Judge: H. Jay Ford, III, Case: 22SMCV00489, Date: 2023-11-16 Tentative Ruling

Case Number: 22SMCV00489    Hearing Date: November 16, 2023    Dept: O

Case Name:  2834 Colorado Avenue LLC v. ABM Industry Groups, LLC

SUBJECT:                 MOTION FOR SUMMARY JUDGMENT OR IN THE ALTERNATIVE SUMMARY ADJUDICATION

MOVING PARTY:   Defendant ABM Industry Groups, LLC

RESP. PARTY:         Plaintiff 2834 Colorado Avenue LLC

TENTATIVE RULING

            Defendant ABM Industry Groups, LLC’s Motion to Summary Judgment is DENIED. Defendant’s Motion for Summary Adjudication is DENIED as to all causes of action, issues and novation affirmative defense. Disputes of material fact exist as to all causes of action, issues, and defenses raised by Defendant ABM Industry Groups, LLC.

            Plaintiff’s objections to the declaration of Jack Walter, nos. 1-2, 4, and 11are SUSTAINED.  The remaining are OVERRULED.  Plaintiff’s objections to the declaration of Justin Escano nos. 12-14 are OVERRULLED.

            Where a defendant seeks summary judgment or adjudication, he must show that either “one or more elements of the cause of action, even if not separately pleaded, cannot be established, or that there is a complete defense to that cause of action.” (Code of Civil Procedure §437c(o)(2).) A defendant may satisfy this burden by showing that the claim “cannot be established” because of the lack of evidence on some essential element of the claim. (Union Bank v. Superior Court (1995) 31 Cal.App.4th 574, 590.) Once the defendant meets this burden, the burden shifts to plaintiff to show that a “triable issue of one or more material facts exists as to that cause of action or defense thereto.” (Id.) If unable to prove the existence of a triable issue of material fact, summary judgment or summary adjudication in favor of the defendant is proper. (Id.)

            “The burden on a defendant moving for summary judgment based upon the assertion of an affirmative defense is different than the burden to show that one or more elements of the plaintiff's cause of action cannot be established. Instead of merely submitting evidence to negate a single element of the plaintiff's cause of action, or offering evidence such as vague or insufficient discovery responses that the plaintiff does not have evidence to create an issue of fact as to one or more elements of his or her case the defendant has the initial burden to show that undisputed facts support each element of the affirmative defense. If the defendant does not meet this burden, the motion must be denied.” (Consumer Cause, Inc. v. SmileCare (2001) 91 Cal.App.4th 454, 467–468.)

            In addition, the evidence and affidavits of the moving party are construed strictly, while those of the opponent are liberally read. (Government Employees Ins. Co. v. Sup. Ct. (2000) 79 Cal.App.4th 95, 100. “All doubts as to the propriety of granting the motion (whether there is any issue of material fact [Code of Civil Procedure] § 437c) are to be resolved in favor of the party opposing the motion (i.e., a denial of summary judgment).” (Hamburg v. Wal-Mart Stores, Inc. (2004) 116 Cal.App.4th 497, 502.)

I.                1^st Cause of Action—Breach of Contract

            “To prevail on a cause of action for breach of contract, the plaintiff must prove (1) the contract, (2) the plaintiff's performance of the contract or excuse for nonperformance, (3) the defendant's breach, and (4) the resulting damage to the plaintiff.” (Richman v. Hartley (2014) 224 Cal.App.4th 1182, 1186.)

            “Several contracts relating to the same matters, between the same parties, and made as parts of substantially one transaction, are to be taken together.” (Civ. Code, § 1642.) “Civil Code section 1642 is most frequently applied to writings executed contemporaneously, but it is likewise applicable to agreements executed by the parties at different times if the later document is in fact a part of the same transaction.” (City of Brentwood v. Department of Finance (2020) 54 Cal.App.5th 418, 434.) “Whether a document is incorporated into the contract depends on the parties’ intent as it existed at the time of contracting. For the terms of another document to be incorporated into the document executed by the parties the reference must be clear and unequivocal ..... The contract need not recite that it “incorporates” another document, so long as it “guide[s] the reader to the incorporated document. To be construed together, the separate instruments must be ‘so interrelated as to be considered one contract.” (Id., internal citations omitted.)

