Judge: Michael E. Whitaker, Case: 21SMCV01453, Date: 2023-08-15 Tentative Ruling

Case Number: 21SMCV01453    Hearing Date: March 7, 2024    Dept: 207

TENTATIVE RULING

MOVING PAPERS:

1. Notice of Motion and Motion for Summary Judgment/Adjudication; Memorandum of Points and Authorities
2. Compendium of Evidence
3. Separate Statement of Undisputed Facts in Support of Motion for Summary Judgment/Adjudication

OPPOSITION PAPERS:

1. Opposition to Motion for Summary Judgment/Adjudication; Memorandum of Points and Authorities
2. Declaration of Joanna Ardalan
3. Separate Statement in Opposition to Motion for Summary Judgment/Adjudication

REPLY PAPERS:

1. Reply in Support of Motion for Summary Judgment/Adjudication
2. Evidentiary Objections

BACKGROUND

Cross-Complainant BFF Construction, Inc. (“BFF”) filed a cross-complaint against Cross-Defendants Peter McNulty (“McNulty”), Nanette James (“James”), Landry Design Group, Inc. (“LDG”), Richard Landry (“Landry”), and Todd Riley (“Riley”) alleging causes of action for (1) breach of contract; (2) fraudulent inducement; (3) negligent interference with contract, and (4) negligence.  The first two causes of action for breach of contract and fraudulent inducement are alleged only as to James and McNulty, while the third and fourth causes of action are alleged only as to the LDG, Landry, and Riley.

BFF was the general contractor for a home construction project for owners McNulty and James.  LDG was the architectural firm for the project, owned by Landry, and Riley is partner at LDG.

Cross-Defendants LDG, Landry, and Riley (“Cross-Defendants”) now move for summary judgment and/or summary adjudication as to the third and fourth causes of action as follows:

Issue 1:  Cross-Defendants are entitled to a judgment in their favor on the third cause of action for negligence [sic] interference with contract and the fourth cause of action for negligence in the operative Cross-Complaint because both causes of action are barred by the two (2) year statute of limitations set forth in Code of Civil Procedure section 339.

Issue 2: Cross-Defendants are entitled to judgment in their favor on the third cause of action for negligence [sic] interference with contract and the fourth cause of action for negligence in the operative Cross-Complaint because they did not have a legal duty to compensate BFF for its work on the project.

 BFF opposes the motion and Cross-Defendants reply.

LEGAL STANDARDS – SUMMARY JUDGMENT/ADJUDICATION

“[T]he party moving for summary judgment bears the burden of persuasion that there is no triable issue of material fact and that he is entitled to judgment as a matter of law[.] There is a triable issue of material fact if, and only if, the evidence would allow a reasonable trier of fact to find the underlying fact in favor of the party opposing the motion in accordance with the applicable standard of proof.”  (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850.)  “[T]he party moving for summary judgment bears an initial burden of production to make a prima facie showing of the nonexistence of any triable issue of material fact; if he carries his burden of production, he causes a shift, and the opposing party is then subjected to a burden of production of his own to make a prima facie showing of the existence of a triable issue of material fact.”  (Ibid.)  

“On a summary judgment motion, the court must therefore consider what inferences favoring the opposing party a factfinder could reasonably draw from the evidence. While viewing the evidence in this manner, the court must bear in mind that its primary function is to identify issues rather than to determine issues.  Only when the inferences are indisputable may the court decide the issues as a matter of law. If the evidence is in conflict, the factual issues must be resolved by trial.”  (Binder v. Aetna Life Ins. Co. (1999) 75 Cal.App.4th 832, 839 [cleaned up].)  Further, “the trial court may not weigh the evidence in the manner of a factfinder to determine whose version is more likely true.  Nor may the trial court grant summary judgment based on the court's evaluation of credibility.”  (Id. at p. 840 [cleaned up]; see also Weiss v. People ex rel. Department of Transportation (2020) 9 Cal.5th 840, 864 [“Courts deciding motions for summary judgment or summary adjudication may not weigh the evidence but must instead view it in the light most favorable to the opposing party and draw all reasonable inferences in favor of that party”].) 

A party may move for summary adjudication as to one or more causes of action, affirmative defenses, claims for damages, or issues of duty if that party contends that there is no merit to the cause of action, defense, or claim for damages, or if the party contends that there is no duty owed.  (See Code Civ. Proc., § 437c, subd. (f)(1).)  “A motion for summary adjudication shall be granted only if it completely disposes of a cause of action, an affirmative defense, a claim for damages, or an issue of duty.”  (Ibid.)  A cause of action has no merit if: (1) one or more elements of the cause of action cannot be separately established, even if that element is separately pleaded, or (2) a defendant establishes an affirmative defense to that cause of action.  (See Code Civ. Proc., § 437c, subd. (n); Union Bank v. Superior Court (1995) 31 Cal.App.4th 573, 583.)  Once the defendant has shown that a cause of action has no merit, the burden shifts to the plaintiff to show that a triable issue of material fact exists as to that cause of action.  (See Code Civ. Proc., § 437c, subd. (o)(2); Union Bank v. Superior Court, supra, 31 Cal.App.4th at p. 583.) 

