Judge: Andrew E. Cooper, Case: 24CHCV00747, Date: 2025-04-04 Tentative Ruling

Counsel wishing to submit on a tentative ruling may inform the clerk or courtroom assisant in North Valley Department F51, 9425 Penfield Ave., Chatsworth, CA 91311, at (818) 407-2251.  Please be aware that unless all parties submit, the matter will still be called for hearing and may be argued by any appearing/non-submitting parties. If the matter is submitted on the court's tentative ruling by all parties, counsel for moving party shall give notice of ruling. This may be done by incorporating verbatim the court's tentative ruling. The tentative ruling may be extracted verbatim by copying and specially pasting, as unformatted text, from the Los Angeles Superior Court’s website, http://www.lasuperiorcourt.org. All hearings on law and motion and other calendar matters are generally NOT transcribed by a court reporter unless one is provided by the party(ies).

Case Number: 24CHCV00747    Hearing Date: April 4, 2025    Dept: F51

LOS ANGELES SUPERIOR COURT

NORTH VALLEY DISTRICT

DEPARTMENT F-51

DEMURRER

Demurrer filed: 12/23/24

MOVING PARTY: Defendants OHLA USA, Inc. fka OHL USA, Inc.; Liberty Mutual Insurance Company; Berkshire Hathaway Specialty Insurance Company; and Zurich American Insurance Company (collectively, “Defendants”)

RESPONDING PARTY: Plaintiff LEED Electric, Inc. (“Plaintiff”)

NOTICE: OK 

RELIEF REQUESTED: Defendants demur to Plaintiff’s entire first amended complaint (“FAC”).

TENTATIVE RULING: The demurrer is overruled. Defendants to file their answer to Plaintiff’s FAC within 20 days.

REQUEST FOR JUDICIAL NOTICE: Defendants’ request for judicial notice is granted.

BACKGROUND 

This is a contract action in which Plaintiff alleges that “on or about November 21, 2019, Plaintiff and Defendants OHLA, and Does 1 through 50, inclusive, entered into a Subcontract Agreement (“Subcontract”) under which Plaintiff agreed to perform certain inspection and testing at the Valencia Water Reclamation Plant Advanced Water Treatment Facility Project (“Project”). The amount of the Subcontract was $6,435,874.00.” (FAC ¶ 9.) Despite Plaintiff’s performance under the agreement, Defendants allegedly failed to timely and fully pay Plaintiff for the work performed. (Id. at ¶¶ 10–11.)

On 3/8/24, Plaintiff filed its original complaint, alleging against Defendants the following causes of action: (1) Breach of Contract; and (2) Claim on Public Works Payment Board. On 3/28/24, Plaintiff filed its FAC, alleging the same causes of action against Defendants.

On 12/23/24, Defendants filed the instant demurrer. On 3/21/25, Plaintiff filed its opposition. On 3/27/25, Defendants filed their reply.

ANALYSIS

As a general matter, a party may respond to a pleading against it by demurrer on the basis of any single or combination of eight enumerated grounds, including that “the court has no jurisdiction of the subject of the cause of action alleged in the pleading”; or that the pleading “does not state facts sufficient to constitute a cause of action” or is uncertain, meaning “ambiguous and unintelligible.” (Code Civ. Proc., § 430.10, subds. (a), (e), (f).) In a demurrer proceeding, the defects must be apparent on the face of the pleading or via proper judicial notice.¿(Donabedian v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968, 994.)

“A demurrer tests the pleading alone, and not the evidence or facts alleged.” (E-Fab, Inc. v. Accountants, Inc. Servs. (2007) 153 Cal.App.4th 1308, 1315.) As such, the court assumes the truth of the complaint’s properly pleaded or implied factual allegations. (Ibid.) The only issue a demurrer is concerned with is whether the complaint, as it stands, states a cause of action. (Hahn v. Mirda (2007) 147 Cal.App.4th 740, 747.)

