Paragon Real Estate Group of San Francisco, Inc. v. Hansen
Filed October 7, 2009, First District, Div. Four
Cite as 2009 SOS 5932

Cross-complaint can Prosper against a Co-defendant

Plaintiff Karen S. Park (Park) purchased a real property located at 5 Oak Street Path in Berkeley, California (the Park property). Paragon Real Estate Group of San Francisco, Inc. (Paragon) acted as the real broker for Park in the said transaction.

Subsequently, Park filed an action for damages before the Alameda County Superior Court. The suit was due to Paragon’s failure to disclose the existence of an easement burdening the property in favor of an adjoining parcel of land owned by Sara Lee and Michael Tripp (easement holders).

Park alleged that since Paragon failed to advise her against the easement claims on her property, she had a right to equitable indemnity as she had incurred attorney’s fees and costs in defense of the easement holders.

As against Hansen, Park alleged that the former committed misrepresentation regarding the facts concerning Lee’s easement.

Paragon filed a third party complaint against Hansen. The court sustained the demurrer to the cross-complaint filed by Hansen.

Thereafter, Paragon filed another cross-complaint alleging a single cause of action against Hansen for equitable indemnity based on comparative fault. Hansen filed another demurrer by arguing that since it had already been made a defendant in the present action, the determination of its liability would become part of the judgment in the present case. Hence, Paragon’s cross complaint was improper and necessary.

The court sustained Hansen’s demurrer to the cross complaint and ordered dismissed as to the latter.

On appeal, the California Appeal Court reversed and vacated the order sustaining Hansen’s demurrer to Paragon’s cross claim. The court ruled that being named as a defendant does not preclude a complaint for cross-complaint against a co-defendant for equitable indemnity.

The trial court erred in automatically dismissing such cross complaint after a good faith settlement determination absent a separate motion seeking to dispose of that cross-complaint, such as a demurrer, summary judgment, or motion to dismiss.