Bramalea California, Inc. v. Reliable Interiors, Inc.

Bramalea California, Inc. (Bramalea), a residential real estate developer, was sued by homeowners for construction defects. Bramalea cross-complained for breach of contract and indemnity against the involved subcontractors. Both the complaint and the cross-complaint were settled, except the issue of Bramalea’s right to recover attorney fees incurred after it tendered its defense to the subcontractors but before it tendered its defense to the subcontractors’ insurers. The trial court dismissed the cross-complaint, finding because Bramalea had not actually paid the attorney fees, it had no standing to recover them. We affirm.

FACTS

The homeowners sued Bramalea in March 1998; at that time, Bramalea was in chapter 11 bankruptcy. Accordingly, the homeowners stipulated in the bankruptcy court to limit their recovery “to any applicable insurance proceeds as well as any assignment of rights by the Debtor against its subcontractors . . . .” Bramalea’s insurer, Zurich of Canada, hired counsel to provide a defense and file a cross-complaint against Bramalea’s subcontractors, all of whom had signed subcontractors’ agreements. The cross-complaint sought relief based on equitable…