Judge: Lee W. Tsao, Case: 22NWCV00415, Date: 2023-01-17 Tentative Ruling
Case Number: 22NWCV00415 Hearing Date: January 17, 2023 Dept: C
AWI BUILDERS, INC. v. RACHLIN PARTNERS, LLC, et al.
CASE NO.:
22NWCV00415
HEARING: 1/17/23
@ 10:30 AM
#4
TENTATIVE
RULING
Defendants Rachlin Partners, LLC and Harrison’s demurrer to complaint is
OVERRULED. Defendants are ORDERED to
file and serve their Answers within 10 days.
Opposing Party to give NOTICE.
Defendants Rachlin Partners, LLC and Harrison
demur to the 1st – 5th causes of action on the grounds
that they fail to state facts sufficient to constitute a cause of action and
are uncertain.
Plaintiff AWI Builders, Inc. alleges that
“[o]n September 17, 2019, AWI and Norwalk-La Mirada Unified
School District ("District") entered into a contract for AWI to
perform work at… Norwalk High School… to complete the Norwalk H.S. — Athletic
Field & Stadium, Bid No. 201819-25 (Formal, DA #03-117769) (the
"Project") in accordance with the Project plans, which AWI is informed
and believe were prepared by RACHLIN.”
(Complaint, ¶ 5.) “[P]rior to
AWI's execution of its contract with the District, RACHLIN and the District had
entered into a written agreement (hereinafter "Contract") whereby it
was agreed that RACHLIN would provide architectural and related services,
including but not limited to architectural plans, to the District in relation
to the Project, in exchange for payment to RACHLIN by the District. As the general contractor for the Project,
AWI is informed and believes and thereon alleges that AWI was an intended
beneficiary of that Contract, and that one purpose of the Contract was to
create a benefit to AWI as the general contractor for the Project.” (Id., ¶ 6.)
Defendants breached the contract by failing to provide design contract
drawings. (Id., ¶ 9.) Based thereon, the Complaint asserts causes
of action for:
1.
Breach
of Written Contract (Third Party Beneficiary) (v. Rachlin)
2.
Professional
Negligence (v. Rachlin)
3.
Intentional
Interference with Contractual Relations (v. Harrison)
4.
Negligence
(v. Harrison)
5.
Indemnity
(v. Harrison)
UNCERTAINTY
“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 California, Inc. (1993) 14 Cal.App.4th 612, 616.) A
demurrer for uncertainty will be sustained only where the complaint is so bad
that a defendant cannot reasonably respond. (Ibid.)
The
court finds that the Complaint is not so uncertain that Defendants cannot
reasonably respond. Demurrer based on
uncertainty is OVERRULED.
ENTIRE
COMPLAINT
An “indemnity
agreement is interpreted according to the language and contents of the contract
as well as the intention of the parties as indicated by the contract.” (Wilshire–Doheny
Associates, Ltd. v. Shapiro (2000) 83 Cal.App.4th 1380, 1396). When
indemnity is expressly provided by contract, the extent of the duty must be
determined from the contract.” (Rossmoor Sanitation, Inc. v. Pylon, Inc.
(1975) 13 Cal.3d 622, 628.)
Article
5 of the AWI/District Contract provides, “Contractor
shall defend, indemnify and hold harmless District, Architect… and their officers, employees, agents and
independent contractors from all liabilities, claims, actions...damages,
losses, cost or expenses of any kind arising from... [a] cause based or
asserted upon any act, omission or breach connected or arising from progress
of Work or performance of service under this Agreement or the Contract
Documents.”
The “hold harmless” provision applies to
“progress of work or performance of service.”
Here, ¶ 9 alleges that Defendants falsified information to prevent AWI
from being paid, which is a willful or fraudulent act not contemplated by the “hold
harmless” provision.
Accordingly, at this juncture, demurrer is
OVERRULED. The parties may conduct
further discovery regarding the wrongful conduct allegations.
1st
CAUSE OF ACTION
BREACH OF CONTRACT:
Whether it is written, oral, or implied, the elements of a cause of action for breach
of contract are as follows: (1) the existence of a contract; (2) Plaintiff’s
performance or excused non-performance; (3) Defendants’ breach; and (4)
resulting damage to Plaintiff. (Reichert v. General Ins. Co. (1968) 68
Cal.2d 822, 830.) “If an action is based on a breach
of written contract, the terms must be set forth verbatim in the body of the
complaint or a copy of the contract must be attached and incorporated by
reference.” (Id. at 459.) Alternatively,
if the claim is based on a written contract, then “a plaintiff may plead the
legal effect of the contract rather than its precise language.” (Construction
Protective Services, Inc. v. TIG Specialty Ins. Co., (2002) 29 Cal.4th 189,
198-199.)
¶ 6 alleges
that AWI was an intended third party beneficiary of the contract between
District and Rachlin.
