Judge Thomas D. Long, Case Number: 24AHCV00275, Date: 2025-01-02 Tentative Ruling

This case arises from an alleged breach of an agreement (the Agreement) wherein Plaintiff Cyber on Demand, Inc. (Plaintiff), who was a subcontractor, agreed to install an Emergency Responder Radio Communication System (the System) at a certain property (the Property) purportedly owned by Defendant APPA Real Estate LLC (APPA Real Estate). (Compl., ¶¶ 10-11.) According to the terms of the agreement, upon completion of Plaintiff installing the System, Defendant Zwick Construction Company (Zwick), who was a contractor, was to pay Plaintiff a total of $90,000.00. (Id. at ¶ 13.) APPA Real Estate then issued Zwick a “Notice of Abandonment and Stop Work Notice,” (Notice of Abandonment) and that “now assuming the work on behalf of Zwick and consequently sought the contractors to provide them (1) current amount owed, (2) outstanding change orders or back charges to Zwick; (3) a copy of punch list received from Zwick, and (4) a complete close out package documents per the Agreement.” (Id. at ¶ 14; Exhibit 2.) Plaintiff alleges that it had not been paid. (Id. at ¶¶ 18-19.)

On February 8, 2024, Plaintiff filed a complaint against Zwick Construction Company, APPA Colorado, LLC (APPA Colorado), and APPA Real Estate LLC, alleging causes of action for (1) breach of contract, (2) common counts, (3) breach of implied covenant of good faith and fair dealing, (4) conversion.

APPA Real Estate requests the Court to take judicial notice of the following document: A true and correct copy of the Grant Deed, recorded December 5, 2019, as Instrument Number 20191342275, whereby COLORADO QUIGLEY, LLC, a Delaware limited liability company transferred to APPA COLORADO, LLC, a Delaware corporation the real property in the City of Los Angeles, County of Los Angeles, State of California, described in the attached Exhibit A, including APN 5755-030-010, 011, 012 & 013.

Pursuant to Evidence Code section 452, subdivision (c), APPA’s request is granted.

Before filing a demurrer or motion to strike, the moving party must meet and confer in person, by telephone, or by video conference with the party who filed the pleading to attempt to reach an agreement that would resolve the objections to the pleading. (Code Civ. Proc., §§ 430.41, 435.5.) “Any determination by the court that the meet and confer process was insufficient shall not be grounds to overrule or sustain a demurrer” or to grant or deny a motion to strike. (Code Civ. Proc., §§ 430.41(a)(4), 435.5.)

Here, on March 14, 2023, an attorney previously employed with APPA’s counsel’s firm sent Plaintiff a meet and confer letter, which outlined the grounds upon which APPA planned on demurring to Plaintiff’s complaint. (Lockard Decl., ¶ 3.) After some back and forth, the parties could not come to an agreement regarding the claimed deficiencies with Plaintiff’s complaint. (Id. at ¶¶ 5-9.) Thus, the meet and confer requirement has been met.

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.)

When a demurrer is sustained, leave to amend must be allowed where there is a reasonable possibility of successful amendment. (Goodman v. Kennedy (1976) 18 Cal.3d 335, 348.) The burden is on the plaintiff to show the court that a pleading can be amended successfully. (Ibid.; Lewis v. YouTube, LLC (2015) 244 Cal.App.4th 118, 226.)

APPA Real Estate demurs to each cause of action alleged in the complaint on the grounds that each cause of action fails to state facts sufficient to constitute a cause of action against APPA Real Estate primarily contends that each of the causes of action alleged in Plaintiff’s complaint fails because APPA Real Estate is not a party to the underlying Agreement nor does it own the Property.

