Judge: Walter P. Schwarm, Case: 30-2021-01185577, Date: 2022-10-18 Tentative Ruling
Defendant’s (Thatcher Engineering & Associates, Inc.) Motion for Judgment on the Pleadings (Motion), filed on 5-11-22 under ROA No. 50, is DENIED.
Code of Civil Procedure section 438, subdivision (c)(1)(B) states, “If the moving party is a defendant, that either of the following conditions exist: [¶] (i) The court has no jurisdiction of the subject of the cause of action alleged in the complaint. [¶] (ii) The complaint does not state facts sufficient to constitute a cause of action against that defendant.” Eckler v. Neutragena Corporation (2015) 238 Cal.App.4th 433, 439 (Eckler), states, “ ‘A motion for judgment on the pleadings serves the function of a demurrer, challenging only defects on the face of the complaint.’ [Citation.] As with a demurrer, ‘[t]he grounds for a motion for judgment on the pleadings must appear on the face of the complaint or from a matter of which the court may take judicial notice.’ [Citation.]” “A trial court’s determination of a motion for judgment on the pleadings accepts as true the factual allegations that the plaintiff makes. [Citations.] In addition, it gives them a liberal construction.” (Gerawan Farming, Inc. v. Lyons (2000) 24 Cal.4th 468, 515-516 (Gerawan).)
The Motion seeks a judgment in Defendant’s favor because the Plaintiff’s (KB Home Coastal, Inc.) Complaint, filed on 2-22-21 under ROA No. 2, fails to state a cause of action against Defendant. (Notice of Motion; 2:1-3.) The Complaint alleges causes of action for Negligent Misrepresentation (Third Cause of Action) and Negligence (Fourth Cause of Action) against Defendant.
Statute of Limitations:
The Motion states, “Since KB Homes’ complaint was not filed until February of 2021, more than five and a half years after the alleged negligent act by Thatcher, such a claim against Thatcher is clearly time barred.” (Motion; 2:12-14.) The Motion relies on Code of Civil Procedure section 339.
Lee v. Hanley (2015) 61 Cal.4th 1225, 1232 (Hanley) provide, “. . . ‘ “ ‘A demurrer based on a statute of limitations will not lie where the action may be, but is not necessarily, barred. [Citation.] In order for the bar . . . to be raised by demurrer, the defect must clearly and affirmatively appear on the face of the complaint; it is not enough that the complaint shows that the action may be barred.” ’ ” [Citation.]”
Roger E. Smith, Inc. v. SHN Consulting Engineers & Geologists, Inc., (2001) 89 Cal.App.4th 638, 642-643 (Roger), states, “Here, as in their motion below, respondents contend Resco's claims are governed by section 339, subdivision 1, which specifies a two-year period of limitations for any action ‘upon a contract, obligation or liability not founded upon an instrument of writing.’ This statute has been applied to claims for professional negligence. [Citation.]” “A cause of action for negligent misrepresentation is barred by the two-year statute of limitations (§ 339) where the allegations amount to a claim of professional negligence. [Citations.]” (Hydro-Mill Company, Inc. v. Hayward, Tilton & Rolapp Insurance Associates, Inc. (2004) 115 Cal.App.4th 1145, 1155 (Hydro-Mill).) Plaintiff’s Opposition to Defendant Thatcher Engineering & Associates, Inc.’s Motion for Judgment on the Pleadings (Opposition), filed on 10-6-22 under ROA No. 74, does not appear to dispute that the applicability of the two-year statute of limitations in Code of Civil Procedure section 339. (Opposition; 6:1-8:13.)
The Motion relies on paragraph 35, 36, and 37 of the Complaint to support that the statute of limitations defect affirmatively appears on the face of the Complaint. (Motion; 2:19-21.) Based on paragraphs 35, 36, 37, 38, 39, 55, 56, 57, 58, and 59 of the Complaint, it appears that Plaintiff’s alleged damages occurred when it realized that improvements would cost approximately $7,000,000. The Complaint does not allege a specific date as to when this event occurred. Liberally construing the Complaint, the court DENIES the Motion based on the statute of limitations because the statute of limitations defect does not affirmatively appear on the face of the Complaint.
Code of Civil Procedure section 411.35:
The Motion states, “In this matter, a certificate of merit was not filed at any time. Based on the foregoing, Thatcher respectfully requests the Court issue judgment in Thatcher’s favor for Plaintiff’s failure to timely file and serve the requisite certificate of merit.” (Motion; 4:13-15.) The Opposition asserts, “Section 411.35 does not provide a right to raise the lack of a certificate in any other motions, including in a motion for judgment on the pleadings. If a certificate is not timely filed, but the design professional fails to raise the deficiency in a demurrer or motion to strike, authority suggests that the requirement is waived.” (Opposition; 9:22-25.)
