TENTATIVE: The Demurrer to the seventh, eighth, ninth, tenth cause of action is sustained with 10 days leave to amend. The demurrer to the third cause of action is overruled. The demurrer to the second, fourteenth, and sixteenth causes of action is sustained without leave to amend. The Court continues the Case Management Conference to February 23, 2024, at 8:30 a.m. and sets a Non-Appearance OSC Re: Amended Complaint for the same date and time. Defendant Welker to give notice.

On July 10, 2023, Andrew Kipper (“Plaintiff”) filed a Complaint against Irwin Welker; Aaron Kuhl, Kuhl Design, Inc.; Arum Kim-Santiago, SDCLA, Inc.; Saeed Zolfaghari; Vista Structural, Inc.; Armando Renteria; AR Construction General Contractor, Inc.; Jose Garcia; Garcia Landscape Design; Juan Garcia’s Lawn Service; Markus Barrington; Dan Stueve; Dan Stueve Properties; Dream Team Real Estate Consultants, Inc.; and Does 1 to 100.

1) Negligence (Against Defendants Welker, Kuhl, Kuhl Design, Santiago, Santiago Design, Zolfaghari, Vista Structural, Renteria, AR Construction, Garcia, Garcia Landscape, Garcia’s Lawn Service, and DOES 1-100);

2) Negligence Per Se (Against Defendants Welker, Kuhl, Kuhl Design, Santiago, Santiago Design, Zolfaghari, Vista Structural, Renteria, AR Construction, Garcia, Garcia Landscape, and DOES 1-100);

3) Violation of California Business and Professions Code §§ 7159 and 7160 (Against Defendants Welker and DOES 1-100);

4) Negligent Supervision and Retention (Against Defendants Welker, Kuhl, Kuhl Design, Santiago, Santiago Design, Zolfaghari, Vista Structural, Renteria, AR Construction);

5) Violation of California Civil Code § 1088 (Against Defendants Barrington, Stueve, Stueve Properties, and Dream Team);

6) Violation of California Civil Code § 2079 (Against Defendants Barrington, Stueve, Stueve Properties, and Dream Team);

7) Intentional Misrepresentation (Against Defendants Welker, Barrington, Stueve, Stueve Properties, Dream Team, and DOES 1-100);

8) Negligent Misrepresentation(Against Defendants Welker, Barrington, Stueve, Stueve Properties, Dream Team, and DOES 1-100);

9) Intentional Nondisclosure of Material Facts(Against Defendants Welker, Barrington, Stueve, Stueve Properties, Dream Team and DOES 1-100);

10) Negligent Nondisclosure of Material Facts(Against Defendants Welker, Barrington, Stueve, Stueve Properties, Dream Team, and DOES 1-100);

11) Violation of California Civil Code §1102, et. seq.(Against Defendants Welker and DOES 1-100);

13) Breach of the Implied Covenant of Good Faith and Fair Dealing (Against Defendant Welker, and DOES 1-100);

15) Violation of California Business and Professions Code §7044 (Against Defendants Welker and DOES 1-100);

16) Breach of Implied Warranties (Against Defendants Welker, Kuhl, Kuhl Design, Santiago, Santiago Design, Zolfaghari, Vista Structural, Renteria, AR Construction, Garcia, Garcia Landscape, Garcia’s Lawn Service and DOES 1-100);

18) Breach of Implied Covenant to Perform Work in a Good and Competent Manner (Against Defendants Welker, Kuhl, Kuhl Design, Santiago, Santiago Design, Zolfaghari, Vista Structural, Renteria, AR Construction, Garcia, Garcia Landscape, Garcia’s Lawn Service, and DOES 1-100).

On September 20, 2023, Plaintiff dismissed Vista Structural Inc. and Saeed Zolfaghari.

On September 18, 2023, Defendant Irwin Welker (“Welker”) filed a demurrer to Plaintiff’s Complaint. Plaintiff opposes the Motion. The matter is now before the court.

