RICHARD HOLZ, INC. v. SFC FLOORING CORPORATION

Plaintiff's ostensible agency argument. For these reasons, the Court DENIES Moving Defendant's Motion for Summary Judgment.

Conclusion

The Court DENIES Moving Defendant's Motion for Summary Judgment. IT IS SO ORDERED, Plaintiff TO GIVE NOTICE. September 9, 2026 _____________________ ____Anthony J. Mohr_ Judge of the Superior Court

STATE OF CALIFORNIA FOR THE COUNTY OF LOS ANGELES - NORTHWEST DISTRICT RICHARD HOLZ, INC., a California corporation, Plaintiffs, vs. SFC FLOORING CORPORATION, a California corporation, and DOES 1 through 20, inclusive, Defendants. | | CASE NO: 24VECV05207 [TENTATIVE] ORDER RE: PLAINTIFF RICHARD HOLZ, INC.'S MOTION FOR SUMMARY ADJUDICATION Dept. W 8:30 a.m. September 10, 2026 | | | | [TENTATIVE] ORDER: The Court GRANTS Plaintiff's Motion for Summary Adjudication as to the fourth cause of action for declaratory relief.

Background

This is a breach of contract dispute between two construction contractors. Plaintiff in this case is Richard Holz, Inc. (RHI). Plaintiff is a general contractor who was hired by non-party AR True Love, LLC, (AR) the corporate owner of a property located in Hidden Hills, California. Plaintiff was hired by AR as the general contractor for a construction project at AR's property. As part of this project, Plaintiff hired Defendant SFC Flooring Corporation (SFC) as a subcontractor, specializing in flooring, tiling, and staircases. The contract between Plaintiff and Defendant included an indemnification clause.

On November 9, 2022, Plaintiff filed suit against non-party AR for breach of contract and foreclosure of mechanic's lien. This claim was sent to arbitration in late December of 2022. On May 23, 2023, non-party AR filed a counterclaim against Plaintiff, alleging multiple defects in their work, including defects in the work done by Defendant subcontractor SFC. On September 12, 2023, Plaintiff submitted a tender of defense letter to Defendant SFC, requesting that they defend Plaintiff against the claims related to Defendant's work. Plaintiff also requested that Defendant pay Plaintiff's attorney fees and costs for work done defending against these claims.

Defendant declined to defend Plaintiff or pay these fees. On October 22, 2024, Plaintiff brought suit against Defendant alleging five causes of action: 1) breach of contract; 2) equitable indemnity; 3) contribution; 4) declaratory relief re: duty to defend; and 5) declaratory relief re: duty to indemnify. Now, Plaintiff moves for summary adjudication as to the fourth cause of action for declaratory relief, based on the issues of Defendant's duty to defend Plaintiff from the claims brought by non-party AR, as well as Defendant's obligation to reimburse Plaintiff for their reasonable attorney fees and costs.

Discussion

Plaintiff moves for summary adjudication of their fourth cause of action for declaratory relief re: duty to defend. (MSJ, p. 2:8-15.) Plaintiff asserts there is no dispute of material fact as to: 1) Defendant's duty to defend Plaintiff from the claims brought by non-party AR, and 2) Defendant's obligation to reimburse Plaintiff for their reasonable attorney fees and costs incurred while defending themselves from non-party AR. (Ibid.)

In analyzing a motion for summary judgment, courts must, 1) determine whether the moving party has negated the opponent's claims [or proven their own]; and 2) determine whether the opposition has demonstrated the existence of a triable, material factual issue." (Hinesley v. Oakshade Town Center (2005) 135 Cal.App.4th 289, 294.) Thus, summary judgment is granted when, after the Court's consideration of the evidence set forth in the papers and all reasonable inferences accordingly, no triable issues of fact exist, and the moving party is entitled to judgment as a matter of law. (CCP Sec. 437(c); Villa v. McFarren (1995) 35 Cal.App.4th 733, 741.)

i) Plaintiff's Initial Burden

Plaintiff asserts there is no dispute of material fact as to: 1) Defendant's duty to defend Plaintiff from the claims brought by non-party AR; and 2) Defendant's obligation to reimburse Plaintiff for their reasonable attorney fees and costs incurred while defending themselves from non-party AR. (MSJ, p. 2:8-15.)

a) Duty to Defend

In support of their assertion that Defendant has a duty to defend Plaintiff from the claims brought against them by non-party AR, Plaintiff provides evidence that they entered into a subcontract with Defendant to perform wood flooring work for AR's property. (Badurek Decl. P. 5; see also, Badurek Decl. Exhibit 2.) This contract contains an indemnity clause, which states that, "Subcontractor agrees to defend, indemnify and hold the . . . Contractor, its agents and employees (Indemnitees) harmless from and against any and all loss, damage, liability, expense, cost, claim, or lien arising out of any Construction Defect . . . resulting directly or indirectly from the performance of the Work described in this Agreement." (Id. P. 9; see also Id. Ex. 2, pp. 4-5.)

