Judge: Monica Bachner, Case: 22STCV06724, Date: 2022-10-18 Tentative Ruling
Case Number: 22STCV06724 Hearing Date: October 18, 2022 Dept: 71
Superior Court of California
County of Los Angeles
DEPARTMENT 71
TENTATIVE RULING
|
VINCE EGAN,
vs.
PATAL CONSTRUCTION, LLC, and WILLIAMS PATAL. |
Case No.: 22STCV06724
Hearing Date: October 18, 2022 |
Defendants Patal Construction, LLC, and Williams Patal’s demurrer to the complaint of Plaintiff Vince Egan is sustained as to the 4th, 5th, 6th and 7th causes of action with leave to amend within 10 days.
Defendants Patal Construction, LLC, and Williams Patal’s motion to strike is denied as moot.
Demurrer
Defendants Patal Construction, LLC (“Patal Construction”), and Williams Patal (“Patal”) (collectively, “Defendants”) demur to the 4th (fraud), 6th (intentional misrepresentation), and 7th (negligent misrepresentation) causes of action in the complaint (“Complaint”) of Plaintiff Vince Egan (“Egan”) (“Plaintiff”) on the basis they fail to state facts sufficient to constitute a cause of action. (Notice of Demurrer, pg. 2; C.C.P §430.10(e).) Defendant Patal also demurs to the Complaint on the grounds that the 4th, 5th (negligence), 6th, and 7th causes of action are subject to a demurrer based on a misjoinder of parties. (Notice of Demurrer, pg. 2; C.C.P §430.10(d).)
This action arises from a residential remodel project located at 805 Norumbega Drive, Monrovia, CA 91016 (“Property”); Plaintiff owns the Property. (Complaint ¶5.) Plaintiff obtained bids from various general contractors to perform extensive home improvements on the property, including bathroom remodels, a new kitchen, and a garage remodel, which included general demolishing, excavation, leveling and compacting, installation of rebar, concrete work, framing, metal structure, roof framing, installation of new gutters and downspouts, roofing, skylight installation, insulation installation, electrical work to completely re-wire the house, complete re-piping of plumbing for the house, drywall, flooring, new stairs, painting, installation of new doors and windows, stucco the entire house, installation and preparation of interior fixtures and trim, and a thorough cleanup and haul away of all remaining debris. (Complaint ¶¶6,7.)
Plaintiff alleges Patal Construction’s principal, Patal, assured Plaintiff that Patal Construction would complete the Project in a skillful manner with quality workmanship, and adhere to the highest standards of professionalism and any subcontractors Patal used would be fully licensed, bonded, and insured. (Complaint ¶6.) Plaintiff alleges he selected Patal Construction to perform the work project based on Patal’s assurances of superior quality of workmanship and professionalism. (Complaint ¶6.)
On or around January 15, 2019, Plaintiff entered into a construction contract (“Contract”) with Patal Construction, by which Patal Construction would perform a remodel on the Property (“Project”) pursuant to an eleven-page bid. (Complaint ¶5, Exh. A.) Plaintiff alleges pursuant to the Contract, the Project was to begin on or about February 4, 2019, and contemplated a completion date of November 15, 2019. (Complaint ¶8.) Plaintiff alleges Patal Construction did not begin demolition until on or about February 13, 2019, and partly concluded on or about April 2, 2019, during which time portions of the project sat completed and exposed to severe elements for extended periods, causing resulting damage to the Property. (Complaint ¶¶9, 10.) Plaintiff alleges Patal construction never provided Plaintiff with a construction schedule, which Plaintiff needed to provide to an interior designer he retained, and appliances Plaintiff purchased were never timely or properly installed and have been stored with the supplier since November 2019, as well as building materials. (Complaint ¶11.) Plaintiff alleges Patal Construction made numerous attempts to amend the contract to delete items from the Project’s scope, demand payments for items included in the original contract scope, failed to follow the plans and specifications in various installations of the Project, attempted to substitute used materials in place of new electrical and plumbing materials required in the contract, and continuously failed to clean up the property. (Complaint ¶¶13-16.) Plaintiff notified Patal Construction of his concerns in or about October 2019 regarding project details, to which Patal Construction gave no substantive response. (Complaint ¶17.) Further, Plaintiff alleges Patal Construction’s subcontractors were not licensed, bonded, or insured. (Complaint ¶27.)
Plaintiff filed the Complaint on or about February 23, 2022. Defendants filed the instant demurrer on April 27, 2022, and accompanying motion to strike on April 29, 2022. Plaintiff filed his oppositions to the demurrer and motion to strike on October 5, 2022. Defendants filed their replies on October 11, 2022.
Summary of Demurrer
In support of their demurrer to the Complaint, Defendants argue the 4th, 6th, and 7th causes of action are subject to a demurrer because they do not sufficiently plead causes of action with the requisite heightened particularity requirements. (Memorandum, pg. 6.) Defendants further argue the Complaint is subject to a demurrer for misjoinder of Patal as to the 4th, 5th, 6th, and 7th causes of action because Plaintiff cannot state a claim against Patal individually since the alleged Contract was between Plaintiff and Patal Construction. (Memorandum, pg. 6.)
