Opinion
C086890
07-30-2021
Michael BERG et al., Plaintiffs, v. PULTE HOME CORPORATION, Defendant; St. Paul Mercury Insurance Company, Intervener and Appellant; Colorific Painting, Inc., et al., Interveners and Respondents.
The Aguilera Law Group, APLC, A. Eric Aguilera and Raymond E. Brown for Intervener and Appellant. Nicolaides Fink Thorpe Michaelides Sullivan LLP, Jeffrey N. Labovitch, San Diego, Jodi S. Green, Los Angeles, and Kimberly A. Hartman for Interveners and Respondents.
Certified for Partial Publication.
Pursuant to California Rules of Court, rules 8.1105 and 8.1110, this opinion is certified for publication with the exception of parts II through IV of the Discussion.
The Aguilera Law Group, APLC, A. Eric Aguilera and Raymond E. Brown for Intervener and Appellant.
Nicolaides Fink Thorpe Michaelides Sullivan LLP, Jeffrey N. Labovitch, San Diego, Jodi S. Green, Los Angeles, and Kimberly A. Hartman for Interveners and Respondents.
Robie, Acting P. J.
This equitable subrogation action arises out of a residential construction defect lawsuit filed by several homeowners against Pulte Home Corporation (Pulte). The homeowners sued Pulte for allegedly violating building standards set forth in Civil Code section 896, breach of contract, and breach of express warranty pertaining to 13 homes (the Berg litigation). St. Paul Mercury Insurance Company (St. Paul) defended Pulte in the Berg litigation as an additional insured under a general liability policy issued to St. Paul's named insured and one of Pulte's subcontractors, Groundbreakers Landscaping, Inc.
All further section references are to the Civil Code unless otherwise specified.
Pertinent to this appeal, St. Paul later sued three of Pulte's subcontractors -- Vaca Valley Roofing, Inc., Norman Masonry, Inc., and Colorific Painting, Inc. (collectively defendants) -- for equitable subrogation through a complaint in intervention in the Berg litigation. In essence, St. Paul sought to pursue Pulte's breach of contract claims against defendants for their failure to defend Pulte in the Berg litigation. Standing in Pulte's shoes, St. Paul asserted defendants were jointly and severally liable for the reimbursement of the money it expended in defending Pulte, which totaled $193,137.68.
The resolution of the equitable subrogation claim proceeded in three phases. First, the trial court conducted a bench trial to determine whether St. Paul was entitled to equitable subrogation; it found St. Paul had proven the eight elements necessary to entitle it to relief. The second phase "consisted of a jury trial regarding the amount of St. Paul's recoverable damages against each defendant in intervention." The jury returned a verdict in favor of St. Paul and specified the amount of damages for which each defendant was liable under its agreement with Pulte. In the last phase of the proceeding, the trial court reduced the damages awarded by the jury to account for setoffs and/or credits for prior settlements. The trial court then entered judgment awarding St. Paul $4,217.82 against Vaca Valley Roofing, Inc.; $2,100.11 against Norman Masonry, Inc.; and $3,121.02 against Colorific Painting, Inc.
St. Paul raises four arguments on appeal: (1) the trial court erred in granting defendants’ request for a jury trial; (2) the trial court erred by failing to instruct the jury that defendants are jointly and severally liable for the mixed defense fees (i.e., attorney fees and costs incurred in defense of the entire Berg litigation, such as attending status conferences or mediations; in other words, tasks unrelated to the defense of a subcontractor's specific scope of work); (3) the trial court erred in denying St. Paul's motion for prejudgment interest; and (4) the trial court erred in denying St. Paul's request for attorney fees in prosecuting the equitable subrogation action. As to the jury trial right contention, we conclude a defendant is entitled to a jury trial on the legal claims pursued against the defendant by an insurer standing in the shoes of its insured, after an insurer's equitable subrogation entitlement has been adjudicated in the insurer's favor by the trial court sitting in equity. We thus disagree with Pulte Home Corp. v. CBR Electric, Inc. (2020) 50 Cal.App.5th 216, 263 Cal.Rptr.3d 814 ( CBR Electric ), which concluded otherwise. We agree, however, with the joint and several liability analysis in CBR Electric and Carter v. Pulte Home Corp. (2020) 52 Cal.App.5th 571, 266 Cal.Rptr.3d 447, which agreed with CBR Electric . Both the CBR Electric and Carter courts concluded that Pulte's standard duty to defend and indemnify language in its master agreement (at issue there and here) does not support St. Paul's position on joint and several liability. ( CBR Electric , at p. 224, 263 Cal.Rptr.3d 814 ; Carter , at pp. 586-587, 266 Cal.Rptr.3d 447.) We conclude the same and find St. Paul's arguments to the contrary unpersuasive.
