City of Santa Barbara, et al. v. CDM Smith, Inc.
Case No: 17CV01847
Hearing Date: Tue Mar 27, 2018 9:30

Nature of Proceedings: Demurrer to First Amended Cross-Complaint (2)

(1) Demurrer of Cross-Defendant MNS Engineers, Inc., to Cross-Complaint of CDM Smith, Inc.

(2) Demurrer of Cross-Defendant MNS Engineers, Inc., to Cross-Complaint of Schock Contracting Corporation

Attorneys:

For Plaintiff City of Santa Barbara: Ariel Pierre Calonne, Tom R. Shapiro, Tava M. Ostenger, Office of the City Attorney; Eric Firstman, Meyers Nave Riback Silver & Wilson PLC

For Defendant, Cross-Complainant, and Cross-Defendant CDM Smith, Inc.: Eric Berg

For Cross-Defendant and Cross-Complainant Schock Contracting Corporation: Steven W. Sedach

For Cross-Defendant MNS Engineers, Inc.: Peter L. Stacy, Brian P. Roteliuk, Weil & Drage, APC

Ruling:

(1) For the reasons set forth herein, the demurrer of MNS Engineers, Inc., to the first amended cross-complaint of CDM Smith, Inc., is overruled.

(2) For the reasons set forth herein, the demurrer of MNS Engineers, Inc., to the first amended cross-complaint of Schock Contracting Corporation is overruled.

(3) MNS Engineers, Inc., shall file and serve its answers to the first amended cross-complaint of CDM Smith, Inc., and to the first amended cross-complaint of Schock Contracting Corporation on or before April 11, 2018.

NOTE: The next CMC set for 4/19/18 and the MSC and Trial Dates are all confirmed. Please do not consider requesting a continuance. There are experienced lawyers on this case and the Court anticipates that the case will be resolved by the trial date.

Background:

(1) Allegations of Plaintiff’s Complaint

On April 26, 2017, Plaintiff City of Santa Barbara (City) filed its original complaint in this action. City is the owner and operator of the El Estero Wastewater Treatment Plant (Plant) to provide primary wastewater treatment for the City, its residents, and the City’s customers. In 1987, City upgraded the Plant to add a tertiary treatment facility that further treated the discharge water (effluent) to bring the water to sufficient quality to be recycled for non-potable purposes such as irrigation and landscaping. The treatment process uses single media gravity deep bed filters (Filters).

By 2014, the Filters required an upgrade due to age and use. In January 2012, City and defendant CDM Smith, Inc., (CDM) entered into an agreement (Preliminary Design Agreement) to perform several tasks for the Plant, including engineering assessment and preliminary design services. On June 4, 2012, CDM issued a memorandum that recommended the consideration of a membrane filtration system to replace the Filters and recommended a preliminary design.

CDM completed a Preliminary Design Report (PDR) on February 19, 2013. Following the PDR, on March 8, 2013, City and CDM entered into an agreement (Design Agreement) to prepare the final design drawings and specifications. Under the Design Agreement, CDM was to prepare detained design drawings as necessary to construct the work detailed in the PDR. CDM prepared specifications for the project.

The project was competitively bid for construction with CDM providing the technical bid documents. On April 29, 2014, City entered into a construction services agreement (Construction Services Agreement) with CDM to provide City with engineering services during the construction of the project. The project was awarded to cross-defendant and cross-complainant Schock Contracting Corp. (Schock).

During construction, CDM was notified that the project specifications were defective in that the technical water quality data for the water being fed directly into the new tertiary membrane system (the secondary effluent) was inaccurate and not reflective of the actual water quality. As a result of this design error, the membranes purchased could no longer be used for project and the City was forced to purchase new membranes at substantially increased costs for installation and additional costs in purchasing, operating, and maintain the new membranes. City was ultimately required to retain a consultant to address the problems created by the design defects and to perform substantial remedial actions.

City filed its original complaint in this action asserting three causes of action against CDM: (1) negligence; (2) breach of contract; and, (3) breach of the covenant of good faith and fair dealing.

Among the breaches of duty asserted by City against CDM is its failure properly to design the UF piping system, and failing to design proper restraints to the piping manifold resulting in damage to the valves and piping system. City also asserts as a breach of duty the failure of CDM to properly design the acid tank, level sensors and associated heating systems, resulting in a fire that destroyed and otherwise damaged City property.

