Case Name:   Wesley Chen v. US-Sino Investment, Inc., et al.

 

Case No.:       1-13-CV-245057

 

Demurrer to Complaint and Motion to Strike by defendant Wayne Ting & Associates, Inc.

 

This action involves claims arising out of an agreement for the construction of a home in Milpitas. On August 17, 2011, plaintiff Wesley Chen and defendant US-Sino Investment, Inc. executed a construction contract whereby US-Sino agreed to construct a residence for Chen and to provide all labor and materials and expertise for the construction in a good and workmanlike fashion.  (Complaint, ¶11 and Exh. A.)  US-Sino breached the contract by performing negligent construction, creating an unsafe worksite and abandoning the project on January 28, 2012, after a subcontractor’s employee was fatally injured at the property.  (Complaint, ¶¶14 – 15.)

 

On April 19, 2013, Chen filed a complaint against US-Sino and Richard Xin Liu asserting causes of action for:

 

(1)            Breach of Contract

(2)            Negligence

(3)            Fraud and Deceit

(4)            Intentional/ Negligent Misrepresentation

(5)            Violation of Business and Professions Code §17200 et seq.

(6)            Breach of Covenant of Good Faith and Fair Dealing

 

Following an unsuccessful demurrer, US-Sino and Liu answered the complaint on January 6, 2014.  On March 12, 2014, Chen filed a Doe amendment designating defendant Wayne Ting & Associates, Inc., as Doe defendant 9.  On May 2, 2014, Chen filed a Certificate of Merit as to Ting pursuant to Code of Civil Procedure section 411.35.  On May 23, 2014, Chen dismissed the third and fourth causes of action against Ting.  On May 28, 2014, Ting filed the motions now presently before the court” a demurrer and motion to strike Chen’s complaint.

 

I.          Ting’s Request for Judicial Notice

 

In support of its demurrer and motion to strike, Ting requests the court take judicial notice of (1) the license issued to Wen-Ling Ting aka Wayne Ting issued by the State of California Board of Registration for Professional Engineers and Land Surveyors on August 27, 1990; (2) pocket certificate of Wayne L. Ting issued by the State of California for Professional Engineers, Land Surveyors and Geologists showing expiration date of December 31, 2014; and (3) pages from the State of California website for Professional Engineers, Land Surveyors and Geologists showing the license search results under Wayne Ting and confirming his license as a civil engineer.

 

Ting’s request for judicial notice is GRANTED. (See McPheeters v. Board of Medical Examiners (1946) 74 Cal.App.2d 46, 47—court will take judicial notice of the records of a public agency.)

 

In reply, Ting asks the court to take judicial notice of (1) the request for dismissal, with prejudice, by plaintiff, of the third and fourth causes of action against Ting filed May 23, 2014; and (2) the proof of service of summons on Ting filed April 15, 2014.  Ting’s request for judicial notice is GRANTED.  (See Evid. Code, §452, subd. (d); People v. Woodell (1998) 17 Cal.4th 448, 455.)

 

II.        Chen’s Request for Judicial Notice

 

In opposition, Chen requests the court take judicial notice of (1) the complaint filed April 19, 2013; and (2) the Certificate of Merit (as to Wayne Ting and Associates Inc.) filed May 2, 2014.  Chen’s request for judicial notice is GRANTED. (See Evid. Code, §452, subd. (d); People v. Woodell (1998) 17 Cal.4th 448, 455.)

 

III.       Motion to Strike

 

1. A.              Certificate of Merit

 

Ting moves to strike Chen’s complaint it on the ground that Ting is a licensed civil engineer and Chen failed to file a Certificate of Merit as required by Code of Civil Procedure section 411.35, subdivision (a) which states:

 

In every action, including a cross-complaint for damages or indemnity, arising out of the professional negligence … of a person holding a valid registration as a professional engineer issued pursuant to Chapter 7 (commencing with Section 6700) of Division 3 of the Business and Professions Code, or a person holding a valid land surveyor’s license issued pursuant to Chapter 15 (commencing with Section 8700) of Division 3 of the Business and Professions Code on or before the date of service of the complaint or cross-complaint on any defendant or cross-defendant, the attorney for the plaintiff or cross-complainant shall file and serve the certificate specified by subdivision (b).