Plaintiff goes on to explain that non-party AR has asserted claims against Plaintiff, alleging defects in work performed by Defendant. (Id. P. 11; see also, Foster Decl. Ex. 7, p.12 [non-party AR's Counterclaim, alleging improper wood flooring adhesion, with an estimated cost of repair of $1.3 million].) Finally, Plaintiff establishes that they gave Defendant written notice of their demand that Defendant defend and indemnify Plaintiff from AR's crossclaims. (Foster Decl. P.P. 10-13.) This notice is relevant because, under the terms of the contract between Plaintiff and Defendant, "[u]pon receipt of notice to defend from an Indemnitee, Subcontractor shall immediately defend the Indemnitee without regard to the validity of any Defect Claims or any ultimate finding of fault, breach of the Agreement, or failure by Subcontractor." (Badurek Decl.

Ex. 2, pp. 41-42.) Based on this contractual language, Defendant was obligated to indemnify and defend Plaintiff in the underlying case. Based on these facts, Plaintiff has met their initial burden to establish that Defendant owed Plaintiff a contractual duty to defend them from liability arising out of the work Defendant performed on AR's property.

b) Obligation to Reimburse Plaintiff

Second, in support of Plaintiff's assertion that Defendant is obligated to reimburse Plaintiff for the reasonable attorney fees and costs they incurred defending themselves from AR's crossclaims, Plaintiff cites to Buchalter v. Levin. This case held that, "[if] the indemnitor is properly notified and does not avail itself of the opportunity to defend an action, thus causing the indemnitee to incur the costs and attorneys' fees necessary in presenting his own defense, this is considered a cost of defense incurred in good faith and in the exercise of reasonable discretion, for which the indemnitee may recover." (Buchalter v. Levin (1967) 252 Cal.App.2d 367, 371 [quoting Tulare County Power Co. v. Pacific Surety Co. (1919) 43 Cal.App. 315, 330].)

As noted above, Plaintiff has established that they gave Defendant written notice of their demand that Defendant defend and indemnify them from AR's crossclaims. (Foster Decl. P.P. 10-13.) This notice is relevant because, under the terms of the contract between Plaintiff and Defendant, "[u]pon receipt of notice to defend from an Indemnitee, Subcontractor shall immediately defend the Indemnitee without regard to the validity of any Defect Claims or any ultimate finding of fault, breach of the Agreement, or failure by Subcontractor." (Badurek Decl. Ex. 2, pp. 41-21.) Thus, per the contract and Buchalter case, Defendant has an obligation to reimburse Plaintiff's reasonable attorney fees and costs. Based on these facts and case law, Plaintiff has met their initial burden to establish that Defendant is obligated to reimburse them for the reasonable attorney fees and costs they incurred.

ii) Defendant's Shifted Burden

The burden now shifts to Defendant to establish a dispute of material fact as to both their duty to defend Plaintiff, as well as their obligation to reimburse Plaintiff's attorney fees and costs.

a) Duty to Defend

As an initial matter, Defendant effectively concedes the issue of their duty to defend. Defendant's Opposition devotes no time to this topic whatsoever. As an illustration, Defendant's analysis section begins, "[e]ven assuming the Court determines that SFC owed a duty to defend qualifying claims concerning its work under the Subcontract, that determination does not establish RHI's entitlement to reimbursement of any particular past or future defense expenses." (Opp. p. 3:13-15.) Defendant goes on to only analyze the second issue raised in this motion. (See generally, Opp.)

Moreover, Defendant's Opposing Separate Statement leaves the majority of Plaintiff's facts undisputed. (See generally, Opp. Sep. Statement.) The few times Defendant does dispute a fact, they only raise minor quibbles about the interpretation of the contract language. (See, e.g., Opp. Sep. Statement, P. 7.) Defendant does not offer their own evidence to dispute these facts. (Ibid.) For these reasons, the Court finds that Defendant has failed to meet their shifted burden as to the first issue of Defendant's duty to defend Plaintiff.

b) Obligation to Reimburse Plaintiff

What Defendant does argue against is Plaintiff's assertion that Defendant is obligated to pay Plaintiff's reasonably incurred attorney fees and costs in conjunction with AR's crossclaim. Specifically, Defendant argues that Plaintiff cannot establish this obligation because the scope of Plaintiff's suit with AR goes beyond the scope of damages "resulting directly" from Defendant's performance. (Opp. p. 3:13-17.) Defendant argues that this limitation in scope means it would be improper to force Defendant to reimburse Plaintiff for all of the fees and costs they incurred in their suit against non-party AR. (Id. p. 4:4-10.) Defendant points out that Plaintiff initiated this suit against AR, and thus, any fees related to that suit would not be covered by this agreement. (Id. p. 4:24-26; see also, Id. p. 5:18-24.)

The Court is unconvinced. Plaintiff does not seek summary adjudication as to the amount of compensation Defendant owes them. Instead, Plaintiff only seeks a declaration stating that, under the terms of the contract, Defendant is obligated to reimburse Plaintiff in some manner. (MSJ, p. 2:8-15.) Thus, it is unclear how the uncertainty surrounding what Defendant owes Plaintiff creates a material dispute as to whether or not they owe it.