Discussion

Where pleadings are defective, a party may raise the defect by way of a demurrer. (Coyne v. Krempels (1950) 36 Cal.2d 257, 262.) A demurrer tests the sufficiency of a pleading, and the grounds for a demurrer must appear on the face of the pleading or from judicially noticeable matters.¿ (CCP § 430.30(a); Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) In evaluating a demurrer, the court accepts the complainant’s properly pled facts as true and ignores contentions, deductions, and conclusory statements. (Daar v. Yellow Cab Co. (1976) 67 Cal.2d 695, 713; Serrano v. Priest (1971) 5 Cal.3d 584, 591.) Moreover, the court does not consider whether a plaintiff will be able to prove the allegations or the possible difficulty in making such proof. (Fisher v. San Pedro Peninsula Hospital (1989) 214 Cal.App.3d 590, 604.)

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 complainant to show the Court that a pleading can be amended successfully. (Id.)

Defendant Irwin Welker (“Defendant”) demurrers to the following causes of action in Plaintiff’s Complaint: (2) Negligence Per Se, (3) Violation of Bus. & Prof. Code sections 7159 and 7160, (7) Intentional Misrepresentation, (8) Negligent Misrepresentation, (9) Intentional Nondisclosure of Material Facts, (10) Negligent Nondisclosure of Material Facts, (14) Strict Liability, and (16) Breach of Implied Warranties.

The court notes that both parties failed to comply with Cal. Rules of Court rule 3.113(d) because the moving and opposition papers exceed the 15-page limit and neither party sought leave of court to submit a longer memorandum. If in the future the parties fail to obtain leave of court to exceed the 15-page limit, the court will consider the papers untimely filed and exercise its discretion not to consider them. (CRC, rules 3.1113 (g) and 3.1300 (d).)

On or about December 4, 2020, Plaintiff purchased the residential real property located at 6226 Maryland Drive in Los Angeles (the “Property”) for approximately $1,680,000. (Compl. ¶ 43.) Plaintiff alleges that he believes Defendant Irwin Welker (“Welker”) purchased the Property with the intent of “flipping” the property by remodeling it and selling it for a quick profit. (Compl. ¶ 43.) The Complaint alleges that Between December 2020 and June 2022, Welker applied for two permits through his agent, Defendant Arum Kim-Santiago (“Santiago”), for work to be performed on the residence. (Compl. ¶ 45, Ex. A, B.)

The Complaint alleges that Welker misrepresented that he was an “owner-builder” exempt from the Contractor’s State License Law because: “First Welker did not intend to and did not perform the work himself. Nor did Welker intend to and did not have the work performed by or through his own employees with wages as their sole compensation. Second, Welker did intend to and did not exclusively contract with licensed contractors.” (Compl. ¶ 47.) Instead, Welker used unlicensed contractors to perform the work. (Comp. ¶ 48.) Welker listed the Property for sale on or about June 23, 2022, about 1.5 years of purchasing it. (Compl. ¶ 51.)

The Complaint alleges that Defendants Barrington, Stueve, Defendants Stueve Properties, and Dream Team, as agents of Welker, represented that the Property was ““fully restored and reimagined top to bottom,” and that it “features all new mechanical systems as well so nothing was left untouched!” when in fact the property contained “dozens of patent and latent defects, was not issued a Certificate of Occupancy, and was completely uninhabitable” at the time the representations were made on the California Multiple Listing Service (“MLS”). (Compl. ¶ 51, Ex. C.) Defendant Kaul and Kuhl Design, as agents of Welker, made similar representation on the Kuhl Design Instagram page. (Compl. ¶ 52, Ex. D.)

When Plaintiff toured the home on June 24, 2022, Defendants concealed the condition of the garage and the fact that the garage flooring was in poor condition and no lighting was installed in the garage, by denying Plaintiff access by claiming that the garage door remote was “missing.” (Comp. ¶ 53.) In reliance on Defendant’s representation about the Property, Plaintiff made an offer to purchase the Property and entered into a written purchase agreement for $3,400,000. (Compl. ¶ 54, Ex. E.)

