Judge: Robert S. Draper, Case: 20STCV12426, Date: 2022-08-17 Tentative Ruling

Case Number: 20STCV12426    Hearing Date: August 17, 2022    Dept: 78

Superior Court of California 

County of Los Angeles 

Department 78 

The Demurrers to the Second, Fourth, Fifth, and Sixth Causes of Actions are SUSTAINED with twenty days leave to amend as to both Cross-Defendants.

The Demurrers to the Third Cause of Action are SUSTAINED without leave to amend as to both Cross-Defendants.

FACTUAL BACKGROUND   

This is an action originally brought by Fung Bark Lau and Yang He (“Plaintiffs”) regarding a variety of construction defects in the renovation of their home (the “Subject Property”). Plaintiffs allege Defendants T.N.L. Construction Inc. (“T.N.L. Construction”), and TNL Renovation Inc. (“TNL Renovation”), to whom T.N.L. Construction assigned its rights and duties pursuant to a novation, negligently performed construction on their home, leading to structural damage and delays.

Relevant here is the Cross-Complaint brought by TNL Renovation. The operative Third Amended Cross-Complaint (“TAXC”) alleges that Cross-Defendants, including Metropolis Design Studio (“Metropolis”) and ROMB Engineering (“ROMB”) partook in the design, development, and construction of the Subject Property. (TAXC ¶ 5.) The damages alleged in the Complaint were the result of Cross-Defendants’ acts and or omissions in the design and construction process. (Ibid.) Accordingly, Cross-Defendants must indemnify TNL Renovation for any damages awarded in the underlying action. (Ibid.)

PROCEDURAL HISTORY 

On March 30, 2020, Plaintiffs filed the Complaint asserting five causes of action:

1.    Negligence;

2.    Breach of Written Contract;

3.    Unjust Enrichment;

4.    Violation of Business and Professions Code Section 7031; and

5.    Claim on Construction Bonds.

On May 29, 2020, T.N.L. Construction demurred to the Complaint. That Demurrer was overruled.

On November 17, 2020, T.N.L. Construction Inc. filed a Cross-Complaint asserting six causes of action:

1.    Comparative Indemnity and Apportionment of Fault;

2.    Total Equitable Indemnity;

3.    Negligence;

4.    Breach of Contract;

5.    Implied Contractual indemnity; and,

6.    Declaratory Relief.

On January 15, 2021, Cross-Defendant EHD Builders Inc. filed a Demurrer to T.N.L. Construction’s Cross-Complaint. That Demurrer was sustained with leave to amend.

On February 3, 2021, TNL Renovation filed a Cross-Complaint asserting four causes of action:

1.    Express Contractual Indemnity;

2.    Implied Indemnity;

3.    Contribution and Apportionment; and

4.    Declaratory Relief

On May 3, 2021, Metropolis filed a Demurrer to TNL Renovation’s Cross-Complaint.

On July 21, 2021, T.N.L. Construction filed a First Amended Cross-Complaint.

On August 3, 2021, TNL Renovation filed a First Amended Cross-Complaint.

On October 6, 2021, Metropolis filed a Demurrer to TNL Renovation’s First Amended Cross-Complaint.

On October 7, 2021, ROMB filed a Demurrer to TNL Renovation’s First Amended Cross-Complaint.

On November 2, 2021, TNL Renovation filed an Ex Parte application for an Order Granting Leave to File a Second Amended Cross-Complaint.

On November 3, 2021, the Court granted TNL Renovation leave to file a Second Amended Cross-Complaint and took ROMB’s Demurrer off calendar.

Also on November 3, 2021, TNL Renovation filed a second Amended Cross-Complaint.

On December 8, 2021, ROMB filed a Demurrer to TNL Renovation’s Second Amended Cross-Complaint.

On February 8, 2022, the Court denied Metropolis’s Demurrer to TNL’s Renovation’s Second Amended Cross-Complaint as moot because Metropolis was no longer listed as a Cross-Defendant.

On February 18, 2022, TNL Renovation filed a Motion for Reconsideration regarding the order denying ROMB’s Demurrer as moot. TNL Renovation argued that both ROMB and Metropolis were properly added as Cross-Defendants by Moe Amendment in March, 2021.

