Judge: Mel Red Recana, Case: 23STCV24203, Date: 2024-10-11 Tentative Ruling
Case Number: 23STCV24203 Hearing Date: October 11, 2024 Dept: 45
Hearing date:
October 11, 2024
Moving Party: Defendant
Vigen Onany & Associates, Inc.
Responding
Party: Plaintiff American General Design
Demurrer
to Complaint and Motion to Strike
The Court
considered the moving papers, opposition, and reply.
The
Court OVERRULES Defendant’s demurrer to the second cause of action of
Plaintiff’s complaint.
The
Court SUSTAINS Defendant’s motion to strike portions of Plaintiff’s
complaint seeking attorney’s fees.
Background
This action
arises out of a contract dispute involving an adaptive reuse development
project for two Downtown Glendale office towers located at 520 N. Central Ave.,
Glendale, California and 521 N. Central Ave., Glendale, California. American
General Design (Plaintiff) brings two causes of action against Vigen Ohany
& Associates, Inc. (Defendant) and Does 1-10 for breach of contract and
professional negligence.
Legal
Standard
A demurrer for
sufficiency tests whether the complaint states a cause of action. (Hahn v.
Mirda (2007) 147 Cal.App.4th 740, 747.) In a demurrer proceeding, the
defects must be apparent on the face of the pleading or via proper judicial
notice. (Donabedian v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968,
994.) In assessing a demurrer, the Court “treat[s] the demurrer as admitting
all material facts properly pleaded, but not contentions, deductions or
conclusions of law.” (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) “The
only issue involved in a demurrer hearing is whether the complaint, as it
stands, unconnected with extraneous matters, states a cause of action.” (Hahn
v. Mirda, supra, at p. 747.) A complaint will be upheld against a
demurrer if it pleads facts sufficient to place the defendant on notice of the
issues sufficient to enable the defendant to prepare a defense. (Doe v. City
of Los Angeles (2007) 42 Cal.4th 531, 549-50.) “Generally it is an abuse of
discretion to sustain a demurrer without leave to amend if there is any
reasonable possibility that the defect can be cured by amendment.” (Goodman
v. Kennedy (1976) 18 Cal.3d 335, 349.) A “[p]laintiff must show in what
manner he can amend his complaint and how that amendment will change the legal
effect of his pleading.” (Ibid.)
A demurrer may be sustained as to a claim
that duplicates another. (Levy v. Only
Cremations for Pets, Inc. (2020) 57 Cal.App.5th 203, 215.) A claim is
duplicative if it adds nothing to the complaint “by way of fact or theory or
recovery.” (Rodrigues v. Campbell Industries (1978) 87 Cal.App.3d 494,
501.)
Before filing a
demurrer, the moving party must meet and confer in person, by telephone, or by
video conference with the party who filed the pleading to attempt to reach an
agreement that would resolve the objections to the pleading. (Code Civ. Proc.,
§ 430.41.) “Any determination by the court that the meet and confer process was
insufficient shall not be grounds to overrule or sustain a demurrer.” (Code
Civ. Proc., § 430.41, subd. (a)(4).)
“[J]udges 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.) The grounds for a
motion to strike are that the pleading has irrelevant, false or improper
matter, or has not been drawn or filed in conformity with laws. (Code Civ.
Proc., § 436.)
Discussion
Demurrer
Meet and Confer
Defendant’s counsel met and conferred with Plaintiff’s counsel. On
November 28, 2023, Defendant’s counsel sent a meet and confer letter to
Plaintiff’s counsel. (Jeon Decl., ¶ 3.) On December 4, 2023, both parties’ counsels met and
conferred via telephone call. (Jeon Decl., ¶ 4.) They could not agree on Plaintiff’s second cause
of action for professional negligence. (Jeon Decl., ¶ 6.) Therefore,
Defendant has complied with the meet and confer requirement.
Demurrer
to Second Cause of Action
Defendant demurs
to the second cause of action for professional negligence on the grounds that
it fails to state facts sufficient to state a cause of action, it is barred by
the economic loss rule, and it is duplicative of the first cause of action for
breach of contract.
“The elements of
a cause of action for professional negligence are (1) the existence of the duty
of the professional to use such skill, prudence, and diligence as other members
of the profession commonly possess and exercise; (2) breach of that duty; (3) a
causal connection between the negligent conduct and the resulting injury; and
(4) actual loss or damage resulting from the professional negligence.” (Oasis West Realty, LLC v. Goldman (2011)
51 Cal.4th 811, 821.)
“[C]onduct
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.” (Erlich
v. Meneze (1999) 21 Cal.4th. 543, 551.) “‘[A] tortious breach of
contract…may be found when (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.’” (Robinson Helicopter Co.,
Inc. v. Dana Corp (2004) 34 Cal.4th 979, 989.) “Under the common law
the established rule is the negligent failure to exercise reasonable care and
skill in undertaking to perform a service contract of this type is a tort, as
well as a breach of contract.” (Moreno v. Sanchez (2003) 106 Cal.App.4th
1415, 1435.)
