Preview
1 LEWIS BRISBOIS BISGAARD & SMITH LLP
GREG L. JOHNSON, SB# 132397 E-FILED
2 E-Mail: Greg.Johnson@lewisbrisbois.com 1/29/2021 1:41 PM
TIMOTHY J. NALLY, SB# 288728 Superior Court of California
3 E-Mail: Timothy.Nally@lewisbrisbois.com County of Fresno
2020 West El Camino Avenue, Suite 700 By: A. Ramos, Deputy
4 Sacramento, California 95833
Telephone: 916.564.5400
5 Facsimile: 916.564.5444
6 Attorneys for Defendant BANK OF STOCKTON
7
8 SUPERIOR COURT OF THE STATE OF CALIFORNIA
9 COUNTY OF FRESNO, CENTRAL DIVISION
10
11 JOHN GARCIA, JANIE GARCIA, VISTA CASE NO. 18CECG00977
DEL SOL LLC,
12 REPLY IN SUPPORT OF CROSS
Plaintiffs, COMPLAINANT BANK OF
13 STOCKTON’S NOTICE OF MOTION
vs. AND MOTION FOR SUMMARY
14 JUDGMENT ON ITS CROSS
BANK OF STOCKTON, DOES 1 to 25, COMPLAINT, OR IN THE
15 inclusive, ALTERNATIVE, SUMMARY
ADJUDICATION
16 Defendants.
Date: February 10, 2021
17 Time: 9:30 a.m.
Dept.: 501
18
Action Filed: March 21, 2018
19 Trial Date: April 12, 2021
20
21 I. INTRODUCTION
22 Cross Defendants John Garcia (“John”), Janie Garcia (“Janie”), and Vista Del Sol, LLC
23 (“VDS”) (collectively “Cross Defendants”) do not raise any material factual disputes that would
24 preclude summary judgment for Cross Complainant Bank of Stockton (“the Bank”) on its
25 declaratory judgment cause of action. The Bank’s motion is based exclusively on the plain language
26 of the Settlement Agreement and Mutual Release (“Settlement Agreement”) it entered into with
27 Cross Defendants, which compels the conclusion that the indemnity obligations the Bank owed to
28
LEWIS 4817-1541-6025.1 Case No. 18CECG00977
BRISBOIS REPLY IN SUPPORT OF CROSS COMPLAINANT BANK OF STOCKTON’S NOTICE OF MOTION AND
BISGAARD MOTION FOR SUMMARY JUDGMENT ON ITS CROSS COMPLAINT, OR IN THE ALTERNATIVE,
& SMITH LLP
ATTORNEYS AT LAW SUMMARY ADJUDICATION
1 Cross Defendants terminated on January 4, 2017, when the Bank’s judgment against the estate of
2 Douglas Maddox, adjudicating that Maddox’s interest in VDS was void and did not cloud the Bank’s
3 interest, became final. The indemnity provision cannot be construed in any other way without
4 rewriting the provision and ignoring black-letter law on the interpretation of contracts, including the
5 parol evidence rule.
6 Given the plain language of the indemnity provision, Cross Defendants unsurprisingly do
7 not—because they cannot—dispute any of the facts material to the Bank’s motion. They are
8 therefore left to look to inadmissible and irrelevant parol evidence to try to oppose the Bank’s
9 motion. They go to great lengths to explain their mindset in entering into the Settlement Agreement,
10 but their undisclosed intentions are irrelevant to contract interpretation. They discuss the
11 negotiations underlying the indemnity provision, but those negotiations—whatever might have been
12 said—is inadmissible under the parol evidence rule to contradict or modify the indemnity
13 provision’s plain and unambiguous language. None of their evidence, however, is sufficient to
14 change what the indemnity provision says: the Bank’s obligation to indemnify, defend, or hold
15 harmless Cross Defendants terminated once the Bank’s judgment against Maddox became final.
16 II. ARGUMENT
17 A. Cross Defendants Cannot Rely on Evidence of Negotiations to Vary or
Contradict the Indemnity Provision’s Express Terms.
18
19 The bulk of Cross Defendants’ Opposition is premised on their characterization of
20 discussions and negotiations leading to the Settlement Agreement . (See Opposition, at 9:2-10:15.)
21 However, those discussions and negotiations cannot, as a matter of law, contradict or supplement
22 the plain and unambiguous terms of the indemnity provision.
23 “Terms set forth in a writing intended by the parties as a final expression of their agreement
24 with respect to the terms included therein may not be contradicted by evidence of a prior agreement
25 or of a contemporaneous oral agreement. (Cal. Code Civ. Proc. § 1856(a).) Furthermore, “[t]he
26 terms set forth in a writing described in subdivision (a) may be explained or supplemented by
27 evidence of consistent additional terms unless the writing is intended also as a complete and
28
LEWIS 4817-1541-6025.1 2 Case No. 18CECG00977
BRISBOIS REPLY IN SUPPORT OF CROSS COMPLAINANT BANK OF STOCKTON’S NOTICE OF MOTION AND
BISGAARD MOTION FOR SUMMARY JUDGMENT ON ITS CROSS COMPLAINT, OR IN THE ALTERNATIVE,
& SMITH LLP
ATTORNEYS AT LAW SUMMARY ADJUDICATION
1 exclusive statement of the terms of the agreement.” (Id. at § 1856(b) [emphasis added].)
