Fireman's Fund Ins. Co. v. Triton Subs, Inc. CA1/3 ( 2021 )

Filed 4/21/21 Fireman’s Fund Ins. Co. v. Triton Subs, Inc. CA1/3
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FIRST APPELLATE DISTRICT
DIVISION THREE
FIREMAN’S FUND INSURANCE
COMPANY, A158653
Plaintiff and Respondent,
v. (City and County of San Francisco
TRITON SUBS, INC., et al., Super. Ct. No. CGC15544547)
Defendants and Appellants.
An electrical fire originating in a Quizno’s Corporation (Quizno’s)
sandwich store damaged it and neighboring stores, spawning several
lawsuits against Quizno’s. After a jury found Triton Subs, Inc. (Triton), a
Quizno’s agent, performed actions that were a substantial cause of the fire
but within the scope of its agency relationship, Quizno’s settled the lawsuits.
Its insurer, Fireman’s Fund Insurance Company (FFIC) paid over $7 million
in satisfaction of the settlement. FFIC then filed a complaint against Triton
for indemnification, and a jury returned a verdict in favor of FFIC. On
appeal, Triton primarily argues that FFIC was collaterally estopped from
litigating its indemnification claim, that the trial court improperly
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interpreted Triton’s indemnity obligations, and that the evidence was
insufficient to support the jury’s verdict. We affirm.
FACTUAL AND PROCEDURAL BACKGROUND
A. Triton, Quizno’s Area Director
Quizno’s is a business that operates casual deli and submarine
sandwich restaurants. In 1997, Triton entered into an Area Director
Marketing Agreement (Agreement) with Quizno’s to serve as its Area
Director, a position tasked with recruiting and assisting Quizno’s franchisees
to build and open new Quizno’s stores throughout California. Triton was
responsible for coordinating renovation contractors and architects for each
restaurant, providing the franchisee with Quizno’s building and interior
design specifications, and submitting forms and reports related to leases and
construction to Quizno’s. Triton was also required to inspect each franchisee
store for compliance with the specifications, standards, and operating
procedures included in the Quizno’s Architecture and Construction Manual
(Manual).
B. City of Monterey Quizno’s Store
In 2003, Triton assisted a franchisee, Harinder Paul Deol, in locating a
space to renovate for a Quizno’s store in the City of Monterey (Monterey).
Architects drafted plans based on Quizno’s specifications, Monterey approved
the plans, and the plans were then sent out for contractor bids. Any
contractor had to be approved by Quizno’s corporate office, a process that
entailed review of the contractor’s references, financial reserves, insurance,
and construction licenses. Triton presented Deol with bids from three
contractors on Quizno’s approved contractor list, but Deol rejected them as
too expensive. Triton then recommended Pat Young, a contractor who was
not on the approved list and whose bid was less than half of the other bids.
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Deol accepted Young’s bid, and they signed an agreement that they
would comply with the Manual, builder’s handbooks specifications, and
electrical drawings. Notably, the Manual required that “all wiring shall be
run in conduit”—that is, placed in metal or plastic tubing to protect the wire
during construction and to protect surrounding people or objects from any
wire failure. But rather than encasing the wires for an industrial size toaster
oven in a conduit, Young’s employee nailed them to joists in the ceiling, a
design that was not identified in the plans approved by Monterey. Deol
operated the store for over one year, then sold his franchise stake to Fancher
Monterey, Inc in 2005.
C. Fancher Monterey, Inc. v. Avila Design et al. and FFIC’s
Indemnification Complaint
In February 2007, an electrical fire started on the basement ceiling of
the Quizno’s store, causing significant damage to the store and several
adjacent stores. The next year, a complaint was filed against Quizno’s,
Triton, and other co-defendants in Fancher Monterey, Inc. v. Avila Design et
al. (Fancher), alleging they negligently constructed the Quizno’s store. A jury
found: (1) the cable supplying power to a toaster oven in the Quizno’s
restaurant was a substantial factor in causing the fire; (2) Quizno’s and
Triton were both negligent and substantial factors in causing the fire; and
(3) Triton performed its actions as a Quizno’s agent and within the scope of
its agency. Because the jury found that all of Triton’s conduct was within the
scope of its agency with Quizno’s, it allocated all of Triton’s fault to Quizno’s.
Quizno’s then settled with claimants for approximately $7.7 million, and
FFIC paid those settlements on Quizno’s behalf.