On March 15, 2022, the Court took ROMB’s Demurrer to TNL Renovation, Inc.’s Second Amended Cross-Complaint off calendar as ROMB was no longer listed as a Cross-Defendant.

On June 14, 2022, the Court granted TNL Renovation’s Motion for Reconsideration. The parties stipulated to allow TNL Renovation to file a Third Amended Cross-Complaint by June 15.

On June 15, 2022, TNL Renovation filed the operative Third Amended Cross-Complaint.

On June 28, 2022, ROMB filed a Demurrer to the Third Amended Cross-Complaint.

On June 30, 2022, Metropolis filed a Demurrer to the Third Amended Cross-Complaint.

On August 4, 2022, TNL Renovation filed Oppositions to both Demurrers.

On August 10, 2022, both Metropolis and TNL Renovation filed Replies.

DISCUSSION 

                         I.     REQUEST FOR JUDICIAL NOTICE  

In ruling upon demurrers, courts may consider matters that are proper for judicial notice.  (ABF Capital Corp. v. Berglass (2005) 130 Cal.App.4th 825, 834.)  

The court may take judicial notice of “official acts of the legislative, executive, and judicial departments of the United States and of any state of the United States,” “[r]ecords of (1) any court of this state or (2) any court of record of the United States or of any state of the United States,” and “[f]acts and propositions that are not reasonably subject to dispute and are capable of immediate and accurate determination by resort to sources of reasonably indisputable accuracy.” (Evid. Code § 452, subds. (c), (d), and (h).)  

Evidence Code Section 452 provides that judicial notice may be taken for facts and propositions that are “not reasonably subject to dispute and are capable of immediate and accurate determination by resort to sources of reasonably indisputable accuracy.” (Cal. Evid. Code § 452(h).) Further, “a court may take judicial notice of [recorded documents and] the fact of a document's recordation, the date the document was recorded and executed, the parties to the transaction reflected in a recorded document, and the document's legally operative language, assuming there is no genuine dispute regarding the document's authenticity. From this, the court may deduce and rely upon the legal effect of the recorded document, when that effect is clear from its face.” (Scott v. JPMorgan Chase Bank, N.A. (2013) 214 Cal.App.4th 743, 745-755.)  

Taking judicial notice of a document is not the same as accepting the truth of its contents or accepting a particular interpretation of its meaning. (Fremont Indem. Co. v. Fremont General Corp. (2007) 148 Cal.App.4th 97, 113-14 (citations and internal quotations omitted).) In addition, judges “consider matters shown in exhibits attached to the complaint and incorporated by reference.” (Performance Plastering v. Richmond American Homes of California, Inc. (2007) 153 Cal.App.4th 659, 665.) However, “[w]hen judicial notice is taken of a document . . . the truthfulness and proper interpretation of the document are disputable.” (Aquila, Inc. v. Sup. Ct. (2007) 148 Cal.App.4th 556, 569 (quoting StorMedia Inc. v. Sup. Ct. (1999) 20 Cal.4th 449, 457 n. 9).) 

The party requesting judicial notice must (a) give each adverse party sufficient notice of the request to enable the adverse party to prepare to meet the request and (b) provide the court with sufficient information to enable it to take judicial notice of the matter. (Cal. Evid. Code § 453.) 

Metropolis requests judicial notice of the following:

1.    The Initial Complaint of Plaintiffs Fung Bark Lau and Yang He.

2.    The Contract between T.N.L. Construction and Plaintiffs (Compl. Ex. A.)

3.    Novation Agreement between Plaintiffs and TNL Renovation. Compl. Ex. E.)

4.    Metropolis’s Requests for Admission as to T.N.L. Construction.

5.    T.N.L Constructions Responses to Metropolis’s Requests for Admission (specifically, numbers 1, 3, 4, 5, 7, 8, 9, 10, 11 and 12).

All of Metropolis’s requests for judicial notice are GRANTED.

TNL Renovation requests judicial notice of the following:

1.    T.N.L. Construction, Inc.’s First Amended Cross-Complaint.

2.    Metropolis Design Studio’s Answer to T.N.L. Construction, Inc.’s Cross-Complaint.

3.    Metropolis Design Studio’s Answer to TNL Construction, Inc.’s Cross-Complaint.

4.    This Court’s Order that Metropolis’s Answer is the Answer to the First Amended Cross-Complaint.

5.    TNL Construction, Inc.’s First Amended Cross-Complaint.

6.    ROMB’s Answer to TNL Construction’s Cross-Complaint.

All of TNL Renovation’s Requests for Judicial Notice are GRANTED.