As to the prejudgment interest argument, we disagree with St. Paul's view that the damages were a matter of mere calculation. As we explain, the damages were not certain or capable of calculation until the jury determined the appropriate allocation of each defendant's share of the defense fees and costs paid by St. Paul in the Berg litigation.
Finally, we find no merit in St. Paul's attorney fees argument. We conclude the attorney fee provision upon which St. Paul relies is ambiguous as to whether the parties intended for it to apply in the type of enforcement proceeding at issue in this appeal. The attorney fees provision must thus be read against the drafter and indemnitee, Pulte. As such, St. Paul (standing in the shoes of Pulte) is not entitled to attorney fees under the master agreements in this enforcement action. Having disagreed with all of St. Paul's arguments, we affirm.
FACTUAL AND PROCEDURAL BACKGROUND
The general factual and procedural background is outlined here; additional facts pertinent to the issues are set forth in the Discussion post . A significant portion of the following facts were taken from the undisputed facts set forth in the judgment and the exhibits attached thereto, including the statement of decision incorporated by reference.
Each of the defendants respectively entered into a master agreement with Pulte, wherein each agreed to, among other things, indemnify and defend Pulte against "all liability, claims, judgments, suits, or demands for damages to persons or property arising out of, resulting from, or relating to [that defendant's] performance of the work under th[e] Agreement and any Contractor Project Agreement (‘Claims’) unless such Claims have been specifically determined by the trier of the fact to be the sole negligence of Pulte." Each of the defendants later entered into one or more contractor project agreements with Pulte to perform subcontracted work at the homes at issue in the Berg litigation. It is undisputed the homeowners in the Berg litigation alleged damages arising out of, resulting from, or relating to each of the defendants’ subcontracted work for Pulte, i.e., roofing, masonry, and painting work.
Pulte tendered its defense in the Berg litigation to each of the defendants, all of whom failed to respond to the tender and did not pay for any of the attorney fees and costs incurred by Pulte in the litigation. Pulte thereafter filed a cross-complaint against numerous subcontractors, including defendants.
Pulte also tendered its defense to St. Paul under policies issued to Groundbreakers Landscaping, Inc. St. Paul agreed to defend Pulte under those policies, subject to a reservation of rights. St. Paul paid a total of $193,137.68 to defend Pulte in the Berg litigation.
To recoup the amounts paid to defend Pulte, St. Paul filed a complaint in intervention in the Berg litigation. "St. Paul's operative complaint in intervention include[d], among other things, a first cause of action seeking a judicial declaration as to the duty of various subcontractors, including [defendants], to defend Pulte under the terms of the subcontract agreements entered into between those subcontractors and Pulte and a fifth cause of action for equitable subrogation asserting that St. Paul, by paying for Pulte's defense, became equitably subrogated to Pulte's rights under the contracts executed by the defendants in intervention."
In May 2017, the trial court considered various motions filed by the parties as to the complaint in intervention and ruled, pertinent to this appeal, that the "complaint in intervention would be bifurcated for trial" such that the trial court would first determine "whether St. Paul was entitled to equitable subrogation against the defendants in intervention" and, "[i]f the Court determined that St. Paul had a right to equitable subrogation, the amount of St. Paul's recoverable damages would then be tried before a jury in Phase II." The trial court further ruled that the language in the agreements between Pulte and each of the respective defendants "did not give rise to a right to recover attorney fees incurred in enforcing the subcontractors’ defense obligation against Pulte."
In June 2017, the trial court held a bench trial to determine whether St. Paul was entitled to equitable subrogation. The trial court issued a statement of decision in December 2017. The court found each defendant had a contractual duty to defend Pulte in the Berg litigation because the homeowners alleged damages related to each of the defendants’ scope of work at the project, and defendants breached that duty by failing to pay for any of the attorney fees and costs incurred by Pulte in defense of that action. Next, the trial court found "St. Paul had proven all eight elements of its equitable subrogation claim as to costs incurred in defending Pulte Home Corporation against claims arising out of, resulting from, or relating to the work of each of the defendants in intervention."
