Appellants, a bank and its manager, sought review of a order from the Superior Court of Los Angeles County (California) denying their complaint seeking to recover unpaid loan and entering judgment against them for compensatory and punitive damages for breach of contract and fraud for an alleged oral promise to extend a line of credit in a secured transaction.
Overview
Appellants, a bank and its manager, sought review of a order denying their complaint seeking to recover unpaid loan and entering judgment against them for compensatory and punitive damages for breach of contract and fraud for an alleged oral promise to extend a line of credit in a secured transaction. Respondents cross-appealed to have the original punitive damages reinstated. Appellants argued that there was insufficient evidence to support the judgment, and that the trial court erred in admitting parole evidence of a separate oral agreement. The court agreed and reversed the judgment. The court found that evidence of appellants alleged promise or agreement to provide a line of credit should not have been admitted and, that even if the evidence were properly admitted, there was not sufficient evidence in the record to support the judgment.
Outcome
The court reversed the judgment against appellants finding that the parol evidence rule barred the essential evidence relied upon by respondents and ordered the trial court to enter judgment in favor of appellants’ on their original complaint. The parties were counseled by a corporate attorneys for the civil litigation.
Procedural Posture
Defendant subcontractor sought review of a judgment from the Court of Appeal, Fourth Appellate District, Division Three (California), which affirmed a trial court’s declaratory ruling that required the subcontractor to reimburse the general contractor’s expense of defending plaintiff homeowners’ construction defect action and prosecuting the general contractor’s cross-complaint.
Overview
The subcontractor was contractually required to indemnify the general contractor against all claims for damages growing out of the execution of the subcontractor’s work and was further required, at its own expense, to defend any suit or action brought against the general contractor founded upon the claim of such damage. The court held that those terms, even if strictly construed in the subcontractor’s favor, obligated the subcontractor to defend, from the outset, any suit against the general contractor insofar as that suit was founded upon claims alleging damage or loss arising from the subcontractor’s negligence. The court stated that Civ. Code, § 2778, subd. 4, placed in every indemnity contract, unless otherwise provided, a duty to assume the indemnitee’s defense if tendered against all claims embraced by the indemnity. That duty did not depend on the outcome of the litigation. The subcontractor thus had a contractual obligation to defend the suit even though the subcontractor was later found not to be negligent. The indemnity provision, by contrast, applied under Civ. Code, § 2772, only to the extent that the general contractor actually sustained liability or paid damages.
Outcome
The court affirmed the judgment of the court of appeal.