Judge: Edward B. Moreton, Jr., Case: 20SMCV01196, Date: 2022-10-19 Tentative Ruling

Case Number: 20SMCV01196    Hearing Date: October 19, 2022    Dept: 200

Superior Court of California

County of Los Angeles

Beverly Hills Courthouse | Department 200

BACKGROUND

On August 31, 2020, Plaintiff William Howell filed this action against Defendants Southern California Edison (“SCE”), Edison Power Constructors Inc. (“EPC”), Tidwell Excavation Acquisition Co., Inc. (“Tidwell”), and Hampton Tedder Electric Co. (“Hampton”). Plaintiff subsequently filed the first amended complaint adding as a defendant “The People of the State of California, acting by and through the Department of Transportation,” also known as “Caltrans,” but erroneously sued as State of California Department of Transportation.

The operative “Amended Third Amended Complaint” (“TAC”) alleges causes of action (“COA”) for: 1) negligence; 2) fraud and concealment; 3) private nuisance; 4) public nuisance; 5) trespass; 6) inverse condemnation; 7) inverse condemnation; and 8) RICO (18 U.S.C. § 1962(b)).

The TAC alleges the following. There is a culvert (the “Culvert”) that runs underneath Topanga Canyon Boulevard where Plaintiff’s property (the “Property”) is located. (TAC, ¶ 3.) The Culvert originally emptied storm water onto an area located above the Property’s driveway (the “Upper Slope”). (TAC, ¶ 3.) Then, using the support of a slope protection concrete called shotcrete (that covered the entire Upper Slope to prevent erosion), the Culvert directed the storm water through the drainage system underneath Plaintiff’s driveway, before discharging that water through an outlet on another slope below the driveway (the “Lower Slope”), that was also covered with shotcrete to prevent erosion. (TAC, ¶ 3.) The storm water would then flow from the Lower Slope, empty into Dix Creek, and a few yards later into Topanga Creek, which is located on the Property. (TAC, ¶ 3.)

On or about September 30, 2019, Defendant EPC, as part of a public works project Defendant SCE enacted and undertook, drilled directly into the Culvert, and then improperly installed a power pole. (TAC, ¶ 4; Figure 1 (p. 4 of the Complaint).) Doing so severely damaged the Culvert and blocked the entire drainage system of which it is part. (TAC, ¶ 4.)

On the morning of December 29, 2019, Plaintiff became aware of the damage to his Property caused by the negligent conduct of Defendants SCE, EPC and Caltrans, when water and debris surged underneath the damaged Culvert and its shotcrete, and then flooded the Upper Slope and driveway, causing substantial mudflow. (TAC, ¶ 40.) The strength and power of the backed-up storm water were so great that it blew out areas above and below the shotcrete that surrounded the Upper Slope, then flowed under the driveway and shotcrete of the Lower Slope, leaving large voids and instability. (TAC, ¶ 40.)

DEMURRERS

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. In a demurrer proceeding, the defects must be apparent on the face of the pleading or via proper judicial notice. (Donabedian v. Mercury Ins. Co. (2004) 116 Cal. App.4th 968, 994.) A demurrer tests the pleadings alone and not the evidence or other extrinsic matters. Therefore, it lies only where the defects appear on the face of the pleading or are judicially noticed. (Civ. Code Proc., §§ 430.30, 430.70.) At the pleading stage, a plaintiff need only allege ultimate facts sufficient to apprise the defendant of the factual basis for the claim against him. (Semole v. Sansoucie (1972) 28 Cal. App. 3d 714, 721.) A “demurrer does not, however, admit contentions, deductions or conclusions of fact or law alleged in the pleading, or the construction of instruments pleaded, or facts impossible in law [citations] ….” (S. Shore Land Co. v. Petersen (1964) 226 Cal.App.2d 725, 732.)

