Judge Gail Killefer, Case 21STCV23639 2022-09-14 Tentative Ruling

TENTATIVE: KDC’s demurrer is sustained without leave to amend. Defendant to give notice.

This action arises out of contracts between Plaintiff Allen I. Mindlin and Defendants Citadel Environmental Service, Inc. (“Citadel”), Cirks Construction, Inc. dba KDC Construction (“KDC”), and Blue Top, Inc. (“Blue Top”) regarding real property Plaintiff owned at 9900 Balboa Boulevard, Northridge, California 91325 (the “Property”).

Plaintiff alleges that he entered into a lease with a third party, Starbucks Corporation (the “Tenant”), for the Property. On or about April 16, 2019, Plaintiff contracted with Citadel to perform environmental consulting services relating to asbestos on the Property. Allegedly, Citadel was contracted to identify extent and location of all existing asbestos, identify the whereabouts of asbestos on the Property, prepare a demolition-level asbestos survey (“Survey”) with a commercially reasonable plan for demolition of asbestos-containing materials, and removal of asbestos and other hazardous materials. Citadel performed the contracted services and represented to Plaintiff that all asbestos in the Property had been removed.

Tenant then contracted with Defendants KDC and Blue Top to perform “construction related activities,” including building a drive-through and demolition of structures located on the Property. During KDC’s construction, work was halted due to the discovery of additional asbestos beyond what Citadel had represented and removed. As such, Plaintiff incurred “additional monies and resources” to remove the remaining asbestos.

In his complaint, Plaintiff brings a claim against KDC for negligence, alleging Plaintiff was an “intended third party beneficiary” of the contract for services between Tenant and KDC. As such, Plaintiff alleges KDC “had a duty to perform [the contracted] work in reasonable, workmanlike manner and subject to industry standards.” Plaintiff alleges that KDC breached that duty, and caused Plaintiff damages, “including investigation costs.”

On April 19, 2022, the court sustained KDC’s demurrer as to the third cause of action of the Complaint (“April 19 Order”). On May 18, 2022, Plaintiff filed a First Amended Complaint (“FAC”) again alleging: (1) breach of contract against Citadel; (2) negligence against Citadel; (3) negligence against KDC and Blue Top; and (4) negligence per se against KDC and Blue Top.

KDC now demurs to the FAC’s third and fourth causes of action. Plaintiff opposes the demurrer.

A party has 30 days after service of the complaint to bring a demurrer to the complaint or cross-complaint. (CCP § 430.40(a).) The court has discretion to consider late demurrers. (Jackson v. Doe (2011) 192 Cal.App.4th 742, 750.)

Here, Plaintiff filed the FAC on May 18, 2022. KDC filed their Demurrer to the FAC on July 25, 2022, which is untimely per CCP § 430.40(a). Although the demurrer is untimely, the court will exercise its discretion to consider the demurrer and continue to analyze the parties’ arguments.

A demurrer is an objection to a pleading, the grounds for which are apparent from either the face of the complaint or a matter of which the court may take judicial notice. (CCP § 430.30(a); see also Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) The purpose of a demurrer is to challenge the sufficiency of a pleading “by raising questions of law.” (Postley v. Harvey (1984) 153 Cal.App.3d 280, 286.) The court “treat[s] the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law. . . .” (Berkley v. Dowds (2007) 152 Cal.App.4th 518, 525 (Berkley).) “In the construction of a pleading, for the purpose of determining its effect, its allegations must be liberally construed, with a view to substantial justice between the parties.” (CCP § 452; see also Stevens v. Sup. Ct. (1999) 75 Cal.App.4th 594, 601.) “When a court evaluates a complaint, the plaintiff is entitled to reasonable inferences from the facts pled.” (Duval v. Board of Trustees (2001) 93 Cal.App.4th 902, 906.)

