Superior Court of California 

County of Los Angeles – West District  

Beverly Hills Courthouse / Department 205 

 

 

BACKGROUND 

This case arises in part from the denial of an insurance claim.  Plaintiff Mahin Ghaffari, as Trustee of the Mahin M. Ghaffari Trust, owns the property located at 10919 Strathmore Drive, Los Angeles, CA 90024 (“Property”) which includes seven (7) residential units and is known as “the Treehouse.” (Compl., ¶¶ 22, 23.)  Plaintiff purchased a commercial insurance policy from Defendants Wesco Insurance Company and Amtrust North America, Inc. (“Moving Defendants”) which provided businessowners coverage for the Property, effective from August 5, 2022, to August 5, 2023 (the “Policy”). (Id. ¶¶ 80, 81.)  

In or about August or September of 2022, excavations began at 10915 Strathmore Drive in Los Angeles (the “Neighboring Parcel”) to build a large residential project known as “The Mark at Los Angeles.” (Id. ¶¶ 13, 26.)  In April 2023, Plaintiff discovered new cracking and radically exacerbated fracturing of the concrete at the Property, including exterior walls and floors, most particularly to the northern side of the Property abutting the Neighboring Parcel.  (Id. ¶ 27.)  Plaintiff claims that the owners of the Neighboring Parcel and the contractors they hired failed to exercise ordinary care and skill in making the excavations, depriving Plaintiff’s land of its lateral support and threatening the integrity of Plaintiff’s property.  (Id. ¶ 32.) 

Plaintiff submitted a claim to Wesco, noting that the damage to the Property appeared to be the result of the ongoing large construction project at the Neighboring Parcel. (Id. ¶ 33.) The Moving Defendants commissioned a report by a “reputable engineer” that concluded: “The concrete and stucco cracks at the parking area, sidewalks, and building cladding are consistent as having resulted or been exacerbated by ground movement due to displacement of the shoring walls at the southeast corner of the neighboring excavation.” (Id. ¶¶ 33, 93-94.)  Plaintiff agrees that this was the “proper conclusion.” (Id. ¶ 100.)  Geotechnical engineers hired by Plaintiff confirmed the findings of the Moving Defendants’ engineer, namely, that the cause of the loss was faulty construction. (Id. ¶ 101.)  On July 3, 2023, Moving Defendants notified Plaintiff that they were denying her claim.  (Id. ¶ 95.)  

This action ensued.  As to Moving Defendants, Plaintiff has alleged claims for breach of contract, breach of the implied covenant of good faith and fair dealing, and violation of Business & Professions Code § 17200. 

This hearing is on Moving Defendants’ demurrer.  Moving Defendants argue that Plaintiff has failed to attach the Policy as an exhibit and has not plead its material terms in haec verba, and as a result, all of Plaintiff’s claims against them must fail.  Additionally, Moving Defendants argue the claims fail because the Policy contains an unambiguous Faulty Workmanship exclusion which precludes coverage for damage to the Property proximately caused by the other defendants.   

MEET AND CONFER 

Code Civ. Proc. § 430.41 requires that before the filing of a demurrer the moving party “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. § 430.41(a).)  The parties are to meet and confer at least five days before the date the responsive pleading is due. (Code Civ. Proc. § 430.41(a)(2).)  Thereafter, the moving party shall file and serve a declaration detailing their meet and confer efforts. (Code Civ. Proc. § 430.41(a)(3).)  Moving Defendants submit the Declaration of Linda Wendell, which attests the parties met and conferred by phone on January 24, 2025, which satisfies the meet and confer requirements.    

LEGAL STANDARD 

A demurrer to a complaint may be general or special. A general demurrer challenges the legal sufficiency of the complaint on the ground it fails to state facts sufficient to constitute a cause of action. (Code Civ. Proc., § 430.10, subd. (e).) The allegations in the complaint as a whole must be reviewed to determine whether a set of alleged facts constitutes a cause of action.¿(People v. Superior Court (Cahuenga's the Spot)¿(2015) 234 Cal.App.4th 1360, 1376.)¿A complaint need only meet fact-pleading requirements, which requires a statement of facts constituting a cause of action in ordinary¿and concise language, and should allege ultimate facts that, as a whole, apprise defendant of the factual basis of the claim. (Code Civ. Proc. §425.10(a)(1);¿Navarrete v. Meyer¿(2015) 237 Cal.App.4th 1276, 1284.) 

A special demurrer challenges other defects in the complaint, including whether a pleading is uncertain. (Code Civ. Proc., § 430.10, subd. (f).)  The term “uncertain” includes the issue of whether the pleading is “ambiguous and unintelligible.”  (Id.) A demurrer for uncertainty should be sustained if the complaint is drafted in such a manner that the defendant cannot reasonably respond, i.e., the defendant cannot determine what issues must be admitted or denied, or what counts are directed against the defendant. (Khoury v. Maly's of California, Inc. (1993) 14 Cal.App.4th 612, 616.) 