“Although a contract has been reduced to writing by the parties, parol evidence is admissible to show fraud, accident, or mistake, to show the omitted portion of the contract where the writing is incomplete on its face, and to clear up an ambiguity or uncertainty.” (Crawford v. France (1933) 219 Cal. 439, 442–443.)

            “[T]he parties may incorporate by reference into their contract the terms of some other document. But each case must turn on its facts. For the terms of another document to be incorporated into the document executed by the parties the reference must be clear and unequivocal, the reference must be called to the attention of the other party and he must consent thereto, and the terms of the incorporated document must be known or easily available to the contracting parties.” (Remedial Construction Services, LP v. AECOM, Inc. (2021) 65 Cal.App.5th 658, 663, as modified on denial of reh'g (July 15, 2021), review denied (Sept. 1, 2021).)

            Here, Defendant ABM Industry Groups, LLC (“ABM”) argues that the 2020 Scope of Services document was not part the 3-12-18 Agreement (“2018 Agreement”) and the 1-1-19 agreement (“2019 Agreement”, collectively the “Agreements”) purported to set out the engineering services ABM was contracted to provide to Plaintiff 2834 Colorado Avenue LLC (“Colorado”). (SUF, ¶¶ 1–3, 15–16; ABM’s Appendix of Evidence, (“Appendix”), Ex. A, Wendel-Smith Decl., ¶¶ 5, 13 Ex. 1, 7.) Colorado does not dispute the signing of the Agreements, but Colorado does dispute whether the proffered Agreements are the complete agreements. Colorado argues Exhibit B within both Agreements does not state any “supervision, labor, material, supplies and equipment as may be necessary to complete and provide material and/or services at the property,” as Article I of the 2018 Agreement states Exhibit B includes. Furthermore, Colorado argues, and points to evidence, that the ABM’s proffered copy of the Agreements does not contain the Contractor’s Proposal sent to Colorado in January of 2018 which includes a Scope of Services Exhibit stating the services ABM allegedly promised to provide to Colorado. (SUF, ¶ 2; Escano Decl., ¶¶ 9–13; Separately Bound Exhibits (“SBE”) 1, pg. LPC 000056-77; SBE 2, pg. COLORADO 000075-96; SBE 3, pg. LPC 000211-323; SBE 4.)

            ABM argues that prior to April of 2020, Colorado did not request ABM to provide “service, repair or operating logs, log complaints relating to equipment, engineering daily logs, or Preventative Maintenance Programs.” (SUF, ¶ 23; Appendix, Ex. A, Wendel-Smith Decl. ¶¶ 24- 26; Ex. B, Declaration of Elliot Zuniga (“Zuniga Decl.”) ¶¶ 3-8.)  Colorado argues these requests were all promised in January 2018 Contractors Proposal which included a Scope of Services attachment. (SUF, ¶¶ 23, 27, 28; Wendel-Smith Decl., Exh. 1, 7; Walter Decl. ¶¶9-13; Escano Decl. ¶¶9-11, SBE 1, pg. LPC 000056-77; SBE 2, pg. COLORADO 000075- 96; SBE 3, pg. LPC 000211-323; SBE 4, 11.