(2) Cross-Complaint of CDM

On September 8, 2017, CDM filed its original cross-complaint (CDM CC) against cross-defendants Schock and MNS Engineers, Inc. (MNS). Following the sustaining of MNS’s demurrer to the CDM CC, CDM filed its first amended cross-complaint (CDM FACC). (Note: The Court appreciates the italicized portions of the CDM FACC as showing changes from the CDM CC.)

CDM alleges in the CDM FACC that during construction CDM discovered that it had the product water data included in its specifications instead of the feed water. The table did not have a header stating that it was feed water, but it was in the feed water section of the specifications. The specifications also conflicted with the drawings, which included correct feed water data.

Schock’s contract with the City included obligations for Schock to notify CDM of any deviations between the plans and specifications, to verify all data, to provide a certification regarding submittals, and to have ultimate responsibility over all submittals. Schock provided CDM with no such notifications.

Several days after CDM entered into the Construction Services Agreement with City, CDM entered into a separate contract with MNS dated May 1, 2014. (Note: The CDM FACC in paragraph 19 references an attached exhibit A. No exhibits are attached to the CDM FACC filed with the Court.) Pursuant to that contract, MNS agreed to perform professional services in the form of certain design engineering tasks for CDM with respect to the project. MNS was aware of the professional obligations CDM was obligated to undertake towards City with respect to the project, including CDM’s right to review change orders as part of CDM’s scope of work. MNS was also aware of these professional obligations by way of its agency relationship with City in its role as construction manager for the project.

MNS was performing construction management services for the project under a contract between MNS and City. MNS did not sufficiently review, scrutinize, or challenge Schock’s change order cost numbers, which were grossly inflated, and did not request CDM’s review of change orders, even though it was in CDM’s scope of work to do so. The project delays were the result of Schock generally falling far behind schedule and not the result of the switching out of the membranes. MNS failed to adequately review and scrutinize Schock’s activities. Once CDM identified the water issue, MNS failed to take steps to adequately manage delay or cost based upon its expectation that the City was going to attempt to lay off all damages occasioned by additional cost and delay on CDM.

CDM also asserts that any pipe failure on the project as alleged by City was due to the piping supports not being installed by Schock as specified and submitted, and Schock’s work being inadequately inspected by MNS. Any damages were the result of certain flanges being overtightened. The overtightening was the result of actions of Schock and the failure to adequately inspect those actions by MNS.

Damages sustained by City as a result of fire at the tank-level sensors were the result of actions of Schock and MNS. The actions taken by Schock and MNS that resulted in this incident were outside of their responsibilities and obligations as set forth in their contracts with City.

The CDM FACC asserts four causes of action against Schock and MNS: (1) implied total indemnity; (2) comparative equitable indemnity; (3) apportionment of fault; and (4) declaratory relief.

MNS demurs to each of the causes of action against it in the CDM FACC. MNS argues that CDM’s theory of liability is premised upon equitable indemnity, which is barred by the economic loss rule.

As discussed below, CDM opposes the demurrer and argues that the CDM FACC is adequately alleged.

(3) Cross-Complaint of Schock

Schock responded to the CDM CC by filing an answer on October 24, 2017, and its own cross-complaint for indemnity, contribution, and declaratory relief against CDM, MNS, and new party Taft Electric Company (Schock CC). Following the sustaining of MNS’s demurrer to the Schock CC, Schock filed its first amended cross-complaint (Schock FACC). (Note: The Court appreciates the italicized portions of the Schock FACC as showing changes from the Schock CC.)

The Schock FACC alleges that City entered into a contract with MNS to serve as City’s construction manager for the project. MNS was an agent of City, and as an agent, MNS was aware of the professional obligations of both it and Schock to undertake towards City with respect to the project, including review and analysis of construction documentation such as plans, specifications, and change orders, and including inspection and construction of the project.

City entered into a professional services agreement with CDM for CDM to provide City with engineering services during construction of the project. CDM entered into a separate contract with MNS in which MNS agreed to perform professional services in the form of certain design engineering tasks for CDM with respect to the project. MNS was aware of the professional obligations CDM was obligated to undertake towards City with respect to the project, including the right to review change orders as part of CDM’s scope of work. MNS was further aware of these professional obligations CDM owed to City by way of MNS’s agency relationship with City in its role as construction manager for the project.