In 2015, FFIC filed a complaint against Triton, alleging FFIC defended
Quizno’s in Fancher, and thus became subrogated to Quizno’s rights to
recover Quizno’s settlement payments and defense costs in Fancher based on
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an express indemnity provision in the Agreement. A jury determined Triton
must indemnify Quizno’s because the fire arose out of Triton’s actions, and it
awarded FFIC approximately $7.8 million.
DISCUSSION
On appeal, Triton challenges several trial court rulings construing the
indemnity provision in Section 18.4 of the Agreement. Section 18.4 requires
Triton “to indemnify and hold [Quizno’s and its officers, employees, agents,
and others] harmless against, and to reimburse them for, any loss, liability,
taxes or damages (actual or consequential) and all reasonable costs and
expenses of defending any claim brought against any of them . . . which any
of them may suffer, sustain or incur by reason of, arising from or in
connection with any acts, omissions or activities of [Triton] or any employee
of or independent contractor engaged by [Triton], not in accordance with this
Agreement.”
Section 19.1, the Agreement’s choice of law provision, mandates the
application of Colorado law to address substantive disputes. (Airs Aromatics,
LLC v. CBL Data Recovery Technologies, Inc. (2020) 50 Cal.App.5th 1009,
1014 [policy favoring enforcement of contractual choice of law provision].)
However, “[i]t is well established that while the courts generally enforce the
substantive rights created by the laws of other jurisdictions, the procedural
matters are governed by the law of the forum” state—here, California.
(World Wide Imports, Inc. v. Bartel (1983) 145 Cal.App.3d 1006, 1012.) With
this framework, we review each of Triton’s arguments.
A. Collateral Estoppel
Triton contends collateral estoppel barred FFIC’s indemnification claim
because the central issue—whether the fire was caused by Triton’s acts “not
in accordance with this Agreement”—is identical to the Fancher jury
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verdict—finding Triton negligently performed its acts within the scope of its
agency with Quizno’s. In Triton’s view, the indemnity provision phrase “not
in accordance with this Agreement” has the same meaning as “outside the
scope of agency,” or an ultra vires act. It argues the jury in Fancher
conclusively absolved Triton of any fault by finding it acted within the scope
of its agency relationship with Quizno’s, and FFIC cannot relitigate that
issue now. Rejecting this argument, the trial court noted the two issues were
different since an “agent can act within the scope of his agency yet still
breach the contract he has with the principal.” We see no error in the court’s
ruling.
Collateral estoppel “precludes relitigation of issues argued and decided
in prior proceedings.” (Lucido v. Superior Court (1990) 51 Cal.3d 335, 341
(Lucido); Code Civ. Proc., §§ 1908 [conclusiveness of judgment], 1911
[“Judgment; Items adjudged”].) The doctrine applies when the issue sought
to be relitigated (1) is identical to that decided in a former proceeding; (2) was
actually litigated; (3) was necessarily decided in the former proceeding;
(4) has a final decision on the merits; and (5) the party against whom
preclusion is sought is the same as, or in privity with, the party to the former
proceeding. (Lucido, at p. 341.) The party asserting collateral estoppel must
satisfy each requirement, and we review the trial court’s ruling de novo.
(Ibid.; Roos v. Red (2005) 130 Cal.App.4th 870, 878.)
At the outset, Triton misapprehends the Fancher jury findings. The
jury did find Triton at fault because its acts were a substantial cause of the
fire. The verdict form simply instructed the jury, if it found Triton was
negligent and “such negligence was within the scope of the agency for
Quizno’s,” to apportion Triton’s percentage of fault to Quizno’s. The jury
determined the negligence was in the scope of the agency relationship, and
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then—following the verdict form’s instruction—allocated zero percent fault to
Triton and 80 percent fault to Quizno’s. The exact percentage of fault
between Triton and Quizno’s was undetermined. For that reason, this case is
not comparable to Columbus Line, Inc. v. Gray Line Sight-Seeing Companies
Associated, Inc. (1981) 120 Cal.App.3d 622, relied upon by Triton. There, a
trial court found that the defendant Gray Line was not negligent towards
plaintiffs and that it did not have an agency relationship with either co-
defendant, thus collateral estoppel precluded the co-defendant’s indemnity
claim against Gray Line. (Id. at p. 629.) Here, the Fancher jury found both—
that Triton was negligent and that it had an agency relationship with
Quizno’s—providing a proper basis for Quizno’s indemnity claim against
Triton. (Ibid.)
