Filed 5/16/13 Anderson Private Investors v. Colak CA2/2 NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION TWO

KAYNE ANDERSON PRIVATE INVESTORS et al.,
Plaintiffs and Appellants,

v.
MUSTAFA COLAK,
Defendant and Respondent. B239111
(Los Angeles County Super. Ct. No. BC462778)

APPEAL from a judgment of the Supe rior Court of Los Angeles County. Joanne B. O’Donnell, Judge. Affirmed.

Valle Makoff, Jeffrey T. Makoff, Brando n M. Carr; Nagler & Associates, Lawrence Nagler and Charles Avrith for Plaintiffs and Appellants.

Lurie, Zepeda, Schmalz & Hogan, Andr ew W. Zepeda and Shawn M. Ogle for Defendant and Respondent.

* * * * * *2 Plaintiffs and appellants Kayne Anderson Private Investors, L.P., Kayne Anderson Private Investors II, L.P. and Kayne Anders on Private Advisors, L.P. appeal from a judgment entered following the trial court’s order sustaining a demurrer without leave to amend filed by defendant and respondent Mu stafa Colak (Colak). Appellants sought equitable indemnity, recovery of attorney fees and declaratory relief, alleging that Colak should bear proportionate responsibility for a multi-million dolla r arbitration award entered against them. After the demurrer wa s sustained, the trial court also denied appellants’ motion for leave to amend to allege a breach of contract claim against Colak. We affirm. The trial court properly sustained the demurrer without leave to amend. Appellants failed to state a cause of action for equitable indemnity because they were not mutually liable with Colak for the same injury. Th ey likewise failed to state a
claim for tort of another becau se they incurred atto rney fees defending allegations of their own fraud. Finally, their declaratory relief action failed because it was merely derivative of their other claims. The trial court pr operly exercised its discretion in denying appellants’ motion for leave to amend and in construing the moti on as an unsupported
motion for reconsideration.

FACTUAL AND PROCED URAL BACKGROUND
The Arbitration. In 1994, Siamak (“Mack”) Katal (Kat al) and his wife Ingrid Katal founded Detection Logic, Inc. (Detecti on Logic), a life safety and se curity contracting company. Appellants are private equity fund groups that had invested over $35 million in Detection Logic between 2005 and 2008. Colak wa s Detection Logic’s president and chief
executive officer in 2007 and 2008. In 2008, after an accountin g firm had conducted an inte rnal audit and issued an opinion that Detection Logic’s 2007 financia l statements were materially correct and complied with generally accepted accounting principles (GAAP), appellants and Katal initiated efforts to sell the company. Inte grated Products and Services, Inc. (IPS) submitted a $150 million bid in October 2008 . Because appellants and Katal required3 that the sale close by the end of 2008, De tection Logic’s September 2008 financial statements (September financ ials) formed the basis for th e $140 million purchase price. The parties executed the secur ities purchase agreemen t (SPA) for the sale of the company on December 12, 2008. IPS retained Colak as Detection Logic’ s president. In connection with the company’s sale, Colak executed a contin gent payment agreement (Reimbursement Agreement) which entitled him to receive a pro forma percentage—specified as 1.4173 percent in a separate agreement—of th e amounts actually received by appellants and Katal under the SPA and correspondingly obligated him to pay back to Detection Logic the same pro forma percentage of any amount that appella nts and Katal were required to pay IPS as a result of financial adjustments under the SPA. 1 Following the sale, IPS discovered that the September financials were not materially correct, did not comply with GAAP and ove rstated Detection Logic’s earnings. In accordance with the terms of the SPA, in September 2009 IPS filed a demand for arbitration, seeking damages for breach of warranty and fraud. In August 2010, IPS filed an amended comp laint in the arbitration that alleged claims for breach of contract, fraud and unfair competition. A ppellants and Katal asserted counterclaims.
The arbitration was conducted in Octo ber 2010. In a July 2011 award, the
arbitrator determined that Detection Logic misrepresent ed its financial position and thereby breached the SPA and engaged in an unfair business practice. He expressly
found that Katal lacked cred ibility and that Colak was cred ible, despite appellants’ and Katal’s efforts to discredit his testimony. The arbitrator further determined that appellants did not engage in fraud, finding that they offered evidence they “reasonably relied on the Company’s senior management a nd accounting department with respect to the September Financials” and there was no ev idence they particip ated in creating or knew of the manipulated financial statements. Nonetheless, it found they were liable for