Here, Defendants demur to the entire FAC on the basis that the Court lacks jurisdiction over the instant matter, and that Plaintiff’s allegations are uncertain.

A.    Meet-and-Confer

Before filing its demurrer, “the demurring party shall meet and confer in person or by telephone with the party who filed the pleading that is subject to demurrer for the purpose of determining whether an agreement can be reached that would resolve the objections to be raised in the demurrer.” (Code Civ. Proc. § 430.41, subd. (a).) The demurring party must file and serve a meet and confer declaration stating either: “(A) The means by which the demurring party met and conferred with the party who filed the pleading subject to demurrer, and that the parties did not reach an agreement resolving the objections raised in the demurrer;” or “(B) That the party who filed the pleading subject to demurrer failed to respond to the meet and confer request of the demurring party or otherwise failed to meet and confer in good faith.” (Id. at subd. (a)(3).)

Here, Defendants’ counsel declares that she met and conferred with Plaintiff’s counsel on numerous occasions regarding the issues raised in the instant demurrer, but the parties were unable to come to an informal resolution. (Decl. of Donna Tobar ¶¶ 5–6.) Accordingly, the Court finds that counsel has satisfied the preliminary meet and confer requirements under Code of Civil Procedure section 430.41, subdivision (a).

B.     Exhaustion of Remedies

Defendants’ primary argument is that “this Court lacks subject matter jurisdiction due to Plaintiff’s failure to exhaust contractual and administrative remedies.” (Dem. 10:8–9, citing Code Civ. Proc., § 430.10, subd. (a).) Defendant argues that “through this action, Plaintiff is trying to circumvent and violate the express dispute resolution procedures to which Plaintiff already expressly agreed, and Plaintiff has not and cannot plead exhaustion of contractual and administrative remedies which are a prerequisite to this Court’s jurisdiction.” (Id. at 10:15–18.)

Specifically, “in the Subcontract, Plaintiff expressly agreed that any claims involving the District (as owner of the Project) or involving interpretation of the Prime Contract documents would be subject to the procedures set forth in the Prime Contract between OHLA and the District.” (Id. at 11:14–16, citing Ex. 1 to FAC, p. 18, par. 33.) “To the extent that, in the judgment of OHLA, any claim or dispute did not involve the District, as Owner, or does not involve interpretation of the Prime Contract Documents, Plaintiff expressly agreed to: (1) provide a written statement of the claim to OHLA; (2) conduct an executive level meeting to attempt to resolve the dispute; and (3) if the claim could not be resolved, to proceed with arbitration with the American Arbitration Association.” (Id. at 15:24–28.)

Defendants assert that despite this arbitration provision in the Subcontract, “here, Plaintiff has failed to sufficiently plead exhaustion of all contractual and administrative remedies or that Plaintiff was excused from exhausting all contractual and administrative remedies. In fact, Plaintiff has not pled that it has complied with any portion of the contractual and administrative dispute resolution process.” (Id. at 17:14–17.) In opposition, Plaintiff does not dispute the existence or scope of the arbitration provision, but instead argues that it “has alleged in its FAC that it has fulfilled all of its requirements” under the agreement, including the arbitration provisions set forth thereunder. (Pl.’s Opp. 2:27, citing FAC ¶ 10 [“Plaintiff has performed all of its requirements under the Subcontract with the exception of those items that it has been legally excused from performing.”].)

Plaintiff further argues that no administrative remedies need be exhausted because its claims are against Defendants as the contractors, and not against the owner of the project. (Id. at 6:2–4.) In reply, Defendants argue that per the terms of the Subcontract, “OHLA (not Plaintiff) is the party that determines whether Plaintiff’s claim should be adjudicated in legal proceedings with the Owner or whether to proceed with contractual arbitration.” (Defs.’ Reply 3:18–20.) The Court declines to make a determination regarding the legal effect of these contractual terms at the demurrer stage. (See Bath v. State of California (2024) 105 Cal.App.5th 1184, 1206–1207.)