More importantly, the contract indemnification issue in FFIC’s
complaint is not identical to the issues in Fancher. The “identical issue”
element under the collateral estoppel doctrine addresses whether “ ‘identical
factual allegations’ are at stake in the two proceedings, not whether the
ultimate issues or dispositions are the same.” (Lucido, supra, 51 Cal.3d at
p. 342.) The Fancher complaint alleged that Quizno’s, by and through its
agents and representatives, negligently participated in building the Monterey
store. Here, the central issue is whether the fire resulted from Triton’s acts
or omissions “not in accordance with this Agreement,” that is, whether Triton
breached its contract. The Agreement’s “Scope of Appointment” provision
outlines the scope of Triton’s agency: “(1) solicit prospective Franchisees for
QUIZNO’S Restaurants . . . ; (2) perform certain site acquisition and
development services described in [the Agreement]; and (3) to render support
and other services . . . described in [the Agreement].” That same provision
requires Triton “to perform its obligations, as a special agent of [Quizno’s] in
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accordance with the terms and conditions” that appear throughout the
Agreement.
Assessing the manner in which Triton performed its duties under the
Agreement is not the same as whether Triton acted within the scope of its
agency relationship with Quizno’s. (See Lucido, supra, 51 Cal.3d at p. 342.)1
Indeed, Triton acknowledged as much in the trial court, noting Triton
triggered its indemnity obligations if it acted beyond the scope of its agency
relationship or if it “act[ed] in an inappropriate manner inside the scope of
the agreement.” Also off the mark is Triton’s further insistence that FFIC’s
claim is baseless because a principal is generally liable for an agent’s conduct
within the scope of its agency. FFIC’s complaint addresses a contractual
obligation to indemnify, not common law indemnity or agency principles.
Because Triton fails to establish that the issues are identical, its collateral
estoppel argument is unavailing.2
1 Triton makes a perfunctory argument that the trial court erred because
it did not instruct the jury that the phrase “not in accordance with” means
“beyond the scope of agency.” We reject this claim because Triton fails to
provide any cogent analysis, citation, or relevant authority to support it.
(Associated Builders & Contractors, Inc. v. San Francisco Airports Com.
(1999) 21 Cal.4th 352, 366, fn. 2.) In any event, the claim fails for the same
reasons stated above. (See Bush v. State Farm Mut. Auto. Ins. Co.
(Colo.Ct.App. 2004) 101 P.3d 1145, 1146 [courts give contract “words their
plain meaning, avoid strained and technical interpretations, and construe the
contract as would a reasonable person of ordinary intelligence”].)
2 In light of this conclusion, we do not address Triton’s arguments that
the Fancher verdict was sufficiently final for the collateral estoppel doctrine
to apply. (See Lucido, supra, 51 Cal.3d at p. 341.) We further reject Triton’s
request for judicial notice of documents demonstrating the finality of the
Fancher verdicts because they are not necessary for our determination.
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B. Indemnity for Quizno’s Negligence
Triton nonetheless maintains the Agreement’s indemnity provision
does not require it to indemnify Quizno’s for Quizno’s own negligence because
the provision lacks the requisite clear and unequivocal language to support
that construction. Triton further claims that indemnity for one’s own fault is
unenforceable under Colorado public policy, and that the trial court erred in
ruling otherwise. We are not persuaded.
1. Construction of the Agreement
In Colorado, indemnity agreements purporting to hold indemnitees
harmless for their own negligence are strictly construed. (Public Service Co.
v. United Cable, Inc. (Colo. 1992) 829 P.2d 1280, 1284 (Public Service).)
“[W]hile indemnity contracts are generally construed to effectuate the parties’
intentions . . . ‘indemnity contracts holding indemnitees harmless for their
own negligent acts must contain clear and unequivocal language to that
effect.’ ” (Id. at p. 1283.) A court will give effect to the contract’s plain
language if it is unambiguous, meaning it is not “susceptible to more than
one reasonable interpretation.” (Ad Two, Inc. v. City & County. of Denver
(Colo. 2000) 9 P.3d 373, 376.)
In Public Service, the Colorado Supreme Court determined the
following language required a party to indemnify an indemnitee for its own
negligence: “Licensee shall indemnify and save and hold harmless [Public
Service] . . . from and against all claims, liabilities, causes of action, or other
legal proceedings by third parties for damage . . . in any way arising out of,
connected with or resulting from the exercise by Licensee of the rights
granted to it hereunder.” (Public Service, supra, 829 P.2d at p. 1282, italics
omitted.) As the court explained, language covering any liability “indicates
an intent to include claims arising from [the indemnitee’s] negligence.” (Id.
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at p. 1283.) “The use of the word ‘liabilities’ is significant because it covers
those instances where [the indemnitee] is legally liable for damages,
including those where liability arises because of its own negligence.” (Ibid.)