2 “Extrinsic evidence may be admitted to explain the meaning of an ambiguous contract, but
3 cannot be admitted to show the parties' intention independent of an unambiguous written
4 instrument.” (Western Heritage Ins. Co. v. Frances Todd, Inc. (2019) 33 Cal.App.5th 976, 991; PV
5 Little Italy, LLC v. MetroWork Condominium Assn. (2012) 210 Cal.App.4th 132, 156 [“Because the
6 language of the relevant instruments is clear and unambiguous, resort to extrinsic evidence of the
7 parties' intent is unnecessary and even inappropriate.”].) Moreover, “parol evidence is admissible
8 only to prove a meaning to which the language is ‘reasonably susceptible’ [citation], not to flatly
9 contradict the express terms of the agreement.” (Winet v. Price (1992) 4 Cal.App.4th 1159, 1167.)
10 Here, the Settlement Agreement is fully integrated, expressly intended by the Bank and
11 Cross Defendants as a complete and exclusive statement of its terms. Paragraph 12 of the Settlement
12 Agreement states:
13 This Agreement, with the appended Exhibit, constitutes the entire agreement
between the Parties hereto with respect to the subject matter of this Agreement, and
14 there are no other agreements, understandings, restrictions, warranties, or
representations, written or oral, among the Parties, concerning the subject matter
15 hereof, other than those expressly set forth herein.
16 (Settlement Agreement, at ¶ 12, attached as Exh. A to Declaration of Greg L. Johnson in Support of
17 Motion for Summary Judgment [“Johnson Decl.”] [emphasis added].) This integration clause
18 demonstrates that the parties intended to make the Settlement Agreement and Release a complete
19 and exclusive statement of the terms thereof. (See Burch v. Premier Homes, LLC (2011) 199
20 Cal.App.4th 730, 742 [integration clause demonstrated parties’ intent to make agreement a final
21 expression of their agreement]; accord Malmstrom v. Kaiser Aluminum & Chem. Corp. (1986) 187
22 Cal.App.3d 299, 315.)
23 Because the Settlement Agreement is fully integrated, Cross Defendants cannot offer
24 evidence of the circumstances, discussions, and negotiations relating to the indemnity provision to
25 add terms to what is an unambiguous provision. The indemnity provision expressly states “that the
26 Bank’s agreement to indemnify, defend or hold harmless the VDS Entities and the Garcia Parties
27 shall expire upon . . . the expiration of any opportunity to seek appellate review of any judgment,
28
LEWIS 4817-1541-6025.1 3 Case No. 18CECG00977
BRISBOIS REPLY IN SUPPORT OF CROSS COMPLAINANT BANK OF STOCKTON’S NOTICE OF MOTION AND
BISGAARD MOTION FOR SUMMARY JUDGMENT ON ITS CROSS COMPLAINT, OR IN THE ALTERNATIVE,
& SMITH LLP
ATTORNEYS AT LAW SUMMARY ADJUDICATION
1 order, or decree . . . adjudging the Bank’s economic interest in the VDS Entities to be free and clear
2 of the Maddox Charging Order . . . .” (Settlement Agreement, at ¶ 3, Exh. A to Johnson Decl.) The
3 Bank’s indemnity obligation owed to Cross Defendants expired—without any caveat, limitation or
4 specification that the expiration applies only to claims made by Maddox—once the Bank obtained
5 a final judgment against Maddox.
6 Cross Defendants’ argument that the negotiations evidence an agreement that the expiration
7 clause applies only to claims made by Maddox requires inserting additional terms into the integrated
8 indemnity provision. (See Opposition, at 9:2-10:15, 16:24-25.) However, no such limitation was
9 included in the final expression of the parties’ agreement. The parties specifically identified three
10 individual (Morris Garcia, Sharon Garcia, and Maddox) whose claims would trigger the Bank’s
11 indemnity and defense obligations if based on specified allegations (distributions made to the Bank
12 made under the Settlement Agreement). However, they did not specify on limitation on the
13 expiration of the Bank’s obligations, which demonstrates that no such limitation was intended.
14 B. Civil Code Section 2778 does not Support an Ongoing Duty by the Bank to
Defend Even After Expiration of the Bank’s Defense and Indemnity Obligation.
15
16 Cross Defendants place significant reliance on section 2778 of the Civil Code in their attempt
17 to vary the plain language of the indemnity provision. (Opposition, at 14:20-16:18.) Relying on this
18 statute, they argue that the Bank is obligated to pay for all defense costs even after expiration of the
19 Bank’s defense and indemnity obligation. (Opposition, at 17:21-24.) Their reliance is misplaced, as
20 they again ignore the plain language of that statute, which makes section 2778 subordinate to the
21 parties’ agreement. Section 2778 states: “In the interpretation of a contract of indemnity, the
22 following rules are to be applied, unless a contrary intention appears . . . .” (Cal. Civ. Code §
23 2778 [emphasis added].)
24 Indeed, by agreement, parties to an indemnity provision may restrict the indemnitor’s
25 defense and indemnity obligation more narrowly than the limitations of section 2778. (See Crawford
26 v. Weather Shield Mfg., Inc. (2008) 44 Cal.4th 541, 553 [“If not forbidden by other, more specific,
27 statutes, the obligations set forth in section 2778 thus are deemed included in every indemnity
28
LEWIS 4817-1541-6025.1 4 Case No. 18CECG00977
BRISBOIS REPLY IN SUPPORT OF CROSS COMPLAINANT BANK OF STOCKTON’S NOTICE OF MOTION AND
BISGAARD MOTION FOR SUMMARY JUDGMENT ON ITS CROSS COMPLAINT, OR IN THE ALTERNATIVE,
& SMITH LLP
ATTORNEYS AT LAW SUMMARY ADJUDICATION
1 agreement unless the parties indicate otherwise.”]; accord Zalkind v. Ceradyne, Inc. (2011) 194
2 Cal.App.4th 1010, 1031.) In Zalkind, the court concluded that the express terms of the at-issue
3 indemnity provision governed over section 2778. There, the court concluded that the claims asserted
4 by the sellers under an asset purchase agreement against the purchaser were untimely because the
5 indemnity provision in the asset purchase agreement imposed a 24-month limitation period on all
6 claims for indemnity, which the court interpreted to include direct claims between the parties. (Id.
