City of Calabasas v. GMZ Engineering, Inc.

American does not have the same level of liability as does the City. For the reasons discussed above, the Court sustains the demurrer to the first through fifth causes of action in the cross-complaint. Although it appears unlikely the City will successfully amend its cross-complaint to sufficiently plead those claims, in an abundance of caution, the Court will provide the City with an opportunity to amend them. (See City of Stockton v. Superior Court (2007) 42 Cal.4th 730, 747 [further amendment permitted when operative complaint "does not on its face foreclose any reasonable possibility of amendment"].)

Sixth Cause of Action: Declaratory Relief

"[D]emurrer is usually not an appropriate method for testing the merits of a declaratory relief action, because the plaintiff is entitled to a declaration of rights even if it is adverse to the plaintiff's interest." (Qualified Patients Ass'n v. City of Anaheim (2010) 187 Cal.App.4th 734, 751, internal quotations and citations omitted.) Accordingly, the Court overrules the demurrer to the sixth cause of action. The City is entitled to a declaration of its rights under the Articles of Agreement, even if that declaration is unfavorable. Therefore, the demurrer to this cause of action is overruled.

CONCLUSION AND ORDER

All American's demurrer to the first through fifth causes of action in the City's cross-complaint is sustained with leave to amend. The demurrer to the sixth cause of action is overruled. The City is to file an amended cross-complaint within 20 days of notice of this order. All American is ordered to provide notice of the Court's ruling and to file proof of service of same.

DEPARTMENT | 415 | HEARING DATE | August 20, 2026 | CASE NUMBER |

| MOTION

| Demurrer to Complaint | MOVING PARTY | Cross-Defendant GMZ Engineering, Inc. | OPPOSING PARTY | Defendant and Cross-Complainant City of Calabasas | MOTION

Cross-Defendant GMZ Engineering, Inc. ("GMZ Engineering") demurs to the cross-complaint of Defendant and Cross-Complainant City of Calabasas ("City"). The City opposes the demurrer.

ANALYSIS

"It is black letter law that a demurrer tests the legal sufficiency of the allegations in a complaint." (Lewis v. Safeway, Inc. (2015) 235 Cal.App.4th 385, 388.) In ruling on a demurrer, the court must "liberally construe[]" the allegations of the complaint. (Code Civ. Proc., Sec. 452.) "This rule of liberal construction means that the reviewing court draws inferences favorable to the plaintiff, not the defendant." (Perez v. Golden Empire Transit Dist. (2012) 209 Cal.App.4th 1228, 1238.)

First Through Fifth Causes of Action: Indemnification-Based Claims

If an indemnity clause "expressly and unequivocally" states the indemnitor is to indemnify the indemnitee for the indemnitee's negligence, the indemnitor must indemnify the indemnitee regardless of whether liability arises as the result of the indemnitee's negligence alone or of the indemnitee's co-negligence with the indemnitor. (MacDonald & Kruse, Inc. v. San Jose Steel Co. (1972) 29 Cal.App.3d 413, 419 (MacDonald).)

On the other hand, if the indemnity clause provides the indemnitor is to indemnify the indemnitee for the indemnitee's liability "howsoever same may be caused," "regardless of responsibility for negligence," "arising from the use of the premises, facilities or services" of the indemnitee, "which might arise in connection with the agreed work," "caused by or happening in connection with the equipment or the condition, maintenance, possession, operation or use thereof," or "from any and all claims for damages to any person or property by reason of the use of said leased property . . .," then "the indemnitee is indemnified from his own acts of passive negligence that solely or contributorily cause his liability, but is not indemnified for his own acts of active negligence that solely or contributorily cause his liability." (Ibid.)

An indemnification clause that provides that the indemnitor is to indemnify the indemnitee for the indemnitee's liabilities caused by the indemnitor, "any negligence on the part of the indemnitee, either active or passive, will bar indemnification against the indemnitor irrespective of whether the indemnitor may also have been a cause of the indemnitee's liability." (Id. at p. 420.)

The City has attached the Articles of Agreement to the cross-complaint. As relevant to the instant motion, that agreement states, "To the fullest extent permitted by law, [GMZ Engineering] shall, at its sole cost and expense, fully defend, indemnify and hold harmless [the City], its authorized representatives and their respective subsidiaries, affiliates, members, directors, officers, employees and agents. . . from and against any and all claims, actions, demands, costs, judgments, liens, penalties, liabilities, damages, losses, and expenses, including but not limited to any fees of accountants, attorneys or other professionals . . ., arising out of, in connection with, resulting from or related to, any act, omission, fault or negligence of [GMZ Engineering], [GMZ Engineering] 's Representative, or any of its officers, agents, employees, Subcontractors or Suppliers, or any person or organization directly or indirectly employed by any of them . . ., in connection with or relating to or claimed to be in connection with or relating to the work performed under this AGREEMENT." (Cross-Complaint, Exhibit A, p. 6.)

