Case Number: BC529356    Hearing Date: September 02, 2014    Dept: 58

JUDGE ROLF M. TREU
DEPARTMENT 58
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Hearing Date: Tuesday, September 2, 2014
Calendar No: 7
Case Name: Vertical Access, Inc. v. ZDX Industries, Inc., et al.
Case No.: BC529356
Motion: Demurrer and Motion to Strike
Moving Party: Cross-Defendant Vertical Access, Inc.
Responding Party: Cross-Complainant ZDX Industries, Inc.
Notice: Improper service of oppositions

Tentative Ruling: Demurrer is overruled. Motion to strike is denied. Cross-Defendant Vertical Access, Inc. to answer the First Amended Cross-Complaint within 10 days.
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Background –
On 12/3/13, Plaintiff Vertical Access, Inc. filed this action against Defendants ZDX Industries, Inc.; and Roxbury Medical Tower, LLC; Roxsan Optimus, LLC; and Morlin Asset Management, LP (collectively “Owners”) arising out of the alleged failure to pay for scaffolding construction and rental services. On 12/16/13, Plaintiff filed a First Amended Complaint asserting causes of action for (1) breach of contract against ZDX, (2) foreclosure of mechanics’ lien against Owners, and (3) common counts.

On 3/25/14, ZDX filed a cross-complaint against Plaintiff. In response to a demurrer and a motion to strike filed by Plaintiff, ZDX filed a First Amended Cross-Complaint on 6/6/14 alleging causes of action for (1) breach of written contract, (2) breach of covenants of good faith and fair dealing, and (3) intentional interference with contractual relationship.

Factual Allegations of the FACC –
In June 2011, ZDX contracted with the owners of real property located at 465 N. Roxbury Dr., Beverly Hills, CA 90212 to be the original general contractor for construction of improvements. ¶ 6. On 10/21/11, ZDX entered into a written agreement with Plaintiff as a subcontractor for rental, construction, and removal of construction scaffolding necessary for ZDX to do the construction of improvements. ¶ 7, Ex. A. Part of the scaffolding delivered by Plaintiff was not usable because joints were not attached properly. ¶ 9. In August 2012, ZDX requested Plaintiff to correct the problems (¶ 10): although Plaintiff did correct the scaffolding, the unusable part remained unusable for about one month (¶ 11).

On 9/19/12, Plaintiff issued invoice number 7175 in the amount of $7,126 for overtime use of the scaffolding when the scaffolding was not usable (¶ 12): ZDX objected and did not approve this invoice (¶ 13). Despite knowing of ZDX’s objection, Plaintiff wrongfully applied ZDX’s subsequent payments to other approved invoices to invoice 7175. ¶ 14. On 6/18/13, Plaintiff removed part of its scaffolding and all ladders to make the scaffolding unusable and inaccessible (¶ 15): ZDX demanded Plaintiff to completely remove its scaffolding which Plaintiff finally did on 7/12/13 (¶¶ 16-18). However, Plaintiff charged ZDX for the time the unusable scaffolding remained on the property. ¶ 19. The owners charged ZDX $20,000 as the result of the delay in removing all scaffolding. ¶¶ 20-22.

Service of Oppositions –
ZDX’s oppositions were filed and served by mail on 8/19/14. Although timely filed, Plaintiff correctly notes that the oppositions were improperly served pursuant to CCP § 1005(c). However, Plaintiff timely filed a substantive reply; therefore, the Court finds no prejudice in considering the oppositions.

Demurrer –
Plaintiff demurs to the FACC on the grounds that there are insufficient facts alleged to support the claims and that Plaintiff’s allegations are uncertain. “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.” Khoury v. Maly’s of California, Inc. (1993) 14 Cal.App.4th 612, 616. Reviewing Plaintiff’s demurrer, Plaintiff improperly attempts to dispute the allegations of the FACC at the pleading stage.

