James Souza (Subcontractor): [INDEMNITY PROVISION NOT ENFORCEABLE]
This case involved a 70 unit apartment complex located in San Diego. Plaintiffs were represented by Mitch Golub, Esq. Of Golub & Morales. Roel was represented by Robert Titus of Stutz, Artiano, Shinoff & Holtz. Attorney James Souza was hired by INSCORP one month before trial on behalf of Calescon, Inc., a drywall subcontractor. The case was venued in Department 63 of San Diego Superior Court before Judge Luis R. Vargas.
A final settlement conference was held with the Plaintiff, Developer, and six subcontractors remaining in the case. The demand to Calescon was $100,000 and an additional 1/6 share totaling $100,000 was being demanded of INSCORP pursuant to alleged additional insurance obligations. The case did not resolve and motions in limine were filed. Kennedy & Souza filed a motion in limine requesting the court find that the subcontract agreement between Calescon and Roel was a contract of adhesion and that the indemnity provision within the subcontract was unenforceable pursuant to the doctrine of unconscionability set forth in Scissor-Tail 28 Cal.3d 807. Reading the briefs, the Judge commented that Plaintiff’s cost of repair, allegedly attributable to Calescon, was less than $560. However, pursuant to the subcontract, Calescon could be held responsible for Plaintiff’s claimed attorneys fees of approximately $800,000. The Judge did not render an official ruling but stated he believed this would be harsh and clearly would fall into the category of “unintended potential consequences” which might lead the court to rule the subcontract to be unconscionable and unenforceable as applied to Calescon.
As Roel’s case against Calescon depended upon being awarded attorneys fees and costs, the case subsequently resolved for $10,000 including the additional insured obligations. It is significant to note the other six remaining subcontractors all paid in excess of $100,000 and the settlements were exclusive of additional insured obligations.