1 The Reimbursement Agreement gave Det ection Logic the right to offset the payments owing by the pro forma percentage o r, in the event it elected not to offset, to assign the right to receive such payment to appellants and Katal.4 Detection Logic’s breach pursuant to section 10.1(a)(i) of th e SPA, which provided that each seller, including appellants, “shall be jointly and severally liable for ‘any breach of any warranty or the inaccuracy of any representation of the Company contai ned in this Agreement.’” On the basis of its establishi ng multiple breaches of the SPA, the arbitrator awarded IPS over $33 million, payable by appellants and Katal jointly and severally. Complaint and Demurrer. In June 2011, appellants filed their orig inal complaint against Colak and others, alleging causes of action for comparative eq uitable indemnity, contribution, tort of another and declaratory relief. Colak demu rred, and appellants filed a first amended complaint before the matter was heard. Alleging the same four causes of action, the operative complaint sought equitable indemnity and reimbursement of attorney fees from Colak to the extent that appellants’ liability to IPS in connection with the sale of Detection Logic was cause d by Colak’s conduct. 2 They alleged that Colak knowingly participated in the fraud and misconduct committed by Katal. They specifically alleged that “Colak’s alleged fraud is detailed in the sworn testimony he gave in the JAMS
Arbitration and include s testimony and documents that he alleges shows he personally manipulated financial data, provided inform ation he knew was incorrect to Detection Logic’s financial personnel charged with ma king disclosures to IPS and signed the SPA (which included financial misrep resentations and warranties).” Colak again demurred, asserting that appe llants failed to allege facts sufficient to state a cause of action. More specifica lly, he argued that equitable indemnity was unavailable because he and appe llants were not joint tortfeas ors, the “tort of another” doctrine did not apply where appellants de fended themselves against allegations involving their own tortious co nduct and declaratory relief was duplicative of their other claims. In support of his demu rrer, he sought judicial notice of the arbitration award, the second amended complaint in the arbitration and the SPA.

2 Appellants’ second cause of action for cont ribution was not alleged against Colak.5 Appellants opposed the demurrer. At th e conclusion of their opposition, they requested leave to amend and further indicat ed they intended to add claims to their complaint seeking Colak’s payment under the Reimbursement Agreement. They attached exhibits showing that they ha d previously demanded payment of Colak’s pro forma percentage under the Reimbursement Agreement, calculated as approximately $340,000. At the conclusion of a December 5, 2011 hearing, the trial court sustained the
demurrer without leave to ame nd for the reasons outlined in its tentative ruling. It determined that because appellants had be en held liable only under the SPA, no indemnity claim arose because th ey were not joint tortfeasors with Colak. The trial court further determined that attorney fees under the “tort of another” theory could not be recovered by exonerated parties who incu rred fees in defending themselves from a codefendant found liable. Finally, it found th at appellants’ declaratory relief claim was insufficient, as it was wholly derivative of the other claims. Motion for Leave to Amend. Though they did not subm it it to the trial court at the time of the hearing, appellants filed a motion for leave to file a second amended complaint on the same day. They sought to add a cause of action for br each of contract and sought recovery of Colak’s pro forma percentage under the Reim bursement Agreement. Colak opposed the motion, characterizing it as an unsupported motion for recons ideration and arguing that the only reason appellants had not included the breach of contra ct claim in their original pleading was because it would have undermined their inde mnity claim. In reply, appellants argued that the contract and inde mnity claims were unrelated, and the only reason they delayed in asserti ng breach of contract was to allow time for Colak to comply with their demand for performance. Following a January 11 , 2012 hearing, the trial court denied the motion. It agreed
with Colak that the breach of contract claim could and should have been alleged originally, issuing a minute order which provided in part: “[P]laintiffs chose in both the original complaint and the first amended comp laint not to allege breach of contract6 against Colak, choosing instead to put all thei r eggs in the one basket of their equitable indemnity theory of recovery. This is not, th erefore, a case where plaintiffs only recently discovered their breach of contract claim agai nst Colak; they have known of it from the beginning and elected, for strategic reasons, not to allege it. When the court sustained
Colak’s demurrer to the first amended complaint without le ave to amend, plaintiffs’ strategy failed.” Also because of the or der sustaining the demurrer without leave to amend, the trial court concluded that appe llant’s motion was one for reconsideration,
made without new or different facts, law or circumstances. The trial court entered a judgment of di smissal in favor of Colak. Appellants timely appealed. Thereafter, the trial c ourt denied Colak’s motion for sanctions. 3

DISCUSSION Appellants maintain that the trial court erred in sustaining the demurrer without
leave to amend and abused its discretion in denying their motion for leave to amend. We
find no merit to their contentions.

I. The Trial Court Properly Sustaine d the Demurrer Without Leave to Amend. A. Standard of Review.
We review de novo a trial court’s sustaining of a demurrer, exercising our independent judgment as to whether the compla int alleges sufficient f acts to state a cause of action. ( Zelig v. County of Los Angeles (2002) 27 Cal.4th 1112, 1126.) We assume the truth of properly pleaded allegations in the complaint and give the complaint a reasonable interpretation, reading it as a whole and with all its parts in their context. ( Aubry v. Tri-City Hospital Dist. (1992) 2 Cal.4th 962, 966–967 .) “We do not, however, assume the truth of the legal contentions, de ductions or conclusions ; questions of law,

