Case Number: SC120771 Hearing Date: June 04, 2014 Dept: O

SC120771
BRENNER v. BELAIR COURTSIDE

Defendants’ Demurrer is OVERRULED as to the 3rd c/a for negligence, SUSTAINED W/10 DAYS LEAVE TO AMEND as to the 4th c/a for statutory negligence and SUSTAINED W/O LEAVE as to the breach of fiduciary duty claim. The negligence claim against Westcom sufficiently states facts establishing that it owes a legal duty to Plaintiff. Westcom is the agent of the COA, which clearly owes Plaintiff a duty of care in maintaining the premises. The COA contract with Westcom to perform property management services and Plaintiff is arguably a third party beneficiary of that contract. The statutory negligence claim fails because the statute or regulation violated is not specified. The breach of fiduciary duty claim fails because there is no authority holding that the individual directors of an HOA owe the homeowners a fiduciary duty.

ANALYSIS: Defendants demur to the complaint on grounds that (1) the 3rd and 4th causes of action for negligence and statutory negligence are improper as to Westcom, as it is merely the property management company: (2) the 4th c/a for statutory negligence fails to plead a specific statute or ordinance violated by the Association or Westcom; (3) the 5th c/a for breach of fiduciary duty is improper against the individual director Defendants , because their only involvement is as board members and it is the COA that owes the fiduciary duty to residents, not the individual board members.

Defendants argue Westcom is not subject to a legal duty of care to residents of the complex in providing maintenance and management services therein. Defendants fail to provide any persuasive argument for this position. Westcom is undisputedly the property manager of the complex and is the agent of Defendant COA in performing its duties. Westcom is subject to a legal duty of care in carrying these duties out and it is entirely reasonable to find that its legal duty of care runs to the residents of the complex, who are the direct beneficiaries of its property management services. Defendants argue that Westcom is merely the agent and therefore it is not subject to a legal duty. There is no authority to support this argument, nor is it a logical conclusion that agent status and a legal duty to third parties in contractual privity with the principal are mutually exclusive.

Likewise, there is no authority cited to support Westcom’s position that a legal duty requires contractual privity under these facts. Moreover, even if such privity is required, Plaintiff has sufficiently alleged basis to find her a third-party beneficiary of the management contract between the COA and Westcom. Westcom was hired by COA to perform maintenance duties they owed to the individual unit owners.

The failure to plead the specific statute or regulation allegedly violated subjects a negligence per se c/a to general demurrer. See Evraets v. Intermedics Intraocular, Inc. (1994) 29 Cal.App.4th 779, 794 (demurrer to negligence per se action properly sustained for failure to plead which of the numerous federal regulations applicable to defendant’s industry were violated); see also Cary v. Los Angeles Ry. Co. (1910) 157 Cal. 599, 604 (“although the violation of such a statute is negligence per se, there must be a causal connection between the unlawful act and the injury, which must be shown in the pleading and by the proof, or the action fails”).

Plaintiff’s 4th c/a for “statutory negligence” is essentially a negligence per se claim based on violation of a statutory duty. Plaintiff’s failure to plead the specific statute or regulation upon which the negligence per se claim is based subjects the claim to general demurrer.

“Directors of nonprofit corporations such as the Association are fiduciaries who are required to exercise their powers in accordance with the duties imposed by the Corporations Code. This fiduciary relationship is governed by the statutory standard that requires directors to exercise due care and undivided loyalty for the interests of the corporation.” Frances T. v. Village Green Owners Assn. (1986) 42 Cal.3d 490, 513. Thus, directors on an HOA owe a fiduciary duty to the actual association, not the individual homeowners or members. To the extent homeowners or members sue, they would have to sue in a derivative capacity on behalf of the HOA. Plaintiff is not suing derivatively. Plaintiff fails to cite any authority holding that a director of an HOA owes a fiduciary duty directly to individual members.

Plaintiff’s reliance on Dwyer v. Lanan & Snow Lubmer Co. is misplaced. Dwyer v. Lanan & Snow Lumber Co. (1956) 141 Cal.App.2d 838, 840-841. Dwyer did not involve breach of a fiduciary duty. Dwyer involved the question of whether a negligence claim could be stated against a corporate officer or director. Dwyer answered the question in the affirmative based on a director’s or officer’s direct participation in a tort. Plaintiff is not asserting negligence based on violation of a legal duty against individual Defendants but violation of fiduciary duty, which requires the existence of a fiduciary relationship.