Ventura Heritage Corp vs. Gouvis

The Court finds that sufficient facts are stated to support the second and third causes of action for express indemnity and breach of contract. Thus, Cross-Defendant’s motion for judgment on the pleadings is DENIED.

202100549252CUBC: Ventura Heritage Corp vs. Gouvis

Cross-Defendant to give notice of this Court’s ruling.

II. Relevant Background

A.

Procedural History

This lawsuit, originally filed on January 4, 2021, and now consolidated with several related cases, arises out of out of the residential construction project of a 154-unit apartment complex known as “Island View Apartments”, for which the property owner, Ventura Heritage Corp., (“Plaintiff” or “VHC”), brought suit against Gouvis Engineering Consulting Group, Inc. (“Gouvis”) and GMEP Engineers, Inc. (“GMEP”) alleging damages as a result of the engineering services performed by Gouvis and GMEP. Plaintiff is the developer and the owner of the Island View Apartments, located at 6061 Promontory Lane, Ventura, California (hereinafter, the “Project” or “Island View Project”). Plaintiff sued for breach of contract, negligence, and fraud.

Three cross complaints have been filed in response to Plaintiff’s complaint. The first cross-complaint was filed November 13, 2023, by GMEP for indemnity against the general contractor of the Project, Pacific Heritage Communities Corp. (“PHCC”) and others.1 The second cross-complaint was filed February 20, 2024, by PHCC for indemnity against GMEP, Gouvis and others, not including moving party, Acoustical Concrete Floor Systems, Inc. (“Acoustical”). The third cross-complaint was filed on September 13, 2024, by Gouvis for indemnity against subcontractors of the Project to include Acoustical (“Gouvis Cross-Complaint”). The four-count Gouvis Cross-Complaint asserts two causes of action against Acoustical and other project subcontractors; the second cause of action for express indemnity and the third cause of action for breach of contract.

Acoustical filed this motion for judgment on the pleadings on April 13, 2026, as to causes of action asserted against it for express indemnity and breach of contract. Gouvis opposed the motion on June 23, 2026, and briefing was complete with the filing of the reply brief on June 29, 2026. The parties stipulated to continue the hearing on this motion, originally set for hearing on July 6, 2026 to August 4, 2026.

The parties previously stipulated to a continuance of the five-year statute, and trial is currently set for May 24, 2027.

B. Complaint Allegations Relevant to the Second and Third Causes of Action

Gouvis is a California structural engineering firm that also provides mechanical, electrical, and plumbing (“MEP”) engineering services, either directly or through others. (Cross-Compl., ¶ 1.) The cross-defendants, to include Acoustical, are subcontractors who contracted with PHCC< the general contractor affiliated with Plaintiff and Westwood Communities Corp. (“Westwood”), to

1 The GMEP cross-complaint named several cross-defendants, including Acoustical. All cross-defendants were

dismissed from the cross-complaint on January 15, 2026, with the exception of United Steel Erectors, which party reflects as named but not served.

202100549252CUBC: Ventura Heritage Corp vs. Gouvis

provide services in connection with the Island Project. (Cross-Compl., ¶ 4.) The lawsuit arises out of work and services provided on the Island Project that is owned by Plaintiff. (Cross-Compl., ¶ 8.) In 2013, Gouvis contracted with Westwood Communities Corp. (“Westwood”) to provide structural and MEP services on the Project, and Westwood assigned its rights under the contract to Plaintiff. That assignment made Plaintiff the owner of all rights with respect to the Westwood-Govis contract. (Cross-Complt., ¶ 9.) Gouvis and GMEP entered into a master agreement to provide MEP engineering services on the Project, most of which services were to be provided by GMEP. (Cross-Complaint, ¶ 10.)

With respect to Gouvis’ second cause of action for immunity, Gouvis makes the following allegations. Between 2015 and 2019, PHCC contracted with each subcontractor, to include Acoustical, under a standard-form subcontract, which is attached to the Cross-Complaint as Exhibit B. (Cross-Complaint, ¶¶ 12 & 19.) The subcontract includes indemnitee provisions, to include a core provision at section 22. (Cross-Complaint, ¶ 20-22.) The subcontract includes an “Owner Indemnitees,” defined to include the Owner and its parent, subsidiary, and affiliated entities of every tier, and “’all such parties’ agents,” and that the subcontractor agrees to defend and indemnify those parties against losses arising out of the Work, the subcontractor’s breach, or its presence or activities, subject to exceptions for the sole negligence or willful misconduct of an Owner Indemnitee or for design defects; a parallel provision in section 22(b) covers “Contractor and Contractor Indemnitees” and their “agents.” (Cross-Compl., ¶ 21.)

As a matter of fact, and law, design professionals act as agents or representatives of the owner in dealings with contractors and subcontractors, citing supporting authorities. (Cross-Compl., ¶ 22.) Gouvis is an express and/or intended third-party beneficiary of the indemnity provision. (Cross-Compl., ¶ 23.) Plaintiff previously attributed the harm to the subcontractors’ own acts and omissions but now seeks to hold Gouvis liable for the same damages, none of which arose from Gouvis’ sole negligence or willful misconduct or from design defects it supplied. (Cross-Compl., ¶ 24.)