Code of Civil Procedure section 411.35 states in part, “(a) In every action, including a cross-complaint for damages or indemnity, arising out of the professional negligence of a person holding a valid architect's certificate issued pursuant to Chapter 3 (commencing with Section 5500) of Division 3 of the Business and Professions Code, or of a person holding a valid registration as a professional engineer issued pursuant to Chapter 7 (commencing with Section 6700) of Division 3 of the Business and Professions Code, or a person holding a valid land surveyor's license issued pursuant to Chapter 15 (commencing with Section 8700) of Division 3 of the Business and Professions Code on or before the date of service of the complaint or cross-complaint on any defendant or cross-defendant, the attorney for the plaintiff or cross-complainant shall file and serve the certificate specified by subdivision (b). . . . [¶] (g) ” The failure to file a certificate in accordance with this section shall be grounds for a demurrer pursuant to Section 430.10 or a motion to strike pursuant to Section 435.”
Curtis Engineering Corporation v. Superior Court (2017) 16 Cal.App.5th 542, 544 (Curtis), states, “In this case, we conclude that a certificate filed after expiration of the statute of limitations and more than 60 days after filing the original pleading (§ 411.35, subd. (b)(2)) does not relate back to the filing of the original pleading. The trial court erred when it overruled a demurrer alleging noncompliance with the certificate requirement of section 411.35. Accordingly, we grant the petition for writ of mandate.” Curtis explains, “Curtis demurred to the amended complaint arguing, among other things, that Sutherland failed to file the required certificate within the limitations period. The trial court overruled the demurrer. As relevant here, the court concluded that the amended complaint related back to the filing date of the original complaint.” (Id., at p. 545.)
Here, the Plaintiff filed the Complaint on 2-22-21. Defendant filed an Answer on 6-18-21 under ROA No. 28. The Answer did not raise the failure to file and serve a certificate of merit as an affirmative defense. More importantly, Defendant did not raise the failure to file a certificate of merit by way of a demurrer or motion to strike as required by Code of Civil Procedure section 411.35, subdivision (g). Code of Civil Procedure does not authorize a party to raise the failure to file a certificate of merit by way of a motion for judgment on the pleads. Therefore, the court DENIES the Motion based on the failure to timely file a certificate of merit.
Economic Loss Rule:
The Motion states, “KB Homes’ claims against Thatcher in this action are strictly barred by California’s well established (and frequently reinforced) ‘Economic Loss Rule’, which holds that for an action to sound in tort, the damages must include personal injury or property damage; yet there exist no such damages here.” (Motion; 4:18-21.) The Opposition responds, “Thatcher briefly argues in its Motion that KB’s causes of action are barred by the economic loss rule. The rule does not apply, however, to direct claims purely related to services such as the one at issue here. It is also an open question whether the rule applies to negligent misrepresentation claims.” (Opposition; 13:11-14.)
Robinson Helicopter Co., Inc. v. Dana Corp. (2004) 34 Cal.4th 979, 990 (Robinson), “With respect to situations outside of those set forth above, we stated: ‘Generally, outside the insurance context, “a tortious breach of contract . . . may be found when (1) the breach is accompanied by a traditional common law tort, such as fraud or conversion; (2) the means used to breach the contract are tortious, involving deceit or undue coercion; or (3) one party intentionally breaches the contract intending or knowing that such a breach will cause severe, unmitigable harm in the form of mental anguish, personal hardship, or substantial consequential damages.” [Citation.] Focusing on intentional conduct gives substance to the proposition that a breach of contract is tortious only when some independent duty arising from tort law is violated. [Citation.] If every negligent breach of a contract gives rise to tort damages the limitation would be meaningless, as would the statutory distinction between tort and contract remedies.’ [Citation.]” “We went on to describe several instances where tort damages were permitted in contract cases. ‘Tort damages have been permitted in contract cases where a breach of duty directly causes physical injury [citation]; for breach of the covenant of good faith and fair dealing in insurance contracts [citation]; for wrongful discharge in violation of fundamental public policy [citation]; or where the contract was fraudulently induced. [Citation.]’ [Citation.]” (Id., at pp. 889-890.)
