Case Name:    Shoreline Builders, Inc. v. SBI Builders, Inc., et al.

Case No.:        1-14-CV-265678

This action for breach of contract, foreclosure of mechanic’s lien, and negligent misrepresentation is brought by the subcontractor on a construction project, plaintiff Shoreline Builders, Inc. (“Shoreline”), against contractor SBI Builders, Inc. (“SBI”), project owner Morgan Hill Retirement Residence, LP (“Morgan Hill”), project architect Anderson Architects, Inc. (“Anderson”), and project engineer Vertech Engineering, Inc. (“Vertech”).

At issue is Morgan Hill’s demurrer to the third cause of action for negligent misrepresentation on the grounds that this claim fails to state a cause of action and is uncertain.  (Code Civ. Proc., § 430.10, subds. (e) and (f).)

In the third cause of action, Shoreline alleges that Morgan Hill and SBI delivered design documents for the project, which were prepared by Anderson and Vertech, that were inaccurate and incomplete, but represented to Shoreline that the documents were accurate and complete.  (First Amended Complaint (“FAC”), ¶¶ 31-34.)  Shoreline also alleges that Morgan Hill and SBI inaccurately represented that Anderson and Vertech would promptly respond to design issues and questions as work progressed.  (Id.)  As a result of these misrepresentations, Shoreline incurred damages due to delay in the project and its need to acquire additional manpower and materials.  (FAC, ¶ 35.)

As an initial matter, the demurrer pursuant to Code of Civil Procedure section 430.10, subdivision (f) is OVERRULED.  Uncertainty is a disfavored ground for demurrer and is typically sustained only where the pleading is so unintelligible that the responding party cannot reasonably respond.  (See Khoury v. Maly’s of California, Inc. (1993) 14 Cal.App.4th 612, 616 [“A demurrer for uncertainty is strictly construed, even where a complaint is in some respects uncertain, because ambiguities can be clarified under modern discovery procedures.”].)  Here, the third cause of action is alleged clearly enough to enable a response.

As to the demurrer pursuant to Code of Civil Procedure section 430.10, subdivision (e), Morgan Hill contends that the third cause of action is entirely barred by the provisions of the subcontract between Shoreline and SBI, which states that “[o]missions from the plans and specifications shall not relieve [Shoreline] from the responsibility of furnishing, making or installing all items required by the applicable building or trade code and/or usually furnished, made or installed in the scope and general character indicated by the plans and specifications.”  (Mot. at pp. 8-9.)  However, Shoreline alleges that it did complete the work required despite the delays caused by incomplete and conflicting plans and specifications.  (FAC, ¶ 16.)  The subcontract does not speak to SBI’s, let alone Morgan Hill’s, liability for omissions from the plans and specifications.  Further, contracts exempting a party from responsibility for a negligent misrepresentation are contrary to California law.  (Civ. Code, § 1668 [“All contracts which have for their object, directly or indirectly, to exempt anyone from responsibility for his own fraud, … whether willful or negligent, are against the policy of the law.”]; McClain v. Octagon Plaza, LLC (2008) 159 Cal.App.4th 784, 794 [claim for intentional or negligent misrepresentation could not be barred by lease].)  Consequently, Morgan Hill’s argument that the third cause of action is barred by the subcontract lacks merit.

Nevertheless, Morgan Hill contends correctly that the third cause of action, which alleges that the misrepresentations at issue were made by Morgan Hill and SBI collectively, fails to state a claim because it is not pleaded with adequate specificity.  (See Charnay v. Cobert (2006) 145 Cal.App.4th 170, 185, fn. 14 [fraud and negligent misrepresentation must be pleaded with particularity and by facts that show how, when, where, to whom, and by what means the representations were tendered]; Tarmann v. State Farm Mut. Auto. Ins. Co. (1991) 2 Cal.App.4th 153, 157 [“The requirement of specificity in a fraud action against a corporation requires the plaintiff to allege the names of the persons who made the allegedly fraudulent representations, their authority to speak, to whom they spoke, what they said or wrote, and when it was said or written.”].)  While Shoreline argues that Morgan Hill is more knowledgeable concerning who specifically made the misrepresentations at issue, this is not a case, such as Committee On Children’s Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 217-218, superseded by statute on another point as stated in Californians For Disability Rights v. Mervyn’s, LLC (2006) 39 Cal.4th 223, 227, involving a large number of alleged misrepresentations published to the general population, or where Shoreline otherwise appears to be at a necessary disadvantage in identifying the specific misrepresentations at issue and the individuals who made them.  Here, Shoreline is as well-positioned as Morgan Hill to identify the individuals that its own agents spoke with, and it is better able to state which misrepresentations it attributes to individuals at Morgan Hill as opposed to individuals at SBI, about whom Morgan Hill would seem to have no information at all.

The demurrer to the third cause of action is consequently SUSTAINED WITH 10 DAYS’ LEAVE TO AMEND on the ground that it fails to state a claim.

Morgan Hill’s request for judicial notice of Shoreline’s interrogatory responses, made in its reply brief, is DENIED.  The request is in improper format (see Cal. Rules of Court, rule 3.1113(l)) and the interrogatory responses are not an appropriate subject of judicial notice given that they are not inconsistent with the allegations of the FAC (see Del E. Webb Corp. v. Structural Materials Co. (1981) 123 Cal.App.3d 593, 604-605 [“The court will take judicial notice of records such as admissions, answers to interrogatories, affidavits, and the like, when considering a demurrer, only where they contain statements of the plaintiff or his agent which are inconsistent with the allegations of the pleading before the court.”]).