Finally, Gouvis alleges that it tendered its defense, the cross-defendants refused to defend or indemnify, and it has been damaged in defense costs, fees, and expenses. (Cross-Compl., ¶ 25.)

As to the third cause of action for breach of contract, Gouvis alleges that, under section 17 of the subcontract, the subcontractor cross-defendants were required to maintain insurance policies, including comprehensive general liability and (for design/build components) professional liability coverage, and to name various entities “and their agents” as additional insureds; it further alleges that Exhibit D, subsection 2, requires that the Owner, certain others, and their “agents” be named as additional insureds under the CGL and umbrella/excess policies. (Cross-Compl., ¶ 27.)

As with the second cause of action, Gouvis alleges that design professionals act as representatives or agents of the owner, citing supporting authorities, and that the subcontractors therefore had an obligation to name Gouvis — by name, profession, or description — as an additional insured. (Cross-Compl., ¶ 28.) Further, Gouvis contends it is an express and/or intended third-party beneficiary of the insurance provisions. (Cross-Compl., ¶ 29.) The subcontractor cross-defendants breached their obligations under the subcontract by failing to indemnify Gouvis. (Cross-Compl., ¶ 30.)

As a result, Gouvis alleges it lacks additional-insured coverage that would provide for its defense and/or indemnification, and has been damaged in losses, costs, expenses, and attorney fees. (Cross-Compl., ¶ 31.)

202100549252CUBC: Ventura Heritage Corp vs. Gouvis

III.Analysis:

A. Motion for Judgment on the Pleadings

A motion for judgment on the pleadings has the same function as a general demurrer but is made after the time for demurrer has expired. (Code Civ. Proc., § 438, subd. (f).) Except as provided by statute, the rules governing demurrers apply. (Civic Partners Stockton, LLC v. Youssefi (2013) 218 Cal.App.4th 1005, 1012 (Civic Partners Stockton, LLC).)

“Judgment on the pleadings is proper when the complaint does not state facts sufficient to constitute a cause of action against the defendant.” (Rolfe v. Cal. Transp. Comm'n (2002) 104 Cal.App.4th 239, 242; see also Code Civ. Proc., § 438, subd. (c)(1)(B)(ii).) “Like a demurrer, the grounds for the motion [for judgment on the pleadings] must appear on the face of the challenged pleading or from any matter of which the court is required to take judicial notice.” (Civic Partners Stockton, LLC, supra, 218 Cal.App.4th at p. 1013.)

In ruling on a motion for judgment on the pleadings, “[a]ll allegations in the complaint and matters upon which judicial notice may be taken are assumed to be true.” (Rippon v. Bowen (2008) 160 Cal.App.4th 1308, 1313.) This means that the court shall accept as true all well pleaded facts, except when contradicted by exhibits to the complaint or documents of which the court has taken judicial notice. (Tucker v. Pacific Bell Mobile Services (2012) 208 Cal.App.4th 201, 210.)

“Unlike a demurrer, a plaintiff may move for judgment on the pleadings on the ground ‘that the complaint states facts sufficient to constitute a cause or causes of action against the defendant and the answer does not state facts sufficient to constitute a defense to the complaint.’ [Citations.]” (Alameda County Waste Management Authority v. Waste Connections US, Inc. (2021) 67 Cal.App.5th 1162, 1174; Code Civ. Proc., § 438, subd. (c)(1)(A).) “Where a plaintiff brings such a motion, we assume the defendant could have proven all of the factual allegations in its answer.” (Ibid.) “‘The issue is whether the [pleading] raises an issue that can be resolved as a matter of law.’ [Citation.]” (Ibid.)

B. Application

In summary, Acoustical brings this motion on two grounds: (1) the contracts in question preclude finding that Gouvis was an agent of Plaintiff or its predecessor (“Owner”), or that Gouvis was a third-party beneficiary of any provision in the Acoustical subcontract (no contract asserted and no facts supporting third party beneficiary); and (2) even if Gouvis did act as the Owner’s agent in some particulars, and is covered by the indemnity provision, the settlement agreement it previously entered extinguishes that indemnity obligation.

Gouvis argues that neither position provides a basis for judgment on the pleadings.

The Court concludes that sufficient facts are stated in the Cross-Complaint to support the two causes of action at issue (express indemnity and breach of contract) (Cross-Complaint, ¶¶ 1-13, 18-30.)

202100549252CUBC: Ventura Heritage Corp vs. Gouvis

There is no rigidity in the pleading requirements for breach of contract: Plaintiff must allege (1) the existence of a valid contract (2) that the defendant had knowledge of the existence of the contract and intended to induce a breach thereof (3) that the contract was in fact breached resulting in injury to plaintiff and (4) the breach and resulting injury must have been proximately caused by defendant’s unjustified or wrongful conduct. (Oasis West Realty LLC v. Goldman (2011) 51 Cal.4th 811, 821.)