                       II.          DEMURRER

Both Metropolis and ROMB demur to the Second through Sixth Causes of Action in the Third Amended Cross-Complaint pursuant to California Code of Civil Procedure section 430.10(e).[1]

A demurrer should be sustained only where the defects appear on the face of the pleading or are judicially noticed. (Code Civ. Pro., §§ 430.30, et seq.) As is relevant here, a court should sustain a demurrer if a complaint does not allege facts that are legally sufficient to constitute a cause of action. (See id. § 430.10, subd. (e).) As the Supreme Court held in Blank v. Kirwan (1985) Cal.3d 311: “We treat the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law. . . . Further, we give the complaint a reasonable interpretation, reading it as a whole and its parts in their context.” (Id. at p. 318; see also Hahn. v. Mirda (2007) 147 Cal.App.4th 740, 747 [“A demurrer tests the pleadings alone and not the evidence or other extrinsic matters. Therefore, it lies only where the defects appear on the face of the pleading or are judicially noticed. [Citation.]”)  

“In determining whether the complaint is sufficient as against the demurrer … if on consideration of all the facts stated it appears the plaintiff is entitled to any relief at the hands of the court against the defendants the complaint will be held good although the facts may not be clearly stated.” (Gressley v. Williams (1961) 193 Cal.App.2d 636, 639.) 

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. (Schifando v. City of Los Angeles, supra, 31 Cal.4th at p. 1081.) The demurrer also may be sustained without leave to amend where the nature of the defects and previous unsuccessful attempts to plead render it probable plaintiff cannot state a cause of action. (Krawitz v. Rusch (1989) 209 Cal.App.3d 957, 967.) 

A.  Procedural Issues

The Court first addresses procedural concerns raised by both parties.

First, Metropolis notes in its Demurrer that at the June 14, 2022, hearing on TNL Renovation’s Motion to Reconsider, the Court granted TNL Renovation limited leave to amend the Second Amended Cross-Complaint only to recaption it. Despite this, TNL Renovation made substantive amendments to the Second Amended Cross-Complaint before filing the instant Third Amended Cross-Complaint.

The Court notes that TNL Renovation exceeded its limited leave to amend by making these substantive amendments. However, due to the convoluted process by which we arrived to the Third Amended Cross-Complaint and the Court’s interest in judicial expediency, the Court will consider the Third Amended Cross-Complaint and the instant Demurrers on their merits.

Second, TNL Renovation argues that both ROMB and Metropolis should be estopped from demurring to the Third Amended Cross-Complaint as both parties filed Answers to T.N.L. Construction’s Cross-Complaint, which includes “the same alleged deficiencies” as TNL Renovation’s Third Amended Cross-Complaint.

TNL Renovation fails to cite an authority holding that a party that answers a Cross-Complaint is estopped from demurring to a later, substantively amended Cross-Complaint. This is especially true here, where the Cross-Complaints in question were filed by separate corporate entities. Accordingly, the Court can see no reason why estoppel should apply.

Finally, TNL Renovation argues that both parties’ Demurrers should be overruled as TNL Renovation obtained Certificates of Merit pursuant to Code of Civil Procedure section 411.35 as to both ROMB and Metropolis.

Section 411.35 states that in any action arising out of a certified architect or professional engineer’s alleged professional negligence, before filing the complaint or cross-complaint the plaintiff or cross-complainant must consult with at least one architect or professional engineer to determine if the defendant or cross-defendant performed their work negligently.

Here, TNL Renovation contends that the demurrers must be overruled pursuant to these certificates. TNL Renovation provides no authority that supports this contention.

The Certificates of Merit are statutory prerequisites to the instant claim, not “get out of jail free” cards to be deployed against all arguments of claim insufficiency. While the certificates may be persuasive regarding the competency of Cross-Defendants’ work, they say absolutely nothing about the legal duty Cross-Defendants owed TNL Renovation, which is the central argument of both Metropolis’s and ROMB’s Demurrers. Accordingly, TNL Renovation’s argument is unavailing.

