Case Name: Edward Berbena, et al. v. Luna Owners’ Association, et al.
Case No.: 16CV304653

I. Background

Edward Berbena and his wife Marni K. Lawlor Berbena (collectively, “Plaintiffs”) commenced this action against defendant Luna Owners’ Association (“LOA”) and defendant Common Interest Management Services, Inc. (“CIMS”) for injuries they allegedly suffered as a result of construction defects at their condominium in Milpitas.

According to the allegations in the first amended complaint (“FAC”), Plaintiffs’ unit is in a complex with defective drain, plumbing, and waste-management systems. Their toilet overflowed repeatedly and a sewage pipe burst in their living room, spraying them from above as they watched a movie. Plaintiffs contacted CIMS many times, but it consistently refused to hire a plumber or assist them with cleanup. Plaintiffs persisted, and CIMS eventually scheduled a plumber; but, the plumber never showed up. They subsequently learned that a CIMS employee canceled the plumber on the basis there was no problem to be addressed. While these plumbing issues were ongoing—and as a result of them—Mr. Berbena contracted Clostridium difficile, which could not be treated with antibiotics and required a number of surgeries.

Plaintiffs then decided to hire their own inspection and remediation companies due to CIMS’s inaction. They were told to vacate and remain away from the condominium because it had unsafe levels of mold, fungus, and sewage pathogens like enterococcus. Plaintiffs brought this information to LOA, but it denied responsibility and insisted, contrary to the inspection reports, that the issue was attributable to their unit and not the building’s plumbing. Consequently, Plaintiffs commenced this action.

In the FAC, Plaintiffs assert causes of action against CIMS and LOA (collectively, “Defendants”) for: (1) negligence (based on property damage); (2) negligence (based on personal injury to Mr. Berbena); (3) intentional infliction of emotional distress; and (4) negligent infliction of emotional distress. They seek compensatory as well as punitive damages. Currently before the Court is Defendants’ motion to strike Plaintiffs’ prayer for punitive damages and related allegations.

II. Discussion

In order to plead a claim for punitive damages, a plaintiff must allege the defendant was guilty of malice, oppression, or fraud and the ultimate facts underlying such allegations. (Civ. Code, § 3294, subd. (a); Clauson v. Super. Ct. (1998) 67 Cal.App.4th 1253, 1255.) If a claim for punitive damages is not properly pleaded, it may be stricken. (Grieves v. Super. Ct. (1984) 157 Cal.App.3d 159, 164; Code Civ. Proc., §§ 435–436.) “In determining whether a complaint states facts sufficient to sustain punitive damages, the challenged allegations must be read in context with the other facts alleged in the complaint.” (Monge v. Super. Ct. (1986) 176 Cal.App.3d 503, 510.) “Further, even though certain language pleads ultimate facts or conclusions of law, such language when read in context with the facts alleged as to defendants’ conduct may adequately plead the evil motive requisite to recovery of punitive damages.” (Ibid.)

“‘Malice’ means conduct which is intended by the defendant to cause injury to the plaintiff or despicable conduct which is carried on by the defendant with a willful and conscious disregard of the rights or safety of others.” (Civ. Code, § 3294, subd. (c)(1).) “‘Oppression’ means despicable conduct that subjects a person to cruel and unjust hardship in conscious disregard of that person’s rights.” (Civ. Code, § 3294, subd. (c)(2).) For purposes of both malice and oppression, despicable conduct means conduct that is “‘so vile, base, contemptible, miserable, wretched or loathsome that it would be looked down upon and despised by ordinary decent people.’ [Citation.]” (American Airlines, Inc. v. Sheppard, Mullin, Richter & Hampton (2002) 96 Cal.App.4th 1017, 1050.) “‘Fraud’ means an intentional misrepresentation, deceit, or concealment of a material fact known to the defendant with the intention on the part of the defendant of thereby depriving a person of property or legal rights or otherwise causing injury.” (Civ. Code, § 3294, subd. (c)(3).)