“The general rule is that the mere assignment of rights under an executory contract does not cast upon the assignee the obligations imposed by the contract upon the assignor. (Citation.) The rule is otherwise, however, where the assignee assumes such obligations. (Citation.) ‘[W]hether there has been an assumption of the obligations is to be determined by the intent of the parties as indicated by their acts, the subject matter of the contract or their words.’ (Citation.)” (Enter. Leasing Corp. v. Shugart Corp. (1991) 231 Cal.App.3d 737, 745.) “Where the obligations of a contract are assumed, the creditor under the original contract may sue the assuming party on the theory that he is an express beneficiary of the assumption contract. The creditor may join both the assuming party and the original debtor.” (Dick v. Woolson (1951) 106 Cal.App.2d 415, 419.)

The Court finds that Plaintiff has alleged sufficient facts to show that APPA Real Estate assumed the obligations of Zwick pursuant to the Agreement, including the obligation of payment.

APPA Real Estate argues that it is not a party to the Agreement, and thus cannot be held liable under the Agreement, because APPA Real Estate’s Notice of Abandonment sent to Plaintiff on September 14, 2023 does not state that APPA Real Estate is assuming the contract. (Opposition, page 7.) However, Plaintiff has sufficiently alleged that APPA Real Estate assumed the obligations of Zwick under the Agreement. Plaintiff alleged, and the Court must accept as true, that APPA Real Estate sent its Notice of Abandonment and is now “assuming the work on behalf of ZWICK and consequently sought the contractors to provide them (1) current amount owed, (2) outstanding change orders or back charges to ZWICK; (3) a copy of punch list received from ZWICK, and (4) a complete close out package documents per the AGREEMENT.” (Compl., ¶ 14.)

Further, the Notice of Abandonment, which is attached as an exhibit to Plaintiff’s complaint, shows that the Notice of Abandonment was sent from a representative of APPA Real Estate, and states that “we are exercising our rights to complete the Work on Zwick’s behalf. In order to better facilitate the completion of your scope of work, please send us the following and be sure to copy Zwick on all communication: 1. Current amount owed as both a progress payment (if any) and retention. 2. Any outstanding change orders or back charges sent to you from Zwick. 3. A copy of the Punch list you received from Zwick. 4. A complete close out package documents as required by your subcontract, and the specifications for your scope of work. Once we receive all of the above information, we will reach out and schedule a punch list walk to review the status of your work. Once your scope of work and punch list is complete, and we have received all the required documentation and required waivers, we will release your retention.” (Compl., Exhibit 2.) These are alleged facts sufficient to support that APPA Real Estate either expressly assumed, or at the least, intended through its actions to assume the obligations of Zwick pursuant to the Agreement. (Heppler, supra, 73 Cal.App.4th at p. 1289 [“an assumption of obligations may be implied from acceptance of benefits under the contracts.”]; Hearn Pac. Corp. v. Second Generation Roofing, Inc. (2016) 247 Cal.App.4th 117, 136 [“an assignee's voluntary acceptance of the benefits of a contract may obligate the assignee to assume its obligations as a matter of law, even if the assignment agreement expressly excludes the obligations.”].) Thus, Plaintiff has alleged facts to survive the instant demurrer.

While APPA Real Estate contends that Plaintiff alleged that the Notice of Abandonment only states that APPA Real Estate is now assuming the work on behalf of Zwick, and that “[n]owhere does the notice say that APPA [Real Estate] is assuming the subcontract that Zwick has with Plaintiff.” (Motion, page 6.) APPA Real Estate’s argument is not for the lack of sufficiency of the facts in the pleadings but as to the interpretation of the notice, which is beyond the scope of a demurrer. Plaintiff has otherwise sufficiently shown that APPA Real Estate, through its conduct, assumed Zwick’s obligations under the Agreement though both the allegations within the complaint as well as the complaint’s attachment of the Notice of Abandonment.

Accordingly, APPA Real Estate’s demurrer is OVERRULED. APPA Real Estate is ordered to file an answer or other responsive pleading within 20 days’ notice of this order.

Parties who intend to submit on this tentative must send an email to the Court at SMCDEPT48@lacourt.org indicating intention to submit. Parties intending to appear are encouraged to appear remotely.

Hon. Thomas D. Long

Judge of the Superior Court