A major corporate dispute has unfolded in California, with U.S. TelePacific Holdings Corp. taking legal action against Honeywell International, Inc. The complaint was filed by U.S. TelePacific Holdings Corp. in the Court of Appeal of the State of California, Sixth Appellate District, on August 27, 2024.
The case centers around a defective Honeywell water filter used by TelePacific in its plumbing system that failed and caused significant flooding damage to a neighboring business, A-1 Trading, Inc., on June 2, 2018. A-1 Trading subsequently sued TelePacific for damages exceeding $1.3 million due to the disruption and damage to their showroom and product inventory. In response, TelePacific cross-complained against Honeywell seeking equitable indemnification and contribution, arguing that the failure of Honeywell's filter was due to design defects, manufacturing defects, failure to warn, and negligence on Honeywell's part.
TelePacific's initial cross-complaint lacked specific factual allegations linking Honeywell to the fault, leading to its dismissal with leave to amend. The first amended cross-complaint incorporated A-1 Trading’s allegations without admitting their truth but pointed out that the failure of a Honeywell water filter caused or contributed to the flooding event described by A-1 Trading. TelePacific contended that if found liable for A-1 Trading’s damages, they should be indemnified by Honeywell due to their responsibility for the filter’s failure.
Honeywell demurred again, arguing that TelePacific had not sufficiently alleged facts showing that Honeywell owed any duty to A-1 Trading or was responsible for their harm. They also cited laches and uncertainty as grounds for dismissal but did not challenge TelePacific’s negligence theory directly beyond asserting that A-1 Trading’s harm was not attributable to them.
The trial court sustained Honeywell’s demurrer without leave to amend based on the conclusion that TelePacific failed to allege facts establishing a tort duty owed by Honeywell to A-1 Trading. However, upon appeal, it was determined that TelePacific’s allegations were sufficient to state a claim for equitable indemnity and declaratory relief but premature regarding contribution claims since no judgment had been rendered against both parties jointly.
TelePacific seeks equitable indemnity from Honeywell if found liable for damages claimed by A-1 Trading and declaratory relief affirming this right. The appellate court reversed the trial court's judgment sustaining the demurrer without leave to amend concerning equitable indemnity and declaratory relief but upheld it without prejudice regarding contribution claims.
The case is represented by attorneys from both sides: Lie J., Greenwood P.J., Grover J., with Case ID H051348.