The trial court had previously granted St. Paul's motion for summary adjudication, determining that Vaca Valley Roofing, Inc. had a contractual duty to defend Pulte in the underlying litigation to the extent the homeowners made claims related to its scope of work.
The eight elements are: " ‘[1] the insured suffered a loss for which the defendant is liable, either as the wrongdoer whose act or omission caused the loss or because the defendant is legally responsible to the insured for the loss caused by the wrongdoer; [2] the claimed loss was one for which the insurer was not primarily liable; [3] the insurer has compensated the insured in whole or in part for the same loss for which the defendant is primarily liable; [4] the insurer has paid the claim of its insured to protect its own interest and not as a volunteer; [5] the insured has an existing, assignable cause of action against the defendant which the insured could have asserted for its own benefit had it not been compensated for its loss by the insurer; [6] the insurer has suffered damages caused by the act or omission upon which the liability of the defendant depends; [7] justice requires that the loss be entirely shifted from the insurer to the defendant, whose equitable position is inferior to that of the insurer; and [8] the insurer's damages are in a liquidated sum, generally the amount paid to the insured.’ " (CBR Electric, supra , 50 Cal.App.5th at p. 229, 263 Cal.Rptr.3d 814.)
The court further found that St. Paul's "right of recovery is limited by the indemnity language in the contracts between Pulte and the defendants in intervention, such that each defendant in intervention is liable only for costs incurred in defending Pulte against the Claims arising out of, resulting from, or relating to its specific scope of work. If it were not so limited, the court would not find that St. Paul prevailed on its equitable subrogation claim because the seventh element, namely that justice requires that the loss be entirely shifted from the insurer to the defendant, whose equitable position is inferior to that of the insurer, would not have been satisfied. The basis of this determination is that the contracts entered into by each of the subcontractors limited their defense obligations to claims arising out of, resulting from, or relating to their specific scopes of work while the law imposes a duty to defend the entire action on St. Paul, as an additional insured carrier." (Citing Presley Homes, Inc. v. American States Ins. Co. (2001) 90 Cal.App.4th 571, 575, 108 Cal.Rptr.2d 686.)
The claim next proceeded to a jury trial "to determine the amount of St. Paul's damages." The trial court explained, "[i]t will be up to a jury to determine the scope of each subcontractor's defense obligation and what, if anything, is owed by each subcontractor to St. Paul."
St. Paul introduced the testimony of an auditing expert relating to the fees it paid in defense of Pulte in the Berg litigation. The expert testified the following portions of the fees incurred by St. Paul in defending Pulte arose directly out of each of the subcontractor's scopes of work: $3,007.50 as to Vaca Valley Roofing, Inc.; $1,417 as to Norman Masonry, Inc.; and $3,170 as to Colorific Painting, Inc. She further testified that $8,098.35 related to the roofing category, and three roofing subcontractors performed the work at issue in the litigation. Finally, the expert testified $65,204.95 of the defense fees related to the mixed defense fees for things like attending settlement conferences or a mediation. Another witness testified the total amount St. Paul paid in defense of Pulte in the Berg litigation amounted to $193,197.68, but the expert witness testified she only saw invoices amounting to roughly $188,000.
The jury was asked to render a special verdict on several questions. The first question was: "Did St. Paul Mercury Insurance Company pay money to defend Pulte Home Corporation against claims arising out of, resulting from, or relating to the work performed by each of the ... subcontractors under their contracts with Pulte Home Corporation on the homes involved in the underlying action brought by homeowner plaintiffs?" The jury answered "Yes" as to each of the defendants. Second, the jury was asked to "state the amount of money you have determined St. Paul Insurance Company paid to defend Pulte Home Corporation against claims arising out of, resulting from, or relating to that subcontractor's work." The jury answered $7,200.11 as to Vaca Valley Roofing, Inc.; $3,585.03 as to Norman Masonry, Inc.; and $5,338.03 as to Colorific Painting, Inc. Third, the jury had to delineate any amounts included in the foregoing sums that were "also paid in defense of any other subcontractor." The jury responded the following amounts allocated to each of the defendants overlapped with other subcontractors: $4,192.61 as to Vaca Valley Roofing, Inc.; $2,168.03 as to Norman Masonry, Inc.; and $2,168.03 as to Colorific Painting, Inc.
