Judge: David B. Gelfound, Case: 22CHCV00109, Date: 2024-04-23 Tentative Ruling

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Case Number: 22CHCV00109    Hearing Date: April 23, 2024    Dept: F49

LOS ANGELES SUPERIOR COURT

NORTH VALLEY DISTRICT

DEPARTMENT F49

DEMURRER WITH MOTION TO STRIKE

Motion filed: 7/12/23

MOVING PARTY: Defendants Crown Construction and Design, Inc. and Road Runner Masonry (“Defendants”)

RESPONDING PARTY: Plaintiff Northbridge Point Homeowners Association (“Plaintiff”)

NOTICE: OK 

RELIEF REQUESTED: An order from this Court sustaining Defendants’ Demurrer to the Second and Fourth Causes of Action in Plaintiff’s First Amended Complaint.

TENTATIVE RULING: The demurrer is SUSTAINED without LEAVE TO AMEND. The motion to strike is GRANTED IN PART.

BACKGROUND

On February 16, 2022, Plaintiff initiated this action against Defendants Crown Construction and Design, Inc. (“Crown”), Road Runner Masonry (“Road Runner”) (collectively, “Defendants”), and Does 1 through 100.

Subsequently, on February 28, 2023, Plaintiff filed her operative First Amended Complaint (“FAC”), alleging the following causes of action: (1) Breach of Contract (Construction Agreement) against Crown and Does 1-50; (2) Negligence against Crown and Does 1-50; (3) Negligent Misrepresentation against Crown and Does 1-50; and (4) Negligence against Road Runner and Does 51-100.

On July 12, 2023, Defendants filed the instant Demurrer (the “Demurrer”) with Motion to Strike (the “Motion”). On April 10, 2024, Plaintiff filed its Opposition. Subsequently, Defendants replied on April 16, 2024.

ANALYSIS

 “It is black letter law that a demurrer tests the legal sufficiency of the allegations in a complaint” (Lewis v. Safeway, Inc. (2015) 235 Cal.App.4th 385, 388.)  A general demurrer is proper, and typically used, where the plaintiff fails to allege “facts sufficient to constitute a cause of action.” (Code Civ. Proc., § 430.10, subd. (e); Cloud v. Northrop Grumman Corp. (1998) 67 Cal.App.4th 995, 1004.)

“The sufficiency of a cause of action is evaluated by presuming all of the material factual allegations in the complaint are true.” (Aubry v. TriCity Hospital Dist. (1992) 2 Cal 4th 962, 966 – 967 (Aubry).) In ruling on a demurrer, a court may consider facts that are properly subject to judicial notice.” (Arroyo v. Plosay, 225 Cal. App. 4th 279.) In ruling on a demurrer, the allegations of the complaint must be liberally construed, with a view to substantial justice between the parties. (Glennen v. Allergan, Inc. (2016) 247 Cal.App.4th 1, 6.) Nevertheless, while "[a] demurrer admits all facts properly pleaded, [it does] not [admit] contentions, deductions or conclusions of law or fact." (George v. Automobile Club of Southern California (2011) 201 Cal.App.4th 1112, 1120, 135.) Additionally, “[a] complaint otherwise good on its face is subject to demurrer when facts judicially noticed render it defective.” (Evans v. City of Berkeley (2006) 38 Cal.4th 1, 6.)

“It is error for a trial court to sustain a demurrer when the plaintiff has stated a cause of action under any possible legal theory. (Barquis v. Merchants Collection Assn. (1972) 7 Cal.3d 94, 103.) And it is an abuse of discretion to sustain a demurrer without leave to amend if the plaintiff shows there is a reasonable possibility any defect identified by the defendant can be cured by amendment. (Blank v. Kirwan, supra, 39 Cal.3d at 318.)” Aubry, supra, 2 Cal. 4th 962, 967.)

A.    Meet and Confer

            A party filing a demurrer “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., section 430.41(a).) A failure to meet and confer does not constitute grounds to sustain or overrule a demurrer. (See Code Civ. Proc., sections 430.41 (a)(4).)

Defendants’ counsel attests that on June 20, 2023, the parties telephonically met and conferred regarding the Demurrer and Motion to Strike. (Cohen Decl., ¶ 3.) As to both the Demurrer and the Motion, the parties were unable to agree on the remaining issues. (Id., ¶ 4.)

Based on these actions, the Court concludes that the meet and confer requirements have been sufficiently met.

