Date: Thursday, May 5, 2016
Case No. BC 562074 Trial Date: None Set
Case Name: Nalbandyan v. Hamlet & Son, Inc., et al.

Moving Party: Defendant Hamlet & Son, Inc.
Responding Party: Plaintiffs Karapet Nalbandyan, Anahit Muradyan and Armen Nalbandyan

RULING:
The court does not agree with the argument in the opposition that plaintiff’s counsel was not permitted to submit an amended motion, or supplemental points and authorities, but only an errata to include omitted documents, or other information. The court accordingly has considered “Plaintiff’s Errata,” including the attached documents.

Motion for reconsideration is GRANTED.
The court has reviewed the submitted “Pool and spa proposal,” previously omitted from the First Amended Complaint, and the case of, Morgan v. AT&T Wireless Services, Inc. (2009) 177 Cal.App.4th 1235, and has reconsidered its April 1, 2016 ruling in connection with the demurrer and motion to strike as applicable to the fourth cause of action of the First Amended Complaint. The demurrer is now sustained with one final opportunity to amend to attach the subject document, and allege facts establishing that the fourth cause of action is not barred by the applicable statute of limitations, without reliance on any argument that the filing of the First Amended Complaint relates back to the filing of the original complaint. The motion to strike is moot in light of the sustaining of the demurrer with leave to amend.

The Second Amended Complaint is to be filed and served within ten days.

Pursuant to CCP § 430.41(c), the court orders that before a demurrer to the Second Amended Complaint may be filed, the parties must meet and confer within five days of receipt of service of the amended pleading. The parties are ordered to file with any further demurrer an appropriate meet and confer declaration under CCP § 430.41(a).

FACTUAL AND PROCEDURAL BACKGROUND:
Plaintiff Karapet Nalbandyan alleges that plaintiff is the owner of a single family residence in Glendale, and entered into a contract incorporating a written proposal with defendant Hamlet & Son, Inc. whereby defendants agreed to design, construct and install a swimming pool and spa on plaintiff’s property for the agreed upon price of $90,000. Plaintiff alleges that defendant breached the contract, and engaged in negligence and fraud. Specifically, plaintiff alleges that defendants did not complete construction of the pool and spa, and did not construct the project according to specifications, with those portions been completed being defective, asymetrical and leaky. Plaintiffs also allege that defendants hired undisclosed and unlicensed contractors and subcontractors, charged plaintiff for materials and labor not provided, and caused severe damage to plaintiff’s property as a result of failure in the application of gunite to the pool and spa, resulting in a spray of gunite over significant portions of plaintiff’s property, causing damage to the roof, exterior, existing stone decking and coping, light fixtures, metal work, and patio furniture.

Defendant Hamlet & Sons has filed a cross-complaint for implied and equitable indemnity, contribution and breach of contract against cross-defendant Legacy Gunite, Inc..

On April 1, 2016, the court heard a Demurrer and Motion to Strike the First Amended Complaint filed on behalf of defendant Hamlet & Son. The demurrer was overruled as to causes of action for negligence and fraud, and sustained to a cause of action for breach of contract on the narrow ground the reference written agreement was not in fact attached to the pleading, with ten days leave to amend to submit the contract as an attachment to the second amended complaint.

The demurrer to the fourth cause of action for violations of the Consumer Legal Remedies Act (“CLRA”) was sustained without leave to amend,
“on the ground the cause of action is barred by the applicable statute of limitations. The court is not persuaded that the doctrine of relation back applies to this claim due to the requirement that a notice be filed before suit can be commenced. The plaintiff filed no such notice prior to filing the initial complaint.”

The court deemed moot the motion to strike in connection with the damages and remedies claimed in connection with the fourth cause of action, given that the court had sustained the demurrer to that cause of action without leave to amend. A copy of the previous work-up is attached for the convenience of the court.

At the hearing, the court granted a request by plaintiff to stay the matter to permit plaintiff to seek a writ of mandate. The stay was ordered to be in effect until May 4, 2013.

On April 18, 2016, plaintiff brought an ex parte application for an OST and extension of the stay for the court to hear a motion for reconsideration of the April 1, 2016 order, evidently opting not to seek relief by writ of mandate. An order shortening time was issued, and the matter set for hearing this date.