            Thus, there is dispute of material fact as to the specific contents of the Agreements, whether or not the Agreement contained the Scope of Services provided to Plaintiff separately from the signed contract in January 2018 as part of the Contractors Proposal, and whether Colorado requested ABM to provide service, repair or operating logs, log complaints relating to equipment, engineering daily logs, or Preventative Maintenance Programs prior to April of 2020. Therefore, ABM’s Motion for Summary Judgement as to the First Cause of Action for Breach of Contract, or in the alternative Summary Adjudication as to only the First Cause of Action for Breach of Contract is DENIED.

a.     Issue No 2 – No Duty Owed with Respect to the 2020 Scope of Services

            The same disputes of fact as above apply to the Summary Adjudication issue of whether the 2020 Scope of Services imposed a duty onto ABM prior to April 2020. Colorado argues the 2020 Scope of Services consists of almost all of the terms contained in the January 2018 Contractor Proposal, Scope of Services and Budget sent by Ron Wendel-Smith. (SUF, ¶¶ 24, 25; Wendel-Smith Decl., Exh. 1, 7; Walter Decl. ¶¶9-13; Escano Decl. ¶¶9-11, SBE 1, pg. LPC 000056-77; SBE 2, pg. COLORADO 000075- 96; SBE 3, pg. LPC 000211-323; SBE 4.) The Court finds there is a dispute of material fact as to the duty imposed on ABM prior to the 2020 Scope of Services because the terms of the Agreements are unclear if they include the January 2018 Contractor Proposal, Scope of Services and Budget information. Therefore, ABM’s Motion for Summary adjudication of Issue Nos. 2 is DENIED.

b.     Issue No. 3 – Novation Defense

            “A novation is a substitution, by agreement, of a new obligation for an existing one, with intent to extinguish the latter. (Civ.Code ss 1530, 1532.) A novation is subject to the general rules governing contracts (Civ.Code s 1532) and requires an intent to discharge the old contract, a mutual assent, and a consideration.” (Klepper v. Hoover (1971) 21 Cal.App.3d 460, 463.)

            ABM argues they are entitled to summary adjudication as to the affirmative defense of novation with respect to the breach of contract cause of action for the 2018 Agreement because the 2019 Agreement constituted a new obligation, nullifying the 2018 agreement. (SUF, ¶¶ 5, 13.) ABM does not provide any evidence to prove each essential element of novation other than pointing to the undisputed fact that the 2019 Agreement was entered into by both parties. ABM provides no evidence of mutual assent or intent to discharge the old contract, and thus summary adjudication of the novation defense is DENIED.

II.             2^nd Cause of Action—Negligence

            A party may not convert a broken promise into a tort by simply pleading breach of a duty of care. (See Erlich v. Menezes (1999) 21 Cal.4th 543, 553 [courts must avoid “converting every contract breach into a tort”]; Stop Loss Ins. Brokers, Inc. v. Brown & Toland Medical Group (2006) 143 Cal.App.4th 1036, 1041 [“Despite the cross-complaint's use of negligence terminology, the alleged misconduct by [defendant] describes, at most, a breach of contract, not a breach of a legal duty of care”].)   

            The Supreme Court in Erlich v. Menezes discussed North American by noting that “conduct amounting to a breach of contract becomes tortious only when it also violates a duty independent of the contract arising from principles of tort law.  An omission to perform a contract obligation is never a tort, unless that omission is also an omission of a legal duty.  (Erlich, supra, 21 Cal.4th at 551.)  The mere negligent breach of a contract is insufficient to state a claim for damages sounding in tort.  (Id.)   The remedy for a breach of contract is generally limited to contract law, and recovery in tort is not permitted unless: “(1) the breach is accompanied by a traditional common law tort, such as fraud or conversion; (2) the means used to breach the contract are tortious, involving deceit or undue coercion or; (3) one party intentionally breaches the contract intending or knowing that such a breach will cause severe, unmitigable harm in the form of mental anguish, personal hardship, or substantial consequential damages.”  (Id. at pp. 553–54.)