B.     Second Cause of Action – Negligence against Crown and Does 1-50

            “The elements of a cause of action for negligence are duty, breach, causation, and damages.” (Melton v. Boustred (2010) 183 Cal.App.4th 521, 529).

‘Whether a defendant owes a duty of care is a question of law. Its existence depends upon the foreseeability of the risk and a weighing of policy considerations for and against imposition of liability.’ [Citation.]” (Burgess v. Superior Court (1992) 2 Cal.4th 1064, 1072.)

“[A]” breach of contract is tortious only when some independent duty arising from tort law is violated.” (Applied Equipment, (1994) 7 Cal.4th 503, 515 (Applied Equipment).)

In Erlich v. Menezes (1999) 21 Cal.4th 543 (Erlich), the Supreme Court of California again reaffirmed its previous decisions detailing the reasons for denying tort recovery in contract breach cases. These include the differing objective underlying tort and contract breach, the importance of predictability in assuring commercial stability in contractual dealings, the potential for converting contract breach into a tort with accompanying punitive damage recovery, and the preference for legislative action in affording appropriate remedies. (Id., at 553.) The Supreme Court summarized that “tort damages have been permitted in contract cases where a breach of duty directly causes physical injury [Citation]; for breach of the covenant of good faith and fair dealing in insurance contracts [Citation]; for wrongful discharge in violation of fundamental public policy; or where the contract was fraudulently induced,” emphasizing “the duty that gives rise to tort liability is either completely independent of the contract or arises from conduct which is both intentional and intended to harm.” (Ibid.)

As a preliminary issue, Plaintiff contends that the Erlich ruling is limited solely to cases of tort damage involving emotional distress. However, the Court disagrees with this interpretation. The legal principle as outlined in both Applied Equipment and Erlich provide clear guidance on the distinctions between tort and contract law, applicable to instances where the same wrongful act is alleged, irrespective of specific type of tort claim being asserted. Consequently, the Court concludes that these principles are directly instructive in determining the boundaries between tort and contract claims in this case.

Defendants argue that the FAC’s Second Cause of Action for Negligence fails to allege any independent duty outside of the parties’ contract. Moreover, they assert that Plaintiff does not claim that Defendants’ alleged negligence in breaching the contract resulted in damage to any personal injuries or to Plaintiff’s other properties that were not covered by the contractual obligations. (Dem, at 5-6.)

Moreover, Plaintiff, in its Opposition, contends that “accompanying every contract is a common-law duty to perform with care, skill, reasonable experience, and faithfulness the thing agreed to be done, and a negligent failure to observe any of these conditions is a tort.” Plaintiff supports this assertion by referencing case law, including North American Chemical Co. v. Superior Court (1997) 59 Cal.App.4th 764, 774 (North American Chemical).

In Erlich, supra, although reversing the Court of Appeal’s ruling in finding tort damages, the Supreme Court of California recognized the lower court’s observation of the legal principal stated in North American Chemical, that “the same wrongful act may constitute both a breach of contract and an invasion of an interest protected by the law of torts, [Citation.]” (Id., at 551.) However, the Supreme Court did not discuss the application of this principle in the North America Chemical case.

Upon reviewing the Northen American Chemical case, the Court observes that the Court of Appeal based its reasoning on two precedents: Eads v. Marks (1952) 39 Cal.2d 807 (Eads), and Allred v. Bekins Wide World Van Services (1975) 45 Cal.App.3d 984 (Allred), both of which exhibited fact patterns consistent with the limitations as outlined in Erlich.

In Eads, supra, the plaintiff’s parents had contracted with the defendant creamery for home milk delivery. Special instructions were given to defendant regarding the placement of the milk bottle due to plaintiff’s young age. The defendant negligently failed to follow these instructions resulting in the plaintiff’s injury. (Id., at 809.) The North American Chemical court highlighted that “It has been well established in this state that if the cause of action arises from a breach of a promise set forth in the contract, the action is ex contractu but if it arises from a breach of duty growing out of the contract it is ex delicto....’ [Citation.][Italics in original.] Where the cause of action arises from the breach of a contractual duty, the action is delictual notwithstanding that it also involves a breach of contract. [Citation.]” Notably, the special instructions in Eads created a tort-protected interest that, combined with the physical damage suffered by the plaintiff, extended beyond the mere contractual duty of milk itself.

Similarly, in Allred, supra, the contract involved the defendant transporting the plaintiff’s personal belongs back to the United States. The defendant packed the plaintiff’s property using rancid and contaminated straw, which led to damages to plaintiff’s property and personal injury to the plaintiff and her husband. (Id., 987-989.)