The terms of a contract must be pled verbatim or according to their legal effect. (Progressive West Ins. Co. v. Yolo County Superior Court (2005) 135 Cal.App.4th 263, 270 fn. 1.) “A cause of action for breach of contract requires pleading of a contract, plaintiff’s performance or excuse for failure to perform, defendant’s breach and damage to plaintiff resulting therefrom.” (McKell v. Washington Mutual, Inc., supra, 142 Cal.App.4th at p. 1489, 49 Cal.Rptr.3d 227.)” (Hale v. Sharp Healthcare (2010) 183 Cal.

App. 4th 1373, 1387.)

Express indemnity if founded on breach of contract.

Generally, indemnity refers to the obligation resting on one party to make good a loss or damage another party has incurred. [Citation.] There are two basic types of indemnity: express indemnity, which relies on an express contract term providing for indemnification, and equitable indemnity, which embraces ‘traditional equitable indemnity’ and implied contractual indemnity.

(Jocer Enterprises, Inc. v. Price (2010) 183 Cal.App.4th 559, 573.) Implied indemnity and express indemnity is not available “in the absence of a joint legal obligation to the injured party.” (Id. at 574.)

“[T]he question whether an indemnity agreement covers a given case turns primarily on contractual interpretation, and it is the intent of the parties as expressed in the agreement that should control. When the parties knowingly bargain for the protection at issue, the protection should be afforded. This requires an inquiry into the circumstances of the damage or injury the language of the contract; of necessity, each case will turn on its own facts.” (Rossmoor, supra, 13 Cal.3d at p. 633.) The indemnity provisions of a contract are to be construed under the same rules for interpreting contracts, “‘with a view to determining the actual intent of the parties.’ ” (Wilshire-Doheny, supra, 83 Cal.App.4th at p. 1396; see also Maryland Casualty Co. v. Bailey & Sons, Inc., supra, 35 Cal.App.4th at p. 864.).” (Zalkind v. Ceradyne, Inc. (2011) 194 Cal. App. 4th 1010, 1024-1025.)

In the reply brief, Acoustical argues that “It is not disputed that Gouvis was not in privity of contract with Acoustical. Thus, the dispute between Acoustical and Gouvis centers on the interpretation of a contractual indemnity provision in the subcontract between Acoustical and PHCC (the identified Managing Agent of the owner). Gouvis, however, alleges that it was an intended third-party beneficiary of the Acoustical subcontract. Further, the Acoustical subcontract identifies the project owner as an intended beneficiary of the subcontract and PHCC as the owner’s agent, notwithstanding the fact that the contract between Govis and the Owner affirmatively states that Gouvis is not “an employee, agent, or partner” of the Owner.

The general rules applicable to breach of contract claims by alleged third-party beneficiaries has been summarized by the California Supreme Court as follows:

202100549252CUBC: Ventura Heritage Corp vs. Gouvis

“In California, as in other jurisdictions, it is well established that under some circumstances a third party may bring an action for breach of contract based upon an alleged breach of a contract entered into by other parties. Civil Code section 1559, enacted as one of the provisions of the original 1872 Civil Code, declares: ‘A contract, made expressly for the benefit of a third person, may be enforced by him at any time before the parties thereto rescind it.’” ....

“Although our past decisions have at times referred to and invoked the creditor-beneficiary and donee-beneficiary labels [citation], this court has not relied primarily on those categories or the Restatement formulations in the numerous cases in which we have discussed and applied the third-party beneficiary doctrine. Instead, a review of this court's third party beneficiary decisions reveals that our court has carefully examined the express provisions of the contract at issue, as well as all of the relevant circumstances under which the contract was agreed to, in order to determine not only (1) whether the third party would in fact benefit from the contract, but also (2) whether a motivating purpose of the contracting parties was to provide a benefit to the third party, and (3) whether permitting a third party to bring its own breach of contract action against a contracting party is consistent with the objectives of the contract and the reasonable expectations of the contracting parties.

All three elements must be satisfied to permit the third-party action to go forward.”

(Goonewardene v. ADP, LLC (2019) 6 Cal.5th 817, 826-830; see also Kaiser Engineers, Inc. v. Grinnell Fire Protection Systems Co. Inc. (1985) 173 Cal.App.3d 1050, 1055-56 [at the pleading stage indemnitee need only allege that they are intended beneficiaries; third party beneficiary status is a matter of contract interpretation and the third person need not be named or identified individually to be an express beneficiary.].)

Here, sufficient facts are alleged for both indemnity and agency. Whether Gouvis can prove that it was an agent within the meaning of the indemnity agreement is properly decided on the presentation of facts and evidence rather than at the pleading stage. (See Kaiser Engineers, Inc. v. Grinnell Fire Protection Systems Co. Inc. (1985) 173 Cal.App.3d at p. 1056.) The interpretation of the extent of the indemnity provision, as well as the issues of agency and the effect of the settlement agreement require further consideration of evidence not before the Court.

Ultimately, the allegations in the Cross-Complaint are sufficient to withstand the motion for judgment on the pleadings.

Based on the foregoing, Acoustical’ s Motion is DENIED.

6