7 at 1031.) The sellers argued that the 24-month limitation period could not apply to direct claims
8 because section 2778 precludes such a construction, but the court rejected their contention because
9 a contrary intention appeared from the various provisions of the asset purchase agreement, rendering
10 section 2778 inapplicable. (Id. at 1030-31.)
11 Here, contrary to Cross Defendants’ contention, section 2778 does not apply to alter the
12 expiration clause in the indemnity provision because the plain and unambiguous language of the
13 indemnity provision shows a contrary intention. As discussed above, the expiration clause expressly
14 states “that the Bank’s agreement to indemnify, defend, or hold harmless” Cross Defendants expired
15 once the Bank’s judgment against Maddox became final. (Settlement Agreement, at ¶ 3, Exh. A to
16 Johnson Decl. [emphasis added].) That clause clearly indicates that the Bank’s defense obligations
17 would expire at the same time as its indemnity and hold-harmless obligations, when the Bank’s
18 judgment against Maddox became final.
19 None of the cases cited by Cross Defendants supports their argument because they are all
20 based on the express terms of the indemnity provisions at issue in those cases. (See Crawford, supra,
21 44 Cal.4th at 555 [interpreting section 2778 and applicable case law to mean that “unless the
22 parties' agreement expressly provides otherwise, a contractual indemnitor has the obligation,
23 upon proper tender by the indemnitee, to accept and assume the indemnitee's active defense against
24 claims encompassed by the indemnity provision.”] [emphasis added]; Centex Homes v. R-Help
25 Construction Co., Inc. (2019) 32 Cal.App.5th 1230, 1237 [defense owed because underlying claim
26 was “embraced by the terms of the indemnity agreement.”]; Goodman v. Severin (1969) 274
27 Cal.App.2d 885, 894 [“An indemnity agreement is to be construed like any other contract with a
28
LEWIS 4817-1541-6025.1 5 Case No. 18CECG00977
BRISBOIS REPLY IN SUPPORT OF CROSS COMPLAINANT BANK OF STOCKTON’S NOTICE OF MOTION AND
BISGAARD MOTION FOR SUMMARY JUDGMENT ON ITS CROSS COMPLAINT, OR IN THE ALTERNATIVE,
& SMITH LLP
ATTORNEYS AT LAW SUMMARY ADJUDICATION
1 view to determining the actual intention of the parties; no artificial rules apply.”] [quotations and
2 citation omitted] [emphasis added].)
3 By agreeing to the indemnity provision as stated in the fully integrated Settlement
4 Agreement, the Bank and Cross Defendants manifested an intent for the Bank’s indemnity and
5 defense obligations to expire on the date the Bank’s judgment against Maddox became final. The
6 Bank is therefore entitled to a judgment declaring its obligations under the indemnity provision
7 terminated on January 4, 2017.
8 C. Cross Defendants’ Request for Judgment as Part of Their Opposition is
Procedurally Improper and should be Denied.
9
10 In concluding their Opposition, Cross Defendants request that the Court make factual
11 findings and enter judgment for damages. (Opposition, at 18:4-19:20.) However, a party cannot
12 obtain summary judgment through an opposition to another party’s summary judgment motion. (See
13 Cal. Code Civ. Proc. § 437c(a) [party seeking summary judgment must make a motion on 75 days’
14 notice with supporting separate statement of undisputed material facts]; id. at § 1003 and 1004
15 [requests for order must be made by motion to the court in which the action is pending].)
16 Furthermore, as set forth in the Bank’s opposition to Cross Defendants’ motion for summary
17 judgment or, alternatively, summary adjudication, various factual disputes exist as to whether the
18 Bank accepted Cross Defendants’ tender of defense of the claims asserted by Maddox, and whether
19 Cross Defendants are entitled to any indemnity for the claims asserted by Morris and Sharon Garcia.
20 Therefore, Cross Defendants are not entitled to judgment on any issue as a matter of law. Any ruling
21 on Cross Defendants’ entitlement to judgment as a matter of law should be made based on the
22 moving papers they filed and the opposition to that motion made by the Bank, not based on their
23 opposition to the Bank’s motion.
24 D. The Bank is Entitled to Summary Judgment on Its Declaratory Judgment
Cause of Action.
25
26 The only matter demonstrated by Cross Defendants’ Opposition that is pertinent to the
27 Bank’s motion for summary judgment is that an actual controversy exists regarding the parties’
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LEWIS 4817-1541-6025.1 6 Case No. 18CECG00977
BRISBOIS REPLY IN SUPPORT OF CROSS COMPLAINANT BANK OF STOCKTON’S NOTICE OF MOTION AND
BISGAARD MOTION FOR SUMMARY JUDGMENT ON ITS CROSS COMPLAINT, OR IN THE ALTERNATIVE,
& SMITH LLP
ATTORNEYS AT LAW SUMMARY ADJUDICATION
1 respective rights and obligations under the clear and unambiguous indemnity provision,
2 demonstrating the need for a declaration of the parties’ legal rights and duties thereunder. “Any
3 person interested under a written instrument . . . may, in cases of actual controversy relating to the
4 legal rights and duties of the respective parties, bring an original action or cross-complaint in the
5 superior court for a declaration of his or her rights and duties . . . including a determination of any
6 question of construction or validity arising under the instrument or contract.” (Cal. Code Civ. Proc.