City alleges that it sustained damages as a result of pipe failure and flanges being overtightened. Such damage was due in part to MNS inadequately inspecting actions taken by contractors on the project.

City also alleges that it sustained damages as a result of fire at the tank-level sensors, and such damages were due, in part, to acts or omissions on the part of MNS. The acts or omissions on the part of MNS that resulted in this incident were outside of its responsibilities as set forth in its contract with City.

MNS knew or reasonably should have known that its failures would potentially cause City to seek contractual or other relief against CDM or Schock.

In the Schock FACC, Schock asserts six causes of action: (1) implied equitable indemnity; (2) comparative contribution; (3) total equitable indemnity; (4) implied contractual indemnity; (5) express indemnity; and (6) declaratory relief. All causes of action except the fifth (which is asserted against cross-defendant Taft Electric Company) are asserted against MNS. Each of the causes of action of the Schock FACC against MNS is dependent upon liability being found against Schock by virtue of a cross-complaint against it.

MNS demurs to the Schock FACC essentially on the same grounds as MNS’s demurrer to the CDM FACC.

The demurrer is opposed by Schock.

Analysis:

“The rules by which the sufficiency of a complaint is tested against a general demurrer are well settled. We not only treat the demurrer as admitting all material facts properly pleaded, but also ‘give the complaint a reasonable interpretation, reading it as a whole and its parts in their context.’” (Yanting Zhang v. Superior Court (2013) 57 Cal.4th 364, 370, internal quotation marks and citations omitted.)

(1) Demurrer to CDM FACC

(A) Requests for Judicial Notice

In support of the demurrer, MNS requests that the Court take judicial notice of the City’s complaint, the CDM CC, the notice of ruling on the prior demurrer, filed December 8, 2017, and the CDM FACC. The Court will grant these requests for judicial notice. (Evid. Code, § 452, subd. (d)(1).) Judicial notice does not extend to the truth of factual assertions appearing in court documents. (Sosinsky v. Grant (1992) 6 Cal.App.4th 1548, 1569.)

(B) Indemnity and Economic Loss Rule

Most the arguments of the parties has been the subject of the Court’s analysis in ruling on the prior demurrers. Nonetheless, there are some new aspects of the CDM FACC.

One new aspect of the CDM FACC is the allegation that several days after CDM entered into the Construction Services Agreement with City, CDM entered into a separate contract with MNS. MNS argues that the terms of that contract are not adequately alleged and therefore the contract should be ignored. In opposition, CDM argues that the contract is pleaded as evidence that MNS was on notice of the terms of the CDM/City contract and is not pleaded to support a claim for breach of contract. The rule requiring pleading of the terms of the contract relates specifically to claims where the existence and particular terms of the contract comprise part of the cause of action. (See McKell v. Washington Mutual, Inc. (2006) 142 Cal.App.4th 1457, 1489 [breach of contract].) Knowledge is an ultimate fact (Crouch v. Wilson (1920) 183 Cal. 576, 579) and, generally, knowledge may be alleged using conclusive allegations (City of Pomona v. Superior Court (2001) 89 Cal.App.4th 793, 803). Consequently, it is not necessary for CDM to allege the specific terms of the contract where the only intended inference from the existence and terms of the contract is notice.

CDM’s claims against MNS are all for indemnity. In arguing the sufficiency of its pleading of the CDM-MNS contract, CDM disclaims alleging any claim for breach of contract. As previously noted by the Court, under these circumstances, the allegations of indemnity obligations in the CDM CC can only be based upon equitable indemnity. (See Bay Development, Ltd. v. Superior Court (1990) 50 Cal.3d 1012, 1029 [discussing E. L. White, Inc. v. City of Huntington Beach (1978) 21 Cal.3d 497 and distinction between express contractual indemnity and implied contractual indemnity as a form of equitable indemnity].)

MNS argues again that BFGC Architects Planners, Inc. v. Forcum/Mackey Construction, Inc. (2004) 119 Cal.App.4th 848 (BFGC) is dispositive of CDM’s equitable indemnity claims. In BFGC, a school district entered into a contract with architects to prepare architectural drawings for and supervise construction of a high school. (Id. at p. 850.) The district also entered into contracts with general contractors respectively for the site phase and construction phase of the project. (Ibid.) In its complaint against the architects for breach of contract and for professional negligence, the district alleged that after construction was completed, the general contractor for the construction phase submitted claims to the district for damages resulting from delays and disruptions caused by the architects’ defective design, for which the district paid substantial sums. (Id. at pp. 850-851.) The architects filed a cross-complaint against several parties including the two general contractors, alleging that the contactors were negligent in failing to comply with the terms of their contracts with district and that the contractors breached their duties as to the standard of care. (Id. at p. 851.) Architects also sought implied equitable indemnity, apportionment of fault, and declaratory relief for indemnity. (Ibid.)

The general contractors in BFGC filed demurrers challenging the cross-complaint by architects. (BFGC, supra, 119 Cal.App.4th at p. 851.) The general contractors argued that they owed no contractual or other duties to the architects, that architects claimed only economic damages, and that the equitable causes of action could not stand because there was no valid direct claim. (Ibid.) The trial court sustained the demurrers without leave to amend and the architects appealed. (Ibid.)

On appeal in BFGC, the court explained the necessary elements for equitable indemnity: “With limited exception, there must be some basis for tort liability against the proposed indemnitor. [Citation.] Generally, it is based on a duty owed to the underlying plaintiff [citations], although vicarious liability [citation] and strict liability [citation] also may sustain application of equitable indemnity. In addition, implied contractual indemnity between the indemnitor and the indemnitee can provide a basis for equitable indemnity. [Citation.]” (BFGC, supra, 119 Cal.App.4th at p. 852.) The court concluded:

“[Architects’ cross-complaint] alleges [the general contractors] breached their duties to district by failing to comply with the terms of their contracts. This is not a cognizable claim on which to base equitable indemnity. [¶] ‘A person may not ordinarily recover in tort for the breach of duties that merely restate contractual obligations. Instead, “ ‘[c]ourts will generally enforce the breach of a contractual promise through contract law, except when the actions that constitute the breach violate a social policy that merits the imposition of tort remedies.’ ” [Citations.]’ [Citation.] [¶] The only allegations of [general contractors’] misconduct are based on their alleged breach of contract, despite [architects’] gloss that in doing so, they breached their duties. This is an improper attempt to recast a breach of contract cause of action as a tort claim. Nor is there any social policy that would demand resort to tort remedies. Without any action sounding in tort, there is no basis for a finding of potential joint and several liability on the part of defendants, thereby precluding a claim for equitable indemnity.” (BFGC, supra, 119 Cal.App.4th at pp. 852-853.)

MNS argues that BFGC is directly on point. Here, CDM alleges that that MNS breached its duties to City by failing to comply with contractual obligations just as the architects alleged that general contractors breached their duties to the district. The breaches alleged are parallel, both involving delays and disruptions stemming from defective design. Applying BFGC, MNS argues that CDM’s claims are barred.

In distinguishing Willdan v. Sialic Contractors Corp. (2007) 158 Cal.App.4th 47 (Willdan), a case cited by CDM in opposition to the earlier demurrer, the Court reasoned: The principal differences between BFGC and Willdan as they relate to the facts alleged here are in the particular duties alleged. In BFGC, the underlying duty was a contractual duty owed by the general contractors to the district; in Willdan, the underlying duties included a tort duty owed by the general contractor to the city. Unfortunately for this analysis, simply labeling the duties as arising in contract or in tort is not especially helpful. The distinguishing point is as stated by the California Supreme Court in Erlich v. Menezes (1999) 21 Cal.4th 543, 551: “[C]onduct amounting to a breach of contract becomes tortious only when it also violates a duty independent of the contract arising from principles of tort law. [Citation.] ‘ “ ‘An omission to perform a contract obligation is never a tort, unless that omission is also an omission of a legal duty.’ ” ’ [Citation.]” In Willdan, the duty was tortious because the duty involved providing defective materials and performing work in the construction of the project in a defective manner; the indemnified claim arose from the defective materials and defective performance of work. In BFGC, the duty was alleged only as arising out of duties created by the parties’ contract and the claim sought to be indemnified arose from delay and disruption of performance of a contract. The Court concluded that, as alleged in the CDM CC, CDM’s claims were much closer to BFGC than to Willdan because the relationship between MNS and City is a contractual one for construction management services, the breaches alleged are breaches in the nature of the management services, and the duties breached by this conduct are solely duties existing by virtue of the contract for MNS to provide management services to City. These duties do not exist independently by virtue of tort law. (Cf. Bily v. Arthur Young & Co. (1992) 3 Cal.4th 370, 376 [auditor owes no general duty of care regarding the conduct of an audit to persons other than the client].)

In opposition to this demurrer, CDM argues that the economic loss rule does not apply because there is a tort duty owned to it by MNS by virtue of the general principles set forth in Biakanja v. Irving (1958) 49 Cal.2d 647 (Biakanja) and J’Aire Corp. v. Gregory (1979) 24 Cal.3d 799 (J’Aire). As summarized in J’Aire, the Biakanja criteria to determine whether a defendant has a special relationship so as to owe a tort duty of care to a plaintiff are: “(1) the extent to which the transaction was intended to affect the plaintiff, (2) the foreseeability of harm to the plaintiff, (3) the degree of certainty that the plaintiff suffered injury, (4) the closeness of the connection between the defendant’s conduct and the injury suffered, (5) the moral blame attached to the defendant’s conduct and (6) the policy of preventing future harm.” (J’Aire, 24 Cal.3d at p. 804.) In J’Aire, the court applied the Biakanja factors to determine that a contractor who undertook construction work pursuant to a contract with the owner of premises may be held liable in tort for business losses suffered by a lessee when the contractor negligently fails to complete the project with due diligence. (Id. at pp. 802, 804-805.)

The theory argued by CDM is that the J’Aire tort of negligent interference with prospective business advantage essentially displaces the economic loss rule where the J’Aire duty applies. This argument was rejected by the California Supreme Court in Aas v. Superior Court (2000) 24 Cal.4th 627 (Aas). (Note: Subsequent to the decision in Aas, the Legislature enacted the Right to Repair Act addressing recovery of damages for residential construction defects (Civ. Code, § 895 et seq.). The California Supreme Court has recently ruled that the Right to Repair Act displaces the common law claim for negligence arising from residential construction defects. (McMillin Albany LLC v. Superior Court (2018) 4 Cal.5th 241, 256.) To that extent, the discussion in Aas as it applies to residential construction within the scope of the Right to Repair Act has been superseded. Aas remains good law as it applies outside of the area statutorily displaced by the Right to Repair Act. There is no claim that the Right to Repair Act has any application to the construction at issue in this case.) The issue in Aas was whether a homeowner may recover damages in negligence from the developer, contractor, and subcontractors who built their dwellings for construction defects that have not caused property damage. (Aas, p. 632.) The plaintiff homeowner argued that the J’Aire tort superseded the economic loss rule. (Id. at p. 636.) The Supreme Court disagreed. (Id. at p. 632.) The court concluded: “[A]pplying the J’Aire factors, we do not find they justify a broad rule permitting recovery of repair costs unaccompanied by property damage or personal injury.” (Id. at p. 647.)

The court in State Ready Mix, Inc. v. Moffatt & Nichol (2015) 232 Cal.App.4th 1227 (State Ready Mix) applied these rules in a context similar to that present here. In State Ready Mix, a concrete supplier wrote a concrete mix design and prepared a bad batch of concrete that was used to construct a harbor pier. (Id. at p. 1229.) The concrete supplier blamed the bad concrete on the civil engineer who drafted the pier plans and helped the general contractor by gratuitously reviewing the supplier’s concrete mix design. (Ibid.) When the supplier was sued to recoup the cost of replacing the concrete, it filed a cross-complaint for equitable indemnity and contribution against the civil engineer. (Id. at p. 1230.) The State Ready Mix court affirmed the sustaining of the demurrer of the civil engineer on the grounds of the economic loss rule. (Ibid.) As stated by the court, the concrete supplier “cannot seek equitable indemnity or contribution for damages caused by the breach of its own contract.” (Ibid.) After analyzing both BFGC and Aas, the court concluded: “Like Aas, the economic loss rule bars [the supplier’s] cross-complaint because [the civil engineer] has no contractual relationship with [the supplier or the project manager] and no facts are alleged that the concrete injured a person or damaged other property.” (Id. at p. 1232.)

