Case Name:???? The Irvine Company, LLC v. Douglas Ross Construction, Inc. (Sycamores)
Case No.:??????? 1-12-CV-234522
This action arises from the construction of a 445-unit apartment project in San Jose commonly known as ?The Sycamores.?? (First Amended Complaint (?FAC?), ? 2.)? Plaintiff is the alleged owner of the project following its acquisition of the corporate assets of the Irvine Commercial Property Company, previously named Irvine Community Development Company.? (Id., ? 3.)? Plaintiff alleges damages resulting from water intrusion due to defects in and around the project?s breezeways, balconies, decks, and other areas.? (Id., ?? 3, 18-20.)
Among several cross-actions, defendant and cross-complainant Cell-Crete Corporation filed a cross-complaint on February 3, 2016 against cross-defendant I.R.C. Technologies, Inc. dba Independent Roofing Consultants, Inc., seeking indemnity in the event that it is held liable in this action and asserting several other claims.
Currently at issue are (1) a motion for summary adjudication by plaintiff and (2) a demurrer to the second and third causes of action in Cell-Crete?s cross-complaint by IRC.
- Plaintiff?s Motion for Summary Adjudication
The Irvine Company LLC filed the operative FAC on March 27, 201,.? On March 2, 2016, it moved for summary adjudication (1) that subcontractor defendants Alcal Specialty Contractors, Inc. dba Alcal Insulation; RJA & Associates, Inc.; and Decorative Paving, Inc. owe a duty to indemnify it, (2) of the fifth cause of action for breach of express indemnity as to these defendants, and (3) of a number of the subcontractor defendants? affirmative defenses based on its alleged comparative negligence and/or comparative fault.
On April 27, 2016, an unauthorized amendment to the FAC was filed by plaintiff?s counsel.? The amendment purports to strike The Irvine Company LLC as the plaintiff and substitute a different entity, Sycamores North Park LLC, in its place.? On April 28 and 29, counsel for Alcal and counsel for plaintiff exchanged letters regarding the impact of the amendment to the FAC, with Alcal?s counsel asserting that the amendment was improper and mooted The Irvine Company LLC?s motion for summary adjudication, and plaintiff?s counsel asserting that the amendment was proper and the motion was not moot.? Plaintiff subsequently withdrew the motion as to RJA and Decorative Paving.? The motion is now at issue as to Alcal only.
Regardless of the impact of the amendment to the FAC, plaintiff?s motion is DENIED.? Whether The Irvine Company LLC or Sycamores North Park LLC is viewed as the moving party, the motion lacks essential evidence showing the relationship of either one of these entities to the project and contracts at issue.? The entire motion is premised on the assumption that plaintiff is a party to or beneficiary of Alcal?s subcontract, which contains an indemnification provision in favor of the ?OWNER??defined by the subcontract as Irvine Community Development Company.? Meanwhile, Irvine Commercial Property Company is the party to the prime construction contract governing the Sycamores project.? While plaintiff alleges that it acquired the assets of these entities, there is no evidence in the record supporting its allegations.? Consequently, there is nothing to support a finding that Alcal must indemnify or hold harmless either of the LLCs.
- IRC?s Demurrer
IRC demurs to the second cause of action for breach of implied warranty and the third cause of action for negligence in Cell-Crete?s cross-complaint for failure to state a claim.? (Code Civ. Proc., ? 430.10, subd. (e).)
The demurrer to the second cause of action is SUSTAINED WITH 10 DAYS? LEAVE TO AMEND.? Cell-Crete acknowledges that it has not and cannot allege privity with IRC, which is generally required to state a claim for breach of implied warranty.? (See Fundin v. Chicago Pneumatic Tool Co. (1984) 152 Cal.App.3d 951, 956 [demurrer to claims for breach of implied warranty was properly sustained where no contract between the parties was alleged].)? Cell-Crete argues that it ?could be a third-party beneficiary of the contract between IRC and Irvine,? but it alleges no facts supporting this theory in its cross-complaint.? Nor does it allege notice on this or any other theory.? (See Title Ins. & Trust Co. v. Affiliated Gas Equipment, Inc. (1961) 191 Cal.App.2d 318, 329 [an allegation of notice is an essential element of a claim for breach of warranty].)[1]
The demurrer to the third cause of action is also SUSTAINED WITH 10 DAYS? LEAVE TO AMEND.? In the third cause of action, Cell-Crete seeks to recover its attorney fees and other litigation expenses.? Under the economic loss rule, ?plaintiffs may recover in tort for physical injury to person or property, but not for purely economic losses that may be recovered in a contract action.?? (San Francisco Unified School Dist. v. W.R. Grace & Co. (1995) 37 Cal.App.4th 1318, 1327.)? While an exception to the economic loss rule may arise where there is a special relationship between the parties (see J?Aire Corp. v. Gregory (1979) 24 Cal.3d 799, 804 [contractor owed a duty of care to tenant to complete construction in a manner that did not cause undue injury to tenant?s business]), Cell-Crete cites no authority supporting the proposition that a subcontractor is liable to another subcontractor for purely economic losses resulting from construction defects.? Particularly given that a subcontractor is not liable to a homeowner applying general negligence principles under these circumstances (see Aas v. Superior Court (William Lyon Company) (2000) 24 Cal.4th 627, abrogated by statute), the factors discussed in Biakanja v. Irving (1958) 49 Cal.2d 647 do not support the imposition of a duty here.? (See State Ready Mix, Inc. v. Moffatt & Nichol (2015) 232 Cal.App.4th 1227, 1233-1234 [engineer did not owe subcontractor a duty of care applying the Biakanja factors; engineer?s services were intended to benefit the project manager, not the subcontractor].)
Footnotes:
[1] With respect to IRC?s argument regarding the inapplicability of an implied warranty claim to a ?design professional,? IRC cites no authority supporting the proposition that Cell-Crete must allege its role on the project with precision at this juncture, and Cell-Crete has alleged that IRC provided materials for the project.? (Cross-Complaint, ?? 7, 17.)