Case Name: Kondori v. Apex Home Builders, Inc.
Case No.: 2016-1-CV-290927

This is an action for negligence related to the replacement of water lines at a condominium unit. On September 10, 2015, Community Management Services, Inc. (“CMS”), the property management company hired by Cedar Gables Homeowners Association (“HOA”), the homeowners association for the Cedar Gables condominium development, entered into a contract to replace existing water supply lines in the upper and lower units at 1068 Cedar Gables—the unit owned by plaintiff Amir Kondri (“Plaintiff”)—with Apex Inc. Construction & Plumbing (“Apex CP”). (See second amended complaint (“SAC”), ¶¶ 1-3, 13, exh. 1.) The estimate states that Apex CP’s contractor license number is 529605—which is actually the license number for defendant Wolfgang Hocke (“Hocke”). (See SAC, ¶¶ 7-8, exh.1.) Plaintiff asserts that both Apex CP and defendant Apex Home Builders, Inc. (“Apex HBI”) are alter egos or dbas of Hocke. (See SAC, ¶¶ 7-8, 13.) While replacing the water lines, Defendants Hocke, Apex CP and Apex HBI (collectively, “Defendants”) damaged the hardwood floor, the bathtub, tiles, kitchen cabinets, the kitchen counter top, walls and ceilings of Plaintiff’s property. (See SAC, ¶ 26.) On May 5, 2017, Plaintiff filed the SAC against Defendants, asserting causes of action for breach of contract and negligence.

Apex HBI and Hocke (collectively, “demurring defendants”) demur to each cause of action against them.

First cause of action

Demurring defendants assert the first cause of action for breach of contract fails to state facts sufficient to constitute a cause of action because it fails to demonstrate the existence of a contract between him and Defendants. The agreement, attached to the SAC, states that it is an estimate from Apex CP for CMS. Demurring defendants argue that “[t]hat contract is with an Apex, Inc., not Wolfgang Hocke or Apex Home Builders, Inc.” Demurring defendants are correct that “[i]f facts appearing in the exhibits contradict those alleged, the facts in the exhibits take precedence.” (Holland v. Morse Diesel International, Inc. (2001) 86 Cal.App.4th 1443, 1447, citing Mead v. Sanwa Bank Cal. (1998) 61 Cal.App.4th 561, 567-568.) Thus, the fact that the purported contract lists Apex CP as the contracting party takes precedence over any contradicting allegation.

However, there is no such contradiction. The SAC alleges that Apex HBI and Apex CP are alter egos of each other and Hocke. Thus, “[u]nder the alter ego doctrine, the courts will ignore the corporate entity and deem the corporation’s acts to be those of the persons or organizations actually controlling the corporation” (Sonora Diamond Corp. v. Super. Ct. (Sonora Union High School Dist.) (2000) 83 Cal.App.4th 523, 538)—in this case, demurring defendants. Demurring defendants tersely contend without citation to any authority that Plaintiff has not “properly alleged that either of [them] is an alter ego of Apex [CP].” (Defs.’ memo of points and authorities in support of demurrer (“Defs.’ memo”), p.4:18-20.) Demurring defendants do not articulate how the SAC does not properly allege that they are alter egos of Apex CP. Accordingly, this argument is without basis. (See Del E. Webb Corp. v. Structural Materials, Co. (1981) 123 Cal.App.3d 593, 604 (stating that “[a]s a general rule in testing a pleading against a demurrer the facts alleged in the pleading are deemed to be true, however improbable they may be”).) Regardless, to prove that Apex HBI and Apex CP are the alter egos of each other and Hocke, Plaintiff will be required to demonstrate that there is “such a unity of interest and ownerships between the corporation and its equitable owner that the separate personalities of the corporation and the shareholder do not in reality exist,” and “an inequitable result [will] result if the acts in question are treated as those of the corporation alone.” (Sonora Diamond Corp. v. Super. Ct. (Sonora Union High School Dist.) (2000) 83 Cal.App.4th 523, 538.) For demurring defendants to be liable on an alter ego theory, Plaintiff will be required to present evidence such as “commingling of funds and other assets of the two entities, the holding out by one entity that it is liable for the debts of the other, identical equitable ownership in the two entities, use of the same offices and employees, and use of one as a mere shell or conduit for the affairs of the other… inadequate capitalization, disregard of corporate formalities, lack of segregation of corporate records, and identical directors and officers.” (Id. at pp.538-539.) However, such evidence is for another day; the hearing on demurrer may not be turned into a contested evidentiary hearing. (Del E. Webb Corp., supra, 123 Cal.App.3d at p.605.) The demurrer to the first cause of action is OVERRULED.

Demurring defendants similarly argue that the second cause of action fails to state facts sufficient to constitute a cause of action because it “does not allege that Defendant had any sort of relationship—subcontractor or otherwise—with ‘Apex Inc. Construction and Plumbing,’ the name on the ‘contract’ (estimate) that Plaintiff includes as Exhibit 1 to the FAC.” (Defs.’ memo, p.5:19-22.) As previously stated, however, the SAC alleges that Apex HBI and Apex CP are alter egos of each other and Hocke. Demurring defendants do not argue that the second cause of action fails to adequately allege facts regarding the application of the alter ego doctrine, much less explain how the allegations would be so inadequate. Accordingly, the demurrer to the second cause of action is OVERRULED.

The Court will prepare the Order.