Here, Plaintiff alleges that it entered into an agreement with Defendant Crown for the tasks including the demolition of damaged concrete, installation of new concrete, addition of drains in the pool deck area, movement of concrete tables, and installation of deco seal. (FAC, ¶ 14.) The FAC also details a list of purported damages:  excessive cracking of the pool deck beyond normal expectations; one of the skimmers was raised by approximately 3/8”, which constitute in an injury hazard; the perimeter of the deck is lifting at the transition to the coping and causing a separation of the newly applied Dek-O Seal; there is concrete at the bottom of the small pool which cannot be removed without leaving some marks in the new plaster; the pool decks are showing signs of permanent discoloration; the jacuzzi deck area and jacuzzi have significant discoloration; the inside diameter of the pickets of the perimeter fencing exceeding 4”; and improperly placed wheelchair kicker at the bottom of handrail to the pool ramp, which was set with clearance for water flow. (Id., ¶ 16.)

Distinct from the situations in Eads and Allred, the damages alleged here clearly arise from a breach of a promise detailed in the contract, thus categorized as ex contractu rather than ex delicto. Plaintiff does not assert that Defendants violated an independent legal duty, i.e., an interest protected by tort law outside the contractual obligation. Additionally, Plaintiff’s pleadings do not claim tort damage where a breach of duty directly causes physical injury.

Furthermore, consistent with the limitations on tort damages arising from breach of contract as outlined in Erlich, Plaintiff’s FAC does not allege any intentional conducts by Defendants, purposeful breach of the covenant of good faith and fair dealing arising from fiduciary duties between the parties, wrongful discharge in violation of fundamental public policy, or fraudulent formation of the contract. Consequently, by applying the established legal principle in Supreme Court cases such as Applied Equipment Corp. and Erlich, the Court concludes that tort recovery is unavailable based on Plaintiff’s allegation of negligent breach of contract.

Given the lack of sufficient factual pleading on the existence of a legal duty independent of the contract, Plaintiff’s allegations fail to constitute the cause of action. (See Code Civ. Proc., § 430.10, subd. (e).)

Therefore, the Court SUSTAINS without LEAVE TO AMEND the Demurrer as to the Second Cause of Action.

C.    Fourth Cause of Action – Negligence against Road Runner and Does 51-100

The FAC alleges that Defendants Road Runner and Crown entered into a written agreement, under which Road Runner agreed to replace the concrete pool deck, and that “Road Runner knew that the Project was being done for the benefit of Plaintiff and owed a duty of care to Plaintiff.” (FAC, ¶ 50.)

Under Civil Code section 1559, “A contract, made expressly for the benefit of a third person, may be enforced by him at any time before the parties thereto rescind it.” Consequently,

Plaintiff may enforce the contract between itself and Crown against Road Runner as a third-party beneficiary.

However, despite this contractual relationship, Plaintiff fails to state a legal duty sufficient to support a cause of action for Negligence, as mere breach of contract does not sufficiently support an action in tort. (Erlich, supra, 21 Cal.4th at 551.)

Following the reasoning applied to the Second Cause of Action, the Court SUSTAINS without LEAVE TO AMEND the Demurrer as to the Fourth Cause of Action.

D.    Motion to Strike

The court may, upon a motion, or at any time in its discretion, and upon terms it deems proper, strike any irrelevant, false, or improper matter inserted in any pleading. (Code Civ. Proc., § 436, subd. (a).) The court may also strike all or any part of any pleading not drawn or filed in conformity with the laws of this state, a court rule, or an order of the court. (Id., § 436, subd. (b).) The grounds for a motion to strike are that the pleading has irrelevant, false, or improper matter, or has not been drawn or filed in conformity with laws. (Id. § 436.) The grounds for moving to strike must appear on the face of the pleading or by way of judicial notice. (Id. § 437.)

In their Motion to Strike, Defendants move to strike the following portions from the FAC:

(1)               FAC, paragraph 15 (portion): “During the course of CROWN’s construction, the Association’s Board Members identified problems with CROWN’s workmanship and, at that time, CROWN appeared to show a willingness to take steps to remediate the problems. CROWN claimed that some of those problems, such as deck discoloration, would improve over time after project completion.”