Procedural
Timeliness of Motions
The opposition argues that the motion is untimely. CCP § 1008(a) provides:
“When an application for an order has been made to a judge, or to a court, and refused in whole or in part… any party affected by the order may, within 10 days after service upon the party of written notice of entry of the order and based upon new or different facts, circumstances, or law, make application to the same judge or court that made the order, to reconsider the matter and modify, amend, or revoke the prior order.

In this case, the notice of the court’s April 1, 2016 ruling was served on April 5, 2016, by mail. [Ex. A]. Permitting an additional five days to file a motion for reconsideration due to the service of the notice by mail would mean the motion should have been brought by April 20, 2016. The motion was filed on April 18, 2016, within the ten day deadline.

Moreover, the notice of ruling, and the court’s minute order reflect that the court had issued a stay of the action until May, which the court may construe as a stay order which prevented the ten day period from beginning to run at all until the stay expired. The motion will not be disregarded as untimely.

Errata
The opposition also argues that plaintiff’s counsel during the ex parte proceedings concerning this matter represented that the ex parte motion was missing some citations and defendant’s counsel pointed out that the motion was missing at least one of the cited exhibits. The court then permitted to file a notice of errata, not an amended motion, by April 20, 2016, but that the errata is not simply a notice of errata, but a fully amended motion. The “Errata” does not appear to be what the court envisioned, as it is a full blown discussion of legal authority which was not included in the original motion. Defendant is correct that this appears to defy the scope of the court’s permission to supplement the motion, and constitute an amended pleading. The court would be within its discretion to disregard the errata, with the exception of the attached documents. (The following legal discussion, in fact, was prepared before the Errata came to my attention, so the court would have performed a legal analysis of the subject case just based on the citation in the original moving papers).

The reply argues that plaintiff’s counsel will be permitted to argue the Morgan case at the hearing, based on the citation in the original motion, and that plaintiff submitted the argument in writing so the court could have it in advance. This seems to concede that plaintiff’s counsel has overreached here, but the court will not disregard the Errata because the Court prefers to have all cogent arguments presented to it in writing.

Affidavit Incomplete
CCP § 1008 specifically requires:
“The party making the application shall state by affidavit what application was made before, when and to what judge, what orders or decisions were made, and what new or different facts, circumstances, or law are claimed to be shown.”

Subdivision (d) provides that a violation of this section may be punishable as contempt and warrant sanctions. Subdivision (e) provides “No application to reconsider any order or for the renewal of a previous motion may be considered by any judge or court unless made according to this section.” Here, the declaration fails to identify any of these items, other than reference to a contract which was in existence as of the prior hearing but had not been attached to the pleading, or argued by counsel to have been entered into on a date different than that alleged in the FAC. The motion could be denied on the ground it fails to follow the precise content requirements of CCP § 1008, but the Court declines to do so on these technical grounds.

No new or different facts or law
Under CCP § 1008(a), A motion for reconsideration may only be brought if it is “based upon new or different facts, circumstances, or law.”

This motion is clearly not brought on new law, since the statutes and cases cited in the motion were all enacted well before the hearing on the previous motion. The “new” law primarily argued, Morgan v. AT&T Wireless Services, Inc. (2009) 177 Cal.App.4th 1235, was decided in 1999, well before the previous hearing.

To the extent any new facts are offered—the fact appears to be that the contract which was not attached to the previous pleading was not “entered” into until January 28, 2013, when it was signed by plaintiff. This would defeat the statute of limitations argument, as the FAC was filed on January 22, 2016, six days before the three year period from January 28, 2013 expired. The argument is that had the copy of the written contract not been inadvertently omitted from the FAC, the court would have been able to realize that the statute of limitations had not run.