A special demurrer for uncertainty is disfavored and will only be sustained where the pleading is so bad that defendant cannot reasonably respond—i.e., cannot reasonably determine what issues must be admitted or denied, or what counts or claims are directed against him/her. (Civ. Code Proc., § 430.10, subd. (f); Khoury v. Maly’s of Calif., Inc. (1993) 14 Cal.App.4th 612, 616.) Moreover, even if the pleading is somewhat vague, “ambiguities can be clarified under modern discovery procedures.” (Ibid.)

“Liberality in permitting amendment is the rule, if a fair opportunity to correct any defect has not been given.” (Angie M. v. Superior Court (1995) 37 Cal.App.4th 1217, 1227.) It is an abuse of discretion for the court to deny leave to amend where there is any reasonable possibility that plaintiff can state a good cause of action. (Goodman v. Kennedy (1976) 18 Cal.3d 335, 349.) The burden is on plaintiff to show in what manner plaintiff can amend the complaint, and how that amendment will change the legal effect of the pleading. (Id.)

A.    SCE’s Demurrer

Defendant SCE demurs to the second cause of action for fraud and concealment and eighth cause of action for RICO (18 U.S.C. § 1962(b)) in the TAC, contending that they fail to state facts sufficient to constitute a cause of action. (Civ. Code Proc., § 430.10, subd. (e).) Plaintiff opposes.

Meet and Confer

SCE’s counsel testifies (and Plaintiff does not dispute) that the parties met and conferred on June 29, 2022, before SCE filed the demurrer but could not reach an agreement. (SCE’s Demurrer, declaration of Benjamin Caplan, ¶ 3.)

Accordingly, the Court finds that SCE has satisfied the meet and confer requirements.

COA 2: Fraud and Concealment

The elements of fraud 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; and (e) resulting damage.” (Charnay v. Cobert (2006) 145 Cal.App.4th 170, 184.) Fraud must be pled with specificity. (Small v. Fritz Companies, Inc. (2003) 30 Cal.4th 167, 184.) “The particularity demands that a plaintiff plead facts which show how, when, where, to whom, and by what means the representations were tendered.” (Cansino v. Bank of America (2014) 224 Cal.App.4th 1462, 1469.) In the case of a corporate defendant, the plaintiff must allege the names of the persons who made the representations, their authority to speak on behalf of the corporation, to whom they spoke, what they said or wrote, and when the representation was made. (West v. JPMorgan Chase Bank, N.A. (2013) 214 Cal.App.4th 780, 793.)

The TAC bases its second cause of action on misrepresentation and concealment.

Fraud by concealment requires allegations demonstrating the defendant was under a legal duty to

disclose the allegedly omitted or concealed facts. (Los Angeles Memorial Coliseum Commission

v. Insomniac, Inc. (2015) 233 Cal.App.4th 803, 831.) “‘“There are ‘four circumstances in which nondisclosure or concealment may constitute actionable fraud: (1) when the defendant is in a fiduciary relationship with the plaintiff; (2) when the defendant had exclusive knowledge of material facts not known to the plaintiff; (3) when the defendant actively conceals a material fact from the plaintiff; and (4) when the defendant makes partial representations but also suppresses some material facts. [Citation.]”’ [Citations.]” (Ibid.) “‘Where ... there is no fiduciary relationship, the duty to disclose generally presupposes a relationship grounded in “some sort of transaction between the parties. [Citations.] Thus, a duty to disclose may arise from the relationship between seller and buyer, employer and prospective employee, doctor and patient, or parties entering into any kind of contractual agreement. [Citation.]” [Citation.]’ [Citation.]” (Ibid. [italics removed].)

Here, the TAC alleges the following among other things. SCE was aware of the power pole being improperly installed into the Culvert prior to the rain and flooding on December 29, 2019. (TAC, ¶ 78.) But SCE concealed those facts from Plaintiff even though they knew or should have known that Plaintiff had no knowledge of the damage to the Culvert, and that the damage could damage the drainage system that traverses through the Howell Property. (TAC, ¶ 78.) SCE further attempted to conceal the damage by removing and relocating the pole, and then placing pea gravel and concrete into the holes where the pole was to hide the damage from Plaintiff. (TAC, ¶ 79.) Had SCE disclosed the damage to the Culvert and the drainage system of which it belongs, Plaintiff would have demanded that the Pole be immediately removed and danger properly abated. (TAC, ¶ 80.)