7 § 1060.) A declaration by the court under such a circumstance is binding and shall have the force
8 of a final judgment, and may be made “whether or not further relief is or could be claimed at the
9 time.” (Ibid.)
10 As set forth in the Bank’s moving papers, its lone cause of action asserted in its Cross-
11 Complaint seeks declaratory relief regarding the parties’ respective rights and obligations pursuant
12 to the indemnity provision in the Settlement Agreement. (Cross-Complaint, at ¶ 45). As discussed
13 extensively above and in the Bank’s moving papers, the indemnity provision unambiguously
14 expired on January 4, 2017, when its judgment against Maddox became final. Clearly, Cross
15 Defendants dispute that, and are attempting to impose on the Bank, contrary to the plain language
16 of the indemnity provision, an obligation to defend and indemnify for claims, expenses and
17 liabilities incurred after January 4, 2017.
18 Cross Defendants’ discussion of their tenders of defense and the costs incurred in defense of
19 those matters is irrelevant to the determination of the Bank’s entitlement to a declaratory judgment
20 except to the extent it shows the need for a declaration of the parties’ respective rights and
21 obligations. (See Opposition, at 10:16-14:19.) And because Cross Defendants continue to seek to
22 require the Bank to indemnify and defend them for claims and expenses arising after January 4,
23 2017, despite the plain and unambiguous language of the indemnity provision terminates the Bank’s
24 defense, indemnity, and hold-harmless obligations as of that date, the Bank is entitled to summary
25 judgment on its declaratory relief action.
26 ///
27 ///
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LEWIS 4817-1541-6025.1 7 Case No. 18CECG00977
BRISBOIS REPLY IN SUPPORT OF CROSS COMPLAINANT BANK OF STOCKTON’S NOTICE OF MOTION AND
BISGAARD MOTION FOR SUMMARY JUDGMENT ON ITS CROSS COMPLAINT, OR IN THE ALTERNATIVE,
& SMITH LLP
ATTORNEYS AT LAW SUMMARY ADJUDICATION
1 III. CONCLUSION
2 For the foregoing reasons, the Bank respectfully requests that the Court grant it Summary
3 Judgment.
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5 DATED: January 29, 2021 LEWIS BRISBOIS BISGAARD & SMITH LLP
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By:
8 GREG L. JOHNSON
Attorneys for Defendant BANK OF STOCKTON
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LEWIS 4817-1541-6025.1 8 Case No. 18CECG00977
BRISBOIS REPLY IN SUPPORT OF CROSS COMPLAINANT BANK OF STOCKTON’S NOTICE OF MOTION AND
BISGAARD MOTION FOR SUMMARY JUDGMENT ON ITS CROSS COMPLAINT, OR IN THE ALTERNATIVE,
& SMITH LLP
ATTORNEYS AT LAW SUMMARY ADJUDICATION
1 CALIFORNIA STATE COURT PROOF OF SERVICE
2 Garcia v. Bank of Stockton, et al.
18CECG00977
3
STATE OF CALIFORNIA, COUNTY OF SACRAMENTO
4
At the time of service, I was over 18 years of age and not a party to this action. My
5 business address is 2020 West El Camino Avenue, Suite 700, Sacramento, CA 95833.
6 On January 29, 2021, I served true copies of the following document(s): REPLY IN
SUPPORT OF CROSS COMPLAINANT BANK OF STOCKTON’S NOTICE OF MOTION
7 AND MOTION FOR SUMMARY JUDGMENT ON ITS CROSS COMPLAINT, OR IN THE
ALTERNATIVE, SUMMARY ADJUDICATION
8
I served the documents on the following persons at the following addresses (including fax
9 numbers and e-mail addresses, if applicable):
10 David M. Gilmore Attorneys for Plaintiffs JOHN GARCIA,
GILMORE MAGNESS JANISSE JANIE GARCIA and VISTA DEL SOL
11 Post Office Box 28907 LLC
Fresno, CA 93729-8907
12 Telephone: (559)448-9800
Facsimile: (559)448-9899
13
The documents were served by the following means:
14
(BY E-MAIL OR ELECTRONIC TRANSMISSION) Based on a court order or an
15 agreement of the parties to accept service by e-mail or electronic transmission, I caused the
documents to be sent from e-mail address Lola.McCutcheon@lewisbrisbois.com to the
16 persons at the e-mail addresses listed above. I did not receive, within a reasonable time
after the transmission, any electronic message or other indication that the transmission was
17 unsuccessful.
18 I declare under penalty of perjury under the laws of the State of California that the
foregoing is true and correct.
19
Executed on January 29, 2021, at Sacramento, California.
