Judge: Daniel S. Murphy, Case: 24STCV22221, Date: 2025-04-18 Tentative Ruling

Case Number: 24STCV22221    Hearing Date: April 18, 2025    Dept: 32

BACKGROUND

            On August 29, 2024, Plaintiff Bixel Villas, LLC filed this action against Defendants Temple Bixel, LLC; Carlie Yapp; IDCS Corporation; ADI Weinberg; Phillip Song; 321 N. Bixel, LLC; and Moses Kagan. Plaintiff filed the operative First Amended Complaint on September 24, 2024. The FAC asserts causes of action for (1) breach of contract, (2) negligence, (3) breach of implied warranty, (4) breach of express warranty, (5) strict liability, and (6) fraud.

            Plaintiff purchased an apartment building from Defendants. Defendants allegedly represented that the property was built correctly by persons with the requisite skill and expertise. Plaintiff allegedly relied on these representations when purchasing the property. After purchasing the property, Plaintiff discovered substantial construction defects and safety issues.

            On March 26, 2025, Defendants Temple Bixel, LLC and Carlie Yapp filed the instant demurrer to the FAC. Plaintiff filed its opposition on April 7, 2025. Defendants filed their reply on April 11, 2025.

LEGAL STANDARD

A demurrer for sufficiency tests whether the complaint states a cause of action. (Hahn v. Mirda (2007) 147 Cal.App.4th 740, 747.) When considering demurrers, courts read the allegations liberally and in context. (Taylor v. City of Los Angeles Dept. of Water and Power (2006) 144 Cal.App.4th 1216, 1228.) In a demurrer proceeding, the defects must be apparent on the face of the pleading or by proper judicial notice. (Code Civ. Proc., § 430.30, subd. (a).) A demurrer tests the pleadings alone and not the evidence or other extrinsic matters. (SKF Farms v. Superior Court (1984) 153 Cal.App.3d 902, 905.) Therefore, it lies only where the defects appear on the face of the pleading or are judicially noticed. (Ibid.) The only issue involved in a demurrer hearing is whether the complaint, as it stands, unconnected with extraneous matters, states a cause of action. (Hahn, supra, 147 Cal.App.4th at 747.)

MEET AND CONFER

Before filing a demurrer or a motion to strike, the demurring or moving party is required to meet and confer with the party who filed the pleading demurred to or the pleading that is subject to the motion to strike for the purposes of determining whether an agreement can be reached through a filing of an amended pleading that would resolve the objections to be raised in the demurrer. (Code Civ. Proc., §§ 430.41, 435.5.)

Here, Defendants have not attached the requisite meet and confer declaration to their demurrer. However, inadequate meet and confer is not a reason to overrule a demurrer. (Code Civ. Proc., § 430.41(a)(4).) Therefore, the Court proceeds on the merits. 

DISCUSSION

I. Breach of Contract

            To establish breach of contract, a plaintiff must show: (1) the contract existed, (2) the plaintiff’s performance of the contract or excuse for nonperformance, (3) the defendant’s breach, and (4) the resulting damage to the plaintiff. (Richman v. Hartley (2014) 224 Cal.App.4th 1182, 1186.)

            Defendants argue that it is unclear whether the contract is written, oral, or implied by conduct. (See Code Civ. Proc., § 430.10(g).) However, the FAC alleges that Plaintiff and Defendants “executed the Purchase Agreement.” (FAC ¶ 24.) It is sufficiently clear that this is a written contract.

            Defendants also argue that the contract is not attached or pled verbatim. However, a plaintiff may “plead the legal effect of the contract rather than its precise language.” (Miles v. Deutsche Bank National Trust Co. (2015) 236 Cal.App.4th 394, 402.) The FAC pleads the legal effect of the contract, as well as the remaining elements of breach of contract. (See FAC ¶¶ 36-39.)

            The demurrer is OVERRULED as to the first cause of action.