Here, there is a contractual relationship alleged between CDM and MNS but that contractual relationship is not alleged either to provide express indemnity or contractual duties owed to CDM that were breached by the incidents alleged in the CDM FACC. The only fact that is new by these allegations is notice to MNS, which CDM argues fits into the foreseeability of harm element of J’Aire. But foreseeability only of economic injury is not sufficient, as held by Aas. (Aas, supra, 24 Cal.4th at p. 646.) The existence of a different contractual relationship, if anything, demonstrates the important function of the economic loss rule of separating contract law from tort law. There was no impediment to CDM and MNS addressing the issue of duty by contract; CDM and MNS had actually formed a contractual relationship with respect to other aspects of the project. The failure of the CDM and MNS to address the instant duty issues in their contract left the duty issues where the law puts them by default: unless there is property damage or personal injury, there is no compensable claim and, as explained in BFGC and State Ready Mix, no basis for equitable indemnity. Thus, there is no basis for equitable indemnity under CDM’s argument based upon J’Aire factors.

There are two other aspects of CDM’s claims that involve the economic loss rule in a different way. City’s complaint against CDM, as characterized in CDM’s FACC, alleges physical damage to piping by overtightening of flanges caused by Schock and by the failure of MNS to adequately inspect. (City Complaint, ¶¶ 23(a), 24; CDM FACC, ¶¶ 26, 29.) Also alleged is physical damage from a fire at the tank-level sensors. (City Complaint, ¶¶ 23(b), 24; CDM FACC, ¶¶ 27, 29.) In sustaining the prior demurrer, the Court referred specifically to the fire as a potential exception to the economic loss rule. This reference did not imply that the only potential exception was the fire. Physical damage by overtightening of flanges also is type of property damage that is outside of the economic loss rule. As discussed above, it is the economic loss rule that generally defeats a compensable tort claim as a basis for equitable indemnity as pleaded by CDM. However, the overtightening incident alleges property damage outside of the application of that rule. CDM alleges concurrent negligence of Schock and MNS as a cause of this physical damage, giving rise to the joint liability that is necessary for equitable indemnity. (See El Escorial Owners’ Association v. DLC Plastering, Inc. (2007) 154 Cal.App.4th 1337, 1353.) As to this aspect of the claims, CDM has sufficiently alleged an action for equitable indemnity. (Although the Court has reservations about the sufficiency of the detail alleged by CDM with respect to the fire incident, in view of this determination, further discussion of the allegations of the fire incident are unnecessary.)

“If the complaint states a cause of action under any theory, regardless of the title under which the factual basis for relief is stated, that aspect of the complaint is good against a demurrer.” (Quelimane Co. v. Stewart Title Guaranty Co. (1998) 19 Cal.4th 26, 38.) Moreover, “a demurrer cannot rightfully be sustained to part of a cause of action or to a particular type of damage or remedy.” (Kong v. City of Hawaiian Gardens Redevelopment Agency (2002) 108 Cal.App.4th 1028, 1047.) As pointed out by MNS, all of CDM’s claims are derivative of the equitable indemnity claim and stand or fall together. Because CDM sufficiently alleges a claim for equitable indemnity based upon the property damage claim, the demurrer will be overruled.

(2) Demurrer to Schock FACC

(A) Requests for Judicial Notice

In support of the demurrer, MNS requests that the Court take judicial notice of the City’s complaint; the Schock CC; the notice of ruling on the prior demurrer to the CDM CC, filed December 8, 2017; the notice of ruling on the prior demurrer to the Schock CC, filed December 27, 2017; and the Schock FACC. The Court will grant these requests for judicial notice. (Evid. Code, § 452, subd. (d)(1).) Judicial notice does not extend to the truth of factual assertions appearing in court documents. (Sosinsky v. Grant, supra, 6 Cal.App.4th at p. 1569.)