20
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/s/ Lola C. McCutcheon
22 Lola C. McCutcheon
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LEWIS 4817-1541-6025.1 9 Case No. 18CECG00977
BRISBOIS REPLY IN SUPPORT OF CROSS COMPLAINANT BANK OF STOCKTON’S NOTICE OF MOTION AND
BISGAARD MOTION FOR SUMMARY JUDGMENT ON ITS CROSS COMPLAINT, OR IN THE ALTERNATIVE,
& SMITH LLP
ATTORNEYS AT LAW SUMMARY ADJUDICATION
Preview
1 LEWIS BRISBOIS BISGAARD & SMITH LLP GREG L. JOHNSON, SB# 132397 E-FILED 2 E-Mail: Greg.Johnson@lewisbrisbois.com 1/29/2021 1:41 PM TIMOTHY J. NALLY, SB# 288728 Superior Court of California 3 E-Mail: Timothy.Nally@lewisbrisbois.com County of Fresno 2020 West El Camino Avenue, Suite 700 By: A. Ramos, Deputy 4 Sacramento, California 95833 Telephone: 916.564.5400 5 Facsimile: 916.564.5444 6 Attorneys for Defendant BANK OF STOCKTON 7 8 SUPERIOR COURT OF THE STATE OF CALIFORNIA 9 COUNTY OF FRESNO, CENTRAL DIVISION 10 11 JOHN GARCIA, JANIE GARCIA, VISTA CASE NO. 18CECG00977 DEL SOL LLC, 12 REPLY IN SUPPORT OF CROSS Plaintiffs, COMPLAINANT BANK OF 13 STOCKTON’S NOTICE OF MOTION vs. AND MOTION FOR SUMMARY 14 JUDGMENT ON ITS CROSS BANK OF STOCKTON, DOES 1 to 25, COMPLAINT, OR IN THE 15 inclusive, ALTERNATIVE, SUMMARY ADJUDICATION 16 Defendants. Date: February 10, 2021 17 Time: 9:30 a.m. Dept.: 501 18 Action Filed: March 21, 2018 19 Trial Date: April 12, 2021 20 21 I. INTRODUCTION 22 Cross Defendants John Garcia (“John”), Janie Garcia (“Janie”), and Vista Del Sol, LLC 23 (“VDS”) (collectively “Cross Defendants”) do not raise any material factual disputes that would 24 preclude summary judgment for Cross Complainant Bank of Stockton (“the Bank”) on its 25 declaratory judgment cause of action. The Bank’s motion is based exclusively on the plain language 26 of the Settlement Agreement and Mutual Release (“Settlement Agreement”) it entered into with 27 Cross Defendants, which compels the conclusion that the indemnity obligations the Bank owed to 28 LEWIS 4817-1541-6025.1 Case No. 18CECG00977 BRISBOIS REPLY IN SUPPORT OF CROSS COMPLAINANT BANK OF STOCKTON’S NOTICE OF MOTION AND BISGAARD MOTION FOR SUMMARY JUDGMENT ON ITS CROSS COMPLAINT, OR IN THE ALTERNATIVE, & SMITH LLP ATTORNEYS AT LAW SUMMARY ADJUDICATION 1 Cross Defendants terminated on January 4, 2017, when the Bank’s judgment against the estate of 2 Douglas Maddox, adjudicating that Maddox’s interest in VDS was void and did not cloud the Bank’s 3 interest, became final. The indemnity provision cannot be construed in any other way without 4 rewriting the provision and ignoring black-letter law on the interpretation of contracts, including the 5 parol evidence rule. 6 Given the plain language of the indemnity provision, Cross Defendants unsurprisingly do 7 not—because they cannot—dispute any of the facts material to the Bank’s motion. They are 8 therefore left to look to inadmissible and irrelevant parol evidence to try to oppose the Bank’s 9 motion. They go to great lengths to explain their mindset in entering into the Settlement Agreement, 10 but their undisclosed intentions are irrelevant to contract interpretation. They discuss the 11 negotiations underlying the indemnity provision, but those negotiations—whatever might have been 12 said—is inadmissible under the parol evidence rule to contradict or modify the indemnity 13 provision’s plain and unambiguous language. None of their evidence, however, is sufficient to 14 change what the indemnity provision says: the Bank’s obligation to indemnify, defend, or hold 15 harmless Cross Defendants terminated once the Bank’s judgment against Maddox became final. 16 II. ARGUMENT 17 A. Cross Defendants Cannot Rely on Evidence of Negotiations to Vary or Contradict the Indemnity Provision’s Express Terms. 18 19 The bulk of Cross Defendants’ Opposition is premised on their characterization of 20 discussions and negotiations leading to the Settlement Agreement . (See Opposition, at 9:2-10:15.) 21 However, those discussions and negotiations cannot, as a matter of law, contradict or supplement 22 the plain and unambiguous terms of the indemnity provision. 23 “Terms set forth in a writing intended by the parties as a final expression of their agreement 24 with respect to the terms included therein may not be contradicted by evidence of a prior agreement 25 or of a contemporaneous oral agreement. (Cal. Code Civ. Proc. § 1856(a).) Furthermore, “[t]he 26 terms set forth in a writing described in subdivision (a) may be explained or supplemented by 27 evidence of consistent additional terms unless the writing is intended also as a complete and 28 LEWIS 4817-1541-6025.1 2 Case No. 18CECG00977 BRISBOIS REPLY IN SUPPORT OF CROSS COMPLAINANT BANK OF STOCKTON’S NOTICE OF MOTION AND BISGAARD MOTION FOR SUMMARY JUDGMENT ON ITS CROSS COMPLAINT, OR IN THE ALTERNATIVE, & SMITH LLP ATTORNEYS AT LAW SUMMARY ADJUDICATION 1 exclusive statement of the terms of the agreement.” (Id. at § 1856(b) [emphasis added].) 