State Ready Mix, Inc. v. Moffatt & Nichol, (2015) 232 Cal.App.4th 1227, 1232 (State Ready Mix), provides, “ ‘Simply stated, the economic loss rule provides: “ ‘ “[W]here a purchaser's expectations in a sale are frustrated because the product he bought is not working properly, his remedy is said to be in contract alone, for he has suffered only “economic” losses.” ’ This doctrine hinges on a distinction drawn between transactions involving the sale of goods for commercial purposes where economic expectations are protected by commercial and contract law, and those involving the sale of defective products to individual consumers who are injured in a manner which has traditionally been remedied by resort to the law of torts” [Citation.]’ [Citation.]”
Here, the Complaint alleges the negligence misrepresentation cause of action in connection with a Drainage Study prepared by Defendant. (For example, see Complaint, at ¶¶ 21 and 53-60.) The Complaint does not allege negligent misrepresentation as a conduct amounting to a tortious breach of contract. The Complaint is not attempting to turn a contract cause of action into a tort action. Therefore, at this stage of the proceedings, the court DENIES the Motion to the extent it relies on the economic loss rule.
Negligent Misrepresentation:
CACI No. 1903 sets forth the elements necessary to establish a cause of action for negligent misrepresentation. Rufini v. CitiMortgage, Inc. (2014) 227 Cal.App.4th 299, 308 (Rufini), states, “The elements of negligent misrepresentation are (1) the defendant made a false representation; (2) without reasonable grounds for believing it to be true; (3) with the intent to deceive the plaintiff; (4) justifiable reliance on the representation; and (5) resulting harm. [Citation.]”
Lazar v. Superior Court (1996) 12 Cal.4th 631, 645 (Lazar), explains, “In California, fraud must be pled specifically; general and conclusory allegations do not suffice. [Citations.] ‘Thus “ ‘the policy of liberal construction of the pleadings . . . will not ordinarily be invoked to sustain a pleading defective in any material respect.’ ” [Citation.] [¶] This particularity requirement necessitates pleading facts which show how, when, where, to whom, and by what means the representations were tendered.’ [Citation.] 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.’ [Citation.]” (Italics in Lazar.)
The Motion contends, “In the instant matter, KB Homes cannot meet even the first element of a negligent misrepresentation cause of action asserted against Thatcher as any such claim is only available where the representation at issue relates to, ‘past or existing facts’, while ‘statements regarding future events are deemed merely opinions’ and therefore are not actionable.” (Motion; 5:15-18.)
Public Employees' Retirement System v. Moody's Investors. Service, Inc. (2014) 226 Cal. App. 4th 643, 662 (Moody’s) states, “ ‘It is hornbook law that an actionable misrepresentation must be made about past or existing facts; statements regarding future events are merely deemed opinions.’ [Citations.] Here, for example, the complaint describes the SIV ratings as ‘ “address[ing] the likelihood that investors will receive payments as promised” and “address[ing] the expected loss posed to investors in relation to timely payment of interest (if applicable) and timely payment of principal at par on the final legal maturity date,” ’ allegations that appear to place the ratings within this nonactionable realm of opinion or prediction. (Italics added.) [¶] However, as CalPERS is quick to note: ‘Under certain circumstances, expressions of professional opinion are treated as representations of fact. When a statement, although in the form of an opinion, is “not a casual expression of belief” but “a deliberate affirmation of the matters stated,” it may be regarded as a positive assertion of fact. [Citations.]”
The Complaint alleges, “In connection with this new proposed channel, Thatcher Engineering submitted a Preliminary Drainage Study to Stratus, dated July 9, 2015. In that study, Thatcher Engineering indicated that following construction of the proposed channel, the water run-off from the Phase II development would be lower and would resolve any flooding concerns that existed in the pre-development condition. Thatcher Engineering further indicated and thus knew that this run-off would drain directly into the Mission Zanja Channel. Thatcher Engineering also knew that the new wider channel it designed for the Phase II development would increase the rate of flow downstream in the Morey Arroyo and Mission Zanja Channels since that was the purpose of that channel. Critically, however, the Preliminary Drainage Study stated nothing about the Mission Zanja Ordinance or how the proposed channel would affect the storm water levels that drain into the Mission Zanja Channel.” (Complaint, ¶ 21.)
Here, the Complaint sufficiently alleges a misrepresentation made by a professional with superior knowledge. Further, the Complaint pleads the negligent misrepresentation cause of action with the required specificity. (For example, see Complaint at ¶¶ 20, 21, and 55.) Thus, the court DENIES the Motion based on failure to state a claim for negligent misrepresentation.
Based on the above, the court DENIES Defendant’s (Thatcher Engineering & Associates, Inc.) Motion for Judgment on the Pleadings filed on 5-11-22 under ROA No. 50.
Plaintiff is to give notice.