Defendant
argues that the Complaint does not allege facts supporting AWI’s intended third
party status. However, at this pleading
stage, Defendant is on notice of the contract, and Plaintiff’s claim based on
its intended third party beneficiary status.
At this
pleading stage, demurrer is OVERRULED.
The parties may conduct further discovery to determine the facts
supporting Plaintiff’s allegation that it was an intended third party
beneficiary.
2nd
CAUSE OF ACTION
NEGLIGENCE: To prevail on a negligence claim, Plaintiffs must plead
facts establishing “duty, breach, causation, and damages.” (Ortega v. Kmart Corp. (2001) 26
Cal.4th 1200, 1205.)
When an
“alleged negligence has caused economic loss, but no personal injury or
property damage, duty is not presumed” (Southern California Gas Leak Cases
(2017) 18 Cal.App.5th 581, 588.) This is
because “[g]enerally, a defendant owes no duty to prevent purely economic loss
to third parties under any negligence theory.” (Id at 587.) In determining the existence of a legal duty in
the absence of privity of contract between a third party plaintiff and a
defendant, the courts apply a balancing test and consider: (1) the extent the
transaction was intended to affect the plaintiff; (2) the foreseeability of
harm to the plaintiff; (3) the degree of certainty that the plaintiff suffered injury;
(4) the closeness of the defendant’s conduct and plaintiff’s injury; and (5)
defendant’s moral blame. (Bily v. Arthur Young & Co. (1992) 3
Cal.4th 370, 397.) Mere foreseeability of harm or
knowledge of potential of
the danger however is insufficient by itself to create a special relationship and
to impose a duty. (Id. at 399.) As
discussed above, courts have “refused to impose a duty to protect third parties
to a contract for professional services from economic loss where such a duty
would subject the
professional service
provider to a conflict in loyalties.” (Ratcliff Architects, Supra, at
606.) “Additionally, when a defendant's liability rests partially under the
control of another party's conduct and the plaintiff is free to contract with
the other party, the defendant's “moral blame” and connection to the
plaintiff's alleged injury is too remote to justify imposition of a tort duty.”
(Id. at 606-607.)
“Tort damages have been permitted in contract
cases where a breach of duty directly causes physical injury; for breach of the
covenant of good faith and fair dealing in insurance contracts; for wrongful
discharge in violation of fundamental public policy; or where the contract was
fraudulently induced… in each of these cases, the 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.” (Robinson
Helicopter Co., Inc. v. Dana Corp. (2004) 34 Cal.4th 979, 989–990.)
Here,
Plaintiff alleges that Rachlin falsified information to prevent AWI from being
paid. At this juncture, the court will allow the
action to proceed past demurrer. The
arguments raised by Rachlin raise triable issues of fact inappropriately
resolved
at this stage in the litigation. Demurrer is OVERRULED.
3rd
CAUSE OF ACTION
Harrison
argues she was not a party to any of AWI’s contracts with the District. ¶¶ 19-20 allege that AWI had existing
contracts with the District, and Harrison knew about those contracts. ¶¶ 21-22 allege Harrison’s intentional
disruption of the performance of the contracts, and intentional misrepresentations.
Accordingly,
the demurrer is OVERRULED.
4th
CAUSE OF ACTION
NEGLIGENCE: To prevail on a negligence claim, Plaintiffs must plead
facts establishing “duty, breach, causation, and damages.” (Ortega v. Kmart Corp. (2001) 26
Cal.4th 1200, 1205.)
Under CCP § 411.35, in every action, including
indemnity, arising from
the professional negligence of a person holding a valid
architect’s certificate on or before the date of the complaint, the attorney
for the plaintiff must file and serve a certificate of merit.
Harrison contends that Plaintiff has
not filed a Certificate of Merit as to Harrison. Plaintiff’s amended certificate
of merit, filed on December 21, 2022, identified Jennifer Harrison. Accordingly, the demurrer is OVERRULED.
5th CAUSE OF ACTION
INDEMNITY: The elements are: 1) the same harm for which claimant may be held
liable; and 2) is properly attributable wholly or partly to defendant or cross-defendant. (Platt v. Coldwell Banker Residential Real
Estate Services (1990) 217 Cal. App. 3d 1439, 1445. See
also Leko v. Cornerstone Building Inspection Service (2001)
86 Cal.App.4th 1109, 1115 - requiring tortfeasors causing injury, jointly and severally
liable, but not any duty owed.) A cause of action for equitable indemnity is 1) a showing of
fault on the part of the indemnitor, and 2) resulting damages to the indemnitee
for which the indemnitor is “equitably responsible.” (Bailey v. Safeway, Inc. (2011) 199
Cal.App.4th 206, 217.)
¶¶
21-22, and 36 allege that Harrison made false misrepresentations to the
District about AWI’s work, which caused damages to AWI in the sum of
$1,884,907.72.
Demurrer
is OVERRULED.