A demurrer on the ground of uncertainty is disfavored and should be sustained only when the complaint is so incomprehensible that the defendant cannot reasonably respond since ambiguities may be clarified in discovery.¿(Lickiss v. Financial indus. Regulatory Auth.¿(2012) 208 Cal.App.4th 1125, 1135.)  Uncertain allegations should be liberally construed in testing a complaint for adequacy against a demurrer, particularly when the facts that are uncertain are presumptively within defendant’s knowledge.¿(Childs v. State¿(1983) 144 Cal.App.3d 155, 160.)¿The particularity requirement in a pleading depends on the extent to which defendant, in fairness, needs detailed information the plaintiff can conveniently provide, while less particularity is required when defendant is assumed to have the knowledge. (Doheny Park Terrance Homeowners Ass'n, Inc. v. Truck Ins. Exch.¿(2005) 132 Cal.App.4th 1076, 1099.) 

In ruling on a demurrer, the court is guided by the following long-settled rules: The court treats the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law. ¿The court may also consider matters which may be judicially noticed. Further, the court gives the complaint a reasonable interpretation, reading it as a whole and its parts in their context. (Blank v. Kirwan¿(1985) 39 Cal.3d 311, 318.) 

Where a demurrer is sustained, leave to amend¿must be allowed where there is a reasonable possibility of successful amendment.¿(Goodman v. Kennedy (1976) 18 Cal.3d 335, 348.)¿The burden is on the plaintiff to show the court that a pleading can be amended successfully.¿(Id.;¿Lewis v. YouTube, LLC (2015) 244 Cal.App.4th 118, 226.)¿However, “[i]f there is any reasonable possibility that the plaintiff can state a good cause of action, it is error to sustain a¿demurrer¿without¿leave¿to¿amend.” (Youngman v. Nevada Irrigation Dist. (1969) 70 Cal.2d 240, 245). 

REQUEST FOR JUDICIAL NOTICE 

Moving Defendants request judicial notice of Wesco Businessowners Policy No. WBP1982557, effective from August 5, 2022 to August 5, 2023, issued to Mahin Ghaffari for the Property (the “Policy”), which is referenced in the Complaint (at ¶¶ 80, 84, 97). On demurrer, when a complaint incorporates a document by reference, but fails to attach it, the court may take judicial notice of the document.  (Ascherman v. General Reinsurance Corp.¿(1986) 183 Cal.App.3d 307, 310-311¿(affirming dismissal after demurrer sustained: court properly took¿judicial notice¿of terms stated in¿contract referenced in complaint, where the parties did not dispute the existence of the¿contract);¿Dryden v. Tri-Valley Growers¿(1977) 65 Cal.App.3d 990, 997¿(affirming dismissal after demurrer sustained: court properly took¿judicial notice¿of letters¿referenced in complaint).)  Accordingly, the Court grants Moving Defendants’ request for judicial notice.   

DISCUSSION 

Moving Defendants argue that Plaintiff fails to attach a copy of the policy or state its terms verbatim, and therefore, Plaintiff’s claims against them should be dismissed.  The Court disagrees. 

To properly allege a cause of action for¿breach of contract, a plaintiff must show, (1) the existence of the contract, (2) the plaintiff's performance or excuse for nonperformance, (3) the defendant's breach, and (4) the resulting damages to plaintiff. (Careau & Co. v. Security Pacific Business Credit, Inc. (1990) 222 Cal.App.3d 1371, 1388.) 

The general rule for pleading a breach of contract is that the Plaintiff must allege the existence of a contract and allege whether the contract is oral or¿written. (McKell v. Washington Mutual, Inc. (2006) 142 Cal.App.4th 1457, 1489.) The contract can be attached to the complaint and incorporated by reference, plead¿verbatim¿within the body of the complaint, or plead as to its¿legal¿effect¿through allegations.¿(Id.) 

Here, Plaintiff alleges Moving Defendants issued her a policy of commercial insurance.  She provides the specific policy number.  She states the effective dates of coverage.  She states that the policy covers damages to structures and improvements at the Property.  She quotes the portions of the policy she claims supports her claim of coverage.  She quotes the portions of the policy Moving Defendants used to deny coverage and explains why they are not a proper basis to deny coverage.  (Compl. ¶¶ 80-97.)  Based on the foregoing, the Court concludes Plaintiff has sufficiently alleged the legal effect of the contract at issue. 

Moving Defendants next argue that the policy excludes the loss claimed by Plaintiff.  The Court agrees. 

The Faulty Workmanship Exclusion states that there will be no coverage for “Negligent Work Faulty, inadequate or defective: (1) Planning, zoning, development, surveying, siting; (2) Design, specifications, workmanship, repair, construction, renovation, remodeling, grading, compaction; (3) Materials used in repair, construction, renovation or remodeling; or (4) Maintenance; of part or all of any property on or off the described premises.”  

The Faulty Workmanship Exclusion is unambiguous, therefore, the exclusion’s clear and explicit language governs. The Faulty Workmanship Exclusion clearly states that there is no coverage for faulty, inadequate or defective workmanship “of part or all of any property on or off the described premises.” (Emphasis added.)  Therefore, damages to Plaintiffs’ property which resulted from faulty workmanship off the described premises, as Plaintiffs allege in this case, are not covered under the Policy.     

While not controlling, Stephens v. Liberty Mutual, 2008 WL 480287 (U.S.D.C., N.D. Cal.), is persuasive authority.  There, the plaintiffs owned a school dormitory, which was adjacent to the Olympic Club.  The plaintiffs allege that their building suffered damage as a result of the demolition of an adjacent parking structure owned by the Olympic Club.¿The plaintiffs submitted a claim for damages to the defendant insurer.  The defendant insurer denied the claim on the ground it was excluded by the faulty workmanship clause in the policy.  The plaintiffs argued that the faulty workmanship clause was ambiguous and should be read to cover the finished product, but not the process that leads to the product.  The Stephens court rejected the argument, concluding the clause was unambiguous and applied to preclude coverage for property damage which resulted from construction and excavation performed on a neighboring property.   

So it is here.  The faulty workmanship clause in the policy at issue here is unambiguous in excluding coverage for faulty workmanship that occurs “on or off” Plaintiffs’ property.  The policy language does not require that the faulty, inadequate or defective workmanship be done at the direction of the owner and/or policyholder. 

Plaintiffs rely on Allstate Ins. Co. v. Smith,¿929 F.2d 447 (9th Cir. 1991).  There,  

a physician rented space in an office building for his medical practice. He bought an “all risk” commercial property policy from Allstate, which included exclusions for losses caused by “faulty workmanship” and rain. A portion of the roof was removed by a contractor hired¿to bring the building into compliance with earthquake standards. The contractor removed most of the roof but did not put a temporary cover over the exposed premises. It rained that night, and the doctor’s office equipment was damaged. He submitted a claim, which Allstate denied based on the “faulty workmanship” exclusion.  The doctor argued that the phrase “faulty workmanship” was ambiguous, as it could be interpreted as either (1) the flawed quality of a finished product, or (2) a flawed process.  

The Ninth Circuit found, under the facts of the case, that the term “faulty workmanship” was ambiguous, and consequently applied the construction most favorable to the doctor, the insured.¿ (Id. at 450.)  The court first found that failing to put a temporary cover over the premises would not be “faulty workmanship” under the “flawed product of a finished product” interpretation, because the roof was not completed at the time of the damage, and there was therefore no finished product or object to evaluate.¿ (Id.¿at 449;¿see also¿id.¿at 450¿(citing cases where courts found “faulty workmanship” based on a defect in the object of the workmanship).) 

The court noted that another section of the policy provided coverage for losses “involving collapse of a covered building . . . caused by . . . use of defective materials or methods of construction.”  Thus, the court concluded, if Allstate intended “faulty workmanship” to include losses resulting from flawed processes of construction, it could have borrowed language from the “collapse” section and stated, “We do not cover any loss or damage caused by . . . faulty . . . methods of construction.” The court determined that Allstate's failure to do so led to a reasonable inference that Allstate did not intend for “faulty workmanship” to mean faulty methods of construction.¿(Id.¿at 449-50.) 

Allstate is inapposite because it did not involve faulty construction.  Further, contrary to Plaintiffs’ argument, Allstate did not hold that faulty workmanship clauses should be read to cover the finished product, and not the process that leads to the product.  Allstate¿simply held that the exclusion was ambiguous, under the circumstances of that case, because it could be read to apply either to a finished product (the roof) or a process (the method of construction).  Under the circumstances of the present case, however, the exclusion is not ambiguous, as Plaintiffs could have no claim for losses caused by the finished product.  There is no question that the property damage to the Plaintiffs’ premises was allegedly caused by the workmanship process.  

Plaintiffs seek leave to amend the Complaint to allege that something other than their neighbor’s faulty construction was the cause of the damage to their Property.  Defendants oppose the request to amend because Plaintiffs never tendered a claim based on any alternative cause, and therefore, Defendants could not have acted improperly in failing to deny coverage based on a cause never previously asserted.  The Court agrees with Defendants.  Plaintiffs cannot assert that Defendants improperly denied their claim on a ground they never raised before.  The only basis for Plaintiffs’ claim was the faulty construction by their neighbor, and as discussed above, this claim is precluded by the faulty workmanship clause.   

CONCLUSION 

Based on the foregoing, the Court sustains the demurrer to the Complaint without leave to amend. 

DATED: March 14, 2025        ___________________________ 

Edward B. Moreton, Jr. 

Judge of the Superior Court