3 After briefing, Colak move d to strike untimely arguments raised in appellants’ reply brief. Though we deny the motion, we need not consider argum ents raised for the first time in a reply brief. ( Mansur v. Ford Motor Co. (2011) 197 Cal.App.4th 1365, 1387–1388; Reichardt v. Hoffman (1997) 52 Cal.App.4th 754, 764.)7 such as the interpretation of a stat ute, are reviewed de novo.” ( Caliber Bodyworks, Inc. v. Superior Court (2005) 134 Cal.App.4t h 365, 373; accord, Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) We may also disregard alle gations which are contrary to law or to a fact of which judicial notice may be taken. ( Wolfe v. State Farm Fire & Casualty Ins.
Co. (1996) 46 Cal.App.4th 554, 559–560.) We apply the abuse of discretion standard in reviewing a trial court’s denial of leave to amend. ( Blank v. Kirwan, supra, 39 Cal.3d at p. 318.) Although leave to amend should be liberally gr anted, the trial court has discre tion to sustain a demurrer without leave to amend where there is no reasonable pr obability that its defects could be cured by amendment. ( Ibid .; Green v. Travelers Indemnity Co. (1986) 185 Cal.App.3d 544, 556.) It is appellants’ burden to show either that the trial court erred in sustaining the demurrer or abused its discretion in denying leave to amend. ( Kong v. City of Hawaiian Gardens Redevelopment Agency (2002) 108 Cal.App.4th 1028, 1038.) B. Equitable Indemnity. In their first cause of action, appellant s alleged they were entitled to “comparative equitable indemnity” in an amount believed to exceed $39 million. 4 In support of their claim, they alleged on information and be lief that the claims on which IPS prevailed “were based upon allegations/admissions of fraudulent conduct by defendant Colak, to the effect that he knowingly participated in the fraudulent preparation of Detection Logic’s Financial Documents, including the September Financials, which IPS relied upon to purchase Detection Logic.” They added th at “Colak’s admissions, if true, render him liable as a joint tortfeasor along with the othe r defendants . . . .” On this basis, they alleged: “The IPS claims and any liability of plaintiffs were caused by acts and omissions of defendants Colak . . . (including particular acts and omissions arising out of and in connection with defendants’ obligations under the SPA and by la w). To the extent

4 This figure took into account an approximate $6.4 million accounting arbitration award entered against appellants in August 2010.8 plaintiffs’ liability to IPS in connection with the sale of De tection Logic was caused by the acts of Colak . . . , those defendan ts are responsible for any damages.” “Equitable indemnity is an equitable doc trine that apportions responsibility among tortfeasors responsible for the same indivisi ble injury on a comparative fault basis. [Citation.] ‘[T]he equitable indemnity do ctrine originated in the common sense proposition that when two individuals are resp onsible for a loss, but one of the two is more culpable than th e other, it is only fair that the mo re culpable part y should bear a greater share of the loss.’ [Citation.] A right of equitable indemnity can arise only if the prospective indemnitor and indemnitee are mutu ally liable to another person for the same injury. [Citation.]” ( Fremont Reorganizing Corp. v. Faigin (2011) 198 Cal.App.4th 1153, 1176–1177; accord, BFGC Architects Planners, Inc. v. Forcum/Mackey Construction, Inc. (2004) 119 Cal.App.4th 848, 852 [the doctrine of equitable indemnity “applies only among defendants who are jointly and severally liable to the plaintiff”]; Children’s Hospital v. Sedgwick (1996) 45 Cal.App.4th 1780, 1786 [“California common law recognizes a right of partial inde mnity under which lia bility among multiple tortfeasors may be apportioned according to the comparative neg ligence of each”].) Emphasizing one of the key elements ne cessary for equitable indemnity, the court
in Stop Loss Ins. Brokers, Inc. v. Brown & Toland Medical Group (2006) 143 Cal.App.4th 1036, 1040 ( Stop Loss ) stated: “It is well-settled in California that equitable indemnity is only available among tortfeasors who are jointly and severally liable for the plaintiff’s injury.” Amplifying that principl e, the court explained that “California law does not permit equitable apportionment of dama ges for breach of contract” and declined
to follow a New Mexico decision wh ich adopted a contrary rule. ( Id. at p. 1041, fn. 2.) While the concurring opinion in Stop Loss advocated for the application of indemnity principles on the ground that the indemnitor’s conduct could also be construed as a breach of duty, it acknowledged the inherent difficulties in applying equitable indemnity principles among parties liable in tort and for breach of contract because of the different measure of damages fl owing from each form of liability. ( Id . at p. 1054 (Pollak, J., concurring).) In view of those complications , the concurrence conced ed that any change9 in the law should co me from the Legislature or the Supreme Court and, absent such change, “we must adhere to the rule that equitable indemnity may be obtained only from one who is jointly and severally liable to the injured part y based on the commission of a tort, i.e., based on the breach of a duty imposed by law.” ( Id . at p. 1055 (Pollak, J., concurring).) Stop Loss affirmed an order sustaining a de murrer without leave to amend where the proposed indemnitor was liable, at most, for breach of contract. ( Stop Loss, supra, 143 Cal.App.4th at pp. 1042–1043.) Thereafter, the court in In re Medical Capital Securities Litigation (C.D. Cal. 2012) 842 F.S upp.2d 1208, 1213, relied on Stop Loss to affirm the dismissal of a complaint where the proposed indemnitee sought equitable
indemnification for a breach of contract. Accord ing to the court, “California state law, as set forth by intermediate appellate courts, is clear. Equitable indemnity is only available between joint tortfeasors. Stop Loss Insurance Brokers, In c. v. Brown & Toland Medical Group is exactly on point. . . . The Banks atte mpt to distinguish th is case because the
contractual defendant in Stop Loss was the third-party defendant, not the third-party plaintiff, as is the case here. This distinction does not control. As the Stop Loss court made clear, both the party seeking indemnif ication and the party from which it seeks indemnification must be tortfeasors. [Citation.]” ( In re Medical Ca pital Securities Litigation, supra , at p. 1213; see also Travelers Casualty and Surety Co. of America v. Desert Gold Ventures, LLC (C.D. Cal. 2010) 2010 WL 5017798 at *15 [holding, as a matter of law, defendants could not seek equitable indemnity from cross-defendants because the claim against defendants was one for breach of contract and “whatever losses [defendants] incur as a result of their breach of the [contract ] are theirs alone, not subject to apportionment”].) Here, appellants’ liability was based on br each of contract. In its order sustaining
Colak’s demurrer without leave to amend, the trial court took judicial notice of the arbitration award. In that award, the arbitr ator expressly determined that appellants did not engage in fraud with respect to the prep aration of the Septembe r financials, nor did they fraudulently induce IPS to enter into the SPA. Instea d, they were contractually10 liable for Detection Logic’s breach of the SPA: “Section 10.1(a)(i) of the SPA provides that each Seller, which includes each of the Re spondent Sellers herein, shall be jointly and severally liable for ‘any breach of any warranty or the inaccuracy of any representation of the Company contained in this Agreement.’” As the trial court explained, “the arbitrator found plaintiffs lia ble for breaching a contract term in the sales agreement in which the defendants affirmed that financial representations in the agreement were correct when in fact they were not and so pl aintiffs became liable for the damage that was caused by the breach.” According to Stop Loss and its progeny, appellants cannot seek equitable indemnific ation from Colak because their liability was premised on their breach of co ntract, and the parties therefore were not joint tortfeasors responsible for a single injury. 5 We are unpersuaded that the author ities on which appellants rely require a
different result. The discussion in Prince v. Pacific Gas & Electric Co. (2009) 45 Cal.4th 1151 does not support appellants’ suggestion th at the case eliminated the joint tortfeasor element of equitable indemnity. There, in order “to provide context to [the plaintiff’s] claim of a right to implie d contractual indemnity,” ( id . at p. 1158) the court described the three historical forms of indemnity: “(1) indemnity expressly provided for by contract (express indemnity); (2) indemnity implied fro m a contract not specifically mentioning