Second, language that requires indemnification for the costs of defense also
“strengthens an interpretation that the parties intended to indemnify
[indemnitee] from all risks and costs, including those arising from its own
negligence.” (Ibid.)
Here, the Agreement contains language similarly evincing Triton’s
intent to indemnify Quizno’s for its negligence. First, Triton agreed “to
indemnify and hold [Quizno’s] . . . harmless . . . for, any loss, liability, . . . or
damages” in connection with Triton’s acts or omissions. Although the
provision does not expressly mention Quizno’s negligence, that failure does
not “render[] an otherwise unambiguous indemnity provision insufficient to
indemnify the indemnitee from its own negligence.” (Public Service, supra,
829 P.2d at p. 1283.) Second, the provision requires Triton to indemnify and
reimburse Quizno’s for “defending any claim brought against any of them.”
As in Public Service, the indemnity provision here was properly upheld
because “the language clearly and unambiguously expresses the intent of the
parties.” (Ibid.) Moreover, in commercial settings like this one, courts are
“willing to find broad language of indemnity holding another harmless
against liability generally, without any specific reference or limitation to its
own negligence, to constitute an adequate expression of intent to indemnify.”
(Constable v. Northglenn, LLC (Colo. 2011) 248 P.3d 714, 716 (Constable).)
Triton argues the Agreement limits indemnity to only Triton’s conduct,
a limitation that it claims did not exist in the indemnity provision at issue in
Public Service, supra, 829 P.2d 1280, and that it asserts is one the Colorado
Supreme Court deemed significant. This argument is based on an incorrect
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reading of Public Service. Like the indemnity language here, the Public
Service provision required that the indemnitor hold the indemnitee harmless
for all liabilities for damages arising out of “the exercise by [Indemnitor] of
the rights granted to it hereunder” (id. at p. 1282, italics omitted), and
consequently, the provision imposed an obligation to indemnify the
indemnitee for the indemnitee’s negligence (id. at p. 1283). And contrary to
Triton’s assertions, Public Service reached that conclusion despite the
circumstance that the indemnity provision at issue expressly referenced the
indemnitor’s negligence without any corresponding mention of the
indemnitee’s negligence. (Id. at pp. 1283–1284 & fn. 4 [distinguishing U.S. v.
Seckinger (1970) 397 U.S. 203, 217]; compare with Constable, supra, 248 P.3d
at p. 717 [express exclusion of indemnitee’s gross negligence or intentional
torts from the defendant’s indemnity obligation indicated the parties
contemplated indemnification of indemnitee’s negligence].) Here, not only
did the Agreement expressly provide that Triton would indemnify and hold
Quizno’s harmless against “any loss, liability, . . . or damages,” but the
Agreement contained no express exclusions regarding Quizno’s negligence.
We do not agree with Triton that the differences between the
Agreement’s indemnity language and the provisions in Public Service and in
Lafarge North America v. K.E.C.I. Colorado (Colo.Ct.App. 2010) 250 P.3d 682compel a reversal. The language is not qualitatively different, and thus not
functionally distinguishable. (See Lafarge, at p. 686 [finding the phrase
“arising in whole or in part” from K.E.C.I.’s acts and omissions comparable to
the language “in any way” in Public Service].) Thus, while the Agreement
lacks the exact language of the provision in either Public Service or Lafarge,
it is nonetheless explicit in requiring indemnification for any loss or liability
and all reasonable costs of defense for any claim arising out of or connected
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with Triton’s acts or omissions not in accordance with its obligations under
the Agreement. Such language “supports an interpretation that the parties
intended that [indemnitee] be indemnified for its own negligence.” (Public
Service, supra, 829 P.2d at p. 1283.)
Other cases that Triton cites are distinguishable because the indemnity
provisions either employed equivocal language (e.g., U.S. Brass Corp. v.
Dormont Mfg. Co. (10th Cir. 2007) 242 Fed.Appx. 575, 577–579; Boulder
Plaza Residential, LLC v. Summit Flooring, LLC (Colo.Ct.App. 2008) 198
P.3d 1217, 1220–1222), or did not sufficiently evince an intent to hold the
indemnitee harmless for its own negligence (e.g., Williams v. White Mountain
Constr. Co. (Colo. 1988) 749 P.2d 423, 425–426 [involving ambiguous oral
statements made on spur of the moment]). Moreover, we reject Triton’s
invitation to review cases outside of Colorado since they are not controlling
here.
Triton additionally claims that Brochner v. Western Ins. Co. (Colo.