(2)               FAC, paragraph 17 (portion): “In correspondence dated December 9, 2020, CROWN noted increased staining since its last inspection. It stated, ‘We can NOT do anything about the staining and hoping that it will diminish in time once the soil underneath the slabs will warm up or will have less moisture. Timing is unknown.’ The CROWN letter acknowledged the presence of hair line cracks and notes that more hair line cracks are likely to occur in the future. CROWN noted: ‘Again, there is NOTHING that could be done about that and unfortunately it is very natural for concrete.’ The CROWN letter concluded that it would address elevated sections of concrete around the pool and spa areas and indicated that it would show the ‘HOA members the acceptable and unacceptable elevations of the concrete prior to any replacement/repairs.’”

(3)               FAC, paragraph 18: “The Board rejected the minimal repairs that were outlined by CROWN in its December 9th correspondence because they did not satisfactorily address the Association’s concerns.”

(4)               FAC, paragraph 20 (portion): “The letter demanded that CROWN tender Association’s claim to its insurers.”

(5)               FAC, paragraph 21: “On September 29, 2021, the Association’s legal counsel sent correspondence to CROWN which indicated that the Association would be moving forward with repairs, but in a final effort to avoid litigation, wished to contact CROWN’s liability insurer. The letter demanded that CROWN provide its liability insurance information by October 6, 2021.”

(6)               FAC, paragraph 23: “… the association has incurred significant attorneys’ fees … in attempting to obtain Defendants’ compliance with the Contract ….”

(7)               FAC, paragraph 30 (portion): “… loss of use, and other consequential … damages ….”

(8)               FAC, Prayer, paragraph 7: “For reasonable attorney’s fees.”

i.                    Request for Attorney’s Fees

“[u]nder the American Rule, as a general proposition each party must pay his own attorney fees. This concept is embodied in [Code Civ. Proc., §] 1021, which provides that each party is to bear his own attorney fees unless a statute or the agreement of the parties provides otherwise.” Gray v. Don Miller & Associates, Inc. (1984) 35 Cal. 3d 498, 504.)

Here, Plaintiff acknowledges that it has agreed to strike the references to attorney fees, during the meet and confer process.

Consequently, the Court GRANTS without LEAVE TO AMEND the Motion to Strike FAC, paragraph 23 (portion) and Prayer for Relief, paragraph 7, as referenced above.

ii.                  Request for Special Damages

Unlike general damages, special damages are those losses that do not arise directly and inevitably from any similar breach of any similar agreement. Instead, they are secondary or derivative losses arising from circumstances that are particular to the contract or to the parties. Special damages are recoverable if the special or particular circumstances from which they arise were actually communicated to or known by the breaching party (a subjective test) or were matters of which the breaching party should have been aware at the time of contracting (an objective test). ... Special damages ‘will not be presumed from the mere breach’ but represent loss that ‘occurred by reason of injuries following from’ the breach. ... Special damages are among the losses that are foreseeable and proximately caused by the breach of a contract. (Civ. Code, § 3300.) (Lewis Jorge Construction Management, Inc. v. Pomona Unified School Dist. (2004) 34 Cal.4th 960, 967–969, most citations omitted.)

Defendants contend that Plaintiff’s FAC contains no allegations that amount to contemplation of the parties nor does the agreement allege any such by the parties relating to any “loss of use” or “consequential damages.” (Mot., at 6.)

The Court notes that the FAC alleges only in paragraph 30 that “As a direct and proximate result of Defendants’ breach of the Contract, Plaintiff has and will be damaged in that it will have to pay to repair the defects in an amount yet unknown, including retaining another contractor to evaluate the work to be performed and to perform the services for which Defendants failed to perform, together with delay, loss of use, and other consequential and incidental damages, all which exceed the minimum jurisdictional amount of this Court. In addition, Plaintiff has been damaged because it will now spend additional funds above what this project should have cost had Defendants performed their work in a reasonable and proper manner.” However, there is no allegation that the damages were “actually communicated to or known by the breaching party, Defendants” as mandated by established law to implicate recoverable special damages.

Plaintiff correctly notes that ““[E]ach evidentiary fact that might eventually form part of the plaintiff’s proof need not be alleged,” citing C.A. v. William S. Hart Union High School Dist. (2012) 53 Cal.4th 861, 872. However, this notion does not excuse the absence of a required allegation, as opposed to the insufficiency of evidentiary facts. When the Court reviews a motion to strike, it examines the allegations that “appear on the face of the pleading or by way of judicial notice.” (See Code Civ., Proc., § 437(a).)