SCE argues that Plaintiff’s concealment theory fails because Plaintiff fails to allege what fiduciary or transactional relationship (if any) existed between them such SCE had a legal duty to disclose the alleged damage to the Culvert to Plaintiff.

In opposition, Plaintiff insists that a direct transactional relationship is not required, but only “some relationship,” cites Hoffman v. 162 N. Wolfe LLC (2014) 228 Cal.App.4th 1178 (“Hoffman”) to support that argument.

The Court disagrees with Plaintiff that only “some relationship” is required for a plaintiff to allege fraud by concealment.

Indeed, in Hoffman, the Court of Appeal rejected there was any duty between potential buyers and a company that owned a prescriptive easement even though there was “some relationship” between the two parties.

In that case, “appellants Steven Hoffman (Hoffman) and Swee Lin Hoffman (collectively, the Hoffmans), purchased the 170 Wolfe property. After close of escrow, the owner of the 162 Wolfe property, respondent 162 North Wolfe LLC (162 LLC), claimed a landscape easement and prescriptive easement rights of ingress and egress over 170 Wolfe.” (Hoffman, supra, 228 Cal.App.4th at p. 1181.)

“The Hoffmans argue[d] that ‘there was a relationship between the parties arising out of their mutual interest in the 170 [Wolfe] Property. At the time of Respondents' nondisclosure, the Hoffmans were tenants in possession of the 170 [Wolfe] Property and [were] in the process of purchasing it. 162 LLC ... claimed easement rights in the 170 [Wolfe] Property.’” (Hoffman, supra, 228 Cal.App.4th at p. 1189.) On the other hand, “162 LLC reiterate[d] on appeal its argument … that summary adjudication …[was] proper because of the absence of a relationship between the parties.” (Id. at p. 1186.) “It contend[ed] that because it had no ‘fiduciary or other transactional relationship with the Hoffmans which would give rise to a duty to disclose material facts known to one party and not the other,’ it had no duty to disclose to the Hoffmans that it claimed easement rights over the 170 Wolfe property.” (Ibid.) “162 LLC contends that therefore, as a matter of law, any alleged concealment of these claimed rights was not actionable.” (Ibid.)

The Court of Appeal held: “We reject the Hoffmans’ contention that because they were potential buyers in a pending sale of 170 Wolfe while 162 LLC claimed undisclosed easement rights over that property, there was a relationship between the parties triggering a duty of disclosure on the part of 162 LLC.” (Hoffman, supra, 228 Cal.App.4th at p. 1189.) In so holding, the Court distinguished Hoffman from other cases where a duty to disclose has been found. (Id. at pp. 1180-1193 [explaining that Hoffman was unlike (1) Vega v. Jones, Day, Reavis & Pogue (2004) 121 Cal.App.4th 282, where (a) there was a transaction relationship between the parties (a merger) and (b) the appellate court found the plaintiff adequately pleaded a claim for active concealment or suppression of facts by alleging that the law firm that represented the opposing party undertook to disclose a transaction but then failed to disclose all material facts; (2) Jones v. ConocoPhillips Co. (2011) 198 Cal.App.4th 1187, where the plaintiffs (family members of a deceased worker exposed to toxic chemicals) had alleged sufficient facts to support a claim of fraudulent concealment against chemical manufacturers; and (3) Pavicich v. Santucci (2000) 85 Cal.App.4th 382, where there was a relationship based upon a business transaction between the parties].) In short, “[a]lthough the Hoffmans (through their business) were tenants at 170 Wolfe and they were in contract to buy that property while 162 LLC claimed easement rights over it, these [were] not circumstances that constitute a transactional relationship between the parties giving rise to a duty of disclosure ….” (Hoffman, supra, 228 Cal.App.4th at p. 1189 [emphasis added].)

