Judge Ralph C. Hofer, Case Number: 24NNCV06402, Date: 2025-05-09 Tentative Ruling

Plaintiffs Alvin Tam and Karen Loi allege that in March of 2020 they entered into a written contract with Harrington Construction Corp. whereby it agreed to provide construction remodeling services for $307,208.00 at plaintiffs’ residential property in San Marino. In October of 2024, the contract was updated to include an additional scope of work, including a master bathroom and a 137 square foot addition. The work was not completed until approximately March of 2021. The complaint alleges that in August of 2022, Harrington Construction Corp. changed its name to defendant Milar Design & Build, Inc. (Milar).

Plaintiffs allege that starting in May of 2024, plaintiffs noticed that their master bathroom walls were soaking wet and hired a contractor to inspect the property for the cause of the excessive moisture. The contractor discovered numerous defects in defendant Milar’s workmanship. The complaint alleges that defendant Milar’s workmanship fell below the standards in the industry, resulting in property damage to plaintiffs’ residence.

The complaint also alleges that defendant Milar was a licensed general contractor who filed with the registrar of the Contractors of the Contractors State License Board a bond issued by defendant American Contractors Indemnity Company (American Contractors Indemnity) in the sum of $25,000.00. The complaint alleges that defendant Milar willfully failed to perform work at plaintiffs’ property with reasonable diligence and performed its work deficiently and defectively, in violation of Business and Professions Code sections 7000 and 7173, as a result of which defendant American Contractors Indemnity is indebted to plaintiffs in the full amount of the penal sum of the license bonds issued to defendant.

“The parties may stipulate without leave of court to one 15-day extension beyond the 30-day time period prescribed for the response after service of the initial complaint.”

Here, the complaint was served by substituted service, with follow up mailing on January 7, 2025. The parties agreed to an extension of time to respond to the complaint of thirty days, to March 21, 2025. [Blake Decl., para. 2]. The demurrer was filed and served on March 20, 2025.

Under CRC Rule 3.110(d), the parties were only permitted to stipulate without leave of court for a 15-day extension. The demurrer was filed two weeks beyond such a permissible extension, without leave of court. The court will consider whether the demurrer will be overruled as untimely.

Defendant American Contractors Indemnity demurs to the cause of action alleged against it, the third cause of action for indemnity, arguing that the cause of action is defective because plaintiffs’ allegations show that the action is barred by the affirmative defense stated in CCP section 996.360, under which a surety is only liable for any act, default of misconduct of the principal or other breach of the conditions of the bond that occurs during the bond’s effective bond period.

(a) The bond remains in full force and effect for all liabilities incurred before, and for acts, omissions, or causes existing or which arose before, the cancellation or withdrawal. Legal proceedings may be had therefor in all respects as though there had been no cancellation or withdrawal.”

Defendant relies on a Request for Judicial Notice, attaching a copy of the bond applicable to defendant Milar, arguing that it is an official record of the State of California, and shows that the bond was effective on March 23, 2023. [RFJN, Ex. 1]. The Bond attached is from the files of the Registrar of Contractors for the State of California, Contractors State License Board, and states, “This bond to become effective 3/23/2023.” [RFJN, Ex. 1, para. 5].

Defendant argues that the complaint alleges that plaintiffs and defendant Milar entered into the contract in March of 2020, and that Milar finished the project in March of 2021. [Complaint, para. 5]. Defendant argues that therefore the period in which Milar could commit any acts or omissions would have had to occur between March of 2020 and March of 2021, but because this period is well before the subject bond became effective, American Contractors Indemnity cannot be held liable.

The complaint is actually a bit ambiguous on the timeframe, as while the complaint alleges that the written contract was originally entered “in March of 2020,” and that “The work performed by Defendant Milar was not completed until approximately March of 2021,” the complaint also alleges that “On October 13, 2024, the contract was updated to include an additional scope of work…” [Complaint, para. 5]. However, the 2024 date appears to be a typographical error, as plaintiffs also allege that a copy of the updated contract is “attached hereto as Exhibit ‘B,’” and a review of that Exhibit shows that the subject contract is dated “10-13-2020.” [Complaint, para. 5, Ex. B].

It would appear from the face of the complaint and in light of the attached Exhibit that the cause of action may be barred on the ground the conduct of the bonded defendant Milar did not occur during the time the bond was in effect.

There has been no timely opposition filed to this demurrer, and moving defendant has filed a Notice of Non-Opposition indicating that no timely opposition to the demurrer has been served. It accordingly is not explained by plaintiffs how American Contractors Indemnity is responsible under an indemnity theory under what is apparently the bond of record by this defendant. The demurrer is sustained with one opportunity to amend to more clearly allege the basis for moving defendant’s liability, if possible.

The Court notes that the demurrer is untimely, filed and served two weeks beyond the time the parties are permitted to stipulate to an extension to respond to a pleading without leave of court. Defendant is cautioned that in the future the Court may refuse to consider pleadings not filed in conformity with the statutes, rules and procedures governing this litigation.

UNOPPOSED Demurrer is SUSTAINED WITH LEAVE TO AMEND to the third cause of action for indemnity on the ground it appears from the pleading, attached exhibits and judicially noticed bond that no acts or omissions subject to the bond occurred while it was in effect.

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