In the third phase of the litigation, the trial court considered whether the setoffs and/or credits for prior settlements, if any, reduced the jury verdicts. The trial court reduced the jury verdicts as to each defendant by 41.42 percent as follows: Vaca Valley Roofing, Inc. from $7,200.11 to $4,217.82; Norman Masonry, Inc. from $3,585.03 to $2,100.11; and Colorific Painting, Inc. from $5,338.03 to $3,121.02.
St. Paul filed a timely notice of appeal. DISCUSSION
I
Defendants’ Right To A Jury Trial
St. Paul asserts "[t]he only cause of action that proceeded to trial was equitable subrogation" and "[s]ince a claim for equitable subrogation sounds in equity, there is no right to a jury trial." In St. Paul's view, "the trial court erred by holding a bifurcated trial after having already found that St. Paul satisfied all eight elements of its equitable subrogation claim." St. Paul relies on CBR Electric , in which the appellate court concluded no jury trial right exists in an equitable subrogation action like this one. ( CBR Electric, supra , 50 Cal.App.5th at p. 242, 263 Cal.Rptr.3d 814.)
Defendants argue the trial court appropriately submitted the damages question to the jury because St. Paul sought money damages for defendants’ breach of their respective indemnity and defense obligations under the master agreements. As such, defendants believe St. Paul pled an adequate remedy at law in the form of money damages, entitling defendants to a jury trial on that issue.
We conclude the trial court appropriately submitted the question of breach of contract damages to the jury.
A
Additional Factual Background
The trial court issued a tentative ruling on the jury trial issue, as follows: "It would appear appropriate for the Court to entertain a Phase I bench hearing to determine if St. Paul has standing to bring this instant action. Then, if the Court determines that St. Paul does have standing, the matter would be tried to a jury. [¶] Here, the gist of the action is a breach of contract action claiming monetary damages rather than specific performance. St. Paul is seeking $60,637.68 by way of this action. In support of this ruling, the Court looks to St. Paul's trial brief re: the right to recover prevailing party attorney's fees as subrogated insurer wherein St. Paul states at page 3, lines 23-24, and continuing thereafter, ‘St. Paul's subrogation claim is based on an allegation that the defendants breached their contractual obligation to defend Pulte in this action.’ This concession supports that the graveman [sic ] of St. Paul's complaint in intervention is breach of contract, thereby affording defendants a right to jury trial. "In Offer v. Superior Court of City and County of San Francisco (1924) 194 Cal. 114, 228 P. 11, the Supreme Court determined that where a right of action to which an insurer was subrogated is legal, i.e., recovery of money for damages it suffered, it is enforceable at law. And the fact that the complaint seeks declaratory relief or names the causes of action ‘equitable’ does not determine the nature of the action." (Italics added.)
At the hearing that followed, St. Paul argued there was "nothing to try to a jury" because the trial court determines whether there is a duty to defend and interprets the terms of the contracts, and "to get through those eight elements [of equitable subrogation], the Court already has to determine what [St. Paul's] damages are and that [such damages] should be shifted to the defendants." St. Paul agreed with the trial court that, "[i]f Pulte were here, the cause of action would be breach of contract" and "there would be a jury trial." But, in St. Paul's view, a jury trial was inappropriate because its claim was not the same as that which Pulte would assert against defendants and the court was disregarding several appellate cases specifically stating equitable subrogation is an equitable claim.
Vaca Valley Roofing, Inc. argued a bench trial was appropriate as to whether St. Paul is entitled to equitable subrogation and has standing to seek reimbursement from the defendants. Its counsel asserted, "then it's still a jury question as to the extent of the damages for which each of the defendants would be responsible." In the roofing company's view, "[t]he defendants in this case cannot be deprived of their right to have the jury make the determination on those issues which are jury questions simply because St. Paul is the intervener in asserting Pulte's right. It cannot be overlooked or ignored that St. Paul has no right independent of Pulte's contracts."