5 The arbitrator also found that Detecti on Logic’s breach of the SPA was sufficient to support a claim for unfair business prac tices under Business and Professions Code section 17200, and dete rmined that IPS’s damage were recoverable as restitution under this theory as well. The tr ial court ruled that the arbitr ator’s finding appellants liable under this quasi-contract theo ry could not be the basis for an equitable indemnity claim because it did not render them joint tortfeas ors with Colak. In their opening brief, appellants did not address the trial court’s unfair competition rulin g and we therefore deem any challenge to th at ruling waived. (E.g., Paulus v. Bob Lynch Ford, Inc. (2006) 139 Cal.App.4th 659, 685 [“Courts will ordinarily treat the appellant’s failure to raise an issue in his or her opening brief as a waiver of that challenge”]; Christoff v. Union Pacific Railroad Co. (2005) 134 Cal.App.4th 118, 125 [“an ap pellant’s failure to discuss an issue in its opening brief forfeits the issue on appeal”]; Reyes v. Kosha (1998) 65 Cal.App.4th 451, 466 [issues not properly raised in appellant’s brief are deemed forfeited or abandoned].)11 indemnity (implied contractual indemnity); and (3) indemnity arising from the equities of particular circumstances (traditional equitable indemnity). [Citation.]” ( Id. at p. 1157, fn. omitted.) It explained that while “not extinguished, implied contractual indemnity is now viewed simply as ‘a form of equitable indemnity.’” ( Id . at p. 1157.) Nonetheless, the court acknowledged that both types of indemnity retained distinct characteristics, as “‘traditional equitable indemnity’ . . . [was] not based on the existence of a contractual relationship between the indemnitor and th e indemnitee,” while implied contractual indemnity continued to requir e that the indemnitor and inde mnitee be in a contractual relationship with one another. ( Id . at pp. 1157, fn. 2 & 1159.) In the context of resolving whether the plaintiff’s claim for implied contractual indemnity could be subject to statutory immunities, the Prince court reaffirmed the principle that traditional equitable indemnity is available only between joint tortfeasors. ( Id . at p. 1160 [“traditional equitable indemnity differs significantly from express contractual indemnity, in that the
former is not available in the absence of a joint legal obligation to the injured party”].)
The other two cases on which appellants principally rely, Considine Co. v. Shadle, Hunt & Hager (1986) 187 Cal.App.3d 760 ( Considine ) and Card Constr. Co. v. Ledbetter (1971) 16 Cal.App.3d 472 ( Card ), likewise addressed indemnity between parties in a contractual relationship. In Considine , a tenant sued his landlord for breach of contract and misrepresentation, and the landlord sought indemnity from counsel who had previously represented the la ndlord and tenant jointly. ( Considine, supra, at pp. 763– 764.) Addressing whether the landlord could seek indemnity in th e event he was found liable only for breach of contract, the court distinguished between implied contractual indemnity and traditional equitable indemnity. It explained: “A defendant sued for breach of contract may have a right of implied indemnity against a third person whose wrong caused the defendant’s breach. [Cita tions.] This implied right of indemnity, however, is distinct from the equitable i ndemnity among tortf easors which was the12 subject of AMA .” ( Id . at pp. 769–770.) 6 Confirming that its reference to “implied indemnity” did not involve traditional equitable indemnity, the court cited County of Los Angeles v. Superior Court (1984) 155 Cal.App.3d 7 98, 803, disapproved by Bay Development, Ltd. v. Superior Court (1990) 50 Cal.3d 1012, 1032, fn. 12, and Nomellini
Construction Co. v. Harris (1969) 272 Cal.App.2d 352, 3 59, both of which involved issues related to implied contractual indemnity. ( Considine, supra, at pp. 769–770.) The balance of the discussion concerned the app lication of implied contractual indemnity principles to a breach of contract and the ap plication of traditional equitable indemnity to an alleged breach of th e duty of care. ( Id . at pp. 770–771.) Contrary to appellants’ position, Considine did not apply traditional equitable in demnity to a breach of contract. Similarly, Card, supra , 16 Cal.App.3d 472 involved a series of subcontractors in contractual relationships. The lowest leve l subcontractors submitted false invoices, causing mid-level subcontractor Card to pay a lower level subcontractor, who in turn never paid the lowest level subcontractors. ( Id . at p. 475.) They successfully sued the general contractor and were paid by its bonding company. Pursuant to a bonding indemnity agreement, Card wa s required to satisfy the bonding company’s judgment. ( Id . at p. 476.) Card then sought indemnity from the lowest level subcontractors on the ground that their conduct had forced it to pa y twice—first when it paid the lower level subcontractor and again when it satisfied the judgment. ( Id . at pp. 476–477.) Reversing an order sustaining a demurrer without leave to amend, the Card court characterized the claim as one for “implied indemnity,” explai ning that because Card’s responsibility to pay was contractual and the subcontractor’s alleged responsibility was based on tortious misrepresentations, “we think appellant Card stated a cause of action against respondents in implied indemnity. [Citations.]” ( Id . at p. 478.) “The right to implied indemnity may arise from contract or from equitable considerations. [Citations.]” ( Standard Oil Co. v. Oil, Chem ical etc. Internat. Union