When bringing a motion for reconsider based on new facts, the moving party must present “a satisfactory explanation for failing to provide the evidence earlier, which can only be described as a strict requirement of diligence.” Garcia v. Hejmadi, (1997) 58 Cal.App.4th 674, 690. The fact that counsel did not effectively argue then existing facts known to counsel is not a ground for reconsideration. Gilberd v. AC Transit (1995) 32 Cal.App.4th 1494, 1500.
The motion fails to explain why counsel did not have access to a copy of the agreement, and the means to know that the date pleaded by plaintiff in the FAC that the contract was entered, December 11, 2012, was incorrect. [See FAC, para. 9]. It is also not explained why this information was not presented in the reply or at the hearing in response to a clear statute of limitations challenge. The opposition objects on this ground. The motion could be denied for failure to present any new or different facts, circumstances or law to support reconsideration, but the Court declines to do so. It is a better use of resources of the trial court to consider the new material now in the first instance, rather than having this Court do so after the Court of Appeal, rules on an appeal of both the denial of this motion and the previous demurrer, with a finding that the new arguments should have been considered. The Court finds that it is best to err on the side of entertaining the action as a whole now, and the issues raised by the previous demurrer on their merits, rather than after a lengthy appellate process.

Substantive
Under CCP section 1008(a):
“When an application for an order has been made to a judge, or to a court, and refused in whole or in part, or granted…any party affected by the order may, within 10 days after service upon the party of written notice of entry of the order and based upon new or different facts, circumstances, or law, make application to the same judge or court that made the order, to reconsider the matter and modify, amend, or revoke the prior order.”

This subdivision further provides:
“For a failure to comply with this subdivision any order made on a subsequent application may be revoked or set aside on ex parte motion.”

Under CCP section 1008, subdivision (e):
“This section specifies the court’s jurisdiction with regard to applications for reconsideration of its orders and renewals of previous motions, and applies to all applications to reconsider any order of a judge or court, or for the renewal of a previous motion, whether the order deciding the previous matter or motion is interim or final. No application to reconsider any order or for the renewal of a previous motion may be considered by any judge or court unless made according to this section.”

The trial court’s determination of a motion for reconsideration is reviewed for abuse of discretion. See Wiz Technology, Inc. v. Coopers & Lybrand (2003, 2nd Dist.) 106 Cal.App.4th 1, 16.

As noted above, plaintiff here has failed to show that any new or different facts which could not have been presented at the previous hearing, are relied upon. The contract which plaintiff seeks to have the court consider was negotiated and entered into in 2012-2013, many years ago, and forms the basis of this lawsuit. A motion for reconsideration is properly denied where it is based on evidence that could have been presented in connection with the original motion. Morris v. Afga Corp. (2006) 144 Cal.App.4th 1452, 1460, 1468 (noting with approval a trial court’s ruling that expert medical causation evidence was “improper for reconsideration because it could have been presented with the motion.”).

Here, it is unfortunate that the contract was not previously attached to the pleading, or that counsel had not at least argued to the court that counsel had inadvertently misread the dates, or cited the case law now relied upon. The motion could be denied as providing no recognized basis for the court to reconsider its previous ruling, but the Court refuses to deny the motion on this technical ground.

The Court will proceed with a full analysis on the merits of the substantive law isses.

Plaintiff argues that he should be permitted leave to amend the fourth cause of action to show that the statute of limitations does not bar the CRLA claim, and the notice provisions were met.

Plaintiff argues that once the pleading is amended to attach the actual contract governing this matter, that contract shows on its face that it was not entered on December 11, 2012, as previously alleged, because, although dated that date on the first page, the second page of the agreement shows it was not executed and its terms accepted by plaintiff until January 28, 2013. [Ex. 1].

The previous concern of the court had been that plaintiff had argued that the three year statute of limitations on his claims had not run because the FAC related back to the filing of the original complaint, while at the same time arguing that plaintiff had given appropriate notice of the CLRA claim by doing so prior to the filing of the First Amended Complaint, basically arguing that the FAC did not relate back to the filing of the original complaint.

The argument now is that plaintiff need not rely on any relation back because the FAC was timely filed within three years of any of the acts claimed to be violations of the CLRA.

Under Civil Code section 1783:
“Any action brought under the specific provisions of Section 1770 shall be commenced not more than three years from the date of the commission of such method, act, or practice.”

The argument by defendant had been that the FAC alleged that the contract was entered into on December 11, 2012, and the statutory notice was not served until December 18, 2015, more than three years later, and the FAC not filed until January 22, 2016, also more than three years later.

This problem is avoided if the pleading is amended to allege that the contract was not entered into until January 28, 2013, as supported by the “Pool and spa proposal” sought to be attached to the pleading. Moreover, plaintiff also now argues that the statute did not begin to run until the “commission” of various acts and practices alleged, some in connection with the performance of the contract, which clearly did not take place until after work had begun, so the contract date does not provide grounds to clearly show that the claims are barred. It does appear that plaintiff has established that the defect previously of concern to the court could be cured by permitting further amendment.

