The Irvine Company LLC vs. Douglas Ross Construction, Inc

This is a construction defect action by plaintiff The Irvine Company LLC (“Irvine”), owner of an apartment project commonly referred to as “The Laurels” located in San Jose, California (the “Project”). Irvine alleges certain conditions at the Project resulting in water intrusion causing tangible property damage in and around, but not limited to, the Property’s breezeways, private balconies, decks, and stairwells. Irvine’s original Complaint was filed on June 1, 2010. The operative First Amended Complaint (“FAC”), filed July 20, 2012, asserts six causes of action for: (1) breach of prime contract; (2) breach of express warranty; (3) breach of subcontracts; (4) breach of express indemnity; (5) negligence; and (6) strict liability. Among the named defendants are Douglas Ross Construction, Inc. (“DRC”) and Poured Floors, Inc. (“Poured Floors”).

On July 28, 2010, DRC filed its Cross-Complaint for breach of contract, indemnity, negligence, and declaratory relief against various subcontractor cross-defendants, including Poured Floors. The Cross-Complaint asserts ten causes of action for: (1) breach of contract; (2) breach of contract for duty to defend; (3) express indemnity; (4) express warranty; (5) negligence; (6) implied indemnity; (7) contribution; (8) declaratory relief for duty to indemnify; (9) declaratory relief for duty to defend; and (10) implied warranty.

On November 26, 2013, Poured Floors filed the instant motion for summary adjudication against the fourth and tenth causes of action in DRC’s Cross-Complaint.

On December 10, 2013, DRC filed its motion for determination of good faith settlement with Irvine. Under the settlement, DRC agreed to pay Irvine $23,000,000 and assign Irvine DRC’s cross-complaint and indemnity rights against cross-defendant subcontractors/parties as well as DRC’s trial experts. On January 10, 2014, the Court granted DRC’s motion for determination of good faith settlement with Irvine.

Discussion

Poured Floors now moves for summary adjudication against DRC’s fourth cause of action for express warranty and tenth cause of action for implied warranty.

“A party may move for summary adjudication as to one or more causes of action with an action…if that party contends that the cause of action has no merit. . . . A motion for summary adjudication shall be granted only if it completely disposes of a cause of action[.] (Cal. Code Civ. Proc., § 437c, subd. (f)(1).) Summary judgment involves a three step process: (1) identify the issues as framed by the pleadings; (2) determine whether the moving party has established facts negating the opposing party’s claims and justifying judgment in the movant’s favor; and (3) determine whether the opposition demonstrates the existence of a triable issue of material fact. (Lease & Rental Management Corp. v. Arrowhead Central Credit Union (2005) 126 Cal.App.4th 1052, 1057-1058.) “[T]he party moving for summary judgment bears an initial burden of production to make a prima facie showing of the nonexistence of any triable issue of material fact.” (Aguilar v. Atl. Richfield Co. (2001) 25 Cal.4th 826, 850.)

In support of its motion, Poured Floors requests judicial notice of: (1) Irvine’s Complaint, filed June 1, 2010; (2) DRC’s Cross-Complaint; and (3) Poured Floors’ Answer to Complaint and Cross-Complaint. The request is GRANTED. (See Evid. Code, § 452, subd. (d).)

Poured Floors argues it is entitled to summary adjudication of the fourth cause of action for express warranty because the Prime Contract between Irvine and DRC and the Subcontract documents limit express warranties to one year (Poured Floors’ Sep. St. of Material Fact [“MF”] 3-5, 6-9), and here, work on the Project began in February of 2005 and was completed by DRC in May of 2005 (MF 10-11), but Irvine’s Complaint was filed five years later in June of 2010 (MF 12). Poured Floors argues there is no triable issue of material fact that the one-year period of express warranty set forth in the Prime Contract expired. As for the tenth cause of action for implied warranty, Poured Floors argues that under California Civil Code section 1791.1 subdivision (c), implied warranties are coextensive in duration with express warranties and in no event have a duration of more than one year.