B.  Second Cause of Action – Implied Indemnity

Both Metropolis and ROMB demur to the Second Cause of Action for Implied Indemnity.

“Implied contractual indemnity is a type of equitable indemnity [citation], predicated on the indemnitor’s breach of contract with the indemnitee.” (Garlock Sealing Technologies, LLC v. NAK Sealing Technologies Corp. (2007) 148 Cal.App.4th 937, 968.) 

“In general, indemnity refers to ‘the obligation resting on one party to make good a loss or damage another party has incurred.’” (Prince v. Pacific Gas & Electric Co. (2009) 45 Cal.4th 1151, 1157 (quoting Rossmoor Sanitation, Inc. v. Pylon, Inc. (1975) 13 Cal.3d 622, 628).) There are two types of indemnity: express indemnity and equitable indemnity. (See id.) Although implied contractual indemnity was historically recognized as a third form of indemnity, it is now recognized as a form of equitable indemnity. (See id.) Implied contractual indemnity is subject to comparative equitable apportionment of loss. (See id. at 1159.)  

1.    As to Metropolis

Metropolis argues that, as there was no contract between Metropolis and TNL Renovation, the Cause of Action for Implied Indemnity fails. Metropolis notes that in discovery, T.N.L. Construction admitted that it did not enter into a contractual relationship with Metropolis. (RFJN Ex. 5 at pp. 10-11.) As T.N.L.’s rights and duties were assigned to TNL Renovation, this would apply to TNL Renovation as well.

In Opposition, TNL Renovation alleges that Metropolis “entered into an agreement wherein there was an implied obligation to exercise ordinary care a builder, contractor, designer, supplied [sp.] of materials, and otherwise.” Indeed, the Third Amended Cross-Complaint alleges that “By and through the contractual agreements, oral representations and/or misrepresentations upon which Cross-Complainant relied, Cross-Defendants impliedly warranted that they had all applicable licenses, permits, insurance, and that their work would comply with all building codes and industry standards of quality workmanship.”

While the Court does not adopt Metropolis’s argument that a written contract is necessary for a claim for implied indemnity, the Third Amended Cross-Complaint simply does not provide any substantive allegations regarding what legal obligations Metropolis owed TNL Renovation, nor how their failure to fulfill those obligations lead to the underlying suit. The Third Amended Cross-Complaints allegations on this matter are purely conclusory. Absent any factual allegations, TNL Renovation cannot successfully state a claim for implied indemnity.

2.    As to ROMB

Similarly, ROMB argues that there is no contract between ROMB and TNL Renovation as ROMB was contracted by EHD Builders, Inc., not TNL Renovation. ROMB argues that TNL Renovation fails to allege the existence of a contractual duty or legal effect of any agreement between ROMB and TNL Renovation.

In Opposition, TNL Renovation argues that as ROMB did not demur to TNL Construction’s First Amended Cross-Complaint, they admit the allegations contained in TNL Renovation’s Third Amended Cross-Complaint. As discussed above, this argument is unavailing.

Moreover, the Court finds that the Third Amended Cross-Complaint fails to allege any facts demonstrating a legal or contractual duty that ROMB owed TNL Renovation.

Accordingly, both parties’ demurrers to the Second Cause of Action for Implied Indemnity are SUSTAINED with twenty days leave to amend.

C.  Third Cause of Action – Contribution and Apportionment

Both Metropolis and ROMB demur to the Third Cause of Action for Contribution and Apportionment.

As ROMB notes in its Demurrer, “a right of contribution may be enforced only after one tortfeasor has, by payment, discharged the joint judgment or has paid more than his pro rata share thereof.” (Code Civ. Proc., § 875(c).) Unlike a right to equitable indemnity, which can be asserted before judgment in the same underlying action, “a right of contribution can come into existence only after rendition of a judgment declaring more than one defendant jointly liable to the plaintiff.” (ROMB Demurrer at p. 4; quoting Coca Cola Bottling Co. v. Lucky Stores, Inc. (1992) 11 Cal.App.4^th 1372, 1378.) A claim for contribution accrues when the party seeking contribution has paid more than its fair share. (Smith v. Parks Manor (1987) 197 Cal.App.3d 872, 880.)