2 “Extrinsic evidence may be admitted to explain the meaning of an ambiguous contract, but 3 cannot be admitted to show the parties' intention independent of an unambiguous written 4 instrument.” (Western Heritage Ins. Co. v. Frances Todd, Inc. (2019) 33 Cal.App.5th 976, 991; PV 5 Little Italy, LLC v. MetroWork Condominium Assn. (2012) 210 Cal.App.4th 132, 156 [“Because the 6 language of the relevant instruments is clear and unambiguous, resort to extrinsic evidence of the 7 parties' intent is unnecessary and even inappropriate.”].) Moreover, “parol evidence is admissible 8 only to prove a meaning to which the language is ‘reasonably susceptible’ [citation], not to flatly 9 contradict the express terms of the agreement.” (Winet v. Price (1992) 4 Cal.App.4th 1159, 1167.) 10 Here, the Settlement Agreement is fully integrated, expressly intended by the Bank and 11 Cross Defendants as a complete and exclusive statement of its terms. Paragraph 12 of the Settlement 12 Agreement states: 13 This Agreement, with the appended Exhibit, constitutes the entire agreement between the Parties hereto with respect to the subject matter of this Agreement, and 14 there are no other agreements, understandings, restrictions, warranties, or representations, written or oral, among the Parties, concerning the subject matter 15 hereof, other than those expressly set forth herein. 16 (Settlement Agreement, at ¶ 12, attached as Exh. A to Declaration of Greg L. Johnson in Support of 17 Motion for Summary Judgment [“Johnson Decl.”] [emphasis added].) This integration clause 18 demonstrates that the parties intended to make the Settlement Agreement and Release a complete 19 and exclusive statement of the terms thereof. (See Burch v. Premier Homes, LLC (2011) 199 20 Cal.App.4th 730, 742 [integration clause demonstrated parties’ intent to make agreement a final 21 expression of their agreement]; accord Malmstrom v. Kaiser Aluminum & Chem. Corp. (1986) 187 22 Cal.App.3d 299, 315.) 23 Because the Settlement Agreement is fully integrated, Cross Defendants cannot offer 24 evidence of the circumstances, discussions, and negotiations relating to the indemnity provision to 25 add terms to what is an unambiguous provision. The indemnity provision expressly states “that the 26 Bank’s agreement to indemnify, defend or hold harmless the VDS Entities and the Garcia Parties 27 shall expire upon . . . the expiration of any opportunity to seek appellate review of any judgment, 28 LEWIS 4817-1541-6025.1 3 Case No. 18CECG00977 BRISBOIS REPLY IN SUPPORT OF CROSS COMPLAINANT BANK OF STOCKTON’S NOTICE OF MOTION AND BISGAARD MOTION FOR SUMMARY JUDGMENT ON ITS CROSS COMPLAINT, OR IN THE ALTERNATIVE, & SMITH LLP ATTORNEYS AT LAW SUMMARY ADJUDICATION 1 order, or decree . . . adjudging the Bank’s economic interest in the VDS Entities to be free and clear 2 of the Maddox Charging Order . . . .” (Settlement Agreement, at ¶ 3, Exh. A to Johnson Decl.) The 3 Bank’s indemnity obligation owed to Cross Defendants expired—without any caveat, limitation or 4 specification that the expiration applies only to claims made by Maddox—once the Bank obtained 5 a final judgment against Maddox. 6 Cross Defendants’ argument that the negotiations evidence an agreement that the expiration 7 clause applies only to claims made by Maddox requires inserting additional terms into the integrated 8 indemnity provision. (See Opposition, at 9:2-10:15, 16:24-25.) However, no such limitation was 9 included in the final expression of the parties’ agreement. The parties specifically identified three 10 individual (Morris Garcia, Sharon Garcia, and Maddox) whose claims would trigger the Bank’s 11 indemnity and defense obligations if based on specified allegations (distributions made to the Bank 12 made under the Settlement Agreement). However, they did not specify on limitation on the 13 expiration of the Bank’s obligations, which demonstrates that no such limitation was intended. 14 B. Civil Code Section 2778 does not Support an Ongoing Duty by the Bank to Defend Even After Expiration of the Bank’s Defense and Indemnity Obligation. 15 16 Cross Defendants place significant reliance on section 2778 of the Civil Code in their attempt 17 to vary the plain language of the indemnity provision. (Opposition, at 14:20-16:18.) Relying on this 18 statute, they argue that the Bank is obligated to pay for all defense costs even after expiration of the 19 Bank’s defense and indemnity obligation. (Opposition, at 17:21-24.) Their reliance is misplaced, as 20 they again ignore the plain language of that statute, which makes section 2778 subordinate to the 21 parties’ agreement. Section 2778 states: “In the interpretation of a contract of indemnity, the 22 following rules are to be applied, unless a contrary intention appears . . . .” (Cal. Civ. Code § 23 2778 [emphasis added].) 