II. Breach of Implied Warranty

            “A warranty is a contractual term concerning some aspect of the sale, such as title to the goods, or their quality or quantity. The warranty may be express or implied.” (Windham at Carmel Mountain Ranch Assn. v. Superior Court (2003) 109 Cal.App.4th 1162, 1168.) There is “an implied warranty of reasonable workmanship in design and construction that applies to the sale of newly constructed real property.” (Ibid.)

            Defendants argue that Plaintiff cannot maintain an implied warranty claim while also pursuing a breach of contract claim because “an action based on an implied-in-fact or quasi-contract cannot lie where there exists between the parties a valid express contract covering the same subject matter.” (Lance Camper Manufacturing Corp. v. Republic Indemnity Co. (1996) 44 Cal.App.4th 194, 203.) However, the court in Lance Camper was discussing an unjust enrichment claim, not an implied warranty claim. Unjust enrichment is a quasi-contract claim pled in the absence of a valid contract. (See Rutherford Holdings LLC v. Plaza Del Rey (2014) 223 Cal.App.4th 221, 231.) By contrast, the implied warranty claim here is not based on an implied-in-fact or quasi-contract.

To the contrary, as stated in Windham, an implied warranty is a term within an existing contract. This is why “privity of contract [between the plaintiff and defendant] is required in an action for breach of either express or implied warranty.” (Windham, supra, 109 Cal.App.4th at p. 1169.) In other words, the implied warranty claim actually requires the existence of the sale contract. The sale contract does not bar the implied warranty claim. Plaintiff may sue for breach of the express terms of the contract as well as for breach of the implied warranty. Both are actionable contract claims deriving from the same contract.   

The demurrer is OVERRULED as to the third cause of action.

III. Breach of Express Warranty

            Defendants argue that the express warranty claim fails because Plaintiff has failed to plead the existence of a contract. However, as discussed above, Plaintiff has adequately pled the contract.

            The demurrer is OVERRULED as to the fourth cause of action.  

IV. Strict Liability

            “One may not be held liable for manufacturing homes or selling lots under the doctrine of strict liability unless one can be deemed a ‘mass producer’ of such homes.” (Fleck v. Bollinger Home Corp. (1997) 54 Cal.App.4th 926, 934.) The FAC does not allege that Defendants are mass producers of homes.   

The demurrer is SUSTAINED as to the fifth cause of action.

V. Economic Loss Rule

            Economic loss consists of “damages for inadequate value, costs of repair and replacement of the defective product or consequent loss of profits—without any claim of personal injury or damages to other property.” (Robinson Helicopter Co., Inc. v. Dana Corp. (2004) 34 Cal.4th 979, 988.) The economic loss rule requires a purchaser to recover in contract for purely economic loss due to disappointed expectations, unless the purchaser “can demonstrate harm above and beyond a broken contractual promise,” such as some form of personal injury or damage to property other than the defective product itself. (Ibid.) The economic loss rule exists to prevent “the law of contract and the law of tort from dissolving one into the other.” (Ibid.) “An omission to perform a contract obligation is never a tort, unless that omission is also an omission of a legal duty.” (Erlich v. Menezes (1999) 21 Cal.4th 543, 551.)

            Here, the negligence and fraud claims are both based on Defendants’ alleged failure to construct the property in a workmanlike manner free of defects. (FAC ¶¶ 41-42, 71-73.) This is the same conduct underlying the breach of contract claim. (Id., ¶ 37.) Plaintiff has not alleged conduct independent of a contractual obligation.

The Supreme Court in Rattagan v. Uber (2024) 17 Cal.5th 1 held that a plaintiff may assert a cause of action for fraudulent concealment based on conduct occurring in the course of a contractual relationship if (i) the elements of the claim can be established independently of the parties’ contractual rights and obligations, and (ii) the tortious conduct exposes the plaintiff to a risk of harm beyond the reasonable contemplation of the parties when they entered into the contract. However, that is not the case here. Therefore, the negligence and fraud claims are barred by the economic loss rule.  

            The demurrer is SUSTAINED as to the second and sixth causes of action.

CONCLUSION

            Defendants Temple Bixel, LLC’s and Carlie Yapp’s demurrer is SUSTAINED as to the second, fifth, and sixth causes of action with leave to amend, and OVERRULED in all other respects.