Here, the TAC has failed to allege any transactional relationship between SCE and Plaintiff. Therefore, the fraudulent concealment claim fails.

“A plaintiff asserting fraud by misrepresentation is obliged to plead and prove actual reliance,

that is, to ‘“establish a complete causal relationship’ between the alleged misrepresentations and

the harm claimed to have resulted therefrom.’ [Citations.]” (OCM Principal Opportunities Fund, L.P. v. CIBC World Markets Corp. (2007) 157 Cal.App.4th 835, 864.) “‘Besides actual reliance, [a] plaintiff must also show “justifiable” reliance, i.e., circumstances were such to make it reasonable for [the] plaintiff to accept [the] defendant’s statements without an independent inquiry or investigation.’ [Citation.] The reasonableness of the plaintiff's reliance is judged by reference to the plaintiff's knowledge and experience.’ [Citation.]” (Ibid.) “[T]he reasonableness of the reliance is ordinarily a question of fact. [Citations.] However, whether a party’s reliance was justified may be decided as a matter of law if reasonable minds can come to only one conclusion based on the facts.” (Guido v. Koopman (1991) 1 Cal.App.4th 837, 843.)

Here, the TAC alleges the following. During and after a meeting on March 2, 2020, held at Caltrans’ offices, SCE (through one of its employees, Jim Abbott) represented to Plaintiff that (1) SCE accepted responsibility for the damage, (2) it would fix it, and (3) intended to submit to Plaintiff and Caltrans a written protocol of inspection. (TAC, ¶ 80.) SCE, through Abbott, made these representations to Plaintiff with the intent of deceiving him into believing that SCE would fix the entire damage to the Property. (TAC, ¶ 81.) However, Abbot knew that those representations were false at the time that he made them. (TAC, ¶ 82.) Plaintiff detrimentally relied on those representations by refraining from taking protective measures that might have stabilized the Lower Slope before it degraded to the point where it was necessary to replace it. (TAC, ¶ 84.)

SCE argues that Plaintiff’s misrepresentation claim fails because, among other things, he has not alleged facts showing that he detrimentally relied on Abbott’s purported statements. Plaintiff’s allegation that he “specifically refrained from taking protective measures that might then have stabilized the Lower Slope before it degraded to the point to the point where it was necessary to replace it,” is insufficient to establish detrimental reliance for the following reasons. This action was filed on August 31, 2020. Abbott allegedly made the statements on March 2, 2020. In a Partner Report dated January 15, 2021, that Plaintiff attached to the TAC, Plaintiff’s own expert concluded there had been no significant change to the integrity of the slopes between its inspection in February and November 2020. Therefore, Defendant implies, Plaintiff could not have “detrimentally relied” on Abbott’s statements to take protective measures because there was no evidence of any change of the slopes before and after Abbot made the statements.

In his opposition, Plaintiff only addresses detrimental reliance in the context of his fraudulent concealment allegation (which the Court has found deficient for lack of duty), and fails to address detrimental reliance in the context of the statements Abbott made.

The Court agrees with SCE that Plaintiff has failed to allege detrimental reliance, a necessary element of his fraudulent misrepresentation allegation. Plaintiff’s other arguments are also unpersuasive.

The burden is on the Plaintiff “to articulate how [he] could amend [his] pleading to render it sufficient.” (Palm Springs Villas II Homeowners Assn., Inc. v. Parth (2016) 248 Cal.App.4th 268, 290.) To satisfy that burden, Plaintiff “must show in what manner [he] can amend [his] complaint and how that amendment will change the legal effect of [his] pleading.” (Goodman v. Kennedy (1976) 18 Cal.3d 335, 349.)

Here, Plaintiff fails to articulate how he can amend his fraud and concealment claim to render it sufficient.

Accordingly, the Court SUSTAINS the demurrer as to the second cause of action for fraud and concealment, without leave to amend.