            In North American Chemical Co. v. Superior Court (1997) 59 Cal.App.4th 764, 774, the Court of Appeal described the common law duty contracting parties have to perform with reasonable care, skill, expedience and faithfulness, and stated that “the same wrongful act may constitute both a breach of contract and an invasion of an interest protected by the law of torts.  Negligent performance of a contract entitles the aggrieved party to sue in tort or contract, distinguishing failure to perform, which gives rise only to a contract action. As the court explained: “A contract to perform services gives rise to a duty of care which requires that such services be performed in a competent and reasonable manner. A negligent failure to do so may be both a breach of contract and a tort.”  (Id. at p. 774; see also Michaelis v. Benavides (1998) 61 Cal.App.4^th 681, 688; 3 Witkin, Cal. Proc. (5^th ed. 2020) Actions §145.)

            Conduct that qualifies as a breach of contract can form the basis of a tort claim if accompanied by a traditional common law tort such as fraud or conversion or where physical injury to property or person results from that conduct. (See Erlich v. Menezes (1999) 21 Cal.4th 543, 551 (recognizing long line of cases in which tort damages were allowed for a breach of contract where the conduct resulted in injury to person or property); Robinson Helicopter Co., Inc. v. Dana Corp. (2004) 34 Cal.4th 979, 989-990 (economic loss rule does not bar tort damages where conduct is also a breach of contract where intentional tort is involved, where conduct violates duty independent of contractual duties, or in contract cases where breach of duty directly causes physical injury).  “The economic loss rule provides that, in general, there is no recovery in tort for negligently inflicted ‘purely economic losses,’ meaning financial harm unaccompanied by physical or property damage.”  (Dhital v. Nissan North America, Inc. (2022) 84 Cal.App.5th 828, 837.)

            Furthermore, Colorado argues the negligence claim is based on damage to the mechanical equipment caused by ABM’s failure to maintain, as evidenced by ABM’s lack of historical records of any maintenance. (SUF, p. 105, Plaintiff’s Additional Material Facts (“AMF”) ¶ 17; Walter Decl., ¶ 24.)  The Court finds there is a dispute of material fact as to whether the alleged negligence caused damage to property, and if so, whether the economic loss rule applies.            Thus, there is a dispute of material fact regarding the second cause of action for Negligence and the ABM’s Motion for Summary Judgement, or in the alternative Summary Adjudication, is DENIED

III.           3^rd Cause of Action—Common Counts

            “A common count is proper whenever the plaintiff claims a sum of money due, either as an indebtedness in a sum certain, or for the reasonable value of services, goods, etc., furnished. It makes no difference in such a case that the proof shows the original transaction to be an express contract, a contract implied in fact, or a quasi-contract.” (Utility Audit Co., Inc. v. City of Los Angeles (2003) 112 Cal.App.4th 950, 958.) “A claim for money had and received can be based upon money paid by mistake, money paid pursuant to a void contract, or a performance by one party of an express contract.” (Id.)

            “[T]he plaintiff must prove that the defendant received money ‘intended to be used for the benefit of [the plaintiff],’ that the money was not used for the plaintiff's benefit, and that the defendant has not given the money to the plaintiff.” (Avidor v. Sutter's Place, Inc. (2013) 212 Cal.App.4th 1439, 1454, internal citations omitted.)

            Here, Colorado points to the several triable issues of fact as to whether ABM agreed to perform the services listed on the Scope of Services page sent to Colorado in January of 2018. (SUF, ¶¶ 1–3, 15–16, 23, 27, 28; Appendix, Ex. A, Wendel-Smith Decl., ¶¶ 5, 13 Ex. 1, 7.) Colorado also points out that it is undisputed Colorado paid ABM’s invoices. (SUF, ¶¶ 11,12, 19, 20, 21, 22; Appendix, Ex. A, Wendel-Smith Decl. ¶¶ 10–11, 14–15, Ex. 6, 8.) Thus, ABM does not prove the common counts claim fails as a matter of law. ABM’s Motion for Summary Judgement, or in the alternative Summary Adjudication, as to the third cause of action for common counts is DENIED.