6 The court’s reference to “ AMA ” is an abbreviation for American Motorcycle Assn. v. Superior Court (1978) 20 Cal.3d 578, a case whic h first applied comparative fault principles to equitable indemnity.13 (1972) 23 Cal.App.3d 585, 588.) The Card court emphasized that the indemnity claim
involved two distinct fo rms of liability—breach of contract and tortious misrepresentation. ( Card, supra , 16 Cal.App.3d at p. 478 .) Because there was no
indication in Card that the court intended to dispense with join t tortfeasor requirement necessary for a claim of equ itable indemnity, we conclude that the “implied indemnity”
referenced in Card arose from contract. Accordingly, we do not construe the case to support appellants’ argument that they st ated a valid cause of action for equitable indemnity against Colak. Finally, appellants’ belated cita tion in their reply brief to County of San Mateo v. Berney (1988) 199 Cal.App.3d 1489 does not assist them. In that case, the court held that a public entity sued for inve rse condemnation may bring a cr oss-complaint for equitable indemnity against “third parties whose neglig ent or fraudulent acts were causative factors in the damaging or taking of private property.” ( Id . at p. 1494.) But a cause of action for
inverse condemnation is unlike one for breac h of contract, as “when the government takes or damages property, it is strictly lia ble to pay compensation therefor, unless an exception to strict liability applies. [Citation.]” ( Paterno v. State of California (1999) 74 Cal.App.4th 68, 82.) Thus, the case was an application of the general principle “that equitable indemnity may also be used to apportion liability where ‘“one or more tortfeasors’ liability rests on the principle of strict lia bility.”’ [Citations.]” ( Greystone Homes, Inc. v. Midtec, Inc . (2008) 168 Cal.App.4th 1194, 1208–1209.) C. Tort of Another. In their third cause of action, appellants s ought attorney fees and costs, alleging: “Due to the torts of the defendants, plaintiffs have been forced to protect their interests by defending litigation brought by IPS and by f iling this action against defendants. To protect their interests, plaintiffs have incu rred, and continue to incur, attorneys’ fees, costs and statutory prejudgment interest owed to IPS.” The trial court ruled that the doctrine did not apply here, where appellant s incurred fees in defending themselves against allegations for which De tection Logic was found liable.14 The “tort of another” doctrine is one of several equitable exceptions to the general rule that each party bears the cost of employing an attorney unless a statute or agreement provides otherwise. (See Prentice v. North Amer. Title Guar. Corp. (1963) 59 Cal.2d 618, 620 ( Prentice ); Heckert v. McDonald (1989) 208 Cal.App.3d 832, 837.) The doctrine provides: “A person who through the to rt of another has been required to act in the protection of his interests by bringing or defending an ac tion against a third person is entitled to recover compensation for the reas onably necessary loss of time, attorney’s fees, and other expenditures thereby su ffered or incurred. [Citations.]” ( Prentice, supra, at p. 620.) In Davis v. Air Technical Industries, Inc. (1978) 22 Cal.3d 1, our Supreme
Court cautioned that “the Prentice exception was not meant to apply in every case in which one party’s wrongdoing causes another to be involved in litigation with a third party. If applied so broadly, the judici al exception would even tually swallow the legislative rule that each party must pa y for its own attorney. [Citations.]” ( Id . at p. 7, fn. omitted; see also David v. Hermann (2005) 129 Cal.App.4th 672, 689 [“The courts have refrained from expanding the rule in a way that would undermine the general rule that a party bears his own attorney fees”].) Accordingly, the tort of another doctri ne has not been extended to enable a defendant to recover fees and expenses incurre d in defending against allegations of his or her own wrongdoing. ( Davis v. Air Technical Industries, Inc., supra, 22 Cal.3d at p. 6 [“Since Davis defended exclusively against a llegations of his own negligence, he is not entitled to recover attorney’s fees” under Prentice or any other doctrine]; accord, Santa Clara Valley Water Dist. v. Olin Corp. (2009) 655 F.Supp.2d 1048, 1063 [“Under Davis . . . , the ‘tort of another’ doctrine of damages recognized in Prentice does not extend to allow recovery of legal expenses by a defe ndant who was defending against allegations of its own negligence”].) Nor is it of any consequence that the party seeking fees ultimately prevails in the underl ying litigation. As the court in Watson v. Department of Transportation (1998) 68 Cal.App.4th 885, 894, expl ained: “The extension of the
Prentice rule to the commonplace case of an ex onerated alleged tortfeasor would go a long way toward abrogation of the American rule that each party to a lawsuit must15 ordinarily pay his or her own attorney’s fees . It would substantia lly expand the notion of duty under the law of torts to compensation of the litigation expenses incurred by all persons, however connected to any tortious even t, whom the injured pl aintiff elects to sue
