Judge: Stephen P. Pfahler, Case: 21CHCV00882, Date: 2022-09-15 Tentative Ruling

Case Number: 21CHCV00882    Hearing Date: September 15, 2022    Dept: F49

Dept. F-49 

Date: 9-15-22 

Case #21CHCV00882 

Trial Date: Not Set (CMC scheduled for 9-15-22)

 

DEMURRER 

 

MOVING PARTY: Defendants, Williams Homes, et al. 

RESPONDING PARTY: Plaintiffs, Steven Little, et al. 

 

RELIEF REQUESTED 

Demurrer to the Second Amended Complaint 

·         1st Cause of Action: Breach of Written Contract 

·         2nd Cause of Action: Strict Liability 

·         3rd Cause of Action: Breach of Oral Contract 

·         4th Cause of Action: Negligence 

·         5th Cause of Action: Intentional Misrepresentation 

·         6th Cause of Action: Fraudulent Concealment 

·         7th Cause of Action: Promissory Fraud 

·         10th Cause of Action: Quantum Meruit 

 

Motion to Strike 

·         Allegations in Support of, and Claim for, Punitive Damages 

 

SUMMARY OF ACTION 

Plaintiffs Steven Little and Brittany Little, as both individuals and trustees of the Steven Little and Brittle Little Revocable Family Trust Dated May 15, 2014 allege the purchase of a home in Stevenson Ranch from Defendant WH Oak Ridge 17, LLC (Oak Ridge) on November 1, 2015. Defendant Lance Williams is the identified owner of Oak Ridge. Plaintiffs allege Defendant Williams Homes, Inc. is the developer of the parcel, with Defendant B&M Contractors, Inc. responsible for construction.  

 

Plaintiffs allege numerous defects in their home, including sinking of the home itself, as well as the pool, separation of the house from the front porch and driveway, separation of roofing tiles, cracking on the exterior stucco walls, as well as interior drywall, cracking in the interior tile and wood flooring, slanting door frames and sloping floors in the upstairs laundry and bedroom closet, unstable retaining walls, and potentially broken pipes as a result of the house shift. 

 

On November 17, 2021, Plaintiffs filed their complaint for Breach of Written Contract, Breach of Oral Contract, Negligence, Negligent Misrepresentation, Intentional Misrepresentation, Negligent Concealment, Fraudulent Concealment, Promissory Fraud, Nuisance (Negligence), Nuisance (Intentional), Conversion, Surety Bond Claim, and Quantum Meruit. On December 17, 2021, Defendant B&M Contractors, Inc., and filed a cross-complaint for Declaratory Relief, Implied Indemnity, Comparative Equitable Indemnity, and Contribution. On December 27, 2021, Defendant American Contractors Indemnity Company answered the complaint.  

 

On March 10, 2022, Plaintiffs filed a first amended complaint without leave of court for Breach of Written Contract, Breach of Oral Contract, Negligence, Intentional Misrepresentation, Fraudulent Concealment, Promissory Fraud, Nuisance (Negligence), Nuisance (Intentional), Conversion, Surety Bond Claim, and Quantum Meruit. B&M Contractors, Inc. answered the second amended complaint on March 18, 2022. On March 21, 2021, the court took the demurrer to the complaint off-calendar and deemed the first amended complaint filed.  

 

On May 18, 2022, the court entered the stipulation of the parties for leave to file a second amended complaint.

 

On May 26, 2022, Plaintiffs filed their second amended complaint for Breach of Written Contract, Strict Liability, Breach of Oral Contract, Negligence, Intentional Misrepresentation, Fraudulent Concealment, Promissory Fraud, Conversion, Surety Bond Claim, and Quantum Meruit.

 

On June 3 and 28, 2022, B&M Contractors, Inc. and American Contractors Indemnity answered the second amended complaint, respectively. 

 

On August 31, 2022, Plaintiffs filed their opposition to Defendants’ Demurrer.

 

On September 8, 2022, Defendants filed their Reply.

 

Both the opposition and reply are timely pursuant CCP §1005. The hearing date for this instant motion is on September 15, 2022.

