Judge: Cherol J. Nellon, Case: 22STCV14576, Date: 2024-02-07 Tentative Ruling

Case Number: 22STCV14576    Hearing Date: February 7, 2024    Dept: 14

Ghandour vs. Mosaid Store

Case Background

Plaintiff hired Defendants to build his home. Plaintiff now alleges that there are various defects in construction.

Complaint

On May 2, 2022, Plaintiff filed his Complaint for (1)-(3) Breach of Contract, (4)-(6) Breach of the Implied Covenant, and (7)-(9) Negligence against Defendants Mosaic Store, Inc. (“Mosaic”), Rusher Air Conditioning (“Rusher”), Arriaga USA, Inc. dba Stoneland (“Arriaga”), and DOES 1-75.

On June 1, 2022, Defendant Rusher filed its Answer.

On August 18, 2022, Defendant Arriaga filed its amended Answer.

On August 22, 2022, Defendant Mosaic filed its Answer.

On July 25, 2023, Plaintiff voluntarily dismissed Defendant Arriaga, with prejudice.

            On August 2, 2023, pursuant to stipulation, Plaintiff filed his First Amended Complaint (“FAC”) for (1)-(3) Breach of Contract, (4)-(6) Breach of the Implied Covenant, and (7)-(9) Negligence against Defendants Mosaic, Rusher, Courtney, Inc. (“Courtney”), and DOES 1-75.

            On August 29, 2023, Defendant Mosaic filed its Answer.

            On September 8, 2023, Plaintiff filed an Amendment to Complaint substituting Hill Engineering & Construction (“Hill”) in lieu of DOE 1.

            On October 27, 2023, Defendant Hill filed its Answer.

Arriaga Cross-Complaint

            On June 10, 2022, Defendant Arriaga filed its Cross-Complaint for (1) Total Indemnity, (2) Equitable Indemnity, (3) Implied Indemnity, (4) Declaratory Relief, (5) Negligence, (6) Declaratory Relief, and (7) Contribution against Cross-Defendant ROES 1-500.

            On July 25, 2023, Cross-Complainant Arriaga voluntarily dismissed its Cross-Complaint, with prejudice.

Mosaic Cross-Complaint

            On August 29, 2023, Defendant Mosaic filed its Cross-Complaint for (1) Implied Contractual Indemnity, (2) Total Indemnity, (3) Equitable Indemnity, (4) Contribution, and (5) Declaratory Relief against Cross-Defendants Courtney and ROES 1-30.

Trial Date

            Jury trial is currently set for July 22, 2024.

Instant Pleading

            Defendant Courtney now demurs to the third, sixth, and ninth causes of action in the FAC, on the grounds that Plaintiff has failed to allege sufficient facts to support those causes of action.

Decision

Defendant’s Request for Judicial Notice (“RJN”) is GRANTED as to Exhibits 1-4 and otherwise DENIED. The court must necessarily review the operative complaint to rule on any demurrer, and need not take judicial notice to do so.

The demurrer is OVERRULED.

Discussion

            This demurrer is based on res judicata and the statute of limitations. Each is an affirmative defense, which can only be raised on demurrer if the facts supporting it appear affirmatively on the face of the complaint, or from matters subject to judicial notice. See Arguello v. Edinger (1858) 10 Cal. 150, 157, Smith v. Hall (1861) 19 Cal. 85, 86; E-Fab, Inc. v. Accountants, Inc. Services (2007) 153 Cal.App.4^th 1308, 1316.

Res Judicata

            Res judicata is a broad term that includes two distinct but related doctrines: claim preclusion and issue preclusion.[1] DKN Holdings LLC v. Faerber (2015) 61 Cal.4^th 813, 823-824; Mycogen Corp. v. Monsanto Co. (2002) 28 Cal.4^th 888, 896-897. Defendant Courtney is asserting issue preclusion.

            Issue Preclusion “differs from claim preclusion in two ways. First, issue preclusion does not bar entire causes of action. Instead, it prevents relitigation of previously decided issues. Second, unlike claim preclusion, issue preclusion can be raised by one who was not a party or privy in the first suit.” Faerber, supra, 61 Cal.4^th at 824. The doctrine applies “(1) after final adjudication (2) of an identical issue (3) actually litigated and necessarily decided in the first suit and (4) asserted against one who was a party in the first suit or one in privity with that party.” Id. at 825.