 

“The failure to file a certificate in accordance with this section shall be grounds for a demurrer pursuant to Section 430.10 or a motion to strike pursuant to Section 435.” (Code Civ. Proc., §411.35, subd. (g).)

 

In opposition, Chen provides a copy of the Certificate of Merit filed on May 2, 2014 in this action.

 

In reply, Ting contends the motion to strike should still be granted because Chen did not serve Ting with the Certificate of Merit as required by Code of Civil Procedure section 411.35, subdivision (a).

 

The record on these motions is not clear whether Chen served the Certificate of Merit on Ting.  If he has not already done so, Chen is directed to serve a copy of the Certificate of Merit on Ting.  In any event, Code of Civil Procedure section 411.35, subdivision (g) only states the “failure to file” as a basis for demurrer or motion to strike.  (See Price v. Dames & Moore (2001) 92 Cal. App. 4th 355, 360—“The statute does not provide that failure to file a certificate requires dismissal.  It declares that failure to file a certificate is a ground for demurrer or motion to strike, both procedures in which leave to amend is routinely and liberally granted to give the plaintiff a chance to cure the defect in question.”)

 

Accordingly, Ting’s motion to strike the complaint is DENIED.

 

1. B.              Restitution

 

Ting separately moves to strike Chen’s prayer for restitution on the ground that although restitution is a proper remedy for a violation of Business & Professions Code section 17200, there are no allegations in the complaint that Chen paid any money to Ting.

 

In opposition, Chen contends those allegations are found at paragraphs 12 – 13 where he alleges:  “Pursuant to the terms of the contract, Plaintiff, agreed to pay defendants for their work. [¶] Plaintiff performed all of his obligations under the contract.”  The contract referenced in the complaint is a “construction contract” (Complaint, ¶11) or Property Improvement Agreement (Complaint, Exh. A.).  Chen also alleges that defendants acted as the agents of other defendants and aided and abetted wrongful conduct.

 

These allegations are sufficient. Accordingly, Ting’s motion to strike Chen’s prayer for restitution is DENIED.

 

IV.       Demurrer

 

1. A.              Certificate of Merit

 

In addition to its motion to strike, Ting also demurs to the entire complaint on the ground that Chen failed to file a Certificate of Merit as required by Code of Civil Procedure section 411.35.  For the reason previously discussed, Ting’s demurrer to the complaint on the ground that no certificate was filed as required by Code of Civil Procedure section 411.35 [Code Civ. Proc., §430.10, subd. (h)] is OVERRULED.

 

1. B.              First Cause of Action – Breach of Contract

 

Ting demurs to the first cause of action for breach of contract on the ground that the only contract identified in the complaint is a contract between plaintiff Chen and defendant US-Sino. In opposition, Chen refers to an extrinsic fact to suggest that a contract existed between Chen and Ting: a Construction Observation Work Order.  The court will not consider this extrinsic evidence.  In Gold v. Gibbons (1960) 178 Cal.App.2d 517, 519, the court held, “Breach of contract cannot be made the basis of an action for damages against defendants who did not execute it and who did nothing to assume its obligations.”  (See also Clemens v. American Warranty Corp. (1987) 193 Cal.App.3d 444, 452—“Under California law, only a signatory to a contract may be liable for any breach.”)]  Since Ting is not a party to the only contract identified in the complaint, there is no basis for liability.

 

Accordingly, Ting’s demurrer to the first cause of action on the ground that the pleading does not state facts sufficient to constitute a cause of action [Code Civ. Proc., §430.10, subd. (e)] for breach of contract is SUSTAINED with 10 days’ leave to amend. Ting’s demurrer to the first cause of action on the ground that the pleading is uncertain [Code Civ. Proc., §430.10, subd. (f)] and on the ground that it cannot be ascertained from the pleading whether the contract is written, is oral, or is implied by conduct [Code Civ. Proc., §430.10, subd. (g)] is OVERRULED.

 

1. C.              Second Cause of Action – Negligence

 

In demurring to the second cause of action, Ting again advances the argument that the claim fails because Chen failed to file a Certificate of Merit. For the reason previously discussed, Ting’s demurrer to the second cause of action on the ground that no certificate was filed as required by Code of Civil Procedure section 411.35 [Code Civ. Proc., §430.10, subd. (h)] is OVERRULED.

 

1. D.              Third and Fourth Causes of Action – Fraud/ Negligent Misrepresentation

 

Chen dismissed the third and fourth causes of action against Ting on May 23, 2014. The demurrer to these two causes of action is moot.

 

1. E.              Fifth Cause of Action – Violation of Business & Professions Code §17200 et seq.

 

Chen’s fifth cause of action is a claim for violation of Business and Professions Code section 17200, otherwise known as the Unfair Competition Law (“UCL”) which “prohibits unfair competition, including unlawful, unfair, and fraudulent business acts.” (Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th 1134, 1143 (Korea).)  “[U]nfair competition shall mean and include any unlawful, unfair or fraudulent business act or practice and unfair, deceptive, untrue or misleading advertising and any act prohibited by Chapter 1 (commencing with Section 17500) of Part 3 of Division 7 of the Business and Professions Code.” (Bus. & Prof. Code §17200.)

 

“Section 17200 ‘borrows’ violations from other laws by making them independently actionable as unfair competitive practices.  In addition, under section 17200, a practice may be deemed unfair even if not specifically proscribed by some other law.”  (Korea, supra, 29 Cal.4th at p. 1143, internal quotations and citations omitted.)  Section 17200 prohibits five different types of wrongful conduct, each of which has become a term of art … (1) Unlawful business act or practice; (2) Unfair business act or practice; (3) Fraudulent business act or practice; (4) Unfair, deceptive, untrue or misleading advertising; and (5) Any act prohibited by [Bus. & Prof. Code §§17500 – 17577.5].”  (Stern, BUS. & PROF. C. §17200 PRACTICE (The Rutter Group 2005) ¶3:13, pp. 3-2 to 3-3.)

 

Ting demurs to the fifth cause of action by arguing that there are no factual allegations of fraudulent conduct leveled specifically against Ting, assuming the fifth cause of action is brought solely under the fraudulent prong of the UCL.  Ting goes on to argue that the claim lacks any specificity for a fraud claim. Even if the fifth cause of action were brought solely under the fraudulent prong of the UCL, Ting’s “argument fails to recognize the distinction between common law fraud, which requires allegations of actual falsity and reasonable reliance pleaded with specificity, and the fraudulent prong of the UCL, which does not. 11 (Tobacco II, supra, 46 Cal.4th at p. 312; see also id. at p. 320 [“relief under the UCL is available without individualized proof of deception, reliance and injury”]; Committee on Children’s Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 212, fn. 11 [197 Cal. Rptr. 783, 673 P.2d 660] (Children’s Television) [“The requirement that fraud be pleaded with specificity … does not apply to causes of action under the [UCL].”].)” (Morgan v. AT&T Wireless Services, Inc. (2009) 177 Cal.App.4th 1235, 1256.)

 

Here, the fifth cause of action alleges “defendants [including Doe defendants such as Ting] falsely represent[ed] to Plaintiff that they would comply with all state and county building ordinances and that they would carry workers compensation insurance for work at the property.” (Complaint, ¶48.) In demurring, Ting advances no other argument that this allegation is insufficient to support a claim for violation of the UCL. In reply, Ting argues Chen has not pleaded actual reliance, but as a matter of due process, the court cannot consider new arguments raised for the first time in reply.  Accordingly, Ting’s demurrer to the fifth cause of action on the ground that the pleading does not state facts sufficient to constitute a cause of action [Code Civ. Proc., §430.10, subd. (e)] for violation of Business & Professions Code §17200 et seq. is OVERRULED.

 

1. F.               Sixth Cause of Action – Breach of Covenant of Good Faith and Fair Dealing

 

Ting demurs to the sixth cause of action for breach of covenant of good faith and fair dealing by arguing that there must be an underlying contract and here, there is none alleged. “The prerequisite for any action for breach of the implied covenant of good faith and fair dealing is the existence of a contractual relationship between the parties, since the covenant is an implied term in the contract.” (Smith v. City and County of San Francisco (1990) 225 Cal. App. 3d 38, 49.) In light of the court’s ruling to the first cause of action above, Ting’s demurrer to the sixth cause of action on the ground that the pleading does not state facts sufficient to constitute a cause of action [Code Civ. Proc., §430.10, subd. (e)] for breach of covenant of good faith and fair dealing is SUSTAINED with 10 days’ leave to amend. Ting’s demurrer to the sixth cause of action on the ground that the pleading is uncertain [Code Civ. Proc., §430.10, subd. (f)] is OVERRULED.