Salinas Energy Corp. v. American Pipe & Tubing, Inc. CA5 ( 2013 )

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NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FIFTH APPELLATE DISTRICT
SALINAS ENERGY CORPORATION,
F063636, F064071
Defendant, Cross-Complainant and
Appellant, (Super. Ct. No. CV-268189)
v.
OPINION
AMERICAN PIPE & TUBING, INC.,
Cross-Defendant and Respondent.
APPEALS from a judgment and order of the Superior Court of Kern County.
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)1 sued defendant and
cross-complainant Salinas 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 equitable indemnity and declaratory relief.2 The trial
court granted APT‟s summary judgment motion on the cross-complaint. APT thereafter
filed a motion for attorney fees under Code of Civil Procedure section 1038,3 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
1We will refer to the plaintiffs by their first names, not out of disrespect, but to
avoid any confusion to the reader.
2
The cross-complaint named other cross-defendants who are not parties to the
judgment or this appeal.
3 Undesignated statutory references are to the Code of Civil Procedure.
2.
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
3.
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
4.
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
5.
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.
The Summary Judgment Motions
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
6.
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.”
7.
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
8.
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.
9.
The Motion for Attorney Fees
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
10.
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
11.
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.” 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
12.
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.
13.
DISCUSSION
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.” (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.
14.
“[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.‟”
(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,” 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.
(Expressions at Rancho Niguel Assn. v. 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 party” as against the indemnitee.
(Children’s Hospital v. Sedgwick (1996) 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
15.
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. (Williams
v. California Physicians’ Service (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. (City of Hope Nat. Medical Center v. Superior 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
16.
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.‟”‟”].)
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 Huitt v.
Southern California Gas Co. (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
17.
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‟].)” (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
18.
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.”
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.”
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.‟” (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
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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 (Gamble).)
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.”].)
20.
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‟”].)
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.” (Knight v.
City of Capitola (1992) 4 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
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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.” (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
22.
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 Soule v. General Motors Corp. (1994) 8
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
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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.”
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
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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, supra, 2 Cal.3d 465, and Persons
v. Salomon North America, Inc. (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
25.
site[,]” 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 absence
of a pressure relief device, not 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
26.
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.
27.
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.
28.