24 Indeed, by agreement, parties to an indemnity provision may restrict the indemnitor’s 25 defense and indemnity obligation more narrowly than the limitations of section 2778. (See Crawford 26 v. Weather Shield Mfg., Inc. (2008) 44 Cal.4th 541, 553 [“If not forbidden by other, more specific, 27 statutes, the obligations set forth in section 2778 thus are deemed included in every indemnity 28 LEWIS 4817-1541-6025.1 4 Case No. 18CECG00977 BRISBOIS REPLY IN SUPPORT OF CROSS COMPLAINANT BANK OF STOCKTON’S NOTICE OF MOTION AND BISGAARD MOTION FOR SUMMARY JUDGMENT ON ITS CROSS COMPLAINT, OR IN THE ALTERNATIVE, & SMITH LLP ATTORNEYS AT LAW SUMMARY ADJUDICATION 1 agreement unless the parties indicate otherwise.”]; accord Zalkind v. Ceradyne, Inc. (2011) 194 2 Cal.App.4th 1010, 1031.) In Zalkind, the court concluded that the express terms of the at-issue 3 indemnity provision governed over section 2778. There, the court concluded that the claims asserted 4 by the sellers under an asset purchase agreement against the purchaser were untimely because the 5 indemnity provision in the asset purchase agreement imposed a 24-month limitation period on all 6 claims for indemnity, which the court interpreted to include direct claims between the parties. (Id. 7 at 1031.) The sellers argued that the 24-month limitation period could not apply to direct claims 8 because section 2778 precludes such a construction, but the court rejected their contention because 9 a contrary intention appeared from the various provisions of the asset purchase agreement, rendering 10 section 2778 inapplicable. (Id. at 1030-31.) 11 Here, contrary to Cross Defendants’ contention, section 2778 does not apply to alter the 12 expiration clause in the indemnity provision because the plain and unambiguous language of the 13 indemnity provision shows a contrary intention. As discussed above, the expiration clause expressly 14 states “that the Bank’s agreement to indemnify, defend, or hold harmless” Cross Defendants expired 15 once the Bank’s judgment against Maddox became final. (Settlement Agreement, at ¶ 3, Exh. A to 16 Johnson Decl. [emphasis added].) That clause clearly indicates that the Bank’s defense obligations 17 would expire at the same time as its indemnity and hold-harmless obligations, when the Bank’s 18 judgment against Maddox became final. 19 None of the cases cited by Cross Defendants supports their argument because they are all 20 based on the express terms of the indemnity provisions at issue in those cases. (See Crawford, supra, 21 44 Cal.4th at 555 [interpreting section 2778 and applicable case law to mean that “unless the 22 parties' agreement expressly provides otherwise, a contractual indemnitor has the obligation, 23 upon proper tender by the indemnitee, to accept and assume the indemnitee's active defense against 24 claims encompassed by the indemnity provision.”] [emphasis added]; Centex Homes v. R-Help 25 Construction Co., Inc. (2019) 32 Cal.App.5th 1230, 1237 [defense owed because underlying claim 26 was “embraced by the terms of the indemnity agreement.”]; Goodman v. Severin (1969) 274 27 Cal.App.2d 885, 894 [“An indemnity agreement is to be construed like any other contract with a 28 LEWIS 4817-1541-6025.1 5 Case No. 18CECG00977 BRISBOIS REPLY IN SUPPORT OF CROSS COMPLAINANT BANK OF STOCKTON’S NOTICE OF MOTION AND BISGAARD MOTION FOR SUMMARY JUDGMENT ON ITS CROSS COMPLAINT, OR IN THE ALTERNATIVE, & SMITH LLP ATTORNEYS AT LAW SUMMARY ADJUDICATION 1 view to determining the actual intention of the parties; no artificial rules apply.”] [quotations and 2 citation omitted] [emphasis added].) 3 By agreeing to the indemnity provision as stated in the fully integrated Settlement 4 Agreement, the Bank and Cross Defendants manifested an intent for the Bank’s indemnity and 5 defense obligations to expire on the date the Bank’s judgment against Maddox became final. The 6 Bank is therefore entitled to a judgment declaring its obligations under the indemnity provision 7 terminated on January 4, 2017. 8 C. Cross Defendants’ Request for Judgment as Part of Their Opposition is Procedurally Improper and should be Denied. 9 10 In concluding their Opposition, Cross Defendants request that the Court make factual 11 findings and enter judgment for damages. (Opposition, at 18:4-19:20.) However, a party cannot 12 obtain summary judgment through an opposition to another party’s summary judgment motion. (See 13 Cal. Code Civ. Proc. § 437c(a) [party seeking summary judgment must make a motion on 75 days’ 14 notice with supporting separate statement of undisputed material facts]; id. at § 1003 and 1004 15 [requests for order must be made by motion to the court in which the action is pending].) 16 Furthermore, as set forth in the Bank’s opposition to Cross Defendants’ motion for summary 17 judgment or, alternatively, summary adjudication, various factual disputes exist as to whether the 18 Bank accepted Cross Defendants’ tender of defense of the claims asserted by Maddox, and whether 19 Cross Defendants are entitled to any indemnity for the claims asserted by Morris and Sharon Garcia. 20 Therefore, Cross Defendants are not entitled to judgment on any issue as a matter of law. Any ruling 21 on Cross Defendants’ entitlement to judgment as a matter of law should be made based on the 22 moving papers they filed and the opposition to that motion made by the Bank, not based on their 23 opposition to the Bank’s motion. 24 D. The Bank is Entitled to Summary Judgment on Its Declaratory Judgment Cause of Action. 