and dismissing the first amended cross-complaint.
As reflected in this court’s order for peremptory writ of mandate, the trial court had no jurisdiction to grant Starpoint’s motion for reconsideration after the court entered the order of dismissal (which constitutes a judgment under Code of Civil Procedure 581d). Had the trial court denied Starpoint’s motion for reconsideration or failed to rule upon it by the time the 60-day period for filing an appeal from the order of dismissal expired, we would agree with DWMC’s assertion the deadline for Starpoint to file its notice of appeal would have been February 14, 2006. But here, before Starpoint’s time to appeal from the order of dismissal expired, the trial court granted the motion for reconsideration (albeit improperly) and vacated its ruling sustaining the demurrer without leave to amend and dismissing the first amended cross-complaint. We reject DWMC’s claim Starpoint lost its right to appeal from the order of dismissal because it encouraged the trial court to grant its improper motion for reconsideration. The fact of the matter is the trial court did grant the motion for reconsideration and it did vacate the order Starpoint challenged. Thus, between January 20 and February 14, 2006, there was no order in the trial court record from which Starpoint could have appealed. After the order of dismissal was reinstated, Starpoint filed its notice of appeal in a timely manner.
Ramon v. Aerospace Corporation (1996) 50 Cal.App.4th 1233, 1237.
Safeco Insurance Company v. Architectural Facades Unlimited, Inc. (2005) 134 Cal.App.4th 1477, 1480-1482 (a motion for reconsideration, which the trial court denied after entry of summary judgment, did not extend the 60-day deadline for filing a notice of appeal from the judgment).
Cf. Ramon v. Aerospace Corporation, supra, 50 Cal.App.4th at pages 1235, 1237-1239 (a motion for reconsideration, which the trial court granted after entry of summary judgment, did not extend the 60-day deadline for filing a notice of appeal from the judgment, where the trial court reaffirmed the summary judgment on reconsideration).
Based on the foregoing, we deny DWMC’s motion to dismiss this appeal.
II. STANDARD OF REVIEW.
In reviewing an order sustaining a demurrer, we accept as true the properly pleaded factual allegations of the complaint and consider matters which may be judicially noticed. The allegations of the complaint must be liberally construed with a view to attaining substantial justice among the parties. We review the complaint de novo to determine whether the trial court erred in sustaining the demurrer. The plaintiff (or cross-complainant) challenging an order sustaining a demurrer “‘may advance on appeal a new legal theory why the allegations of the [complaint] state a cause of action.’”
Thompson v. County of Alameda (1980) 27 Cal.3d 741, 746; Blank v. Kirwan (1985) 39 Cal.3d 311, 318.
Code of Civil Procedure section 452; King v. Central Bank (1977) 18 Cal.3d 840, 843.
Cantu v. Resolution Trust Corp. (1992) 4 Cal.App.4th 857, 879.
Dudley v. Department of Transportation (2001) 90 Cal.App.4th 255, 259.
III. THE TRIAL COURT ERRED IN SUSTAINING THE DEMURRER.
Starpoint contends the trial court erred in sustaining DWMC’s demurrer because there were no defects in the cause of action for express contractual indemnity apparent on the face of the first amended cross-complaint or matters subject to judicial notice.
DWMC argues Starpoint has not alleged the existence of a valid written contract as part of its cause of action for express contractual indemnity. We disagree. Starpoint has produced a writing signed by both parties which states DWMC agrees to indemnify Starpoint and hold it harmless “from any claim, demand or legal proceeding (including legal fees, costs and expenses related thereto) involving allegations” such as those asserted in the personal injury action at issue here. At the pleading stage of these proceedings, we cannot test the credibility of DWMC’s assertion the April 18, 2001 “letter is not and was not intended to constitute a contract in and of itself and it cannot form the basis for a claim for express contractual indemnification” simply because it was made in connection with an audit of Starpoint’s financial statements. Nor can we resolve DWMC’s contention the indemnification agreement set forth in the April 18, 2001 letter applied only to claims arising prior to December 31, 2000. There is nothing in the express language of the indemnification agreement indicating it did not apply to future claims.
Apparently DWMC has abandoned its argument the indemnification agreement is not a valid contract because it lacks consideration on the part of Starpoint, as asserted in the demurrer. As Starpoint pointed out in opposition to the demurrer, pursuant to Civil Code section 1614, “A written instrument is presumptive evidence of consideration.”
The only other argument DWMC raises on appeal in support of the order of dismissal is its claim Starpoint cannot enforce the indemnification agreement because Starpoint (then Daewoo Motor America, Inc.) did not assume the agreement in the bankruptcy action. As DWMC explains in its appellate brief, an executory contract not assumed in bankruptcy is unenforceable. Starpoint argues the indemnification agreement is not executory and therefore is enforceable regardless of whether it was assumed in the bankruptcy action.
As a threshold matter, DWMC asserts Starpoint is barred from arguing on appeal the indemnification agreement is not an executory contract because Starpoint did not raise this issue prior to the trial court’s entry of the order of dismissal. DWMC is wrong. As set forth above, the plaintiff (or cross-complainant in this case) challenging an order sustaining a demurrer “‘may advance on appeal a new legal theory why the allegations of the [complaint] state a cause of action.’”
Dudley v. Department of Transportation, supra, 90 Cal.App.4th at page 259.
Turning to the merits of DWMC’s argument, we conclude we cannot resolve at the pleading stage of these proceedings, based on the face of the first amended cross-complaint and matters subject to judicial notice, whether or not the indemnification agreement is an executory contract. According to DWMC, “In the context of bankruptcy, the generally accepted definition of executory is ‘a contract under which the obligations of both the bankrupt and the other party to the contract are so unperformed that the failure of either to complete performance would constitute a material breach excusing the performance of the other.’ [Citation]” As Starpoint also explains, “if either party to a contract has ‘substantially performed’ its part of the bargain, and that party’s failure to perform further would not excuse performance by the other party, the contract is not executory.” The express terms of the April 18, 2001 agreement do not reveal whether any performance remained due from either side at the time the bankruptcy action was filed. The first amended cross-complaint alleges Starpoint “has performed all conditions and obligations to be performed on its part under” the April 18, 2001 written agreement with DWMC, and this court must accept that allegation as true in reviewing DWMC’s demurrer.
DWMC quotes Jensen v. Continental Financial Corporation (8th Cir. 1979) 591 F.2d 477, 481 in support of this proposition.
Starpoint cites In re Munple, Ltd. (9th Cir. 1989) 868 F.2d 1129, 1130 in support of this proposition.
Based on our conclusion we cannot determine at the pleading stage of these proceedings whether the indemnification agreement is an executory contract, we need not determine at this juncture whether the indemnification agreement is a component or modification of the Automobile Distribution Agreement which was assumed by Starpoint in the bankruptcy action.
DWMC has not established any defect in Starpoint’s cause of action for express contractual indemnity which is apparent on the face of the first amended cross-complaint or matters subject to judicial notice. Starpoint has stated a valid cause of action with no need for amendment. Thus, the trial court erred in sustaining DWMC’s demurrer.
DWMC has not independently challenged the validity of Starpoint’s cause of action for declaratory relief.
DISPOSITION
The order sustaining the demurrer without leave to amend and dismissing the first amended complaint is reversed and the cause is remanded for further proceedings
consistent with this opinion. Appellant is entitled to recover its costs on appeal.
We concur: WOODS, J., ZELON, J.