Judge Daniel M. Crowley, Case Number: 24STCV02982, Date: 2024-06-10 Tentative Ruling

Defendants Green Pastures Group, Inc.’s and John Cohen’s demurrer to Plaintiffs Carl Jacobs’ and Beverly Jacobs’ entire Complaint is overruled. Defendants Green Pastures Group, Inc.’s and John Cohen’s demurrer to Plaintiffs’ 2nd and 3rd causes of action is overruled. Defendants Green Pastures Group, Inc.’s and John Cohen’s demurrer to Plaintiffs’ 4th and 7th causes of action is sustained with 20 days leave to amend.

Defendants Green Pastures Group, Inc.’s and John Cohen’s motion to strike portions of Plaintiffs’ complaint is denied as moot.

Defendants Green Pastures Group, Inc. (“GPG”) and John Cohen (“Cohen”) (collectively, “Moving Defendants”) demur to the to Complaint (“Complaint”) of Plaintiffs Carl Jacobs (“Carl”) and Beverly Jacobs (“Beverly”) (collectively, “Plaintiffs”) in its entirety, as well as the 2nd, 3rd, 4th, and 7th causes of action. (Notice of Demurrer, pgs. 1-3; C.C.P. §§430.41(e), (f).)

Defendants also move to strike portions of Plaintiffs’ Complaint. (Notice of MTS, pgs. 1-2; C.C.P. §§435, 436, 437.)

Before filing a demurrer, the demurring party must meet and confer in person, by telephone, or by video conference with the party who filed the pleading to attempt to reach an agreement that would resolve the objections to the pleading and obviate the need for filing the demurrer. (C.C.P. §430.41(a).)

(3) The demurring party shall file and serve with the demurrer a declaration stating either of the following: (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. (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. (C.C.P. §430.41(a)(3).)

Moving Defendants’ counsel declares that on April 1, 2024, she met and conferred with Plaintiffs’ counsel telephonically to discuss the instant demurrer and motion to strike. (Decl. of Bassi ¶3.) Moving Defendants’ counsel’s declaration is sufficient under C.C.P. §430.41(a). Therefore, the Court will consider Moving Defendants’ demurrer.

Plaintiffs filed operative Complaint on February 5, 2024 against Moving Defendants and Non-moving Defendants Old Republic Surety Company (“Old Republic”) and Western Surety Company (“Western”) (collectively, “Defendants”), alleging eight causes of action: (1) Breach of Contract; (2) Negligence; (3) Breach of Express Warranty; (4) Breach of Implied Warranty; (5) Negligence/Construction Defect; (6) Breach of Implied Warranty; (7) Fraud-Failure to Disclose Defects; and (8) Action Against License Bond.

Moving Defendants filed the instant demurrer and accompanying motion to strike on April 5, 2024. Plaintiffs filed their opposition on May 28, 2024. Moving Defendants filed their reply on June 3, 2024.

Plaintiffs allege they are husband and wife and together own the real property located at 420 N. Las Palmas Ave., Los Angeles, CA 90004 (“Property”). (Complaint ¶1.) Plaintiffs allege in or about May 2021, Plaintiffs and GPG entered into a verbal contract for the design and construction of a swimming pool and spa and related electrical and plumbing systems, pool equipment, as well as various hardscape items including a pool deck and related drainage systems, and landscaping, for a total contract price of approximately $250,000.00. (Complaint ¶10.) Plaintiffs allege during the course of construction, the parties entered into numerous modifications to the contract consisting of changes in the scope of work and additions and/or credits to the contract price. (Complaint ¶10.)

Plaintiffs allege GPG began work on the Property in approximately May 2021 but never completely finished its work as of July 2023, after numerous attempts by the Plaintiffs to correct or finish multiple items including, without limitation, fencing, delaminating stone tiles around the pool deck, fixing the leaks in the spa, and deck lighting. (Complaint ¶11.) Plaintiffs allege after these attempts failed, in or about August 2023, Plaintiffs notified Moving Defendants that their services were being terminated. (Complaint ¶12.)

Plaintiffs allege subsequently, they engaged the services of pool construction experts for the purpose of inspecting and evaluating Defendants’ work on the Property, at which time Plaintiffs discovered numerous defects enumerated in paragraph 16 below. (Complaint ¶13.) Plaintiffs allege in consideration for the work described herein, Plaintiffs have paid GPG and/or its vendors approximately $317,000.00. (Complaint ¶14.) Plaintiffs allege at all times material hereto, Defendant expressly agreed to provide Plaintiffs with high quality work, to be constructed in a first class, professional and workmanlike manner and in accordance with all applicable building codes and in accordance with the approved plans and specifications. (Complaint ¶15.)

Plaintiffs allege Moving Defendants billed themselves as “Pool Builders to the Stars” and “A Master Craftsman Expert Design/Build Firm.” (Complaint ¶16.) Plaintiffs allege they have performed all conditions, covenants and promises required in accordance with the terms and conditions of the written contract and change orders entered into between the Plaintiffs and Defendant. (Complaint ¶17.)

Plaintiffs allege beginning in or about July 2023, and continuing thereafter, GPG breached the contract with the Plaintiff by failing to construct the improvements in a first class, professional and workmanlike manner as manifested by, but not limited to numerous defects which have resulted in damage to Plaintiffs and Plaintiffs’ Property, as herein alleged, during the period between the initial construction of the above-described improvements until the present time. The defects include, without limitation, the following:

a. Failure to construct the pool and spa with proper permits required by the City of Los Angeles, in particular building a new pool inside an old pool without proper engineering or approval by the City of Los Angeles;

b. Failure to follow plans and engineering drawings, causing the City of Los Angeles, Department of Building & Safety to disapprove the construction of the pool and spa;

d. Failure to enlist the services of a licensed geotechnical consultant to verify existing soils conditions;

e. There is uncompacted and uncertified fill material, as well as moisture trapped between the old pool deep end floor and the new pool floor.

g. The MEP system is not designed properly for the optimal functioning of the pool and spa;

i. The pool requires a two-pump system whereas only a one pump system was designed and installed;

m. No pool enclosure fence and gates required by State and local building codes;

n. The pool deck was constructed at the wrong elevation, causing the weep screed on an adjacent structure to be “buried” in violation of the City’s building codes;

o. Stone pavers around the pool and spa are incorrectly installed and are delaminating;

p. Pool deck is improperly sloped causing inadequate drainage and causing water migration under the stone pavers around the pool and spa;

r. The spa has voids of 6” to 12” on its western face that show exposed steel and plumbing; water is leaking from the spa into this void, causing corrosion to the steel reinforcing bars in the spa;

s. The pebble finish was installed on top of two different applications of Hydrazo without use of the proper bonding materials;

t. Leaking from the pool and spa causing saturation and damage to the landscaped area between the pool and the Plaintiffs’ residence.

u. The combined result of the foregoing defects will require complete removal of the old pool and new pool and spa, as well as other alterations to the property noted above.

Moving Defendants demur to the entire Complaint on the basis fails in its entirety to state facts sufficient to constitute the causes of action against Cohen and is uncertain as to Cohen. (Demurrer, pgs. 6-7.) Moving Defendants demur to the 2nd, 3rd, and 4th on the basis the causes of action fail to state facts sufficient to constitute causes of action against Cohen, and 7th cause of action on the basis it fails to allege facts sufficient to allege a cause of action. (Demurrer, pgs. 7-10.)

Moving Defendants demur generally to Plaintiffs’ Complaint on the basis it is wholly devoid of facts to support of cause of action alleged against Cohen. However, Plaintiffs sufficiently allege on information and belief that Cohen is an alter ego of GPG, such that allegations against GPG that are sufficiently alleged also apply to Cohen. (See Complaint ¶¶4-5.)

Accordingly, Moving Defendants’ demurrer to the entire Complaint is overruled.

A cause of action for negligence requires the following elements: (1) defendant owed the plaintiff a legal duty; (2) breached the duty; and (3) the breach caused (4) damages. (Thomas v. Stenberg (2012) 206 Cal.App.4th 654, 662.) A complaint which lacks allegations of fact to show that a legal duty of care was owed is fatally defective. (See Jones v. Grewe (1987) 189 Cal.App.3d 950.) The existence of a legal duty of care is properly challenged by demurrer and is a question of law for the court. (Hegyes v. Unjian Enterprises, Inc. (1991) 234 Cal.App.3d 1103, 1111.)

Plaintiffs allege Defendants so carelessly and negligently planned, designed, improved, constructed, modified, observed, inspected, installed and/or performed work and services at the Property as herein alleged so as to proximately cause the defects and damages to the Plaintiffs’ Property and other improvements to the Property, as herein alleged. (Complaint ¶24.)

Plaintiffs sufficiently allege Cohen is an alter ego of GPG, which imputes Plaintiffs’ allegations against GPG to Cohen.

Further, Plaintiffs allege on information and belief that Cohen is a shareholder, officer, and director of GPG. (Complaint ¶3 [“At all times herein mentioned, Cohen is and was a licensed pool contractor in the State of California, and the qualifying ‘responsible managing officer’ of Defendant GPG.”].) It follows that Plaintiff has alleged Cohen, being an officer, director and shareholder of GPG is personally liable for his own tortious conduct. (Frances T. v. Village Green Owners Association (1986) 42 Cal.3d 490, 503-505 [stating corporate director or officer status neither immunizes a person from personal liability for tortious conduct nor subjects him or her to vicarious liability for such acts].) According to the California Contractor’s State License Law, the responsible managing officer of a licensed corporation “shall be responsible for exercising supervision and control of their employer’s or principal’s construction operations to secure compliance with this chapter and the rules and regulations of the board.” (Business & Professions Code §7068.1.)

Accordingly, Moving Defendants’ demurrer to Plaintiffs’ 2nd cause of action is overruled.

“The essential elements of a cause of action under the California Uniform Commercial Code for breach of an express warranty to repair defects are (1) an express warranty to repair defects given in connection with the sale of goods; (2) the existence of a defect covered by the warranty; (3) the buyer’s notice to the seller of such a defect within a reasonable time after its discovery; (4) the seller’s failure to repair the defect in compliance with the warranty; and (5) resulting damages.” (Orichian v. BMW of North America, LLC (2014) 226 Cal.App.4th 1322, 1333-1334, as modified (July 1, 2014), internal citations omitted.)

Plaintiffs allege on information and belief that GPG and/or Cohen hired Defendants Does 26 through 50 as GPG’s subcontractors to perform all or substantially all of the work for the project described in paragraph 8 herein, and that Defendants Does 26 through 50 performed the work, and caused the defects in construction, that are delineated in paragraph 16 herein. (Complaint ¶35.)

Plaintiffs allege Does 26 through 50 knew at all times that the work was being performed by them for the Plaintiffs’ benefit and, should any of said Defendants work be defective, that it would directly injure the Plaintiffs and/or their property. (Complaint ¶36.)

Plaintiffs allege Does 26 through 50 owed a duty to perform its/their work with due care and to exercise reasonable diligence to assure that the scope of work performed by them in connection with the project was constructed and completed in a first class, professional and workmanlike manner free from defects in material and workmanship, in accordance with the project plans and specifications, and in accordance with all applicable building and safety codes. (Complaint ¶37.)

Plaintiffs allege Defendants so carelessly and negligently planned, constructed, modified, inspected and/or performed work and services at the Property as herein alleged so as to proximately cause the defects and damages to the Plaintiffs’ Property and other improvements to the Property, as herein alleged. (Complaint ¶38.)

Moving Defendants’ demurrer to Plaintiffs’ cause of action on the basis Cohen has not entered into a contract with Plaintiffs is unavailing because Plaintiffs sufficiently allege Cohen is an alter ego of GPG.

Accordingly, Moving Defendants’ demurrer to the 3rd cause of action is overruled.

“Unlike express warranties, which are basically contractual in nature, the implied warranty of merchantability arises by operation of law. It does not ‘impose a general requirement that goods precisely fulfill the expectation of the buyer. Instead, it provides for a minimum level of quality.’” (American Suzuki Motor Corp. v. Superior Court (1995) 37 Cal.App.4th 1291, 1295-1296, internal citations omitted.)

A plaintiff must allege the following elements: (1) that plaintiff bought a consumer good from/manufactured by defendant; (2) that at the time of purchase defendant was in the business of selling consumer goods to retail buyers/manufacturing consumer goods; (3) that the consumer good was not of the same quality as those generally acceptable in the trade; (4) plaintiff was harmed; and (5) defendant’s breach of the implied warranty was a substantial factor in causing plaintiff’s harm. (See CACI 3210.)

Plaintiffs allege in agreeing to make the improvements to the Plaintiffs’ Property as herein alleged, Defendants impliedly warranted that the improvements would be properly constructed in a first class, professional and workmanlike manner, free of defects in material and workmanship, and built in accordance with the project plans and specifications and in accordance with all applicable building and safety codes. (Complaint ¶31.) Plaintiffs allege the improvements to the Property performed by GPG, Cohen and Does 1 through 25 were not constructed in a professional and workmanlike manner, the improvements were not made in accordance with the applicable project plans and specifications, are not free from defects in material and workmanship, and are not completed accordance with all applicable building and safety codes. (Complaint ¶32.)

Plaintiffs fail to allege Moving Defendants are subject to the instant cause of action as merchants in the business of selling consumer goods to retail buyers or manufacturing consumer goods. Plaintiffs fail to allege Moving Defendants’ breach of the implied warranty was a substantial factor in causing Plaintiffs’ harm.

Accordingly, Moving Defendants’ demurrer to Plaintiffs’ 4th cause of action is sustained with 20 days leave to amend.

The elements of fraud, which give rise to the tort action for intentional misrepresentation, are: “(a) misrepresentation (false representation, concealment, or nondisclosure); (b) knowledge of falsity (or ‘scienter’); (c) intent to defraud, i.e., to induce reliance; (d) justifiable reliance; an (e) resulting damage.” (Lazar v. Superior Court (1996) 12 Cal.4th 631, 638.) Fraud must be pleaded with

specificity: “general and conclusory allegations do not suffice.” (Small v. Fritz Companies, Inc. (2003) 30 Cal.4th 167, 184, quoting Lazar, 12 Cal.4th at pg. 638.)

“[T]he elements of an action for fraud and deceit based on a concealment are: (1) the defendant must have concealed or suppressed a material fact, (2) the defendant must have been under a duty to disclose the fact to the plaintiff, (3) the defendant must have intentionally concealed or suppressed the fact with the intent to defraud the plaintiff, (4) the plaintiff must have been unaware of the fact and would not have acted as he did if he had known of the concealed or suppressed fact, and (5) as a result of the concealment or suppression of the fact, the plaintiff must have sustained damage.” (Boschma v. Home Loan Center, Inc. (2011) 198 Cal.App.4th 230, 248.)

“A duty to speak may arise in four ways: it may be directly imposed by statute or other prescriptive law; it may be voluntarily assumed by contractual undertaking; it may arise as an incident of a relationship between the defendant and the plaintiff; and it may arise as a result of other conduct by the defendant that makes it wrongful for him to remain silent.” (SCC Acquisitions, Inc. v. Central Pacific Bank (2012) 207 Cal.App.4th 859, 860.)

“In transactions which do not involve fiduciary or confidential relations, a cause of action for non-disclosure of material facts may arise in at least three instances: (1) the defendant makes representations but does not disclose facts which materially qualify the facts disclosed, or which render his disclosure likely to mislead; (2) the facts are known or accessible only to defendant, and defendant knows they are not known to or reasonably discoverable by the plaintiff; (3) the defendant actively conceals discovery from the plaintiff.” (Warner Construction Corp. v. L.A. (1970) 2 Cal.3d 285, 294, footnotes omitted.)

Plaintiffs allege on information and belief that Defendants knew during the course of construction of the improvements described herein, that said improvements were required to be performed in a first class, professional and workmanlike manner, free from defects in material and workmanship, and performed in accordance with the project plans and specifications and in accordance with all applicable building and safety codes. (Complaint ¶46.) Plaintiffs allege the vast majority of the defects in the improvements are latent and these defects were not discovered by Plaintiffs until in or about July 2023, when continuing problems with the pool, spas and related structures led Plaintiffs to enlist the services of a pool construction experts who, thereafter, conducted destructive testing of the new pool shell, in order to identify the defects alleged herein. (Complaint ¶47.)

Plaintiffs allege on information and belief that the defects alleged herein are not isolated incidents, but indicative of Defendants GPG and Cohen’s negligent and careless business practices and that said Defendants knew or should have known of the alleged defects in the construction of the pool and spa and related mechanical, electrical and plumbing systems and yet failed to disclose those defects to the Plaintiffs, who are lay persons when it comes to construction of pools and spas. (Complaint ¶48.)

Plaintiffs allege Defendants, as licensed contractors, had an obligation to disclose these defects to the Plaintiffs, yet the Defendants failed to disclose the above-described defects to the Plaintiffs. (Complaint ¶49.)

Plaintiffs allege in reliance thereon, Plaintiffs have paid to Defendants in excess of $317,000.00 for the improvements described herein, which are now discovered to be defectively built, built without conformance to the project plans and specifications, built in violation of applicable building and safety codes, all as previously alleged herein. (Complaint ¶50.)

Plaintiffs fail to allege fraud with the requisite specificity. Plaintiffs fail to allege the undisclosed facts at issue with specificity. Plaintiffs also fail to allege with specificity that Moving Defendants intentionally concealed or suppressed the facts that should have been disclosed to Plaintiffs with the intent to defraud Plaintiffs. (Warner Construction Corp., 2 Cal.3d at pg. 294, footnotes omitted.)

Accordingly, Moving Defendants’ demurrer to Plaintiff’s 7th cause of action is sustained with 20 days leave to amend.

Moving Defendants’ demurrer to Plaintiffs’ 2nd and 3rd causes of action is overruled. Moving Defendants’ demurrer to Plaintiffs’ 4th and 7th causes of action is sustained with 20 days leave to amend.

In light of the Court’s ruling on Moving Defendants’ demurrer, Moving Defendants’ motion to strike is denied as moot.

Hon. Daniel M. Crowley

Judge of the Superior Court