COA 8: RICO (18 U.S.C. § 1962(b))

“RICO is contained in title 18, United States Code sections 1961 through 1968. It is aimed at

‘racketeering activity’ and to this end, among other civil and criminal remedies, creates a private cause of action for treble damages by providing ‘[a]ny person injured in his business or property by reason of a violation of section 1962 of this chapter may sue therefor in any appropriate United States district court and shall recover threefold the damages he sustains and the cost of the suit, including a reasonable attorney’s fee.’ (18 U.S.C. § 1964(c).)” (Gervase v. Superior Court (1995) 31 Cal.App.4th 1218, 1228 (“Gervase”).)

“Although RICO provides for a private cause of action in federal district court, the California Supreme Court has held that state courts have concurrent jurisdiction over RICO claims.” (Gervase, supra, 31 Cal.App.4th at p. 1228.) “In exercising this jurisdiction state courts are applying and, where necessary, interpreting federal statutory law.” (Id. at pp. 1228-1229.)

“For an act or omission to qualify as racketeering activity, it must be included in the list of activities set forth in title 18, United States Code section 1961, subdivision (1).” (Gervase, supra, 31 Cal.App.4th at p. 1232.) “While that list is lengthy, it does not include every criminal or civil wrong a person or entity might commit and excluded actions, no matter how grievous, cannot qualify as racketeering activity within the meaning of RICO.” (Ibid.) “[A] common element of all actions included in the list is a requirement that the action be criminal in nature, that is, that it be chargeable, indictable, or punishable as a crime.” (Ibid.)

“To support a claim under RICO, it is not enough that the defendant engaged in a racketeering activity; rather, the plaintiff must also establish a pattern of racketeering activity.” (Gervase, supra, 31 Cal.App.4th at p. 1232.) Although RICO requires at least two predicate acts of racketeering activity, “it appears clear that Congress intended to require a minimum of two acts but not to provide that two acts are necessarily sufficient.” (Ibid.)

“RICO is concerned with racketeering activity in connection with an enterprise that engages in or affects interstate commerce ….” (Gervase, supra, 31 Cal.App.4th at p. 1233.)

Here, Plaintiff’s Racketeer Influenced and Corrupt Organizations (“RICO”) claim alleges the following. SCE is an enterprise engaged in and whose activities affect interstate and foreign commerce. (TAC, ¶ 137.) SCE committed numerous that constitute a pattern for racketeering activity, including “colluding to conceal from Howell the improperly installed Pole in the Subject Culvert and subsequent and negligent attempts to stabilize the Pole through pole stabilizing foam and pea gravel.” (TAC, ¶ 139.) In addition, “SCE and EPC employed

the wire and mail to effectuate their scheme [of fraudulent concealment], and thus are liable for mail and wire fraud, a predicate act under the statute.” (TAC, ¶ 139.)

The Court agrees with SCE that the TAC simply fails to allege facts showing racketeering or a pattern of such. Indeed, since the Court has sustained without leave to amend SCE’s demurrer to the Plaintiff’s fraud and concealment claim, there is no basis for the racketeering claim which requires an action that is criminal in nature.

Plaintiff fails to articulate how he can amend his RICO claim to render it sufficient.

Accordingly, the Court also SUSTAINS the demurrer as to the eighth cause of action for RICO, without leave to amend.

MOTION TO STRIKE PUNITIVE DAMAGES

SCE moves to strike the punitive damages allegations in the TAC. Plaintiff opposes.

To state a prima facie claim for punitive damages, a complaint must set forth the elements stated in the general punitive damage statute, Civil Code section 3294. (College. Hospital, Inc. v. Superior Court (1994) 8 Cal.4th 704, 721.) These statutory elements include allegations that the defendant has been guilty of oppression, fraud, or malice. (Civ. Code, § 3294, subd. (a).)  

Here, the Court has sustained without leave to amend SCE’s demurrer to the second cause of action for fraud.

Accordingly, the Court strikes the punitive damages allegations in Paragraph 85 of the TAC, without leave to amend.

As for the rest of the punitive damages’ allegations, the Court finds that Plaintiff has not alleged facts sufficient to show malice or oppression.