            Plaintiff hired a general contractor to build his home. (FAC ¶ 13). That general contractor then hired Defendant Courtney as a subcontractor to perform waterproofing work. (FAC ¶ 19). The general contractor is not a party to this lawsuit.

            On January 13, 2017, the general contractor filed a claim in arbitration against the Plaintiff. (RJN Exhibit 1). On February 20, 2017, the Plaintiff filed a cross-claim in arbitration against the general contractor. (RJN Exhibit 2). On February 7, 2018, the general contractor filed a cross-claim in arbitration against Defendant Courtney. (RJN Exhibit 3). On September 2, 2021, the arbitrator issued an interim award on the claims between Plaintiff and the general contractor. (RJN Exhibit 4). The claims between the general contractor and Courtney had already been settled. (Id.).

            The arbitrator’s interim award contained findings on three alleged defects in Courtney’s work, identified as Defect Nos. 8, 46, and 54. Defect No. 8 was described as “[w]ater leaking into mechanical room along outdoor central stairs down to Building A from Landscaping.” (RJN Exhibit 4 p. 37:20-21). Defect No. 46 is described as “[w]ater leaking from penetration into mechanical room [in Building A] and water leaking along north wall.” (Id. p. 37:22-38:1). Defect No. 54 was described as “water leaks in the “gardener’s shed” or “gardener’s closet” portion of Building A.” (Id. p. 68:23). After the arbitrator issued the interim award, Plaintiff and the general contractor settled their dispute.

            The FAC describes the defects attributable to Defendant Courtney as “water intrusion in the northeast area of the guest house and adjacent gardener’s closet.” (FAC ¶ 20). According to Plaintiff, “water was entering through the ceiling of the guest house and from the wall on the east side of the gardener’s closet.” (Id.). Defendant Courtney argues that this defect is the same as the defects addressed in the arbitration. Plaintiff disagrees.

            It is impossible to say, without a factual record, whether the alleged defects are the same. The written descriptions have some obvious overlap and some differences. It is impossible for the court to tell if those differences are merely semantic – different accounts written at different times of the same phenomenon – or physically distinguishable issues. This is particularly true given that all the descriptions discuss symptoms of the defects (inflow of water), rather than the defects themselves (the error in construction that allowed the inflow). See Mills v. Forestex Co. (2003) 108 Cal.App.4^th 625, 645.

Defendant Courtney also supplies this court with no authority for the proposition that an interim award in arbitration is a “final adjudication” for purposes of issue preclusion. In fact, neither party cites to any case law on point. In the absence of case law, or any factual details regarding the process followed in this particular arbitration, the court is forced to take the award at face value. It says it’s an interim award, and “interim” does not mean final.

            At this stage, on this record, this court cannot apply the doctrine of issue preclusion to bar the claims against Defendant Courtney.

Statute of Limitations

            The limitations period in a construction defect case is 4 years for a patent defect, 10 years for a latent one. Code of Civil Procedure §§ 337.1 and 337.15. However, case law holds that once a latent defect is actually discovered, a shorter statute of limitations begins to run, depending on the type of claim that is brought. Mills, supra, 108 Cal.App.4^th at 646. Contract claims fall under the four-year period set forth in Code of Civil Procedure § 337, but negligence claims fall under the three-year period given in Code of Civil Procedure § 338. Mills, supra, 108 Cal.App.4^th at 646.

            Defendant Courtney argues that discovery occurred no later than February of 2017, because Plaintiff complained about the same symptoms in arbitration. Defendant Courtney was not added to this litigation until August 2, 2023, 6 ½ years later. This position is akin to their position on res judicata and suffers the same fundamental vulnerability: this court cannot say whether the parties are talking about the same defect or not.

Are these problems in the same portion of the same structure, or different portions? Was one issue repaired only for another to manifest? Does an issue with one facet of a subcontractor’s work call into question their entire effort? These are factual questions the court is not prepared to answer on a demurrer.

Conclusion

            Defendant Courtney has made two nearly identical arguments, suggesting that this is the second of two nearly identical proceedings. They may prove to be right in the end. But in construction defect cases, factual details matter. And on demurrer, especially where the asserted grounds are affirmative defenses, those details are necessarily lacking. Therefore, the demurrer is OVERRULED.