Next, Defendant cites to Crawford v. Weather Shield Mfg., Inc. (2008) 44 Cal.4th 541, 565, fn. 12.) There, the court explained that, "[i]f any party moves for summary judgment or adjudication (Code Civ. Proc., Sec. 437c) with respect to the duty to defend against litigation still in progress, the court may proceed as it deems expedient. For example, the court may resolve legal issues then ripe for adjudication, such as whether any of the contracts at issue include a duty to defend, and, if so, whether the underlying suit or proceeding as to which a defense is sought falls within the scope of any of the parties' contractual duty to defend.

If the court finds that an ongoing duty to defend is owed by one or more parties, but the affected parties, acting in good faith, then cannot agree on how such a defense should be provided or financed, the court may, in its discretion, permit the underlying litigation to proceed with counsel chosen and paid by the party to whom the duty is owed, subject to a later determination of how damages for breach of the duty to defend should be apportioned among the breaching parties." (Crawford v. Weather Shield Mfg., Inc. (2008) 44 Cal.4th 541, 565, fn. 12 [emphasis added].)

Put simply, this Court has the discretion under Crawford to postpone the discussion of what portion of the defense Defendant is obligated to pay for, pending a later motion. As emphasized above, the language of Crawford clearly indicates that this decision lies within the Court's discretion. Thus, this Court is not bound by Crawford to settle this issue at a later date. Given the present facts, the Court does not find that it would be expedient to separate these issues. Plaintiff has provided evidence of a clear and unambiguous contractual obligation by Defendant to, "immediately defend [Plaintiff] without regard to the validity of any Defect Claims or any ultimate finding of fault, breach of the Agreement, or failure by Subcontractor . . . and Subcontractor shall agree to pay such counsel and all costs of defense as herein provided." (Badurek Decl.

P. 9, Ex. 2 at 41-42.) This language is clear and unequivocal about Defendant's obligations. Additionally, its terms are undisputed. Therefore, the Court sees no reason to put Defendant's obligations on hold.

Finally, the Court agrees with Defendant that Plaintiff will almost assuredly incur costs and fees that go beyond the scope of what Defendant is obligated to pay, as Plaintiff is also litigating his own case against AR. However, based on non-party AR's cross complaint, $1,312,715.00 of the $1,394,487.79 in damages asserted by AR (94%) are attributable solely to repairs for the improperly installed wood flooring. (Foster Decl. Ex. 7, pp. 12-13.) This wood flooring is, "damage, liability, expense, cost, claim, or lien arising out of any Construction Defect . . . resulting directly or indirectly from the performance of the Work described in this Agreement." (Badurek Decl.

P. 9, Ex. 2 at 41.) Thus, Defendant is responsible for the majority of the damages alleged in AR's cross complaint. Therefore, the Court does not find it would be expedient to relieve Defendant of the immediate obligation to incur the costs of Plaintiff's defense.

Notably absent from Defendant's Opposition is a dispute of any material fact about the terms of their obligation to Plaintiff. (See generally, Opp.) Defendant's Opposition relies entirely on the Crawford case, and the argument that they should not have to incur all of Plaintiff's legal fees. (Ibid.) As explained above, the Court is not convinced that it should exercise its discretion under Crawford to relieve Defendant of this obligation. Additionally, the Court agrees that Defendant will not be responsible for all of Plaintiff's costs.

However, they will still be responsible for some of them, and they will still be responsible for defending Plaintiff in this cross-action. Thus, the Court sees no reason why Defendant should not be compelled to fulfill these obligations now, with the precise apportionment of fees and costs to be determined at a later date. For these reasons, the Court finds that Defendant has failed to meet their shifted burden to establish a dispute of material fact as to the issue of their duty to reimburse Plaintiff for their reasonably incurred costs and fees.

iii) Summary

In summary, Defendant has failed to meet their shifted burden as to both their duty to defend Plaintiff, as well as their obligation to reimburse Plaintiff's attorney fees and costs. Therefore, the Court GRANTS Plaintiff's Motion for Summary Adjudication as to the fourth cause of action.

Conclusion

The Court GRANTS Plaintiff's Motion for Summary Adjudication as to the fourth cause of action for declaratory relief. IT IS SO ORDERED, Plaintiff TO GIVE NOTICE. September 10, 2026 _____________________ _____ Judge of the Superior Court Case Number: 26VECV00775 Hearing Date: September 10, 2026 Dept: W SUPERIOR COURT OF THE STATE OF CALIFORNIA FOR THE COUNTY OF LOS ANGELES - NORTHWEST DISTRICT RIZE CREDIT UNION formerly known as SCE, a federally chartered credit union, Plaintiff, vs. ARMEN G. TSATINIAN AKA ARMEN TSATINIAN, an individual; the STATE OF CALIFORNIA acting by and through the