 

RULING 

Demurrer: Sustained with Leave to Amend in Part/Overruled in Part 

 

 

Defendants Williams Homes, Inc., Lance Williams, and WH Oak Ridge 17, LLC submit the subject demurrer to the first, second, third, fourth, fifth, sixth, seventh, and tenth causes of action for Breach of Written Contract, Strict Liability, Breach of Oral Contract, Negligence, Intentional Misrepresentation, Fraudulent Concealment, Promissory Fraud, and Quantum Meruit. Defendants submit the subject demurrer on grounds of uncertainty insufficient facts, and improper claims. Plaintiff in opposition asserts the operative complaint sufficiently articulates all claims. Defendants in reply reiterates the lack of supporting facts and bases of liability.  

 

A demurrer is an objection to a pleading, the grounds for which are apparent from either the face of the complaint or a matter of which the court may take judicial notice. (Code Civ. Proc., § 430.30, subd. (a); see also Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) The purpose of a demurrer is to challenge the sufficiency of a pleading “by raising questions of law.” (Postley v. Harvey (1984) 153 Cal.App.3d 280, 286.) “In the construction of a pleading, for the purpose of determining its effect, its allegations must be liberally construed, with a view to substantial justice between the parties.” (Code Civ. Proc., § 452.) The court “ ‘ “treat[s] the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law . . . .” ’ ” (Berkley v. Dowds (2007) 152 Cal.App.4th 518, 525.) In applying these standards, the court liberally construes the complaint to determine whether a cause of action has been stated.  (Picton v. Anderson Union High School Dist. (1996) 50 Cal.App.4th 726, 733. 

 

“A demurrer for uncertainty is strictly construed, even where a complaint is in some respects uncertain, because ambiguities can be clarified under modern discovery procedures.” (Khoury v. Maly's of California, Inc.¿(1993) 14 Cal.App.4th 612, 616; Williams v. Beechnut Nutrition Corp.¿(1986) 185 Cal.App.3d 135, 139 [“[U]nder our liberal pleading rules, where the complaint contains substantive factual allegations sufficiently apprising defendant of the issues it is being asked to meet, a demurrer for uncertainty should be overruled or plaintiff given leave to amend.] 

 

1st Cause of Action, Breach of Written Contract: Overruled. 

Defendants challenge the lack of a copy of the written purchase agreement, or alternatively the failure to sufficiently allege the terms. Defendants additionally challenge the incorporation of construction defect statutes as lacking any connection with the contract claims. Finally, Defendants note the lack of any allegations regarding the breach of the contract by Defendants WH Oak Ridge 17, LLC and Lance Williams. 

 

Plaintiff in opposition contends paragraph 21 of the second amended complaint articulates the pertinent contractual term: the requirement in the purchase agreement that all disputes require adherence to the Right to Repair Law statutes under Civil Code section 895-945.5. 

 

Defendants in reply reiterate the uncertainty of which agreement Plaintiffs reference, including the lack of any contractual obligation to adhere to statutory obligations.  

 

“To state a cause of action for breach of contract,¿[a plaintiff]¿must plead the contract, his performance of the contract or excuse for nonperformance, [defendant’s] breach and the resulting damage. (Citation.) Further, the complaint must indicate on its face whether the contract is written, oral, or implied¿by conduct. (Citation.)” (Otworth v. Southern Pac. Transportation Co.¿(1985) 166 Cal.App.3d 452, 458–59.) In examining a breach of contract claim, the court is required to examine the terms, or at least the legal effect of the contract. (Blank v. Kirwan¿(1985) 39 Cal.3d 311, 318 [“we give the complaint a reasonable interpretation, reading it as a whole and its parts in¿their context”]; Construction Protective Services, Inc. v. TIG Specialty Ins. Co.¿(2002) 29 Cal.4th 189, 198–199 [“In an action based on a¿written contract, a plaintiff may plead the legal effect of the contract rather than its precise language”].)  

 

Plaintiffs specifically alleges the existence of the written purchase agreement with all defendants. [Sec. Amend. Comp., ¶ 18.] Plaintiffs admittedly only specifically reference a “pertinent” section of the contract which requires compliance with “Right to Repair Law statutes, engage in mediation, and follow that by judicial reference. If the dispute is not subject to the Right to Repair Law, then the parties’ dispute shall be resolved by arbitration.” [Sec. Amend. Comp., 21.] Repairs were apparently conducted over a period of 19 months, which Plaintiffs allege were deficient. [Id., ¶ 30.]  