Based on the foregoing, the Court finds that Plaintiff has sufficiently alleged that it has performed all of its obligations under the subject agreement, including any prelitigation alternative dispute resolution. (FAC ¶ 10.) The Court further finds that there is no exhaustion of administrative remedies requirement in the instant action, as Plaintiff brings no causes of action against the public owner. Notwithstanding the foregoing, Defendants retain their right to bring a separate motion to compel Plaintiff’s claims to arbitration.

C.    Breach of Contract

Plaintiff’s first cause of action alleges Breach of Contract against Defendants. To state a cause of action for breach of contract, a plaintiff must be able to establish “(1) the existence of the contract, (2) plaintiff’s performance or excuse for nonperformance, (3) defendant’s breach, and (4) the resulting damages to the plaintiff.” (Oasis West Realty, LLC v. Goldman (2011) 51 Cal.4th 811, 821.) A written contract may be pleaded either verbatim or generally “according to its legal intendment and effect.” (Construction Protective Services, Inc. v. TIG Specialty Ins. Co. (2002) 29 Cal.4th 189, 198–199.)

Here, Defendants argue that this claim is uncertain pursuant to Code of Civil Procedure section 430.10, subdivision (f) because “Plaintiff has failed to attach a copy of its claim or sufficiently plead whether Plaintiff’s claims involve the District or interpretation of the Prime Contract Documents or whether the claims involve solely OHLA (and its sureties). … As such, it is uncertain which contractual and administrative remedies must be exhausted.” (Dem. 18:4–7.)

Generally speaking, “demurrers for uncertainty are disfavored and thus are strictly construed because ambiguities can reasonably be clarified under modern rules of discovery. Such demurrers are granted only if the pleading is so incomprehensible that defendant cannot reasonably respond.” (Cal.Jur.3d § 137.) “Where the complaint contains substantive factual allegations sufficiently apprising defendant of the issues it is being asked to meet, a demurrer for uncertainty should be overruled or plaintiff given leave to amend.” (Williams v. Beechnut Nutrition Corp. (2011) 185 Cal.App.3d 135, 139 fn.2.)

Plaintiff argues in opposition that it has sufficiently alleged each element of this cause of action, and “Defendants’ arguments are meritless, as LEED attached the only document that was required to be attached to its FAC (the OHLA/LEED Subcontract).” (Pl.’s Opp. 9:16–17.) The Court agrees and finds that in applying the stringent standard for demurrers filed on the basis of uncertainty, the Court finds that the FAC is not “so incomprehensible” that Defendants cannot respond.

Based on the foregoing, the Court finds that Plaintiff has alleged facts sufficient to constitute a cause of action for Breach of Contract. Accordingly, the demurrer against Plaintiff’s first cause of action is overruled.

D.    Claim on Public Works Payment Board

Plaintiff’s second cause of action alleges Claim on Public Works Payment Board against Defendants. “A surety who has assumed liability for payment or performance is liable to the creditor immediately upon the default of the principal, and without demand or notice.” (Civ. Code § 2807.)

Here, Defendants argue that this cause of action fails because “Plaintiff has failed to either allege the terms of the Payment Bond or attach a copy of the Payment Bond.” (Dem. 19:24–25.) In opposition, Plaintiff argues that the “second cause of action is not a breach of contract claim (it is a ‘Claim on Public Works Payment Bond’), so no copy of the bond is required.” (Pl.’s Opp. 10:15–16.) The Court notes that Defendants do not address this cause of action in their reply.

Based on the foregoing, the Court finds that Plaintiff has alleged facts sufficient to constitute a cause of action for Claim on Public Works Payment Board. Accordingly, the demurrer against Plaintiff’s second cause of action is overruled.

//

//

//

//

CONCLUSION 

The demurrer is overruled. Defendants to file their answer to Plaintiff’s FAC within 20 days.