Judge: Helen Zukin, Case: 19SMCV01966, Date: 2022-09-12 Tentative Ruling
Case Number: 19SMCV01966 Hearing Date: September 12, 2022 Dept: 207
Background
The present action arises
out of the design and construction of a custom residential home. Michael Levine and Zorbey Ozdilek (“Plaintiffs”)
contracted with Montalba Architects, Inc. to serve as the architect for the construction
of Plaintiffs’ custom home in Los Angeles, California (“the project”). During the
project, Plaintiffs learned the general contractor and various subcontractors,
including Defendant Temperature Equipment Corporation (“TEC”) failed to construct
Plaintiffs’ home according to Plaintiffs’ specifications.
Plaintiffs’ operative complaint is the
Fourth Amended Complaint (“FAC”) filed on June 30, 2022. TEC previously brought
motions to strike Plaintiffs’ claim for punitive damages and Plaintiffs’ cause
of action for violation of Business & Professions Code § 17200 asserted in
Plaintiffs’ prior Second and Third Amended Complaints. The Court granted these
motions with leave to amend. TEC now moves to strike Plaintiffs’ claim for
punitive damages and cause of action under Business & Professions Code §
17200, arguing the FAC does not cure the deficiencies which led the Court to
grant its prior motions to strike these same allegations.
Motion to Strike Standard
Motions to strike are used to reach defects or objections to
pleadings which are not challengeable by demurrer (i.e., words, phrases, prayer
for damages, etc.). (C.C.P. §§ 435, 436 & 437.) A motion to strike lies
only where the pleading has irrelevant, false or improper matter, or has not
been drawn or filed in conformity with laws. (C.C.P. § 436.) The grounds for moving
to strike must appear on the face of the pleading or by way of judicial notice.
(C.C.P. § 437.)
Analysis
1. Meet and
Confer Requirement
Before filing a
motion to strike, the moving party is required to “meet and confer in person or
by telephone” with the party who filed the pleading that is subject to the
motion to strike for the purposes of determining whether an agreement can be
reached through a filing of an amended pleading to resolve the objections to be
raised in the demurrer. (C.C.P. § 435.5(a).) No such in person or telephonic
meet and confer occurred here prior to the filing of TEC’s motion. Rather, it
appears TEC’s efforts to meet and confer to resolve its specific issues
concerning the FAC was limited to sending one email to counsel for Plaintiffs
without undertaking further meet and confer efforts by phone or in person in
conformance with Code Civ. Proc. § 435.5. (Amended Hollins Decl. at ¶¶ 3-4.)
The parties then subsequently engaged in the required meet and confer process
after TEC’s motion to strike had been filed. (Id. at ¶¶5-7.) Accordingly,
the Court will consider the merits of TEC’s motion.
2. Punitive
Damages
“In order to survive a motion to
strike an allegation of punitive damages, the ultimate facts showing an
entitlement to such relief must be pled by a plaintiff. In passing on the correctness
of a ruling on a motion to strike, judges read allegations of a pleading
subject to a motion to strike as a whole, all parts in their context, and
assume their truth.” (Clauson v. Superior Court (1998) 67 Cal.App.4th
1253, 1255 (internal citations omitted).)
A motion to strike punitive damages is
properly granted where a plaintiff does not state a prima facie claim for
punitive damages, including allegations that defendant is guilty of oppression,
fraud, or malice. (Turman v. Turning Point of Cent. California, Inc.
(2010) 191 Cal.App.4th 53, 63.) “Mere negligence, even gross negligence, is not
sufficient to justify such an award” for punitive damages. (Kendall Tacht
Corp. v. United California Bank (1975) 50 Cal.App.3d 949, 958.) The
allegations supporting a request for punitive damages must be alleged with
specificity; conclusory allegations without sufficient facts are not enough. (Smith
v. Superior Court (1992) 10 Cal.App.4th 1033, 1041-42.)
Under California law punitive or
exemplary damages are not recoverable where a party’s cause of action are based
on obligations “arising from contract,” even if the claim is characterized as
one for fraud. (Doyle v. Chief Oil Co. (1944) 64 Cal.App.2d 284, 295
[“Although the acts of appellants were fraudulent, such acts were related to
and affected certain obligations ‘arising from contract,’ the violation of
which resulted in the alleged damage to respondents; therefore, the award of $
500 as exemplary damages herein cannot be sustained”]; MacMorris Sales Corp.
v. Kozak (1968) 263 Cal.App.2d 430, 438 [holding punitive damages cannot be
awarded under any contract theory, even where some of the court’s findings
appear to sound in fraud or suggest a cause of action for breach of fiduciary
duties].)
A plaintiff’s “conclusory
characterization of defendant’s conduct as intentional, willful and fraudulent
is a patently insufficient statement of ‘oppression, fraud, or malice, express
or implied, within the meaning of section 3294.” (Brousseau v. Jarrett
(1977) 73 Cal.App.3d 864.)
In granting TEC’s prior motions to
strike Plaintiffs’ claim for punitive damages in the Second and Third Amended
Complaints, the Court found the allegations against TEC in those pleadings “arise to at most negligence” or simply characterized TEC’s
conduct as malicious, oppressive, or fraudulent in a conclusory manner. The
question before the Court now is whether Plaintiffs’ FAC has added factual
allegations which can support a claim for punitive damages against TEC.
From review of the FAC, it appears
the only new allegations as to TEC are contained in paragraphs 316, 353, and
358.