1986) 724 P.2d 1293 (Brochner) bars indemnity for a principal’s own
negligence as a matter of the public policy reflected in Colorado’s anti-
indemnity statute. We are not convinced. First, Colorado public policy
precludes making an agreement to indemnify parties for damages resulting
from their own intentional or willful wrongful acts, but not their own
negligence. (Constable, supra, 248 P.3d at p. 716.) Second, Brochner was a
case abolishing the common law doctrine of indemnity between two joint
tortfeasors; it did not change Colorado’s law on contractual indemnity.
(Brochner, at p. 1299.) Moreover, even if a contract provision were not at
issue here, which we do not find, the Brochner court expressly reserved the
“question of whether the common law doctrine of indemnity should be
preserved or abolished in situations where the party seeking indemnity is
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vicariously liable or is without fault.” (Id. at p. 1298, fn. 6.)3 Those are the
circumstances here. In sum, Triton is liable under the Agreement to
indemnify Quizno’s for any negligence on its part.
2. Special Verdict Form
As relevant here, the jury received a special verdict form that asked:
“Did Triton act not in accordance with the [Agreement]?” and if so, “Did the
fire at the Monterey Quizno[’s] result from, arise out of, or in connection with
Triton’s acts not in accordance with the [Agreement]?” Triton challenges the
special verdict form as incomplete because it did not permit the jury to
allocate fault between Triton, Quizno’s, and third parties. After reviewing
the special verdict form de novo, we find no flaw. (Saxena v. Goffney (2008)
159 Cal.App.4th 316, 325 (Saxena).)
A special verdict “must present the conclusions of fact as established by
the evidence.” (Code Civ. Proc., § 624.) It is “fatally defective” if it does not
allow the jury to resolve every controverted issue. (Saxena, supra, 159
Cal.App.4th at p. 325.) Here, the special verdict form tracked the language
in the Agreement’s indemnity provision. Notably, the provision contained no
language limiting Triton’s liability to a percentage of the damages based on
3 We do not address Triton’s additional argument that the Agreement is
a construction contract—a contract that involves design, planning,
supervision, and inspection of a building site—rendering the Agreement’s
indemnity provision void as a matter of Colorado public policy. (C.R.S. § 13–
21–111.5, subds. (6)(b), (e)(II) [defining “construction agreement”].) Triton’s
failure to make that claim below forfeits its review on appeal. (P&D
Consultants, Inc. v. City of Carlsbad (2010) 190 Cal.App.4th 1332, 1344.)
While this case was being briefed, FFIC requested we take judicial
notice of several documents related to the Colorado anti-indemnity statute,
and we deferred a ruling until consideration of the appeal. (People v. Preslie
(1977) 70 Cal.App.3d 486, 493–494.) We now deny the request because the
documents are not relevant to this appeal. (Jordache Enterprises, Inc. v.
Brobeck, Phleger & Harrison (1998) 18 Cal.4th 739, 748, fn. 6.)
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its percentage of fault, such as “to the extent” that any injury or damage is
caused by an indemnitor, and instead it required Triton to indemnify
Quizno’s for its own negligence. Accordingly, the jury had no reason to
determine the parties’ comparative fault. The questions in the special verdict
form properly set forth the conclusions of fact for every controverted issue.
C. Acts “Not in Accordance” with Agreement
Triton contends there was insufficient evidence that its acts or
omissions triggered a contractual obligation to indemnify Quizno’s. In
essence, Triton claims that the Agreement did not require it to inspect or
report on construction work and that there was no evidence showing it
otherwise failed to act in accordance with the Agreement.
Challenges to the sufficiency of the evidence are subject to a substantial
evidence standard of review. (U.S. Ecology, Inc. v. State of California (2005)
129 Cal.App.4th 887, 908 (U.S. Ecology) [breach of contract case]; see
Albright v. McDermond (Colo. 2000) 14 P.3d 318, 322 [deference to trial court
factual findings].) “We review the evidence in the light most favorable to the
respondent, resolve all evidentiary conflicts in favor of the prevailing party
and indulge all reasonable inferences possible to uphold the jury’s verdict.”
(U.S. Ecology, at p. 908.)
1. Section 13.1, Standards of Service
Section 13.1 of the Agreement, titled “Standards of Service,” required
that Triton adhere “to the highest standards of honesty, integrity, fair
dealing and ethical conduct” in all dealings with franchisees. FFIC claims
Triton’s representations to Deol, the franchisee, about an inexperienced
contractor renovating the Monterey store demonstrated Triton’s failure to
comply with Section 13.1.
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Under the standard Franchisee Agreement, franchisees were required
“to hire a fully qualified licensed and insured” general contractor, chosen
from a list of Quizno’s-approved contractors, for managing the store’s
construction. Here, the evidence at trial established the following. Triton
gave franchisees a list of Quizno’s-approved contractors who could complete
construction on a particular store. Despite Triton’s policy of rejecting bids
from unapproved contractors or investigating them before proceeding further,
Triton presented Deol, the franchisee, with a bid from Young, who was an
unvetted and unapproved contractor. Young, whose bid was half the cost of
the other construction bids that Triton received, had been a contractor for
approximately one year building non-electrified metal sheds. Deol accepted
Young’s bid based on Triton’s recommendation and representation that he
was Quizno’s-approved. On this record, there is substantial evidence showing
that Triton did not act in accordance with Section 13.1.
Triton’s assertions to the contrary are unpersuasive. To the extent
Triton claims there was testimony that Quizno’s approved of Young before
starting construction, the jury could reasonably reject it. We do not disturb a
jury’s credibility determination on appeal. (See Lenk v. Total-Western, Inc.
(2001) 89 Cal.App.4th 959, 968.)
Next, Triton disputes its actions were unethical or dishonest because it
simply presented the franchisee with a cost-effective contractor. But Triton
was aware that those lower costs, particularly for the electrical work, were
partially based on Young’s stated intention to use an hourly employee rather
an electrical subcontractor. Young admitted he was not an electrician and
not competent to inspect electrical work. Meanwhile, Triton acknowledged
this was a specialty trade generally performed by an electrical subcontractor,
yet there was evidence that Triton did not disclose this information to the
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franchisee. In sum, there was substantial evidence of Triton’s noncompliance
with Section 13.1.
2. Section 9.8, Area Director’s Inspections
Section 9.8. of the Agreement, titled “Area Director’s Inspections,”
provides that “[Triton] shall ascertain through field audits, reviews and
inspections, that each Franchisee . . . has complied satisfactorily with all of
the terms and conditions of the Franchise Agreement, specifications,
standards . . . and Franchisee’s Operations Manual . . . .” Under the
Franchisee Agreement, renovations of the restaurant property must “comply
with the image, standards or operation and performance capability
established” in the Quizno’s Architecture and Construction Manual. Section
9.4 of the Agreement mandates Triton’s familiarity with “standards and
specifications for the build out . . . of the Restaurant as prescribed from time
to time by [Quizno’s].” Section 9.8 also requires Triton to “notify Franchisee
in writing with a copy and evaluation report to Franchisor, of any
deficiencies.”
Contrary to Triton’s insistence, the foregoing provisions amply
document that Triton’s inspection duties extended to the construction of
Deol’s restaurant.
On that score, there was evidence indicating Triton knew that “all
wiring shall be run in conduit”—a requirement in both Quizno’s Manual and
the construction plans. Young’s failure to encase the toaster oven cable in a
protective conduit was obvious and visible, and both Young and a Triton
representative acknowledged seeing exposed wiring on the basement ceiling
during the inspection of the restaurant. Triton did not include this deficiency
on the “punch list”—a written list provided to contractors of incomplete or
unsatisfactorily completed construction items that needed to be fixed—it sent
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to Young and the franchisee. Finally, while we acknowledge that a
franchisee could reasonably rely on Monterey’s inspection of the electrical
work and that the Agreement did not mandate how Triton was to conduct its
inspections, neither circumstance altered Triton’s independent obligations to
inspect and report to the franchisee any deficiencies under Section 9.8.
In sum, substantial evidence supports a finding that Triton did not act
in accordance with its obligations under Section 9.8.
D. Causation
Triton next claims there was no evidence that its failures to act in
accordance with the Agreement caused the fire. In part, Triton argues that
Dr. Vyto Babrauskas—a forensic fire and explosions investigator and FFIC’s
expert—gave opinion testimony about the cause of the fire based on
unestablished predicate facts. In admitting such testimony, Triton claims,
the trial court allowed the expert to provide a speculative opinion about the
cause of the fire, which failed to establish a causal nexus between the fire and
Triton’s asserted failures.
1. Additional Facts
Dr. Babrauskas testified that the fire originated on the specific ceiling
joist where the toaster oven electrical cable was attached, a conclusion based
on his discussions with other experts, his examination of fire reports, and his
review of post-fire photos of the restaurant. The joist bore unique burn
damage—a chunk of the wood was gone—compared to the others, the
electrical cable connecting to the toaster oven was attached to the joist, but
its PVC insulation, a combustible material, had burned off. In Babrauskas’s
opinion, a malfunctioning wire, the only object that was or could be in that
joist space, ignited a fire, and the PVC insulation and wooden joist fueled the
fire after ignition.
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Dr. Babrauskas also opined that a hammer strike to the PVC-insulated
power cable was “the most consistent and the most likely explanation” for
the cause of the fire. He explained electrical cable is susceptible to
mechanical damage often caused during installation when a hammer is used.
Hammer blows to a PVC-insulated cable leave no easily visible mark but
render the insulation susceptible to damage during periodic voltage or power
surges. In damaged cables, power surges heat the insulation and ignite it as
a result of arc tracking—electricity moving between formerly insulated wires
in the cable. He noted that the heating element in the toaster oven had
previously burned out and that the store experienced excessive light bulb
burn outs, all classic symptoms of repeated power surges.
Robert Kilgore testified as FFIC’s expert in electrical engineering.
Based on a photo of the fire area, he explained the toaster oven cables were
improperly bundled together and then nailed to the joist with a two-headed
nail. This installation did not conform to the electrical code or city-approved
plans because, among other things, the cables were not placed in a conduit.
Conduits protect the wire from damage, such as hitting it with a hammer,
and protects areas outside of the wires from potential damage if the wires
fail. Kilgore’s examination of the actual toaster oven cable revealed one area
that was kinked, possibly as the result of a two-headed nail, which lined up to
where the cable could have been affixed on the joist.
2. Analysis of Dr. Babrauskas’s Testimony
Evidence Code section 802 allows courts to exclude an expert’s opinion
if it is “based on reasons unsupported by the material on which the expert
relies.” (Sargon Enterprises, Inc. v. University of Southern California (2012)
55 Cal.4th 747, 771; Evid. Code, § 802; see Rest.2d Conf. of Laws, § 138
[“[T]he forum applies its own local law in determining the grounds for
17
excluding evidence”].) Courts assess whether “ ‘as a matter of logic, the
studies and other information cited by experts adequately support the
conclusion that the expert’s general theory’ ” is valid rather than reaching an
evaluation of the expert’s conclusions. (Sargon, at p. 772.) We review the
admission of expert testimony for an abuse of discretion. (Id. at p. 773.)4
While we agree that expert opinions may not be speculative or
grounded in unsupported reasoning, that was not the case here. (Cooper v.
Takeda Pharmaceuticals America, Inc. (2015) 239 Cal.App.4th 555, 576.)
Dr. Babrauskas’s opinion that the PVC-insulated toaster cable was most
likely damaged during installation and caused the fire was based on fire
reports, photos of the burn area and bare wires, and research from laboratory
tests. (People v. Sanchez (2016) 63 Cal.4th 665, 675 [experts may relate
information acquired from “lectures, study of learned treatises, etc”].) His
description of arc tracking was based on established scientific literature, and
he explained it was simply the typical process of how electricity moves from
one wire to another when it is damaged. Then he explained the possible
consequences of this process. Contrary to Triton’s assertions, Babrauskas’s
opinion was not speculative due to his failure to examine the damaged
insulation. As Babrauskas explained, there was no damaged insulation to
inspect because it completely burned away. Admitting this testimony was
not an abuse of discretion.
4 We reject FFIC’s claim that Triton waived this argument. Triton
objected that Dr. Babrauskas’s opinion was based on unestablished predicate
facts—an accidental hammer strike, power surges, and arc-tracking—before
the expert presented any testimony, thus preserving the issue for our review.
(People v. Stamps (2016) 3 Cal.App.5th 988, 993.)
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3. Substantial Evidence
Relatedly, Triton argues there was insufficient evidence supporting the
jury’s verdict that the fire resulted from, or arose out of or in connection with,
Triton’s acts not in accordance with the Agreement. “Arising out of” has been
construed as “but for” cause under Colorado law. (Northern Ins. Co. v.
Ekstrom (Colo. 1989) 784 P.2d 320, 323.) Consistent with that interpretation,
the trial court instructed the jury that it had to decide “whether ‘but for’
Triton’s conduct the fire would not have occurred,” meaning “if the same
event would not have occurred without that action or failure to act.”
Viewing the evidence as favorably as possible to FFIC, we conclude
there was substantial evidence supporting the verdict. (U.S. Ecology, supra,
129 Cal.App.4th at p. 908.) Undisputed testimony established that the
toaster oven cable was installed with a two-headed nail on the wooden joist,
that the cable not enclosed in a conduit to protect it from damage during
installation, and that the PVC insulation had burned off the cable leaving the
bare wire exposed. Dr. Babrauskas identified potential evidence of power
surges at the store, such as the toaster oven heating element burning out and
excessive light bulb burn outs, which could have resulted in heating up the
PVC insulation sufficiently to ultimately ignite the fire.