1. Contract Claims
Plaintiff argues that ZDX has failed to allege breach or damages to support the contract claims. However, these arguments are based on Plaintiff’s assertions that it has substantially complied with its subcontract, that ZDX used the scaffolding for a period of time, and that ZDX failed to pay for use of the scaffolding. The FACC alleges that part of the scaffolding was unusable in August 2012 but Plaintiff charged ZDX for use through invoice 7175 and applied payments to this disputed invoice. FACC ¶¶ 9-14. The FACC also alleges that Plaintiff removed part of its scaffolding and all access to the scaffolding on 6/18/13 with the remaining scaffolding not removed until 7/12/13 but that Plaintiff charged ZDX for the time the remaining scaffolding was left in place. Id. ¶¶ 15-19. At the pleading stage, this is sufficient to allege facts to support the claims for breach of contract and breach of covenants of good faith and fair dealing.

2. Interference with Contractual Relations
Plaintiff argues that ZDX has failed to allege facts as to a contract between ZDX and a third party, Plaintiff’s knowledge, and breach of disruption of that contract. See, e.g., Pac. Gas & Electric Co. v. Bear Stearns & Co. (1990) 50 Cal.3d 1118, 1126. However, the FACC alleges that ZDX entered into a contract with owners of real property as the original general contractor for construction of improvements (FACC ¶ 6); that Plaintiff knew that ZDX was the original general contractor for construction of improvements (id. ¶ 7); that Plaintiff provided scaffolding that was partly unusable in August 2012 for about one month (id. ¶¶ 9-11) and left parts of scaffolding that was unusable and inaccessible from 6/18/13 to 7/12/13 (id. ¶¶ 15-19); and that this caused ZDX to be penalized for being unable to timely perform its services to the owners of the property (id. ¶¶ 20-22). At the pleading stage, this is sufficient to allege facts to support the claim for intentional interference with contractual relations.

Motion to Strike –
Plaintiff moves to strike ZDX’s claim for punitive damages and for costs (to the extent ZDX is seeking attorney fees).

1. Punitive Damages
“Something more than the mere commission of a tort is always required for punitive damages. There must be circumstances of aggravation or outrage, such as spite or ‘malice,’ or a fraudulent or evil motive on the part of the defendant, or such a conscious and deliberate disregard of the interests of others that his conduct may be called wilful [sic] or wanton.” Taylor v. Superior Court (1979) 24 Cal.3d 890, 894-95 (citation omitted). Malice requires despicable conduct in addition to the willful and conscious disregard of Plaintiff’s interests. See College Hospital Inc. v. Superior Court (1994) 8 Cal.4th 704, 725). Oppression means “despicable conduct that subjects a person to cruel and unjust hardship in conscious disregard of that person’s rights.” Civil Code § 3294(c)(2). “’Despicable conduct’ is conduct which is so vile, base, contemptible, miserable, wretched or loathsome that it would be looked down upon and despised by ordinary decent people.” Mock v. Michigan Millers Mutual Ins. Co. (1992) 4 Cal.App.4th 306, 331 (citation omitted).

As further detailed in the Court’s summary of the factual allegations of the FACC, ZDX alleges that Plaintiff knew that ZDX was the original general contractor to provide construction of improvements for the property, provided partly unusable scaffolding and left unusable and inaccessible scaffolding on the property, and charged ZDX for the use and time that such scaffolding was left in place. At the pleading stage, this is sufficient to support malice or oppression.

2. Costs
Plaintiff argues that it is unclear whether ZDX is seeking attorney fees. See FACC p. 8:11 (claiming costs incurred to prosecute this suit). However, ZDX’s claim for costs is substantively identical to Plaintiff’s claim for costs. See FAC p. 6:2 (claiming costs of suit herein incurred). To the extent any party claims attorney fees, this can be addressed at the appropriate time. At the pleading stage, the claim for costs is not improper.

Ruling –
The demurrer is overruled and the motion to strike is denied.