On July 1, 2022, Defendant Welker expressly represented to Plaintiff “in writing via a Real Estate Transfer Disclosure Statement, that he was not aware of any structural modifications or other alterations or repairs made without necessary permits or not in compliance with building codes.” (Compl. ¶ 55, Ex. F.) On July 1, 2022, Defendant Welker via a Seller Property Questionnaire, also represented that “he was not aware of any past or present material facts or other significant items affecting the value or desirability of the Home.” (Compl. ¶ 56.) Welker explicitly represented that the Property “was renovated top to bottom. A new addition was added. All new mechanical systems, plumbing, electrical, etc. and that [t]he entire home was remodeled top to bottom to code. All new systems and fixtures. New roof, stucco, insulation, etc.” (Compl. ¶ 56, Ex. G.) On July 11, 2022, Defendants Barrington, Stueve, Stueve Properties, and Dream Team issued an Agent Visual Inspection Disclosure Form, falsely attesting that every room had been fully remodeled and was in great condition. (Comp. ¶ 59, Ex. H.)

After the July 7, 2022, inspection revealed certain issues in need of repair, the parties agreed to lower the purchase price to $3,255.00 with escrow to close on August 12, 2022. (Compl. ¶¶ 58, 61.) However, Defendants failed to inform Plaintiff that the Certificate of Occupancy—the final document in the permit process for construction that confirms that the property is safe to live in, that indicates that the Property is in compliance with the applicable building codes and indicates that the property is fit for use—had not been issued and remains unissued at the time of the filing this action. (Compl. ¶ 62.) The Complaint alleges that Welker added Addendum 3, to the Purchase Agreement and Sale Agreement (“PSA”) to hide the significance that no Certificate of Occupancy had been issued. (Comp. ¶¶ 65, 67.) Escrow closed on the Property on or about August 12, 2022. (Compl. ¶ 68.) The Complaint alleges that after purchasing the home, Plaintiff noticed several patent and latent construction defects due to Defendants not complying with the Building Code, resulting in Damage to Plaintiff. (Compl. ¶¶ 69-74.)

“[T]he doctrine of negligence per se is not a separate cause of action but creates an evidentiary presumption that affects the standard of care in a cause of action for negligence.” (Millard v. Biosources, Inc. (2007) 156 Cal.App.4th 1338, 1353, fn. 2.) “Under the doctrine, ‘the plaintiff ‘borrows' statutes to prove duty of care and standard of care.’ ”(Das v. Bank of America, N.A. (2010) 186 Cal.App.4th 727, 738 citing Johnson v. Honeywell Internat. Inc. (2009) 179 Cal.App.4th 549, 558 (Johnson).) “The doctrine of negligence per se does not provide a private right of action for violation of a statute.” (Johnson at p. 556.)

“The negligence per se doctrine is codified in Evidence Code section 669, under which negligence is presumed if the plaintiff establishes four elements: (1) the defendant violated a statute, ordinance, or regulation of a public entity; (2) the violation proximately caused death or injury to person or property; (3) the death or injury resulted from an occurrence of the nature of which the statute, ordinance, or regulation was designed to prevent; and (4) the person suffering the death or the injury to his person or property was one of the class of persons for whose protection the statute, ordinance, or regulation was adopted. The first two elements are normally questions for the trier of fact, while the latter two elements are determined by the trial court as a matter of law.” (Galvez v. Frields (2001) 88 Cal.App.4th 1410, 1420.)

The second cause of action alleges that Defendant Welker failed to comply with Bus. & Prof. Code § 7044 by being an owner who builds or improves the property with the intent to sell the property, did not personally perform the work or employ workers with wages as their sole compensation and hired only unlicensed contractors to perform the work, and sold more than four single-family residences in the 2019 to 2020 calendar year. (Compl. ¶ 85.) The Property was also not Welker’s personal residence. (Compl. ¶ 86.) Welker is also alleged to have violated Pen. Code § 118 by falsely stating under penalty of perjury on the Owner-Builder Declarations, that he would abide by all owner-builder requirements. (Compl. ¶ 88.) Welker is also alleged to have violated Bus. & Prof. Code § 7028 by engaging in the business of, or acting in the capacity of, a contractor without being licensed. (Compl. ¶ 89.)