 

The plain language of the statute exempts contract-based causes of action from statutory preemption. 

 

(a) Except as provided in this title, no other cause of action for a claim covered by this title or for damages recoverable under¿Section 944¿is allowed. In addition to the rights under this title, this title does not apply to any action by a claimant to enforce a contract or express contractual provision, or any action for fraud, personal injury, or violation of a statute. Damages awarded for the items set forth in Section 944 in such other cause of action shall be reduced by the amounts recovered pursuant to¿Section 944¿for violation of the standards set forth in this title. 

(b) As to any claims involving a detached single-family home, the homeowner's right to the reasonable value of repairing any nonconformity is limited to the repair costs, or the diminution in current value of the home caused by the nonconformity, whichever is less, subject to the personal use exception as developed under common law. 

 

(Civ. Code, § 943.) 

 

If a claim for damages is made under this title, the homeowner is only entitled to damages for the reasonable value of repairing any violation of the standards set forth in this title, the reasonable cost of repairing any damages caused by the repair efforts, the reasonable cost of repairing and rectifying any damages resulting from the failure of the home to meet the standards, the reasonable cost of removing and replacing any improper repair by the builder, reasonable relocation and storage expenses, lost business income if the home was used as a principal place of a business licensed to be operated from the home, reasonable investigative costs for each established violation, and all other costs or fees recoverable by contract or statute. 

 

(Civ. Code, § 944.) 

 

The language of the operative complaint seeks to enforce the rights under the purchase agreement regarding adherence to the Right to Repair Law statute. The articulated terms are sufficient for purposes of determining the legal effect of the contract. (Blank v. Kirwan, supra, 39 Cal.3d at p. 318.)  

 

While a party is limited to recovery of economic losses and property damage to the statutory scheme, nothing in the plain language of the statute or demurrer establishes a bar to the complaint simply based on seeking enforcement of the agreement. (McMillin Albany LLC v. Superior Court¿(2018) 4 Cal.5th 241, 249, 252-253, 256.) Though it’s not clear what damages Plaintiffs specifically seek, the court declines to infer any bar based on economic loss or property damage for purposes of ruling on the demurrer. The court also declines to consider any extrinsic references to the individual defendants as parties to the contract for purposes of the demurrer. The demurrer is therefore overruled. 

 

2nd Cause of Action, Strict Liability: Sustained with Leave to Amend 

4th Cause of Action, Negligence: Sustained with Leave to Amend 

Defendants contend the subject cause of action arising in strict liability and/or negligence is precluded and limited to recovery under Civil Code section 896 and 897. Plaintiffs improperly seek relief beyond the statutory scheme now governing construction defect. Plaintiffs in opposition acknowledges the statutory scheme, but contends the exemptions continue to allow the subject claims to proceed. 

 

As with the breach of contract cause of action, Plaintiffs correctly cite to the exemptions. Nevertheless, the argument in opposition insufficiently addresses the actual limitations of the case. The California Supreme Court interpreted the statutes, and found the common law provisions arising in contract, fraud and personal injury remain undisturbed, but economic losses and property damages claims expressed in claims of negligence and strict liability are now governed by the new statutory scheme. (McMillin Albany LLC v. Superior Court, supra, 4 Cal.5th at pp. 249, 252-253, 256.)  

 

The complaint itself specifically alleges construction defects thereby leading to water, structural and soil issues. [Sec. Amend. Comp., ¶¶ 38, 40.] The complaint alleges damages in excess of one million dollars. [Id., ¶ 41.] Said claims specifically indicate a claim for economic loss and property damage. Nothing in the plain language of the operative pleading or opposition creates a separate and distinct claim outside the statutory scheme. The demurrer is therefore sustained with leave to amend in order to allow Plaintiffs an opportunity to allege a claim separate and apart from the statutory limitations created by the Right to Repair scheme.  

 

3rd Cause of Action: Breach of Oral Contract 

Defendants challenge the oral contract on grounds of lack of formation and basis of consideration. Like the written contract, Defendants also challenge the reliance on the statutory authority as a basis compelling repairs under alleged contractual obligations. “A cause of action for damages for breach of contract is comprised of the following elements: (1) the contract, (2) plaintiff's performance or excuse for nonperformance, (3) defendant's breach, and (4) the resulting damages to plaintiff.” (Careau & Co. v. Security Pacific Business Credit, Inc.¿(1990) 222 Cal.App.3d 1371, 1388.) 