25 26 The only matter demonstrated by Cross Defendants’ Opposition that is pertinent to the 27 Bank’s motion for summary judgment is that an actual controversy exists regarding the parties’ 28 LEWIS 4817-1541-6025.1 6 Case No. 18CECG00977 BRISBOIS REPLY IN SUPPORT OF CROSS COMPLAINANT BANK OF STOCKTON’S NOTICE OF MOTION AND BISGAARD MOTION FOR SUMMARY JUDGMENT ON ITS CROSS COMPLAINT, OR IN THE ALTERNATIVE, & SMITH LLP ATTORNEYS AT LAW SUMMARY ADJUDICATION 1 respective rights and obligations under the clear and unambiguous indemnity provision, 2 demonstrating the need for a declaration of the parties’ legal rights and duties thereunder. “Any 3 person interested under a written instrument . . . may, in cases of actual controversy relating to the 4 legal rights and duties of the respective parties, bring an original action or cross-complaint in the 5 superior court for a declaration of his or her rights and duties . . . including a determination of any 6 question of construction or validity arising under the instrument or contract.” (Cal. Code Civ. Proc. 7 § 1060.) A declaration by the court under such a circumstance is binding and shall have the force 8 of a final judgment, and may be made “whether or not further relief is or could be claimed at the 9 time.” (Ibid.) 10 As set forth in the Bank’s moving papers, its lone cause of action asserted in its Cross- 11 Complaint seeks declaratory relief regarding the parties’ respective rights and obligations pursuant 12 to the indemnity provision in the Settlement Agreement. (Cross-Complaint, at ¶ 45). As discussed 13 extensively above and in the Bank’s moving papers, the indemnity provision unambiguously 14 expired on January 4, 2017, when its judgment against Maddox became final. Clearly, Cross 15 Defendants dispute that, and are attempting to impose on the Bank, contrary to the plain language 16 of the indemnity provision, an obligation to defend and indemnify for claims, expenses and 17 liabilities incurred after January 4, 2017. 18 Cross Defendants’ discussion of their tenders of defense and the costs incurred in defense of 19 those matters is irrelevant to the determination of the Bank’s entitlement to a declaratory judgment 20 except to the extent it shows the need for a declaration of the parties’ respective rights and 21 obligations. (See Opposition, at 10:16-14:19.) And because Cross Defendants continue to seek to 22 require the Bank to indemnify and defend them for claims and expenses arising after January 4, 23 2017, despite the plain and unambiguous language of the indemnity provision terminates the Bank’s 24 defense, indemnity, and hold-harmless obligations as of that date, the Bank is entitled to summary 25 judgment on its declaratory relief action. 26 /// 27 /// 28 LEWIS 4817-1541-6025.1 7 Case No. 18CECG00977 BRISBOIS REPLY IN SUPPORT OF CROSS COMPLAINANT BANK OF STOCKTON’S NOTICE OF MOTION AND BISGAARD MOTION FOR SUMMARY JUDGMENT ON ITS CROSS COMPLAINT, OR IN THE ALTERNATIVE, & SMITH LLP ATTORNEYS AT LAW SUMMARY ADJUDICATION 1 III. CONCLUSION 2 For the foregoing reasons, the Bank respectfully requests that the Court grant it Summary 3 Judgment. 4 5 DATED: January 29, 2021 LEWIS BRISBOIS BISGAARD & SMITH LLP 6 7 By: 8 GREG L. JOHNSON Attorneys for Defendant BANK OF STOCKTON 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 LEWIS 4817-1541-6025.1 8 Case No. 18CECG00977 BRISBOIS REPLY IN SUPPORT OF CROSS COMPLAINANT BANK OF STOCKTON’S NOTICE OF MOTION AND BISGAARD MOTION FOR SUMMARY JUDGMENT ON ITS CROSS COMPLAINT, OR IN THE ALTERNATIVE, & SMITH LLP ATTORNEYS AT LAW SUMMARY ADJUDICATION 1 CALIFORNIA STATE COURT PROOF OF SERVICE 2 Garcia v. Bank of Stockton, et al. 18CECG00977 3 STATE OF CALIFORNIA, COUNTY OF SACRAMENTO 4 At the time of service, I was over 18 years of age and not a party to this action. My 5 business address is 2020 West El Camino Avenue, Suite 700, Sacramento, CA 95833. 6 On January 29, 2021, I served true copies of the following document(s): REPLY IN SUPPORT OF CROSS COMPLAINANT BANK OF STOCKTON’S NOTICE OF MOTION 7 AND MOTION FOR SUMMARY JUDGMENT ON ITS CROSS COMPLAINT, OR IN THE ALTERNATIVE, SUMMARY ADJUDICATION 8 I served the documents on the following persons at the following addresses (including fax 9 numbers and e-mail addresses, if applicable): 10 David M. Gilmore Attorneys for Plaintiffs JOHN GARCIA, GILMORE MAGNESS JANISSE JANIE GARCIA and VISTA DEL SOL 11 Post Office Box 28907 LLC Fresno, CA 93729-8907 12 Telephone: (559)448-9800 Facsimile: (559)448-9899 13 The documents were served by the following means: 14 (BY E-MAIL OR ELECTRONIC TRANSMISSION) Based on a court order or an 15 agreement of the parties to accept service by e-mail or electronic transmission, I caused the documents to be sent from e-mail address Lola.McCutcheon@lewisbrisbois.com to the 16 persons at the e-mail addresses listed above. I did not receive, within a reasonable time after the transmission, any electronic message or other indication that the transmission was 17 unsuccessful. 18 I declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct. 19 Executed on January 29, 2021, at Sacramento, California. 20 21 /s/ Lola C. McCutcheon 22 Lola C. McCutcheon 23 24 25 26 27 28 LEWIS 4817-1541-6025.1 9 Case No. 18CECG00977 BRISBOIS REPLY IN SUPPORT OF CROSS COMPLAINANT BANK OF STOCKTON’S NOTICE OF MOTION AND BISGAARD MOTION FOR SUMMARY JUDGMENT ON ITS CROSS COMPLAINT, OR IN THE ALTERNATIVE, & SMITH LLP ATTORNEYS AT LAW SUMMARY ADJUDICATION