As such, pursuant to the expressed terms of the agreement, GMZ Engineering must indemnify the City for passive negligence but not for the City's active negligence. (MacDonald, supra, 29 Cal.App.3d at p. 419.) Additionally, Civil Code section 2782, subdivision (b) bars a provision in a construction contract with a public agency which would relieve the agency from liability for its own active negligence. (See also Civ. Code, Sec. 2782.8.)

In the instant matter, the City seeks to require GMZ Engineering to indemnify the City for the wrongful termination claims Plaintiff Darren Arrieta ("Plaintiff") brought against the City. In his operative second amended complaint, Plaintiff alleges GMZ Engineering engaged in unlawful conduct, which Plaintiff reported to the City; GMZ Engineering's employees harassed Plaintiff, which Plaintiff reported to the City; and the City retaliated against Plaintiff for making such reports and terminated Plaintiff's employment. (Second Amended Complaint, P.P. 10-12, 16-17, 19.)

Plaintiff's claims are thus premised entirely on the City's conduct, not GMZ Engineering's. While Plaintiff alleges he reported misconduct by GMZ Engineering and its employees to the City, Plaintiff's claims arise out of the City's response to those reports, not any conduct by GMZ Engineering. Furthermore, to the extent the City seeks to require GMZ Engineering to indemnify the City for Plaintiff's claim the City acted intentionally to violate Plaintiff's rights, such indemnification is impermissible. (Downey Venture v. LMI Ins. Co. (1998) 66 Cal.App.4th 478, 499-500.) "A termination of employment . . . is such an act." (B & E Convalescent Center v. State Compensation Ins. Fund (1992) 8 Cal.App.4th 78, 98 (B & E Convalescent).) As such, the City fails to allege contractual claims against GMZ Engineering.

Because GMZ Engineering and the City agreed to a contractual indemnity clause, the City cannot state claims for equitable indemnity which exceed the scope of the indemnity clause. (E. L. White, Inc. v. City of Huntington Beach (1978) 21 Cal.3d 497, 508.) Accordingly, the City likewise fails to allege equitable indemnity claims against GMZ Engineering.

In opposition, the City argues GMZ Engineering's demurrer is untimely and GMZ Engineering failed to meet and confer prior to filing the demurrer. However, the City addresses the merits of GMZ Engineer's demurrer and thereby has waived any procedural objections. (See In re Marriage of Falcone & Fyke (2008) 164 Cal.App.4th 814, 826.)

The City also argues Plaintiff's claims fall within the scope of the indemnification clause. The City is incorrect. The City maintains its "exposure in the underlying lawsuit is entirely derivative of GMZ's alleged wrongful conduct." (Opposition to Demurrer, p. 11.) But, as discussed above, Plaintiff's claims are not based on GMZ Engineering's alleged wrongful conduct. Rather, they are based on the City's alleged retaliation for Plaintiff having reported GMZ Engineering's alleged wrongful conduct.

The City cites Crawford v. Weather Shield Mfg. (2008) 44 Cal.4th 541, which is not on point. In that case, the California Supreme Court considered the scope of the duty to defend based on an indemnity provision between a contractor and subcontractor. (Id. at p. 547.) Homeowners sued a contractor and subcontractor for construction defects, and the contractor cross-complained against the subcontractor for indemnity based on the indemnity provision, which required the subcontractor to indemnify the contractor for damages arising from the subcontractor's work and to defend "any suit or action" brought against the contractor "founded upon" a claim of such damages. (Id. at pp. 547-548.)

The Supreme Court held the indemnity clause in the agreement between the subcontractor and the contractor expressly required the subcontractor to defend any action against the contractor based on the subcontractor's role in the construction, even if the subcontractor was ultimately found not liable for negligence. (Id. at p. 553.) The Supreme Court further held, unless the indemnity clause otherwise specifies, the indemnitor's duty includes a duty to assume the indemnitee's defense against all claims embraced by the indemnity clause. (Id. at 555.)