In the fourth cause of action for express warranty against Poured Floors, DRC alleges that pursuant to Section 19.1 of the subcontract agreement between DRC and Poured Floors, Poured Floors warranted that “all materials and equipment furnished shall be new unless otherwise specified” and that all work under the written contract “shall be of good quality, free from faults and defects and in accordance with the Contract documents.” DRC alleges that if Irvine was damaged as alleged in its Complaint regarding the constructing of elements of the pool and podium expansion joints and related improvements, this damage was directly and proximately caused and contributed to by the negligence and/or faults of Poured Floors. In the tenth cause of action, DRC alleges that it purchased goods from Poured Floors, and in every contract for the sale of goods by a merchant, there is a warranty that the goods shall be merchantable. DRC alleges that Poured Floors breached the implied warranty of merchantability by failing to deliver non-defective fully operational goods at the Project. DRC further alleges the goods produced by Poured Floors were not fit for the ordinary purpose for which they were intended and did not conform to the promises or facts set forth by DRC.

Poured Floors submits a copy of the Subcontract Agreement between it and DRC, dated April 10, 2003, in which Poured Floors agreed to furnish and pay for all labor, tools, material, equipment cartage, services, supervision and all other associated costs required to complete “floor fill and lightweight concrete” work at the Project. In Section 19 – Warranty, the Subcontract Agreement states:

19.1 SUBCONTRACTOR warrants to OWNER, ARCHITECT and CONTRACTOR that all materials and equipment furnished shall be new unless otherwise specified and that all work under this Agreement shall be of good quality, free from faults and defects and in accordance with the Contract Documents. All work not conforming to these requirements, including substitutions not properly approved and authorized, may be considered defective and ordered to be removed. The warranty provided in this SECTION 19 – WARRANTY shall be in addition to and not in limitation of any other warranty or remedy required by law or by the Contract Documents.

19.2 SUBCONTRACTOR agrees to execute Contractor’s standard warranty form in compliance with the warranty requirements contained in the Contract Documents and in the agreement.

The Prime Contract between Irvine and DRC is attached as Exhibit A to Irvine’s original Complaint. In section 5.3 on “Warranty”, the Prime Contract states:

Contractor hereby guarantees that the Work and all portions thereof (whether performed by Contractor or a Subcontractor) will be free from all defects in material and workmanship furnished under the Contract Documents for a period of one (1) year form the date of Final Completion[.]

Poured Floors submits a copy of the Notice of Completion for the Project, dated May 13, 2005. Under section 5.3 of the Prime Contract and Poured Floors’ Subcontract Agreement with DRC (which states that Poured Floors’ express warranty obligations were in accordance with the terms of the Prime Contract), the express one-year warranty for defects in material and workmanship would have expired on May 13, 2006, one year after the date of final completion. Irvine alleges that it discovered water intrusion causing tangible property damage “[w]ithin the last three (3) years from the date of this Complaint,” which was filed on June 1, 2010. Thus, Poured Floors sufficiently demonstrates that the express one-year warranty period in which Poured Floors warranted its materials and workmanship would be free from defects expired prior to the filing of Irvine’s Complaint, as well as Irvine’s alleged discovery of damage at the Project.

“The duration of the implied warranty of merchantability and where present the implied warranty of fitness shall be coextensive in duration with an express warranty which accompanies the consumer goods, provided the duration of the express warranty is reasonable; but in no event shall such implied warranty have a duration of less than 60 days nor more than one year following the sale of new consumer goods to a retail buyer. Where no duration for an express warranty is stated with respect to consumer goods, or parts thereof, the duration of the implied warranty shall be the maximum period prescribed above.” (Cal. Civ. Code, § 1791.1, subd. (c).) Thus, any implied warranty period for Poured Floors’ work under the Subcontract would have been for a period of one-year and would have expired prior to the filing of Irvine’s Complaint, as well as Irvine’s alleged discovery of damage at the Project.

The Court finds that Poured Floors carries its burden to demonstrate the absence of a triable issue on DRC’s express and implied warranty claims. No opposition was filed either by DRC or Irvine, who received assignment of DRC’s Cross-Complaint as part of their settlement before the opposition deadline to the instant motion.

Poured Floors’ motion for summary adjudication is GRANTED.

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