Defendant Welker demurs to the second cause of action on the basis that it is duplicative of the first cause of action for negligence and the alleged statutory violations fail to establish a standard of care with respect to the work performed on the Property. The court agrees that the second cause of action is not properly pled because Plaintiff fails to allege how violations of Bus. & Prof. Code §§ 7044 and 7028 and Pen. Code § 118 proximately caused injury to Plaintiff or his property, that the injury “resulted from an occurrence of the nature which the statute, ordinance, or regulation was designed to prevent,” and that Plaintiff was a member of the class of persons sought to be protected by the statute, ordinance, or regulation. (Evid. Code, § 699.) Without such facts, the court cannot determine if the Plaintiff has pleaded facts to support an evidentiary presumption of negligence per se.

As Plaintiff’s Opposition does not address the second cause of action, the demurrer to the second cause of action is sustained without leave to amend.

C. Third Cause of Action - Violation of Bus. & Prof. Code §§ 7159 and 7160

Defendant Welker argues that Bus. & Prof. Code § 7159 does not apply because the Complaint alleges that the contract related to a Repair Request wherein Welker agreed to all repairs, except the crawl space. (Compl. ¶ 101.) Moreover, because escrow did not close until August 12, 2022, Plaintiff was not yet the owner of the residence such that there was no “home improvement contract” “between contractor and an owner.” (Bus. & Prof. Code, § 7159(b).) Therefore, the agreement between Plaintiff and Welker did not meet the definition of “home improvement contract” as outlined in section 7159. Hence, Bus. & Prof. Code § 7160 also does not apply.

In opposition, Plaintiff argues that the fact that Plaintiff was not yet the owner of the property should not prevent the enforcement of section 7159. Plaintiff fails to point to language in section 7159 or in the Bus. & Prof. Code that would support a finding that the Legislature intended “owner” to apply to buyers in the process of purchasing a property. Moreover, case law supporting “a strong public policy in favor of protecting the public against unscrupulous and/or incompetent contracting work” refers to Bus. & Prof. Code § 7031 and the definition of “contractor” and not section 7159 and the definition of “owner.” (Vallejo Development Co. v. Beck Development Co. (1994) 24 Cal.App.4th 929, 938.) The Contractors State License Law (CSLL) provides ‘a comprehensive scheme which governs contractors doing business in California.’ [Citation.]” (Judicial Council of California v. Jacobs Facilities, Inc. (2015) 239 Cal.App.4th 882, 894.)

Although the definition of who is a “contractor” is meant to be applied broadly, Plaintiff fails to point to case law that would permit the court to find that a person about to purchase a home qualifies as “owner” under section 7159. Bus. & Prof. § 4025(b) applies a broad definition to the word “Person” which includes “an individual, a firm, partnership, corporation, limited liability company, association or other organization, or any combination thereof.” (Bus. & Prof. Code, § 7025(b).) However, when drafting the definition of “home improvement contract,” the Legislature elected to apply the definition to an agreement between a contractor and an “owner” or “tenant,” not a future or prospective owner.

For the reasons set forth above, the court agrees that section 7159 does not apply to Defendant Welker. However, section 7160 states “[a]ny person”, supporting the finding that section 7160 applies to Plaintiff and may be alleged against Defendant Welker. “A demurrer must dispose of an entire cause of action to be sustained.” (Fremont Indemnity Co. v. Fremont General Corp. (2007) 148 Cal.App.4th 97, 119.) Because Defendant Welker's demurrer is only partially successful in disposing of the third cause of action, the demurrer to the third cause of action is overruled.

D. Seventh, Eighth, Ninth, and Tenth Causes of Action - Intentional Misrepresentation, Negligent Misrepresentation, Intentional Nondisclosure of Material Facts, Negligent Nondisclosure of Material Facts

“In California, fraud must be pled specifically; general and conclusory allegations do not suffice.” (Lazar v. Superior Court (1996) 12 Cal.4th 631, 645 (Lazar).) “Causes of action for intentional and negligent misrepresentation sound in fraud and, therefore, each element must be pleaded with specificity. (Daniels v. Select Portfolio Servicing, Inc. (2016) 246 Cal.App.4th 1150, 1166 disapproved on other grounds by Sheen v. Wells Fargo Bank, N.A. (2022) 12 Cal.5th 905.) Specificity “necessitates pleading facts which show how, when, where, to whom, and by what means the representations were tendered.” (Lazar at p. 631.)