(B) Demurrer Procedure

In opposition, Schock argues that MNS has failed to comply with the requirements of Code of Civil Procedure section 430.41 by sending a meet and confer email on February 19, 2018 (President’s Day). “The parties shall meet and confer at least five days before the date the responsive pleading is due. If the parties are not able to meet and confer at least five days prior to the date the responsive pleading is due, the demurring party shall be granted an automatic 30-day extension of time within which to file a responsive pleading, by filing and serving, on or before the date on which a demurrer would be due, a declaration stating under penalty of perjury that a good faith attempt to meet and confer was made and explaining the reasons why the parties could not meet and confer.” (Code Civ. Proc., § 430.41, subd. (a)(2).) According to the attached proof of service, Schock’s FACC was served by mail on January 15, 2018; the Schock FACC was filed on January 16, 2018. The response was due on February 20, 2018. (Code Civ. Proc., §§ 430.40, subd. (a) [demurrer within 30 days after service], 1013, subd. (a) [extended 5 days for service by mail]; 12a, subd. (a) [extended to court day following a court holiday). The declaration of attorney Brian P. Roteliuk states that a telephonic conference was held on February 15 which did not result in an agreement and that Roteliuk sent a further letter on February 19. While the Court encourages thorough meet and confer conferences in advance of filing a demurrer, the February 15 telephonic conference as set forth in the declaration complies with the requirements of section 430.41. The demurrer will be addressed on the merits.

(C) Additional Cause of Action

Also in opposition, MNS argues that the addition in the Schock FACC of the new cause of action for implied contractual indemnity is beyond the scope of leave to amend granted by the Court in sustaining the demurrer to the Schock CC.

“Generally, when a court sustains a demurrer with leave, the pleader may amend only the cause of action as to which the demurrer was sustained. [Citation.] But the general rule does not apply if the new cause of action responds to the court’s reasoning for sustaining the earlier demurrer.” (Rope v. Auto-Chlor System of Washington, Inc. (2013) 220 Cal.App.4th 635, 654, superseded by statute on other grounds as discussed in Moore v. Regents of the University of California (2016) 248 Cal.App.4th 216, 245.)

The new cause of action responds to the Court’s reasoning for sustaining the earlier demurrer and so is within the scope of the leave to amend granted by the Court. But, contrary to Schock’s arguments in opposition, the new cause of action does not provide a different basis for Schock’s arguments against the demurrer. The demurrer to the Schock FACC, like the demurrer to the Schock CC, is based upon the same arguments about the economic loss rule and equitable indemnity discussed above in the context of the CDM FACC.

“In general, indemnity refers to ‘the obligation resting on one party to make good a loss or damage another party has incurred.’ [Citation.] Historically, the obligation of indemnity took three forms: (1) indemnity expressly provided for by contract (express indemnity); (2) indemnity implied from a contract not specifically mentioning indemnity (implied contractual indemnity); and (3) indemnity arising from the equities of particular circumstances (traditional equitable indemnity).[Citations, fn.] [¶] Although the foregoing categories of indemnity were once regarded as distinct, we now recognize there are only two basic types of indemnity: express indemnity and equitable indemnity. [Citation.] Though not extinguished, implied contractual indemnity is now viewed simply as ‘a form of equitable indemnity.’ [Citations.]” (Prince v. Pacific Gas & Electric Co. (2009) 45 Cal.4th 1151, 1157.) The issue in this case with the economic loss rule and equitable indemnity is with joint liability. “[O]ur recognition that ‘a claim for implied contractual indemnity is a form of equitable indemnity subject to the rules governing equitable indemnity claims’ [citation] corrects any misimpression that joint liability is not a component of such claims.” (Id. at p. 1166.)

For purposes of this demurrer, there is no meaningful legal difference between the claim for implied contractual indemnity and equitable indemnity. So, for purposes of this demurrer, the fourth cause of action is merely redundant to the causes of action based on equitable indemnity. “‘[R]edundancy’ is not a cause for demurrer.” (McDonell v. American Trust Co. (1955) 130 Cal.App.2d 296, 303; accord, County of Santa Clara v. Hayes Co. (1954) 43 Cal.2d 615, 619-620.)

(D) Indemnity Claims

The legal arguments of MNS with respect to the viability of equitable indemnity track the arguments made by MNS in its demurrer to the CDM FACC. The same analysis and results apply here. The Court notes that Schock has provided greater detail in its allegations regarding the property damage claims for overtightening and for the fire. (See Schock FACC, ¶¶ 18, 19, 35, 36.) For the same reasons discussed above, the economic loss rule does not apply to these aspects of these claims and Schock has sufficiently alleged joint liability so as to state a claim for equitable indemnity. For the same reasons as discussed above, the demurrer to the Schock FACC will be overruled.