“‘Malice’ means conduct which is intended by the defendant to cause injury to the plaintiff or despicable conduct which is carried on by the defendant with a willful and conscious disregard of the rights or safety of others.” (Civ. Code, § 3294, subd. (c)(1).) “‘Oppression’ means despicable conduct that subjects a person to cruel and unjust hardship in conscious disregard of that person’s rights.” (Civ. Code, § 3294, subd. (c)(2).)

“As amended to include [despicable], the statute plainly indicates that absent an intent to injure the plaintiff, ‘malice’ requires more than a ‘willful and conscious’ disregard of the plaintiffs’ interests. The additional component of ‘despicable conduct’ must be found.” (College Hospital, Inc., supra, 8 Cal.4th at p. 725.) The statute’s reference to despicable conduct represents a “new substantive limitation on punitive damage awards.” (Ibid.) Despicable conduct is “conduct which is so vile, base, contemptible, miserable, wretched or loathsome that it would be looked down upon and despised by ordinary decent people. Such conduct has been described as ‘having the character of outrage frequently associated with crime.’” (Tomaselli v. Transamerica Ins. Co. (1994) 25 Cal.App.4th 1269, 1287.)

Plaintiff argues his prayer for punitive damages against SCE are sufficiently supported by his negligence, private nuisance, public nuisance, and trespass claims.

The Court disagrees. The allegations in the TAC do not show that SCE’s alleged wrongful conduct was of the character of outrage frequently associated with crime. “California does not recognize punitive damages for conduct that is grossly negligent or reckless. (See [Taylor v. Superior Court (1979) 24 Cal.3d 890, 899–900] [noting ‘ordinarily, routine negligent or even reckless disobedience of [the] laws would not justify an award of punitive damages’]; [Egan v. Mutual of Omaha Ins. Co. (1979) 24 Cal.3d 809, 828] [noting that punitive damages should be awarded ‘only in the most outrageous cases’ and noting that to be awarded, the ‘act complained of must not only be willful, in the sense of intentional, but it must be accompanied by some aggravating circumstance amounting to malice’].)” (Colombo v. BRP US Inc. (2014) 230 Cal.App.4th 1442, 1456, fn. 8.) Here, the TAC has alleged at best grossly negligent or reckless conduct against SCE.

Plaintiff fails to explain how he can further amend his pleading to sufficiently allege punitive damages against SCE.

Accordingly, the Court GRANTS SCE’s motion to strike the following allegations in the TAC.

CONCLUSION

Defendant Southern California Edison Company’s Demurrer is SUSTAINED, without leave to amend. Defendant’s Motion to Strike is GRANTED, without leave to amend. The Court strikes the following punitive damages allegations in the Amended Third Amended Complaint:

(1)   The entirety of paragraph 54 (Page 30, line 22 to Page 31, line 4);

(2)   The following portion paragraph 59, (Page 33 line 19-20): “thus subjecting said entities to punitive damage liability ....”

(3)   The following portion of paragraph 60, (Page 35, line 22): “thus subjecting said entities to punitive damage liability.”

(4)   The following portion of paragraph 61 (Page 36, line 27 to Page 37, line 1): “thus subjecting said entities to punitive damage liability...”

(5)   The entirely of paragraph 62 (Page 37, lines 4-14);

(6)   The entirely of paragraph 76 (Page 41, lines 9-19);

(7)   The entirety of paragraph 85 (Page 34, lines 12-27);

(8)   The entirety of paragraph 96 (Page 47, lines 12-20);

(9)   The entirety of paragraph 106 (Page 50, lines 1-9);

(10)  The entirety of paragraph 113 (Page 52, lines 16-25);

(11)  Paragraph 8 of the prayer of damages (Page 61, lines 1-2): “Except against Caltrans, exemplary damages in an amount according to proof pursuant to Cal. Civil Code §3294.”

Defendant to give notice.

Dated: October 14, 2022

__________________________________________

Edward B. Moreton, Jr.

Judge of the Superior Court