EVIDENTIARY OBJECTIONS

            The Court rules as follows with respect to BFF’s evidentiary objections:

1.      Sustained

2.      Overruled

3.      Overruled

4.      Overruled

5.      Overruled

6.      Overruled

DISCUSSION

A.    ISSUE 1: STATUTE OF LIMITATIONS

BFF’s third and fourth causes of action for negligent interference with contract and negligence both sound in negligence.  The statute of limitations for negligence is two years.  (Code Civ. Proc., § 335.1.) 

Emergency Rule 9 tolled the applicable statute of limitations for 178 days from April 6, 2020 to October 1, 2020, meaning BFF’s claim must have accrued on or after April 23, 2019, which is two years and 178 days prior to October 18, 2021, when BFF filed its original cross-complaint.

            Cross-Defendants’ Evidence

Cross-Defendants argue that the statute of limitations accrued by January 21, 2016, when the change order regarding modifications to the foundation, which was caused by LDG’s “subpar” architectural plans, put BFF on notice that the project would be delayed and BFF would incur additional expenses.  Alternatively, BFF knew by August 2017, the original completion date for the project, that completion of the project was delayed, and BFF was incurring additional expenses. 

In support, BFF has provided the following evidence:

·         The contract between BFF and the owners called for a fixed fee and a fixed amount of time (20 months), from the date the permit issued, but specified that if the contract exceeded those 20 months, an additional $25,000 per month would be due.  (Ex. 5 [contract]; Ex. 16 [Fata Depo] at pp. 40:13-18; 68:9-17.)

·         The permit issued on December 9, 2015, making the original completion date in August 2017 (Ex. 16 [Fata Depo] at pp. 76:5-17; 103:13-20.)

·         BFF’s profit would decrease slightly the longer the project went on, even with the additional $25,000 per month.  (Ex. 16 [Fata Depo] at pp. 69:5-17; 73:2-6.)

·         The January 21, 2016 change order put BFF on notice that a defect in LDG’s foundation plan delayed completion of the project by one month and increased construction costs by $26,170.00.  (Ex. 13 [change order]; Ex. 16 [Fata Depo] at p. 90:7-17)

·         In March 2016 BFF encountered foundational problems caused by the “subpar” architectural plans not matching (Ex. 16 [Fata Depo] at pp. 43:6-12; 88:2-18.)

·         BFF was aware when it issued the foundation change order that the project would be delayed (Ex. 16 [Fata Depo] at pp. 43:19-44:3; 46:7-14.)

·         As of April 25, 2016, BFF was aware that Landry’s “subpar plans” for elevations in the basement would cause further delay.  (Ex. 16 [Fata Depo] at p. 102:10-14.)

·         The owners paid approximately an additional $100,000 in additional monthly fees beyond the original 20 months, but around September or October of 2019, communications broke down between BFF and the owners with regard to the outstanding balance owed.  (Ex. 16 [Fata Depo] at pp. 118:21-119:1.)

·         Due to the owners’ financial situation, BFF was invoicing the owners for partial amounts and accepting partial payments once the project went over the original 20 months.  (Ex. 16 [Fata Depo] at p. 124:1-12.)

·         The project was not completed until April 2019.  (Ex. 16 [Fata Depo] at pp. 113:21-114:4.)

An action does not accrue when the damages are nominal or the existence of damages are speculative or illusory.  (Walker v. Pacific Indem. Co. (1960) 183 Cal.App.2d 513, 517.)  But “once plaintiff has suffered actual and appreciable harm, neither the speculative nor uncertain character of damages nor the difficulty of proof will toll the period of limitation.”  (Davies v. Krasna (1975) 14 Cal.3d 502, 514.)

Here, while BFF may have known it would suffer nominal damages by virtue of the delay, it was not clear that the owners would not ultimately pay BFF most of the additional charges until September or October of 2019, when communications with the owners broke down.  Therefore, cross-defendants have not met their burdens of production and persuasion in establishing that the statute of limitations had run prior to BFF filing the original cross-complaint.

B.     ISSUE 2: DUTY

Cross-Defendants’ argument that they owed no duty of care to BFF is duplicative of their arguments on demurrer, which the Court already rejected:

Factors to consider in determining whether Landry Cross-Defendants owed a duty of care are (1) the extent to which the transaction was intended to affect BFF, (2) the foreseeability of harm to BFF, (3) the degree of certainty that BFF suffered injury, (4) the closeness of the connection between Landry Cross-Defendants’ conduct and the injury suffered, (5) the moral blame attached to Landry Cross-Defendants’ conduct, and (6) the policy of preventing future harm. (Biakanja v. Irving (1958) 49 Cal.2d 647, 650.)