The opposition argues that plaintiff should not be permitted to now argue that the contract was entered into on a different date, as plaintiff has previously made verified allegations and discovery responses that the contract was entered into on December 11, 2012, and should now be bound by that allegation.

Ordinarily a court may disregard subsequent inconsistent allegations in the absence of some explanation for the change. See Owens v. Kings Supermarket (1988) 198 Cal.App.3d 379, 384.

As an initial matter, and as pointed out in the reply, it appears that the allegations at issue are that the contract was entered “On or about December 11, 2012…” [FAC, para. 9]. Discovery responses also use this “on or about language.” [Opposition, Ex. B]. There is accordingly a strong argument that an allegation that the actual date was in January of 2012 is not inconsistent with this “on or about” allegation at all.

Moreover, there is clearly an explanation for the inconsistency offered here—counsel had not carefully reviewed the document and made a mistake in making the previous allegation. The document supports the new version of facts and, particularly at the pleading stage, there appears no reason to find that a change cannot be properly made here. There is no real prejudice shown to defendant if the court permits the change, and defendant will still be able to point out the inconsistency to the trier of fact.

The opposition also argues that plaintiff should be judicially estopped from now taking a position inconsistent with the previous allegations that the contract was entered into on December 11, 2011.

Judicial estoppel is the doctrine under which a party may be precluded from taking inconsistent positions in separate judicial proceedings. The Swahn Group, Inc. v. Segal (2010) 183 Cal.App.4th 831:
“The doctrine of judicial estoppel precludes a party from taking inconsistent positions in separate judicial proceedings. It is invoked to prevent a party from changing its position over the course of judicial proceedings when such positional changes have an adverse impact on the judicial process. The policies underlying preclusion of inconsistent positions are “general considerations of the orderly administration of justice and regard for the dignity of judicial proceedings. Judicial estoppel is ‘intended to protect against a litigant playing “fast and loose with the courts.” It seems patently wrong to allow a person to abuse the judicial process by first advocating one position, and later, if it becomes beneficial, to assert the opposite.”
Swahn, at 841, citing, quoting Jackson v. County of Los Angeles (1997) 60 Cal.App.4th 171, 182.

In Jackson, the Second District set forth the elements to establish judicial estoppel:
“(1) the same party has taken two positions; (2) the positions were taken in judicial or quasi-judicial administrative proceedings; (3) the party was successful in asserting the first position (i.e., the tribunal adopted the position or accepted it as true); (4) the two positions are totally inconsistent; and (5) the first position was not taken as a result of ignorance, fraud, or mistake.”
Jackson, at 183.

The argument is evidently that plaintiff should be estopped from now asserting a different date for the contract formation. Again, it is not clear that two positions have been taken here, as the “on or about language” renders plaintiff’s “position” on the date of formation rather vague.

Moreover, it is not clear how it can be argued that plaintiff was successful in asserting the initial allegation that the contract was entered into in December of 2011. The court has not been in a position to accept this date as true other than in ruling against plaintiff in sustaining a demurrer. Plaintiff has not so far in this litigation successfully used that date to its advantage

Finally, as argued in the reply, it appears that this position was taken as a result of mistake.

Accordingly, no judicial estoppel has been established.

Overall, because plaintiff is no longer in a position of arguing that the CLRA cause of action relates back to the filing of the original complaint, he is now not being inconsistent in arguing that the CRLA claim is brought for the first time in the FAC, so that the required notice had to precede the filing of the FAC, not the filing of the original complaint.

Civil Code § 1782, setting forth the prerequisites for commencement of an action pursuant to the Act, provides in pertinent part:
“(a) Thirty days or more prior to the commencement of an action for damages pursuant to this title, the consumer shall do the following:

(1) Notify the person alleged to have employed or committed methods, acts, or practices declared unlawful by Section 1770 of the particular alleged violations of Section 1770.

(2) Demand that the person correct, repair, replace, or otherwise rectify the goods or services alleged to be in violation of Section 1770.