Defendant Welker asserts that Plaintiff’s fraud claims are not pled with the requisite specificity and instead make conclusory statements and fail to show justifiable reliance or caution.

The seventh and eighth causes of action relate to statements made in the MLS listing, describing the home as “fully restored and reimagined top to bottom” such that “nothing was left untouched!” despite the home containing patent and latent defects, without a Certificate of Occupancy, and the Property being uninhabitable. (Compl. ¶¶ 136, 151.) Plaintiff fails to allege who made the representations on the MLS listing and why the representations were false. Plaintiff also fails to state that he reviewed the MLS listing and relied on said statement before purchasing the Property.

The seventh and eighth causes of action also state that representations were made by Defendant Welker on July 1, 2022, in writing via the Real Estate Transfer Disclosure Statement wherein Welker asserted that he was not aware of any structural modification, alterations, or repairs made without the necessary permits or not in compliance with building codes. (Compl. ¶¶ 133, 152.) On that same day, Welker also asserted in the Seller Property Questionnaire that he was not aware of any material facts or defects affecting the value or desirability of the Home. (Compl. ¶¶ 138, 153.) The court agrees that Plaintiff fails to allege scienter, meaning that Welker knew that modifications had been made without the necessary permit or compliance with the applicable building codes. Plaintiff also fails to identify the noncompliant modifications. As to defects existing in the Property, Plaintiff again fails to allege scienter and what the material defects were that affected the desirability of the Home.

Based on the above, the demurrer to the seventh and eighth causes of action is sustained with leave to amend.

The ninth cause of action for intentional nondisclosure alleges that Defendant knew but failed to disclose that work on the Property was performed by unlicensed contractors, that certain work was not permitted or in compliance with the building codes, and that no Certificate of Occupancy had been issued, and represented that the non-issuance of the Certificate of Occupancy was a minor error. (Compl. ¶¶ 70, 168.) The Property also lacked HVAC heating throughout the Property. (Compl. ¶ 168.) These facts were not disclosed prior or after the purchase of the home. (Compl. ¶ 169.) Plaintiff alleges that the concealment and nondisclosure of these facts were intended to mislead Plaintiff and induce him to purchase Property. Had Plaintiff known these facts, he would not have purchased the home or allowed escrow to close. (Compl. ¶¶ 169 -173.)

The tenth cause of action for Negligent Nondisclosure alleges that Defendants knew or should have known that the work performed on the Property was performed by unlicensed contractors and the work was not permitted or in compliance with building codes and that no Certificate of Occupancy had been issued, and that the Property lacked HVAC heating. (Compl. ¶ 179.) The nondisclosure of these facts caused Plaintiff to be misled about the condition and quality of the Property such that had Plaintiff known, he would not have purchased the Property. (Compl. ¶ 180-183.)

The Complaint fails to explain how Addendum 3, which stated that a Certificate of Occupancy had not been issued, constituted an omission or nondisclosure and who was obligated to disclose that fact to Plaintiff. Plaintiff fails to specify what work failed to comply with the building codes, and what specific building codes were violated. Plaintiff also fails to allege which specific Defendants failed to inform Plaintiff that the Property lacked HVAC heating and why those Defendants were obligated to make such a disclosure.

Defendant also points out that Exhibit E informs the buyer that “Seller and Agents may not be aware of all defects affecting the Property or other factors that Buyer considers important. Property improvements may not be built according to code, in compliance with current Law, or have had all required permits issued and/or finalized.” (Compl. Ex. E at p. 5 of 16.) Plaintiff fails to point out how Defendants may still be held liable despite warning Plaintiff that some improvements may not be up to code and not all permits issued.

Based on the above, the demurrer to the ninth and tenth causes of action is sustained with leave to amend.

Plaintiff’s fourteenth cause of action is premised on the fact that Defendant Welker was a builder as defined by Civ. Code § 895 and he failed to comply with the requirements of section 895. (Compl. ¶¶ 209, 210.) The Right to Repair Act (the “Act”) is codified at Civ. Code §§ 895-945.5. (McMillin Albany LLC v. Superior Court (2018) 4 Cal.5th 241, 247.) The Act “sets forth detailed statewide standards that the components of a dwelling must satisfy. It also establishes a prelitigation dispute resolution process that affords builders notice of alleged construction defects and the opportunity to cure such defects, while granting homeowners the right to sue for deficiencies even in the absence of property damage or personal injury.” (Id. at p. 247.)