St. Paul responded by agreeing its "rights arise out of the subcontracts" and "the subcontracts say [defendants] have to defend any lawsuit, so all of the subcontractors had to defend the whole lawsuit." It asserted, however, the equitable subrogation claim is subject to a bench trial and "[t]he only issue that potentially could go to a jury would be [the] damages issue, and to do that, the Court would first have to interpret the defense agreements and make a determination as to what the scope of the defense obligation was for each subcontractor."
The trial court affirmed its tentative ruling. In response, St. Paul asked the court: "What does that mean? What are we going to try to a jury?" The trial court responded: "Well, that's another day. Another judge needs my courtroom for a completely separate matter. And we'll have pretrial conference and what have you right before all of that." As explained ante , after the bench trial, the jury considered whether St. Paul paid money to defend Pulte against claims arising out of, resulting from, or relating to the work performed by each of the defendants and the damages to be allocated to each of the defendants in that regard.
B
The Trial Court Did Not Err In Granting Defendants’ Jury Trial Request
We review de novo the trial court's ruling that defendants were constitutionally entitled to a jury trial. (See Caira v. Offner (2005) 126 Cal.App.4th 12, 37, fn. 17, 24 Cal.Rptr.3d 233.) "It is well settled in California that there is no right to a jury trial in civil actions that are equitable in nature. It is only when issues of law are involved that the right to a trial by jury attaches." ( Meyer Koulish Co. v. Cannon (1963) 213 Cal.App.2d 419, 430-431, 28 Cal.Rptr. 757.)
As a matter of background, "[h]istorically, there were separate law and equity courts. [Citation.] The law courts dealt with ordinary property rights, debts, and trespasses and adjudicated disputes by live testimony before a lay jury. [Citation.] The equity courts dealt with ethical matters and adjudicated disputes by written testimony before a judge. [Citation.] The separate law and equity courts were merged, but the distinction between law and equity remains to this day. The right to a jury trial for civil actions is generally limited to those causes of action (and their analogues) that were historically triable in a court of law. [Citations.] Those causes of action that were historically tried to a judge remain triable to a judge today because it is thought that the exercise of equitable powers ‘depend[s] upon skills and wisdom acquired through years of study, training and experience which are not susceptible of adequate transmission through instructions to a lay jury.’ " ( Hoopes v. Dolan (2008) 168 Cal.App.4th 146, 155-156, 85 Cal.Rptr.3d 337.)
To determine whether a claim is legal or equitable, a court looks to the "gist" of the action, understood as "the nature of the rights involved and the facts of the particular case." ( People v. One 1941 Chevrolet Coupe (1951) 37 Cal.2d 283, 299, 231 P.2d 832.) "The legal or equitable ‘gist’ of the action is ordinarily determined by the mode of relief to be afforded, though the prayer for relief is not conclusive." ( Walton v. Walton (1995) 31 Cal.App.4th 277, 291, 36 Cal.Rptr.2d 901.) Money damages are ordinarily the earmark of a legal claim. ( Offer v. Superior Court, supra , 194 Cal. at p. 121, 228 P. 11 ["[t]he right of action to which the insurer was subrogated being legal, that is, for the recovery of money for damages suffered, it is enforceable at law"]; Raedeke v. Gibraltar Sav. & Loan Assn. (1974) 10 Cal.3d 665, 672, 111 Cal.Rptr. 693, 517 P.2d 1157 [actions at law ordinarily seek money damages].) However, "[a]n action is one in equity where the only manner in which the legal remedy of damages is available is by application of equitable principles." ( Van de Kamp v. Bank of America (1988) 204 Cal.App.3d 819, 865, 251 Cal.Rptr. 530 ; see also C & K Engineering Contractors v. Amber Steel Co. (1978) 23 Cal.3d 1, 9-10, 151 Cal.Rptr. 323, 587 P.2d 1136 [no jury trial right in suit for damages because action was entirely based on the equitable doctrine of promissory estoppel].)