The general rule is that the plaintiff need only allege ultimate facts, not evidentiary facts. (Doe v. City of Los Angeles (2007) 42 Cal.4th 531, 550.) “All that is required of a plaintiff, as a matter of pleading, even as against a special demurrer, is that his complaint set forth the essential facts of the case with reasonable precision and with sufficient particularity to acquaint the defendant with the nature, source and extent of his cause of action.” (Rannard v. Lockheed Aircraft Corp. (1945) 26 Cal.2d 149, 156-157.) “[D]emurrers for uncertainty are disfavored and are granted only if the pleading is so incomprehensible that a defendant cannot reasonably respond.” (Mahan v. Charles W. Chan Ins. Agency, Inc. (2017) 14 Cal.App.5th 841, 848, fn. 3, citing Lickiss v. Fin. Indus. Regulatory Auth. (2012) 208 Cal.App.4th 1125, 1135.) In addition, even where a complaint is in some respects uncertain, courts strictly construe a demurrer for uncertainty “because ambiguities can be clarified under modern discovery procedures.” (Khoury v. Maly’s of California, Inc. (1993) 14 Cal.App.4th 612, 616.)

Demurrers do not lie as to only parts of causes of action where some valid claim is alleged but “must dispose of an entire cause of action to be sustained.” (Poizner v. Fremont General Corp. (2007) 148 Cal.App.4th 97, 119.) “Generally it is an abuse of discretion to sustain a demurrer without leave to amend if there is any reasonable possibility that the defect can be cured by amendment.” (Goodman v. Kennedy (1976) 18 Cal.3d 335, 349.)

The elements of a¿negligence¿cause of action are the existence of a legal duty of care, breach of that duty, and proximate cause resulting in injury. (McIntyre v. The Colonies-Pacific, LLC¿(2014) 228 Cal.App.4th 664.)¿

“Since Plaintiff’s third cause of action for negligence argues Plaintiff was owed a duty since he was an intended third-party beneficiary, and Plaintiff’s Opposition seeks to provide supporting evidence for that contention, the third cause of action for negligence does not therefore include allegations for duties which arose outside of the contract between KDC and Tenant. As such, this court finds Plaintiff’s negligence cause of action to be a restatement of contractual obligations, rather than allegations of duties, breach, causation, and damages that arose outside of the contract between KDC and Tenant. Accordingly, the demurrer to the third cause of action is sustained.” (April 19 Order, 6.)

Here, Defendant KDC again contends that the third cause of action is insufficiently pled because the FAC maintains the same competing theories as the initial Complaint—namely that KDC owed him a contractual duty of care as he was an intended third-party beneficiary of the Tenant-KDC Agreement, but also that Plaintiff and KDC had a “special relationship” whereby KDC owed him a special duty of care. (Demurrer, 8-9.)

KDC again argues that the contract for construction services on Plaintiff’s Property between KDC and Tenant did not have a “motivating purpose” of benefitting Plaintiff; the intent to benefit Plaintiff is not manifest in the contract or FAC as Plaintiff has not alleged sufficient facts to show the contract had manifest intentions of benefitting the Plaintiff. (Demurrer, 9.) (Kalmanovitz v. Bitting (1996) 43 Cal.App.4th 311, 314.)

Second, KDC again contends that Plaintiff’s third cause of action based on negligence is barred under the economic loss rule. (Demurrer, 10-11.)

“A person may not ordinarily recover in tort for the breach of duties that merely restate contractual obligations. Instead, “‘[c]ourts will generally enforce the breach of a contractual promise through contract law, except when the actions that constitute the breach violate a social policy that merits the imposition of tort remedies.’” [Citations.]” (Aas v. Superior Court (2000) 24 Cal.4th 627, 643, superseded by statute on another ground as set out in Rosen v. State Farm General Ins. Co. (2003) 30 Cal.4th 1070, 1079–1080.)

Here, KDC again explains, Plaintiff only alleges breaches of duties owed which arose due to contractual obligations between KDC and Tenant, of which Plaintiff alleges he was an intended third-party beneficiary. (Demurrer, 10-11.) “Plaintiff’s claim is nothing more than a breach of contract claim restated as a negligence claim. Plaintiff may not recover in tort for the breach of duties that merely restate contractual obligations.” (Demurrer, 10.)

KDC also contends that any allegations of a “special relationship” are not supported by sufficient facts or supporting authorities. (Demurrer, 11.) KDC explains that “when a plaintiff seeks to recover economic damages without personal injury or property damage, courts resolve the duty issue by applying the criteria set forth in Biakanja v. Irving (1958) 49 Cal.2d 647.” (Id.) KDC further contends that since no breach of contractual duty has been pled against KDC, Plaintiff’s reliance on Biakanja is unavailing. (Id.)

As set forth by the Biakanja court, the facts the court balances in order to find such a special relationship include: “(1) the extent to which the transaction was intended to affect the plaintiff; (2) the foreseeability of harm to the plaintiff; (3) the degree of certainty that the plaintiff suffered injury; (4) the closeness of the connection between the defendant’s conduct and the injury suffered; (5) the moral blame attached to the defendant’s conduct; and (6) the policy of preventing future harm.” (Demurrer, 12; citing Biakanja, supra at 650-1.) As such, KDC also contends that aside from the first factor, “the FAC makes no attempt to identify any of the Biakanja factors or to plead any facts showing how they might be met. The FAC provides only the bare legal conclusion that a special relationship existed between Plaintiff and KDC.” (Demurrer, 12.)

Third, KDC again contends that the FAC only alleges purely economic losses caused by KDC. KDC states that in negligence causes of actions, a defendant does not owe a duty to protect against “purely economic losses.” (Southern California Gas Leak Cases (2019) 7 Cal.5th 391, 398-400 [defining economic losses as “pecuniary or commercial loss that does not arise from

actionable physical, emotional or reputational injury to persons or physical injury to property”].)

In opposition, Plaintiff argues that KDC owed a duty of care to Plaintiff under Civil Code §1714, and explains that the FAC has alleged that beyond economic losses, damage to the Property was also suffered. (Opp., 7-8; citing FAC ¶¶ 22, 24, 38, 40, 44, 47.) Plaintiff further contends he has merely pled alternate theories of liability against KDC. (Opp., 8-9.) Plaintiff further affirms the “FAC clearly alleges want of ordinary care or skill in the management by KDC in performing the construction/demolition at the Property -which statutory duty KDC breached.” (Opp., 10.) While Plaintiff points to paragraphs 20-24, 36-39, and 43-46 of the FAC in support of this contention, Plaintiff does not show, beyond conclusory claims, that sufficient allegations have been made against KDC in the FAC to show a violation of a duty of care owed and resulting damages, since the referenced paragraphs of the FAC only speak of the actions of KDC and Blue Top collectively, and without the necessary specificity.

Plaintiff also contends that since the Property was owned by Plaintiff, a benefit to the Plaintiff was a “motivating purpose” of the Agreement. (Opp., 11.) However, Plaintiff again fails to point to where in the Agreement evinces an intention to benefit Plaintiff, or circumstances which manifest such an intention to benefit Plaintiff as a motivating purpose of the agreement.

Plaintiff also contends that the Biakanja factors are satisfied, but only points to paragraphs of the FAC which include conclusory allegations to that effect. (Opp., 13-14.)

Lastly, Plaintiff contends that the economic loss rule does not preclude Plaintiff’s claims, again relying on section 1714. (Opp., 16.) However, Plaintiff fails to provide any supporting authority for its contention that the economic loss rule does not apply here.

In Reply, KDC contends “Plaintiff’s situation is materially distinguishable from the narrow circumstances of the plaintiffs in Biakanja, J’Aire, and Beacon. Unlike those plaintiffs, Plaintiff has not alleged that he had an interest in the subject of the Starbucks-KDC Agreement, i.e., the construction of a drive-through. Plaintiff has not alleged that he was relying on KDC’s performance of the Starbucks-KDC Agreement for anything that was contemplated in that contract. Plaintiff has not alleged that he had a present or future financial connection to the Project. Whether or not KDC performed its contract had no effect on Plaintiff’s business dealings, even incidentally.” (Reply, 5.)

KDC also contends that Plaintiff’s circumstances do not satisfy the Biakanja factors, as: (1) the FAC is “entirely devoid” of any facts alleging more than a “tangential interest” in the Tenant-KDC Agreement, beyond simply collecting rent; (2) there was no foreseeability of harm to Plaintiff as KDC was hired simply to construct a drive-through; (3) there is also no certainty of injury as no facts are alleged that KDC observed Citadel fail to identify and remove all asbestos-containing material; (4) there are no allegations that KDC knew asbestos still existed in the structure of the Property; (5) there are no allegations that KDC controlled Citadel’s performance in removing the asbestos; and (6) Plaintiff can protect himself without making this claim against Tenant’s contractor, KDC. (Reply, 6-8.) KDC also affirms that Plaintiff has not explained how the economic loss rule does not apply to the circumstances of this case. (Reply, 9.) The court agrees.

As such, this court again finds Plaintiff’s negligence cause of action to be a restatement of contractual obligations, rather than allegations of duties, breach, causation, and damages that arose outside of the contract between KDC and Tenant. Accordingly, the demurrer to the third cause of action is again sustained.