who succeed in establishi ng lack of liability.” Here, the judicially-noticed second ame nded complaint filed in the arbitration established that IPS’s allegations were dire cted against Katal and appellants collectively as the “sellers” of Detection Logic. The arbitration award confirmed that appellants defended against allegations of their own fraud and fraudulent induc ement. The record fails to demonstrate the “‘exceptional ci rcumstances’” found to be present in Manning v. Sifford (1980) 111 Cal.App.3d 7, 12, a case relied on by appellant s. There, buyers sued an adjacent property owner and their real estate brokers when the property owner, Sifford, blocked an easement that the broke rs had represented permitted access. ( Id . at p. 9.) After the trial court confirmed the ex istence of the easement, the brokers sought recovery of attorney fees from Sifford, and the appellate court reversed the denial of fees, reasoning: “In this instance, br okers’ litigation expenses were incurred solely on behalf of the innocent prevailing parties who were th e victims of Sifford’s wrongful conduct. Brokers were innocent of any wrongdoing but we re compelled to prove the [buyers’] case against Sifford to protect themselves from li ability. Under such ci rcumstances, it is only fair that Sifford be required to compensa te the brokers for th eir reasonable litigation expenses, including attorney’s fees.” ( Id . at p. 12.) Though appellants now attempt to cast th emselves in the role of the innocent brokers forced to help IPS pr ove its case against Katal, the arbitration award belies their position. (See Martinez v. Socoma Companies, Inc. (1974) 11 Cal.3d 394, 399 [allegations constituting conclusions of law or contrary to matters subject to judicial
notice not deemed true fo r purposes of demurrer]; Interinsurance Exchange v. Narula (1995) 33 Cal.App.4th 1140, 1143 [same].) Ac cording to the arbitr ator, IPS’s evidence
of fraud involved Katal’s acts and omissions th at were established, in part, by Colak’s testimony. Unlike the brokers who helped prove the buyers’ case, appellants instead “presented evidence designed to discredit Colak.” The arb itrator found such evidence16 unpersuasive, noting that “the evidence sh owed that Katal often used threats and intimidation with the Compa ny’s employees” and that Cola k had reason to fear Katal would withhold a promised stock payment. Th us, appellants tried to protect themselves from liability by assail ing Colak’s credibility. To apply th e tort of another doctrine under these circumstances would essentially turn the doctrine on its head. The trial court properly ruled that “[a] tort of another claim cannot be brought by an ex onerated party against a codefendant who is fo und liable for the fees that th e party incurred in defending
itself.” D. Declaratory Relief. In their fourth cause of action, appella nts sought a declaration concerning the proportionate fault of all parties involved in the arbitration. The trial court sustained
Colak’s demurrer without leave to amend on the ground the claim was wholly derivative and duplicative of appe llants’ other claims. “Generally, an action in declaratory relief will not lie to determine an issue which can be determined in the underlying tort action. ‘The declaratory relief statute should not be used for the purpose of anticipating and de termining an issue which can be determined in the main action. The object of the statut e is to afford a new form of relief where needed and not to furnish a litig ant with a second cause of ac tion for the determination of identical issues.’ [Citation.]” ( California Ins. Guarantee Assn. v. Superior Court (1991) 231 Cal.App.3d 1617, 1623–1624.) Here, the language of appellants’ declaratory relief cause of action shows that it was wholly de rivative of the other causes of action and therefore the demurrer was properly su stained as to this claim. (See Ochs v. PacifiCare of California (2004) 115 Cal.App.4th 782, 794.) Specifically, appellants alleged they were entitled to comparative equitable indemn ity and attorney fees and costs under the tort of another doctrine, and sought “a dete rmination of defendant Colak’s liability and proportionate fault with respect to the IPS clai ms.” The declaration they sought was thus
no different than what woul d have been determined in their underlying claims. Contrary to appellants’ assertion, Ball v. FleetBoston Financial Corp. (2008) 164 Cal.App.4th 794 supports the trial court’s determ ination. There, the court held that the17 plaintiff’s declaratory relief cause of action was wholly derivative of its failed statutory claim where “[t]he only declara tion sought by the cause of acti on is a judicial declaration that the arbitration provisions of the cred it card agreement are illegal and unconscionable, and violate public policy,” and the statut ory cause of action “requests that the enforcement of the arbitration provisions of the credit card agre ement be enjoined, because they are unlawful a nd/or unconscionable.” ( Id . at p. 800.) Here, similarly, appellants’ cause of action for comparativ e equitable indemnity sought a judgment against Colak “in an amount proportionate” to his fault and their cause of action for tort of another sought to hold Colak responsible for their attorney fees and costs. The determination sought by appellant’s decl aratory relief claim was no different. Accordingly, the trial court pr operly sustained Colak’s demurrer to the fourth cause of
action.

II. The Trial Court Proper ly Exercised Its Discreti on in Denying Leave to
Amend. Appellants challenge the trial court’s deni al of leave to ame nd in two contexts. First, they argue that, at a minimum, the de murrer should have been sustained with leave to amend. Second, they argue that their separate motion for leave to file a second amended complaint should have been granted. We address each claim in turn. A. Amendment to Complaint. In their opposition to the demurrer and at the hearing, appellants requested leave to amend. They bore the burden of showing th at an amendment would cure the defects in their pleading. ( Arce v. Childrens Hospital Los Angeles (2012) 211 Cal.App.4th 1455, 1497, fn. 19.) A plaintiff seeking to satisfy that burden “‘“must show in what manner he can amend his complaint and ho w that amendment will change the legal effect of his pleading.” [Citation.] The assertion of an ab stract right to amend does not satisfy this burden.’ [Citation.] The plaintiff must clearl y and specifically state ‘the legal basis for amendment, i.e., the elements of the cause of action,’ as we ll as the ‘factual allegations18 that sufficiently state all requi red elements of that cause of action.’ [Citation.]” ( Maxton
v. Western States Metals (2012) 203 Cal.App.4th 81, 95.) Beyond mentioning the pro posed addition of facts rela ting to the Reimbursement Agreement, appellants have not articulated e ither any factual allegations or legal bases for leave to amend. On appeal, though appe llants have renewed their request for leave to amend, they have similarly failed to show how an amendment wo uld cure the multiple defects in their complaint. “Where the a ppellant offers no allegations to support the possibility of amendment and no legal authority showing the viability of new causes of action, there is no basis for finding the trial court abused its discretion when it sustained
the demurrer without leave to amend. [Citations.]” ( Rakestraw v. California Physicians’
Service (2000) 81 Cal.App.4th 39, 44.) The trial court properly exercised its discretion in denying leave to amend in connection with its order sustaining the demurrer. B. Motion for Leave to Amend. On the same day that the trial court su stained Colak’s demurrer without leave to amend, appellants filed a motion for leave to file a second amended complaint. For the first time, they alleged a breach of contract cause of action, seeking recovery from Colak under the Reimbursement Agreement. They a lleged that the total amount due under the Reimbursement Agreement became final on Oct ober 24, 2011 after the parties reached a stipulation concerning costs, they immediat ely made a demand on Colak that he pay his pro forma percentage, and he rejected the demand on November 17, 2011. In its order denying appellants’ motion, th e trial court described at length how the record established appellants were aware of thei r breach of contract claim at the time they filed their earlier pleadings, but for strategic reasons elected to omit it. The trial court further explained that because appellants had filed their motion after it had already
sustained Colak’s demurrer withou t leave to amend, the motion must be treated as one for reconsideration. So construed, the trial c ourt found the motion had no merit: “Plaintiffs were plainly aware of their potential breach of contract against Colak when they filed their opposition to Colak’s demurrer—they were aware of it when they filed their original and first amended complaints. Because plai ntiffs had knowledge of the breach of19 contract theory at the time they opposed th e Colak demurrer, they have failed to offer new or different facts, circumstances or law that they could not w ith reasonable diligence have discovered and produced at the tim e of the hearing on Colak’s demurrer and
reconsideration under CCP Sec tion 1008 is thus improper.” The trial court concluded its order by declining to reconsider the order sustaining Colak’s demurrer on its own motion, “because it wishes to discourage the kind of gamesmanship th at plaintiffs have engaged
in.”
We review the denial of a motion for rec onsideration for an abuse of discretion. ( California Correctional Peac e Officers Assn. v. Virga (2010) 181 Cal.App.4th 30, 42; New York Times Co. v. Superior Court (2005) 135 Cal.App.4th 206, 212.) “Where a
demurrer has been sustained without leave to amend, it is proper to seek reconsideration
based on a proposed amended complaint alleging differe nt facts than the complaint to
which the demurrer was sustained. The ame nded pleading itself constitutes a ‘different state of facts’ to permit reconsideration under CCP § 1008(a).” (Weil & Brown, Cal.
Practice Guide: Civil Procedure Before Tr ial (The Rutter Group 2012) ¶ 7:155.6, p. 7(1)-65 (rev. # 1, 2012), citing Rains v. Superior Court (1984) 150 Cal.App.3d 933, 944 ( Rains ).) Also relying on Rains , the court in Careau & Co. v. Security Pacific Business Credit, Inc. (1990) 222 Cal.App.3d 1371, 1386, se emed to suggest that the trial
court abused its discretion in the even t it denied such a motion: “Under Rains v. Superior
Court (1984) 150 Cal.App.3d 933, 943–944, plai ntiffs were entitled to submit proposed second amended complaints by way of a moti on for reconsideration. If those second amended complaints stated any causes of act ion, then the trial c ourt was obligated to (1) vacate its order which sustained the demurre rs without leave to amend and (2) make a different order granting plaintiffs leave to file an amended complaint, which would