The economic
loss rule states that one cannot recover in negligence cases for purely
economic losses. (Sheen v. Wells Fargo (2022) 12 Cal.5th 905, 922.) Tort
claims for economic losses between contracting parties “are barred when they
arise from—or are not independent of—the parties’ underlying contracts.” (Id.
At 923.)
First, Plaintiff
states sufficient facts to state a cause of action. The complaint alleges
Defendant had a duty as a development consultant because Defendant held itself
out as a consultant for condominium budget preparation, reserve studies,
financial management, and accounting with knowledge under the California
Department of Real Estate guidelines. (Complaint, ¶ 50.) Defendant’s duty also arose under the express provisions of
its contract with Plaintiff to provide these services consistent with the
industry standards. (Complaint, ¶ 51.) Defendant breached this duty by ignoring communications, providing
materials in an untimely manner, and providing inaccurate materials. (Complaint,
¶ 52.) Plaintiff had to alter its original project from
converting the buildings into condominiums to converting them into apartments due
to Defendant’s delays and mistakes. (Complaint, ¶ 31.) This resulted in Plaintiff’s loss of $10,000,000 in actual,
compensatory, and consequential damages. (Complaint, ¶ 53.) Therefore, Plaintiff has alleged facts sufficient to state
a cause of action.
Next, Defendant
argues that the second cause of action is duplicative of the first cause of
action for breach of contract because it arose out of contractual duty and does
not make any separate allegations. However, the claim is not duplicative
because it arises out of a duty independent of the contract.
(See Moreno v. Sanchez (2003) 106 Cal.App.4th 1415, 1435.) Here, Plaintiff alleges that Defendant had a duty to exercise the
standard of care of other members of the profession. (Complaint,
¶ 50.) Defendant’s duty arose out of both the express
provisions of the contract and because Defendant held itself out as possessing
the requisite skill, prudence, and diligence of other members of the
profession. (See Robinson Helicopter Co., Inc. v.
Dana Corp (2004) 34 Cal.4th 979, 989.) The second cause of action thereby asserts
a different legal theory than the first cause of action.
Lastly,
Defendant argues that this cause of action is barred by the economic loss rule.
However, as discussed above, Plaintiff alleges Defendant’s duty did not arise
solely out of its contractual obligations which would bar purely economic
recovery. (See Sheen v. Wells Fargo (2022) 12 Cal.5th 905, 922.) Instead,
Plaintiff alleges an independent tortious cause of action premised on Defendant
holding itself out as a development consultant. (Complaint, ¶ 50.) Defendant told Plaintiff its goal was
to prepare the materials in accordance with the California Department of Real
Estate standards based on its experience and contacts. (Complaint, ¶ 14.) As a result, Plaintiff has pled
sufficient facts to sustain an independent cause of action for professional
negligence which is not barred by the economic loss rule.
Accordingly,
Defendant’s demurrer to Plaintiff’s complaint is overruled.
Motion
to Strike
Defendant
moves to strike portions of Plaintiff’s claims seeking attorney’s fees on the
grounds that it seeks remedies which are not recoverable.
“Absent
an agreement or statute, a party is generally precluded from recovery of
attorney’s fees.” (Nasser v. Superior Court (1984) 156 Cal.App.3d 52,
56.)
Defendant moves
to strike the following: “Plaintiff has and will incur attorney’s fees”
(Complaint, ¶ 47, p. 10, line 15) and “for
reasonable attorney fees” (Prayer for Relief, ¶ 3, p. 12, line 9.) During the meet
and confer on December 4, 2023, Plaintiff’s counsel acknowledged it did not
have valid grounds to seek attorney’s fees and expressed a willingness to amend
the complaint. (Jeon Decl., ¶ 5.) As of this date,
Plaintiff has not provided an amended complaint. (Jeon
Decl., ¶ 5.) Further, Plaintiff has not
provided an agreement or statute permitting attorney’s fees. Accordingly,
Defendant’s motion to strike portions of Plaintiff’s complaint seeking
attorney’s fees is sustained.
It
is so ordered.
Dated: October 11, 2024
_______________________
MEL RED RECANA
Judge of the
Superior Court