Under the negligence per se doctrine, which is codified at Evidence Code § 669, negligence is presumed if a plaintiff establishes four elements: (1) The defendant violated a statute or regulation; (2) the violation caused the plaintiff's injury; (3) the death or injury resulted from the kind of occurrence the statute or regulation was designed to prevent; and (4) the plaintiff was one of the class of persons the statute or regulation was intended to protect. The first two elements are normally questions for the trier of fact. The last two elements are determined by the trial court as a matter of law. (Daum v SpineCare Medical. Group, Inc. (1997) 52 Cal. App. 4th 1285; Norman v Life Care Centers of America, Inc. (2003) 107 Cal. App. 4th 1233, 1246)

The FAC alleges violations of Rule 1403 of the South Coast Air Quality Management District, codified by 40 CFR §61.145, et seq. (FAC ¶42.)

First, KDC correctly explain that negligence per se is not a separate cause of action, but “is an evidentiary presumption.” (Demurrer, 13; citing Evid. Code § 669.) KDC explains the regulation at issue is “part of the National Emission Standards for Hazardous Air Pollutants (“NESHAP”) and is authorized by the 1970 Clean Air Act.” (Demurrer, 14.) KDC contends that while Plaintiff has alleged a violation of a regulation, Plaintiff “has failed to plead facts establishing the second, third, and fourth elements of negligence per se.” (Id.)

KDC contends that the FAC has only pled “monetary injury” to Plaintiff, as opposed to the death, personal injury, or property damage required to sustain a claim under negligence per se. (Demurrer, 14-15.) KDC further contends “Plaintiff has not alleged that he was exposed to airborne asbestos or contracted any asbestos-related injury or illness,” and therefore has not shown an injury of the type the regulation sought to prevent. (Demurrer, 15.) Lastly, KDC contends “[t]he class of persons NESHAP was adopted to protect is people who are exposed to airborne asbestos and other hazardous pollutants. ... Plaintiff does not plead that he was exposed to asbestos or physically harmed by asbestos as a result of KDC’s alleged negligence.” (Id.)

In opposition, Plaintiff points to conclusory claims made in the FAC that a violation of a statute has occurred, which caused damage to Plaintiff, resulting in an injury which the regulation was designed to prevent, and Plaintiff was of the class of persons who was sought to be protected under the regulation. (Opp., 17; citing FAC ¶¶42-6.) Plaintiff further argues the FAC alleges damage to property, alongside the “monetary injury” alleged. (Id.; FAC ¶47.) After making such conclusory claims, Plaintiff states, “the Court must accept as true all material facts alleged in the complaint.” (Id.) However, Plaintiff fails to distinguish between a material fact and a conclusory allegation here. While the court has to accept all material allegations of fact in the complaint at the demurrer stage, the court is under no guidance to accept as true all conclusory allegations or inferences as well.

In reply, KDC contends “Plaintiff cannot with a straight fact contend that the Clean Air Act was designed to prevent damage to billboards.” (Reply, 10, n.2.) “Plaintiff must allege facts showing that he suffered the kind of harm that NESHAP was designed to prevent, and that he belonged to the class of persons that NESHAP was adopted to protect... Plaintiff does not show how the FAC establishes these necessary elements.” (Reply, 9-10.) The court agrees.

As in the FAC, Plaintiff’s opposition relies on mere conclusions that a violation of a regulation occurred, that the violation caused a damage of the kind the regulation sought to prevent, and that the violation caused damage to a person the regulation sought to protect. Plaintiff’s opposition, and the FAC, fail to show how the damage to the billboard on the Property was a type of harm the Clean Air Act, and this regulation specifically, sought to prevent. Plaintiff’s opposition further fails to explain how the FAC shows that Plaintiff, as owner of the Property, was an intended beneficiary of the cited regulation, beyond mere conclusory language to that effect.

[1] KDC submits the declaration of their counsel, Thomas W. Holloman (“Holloman”), to demonstrate compliance with statutory meet and confer requirements. Holloman attests that counsel corresponded with Plaintiff’s counsel telephonically on July 7, 2022 and July 18, 2022, but these efforts were “ultimately unsuccessful.” (Holloman Decl. ¶¶ 2-3.) The Holloman Declaration is sufficient for purposes of CCP §§ 430.41 and 435.5.