include the causes of action which the trial cour t, in deciding the me rits of the motion for reconsideration, determined were valid. [Citation.]”
In Rains, psychiatric patients brought several cau ses of action against psychiatrists in a residential treatment program. In co nnection with their cl aim for battery, the plaintiffs alleged that although they had cons ented to certain types of physical violence20 for treatment purposes, the assaults were used to control their behavior under the guise of treatment. ( Rains, supra, 150 Cal.App.3d at pp. 936–937.) On demurrer, th e defendants argued that the plaintiffs’ admission of cons ent barred their battery claim, and the trial
court sustained the demurrer w ithout leave to amend. ( Id . at p. 937.) The plaintiffs
moved for reconsideration and submitted a proposed complain t that contained additional allegations showing that the defendants had withheld inform ation concerning the purpose of the assaults and batteries, and the appellate court concluded that the plaintiffs stated a valid claim. ( Id . at p. 938.)
In connection with its dete rmination that sanctions were not warranted for the plaintiffs’ procedural use of a motion for reconsideration, the Rains court determined that the “different facts” alleged in the propose d pleading sufficed as the “new or different facts” required under C ode of Civil Procedure 1008, subdivision (a). ( Rains, supra, 150 Cal.App.3d at p. 944.) Finding that the plain tiffs satisfied the stat utory requirements, the
court held there was no basis for the imposition of sanctions ; it did not, however, mandate that a motion for reconsideration must be granted in every instance where a proposed amended pleading sets forth different facts. ( Id . at pp. 944–945.) Importantly, more recent cases construing Code of Civil Procedure section 1008 have held that “[a] motion for reconsiderati on must be based on new or different facts, circumstances or law [citation], and facts of which the party seeking reconsideration was aware at the time of the original ruling ar e not ‘new or different.’ [Citation.]” ( In re Marriage of Herr (2009) 174 Cal.App. 4th 1463, 1468; see Hennigan v. White (2011) 199 Cal.App.4th 395, 405–406 [motion for recons ideration of summary judgment properly denied where, at the time of the original ruling, the plainti ff was aware of the information
in the new declarations she sought to offer]; Garcia v. Hejmadi (1997) 58 Cal.App.4th 674, 688–690 [same].) Here, the record unambiguously shows that—at the latest— appellants were aware of all facts necessary to allege their breach of contract claim at the time of the hearing on the demurrer. Thus, their breach of contract allegations were
insufficient to serve as new or different facts necessary for reconsideration.21 We find it equally significant that the Rains court observed it was “not apparent that plaintiffs sought such reconsideration in bad faith or that the contentions there advanced were believed by th em to be frivolous.” ( Rains, supra , 150 Cal.App.3d at p. 944.) Here, in contrast, the trial court expressly found that ap pellants had engaged in “gamesmanship” by deliberately omitting the breach of contract cause of action from their first two complaints and electing “to put all their eggs in the one basket of their equitable indemnity theory of recovery.” As Colak pointed out in his opposition to the motion for leave to amend, appellants’ strategy was obvious: They sought over $39 million in their comparativ e equitable indemnity claim as compared to the $340,000 dictated by the Reimbursement Agreement. But, their claim under the Reimbursement Agreement would potentially ba r their comparative equitabl e indemnity claim. (See Markley v. Beagle (1967) 66 Cal.2d 951, 96 1 [“Since the parties expressly contracted with respect to the contractors’ duty to indemn ify the owners, the extent of that duty must
be determined from the contract and not fro m the independent doctrine of equitable indemnity”].) The trial court therefore determ ined that appellants “elected, for strategic reasons, not to allege” their breach of contract claim, even though th ey were aware of it from the beginning. The trial court properly exercised its discre tion to conclude that appellants’ tactics
rendered them unable to offer a valid basis for failing to raise the breach of contract claim
before the demurrer had been sustaine d without leave to amend. (See Forrest v. Department of Corporations (2007) 150 Cal.App.4th 183, 202 [a motion for reconsideration requires a strong showing of diligence] disapproved on another point in
Shalant v. Girardi (2011) 51 Cal.4th 1164, 1172, fn. 3; Mink v. Superior Court (1992) 2 Cal.App.4th 1338, 1342 [the party seeking reconsiderati on must offer a satisfactory explanation for the failure to produce the ne w or different facts at an earlier time].) Likewise, on appeal appellants have failed to o ffer a satisfactory explanation for failing to bring the breach of contract claim earlier, in stead asserting that th eir motion should not
have been characterized as one for reconsideration. We conclude they have failed to
meet their burden to show an abuse of discretion.22 DISPOSITION The judgment is affirmed. Cola k is entitled to his costs on appeal.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

.

________________ _____, J. *
FERNS
We concur:

________________ ____________, Acting P. J.
ASHMANN-GERST

___________________ _________, J.
CHAVEZ

* Judge of the Los Angeles Superior Court, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.