Legal Standard
“[A] demurrer tests the legal sufficiency of the allegations in a complaint.” (Lewis v. Safeway, Inc. (2015) 235 Cal.App.4th 385, 388.) A demurrer can be used only to challenge defects that appear on the face of the pleading under attack or from matters outside the pleading that are judicially noticeable. (See Donabedian v. Mercury Insurance Co. (2004) 116 Cal.App.4th 968, 994 [in ruling on a demurrer, a court may not consider declarations, matters not subject to judicial notice, or documents not accepted for the truth of their contents].) For purposes of ruling on a demurrer, all facts pleaded in a complaint are assumed to be true, but the reviewing court does not assume the truth of conclusions of law. (Aubry v. Tri-City Hospital District (1992) 2 Cal.4th 962, 967.)
Leave to amend must be allowed where there is a reasonable possibility of successful amendment. (See Goodman v. Kennedy (1976) 18 Cal.3d 335, 349 [court shall not “sustain a demurrer without leave to amend if there is any reasonable possibility that the defect can be cured by amendment”]; Kong v. City of Hawaiian Gardens Redevelopment Agency (2002) 108 Cal.App.4th 1028, 1037 [“A demurrer should not be sustained without leave to amend if the complaint, liberally construed, can state a cause of action under any theory or if there is a reasonable possibility the defect can be cured by amendment.”]; Vaccaro v. Kaiman (1998) 63 Cal.App.4th 761, 768 [“When the defect which justifies striking a complaint is capable of cure, the court should allow leave to amend.”].) The burden is on the complainant to show the Court that a pleading can be amended successfully. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.)
Failure to State a Claim
Fraud and Intentional Misrepresentation (4th & 6th COAs)
The elements of fraud are: “(a) misrepresentation (false representation, concealment, or nondisclosure); (b) knowledge of falsity (or ‘scienter’); (c) intent to defraud, i.e., to induce reliance; (d) justifiable reliance; and (e) resulting damage.” (Charnay v. Cobert (2006) 145 Cal.App.4th 170, 184; Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 974.) A cause of action for fraud must be alleged with factual specificity. Plaintiff must plead facts showing “how, when, where, to whom, and by what means the representations were tendered. [Citation]” (Small v. Fritz Companies, Inc. (2003) 30 Cal.4th 167, 184.)
Plaintiff does not allege sufficient facts to constitute causes of action for fraud and intentional misrepresentation. Plaintiff’s causes of action are based on general allegations that “[o]n multiple occasions prior to the execution of the Contract, Patal assured Plaintiff that Patal would complete the Project in a skillful manner with quality workmanship and adhere the highest standards of professionalism. Patal also assured Plaintiff that any subcontractors Patal used would be fully licensed, bonded, and insured,” and “Patal then represented to Plaintiff both orally and in writing that the Project was designed and to be built by properly licensed, insured, bonded, and competent contractors and subcontractors.” (Complaint ¶¶52, 65.) Plaintiff further alleges “[a]t the time Patal made the previously alleged representations to Plaintiff, Patal knew that Plaintiff was reasonably relying upon the representations in deciding on which contractor they would select to perform the contemplated home improvement work” and “Patal intended for Plaintiff to rely on their false representations.” (Complaint ¶¶55, 67.) The Complaint does not state how, when, where, and by what means the representations were tendered to Plaintiff, and the circumstances which would make any reliance on Defendant’s reliance on the representations justifiable. (Small, supra, 30 Cal.4th at pg. 184; Charnay, supra, 145 Cal.App.4th at pg. 184; Engalla, supra, 15 Cal.4th at pg. 974.)
Plaintiffs argue this Court should grant leave to amend the Complaint to correct any deficiencies because Plaintiff has not had any prior challenge to the complaint and is able to correct any deficiencies with a simple amendment. (Goodman v. Kennedy (1976) 18 Cal.3d 335; Titus v. Canyon Lake Property Owners Association (2004) 118 Cal.App.4th 906; Okun v. Superior Court, (1981) 29 Cal.3d 442; Virginia G. v. ABC Unified School District (1993) 15 Cal.App.4th 1848.)
Based on the foregoing, Defendants’ demurrer to the 4th and 6th causes of action is sustained with 10 days leave to amend.
Negligent Misrepresentation (7th COA)
The elements of a cause of action for negligent misrepresentation include: “[(1)] [m]isrepresentation of a past or existing material fact, [(2)] without reasonable ground for believing it to be true, and [(3)] with intent to induce another’s reliance on the fact misrepresented; [(4)] ignorance of the truth and [(5)] justifiable reliance on the misrepresentation by the party to whom it was directed; and [(6)] resulting damage. (Hydro-Mill Co., Inc. v. Hayward, Tilton & Rolapp Ins. Associates, Inc. (2004) 115 Cal.App.4th 1145, 1154.) The facts constituting the alleged fraud must be alleged factually and specifically as to every element of fraud, as the policy of “liberal construction” of the pleadings will not ordinarily be invoked. (Lazar v. Superior Court (1996) 12 Cal.4th 631, 645.) To properly allege fraud against a corporation, the plaintiff must plead the names of the persons allegedly making the false representations, their authority to speak, to whom they spoke, what they said or wrote, and when it was said or written. (Tarmann v. State Farm Mutual Automobile Insurance Co. (1991) 2 Cal.App.4th 153, 157.)