Paragraph 316 alleges other defendants
substantially assisted the purported fraudulent actions of TEC and others. The
allegations in paragraphs 353 and 358 concern Plaintiffs’ claim under Business
& Professions Code § 17200. Paragraph 353 asserts:
As more fully argued hereinabove,
TEMPERATURE’s conduct was indeed unfair in that MESSRS. LEVINE and OZDILEK
suffered a substantial injury as a result of TEMPERATURE’s unfair acts, having
to expend significant monies and resources to inspect, replace, and repair much
of the ductwork and mechanical systems on the PROJECT, hiring a competent
general contractor to oversee those repairs, and incurring the damages
resulting from MESSRS. LEVINE and OZDILEK’s displacement from their home while
it was being repaired. While TEMPERATURE personally profited from its unfair
acts, there was no real benefit to consumers therefrom, and TEMPERATURE’s bad
acts did not foster even a modicum of competition in the market. And because
MESSRS. LEVINE and OZDILEK fully (and reasonably) expected that each contractor
on the PROJECT, including TEMPERATURE, would be competent and would be properly
supervised, MESSRS. LEVINE and OZDILEK certainly could not have anticipated the
injuries that they would suffer due to TEMPERATURE’s unfair business practices
and actions.
Paragraph 358 adds an allegation that “By
and through its negligent, reckless, and otherwise illegal behavior, TEMPERATURE
violated multiple state laws….”
The Court finds these allegations do
not support a claim for punitive damages against TEC. Paragraph 316 does not
allege any new conduct by TEC, but rather concerns allegations that other
defendants assisted TEC in committing the actions which the Court has
previously determined were insufficient to support a claim for punitive
damages. Similarly, paragraphs 353 and 358 do not contain any new factual
allegations justifying an award of punitive damages against TEC, but simply
characterize TEC’s conduct as unfair or reckless.
As with the Second and Third Amended
Complaints, the FAC when taken as a whole states factual allegations as to TEC
which arise, at most, to negligence or breach of contract in failing to install
dampers or fresh air intakes, installing different furnaces and condensers than
were called for in the project specifications, and otherwise failing to
adequately perform the work they were hired to do. The Court finds the FAC fails to sufficiently plead a claim
for punitive damages against TEC and TEC’s motion to strike that claim is
GRANTED.
3. Violation
of Business & Professions Code § 17200
California’s Unfair Competition Law
(“UCL”), codified at Business and Professions Code section 17200 et seq.,
prohibits “any unlawful, unfair, or fraudulent business act or practice.” (Bus.
& Prof. Code § 17200; see Clark v. Superior Court (2010) 50 Cal.4th
605, 610.) A UCL plaintiff must plead and prove the defendant engaged in a
business practice which was either unlawful (i.e., is forbidden by law) or
unfair (i.e., harm to victim outweighs any benefit) or fraudulent (i.e., is
likely to deceive members of the public). (Albillo v. Intermodal Container
Services, Inc. (2003) 114 Cal.App.4th 190, 206.) “An unlawful business
practice or act within the meaning of the UCL is an act or practice, committed
pursuant to business activity, that is at the same time forbidden by law.” (Bernardo
v. Planned Parenthood Federation of America (2004) 115 Cal.App.4th 322,
351.) Such a UCL action, moreover, when based on a contract, is not appropriate
where the public in general is not harmed by the defendant's alleged unlawful practices.
(Rosenbluth International, Inc. v. Superior Court (2002) 101 Cal.App.4th
1073, 1077.)
“A plaintiff alleging unfair
business practices under these statutes must state with reasonable
particularity the facts supporting the statutory elements of the violation.” (Khoury
v. Maly's of California, Inc. (1993) 14 Cal.App.4th 612, 619.) In other
words, because section 17200 is a statutory cause of action, every element of
the violation must be pled with specificity. (Id.) This applies with
equal force to UCL claims based on alleged unlawfulness and those based on
unfairness.
The Court has previously stricken
Plaintiffs’ claim for unfair competition against TEC, finding Plaintiffs failed
to state sufficient facts with the requisite level of reasonable particularity
to support a cause of action for violation of Business & Professions Code §
17200. As set forth above, Plaintiff have added two paragraphs in the FAC
regarding their claim for unfair competition against TEC: paragraphs 353 and
358.
Upon review of these amended
allegations, the Court finds they also fall short of supporting a cause of
action against TEC under section 17200. Aside from minor wording changes, the
only new allegations as to TEC simply characterize TEC’s conduct as “unfair”
under section 17200 because Plaintiffs were harmed by it (paragraph 353) or
“negligent, reckless, and otherwise illegal” (paragraph 358). Plaintiffs do not
allege any new acts done by TEC or additional facts demonstrating unfair
competition under Business & Professions Code §17200. As with the Second
and Third Amended Complaints, the Court finds these new statements are simply
legal conclusions devoid of any factual basis which are insufficient to support
a claim under section 17200 and GRANTS TEC’s motion to strike this cause of
action.
4. Leave to
Amend
Plaintiffs acknowledge they “have previously
stated that this 4AC would be their final amendment to the operative complaint”
but again request they be granted further leave to amend should the Court find
any “minor defects” which are “readily curable.” (Opposition at 14.) The Court
finds the defects identified above are more than “minor,” and has no
information before it from which it could find they are readily curable. Plaintiffs
have had multiple opportunities to state viable claims against TEC for punitive
damages and violation of Business & Professions Code § 17200. They have not
done so and there are no facts before the Court from which it can conclude that
Plaintiffs could sufficiently state such claims if given further leave to
amend. (Krawitz v. Rusch (1989) 209 Cal.App.3d 957, 967 [denying leave
to amend is proper where plaintiff “was granted numerous opportunities to amend
her complaint and yet remained unable to successfully state a cause of action”].)
Accordingly, TEC’s motion to
strike is GRANTED without leave to amend.
Conclusion
Defendant Temperature
Equipment Corporation’s Motion to
Strike the Fourth Amended Complaint is GRANTED without leave to amend.