In the instant case, Plaintiff's claims against the City do not fall within the scope of the indemnity clause, which does not cover claims based on the City's active negligence. Furthermore, Plaintiff's claims are not based on GMZ Engineering's work on the project at issue, but rather on the City's personnel decisions. As the claims do not fall within the scope of the indemnity clause, GMZ Engineering does not owe a duty to defend or indemnify the City.

Likewise, the City's argument Civil Code section 2782, subdivision (b) is inapplicable fails. As an initial matter, as set forth above, the agreement between the City and GMZ Engineering does not cover the City's active negligence. Furthermore, because the City is a public entity, Civil Code section 2782, subdivision (b) would bar any agreement which purports to cover the City's active negligence.

The City argues, through its cross-complaint, it "seeks indemnity for the costs and liabilities the City has incurred because [GMZ Engineering's] unlawful work performance triggered the entire chain of events culminating in [Plaintiff's] whistleblower and harassment lawsuit." (Opposition to Demurrer, p. 13.) Again, the City misconstrues Plaintiff's allegations. Those allegations are premised entirely on the City's alleged unlawful personnel decisions, not on GMZ Engineering's conduct.

The City also cites Oltmans Const. Co. v. Bayside Interior s, Inc. (2017) 10 Cal.App.5th 355, which is likewise not on point. In that case, the Court of Appeal considered an indemnity provision which required a subcontractor to indemnify a general contractor, ' " except to the extent the claims arise out of, pertain to, or relate to the active negligence or willful misconduct " of the general contractor.'" (Id. at p. 358.) The Court held, if the general contractor's active negligence caused the underlying injury, the subcontractor was responsible for indemnification of the portion of liability attributable to the general contractor's negligence. (Id., at p. 367.)

In this case, none of Plaintiff's claims are premised on the City's negligence. All of them relate to the City's alleged wrongful termination of Plaintiff. "It is well established and generally self-evident that the act of terminating an employee is an intentional act." (B & E Convalescent, supra, 8 Cal.App.4th at p. 98.)

The City's contention its claim for contribution against GMZ Engineering is viable is also unavailing. "Equitable contribution allows for loss sharing among co-obligors that share the same level of liability on the same risk as to the same principal." (Morgan Creek Residential v. Kemp (2007) 153 Cal.App.4th 675, 684, internal quotations and citations omitted.) GMZ Engineering does not share the same level of liability to Plaintiff as does the City because Plaintiff's claims are employment claims against the City as Plaintiff's former employer. GMZ Engineering never employed Plaintiff.

The Court, therefore, sustains the demurrer to the first through fifth causes of action in the cross-complaint. Although it appears unlikely the City will successfully amend its cross-complaint to sufficiently plead those claims, in an abundance of caution, the Court will provide the City with an opportunity to do so. (See City of Stockton v. Superior Court (2007) 42 Cal.4th 730, 747 [further amendment permitted when operative complaint "does not on its face foreclose any reasonable possibility of amendment"].)

Sixth Cause of Action: Declaratory Relief

"[D]emurrer is usually not an appropriate method for testing the merits of a declaratory relief action, because the plaintiff is entitled to a declaration of rights even if it is adverse to the plaintiff's interest." (Qualified Patients Ass'n v. City of Anaheim (2010) 187 Cal.App.4th 734, 751, internal quotations and citations omitted.) Accordingly, the Court overrules the demurrer to the sixth cause of action. The City is entitled to a declaration of its rights under the Articles of Agreement, even if that declaration is unfavorable.

CONCLUSION AND ORDER

GMZ Engineering's demurrer to the first through fifth causes of action in the City's cross-complaint is sustained with leave to amend. The demurrer to the sixth cause of action is overruled. The City is to file an amended cross-complaint within 20 days of notice of this order. GMZ Engineering is ordered to provide notice of the Court's ruling and to file proof of service of same.

Case Number: 25STCV11267C Hearing Date: August 20, 2026 Dept: 415 TENTATIVE RULING

DEPARTMENT | 415 | HEARING DATE | August 20, 2026 | CASE NUMBER | 25STCV11267C | MOTION | Motion for Sanctions | MOVING PARTY | Cross-Defendant GMZ Engineering, Inc. | OPPOSING PARTY | Cross-Complainant City of Calabasas | MOTION

Cross-Defendant GMZ Engineering, Inc. ("GMZ Engineering") seeks sanctions against Defendant and Cross-Complainant City of Calabasas ("City") pursuant to Code of Civil Procedure section 128.7 based on the City's cross-complaint. The City opposes the motion.

ANALYSIS