Judge: James A. Mangione, Case: 37-2023-00030097-CU-BC-CTL, Date: 2024-04-26 Tentative Ruling

SUPERIOR COURT OF CALIFORNIA,

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HALL OF JUSTICE

TENTATIVE RULINGS - April 25, 2024

04/26/2024  09:00:00 AM  C-75 COUNTY OF SAN DIEGO

JUDICIAL OFFICER:James A Mangione

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Civil - Unlimited  Breach of Contract/Warranty Demurrer / Motion to Strike 37-2023-00030097-CU-BC-CTL PREMIUM WEST CONCRETE INC A CALIFORNIA CORPORATION VS SILVERLINE CONSTRUCTION INC A CALIFORNIA CORPORATION [IMAGED] CAUSAL DOCUMENT/DATE FILED:

Plaintiff/Cross-Defendant Premium West Concrete Inc.'s Demurrer to Defendant/Cross-Complainant SLC Construction Corp. dba Silverline Construction's ('Silverline') Cross-Complaint is sustained without leave to amend.

The Cross-Complaint raises a cause of action for negligence (second cause of action), breach of the implied covenant to do work in a good and competent manner (fourth cause of action) and breach of the implied covenant of good faith and fair dealing. Premium asserts that these causes of action are duplicative of the cause of action for breach of contract and are barred by the economic loss doctrine.

'[T]he economic loss rule provides: Where a purchaser's expectations in a sale are frustrated because the product he bought is not working properly, his remedy is said to be in contract alone, for he has suffered only economic losses. This doctrine hinges on a distinction drawn between transactions involving the sale of goods for commercial purposes where economic expectations are protected by commercial and contract law, and those involving the sale of defective products to individual consumers who are injured in a manner which has traditionally been remedied by resort to the law of torts. [Citation.] The economic loss rule requires a purchaser to recover in contract for purely economic loss due to disappointed expectations, unless he can demonstrate harm above and beyond a broken contractual promise. [Citation.] Quite simply, the economic loss rule prevents the law of contract and the law of tort from dissolving one into the other.' (Robinson Helicopter Co., Inc. v. Dana Corp. (2004) 34 Cal.4th 979, 988 (quotation marks and alterations omitted).) '[T]he duty that gives rise to tort liability is either completely independent of the contract or arises from conduct which is both intentional and intended to harm.' (Id. at 990.) Second Cause of Action Silverline's negligence cause of action alleges that Premium 'negligently failed to perform construction work up to the standards in the industry', which resulted in 'physical damage to the home'. (XC ¶¶ 28-29.) The Cross-Complaint also alleges that Silverline was harmed because the project has been delayed, resulting in lost revenue and extra expense, and Silverline will need to correct the construction deficiencies. However, these damages are traditional damages for breach of contract. Silverline does not own the house and therefore, cannot bring a claim related for damage to that property. Ultimately, the purported damage to Silverline is the result of Premium's alleged failure to perform under the contract-not a breach of some independent duty of care Silverline owed Premium. Therefore, the negligence cause of action is barred by the economic loss rule.

Fourth Cause of Action Calendar No.: Event ID:  TENTATIVE RULINGS

3076068  15 CASE NUMBER: CASE TITLE:  PREMIUM WEST CONCRETE INC A CALIFORNIA CORPORATION VS  37-2023-00030097-CU-BC-CTL The duty to perform work in a good and workmanlike manner is derivative of the contractual liability between the parties. It allows a contractor to sue a subcontractor for breach of contract and/or indemnity even when the contract does not explicitly state that the subcontractor's work must meet a specific industry standard. It does not, as Silverline implies, create an additional, independent tort duty owed by a subcontractor to a general contractor. Therefore, this cause of action is barred by the economic loss rule.

Fifth Cause of Action Finally, Silverline has alleged a breach of the implied covenant of good faith and fair dealing. 'Under California law, every contract includes an implied covenant of good faith and fair dealing. [Citation.] But the covenant exists merely to prevent one contracting party from unfairly frustrating the other party's right to receive the benefits of the agreement actually made. [Citation.] The implied covenant cannot impose substantive duties or limits on the contracting parties beyond those incorporated in the specific terms of their agreement.' (Prager University v. Google LLC (2022) 85 Cal.App.5th 1022, 1039 (quotation marks and alterations omitted), review denied (Mar. 15, 2023).) To support this claim, Silverline alleges that Premium 'did not perform work consistently with its bid and in accordance with the plans', 'did some work outside the scope of the sub-contract, and then retroactively submitted change orders for the work', 'submitted two retaliatory change orders' and 'failed to waive portions of the lien when SILVERLINE paid for some of the change orders'. (XC ¶ 45.) However, all of these relate to breaches of specific contractual provisions. Article 4 and section 9.1 required Premium to follow all plans and perform work in accordance with the schedule, section 2.1 required Premium to provide partial lien waivers for work paid by Silverline, section 3.2 required Premium to submit change orders prior to performing any work outside the scope of the agreement and article 26 required Premium to 'work with SILVERLINE in good faith'. As such, the identified bases for this claim are actually alleged breaches of the contract itself. Therefore, this cause of action is duplicative of the breach of contract claim.

Furthermore, as Silverline has not alleged damage beyond the broken promise, it is also barred by the economic loss rule.

The minute order is the order of the Court.

Calendar No.: Event ID:  TENTATIVE RULINGS

3076068  15