Judge: Mark H. Epstein, Case: 23SMCV01239, Date: 2023-08-17 Tentative Ruling

Case Number: 23SMCV01239    Hearing Date: August 17, 2023    Dept: R

The demurrers are OVERRULED.

This is a construction case.  Plaintiffs allege that they entered into a series of contracts with SCC General Construction (SCC) to do work on their property.  They further allege that SCC is owned and operated by the Schraders (Luis and Guillermo).  They also claim that Elizabeth Martinez is responsible for the problems, as is Altece Design.  The construction went poorly and plaintiffs allege that this is in part due to a series of false statements defendants made to them.  Defendants demur to the second, third, fourth, fifth, and seventh causes of action and plaintiffs oppose.

As to the second and third causes of action (fraud and negligent misrepresentation), the complaint is sufficiently detailed.  The agency allegations are sufficient.  (Skopp v. Weaver (1976) 16 Cal.3d 432.)  They also plead the bases for liability due to the agency relationship, noting, for example, how Luis is associated to the SCC entities and the pertinent email addresses.  Further, there is sufficient particularity about the alleged fraudulent statements.  For example, the allegation that defendants told plaintiff that it had obtained the necessary permits when in fact it had not, and thereby convinced plaintiff to enter into the contract, is more than sufficient to state a cause of action.  And defendants’ overstate the amount of particularity necessary regarding allegations of reliance and intent.  (Philpson & Simon v. Gulsvig (2007) 154 Cal.App.4th 347.) 

Turning to the negligence cause of action, again the demurrer fails.  While negligent breach of contract is indeed not a tort, here defendants owed duties beyond those articulated in the contract.  Those duties are based on requirements imposed by law upon contractors regarding their work.  That is enough.  Defendants also complain that there is no allegation as to the specific defect in a material they provided.  But such is not required at the pleading stage.  And as to the individuals, they are properly named regarding this cause of action due to the agency allegations.

The fifth cause of action is for disgorgement.  Business & Professions Code section 7031 requires that one holding itself out as a general contractor who has no license must disgorge any monies paid to that person for the contracting work.  That is what plaintiffs allege here.  However, there is a one year statute of limitations on this cause of action.  (Code Civ. Proc. § 340.)  But the cause of action starts to run when the job is completed; not when the contract is signed.  Nothing in the complaint, therefore, demonstrates that the cause of action is untimely.  Because defendants cannot go outside the pleadings to raise the defense, the demurrer is overruled.  Further, defendants do not state (even were they permitted to go outside the pleadings) that the work was completed outside the limitations period.  As such, again, they have failed to make out their case.

Finally, the seventh cause of action is for conversion.  Frankly, the court was close to sustaining this one.  All of the above torts do not constitute conversion.  Conversion requires the interference with another’s right of possession of property.  But taking money for poor or even fraudulently-induced construction is not conversion.  But plaintiffs also allege that defendants stole a water heater for which plaintiffs paid.  If plaintiffs paid for it, then they had a right to possess it.  If defendants took it or failed to deliver it, then they interfered with that right.  That is enough for conversion, and a demurrer does not lie as to only part of a cause of action.

Other than conversion, this was not a close one.  Defendants might want to more carefully consider the motions they bring in the future.

Accordingly, the demurrer is overruled.  Defendants has 20 days to answer.