Case Number: BC566632??? Hearing Date: April 25, 2016??? Dept: 50

Superior Court of California
County of Los Angeles
Department 50

KWN, LLC, et al.
Defendants. Case No.: BC 566632
Hearing Date: April 25, 2016

Hearing Time: 8:30 a.m.



Plaintiff Xiaolin Tong (?Plaintiff?) filed this action on December 12, 2014. The original Complaint asserted one cause of action for specific performance against Defendant KWN, LLC. Plaintiff filed the operative First Amended Complaint (?FAC?) on October 6, 2015. The FAC is brought against Defendants KWN, LLC (?KWN?); Kwok Yuen Ng (?Ng?); Kwok Tien Wu (?Wu?); EGL Associates, Inc. (?EGL?) and Hank Hsing-Lian Jong (?Jong?).
The FAC alleges the following: On or about April 27, 2013, Plaintiff entered into an agreement with KWN to purchase real property for $3.45 million. (FAC ?11.) Pursuant to the agreement, KWN was to construct the subject property in a workmanlike manner and in conformance with the plans and specifications on file. (FAC ?13.) On June 3, 2013, Plaintiff wired an initial deposit of $103,500 to the escrow holder. (FAC ?14.) Escrow was supposed to close on June 9, 2014 but the escrow closing date was pushed back because KWN was unable to obtain the City?s approval of the project plans until February 2014. (FAC ??15-16.) Plaintiff believes that KWN wishes to pull out of the agreement and sell the property to another buyer for a higher asking price. (FAC ?19.) On January 20, 2015, Plaintiff inspected the property and discovered that the property lacked retaining walls on the North, South, and East sides, despite the fact that the plans provide for retaining walls. (FAC ??21, 23.) The lack of retaining walls caused shifting in the property and cracking on the walls. (FAC ?23.) The cost to repair defects in the property is estimated to be $720,906, the majority of which is for the construction of retaining walls. (FAC ?25.)
The FAC asserts the following causes of action: (1) specific performance; (2) breach of contract; (3) breach of implied covenant of good faith and fair dealing; (4) negligence; (5) breach of implied warranty; (6) intentional misrepresentation; and (7) negligent misrepresentation.
Defendants Jong and EGL now demur to the fourth through seventh causes of action.

Request for Judicial Notice
Jong and EGL request judicial notice pursuant to Evidence Code ?? 452 (d) and (h) of a February 19, 2013 agreement between EGL and Ng. This document is not a court record that the Court may take judicial notice of under ?452(d). Further, ?the existence of a contract between private parties cannot be established by judicial notice under Evidence Code section 452, subdivision (h).? (Gould v. Maryland Sound Industries, Inc. (1995) 31 Cal.App.4th 1137, 1145.) Accordingly, the request for judicial notice is DENIED.

A demurrer can be used only to challenge defects that appear on the face of the pleading under attack or from matters outside the pleading that are judicially noticeable. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) ?To survive a demurrer, the complaint need only allege facts sufficient to state a cause of action; each evidentiary fact that might eventually form part of the plaintiff’s proof need not be alleged.? (C.A. v. William S. Hart Union High School Dist. (2012) 53 Cal.4th 861, 872.) For the purpose of testing the sufficiency of the cause of action, the demurrer admits the truth of all material facts properly pleaded. (Aubry v. Tri-City Hosp. Dist. (1992) 2 Cal.4th 962, 966-967.)

