Judge: Gregory Keosian, Case: 21STCV07384, Date: 2023-08-08 Tentative Ruling

Case Number: 21STCV07384    Hearing Date: August 8, 2023    Dept: 61

I.                   DEMURRER

A demurrer should be sustained only where the defects appear on the face of the pleading or are judicially noticed. (Code Civ. Pro., §§ 430.30, et seq.) A court should sustain a demurrer if a complaint does not allege facts that are legally sufficient to constitute a cause of action. (See id. § 430.10, subd. (e).) As the Supreme Court held in Blank v. Kirwan (1985) Cal.3d 311: “We treat the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law. . . . Further, we give the complaint a reasonable interpretation, reading it as a whole and its parts in their context.” (Id. at p. 318; see also Hahn. v. Mirda (2007) 147 Cal.App.4th 740, 747 (“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.”))

“In determining whether the complaint is sufficient as against the demurrer … if on consideration of all the facts stated it appears the plaintiff is entitled to any relief at the hands of the court against the defendants the complaint will be held good although the facts may not be clearly stated.”  (Gressley v. Williams (1961) 193 Cal.App.2d 636, 639.)

“A demurrer for uncertainty is strictly construed, even where a complaint is in some respects uncertain, because ambiguities can be clarified under modern discovery procedures.” (Khoury v. Maly’s of Cal., Inc. (1993) 14 Cal.App.4th 612, 616.) Such demurrers “are disfavored, and are granted only if the pleading is so incomprehensible that a defendant cannot reasonably respond.” (Mahan v. Charles W. Chan Insurance Agency, Inc. (2017) 14 Cal.App.5th 841, 848.)

A demurrer should not be sustained without leave to amend if the complaint, liberally construed, can state a cause of action under any theory or if there is a reasonable possibility the defect can be cured by amendment. (Schifando v. City of Los Angeles, supra, 31 Cal.4th at p. 1081.) The demurrer also may be sustained without leave to amend where the nature of the defects and previous unsuccessful attempts to plead render it probable plaintiff cannot state a cause of action. (Krawitz v. Rusch (1989) 209 Cal.App.3d 957, 967.)

Defendants Webcor Construction, LP and Next Century Partners, LLC (Defendants) demurrer to the seventh and eighth causes of action for intentional and negligent misrepresentation on the grounds that the allegations in the fourth amended complaint (4AC) merely allege that opinions as to future events were offered, which are not actionable. (Demurrer at pp. 4–6.) Webcor further demurrers to the ninth cause of action for false promise, on the grounds that Plaintiff Retrolock Corporation (Plaintiff) alleges no detrimental reliance save its own performance on the contract, which it was obligated to undertake in any event. (Demurrer at pp. 6–9.)

The elements of fraud are: (1) misrepresentation (false representation, concealment, or nondisclosure); (2) knowledge of falsity (scienter); (3) intent to defraud or induce reliance; (4) justifiable reliance; and (5) damages.  (See Lazar v. Superior Court (1996) 12 Cal.4th 631, 638.) It is well-established that “[t]o withstand a demurrer, the facts constituting every element of fraud must be alleged with particularity, and the claim cannot be salvaged by references to the general policy favoring the liberal construction of pleadings.” (Goldrich v. Natural Y Surgical Specialties, Inc. (1994) 25 Cal.App.4th 772, 782.) “This particularity requirement necessitates pleading facts which show how, when, where, to whom, and by what means the representations were tendered.” (Lazar, supra, 12 Cal.4th at p. 645 (internal quotation marks omitted).)

The elements of negligent misrepresentation are the same as those of fraud, “except for the second element, which for negligent misrepresentation is the defendant made the representation without reasonable ground for believing it to be true.” (West v. JPMorgan Chase Bank, N.A. (2013) 214 Cal.App.4th 780, 792.)

The allegations at issue are as follows. When Plaintiff’s executives expressed concerns to Webcor and Next Century that any “slippage” in the schedule would cause substantial damage to Plaintiff,  Defendants’ representatives assuaged Plaintiff with assurances that there would be “no slippage in the schedule” and that the schedule would “very likely accelerate by 90 days.” (4AC ¶¶ 24–26.) These representations were false. (4AC ¶ 146.) In fact, the schedule had already slipped and been delayed when the representations were made, which Defendants knew. (4AC ¶ 32.)

“It is hornbook law that an actionable misrepresentation must be made about past or existing facts; statements regarding future events are merely deemed opinions.” (Neu-Visions Sports, Inc. v. Soren/McAdam/Bartells (2000) 86 Cal.App.4th 303, 309–310.) Exceptions to the ordinary rule arise “(1) where a party holds himself out to be specially qualified and the other party is so situated that he may reasonably rely upon the former's superior knowledge; (2) where the opinion is by a fiduciary or other trusted person; (3) where a party states his opinion as an existing fact or as implying facts which justify a belief in the truth of the opinion.” (Brakke v. Economic Concepts, Inc. (2013) 213 Cal.App.4th 761, 769.)

Plaintiff here has pleaded facts alleging that Defendants’ representations fit within this third exception. Although Defendants’ alleged representations are couched in terms of future schedule slippage, Plaintiff alleges that they implied a statement as to the present timeliness of the project, which Defendants knew to be false when the statements were made. As Plaintiff alleges it, this is a case “where the opinion is professedly based on facts known by the speaker to be nonexistent.” (Daniels v. Oldenburg (1950) 100 Cal.App.2d 724, 727.)

Accordingly, the demurrers are OVERRULED as to the seventh and eighth causes of action.

This leaves Webcor’s demurrer to the ninth cause of action for false promise. The allegations of false promise are as follows. Delays in the project caused Plaintiff to submit several change orders to Defendants regarding its proceedings, and Defendants represented to Plaintiff that they would approve each change order and pay Plaintiff accordingly. (4AC ¶¶ 46–47.) Plaintiff relied on these assurances and continued to perform, when in fact Defendants knew that several of these change orders would not be approved. (SAC ¶¶ 48–50.)

Webcor points to language in the contract between itself and Plaintiff (attached to the SAC as Exhibit 1) to the effect that if the parties cannot agree to the terms of a change order, Plaintiff “shall nonetheless timely perform the work as changed by Contractor’s written direction.” (Demurrer at p. 6; SAC Exh. 1, § 6.1.) Webcor relies on authority stating that the continuing performance of acts that one is already obligated to perform cannot constitute detrimental reliance for the purposes of a claim for false promise. (See Lueras v. BAC Home Loans Servicing, LP (2013) 221 Cal.App.4th 49, 79 [“Continuing to make payments on the loan (reduced under the Forbearance Agreement) does not constitute detrimental reliance because Lueras already had the obligation to make those payments.”].)

Plaintiff in opposition argues that it relied to its detriment on Webcor’s promises, namely by foregoing the potential remedy of rescission of its contract, owing to its fraudulent inducement. (Opposition at pp. 3–5.)

This argument is unpersuasive, because the 4AC contains no allegation that Plaintiff detrimentally relied upon Webcor’s promises by foregoing the right to rescind the contract. The 4AC contains no allegations related to rescission or the voidability of the subcontract that Plaintiff relies upon in opposing the demurrer.

Accordingly, the demurrer is SUSTAINED with leave to amend.