An architect, in his or her capacity as an independent contractor, may be sued for negligence in the preparations of plans and specifications. Such a suit may be brought either by the client or third parties. [Huber, Hunt & Nichols, Inc. v. Moore, 67 Cal. App. 3d 278, 136 Cal. Rptr. 603 (5th Dist. 1977); see also Mallow v. Tucker, Sadler & Bennett, Architects & Engineers, Inc., 245 Cal. App. 2d 700, 54 Cal. Rptr. 174 (4th Dist. 1966) (liability for failure to delineate on plans location of buried high voltage lines despite possessing means of doing so); But see Civ. Code § 2782.8, effective Jan. 1, 2018, which promulgates that design professionals are no longer exposed to unlimited liability with respect to the duty to indemnify and the cost to defend. Cal. Civ. Code § 2782.8 (West) Rather, a design professional's cost of defending an indemnitee is limited to that party's proportionate percentage of fault.]

Liability exists because an architect is under a duty to exercise ordinary care in the course of work for the protection of any person who foreseeably and with reasonable certainty may be injured by a failure to do so, even though such an injury may occur after the work has been accepted by the person engaging the architect's services. [Montijo v. Swift, 219 Cal. App. 2d 351, 33 Cal. Rptr. 133 (4th Dist. 1963)] Thus, when an architect prepares plans and specifications in a careless and negligent manner and a third person within the area of foreseeable risk is injured or his or her property damaged as a result of the defective design, the third person can recover damages from the architect. [Peak v. Richmond Elementary Sch. Dist., 161 Cal. App. 2d 366, 326 P.2d 860 (1st Dist. 1958)] Liability may be imposed for negligent design where no supervisory responsibilities are involved. [Mallow v. Tucker, Sadler & Bennett, Architects & Engineers, Inc., 245 Cal. App. 2d 700, 54 Cal. Rptr. 174 (4th Dist. 1966)]

Foreseeable third parties to whom an architect owes a duty may include contractors [Huber, Hunt & Nichols, Inc. v. Moore, 67 Cal. App. 3d 278, 136 Cal. Rptr. 603 (5th Dist. 1977)], purchasers of buildings designed by the architects [Cooper v. Jevne, 56 Cal. App. 3d 860, 128 Cal. Rptr. 724 (2d Dist. 1976); Beacon Residential Community Ass'n v. Skidmore, Owings & Merrill LLP, 59 Cal. 4th 568, 173 Cal. Rptr. 3d 752, 327 P.3d 850 (2014)], lenders [U. S. Fin. v. Sullivan, 37 Cal. App. 3d 5, 112 Cal. Rptr. 18 (4th Dist. 1974)], and adjoining landowners [Peak v. Richmond Elementary Sch. Dist., 161 Cal. App. 2d 366, 326 P.2d 860 (1st Dist. 1958)]. An architect's liability extends to economic loss as well as bodily injury. [Cooper v. Jevne, 56 Cal. App. 3d 860, 128 Cal. Rptr. 724 (2d Dist. 1976) (liability for economic losses of subsequent purchasers exists even where there is no physical injury or property damage)]

(Cal. Civ. Prac. Torts (Nov. 2021 Update) § 34:24. Liability for defective plans and specifications.) 

The Court finds that BFF’s allegations are sufficient. According to the allegations, (1) the transaction, i.e., the construction of the Property was intended to affect BFF; (2) the harm to BFF, i.e., delays in construction and lack of compensation for the delays, was foreseeable to BFF because the construction was dependent on Landry Cross-Defendants’ plans; (3) BFF did in fact suffer injury because it was not adequately compensated by Cross-Defendants Peter McNulty and Nanette James; and (4) Landry Cross-Defendants’ conduct in failing to make timely plans and subsequently changing the plans is closely tied to the harm suffered by BFF. Additionally, given the foreseeability of harm, moral blame may be attached to Landry Cross-Defendants’ conduct to prevent future harm.

(April 12, 2022 Minute Order.)

            The evidence Cross-Defendants have provided similarly demonstrates (1) the transaction was intended to benefit BFF (through the construction fees); (2) harm to BFF due to delays and lack of compensation by the owners was foreseeable because the construction was dependent on Cross-Defendants’ architectural plans; (3) BFF suffered injury because it was not adequately compensated by McNulty and James; and (4) Cross-Defendants’ “subpar” architectural plans are closely related to BFF’s resulting harm. 

            Thus, Cross-Defendants have not met their burdens of production and persuasion that it did not owe BFF a duty of care.

CONCLUSION AND ORDER

For the reasons stated above, the Court denies Cross-Defendants’ motion for summary judgment and/or adjudication in its entirety. 

Cross-Defendants shall give notice of the Court’s ruling, and to file a proof of service of such.  

DATED:  March 7, 2024                                                        ___________________________

                                                                                          Michael E. Whitaker

                                                                                          Judge of the Superior Court