Turning to the issue at hand, "[s]ubrogation is the ‘substitution of another person in place of the creditor or claimant to whose rights he or she succeeds in relation to the debt or claim.’ [Citation.] ‘In the case of insurance, subrogation takes the form of an insurer's right to be put in the position of the insured in order to pursue recovery from third parties legally responsible to the insured for a loss which the insurer has both insured and paid. [Citations.]’ [Citation.] ‘The subrogated insurer is said to " ‘stand in the shoes’ " of its insured, because it has no greater rights than the insured and is subject to the same defenses assertable against the insured. Thus, an insurer cannot acquire by subrogation anything to which the insured has no rights, and may claim no rights which the insured does not have.’ " ( Interstate Fire & Casualty Ins. Co. v. Cleveland Wrecking Co. (2010) 182 Cal.App.4th 23, 31-32, 105 Cal.Rptr.3d 606.)
"Usually, a general liability insurer that has paid a claim to a third party on behalf of its insured may have an equitable right of subrogation against (1) other parties who contributed to the harm suffered by the third party (joint tortfeasors) under an equitable indemnity theory, and (2) other parties who are legally liable to the insured for the harm suffered by the third party (such as by an indemnification agreement) under a contractual indemnity theory." ( Interstate Fire & Casualty Ins. Co. v. Cleveland Wrecking Co. , supra , 182 Cal.App.4th at p. 32, 105 Cal.Rptr.3d 606.) The second theory applies in this proceeding.
In our minds, an equitable subrogation action consists of two phases of relief -- entitlement and enforcement. In the entitlement phase, the question is whether the plaintiff's equitable position "is superior to the position of the party to be charged." ( Dobbas v. Vitas (2011) 191 Cal.App.4th 1442, 1446, 119 Cal.Rptr.3d 798.) More specifically, whether, under the circumstances presented in this case, an insurer (St. Paul) is entitled to equitable subrogation under the eight-element test such that the insurer (St. Paul) may stand in the shoes of its insured (Pulte) to pursue the rights held by the insured (Pulte) against third parties (defendants) under a contractual indemnity theory. Undoubtedly, this inquiry must be performed by the trial court sitting as a court of equity. ( Ibid. ; Valley Crest Landscape Development, Inc. v. Mission Pools of Escondido, Inc. (2015) 238 Cal.App.4th 468, 482, 189 Cal.Rptr.3d 259.) The relief at issue in the entitlement phase is an insurer's ability to stand in the shoes of its insured. Once an insurer has established that it is entitled to equitable subrogation, the insurer may enforce its insured's rights against third parties.
In the enforcement phase, the question is whether the insurer prevails on the substantive claims asserted against the third parties, standing in the shoes of its insured. The right to a jury trial would depend on the legal or equitable nature of the claims asserted against the third parties. Here, St. Paul asserted Pulte's breach of contract claim against defendants. Defendants were thus entitled to a jury trial in the enforcement phase. ( C & K Engineering Contractors v. Amber Steel Co., supra , 23 Cal.3d at p. 9, 151 Cal.Rptr. 323, 587 P.2d 1136 [action seeking recovery of damages for traditional breach of contract is an action at law in which a right to jury trial ordinarily exists]; Raedeke v. Gibraltar Sav. & Loan Assn. , supra , 10 Cal.3d at p. 671, 111 Cal.Rptr. 693, 517 P.2d 1157 [same].)
The two-phase concept of an equitable subrogation proceeding is supported by our Supreme Court's reasoning in Offer , as noted by the trial court. Although our Supreme Court did not in that case consider or decide the jury trial question before us, the court did distinguish between the equitable nature of subrogation on the one hand and the independent equitable or legal nature of the action to which the insurer asks to be subrogated on the other. In Offer , an insurance company paid its insured for damages caused by an automobile accident; the insurance company then sued the third party who caused the accident on a subrogation theory in a court of equity, seeking to recover damages arising from the accident. ( Offer v. Superior Court, supra , 194 Cal. at pp. 116-117, 228 P. 11.) The defendant argued he could be sued only in a court of law, not a court of equity, because the cause of action to which the insurance company became subrogated was legal in nature. ( Id. at p. 117, 228 P. 11.) Our Supreme Court agreed with the defendant. ( Id. at p. 123, 228 P. 11.)