In Plaintiffs’ first, second, and third causes of action, they include a conclusory allegation that Defendants “acted maliciously, fraudulently[,] and oppressively, thereby allowing [them] to recover punitive damages….” (FAC, ¶¶ 26, 32, 38.) Defendants argue these allegations are insufficient on their own. While they are correct, this does not end the inquiry. The issue is whether Plaintiffs plead facts to support this characterization of Defendants’ conduct. Defendants erroneously proceed as though the characterization of their conduct exists in a vacuum. They do not provide analogous legal authority and a reasoned discussion of the allegations in the pleading to support the conclusion that Plaintiffs do not plead facts sufficient to support their ultimate characterizations. Thus, their approach is inapt.

Here, Plaintiffs do not allege facts to support the recovery of punitive damages based on fraud. And, they tacitly concede this point in their opposition. Nevertheless, they do allege Defendants “had actual knowledge of the flooding of raw sewage in [P]laintiffs’ unit and were well aware that their repeated refusals to assist [P]laintiffs would result in the harm [ ] suffered.” (FAC, ¶ 25.) Plaintiffs then allege “Defendants willfully failed to avoid those probable dangerous consequences.” (FAC, ¶ 25.) These allegations are consistent with the history of the plumbing problems set forth in the background portion of the pleading. (FAC, ¶¶ 8–15, 19.) Defendants do not address these allegations. Also, they do not cite and the Court is not aware of authority establishing the facts pleaded are insufficient, as a matter of law, to support a claim for punitive damages based on malice or oppression. Accordingly, Defendants do not demonstrate Plaintiffs fail to plead facts sufficient to support the ultimate characterizations of their conduct.

Defendants also argue Plaintiffs do not allege authorization or ratification sufficient to state a claim for punitive damages against them based on the conduct of their employees. To recover punitive damages from an employer based on the conduct of its employee, a plaintiff must allege the “employer had advance knowledge of the unfitness of the employee and employed him or her with a conscious disregard of the rights or safety of others or authorized or ratified the wrongful conduct for which the damages are awarded or was personally guilty of oppression, fraud, or malice.” (Civ. Code, § 3294, subd. (b).) “With respect to a corporate employer, the advance knowledge and conscious disregard, authorization, ratification or act of oppression, fraud, or malice must be on the part of an officer, director, or managing agent of the corporation.” (Civ. Code, § 3294, subd. (b).) A managing agent is someone who, like a corporate officer or director, exercises “substantial discretionary authority over significant aspects of a corporation’s business” and policies. (White v. Ultramar, Inc. (1999) 21 Cal.4th 563, 577–78.)

As with Defendants’ first argument, their argument about the allegations of ratification and authorization is not supported by legal analysis and a fair and complete discussion of the allegations in the pleading. They insist there are no facts in the pleading, but this is inaccurate. Plaintiffs allege there was knowledge on the part of the board of LOA because they sued the builder for construction defects, including those at issue in this action. Additionally, Plaintiffs allege specific instances of conduct reflecting knowledge on the part of executives of LOA and CIMS. Katrina Sorensen, President of LOA, knew about sewage pipes leaking into the garage directly below Plaintiffs’ unit. (FAC, ¶ 11.) Plaintiffs reported toilet overflows to CIMS’s Community Manager, Veronica Sandoval, who in turn reported the problem to the Senior Vice President, Bob Burton. (FAC, ¶¶ 12–15.) Plaintiffs presented the results of their home inspection to LOA’s board. (FAC, ¶ 19.) Thus, Plaintiffs allege Defendants’ executives knew about the raw sewage leaks. They allege Mr. Burton and the board of LOA, despite this knowledge, simply ignored the problem and refused to act. Based on these allegations, and in light of the insufficiency of Defendants’ presentation, the Court is not persuaded Plaintiffs fail to allege authorization or ratification sufficient to plead entitlement to punitive damages.

In conclusion, Defendants do not demonstrate Plaintiffs’ punitive damages allegations are not properly pleaded. To be sure, their reply does not fill the gaps in their analysis. Consequently, the motion to strike is DENIED.