Plaintiff failed to allege sufficient facts to constitute a cause of action for negligent misrepresentation. Plaintiff alleges, “Patal represented to Plaintiff both orally and in writing that the Project was designed and to be built by properly licensed, insured, bonded, and competent contractors and subcontractors,” and “Patal made these representations with the intention of inducing Plaintiff to act in reliance upon those representations by entering into the Contract.” (Complaint ¶¶72, 74.) Plaintiff fails to allege facts with specificity as to whom they were spoken, what they said or wrote, and when it was said or written. (Tarmann, supra, 2 Cal.App.4th at pg. 157.)
Based on the foregoing, Defendants’ demurrer to the 7th cause of action is sustained with 10 days leave to amend.
Misjoinder
C.C.P. §430.10 provides, “The party against whom a complaint . . . has been filed may object[ ] by demurrer . . . as provided in Section 430.30[ ] to the pleading on . . . [the] grounds . . . [t]here is a defect or misjoinder of parties.” (C.C.P. §430.10(d).)
Citing Van Zant v. Apple Inc. (2014) 229 Cal.App.4th 965, 973, Defendants argue Patal is a misjoined party for the 4th, 5th, 6th, and 7th causes of action because Plaintiff fails to allege actionable conduct by Patal and no basis to impose vicarious liability for Patal Construction’s alleged breach of oral contract. (Memorandum, pg. 12.) In opposition, Plaintiff argues Patal directly engaged in conduct amounting to fraud, based not only on his direct supervision of Patal Construction’s tortious acts by failing to ensure that Patal Construction performed defect-free work on the Project that meets the applicable building codes and standards, but also his own misrepresentations and deceit. (Opposition Demurrer, pg. 10.)
A breach of contract cause of action requires a party to allege the existence of a contract. (Lortz v. Connell (1969) 273 Cal.App.2d 286, 290; see also CACI 300, 303.) A corporation is “a legal entity, separate and distinct from its stockholders, officers and directors, with separate and distinct liabilities and obligations.” (Sonora Diamond Corp. v. Superior Court (2000) 83 Cal.App.4th 523, 538.) “It is [] well established that corporate agents and employees acting for and on behalf of a corporation cannot be held liable for inducing a breach of the corporation’s contract.” (Shoemaker v. Myers (1990) 52 Cal.3d 1, 24.) “Directors and officers of a corporation are not rendered personally liable for its torts merely because of their official positions [and] shareholders of a corporation are not normally liable for its torts.” (Wyatt v. Union Mortgage Co. (1979) 24 Cal.3d 773, 785.)
Alter ego liability is proper only where “the corporate form is used to perpetrate a fraud, circumvent a statute, or accomplish some other wrongful or inequitable purpose.” (Turman v. Superior Court (2017) 17 Cal.App.5th 969, 980 (emphasis in original).) To impose liability on a corporation’s shareholders for the corporation’s obligations is “an extreme remedy, sparingly used. The standards for the application of alter ego principles are high, and the imposition of [alter ego] liability is to be exercised reluctantly and cautiously.” (Highland Springs Conference & Training Center v. City of Banning (2016) 244 Cal.App.4th 267, 281.) To provide fair notice a plaintiff must allege “some conduct amounting to bad faith [that] makes it inequitable for the corporate owner to hide behind the corporate form.” (Sonora Diamond Corp., supra, 83 Cal.App.4th at pg. 539.) A complaint must set forth the facts with sufficient precision “to show a unity of interest and ownership, and an unjust result if the corporation is treated as the sole actor. An allegation that a person owns all of the corporate stock and makes all of the management decisions is insufficient to cause the court to disregard the corporate entity[.]” (Leek v. Cooper (2011) 194 Cal.App.4th 399, 415.)
Here, Plaintiff’s Complaint alleges only Plaintiff and Patal Construction are parties to the Contract. (Complaint ¶5, Exh. A.) Williams Patal, a corporate agent of Patal Construction cannot be held liable for inducing a breach of Patal Construction’s contract with Plaintiff. (Shoemaker, supra, 52 Cal.3d at pg. 24; Wyatt, supra, 24 Cal.3d at pg. 785.) Given the Court’s ruling on the fraud allegations, the Complaint fails to allege specific facts that meet the high burden for imposing individual liability on Patal. Plaintiff’s conclusory allegations are insufficient to establish individual liability against Patal. (See Complaint, ¶¶ 19-21, 52-53, 60-61, 65-66, 72-73.)
Accordingly, Defendants’ demurrer to the Complaint for misjoinder of Patal as to the 4th, 5th, 6th, and 7th causes of action is sustained with 10 days leave to amend.
Motion to Strike
Considering the Court’s ruling on the demurrer, Defendants’ motion to strike is moot.
Dated: October _____, 2022
Hon. Monica Bachner
Judge of the Superior Court