Consequently, the Court GRANTS with LEAVE TO AMEND the Motion to Strike FAC, paragraph 30 (portion) as referenced above.

iii.                Violation of Evidence Codes

Defendants move to strike the several portions of the FAC based on violations of Evidence Codes section 1151, 1152, and 1155, arguing that legally inadmissible matters are irrelevant or improper matter inserted in any pleading, thus warranting their removal. (Mot., at 6, Reply, at 3.)

Under Evidence Code section 1151, “[w]hen, after the occurrence of an event, remedial or precautionary measures are taken, which, if taken previously, would have tended to make the event less likely to occur, evidence of such subsequent measures is inadmissible to prove negligence or culpable conduct in connection with the event.”

            FAC, paragraph 15 (portion), states: “During the course of CROWN’s construction, the Association’s Board Members identified problems with CROWN’s workmanship and, at that time, CROWN appeared to show a willingness to take steps to remediate the problems. CROWN claimed that some of those problems, such as deck discoloration, would improve over time after project completion.”

            However, the Court finds that FAC paragraph 15 does not allege subsequent remedial measures, but rather actions taken “during the cause of ... construction,” and thus not violate Evidence Code section 1151.

            Therefore, the Court DENIES the Motion to Strike FAC, paragraph 15 (portion) as referenced above.

            Under Evidence Code section 1152, “[e]vidence that a person has, in compromise … furnished or offered or promised to furnish any money or any other thing, act, or service to another who has sustained or will sustain or claims that he or she has sustained loss or damage, as well as any conduct or statements made in negotiations thereof, is inadmissible to prove his or her liability for the loss or damage or any part of it.”

FAC, paragraph 17 (portion) states,: “In correspondence dated December 9, 2020, CROWN noted increased staining since its last inspection. It stated, ‘We can NOT do anything about the staining and hoping that it will diminish in time once the soil underneath the slabs will warm up or will have less moisture. Timing is unknown.’ The CROWN letter acknowledged the presence of hair line cracks and notes that more hair line cracks are likely to occur in the future. CROWN noted: ‘Again, there is NOTHING that could be done about that and unfortunately it is very natural for concrete.’ The CROWN letter concluded that it would address elevated sections of concrete around the pool and spa areas and indicated that it would show the ‘HOA members the acceptable and unacceptable elevations of the concrete prior to any replacement/repairs.’”

FAC paragraph 18 pleads: “The Board rejected the minimal repairs that were outlined by CROWN in its December 9th correspondence because they did not satisfactorily address the Association’s concerns.”

The Court finds that allegations in paragraphs 17 and 18 fall within the scope of “conduct or statements made in negotiations,” thus inadmissible under Evidence Code section 1152.

Accordingly, the Court GRANTS without LEAVE TO AMEND the Motion to Strike FAC paragraphs 17 (portion) and 18, as referenced above.

Under Evidence Code section 1155, “[e]vidence that a person was, at the time a harm was suffered by another, insured wholly or partially against loss arising from liability for that harm is inadmissible to prove negligence or other wrongdoing.”

FAC paragraph 20 (portion) states, “The letter demanded that CROWN tender Association’s claim to its insurers.”

FAC paragraph 21 alleges, “On September 29, 2021, the Association’s legal counsel sent correspondence to CROWN which indicated that the Association would be moving forward with repairs, but in a final effort to avoid litigation, wished to contact CROWN’s liability insurer. The letter demanded that CROWN provide its liability insurance information by October 6, 2021.”

The Court agrees with Defendants that the facts alleged in paragraphs 20 (portion) and 21 regarding Defendants’ insurance information is irrelevant to the FAC as they are not essential to the statement of the claim.

Therefore, the Court GRANTS without LEAVE TO AMEND the Motion to Strike FAC paragraphs 20 (portion) and 21, as referenced above.

In sum, the Court GRANTS IN PART the Motion to Strike.

CONCLUSION

Defendants’ Demurrer is SUSTAINED without LEAVE TO AMEND.

Defendants’ Motion to Strike is GRANTED without LEAVE TO AMEND as to paragraphs 17 (portion), 18, 20 (portion), 21, 23 of the First Amended Complaint, and paragraph 7 of the Prayer for Relief.

Defendants’ Motion to Strike is DENIED as to paragraph 15 (portion) of the First Amended Complaint.

Defendants’ Motion to Strike is GRANTED with LEAVE TO AMEND as to paragraph 30 (portion) of the First Amended Complaint.

Moving party is to give notice.