Our Supreme Court explained: "At first, subrogation was purely an equitable remedy not to be claimed at law. But the courts of law gradually grew to sustain actions founded on the doctrine of subrogation in cases where the claim itself was cognizable at law . [¶] The better view is that a court of law may deal with subrogation as it may with assignment, and when the right of action to which a plaintiff asks to be subrogated is a legal right of action a court of law may treat a plaintiff who is entitled in equity to subrogation as an assignee and allow him to maintain an action of a legal nature upon the right to which he claims to be subrogated .... Of course, if the cause of action to which he claims to be subrogated is an equitable one, he must sue in equity, and there can always sue in his own name." ( Offer v. Superior Court, supra , 194 Cal. at pp. 120-121, 228 P. 11, italics added.) Our Supreme Court concluded that, in that case, "[t]he right of action to which the insurer was subrogated being legal, that is, for the recovery of money for damages suffered, [the action wa]s enforceable at law." ( Id . at p. 121, 228 P. 11.) "The fact that the complaint prays that the court decree the insurance company to be subrogated to the rights of the insured does not determine the nature of the action . In essence the action against petitioner herein is a legal action and he is entitled to have such action tried in a court of law." ( Id . at p. 123, 228 P. 11, italics added.)
We draw from the foregoing the premise that an equitable subrogation claim does not in and of itself cloak an insurer's subrogated cause of action against third parties in equity. As our Supreme Court said, an insurer's equitable subrogation claim does not determine the nature of the underlying action to which the insurer seeks to be subrogated. ( Offer v. Superior Court, supra , 194 Cal. at p. 123, 228 P. 11.) In that vein, it seems anomalous to suggest that defendants’ right to a jury trial depends on whether Pulte or St. Paul pursues the breach of contract action. The right to a jury trial does not turn on the identity of the plaintiff; it turns on the nature of the claim asserted. Indeed, as St. Paul acknowledged during oral argument before the trial court, had Pulte rather than St. Paul brought the breach of contract claim against defendants, defendants would have had a right to a jury trial. We can conceive of no reason why the result would be different simply because St. Paul stepped into the shoes of Pulte. To this point, we find a Colorado Supreme Court opinion persuasive.
In DeWitt , an insurer sought damages against third parties as a subrogee of its insured, who suffered injuries from a vehicle collision. ( American Family Mutual Ins. Co. v. DeWitt (Colo. 2009) 218 P.3d 318, 320.) The trial court submitted the claim to a jury. ( Ibid . ) On appeal, the insurer argued, among other things, that the trial court erred in submitting the cause to a jury. ( Ibid . ) The Colorado Supreme Court disagreed and concluded that, "[w]hile the act of subrogation has its roots in equity, ... the presence of a subrogee party does not transform otherwise legal claims into claims in equity." ( Ibid . )
The Colorado Supreme Court explained: "Once an insurance company enjoys [subrogation] rights, they ‘stand in the shoes of the insured’ for all legal purposes and may pursue any rights held by the insured subrogor. If the insurance company, as subrogee, is allowed to pursue the legal claims of its subrogor, the mere existence of subrogation does not transform those claims at law into equitable actions. In other words, a subrogated insurer ‘has no greater rights than the insured, for one cannot acquire by subrogation what another, whose rights he or she claims, did not have.’ " ( American Family Mutual Ins. Co. v. DeWitt, supra , 218 P.3d at p. 323, italics added.)
Applying these principles, the Colorado Supreme Court said that, "rather than focusing on the existence of subrogation, we must evaluate the nature of the actual claims asserted by [the insurer] on behalf of [its insured] in order to determine whether the [third parties] were entitled to a jury." ( American Family Mutual Ins. Co. v. DeWitt, supra , 218 P.3d at p. 323.) Because both claims the insurer asserted against the third parties were rooted in negligence and the insurer "was only entitled to pursue compensatory damages, which are legal, rather than equitable, in nature," the third parties were entitled to a jury trial. ( Id . at p. 324.)
We agree with the Colorado Supreme Court's analysis. An insurer's entitlement to equitable subrogation does not transform its insured's legal claims against third parties into equitable ones. For this reason, we disagree with CBR Electric , upon which St. Paul relies.