 

Plaintiffs allege an oral agreement whereby Defendants would complete construction defect repairs in exchange for Plaintiffs to forego filing a lawsuit. The work was poorly performed, and not completed within the represented time frame. [Sec. Amend. Comp., ¶¶ 43-47.] Defendants challenge the claim on a failure of consideration given the statutorily existing obligation to conduct repairs under the Right to Repair Law statutes. Defendants also challenge on grounds of uncertainty, due to the additional terms and breach of covenant of good faith and fair dealing allegations as well. Plaintiffs in opposition maintains the uncertainty challenges are not sufficient to sustain the demurrer. 

 

The opposition lacks any specific response to the consideration argument. “A statutory or legal obligation to perform an act may not constitute consideration for a contract.” (O'Byrne v. Santa Monica-UCLA Medical Center¿(2001) 94 Cal.App.4th 797, 808.) The operative complaint specifically seeks to allege a claim based on pre-existing statutory duties. The court therefore finds no basis of consideration. The demurrer is sustained. 

 

5th Cause of Action, Intentional Misrepresentation: Sustained with Leave to Amend 

6th Cause of Action, Fraudulent Concealment: Sustained with Leave to Amend 

7th Cause of Action, Promissory Fraud: Sustained with Leave to Amend 

“‘The elements of fraud, which give rise to the tort action for deceit, 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.’” (Lazar v. Superior Court¿(1996) 12 Cal.4th 631, 638.) “‘Promissory¿fraud’ is a subspecies of the action for¿fraud¿and deceit.¿A promise to do something necessarily implies the intention to perform; hence, where a promise is made without such intention, there is an implied misrepresentation of fact that may be actionable¿fraud.” (Ibid.) “‘Active¿concealment¿or suppression of facts by a nonfiduciary “is the equivalent of a false representation, i.e., actual¿fraud.” [Citation.] (Citation).)’ A¿fraud¿claim based upon the suppression or¿concealment¿of a material fact must involve a defendant who had a legal duty to disclose the fact. (Civ.Code, § 1710, subd. (3) [a deceit includes “[t]he suppression of a fact, by one who is bound to disclose it, or who gives information of other facts which are likely to mislead for want of communication of that fact”]; Citation.)” (Hoffman v. 162 North Wolfe LLC¿(2014) 228 Cal.App.4th 1178,  

1186.) 

 

“A plaintiff's burden in asserting a fraud claim against a corporate employer is even greater. In such a case, the plaintiff must ‘allege the names of the persons who made the allegedly fraudulent representations, their authority to speak, to whom they spoke, what they said or wrote, and when it was said or written.’” (Id. at p. 645.) 

 

Defendants challenge the fraud claims on grounds that the operative complaint lacks sufficient articulation of any representations by Lance Williams. On the concealment claim, Defendants challenge any basis of a disclosure obligation. Defendants challenge any showing of reliance or causation as well. Plaintiffs generally counter the fraud claim sufficiently articulates the fraud claims. 

 

The claims arise from alleged promises to conduct and complete repairs within a certain time frame, and the failure to both timely complete the repairs and completion of the repairs in a substandard manner. On the concealment claim, Plaintiffs rely on the claim that Defendants should have instructed them to vacate the residence during the repairs in order to allow timely repair, while the promissory fraud alleges a promise to never perform. 

 

The plain allegations of performance, albeit substandard repairs, factually renders the promissory fraud claim insufficient. As for the concealment claim, Plaintiffs reliance on the conclusion that the failure to disclose the necessity to move out of the house in order to allow the timely facilitation of repairs, also fails to actually provide the basis for disclosure or specifically establish the nexus between the alleged withheld information and 15 month additional repair period. On the misrepresentation claim, Plaintiffs need to better articulate the basis of liability against each and every defendant, including the corporate defendant. The demurrer is sutained. 

 

10th Cause of Action, Quantum Meruit: Sustained with Leave to Amend 

Defendants challenge the subject cause of action on grounds that Plaintiffs fail to allege any basis for quantum meruit based on the rendering of services. Defendants also contend that the Williams defendants never owned the property, thereby deriving any benefit from the property. Plaintiffs counter with a general statement of sufficiency and statement to the operative complaint allegations regarding an oral agreement, and the right to plead the cause of action as an alternative to other claims. Plaintiffs also cite to abandonment doctrine for support of the quantum meruit premise.  