Plaintiff alleges he is not required to comply with the prelitigation requirements because Welker did not record on title a notice of the prelitigation procedures and did not provide notice that these procedures impact Plaintiff’s legal rights as a buyer in violation of Civ. Code § 912(f). (Compl. ¶ 211.)

Defendant Welker argues that section 895 does not apply to residences that are being renovated, remodeled, or resold because the Act applies “to original construction intended to be sold as an individual dwelling unit.” (Civ. Code, § 896.) “This title applies only to new residential units where the purchase agreement with the buyer was signed by the seller on or after January 1, 2003.” (Civ. Code, § 938.) “Having considered the entire statutory scheme, we conclude that the Legislature intended that all claims arising out of deficiencies in residential construction, involving new residential units where the purchase agreement was signed on or after January 1, 2003 (§ 938), with limited exceptions not relevant here, be subject to the standards and requirements of the Act[.]” (Homes, Inc. v. Superior Court Elliott (2016) 6 Cal.App.5th 333, 341.) Therefore, the Act does not apply to Plaintiff’s claims because the Property was originally built in 1928 and is not “new residential unit” under the Act. (Compl. ¶¶ 31, 32, Ex. C.)

Plaintiff fails to oppose the demurrer to the fourteenth cause of action. Accordingly, the demurrer is sustained without leave to amend.

The sixteenth cause of action alleges that Defendants breached the warranty by not performing work in a reasonably good and workmanlike manner, including failing to comply with the building code requirements, no Certificate of Occupancy, lack of HVAC heating, and numerous defects in the work performed. (Compl. ¶ 222.)

Defendant Welker argues that the sales contract disclaimed any implied warranties by the inclusion of “As-Is” provision. (Compl. Ex. E, at p 5, ¶ 7(B)(1).) Moreover, the Property was not a new consumer good for implied warrant to attach under the Song-Beverly Consumer Warranty Act. Under the Song-Beverly Act “every retail sale of consumer goods includes an implied warranty by the manufacturer and the retail seller that the goods are merchantable unless sold “ ‘as is' ” or “ ‘with all faults.’ ” (Pierce v. Western Surety Co. (2012) 207 Cal.App.4th 83, 90 [internal citation omitted].)

The Plaintiff’s opposition fails to address the demur to the sixteenth cause of action. Therefore, the demur to the sixteenth cause of action is sustained without leave to amend.

The demurrer to the seventh, eighth, ninth, tenth cause of action is sustained with 10 days leave

to amend. The demurrer to the third cause of action is overruled. The demurrer to the second,

fourteenth, and sixteenth causes of action is sustained without leave to amend. The Court

continues the Case Management Conference to February 23, 2024, at 8:30 a.m. and sets a Non-

[1] Pursuant to CCP § 430.41, the meet and confer requirement has been met. (Hazen Decl. ¶ 2.)

HEARING DATE: Friday, January 19, 2024

CASE NUMBER: 23STCV16022

CASE NAME: Andrew Kipper v. Irwin Welker, et al.

MOVING PARTY: Defendants Arum Kim-Santiago and SDCLA, Inc.

OPPOSING PARTY: Plaintiff Andrew Kipper

TRIAL DATE: Not Set

PROOF OF SERVICE: OK

PROCEEDING: Motion to Strike Punitive Damages and Request for Attorney Fees

OPPOSITION: 22 December 2023

REPLY: 29 December 2023

TENTATIVE: Santiago Defendants’ motion to strike punitive damages from the first, second, and fourth causes of action is granted with 10 days leave to amend. The Santiago Defendants’ request to strike attorney’s fees from the first, second, fourth, sixteenth, and eighteenth causes of action is granted without leave to amend. The Court continues the Case Management Conference to February 23, 2024, at 8:30 a.m. and sets a Non-Appearance OSC Re: Amended Complaint for the same date and time. Santiago Defendants to give notice.

Background

The Complaint alleges 18 causes of action: