Judge Daniel M. Crowley, Case Number: 24STCV23127, Date: 2025-03-06 Tentative Ruling

Cross-Defendant Rayco Construction Enterprises, LLC d/b/a Rayco Exteriors’ demurrer to Cross-Complainant Country Club Gardens Owners’ Association’s cross-complaint is overruled.

Cross-Defendant Rayco Construction Enterprises, LLC d/b/a Rayco Exteriors (“Rayco”) (“Cross-Defendant”) demurs to Cross-Complainant Country Club Gardens Owners’ Association’s (“CCGOA”) (“Cross-Complainant”) cross-complaint (“XC”). (Notice Demurrer, pg. ii.)

Before filing a demurrer, the moving 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), emphasis added.)

Cross-Defendant’s counsel declares that on December 11, 2024, he met and conferred telephonically with Cross-Complainant’s counsel, and the parties were unable to reach an agreement. (See Decl. of Raub ¶4.) Cross-Defendant’s counsel’s declaration is sufficient under C.C.P. §430.41(a). Accordingly, the Court will consider Cross-Defendant’s demurrer.

Cross-Complainant filed the operative XC on October 14, 2024, against Cross-Defendant alleging two causes of action: (1) accounting; and (2) declaratory relief.

Cross-Defendant filed the instant demurrer on December 16, 2024. Cross-Complainant filed its opposition on February 20, 2025. Cross-Defendant filed its reply on February 27, 2025.

Cross-Defendant demurs to both causes of action on the basis they fail to state facts sufficient to constitute causes of action against Rayco. (Demurrer, pg. ii; C.C.P. §430.10(e).)

“[A] demurrer tests the legal sufficiency of the allegations in a complaint.” (Lewis v. Safeway, Inc. (2015) 235 Cal.App.4th 385, 388.) A demurrer can be used only to challenge defects that appear on the face of the pleading under attack or from matters outside the pleading that are judicially noticeable. (See Donabedian v. Mercury Insurance Co. (2004) 116 Cal.App.4th 968, 994 [in ruling on a demurrer, a court may not consider declarations, matters not subject to judicial notice, or documents not accepted for the truth of their contents].) For the purpose of ruling on a demurrer, all facts pleaded in a complaint are assumed to be true, but the reviewing court does not assume the truth of conclusions of law. (Aubry v. Tri-City Hospital District (1992) 2 Cal.4th 962, 967.)

“[A] cause of action for accounting need only state facts showing the existence of the relationship which requires an accounting and the statement that some balance is due the plaintiff.” (Kritzer v. Lancaster (1950) 96 Cal.App.2d 1, 7.)

Cross-Complainant alleges it and Cross-Defendant entered into a contract on or around November 2023. (XC ¶32.) Cross-Complainant alleges Section 2(b) of the contract with Cross-Defendant states, “The Contract Sum is One Million, Two Hundred Seventy-Two Thousand, Seven Hundred Twenty-Seven Dollars and 45 cents ($1,272,727.4), contingent upon availability of funds.” (XC ¶33.)

Cross-Complainant alleges Cross-Defendant was involved in developing the source of revenues necessary to pay for the work of improvement, the emergency assessment, and CCGOA, through its prior board, relied on the representations that the emergency assessment was valid and would fund the contract. (XC ¶34.)

Cross-Complainant alleges Section 2, (I) of the contract states, “Contractor shall submit applications for payment by the 25th of each month to Owner c/o Construction Consultant. Construction Consultant shall review Contractor’s application for payment for conformance with the contract documents.. Once approved by Construction Consultant, Construction Consultant shall submit Contractor’s application for payment to Owner during the first week of the following month. Owner shall make payment to Contractor c/o Construction Consultant by the 25th of that month.” (XC ¶35.)

Cross-Complainant alleges that all invoices submitted by Cross-Defendant to Cross-Complainant were to first be reviewed and approved by Design Build Associates, LLC (“DBA”). (XC ¶36.)

Cross-Complainant alleges on information and belief that the invoices provided by DBA, on behalf of Cross-Defendant, were improperly inflated, and manipulated, and did not appear to reflect the work done at the property. (XC ¶38.)

Cross-Complainant alleges Section 7, (A) of the contract with Cross-Defendant states, “Except when direct communications have been specially authorized, Owner and Contractor shall communicate with each other through the Construction Consultant. Communications by and with subcontractors, sub-subcontractors, and material suppliers shall be through Contractor.” (XC ¶39.)

Cross-Complainant alleges it was unable to contact Cross-Defendant, due to their contract, which required DBA to act as Construction Consultant and required the Cross-Complainant to bring its concerns to DBA. (XC ¶40.) Cross-Complainant alleges it advised DBA that the billing exceeded the work completed at the Association. (XC ¶40.)

Cross-Complainant alleges as of February 15, 2024, Cross-Complainants have paid to Cross-Defendant $114,000. (XC ¶41.)

Cross-Complainant alleges that Cross-Defendant and DBA have not identified, to date, that the work completed on the Cross-Complainant’s property comports with the amounts billed. (XC ¶42.)

Cross-Complainant alleges Cross-Defendants have now filed a mechanics lien in the amount of $254,105.69 alleging that Cross-Complainant has failed to pay the balance owed on the invoices billed. (XC ¶43.)

Cross-Complainant alleges on information and belief that the lien recorded by Cross-Defendant is overbroad, in that it overvalues and over secures the work completed within CCGOA. (XC ¶45.) Cross-Complainant requests an accounting of the actual value of the work performed as opposed to the value CCGOA has already paid and a rendering of the true amount improvement provided on the property supporting the alleged lien. (XC ¶45.)

Cross-Complainant sufficiently states a cause of action for accounting. Cross-Complainant alleges it and Cross-Defendant have a relationship because they entered into a contract on or around November 2023. (XC ¶32.) Cross-Complainant alleges on information and belief that invoices provided by DBA on behalf of Cross-Defendant were improperly inflated, manipulated, and did not appear to reflect the work done at the property, and because Cross-Complainant alleges it has paid more than the work completed at the property, CCGOA has properly laid out sufficient facts to show that an accounting is necessary to determine the amounts owed between the parties. (XC ¶45.) Taking the allegations in the XC as true, the invoices provided by DBA, on behalf of Cross-Defendant, were improperly inflated, and manipulated, and did not appear to reflect the work done at the property, and such a sum cannot be made certain by a simple calculation. (See Civic W. Corp. v. Zila Industries, Inc. (1977) 66 Cal.App.3d 1, 14 [accounting is not available where the plaintiff alleges the right to recover a sum that can be made certain by calculation].)

Accordingly, Cross-Defendant’s demurrer to Cross-Complainant’s 1st cause of action is overruled.

“Any person interested under a written instrument, excluding a will or a trust, or under a contract, or who desires a declaration of his or her rights or duties with respect to another, or in respect to, in, over or upon property, or with respect to the location of the natural channel of a watercourse, may, in cases of actual controversy relating to the legal rights and duties of the respective parties, bring an original action or cross-complaint in the superior court for a declaration of his or her rights and duties in the premises, including a determination of any question of construction or validity arising under the instrument or contract. He or she may ask for a declaration of rights or duties, either alone or with other relief; and the court may make a binding declaration of these rights or duties, whether or not further relief is or could be claimed at the time.” (C.C.P. §1060; Ludgate Insurance. Co. v. Lockheed Martin Corp. (2000) 82 Cal.App.4th 592, 605-606; Bennett v. Hibernia Bank (1956) 47 Cal.2d 540, 549; see also City of Cotati v. Cashman (2002) 29 Cal.4th 69, 80 [“‘an actual, present controversy must be pleaded specifically” and “the facts of the respective claims concerning the [underlying] subject must be given.’”].)

Cross-Complainant alleges an actual controversy has arisen and now exists between Cross-Complainant and Cross-Defendant concerning their respective rights and duties as it is believed that the Mechanics Lien filed by Cross-Defendants is based on improper inflated invoices submitted by Cross-Defendant and approved by a third party, DBA, who was personally benefiting from the contract and inflated invoices. (XC ¶48.)

Cross-Complainant alleges the source of revenues for the contemplated work to be completed by Cross-Defendant was afforded via an emergency assessment, which Cross-Defendant was aware of and participated in developing. (XC ¶49.)

Cross-Complainant alleges the contract between Cross-Complainant and Cross-Defendant stated that the sum of the contract ($1,272,727.4), was contingent upon availability of funds. (XC ¶50.)

Cross-Complainant alleges Cross-Defendant was materially involved in developing the basis for the emergency assessment and it was aware and relied on the emergency assessment as the contingent source of funds to pay for the improvements. (XC ¶51.) Cross-Complainant alleges that if the emergency assessment fails as not being in compliance with Civil Code §5610, the contingency fails, and CCGOA may cancel the contracts as per the terms of the agreements. (XC ¶51.)

Cross-Complainant alleges that it seeks a judicial determination to determine Cross-Complainant’s rights, and to determine the amount owed by Cross-Complainant to Cross-Defendant under the Mechanics Lien, if any; an accounting to determine the amount owed to Cross-Defendants, if any; and to determine whether the illegality of the emergency assessment estops the Cross-Defendant from collecting any further funds on the project. (XC ¶52.)

Cross-Complainant sufficiently states a cause of action for declaratory relief. First, Cross-Complainant requests a judicial determination as to the emergency assessment developed by Cross-Defendant and DBA, and whether such assessment was compliant with Civil Code §5610. Second, if the mechanics lien filed by Rayco is found to be based on improperly inflated invoices, then Cross-Complainant requests a judicial determination of the amount owed and to clear title to the CCGOA’s and its members’ property.

Accordingly, Cross-Defendant’s demurrer to Cross-Complainant’s 2nd cause of action is overruled.

Cross-Defendant’s demurrer to Cross-Complainant’s 1st and 2nd causes of action is overruled.

Hon. Daniel M. Crowley

Judge of the Superior Court