 

Quantum meruit requires a party to “establish both that he or she was acting pursuant to either an express or implied request for services from the defendant and that the services rendered were intended to and did benefit the defendant.” (Ochs v. PacifiCare of California¿(2004) 115 Cal.App.4th 782, 794.) “‘The measure of recovery in¿quantum¿meruit¿is the reasonable value of the services rendered¿provided¿they were of direct benefit to the defendant.’” (Maglica v. Maglica¿(1998) 66 Cal.App.4th 442, 449.) 

 

The court finds no basis of support for quantum meruit against the contractor defendants. Plaintiffs retained the value of any and all repairs performed. (Amelco Electric v. City of Thousand Oaks¿(2002) 27 Cal.4th 228, 238-239.) The demurrer is sustained.  

 

 

Motion to Strike: Granted without Prejudice/Moot 

Defendant challenges the the punitive damages claim on grounds that the complaint insufficiently supports the claim, and instead relies on unsupported conclusions. Plaintiffs counter that the complaint sufficiently articulates the claim for punitive damages. Defendant in reply reiterates the challenge to the punitive damages claim, due insufficient allegations and conclusive recitations of authority, rather than factual support.  

 

Civil Code, Section 3294, subdivision (c) authorizes punitive damages upon a showing of malice, oppression, or fraud, which are defined as follows: 

 

(1) “Malice” means conduct which is intended by the defendant to cause injury to the plaintiff or despicable conduct which is carried on by the defendant with a willful and conscious disregard of the rights or safety of others. 

(2) “Oppression” means despicable conduct that subjects a person to cruel and unjust hardship in conscious disregard of that person’s rights. 

(3) “Fraud” means an intentional misrepresentation, deceit, or concealment of a material fact known to the defendant with the intention on the part of the defendant of thereby depriving a person of property or legal rights or otherwise causing injury. 

 

Punitive damages require more than the mere commission of a tort. (See Taylor v. Superior Court (1979) 24 Cal.3d 890, 894-95.) Specific facts must be pled in support of punitive damages. (Hillard v. A.H. Robins Co. (1983) 148 Cal.App.3d 374, 391-392.) “The mere allegation an intentional tort was committed is not sufficient to warrant an award of punitive damages. [Citation.] Not only must there be circumstances of oppression, fraud or malice, but facts must be alleged in the pleading to support such a claim. [Citation.]” (Grieves v. Superior Court (1984) 157 Cal.App.3d 159, 166, fn. Omitted [emphasis added].) 

 

The demurrer to the fraud causes of action render the motion to strike moot as to those claims. The remaining claim based on the conversion due to the removal of pool equipment insufficiently demonstrates conduct meeting the punitive damages standard. The motion is therefore granted without prejudice.  

 

In summary, the demurrer is overruled as to the breach of written contract claim, and sustained with 30 days leave to amend as to the remainder. The motion to strike is moot as to the fraud causes of action, and granted as to the conversion claim. Plaintiff is granted 30 days leave to amend. Plaintiff may only add facts in support of the punitive damages claims. Plaintiff may not add any new causes of action, but may add facts. (Harris v. Wachovia Mortgage, FSB¿(2010) 185 Cal.App.4th 1018, 1023.) If Plaintiffs decline or fail to file a third amended complaint, Defendants are ordered to answer the remaining causes of action. 

 

“In response to a demurrer and prior to the case being at issue, a complaint or cross-complaint shall not be amended more than three times, absent an offer to the trial court as to such additional facts to be pleaded that there is a reasonable possibility the defect can be cured to state a cause of action. The three-amendment limit shall not include an amendment made without leave of the court pursuant to¿Section 472, provided the amendment is made before a demurrer to the original complaint or cross-complaint is filed.” (Code Civ. Proc., § 430.41, subd. (e)(1).) Although Plaintiffs are granted leave to file their third amended complaint, the potential future pleading only constitutes the first pleading following consideration of a demurrer, given the improperly filed first amended complaint and stipulated second amended complaint. 

 

Defendants to provide notice. 

 

Moving party to give notice.