Here, as the Third Amended Cross-Complaint does not allege the entrance of a judgment against TNL Renovation, and as no such judgment has occurred, TNL Renovation cannot state a claim for contribution against either Cross-Defendant.

Accordingly, both parties Demurrers to the Third Cause of Action for Contribution and Apportionment are SUSTAINED without leave to amend.

D.  Fourth Cause of Action – Total Equitable Indemnity

Both Metropolis and ROMB demur to the Fourth Cause of Action for Total Equitable Indemnity.

As noted above, the Third Amended Cross-Complaint fails to allege facts showing that either Cross-Defendant owed a legal or contractual duty to TNL Renovation. Accordingly, the Fourth Cause of Action for Total Equitable Indemnity also fails.

The Demurrers to the Fourth Cause of Action for Total Equitable Indemnity are SUSTAINED with twenty days leave to amend.

E.   Fifth Cause of Action – Negligence

Both Metropolis and ROMB demur to the Fifth Cause of Action for Negligence.

“In order to state a cause of action for negligence, the complaint must allege facts sufficient to show a legal duty on the part of the defendant to use due care, a breach of such legal duty, and the breach as the proximate or legal cause of the resulting injury.” (Bellah v. Greenson (1978) 81 Cal.App.3d 614, 619.) In California, negligence may be pleaded in general terms. (Landeros v. Flood (1976) 17 Cal.3d 399, 407-408.) 

Here, as noted above, the Third Amended Cross-Complaint fails to allege any legal duty that Metropolis and ROMB owed TNL Renovation. While negligence may be pleaded in general terms, the plaintiff may not assert a contractual duty where a contract does not exist.

Additionally, as ROMB notes in its Demurrer, the only damages that TNL Renovation alleges resulting from Cross-Defendants’ purported negligence are generic “resulting damages” (TAXC ¶ 27), damages that may result from Plaintiffs’ suit (TAXC ¶ 28), and the costs of defending itself in the underlying action. (TAXC ¶ 29.)

Any damages related to the eventual award in the underlying action would constitute derivative harm and would be properly addressed pursuant to a claim for indemnification, not a claim for negligence. Additionally, costs and attorney fees related to litigation are costs, not damages. (Marron v. Superior Court (2003) 108 Cal.App.4^th 1049, 1065.)

Finally, though the Third Amended Complaint does allege “resulting damages,” there are no facts indicating what these resulting damages are, to what breach they are connected to, or to which Cross-Defendant they apply. Again, though pleading negligence does not require the particularity of a claim for fraud, a Complaint must inform the defendant of what they are accused. Merely alleging “resulting damages” does not accomplish this.

Accordingly, both parties’ Demurrers to the Fifth Cause of Action for Negligence are SUSTAINED with twenty days leave to amend.

F.   Sixth Cause of Action – Declaratory Relief

Finally, both Metropolis and ROMB demur to the Sixth Cause of Action for Declaratory Relief.

CCP section 1060 provides that a person may bring an action for declaratory relief if he or she “desires a declaration of his or her rights or duties with respect to another, or in respect to, in, over or upon property . . . .” (Code Civ. Proc., § 1060.) A request for declaratory relief may be brought alone or with other relief. (See id.) 

To state a declaratory relief claim, the plaintiff must allege a proper subject of declaratory relief and an actual controversy involving justiciable questions relating to the party’s rights or obligations. (See Jolley v. Chase Home Finance, LLC (2013) 213 Cal.App.4th 872, 909.) The validity of a contract is a proper subject of declaratory relief. (See Code Civ. Proc., § 1060.) 

While declaratory relief operates prospectively, a proper action for declaratory relief can redress past wrongs. (See Travers v. Louden (1967) 254 Cal.App.2d 926, 931.)

Here, as the demurrer to all causes of action related to ROMB and Metropolis have been sustained, TNL Renovation has not alleged an actual controversy involving justiciable questions.

Accordingly, both parties’ Demurrers to the Sixth Cause of Action for Declaratory Relief are SUSTAINED with twenty days leave to amend.

DATED: August 17, 2022 

____________________________

Hon. Robert S. Draper 

Judge of the Superior Court