The notice shall be in writing and shall be sent by certified or registered mail, return receipt requested, to the place where the transaction occurred or to the person’s principal place of business within California.”

The FAC alleges:
“More than thirty days prior to the filing of this Complaint, on or about December 18, 2015, Plaintiff served upon Defendants and their counsel a notice of the above violations pursuant to Civil Code § 1782 and demanded that Defendants correct the violations within thirty days.”
[Para. 27].

It is also alleged that defendants have not responded to the demand or commenced any corrections. [Para. 28].

Defendant has argued in the demurrer that the complaint was filed on October 29, 2014, but the alleged notice was not filed until December of 2015, after the complaint was filed and not thirty days before. As argued by plaintiff, the FAC was not filed until January 22, 2016, and added this claim for the first time.

Plaintiff in this motion for reconsideration argues that the court’s finding that the fourth cause of action was untimely “has permitted (and indeed required)” plaintiff to bring to the court’s attention the case of Morgan v. AT&T Wireless Services, Inc. (2009) 177 Cal.App.4th 1235. It could be that plaintiff intentionally withheld this case from the Court’s attention as inconsistent with the “relations back” doctrine statute of limitations argument. If so, this decision was strategic and made in good faith without any intentions to mislead the Court.

In Morgan, the Second District reversed the trial court’s order to the extent it dismissed a cause of action under the CLRA after sustaining a demurrer to the third amended complaint without leave to amend, finding that the trial court had erred in sustaining the demurrer for failure of plaintiffs to comply with the CLRA notice requirements. In Morgan, plaintiffs had filed an original complaint as well as a first amended complaint which included causes of action for violations of the CLRA and sought only injunctive relief, making it clear that no damages were sought, and including an allegation that plaintiffs were giving notice pursuant to Civil Code § 1782 and demanding that the deceptive practices be rectified within 30 days, and that “Failure to do so will result in Plaintiff amending this Complaint to seek damages for such deceptive practices…” In the second amended complaint, plaintiff sought damages and alleged they had provided the notice required under the statute, and again so alleged in the third amended complaint.

The Second District focused on the statutory language itself, which then provided at Civil Code § 1782 (d), “This notice requirement need not be complied with in order to bring an action for injunctive relief.” Morgan, at 1260.

The statute has since been amended, but continues to provide different notice requirements for actions seeking only injunctive relief which then are amended to seek damages:
“(d) An action for injunctive relief brought under the specific provisions of Section 1770 may be commenced without compliance with subdivision (a). Not less than 30 days after the commencement of an action for injunctive relief, and after compliance with subdivision (a), the consumer may amend his or her complaint without leave of court to include a request for damages. The appropriate provisions of subdivision (b) or (c) shall be applicable if the complaint for injunctive relief is amended to request damages.”

The Second District in Morgan rejected the argument which defendant relies upon here, in effect, that notice was required to be sent before commencement of the lawsuit, rather than before the CLRA cause of action seeking damages:
“… AT&T argues that plaintiffs’ CLRA claim fails because plaintiffs did not send the required notice before commencement of the lawsuit. AT&T’s argument is contrary to the express language of the notice statute. Plaintiffs (or their predecessor) were not required to provide notice before filing the original or first amended complaints because they did not seek damages under the CLRA in those complaints. Thus, as stated in Civil Code section 1782, subdivision (d), no notice was required. Moreover, that statute contemplates that a consumer may amend a complaint for injunctive relief to add a request for damages under the CLRA. Indeed, the statute expressly allows such an amendment, as long as it is done 30 days or more after filing of the original complaint and compliance with the notice requirement. (Civ. Code, § 1782, subd. (d).)
Morgan, at 1260.

Here, there was no CLRA claim at all until the filing of the FAC, so under Morgan, no need to allege notice in connection with the previous pleading, but only prior to the filing of the pleading which included the claim for damages under the CLRA, which is what is alleged here. The opposition does not address this argument, or argue that Morgan is not the proper law to be applied in this matter.

Accordingly, permitting leave to amend to correct the statute of limitations problem will not be a useless exercise, as plaintiff will then be in a position to properly and not inconsistently argue that the FAC should be considered a new pleading in connection with the CLRA claim and its notice requirements.

The court has reconsidered its previous ruling and issues a new order sustaining the demurrer with leave to amend.