The facts of CBR Electric mirror this case. St. Paul defended Pulte in the underlying construction defect action and then "sought reimbursement of defense costs under an equitable subrogation theory against six subcontractors ... [who] had worked on the underlying construction projects and whose contracts required them to defend [Pulte] in suits involving allegations related to their work." ( CBR Electric, supra , 50 Cal.App.5th at p. 224.) After concluding St. Paul was entitled to equitable subrogation ( id. at pp. 230-241, 263 Cal.Rptr.3d 814 ), the Fourth District Court of Appeal considered whether it could determine the amount for which each defendant was liable ( id . at pp. 241-243, 263 Cal.Rptr.3d 814 ). In that regard, three defendants asserted they were entitled to a jury trial on the issue of the monetary damages sought. ( Id . at p. 242, 263 Cal.Rptr.3d 814.)
The CBR Electric court concluded that, "[a]s an initial matter, defendants are not entitled to a jury trial on the amount each owes St. Paul in subrogation." ( CBR Electric , supra , 50 Cal.App.5th at p. 242, 263 Cal.Rptr.3d 814.) The court explained that equitable subrogation is a proceeding in equity and the relief sought depended on the application of equitable doctrines. ( Ibid. , quoting St. Paul Fire & Marine Ins. Co. v. Murray Plumbing & Heating Corp. (1976) 65 Cal.App.3d 66, 72, 135 Cal.Rptr. 120 ; Fireman's Fund Ins. Co. v. Morse Signal Devices (1984) 151 Cal.App.3d 681, 686, 198 Cal.Rptr. 756 ; American Motorists Ins. Co. v. Superior Court (1998) 68 Cal.App.4th 864, 871, 80 Cal.Rptr.2d 621.) Thus, in the CBR Electric court's view, "it does not matter that St. Paul is seeking monetary damages and not a traditionally equitable remedy like declaratory relief. If, as here, ‘the action is essentially one in equity and the relief sought depends upon the application of equitable doctrines, the parties are not entitled to a jury trial.’ " ( CBR Electric , at p. 242, 263 Cal.Rptr.3d 814.)
None of the cases relied upon by the CBR Electric court dealt with the nature of the right to a jury trial on the substantive claim asserted by the insurer against third parties after the trial court found the equities entitled the insurer to equitable subrogation. Two of the cases relied upon discussed the equitable nature of equitable subrogation in the entitlement phase of the analysis. ( St. Paul Fire & Marine Ins. Co. v. Murray Plumbing & Heating Corp., supra , 65 Cal.App.3d at p. 72, 135 Cal.Rptr. 120 [special defense of equitable subrogation is a matter of equity to be determined by the court]; Fireman's Fund Ins. Co. v. Morse Signal Devices, supra , 151 Cal.App.3d at pp. 686-688, 198 Cal.Rptr. 756 [insurer was not entitled to equitable subrogation of any of the insureds’ causes of action based on breach of contract or negligence].)
The portion of the third case relied upon by the CBR Electric court merely states the general proposition that when the relief sought depends on the application of equitable doctrines, no jury trial right attaches. ( American Motorists Ins. Co. v. Superior Court, supra , 68 Cal.App.4th at p. 871, 80 Cal.Rptr.2d 621.) The relief sought in the enforcement phase of this proceeding -- i.e., breach of contract damages -- is not, however, dependent on the application of equitable doctrines. (Cf. C & K Engineering Contractors v. Amber Steel Co., supra , 23 Cal.3d at pp. 9-10, 151 Cal.Rptr. 323, 587 P.2d 1136 [no jury trial right where suit for damages based entirely on equitable doctrine of promissory estoppel]; Maryland Casualty Co. v. Nationwide Mutual Ins. Co. (2000) 81 Cal.App.4th 1082, 1093-1094, 97 Cal.Rptr.2d 374 [relief sought in equitable contribution action between insurers is equitable].) " ‘The fact that equitable principles are applied in the action does not necessarily identify the resultant relief as equitable.’ " ( Raedeke v. Gibraltar Sav. & Loan Assn., supra , 10 Cal.3d at p. 674, fn. 4, 111 Cal.Rptr. 693, 517 P.2d 1157.)
At bottom, but for St. Paul standing in the shoes of Pulte, defendants would have been entitled to a jury trial on the breach of contract claim. We can fathom no reason why defendants’ right to a jury trial should be negated simply because St. Paul rather than Pulte pursued the breach of contract claim. II-IV DISPOSITION
See footnote *, ante .
The judgment is affirmed. Defendants shall recover their costs on appeal. ( Cal. Rules of Court, rule 8.278(a)(1)-(2).)
We concur:
Murray, J.
Renner, J.