Dr. Babrauskas’s testimony explained that damage to the unprotected
toaster oven cable during installation was “most consistent and the most
likely explanation of the facts” on cause of the fire. (See Cooper v. Takeda
Pharm. Am., Inc. (2015) 239 Cal.App.4th 555, 578.) In conveying this
opinion, Babrauskas provided “a reasoned explanation illuminating why the
facts have convinced [him], and therefore should convince the jury, that it is
more probable than not” that the faulty installation of the toaster cable
caused the damage. (Ibid.) Rather than disputing that the toaster oven cable
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was not in a conduit and thus incorrectly installed, Triton complains there
was insufficient evidence that the wire was damaged during the initial
installation. But Kilgore’s inspection of the wire revealed damage potentially
caused by a nail. There was no reason to believe that anyone would have
been hammering the insulated cable after installation.
Finally, Triton points out it did not supervise the contractor’s employee
and had no duty to supervise installation of the conduit. However, the
evidence showed a Triton representative was aware that Young was an
inexperienced contractor who could not adequately supervise electrical work
performed by an hourly employee. Triton’s representations to Deol that
Young was a Quizno’s-approved contractor induced Deol to accept Young’s
bid. Evidence further established that a competent contractor would
understand and properly follow the construction plans and Manual requiring
the encasing of all wiring in a conduit, that Triton was aware of this plan
requirement, but that Triton did not report this visible defect to Deol. And
significantly, Triton does not dispute that a fire would not have occurred if
the wires were properly placed in a conduit. Accordingly, there was
substantial evidence that the fire would not have happened but for Triton’s
acts and omissions.
E. Prejudgment Interest
Finally, we reject Triton’s various challenges to FFIC’s prejudgment
interest award. The initial June 25, 2019 judgment stated FFIC was entitled
to recover “$7,841,553.72, plus interest in the amount of $_____. . . .” On
August 12, the trial court found FFIC entitled to prejudgment interest
starting from March 5, 2015 at a rate of 10 percent pursuant to Civil Code
section 3287, and it ordered the parties to confer on the correct sum to be
entered into the judgment nunc pro tunc. (Civ. Code, § 3287, subd. (a).) On
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August 22, Triton filed a notice of appeal encompassing the June 25
judgment, as well as the August 12 order granting FFIC’s motion for
prejudgment interest. On September 11, 2019, the trial court entered a
judgment nunc pro tunc that included the prejudgment interest amount of
$3,379,386.97.
Triton claims the August 22 notice of appeal divested the trial court of
jurisdiction to set the prejudgment interest amount. (See Code Civ. Proc.,
§ 916, subd. (a).) While an appeal of a judgment generally stays trial court
proceedings, a trial court “may proceed upon any other matter embraced in
the action and not affected by the judgment or order.” (Code Civ. Proc., § 916,
subd. (a).) For example, a trial court may correct clerical errors in a
judgment nunc pro tunc, despite the pendency of an appeal. (Gravert v.
DeLuse (1970) 6 Cal.App.3d 576, 581.)
Here, as Triton acknowledges, the trial court’s order setting the
prejudgment interest amount had no impact on the effectiveness of Triton’s
appeal. (Varian Medical Systems, Inc. v. Delfino (2005) 35 Cal.4th 180, 189.)
The September 11 nunc pro tunc judgment simply conformed to the August
12 decision, ordering that the prejudgment interest to which FFIC was
entitled should be calculated at 10 percent. (Theriot v. Superior Court of Los
Angeles County (1963) 221 Cal.App.2d 174, 179 [general rule nunc pro tunc
judgment].) In other words, the order “merely quantified the amount of
prejudgment interest awarded in the original judgment [and] . . . did not
substantially change the original judgment.” (Guseinov v. Burns (2006) 145
Cal.App.4th 944, 951.) The order was thus outside of the scope of an
automatic section 916 stay.
Triton further waived its right to complain about the timing of FFIC’s
motion seeking prejudgment interest, which was filed after the judgment was
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entered. Triton’s failure to make this argument in the trial court forfeits its
review on appeal. (Sea & Sage Audubon Soc’y, Inc. v. Planning Com. (1983)
34 Cal.3d 412, 417.)
DISPOSITION
The judgment is affirmed. Respondent is entitled to its costs on appeal.
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_________________________
Fujisaki, Acting P.J.
WE CONCUR:
_________________________
Petrou, J.
_________________________
Wiseman, J.*
A158653
* Retired Associate Justice of the Court of Appeal, Fifth Appellate
District, assigned by the Chief Justice pursuant to article VI, section 6 of the
California Constitution.
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