Fourth Cause of Action ? Negligence
?The elements of a cause of action for negligence are (1) a legal duty to use reasonable care, (2) breach of that duty, and (3) proximate cause between the breach and (4) the plaintiff’s injury.? (Mendoza v. City of Los Angeles (1998) 66 Cal.App.4th 1333, 1339.)
Here, the FAC alleges that ?EGL was the engineer who approved the Grading & Drainage Plan and Demolition & Erosion Control Plan for the construction of the SUBJECT PROPERTY. As an engineer, EGL owed PLAINTIFF a duty of care to perform its work with due care?? (FAC ?50.) The FAC alleges that EGL breached its duty by failing to perform its work with due care and in a good and workmanlike manner. (FAC ?51.) The FAC also alleges that EGL?s breach caused defects in the subject property and resulted in damages to Plaintiff. (FAC ??52-53.) These allegations are sufficient to state a cause of action for negligence. Jong and EGL?s arguments in support of the demurrer rely on extrinsic facts that do not appear on the face of the pleading or from matters that are judicially noticeable. Accordingly, the demurrer to the fourth cause of action is overruled.

Fifth Cause of Action ? Breach of Implied Warranty
Builders and vendors of new construction impliedly warrant that the structure was designed and constructed in reasonably workmanlike manner. (Pollard v. Saxe & Yolles Dev. Co. (1974) 12 Cal.3d 374, 380.) In certain circumstances, a real property owner may maintain a breach of implied warranty cause of action against a subcontractor despite the lack of a contract between the owner and subcontractor. (Burch v. Superior Court (2014) 223 Cal.App.4th 1411, 1423.) Here, the FAC alleges that the agreement between Plaintiff and KWN included an implied warranty protecting Plaintiff from defective construction. (FAC ?56.) The FAC also alleges that EGL breached the implied warranty because the work was not completed in a good and workmanlike manner. (FAC ?57.) The allegations are sufficient to state a cause of action for breach of implied warranty. In arguing that Plaintiff failed to state a claim, Jong and EGL again improperly rely on extrinsic matter. The demurrer to the fifth cause of action is overruled.

Sixth Cause of Action ? Intentional Misrepresentation
The elements of fraud are: (1) misrepresentation, (2) knowledge of falsity, (3) intent to defraud, (4) justifiable reliance, and (5) resulting damage. (Charnay v. Cobert (2006) 145 Cal.App.4th 170, 184.) Fraud must be pleaded specifically. To survive demurrer, plaintiff must plead facts that ?show how, when, where, to whom, and by what means the representations were tendered.? (Hamilton v. Greenwich Investors XXVI, LLC (2011) 195 Cal.App.4th 1602, 1614.)
Here, the FAC alleges that, on March 22, 2013, Jong, on behalf of EGL, represented to Plaintiff that there were retaining walls on the subject property by means of the Grading & Drainage Plan and Demolition & Erosion Control Plan which states that the existing retaining walls were to remain. (FAC ?60.) These allegations sufficiently specify the circumstances surrounding the alleged misrepresentation. The FAC also alleges the remaining elements of a cause of action for fraud. (FAC ??62-67.) Jong and EGL argue that they never spoke or had contact with Plaintiff. However, this fact is not disclosed in the pleading. The demurrer to the sixth cause of action is overruled.

Seventh Cause of Action ? Negligent Misrepresentation
?The elements of negligent misrepresentation are (1) the misrepresentation of a past or existing material fact, (2) without reasonable ground for believing it to be true, (3) with intent to induce another’s reliance on the fact misrepresented, (4) justifiable reliance on the misrepresentation, and (5) resulting damage.? (Nat’l Union Fire Ins. Co. of Pittsburgh, PA v. Cambridge Integrated Servs. Grp., Inc. (2009) 171 Cal.App.4th 35, 50 (internal quotations omitted).)
Here, the FAC?s allegations pertaining to the seventh cause of action are substantially the same as the allegations pertaining to the sixth cause of action. The only difference is Plaintiff alleges that Jong and EGL may have honestly believed their representations were true but they had no reasonable grounds for this belief. (FAC ?72.) The allegations are sufficient to state a cause of action for negligent misrepresentation. The demurrer to the seventh cause of action is overruled.

Based on the foregoing, the demurrer to the FAC is overruled in its entirety. Jong and EGL are ordered to file an Answer to the FAC within 20 days of notice of this ruling. Plaintiff is ordered to give notice.