ORIAN CONSTRUCTION AND ROOFING, INC. VS. CALABASAS BLUE, LLC

[TENTATIVE] ORDER: The Motion for Summary Judgment is DENIED. The alternative Motion for Summary Adjudication is DENIED. Defendants’ request for judicial notice is GRANTED.

1. Introduction

   Defendants Calabasas Blue, LLC (“CB”) and Avi Ruimi (“Ruimi”) (collectively “Defendants”) move for summary judgment or alternatively summary adjudication against the Complaint filed in the consolidated action, LC107371. The issues presented in the summary adjudication motion are the first cause of action (“COA”) for intentional misrepresentation, the second COA for concealment and suppression of fact and the third COA for promise with no intent to perform.

2. Procedural Issues

Defendants’ separate statement is in violation of CRC 3.1350 in that the facts are not separated by cause of action. It is further noted that the issues identified in the Notice to the motion are not set out in verbatim in the separate statement. The Court has discretion to deny the motion for failure to comply with these requirements. CCP §437c(b)(1); Cadlo v Owens-Illinois Inc. (2004) 125 Cal. App. 4^th 513, 523. However, the Court exercises its discretion to overlook the procedural defect in order to address the merits of the briefs presented by both parties.

1. Discussion

A. First COA - Misrepresentation

The Complaint alleges that Ruimi stated to Plaintiffs that the utilities would be removed before their grading work began. (Defendants’ Material Fact (“DMF”) 19; Compl. ¶¶12-13.) This claim is also seen as the grounds for the promissory fraud claim under the third COA. (Compl. ¶31.) This statement may be actionable under promissory fraud. The “fact” being misrepresented is the speaker's present intention to perform. CC §1710(4); Engalla v. Permanente Med. Group, Inc. (1997) 15 Cal. 4th 951, 973. Further, “…when a party possesses or holds itself out as possessing superior knowledge or special information or expertise regarding the subject matter and a plaintiff is so situated that it may reasonably rely on such supposed knowledge, information, or expertise, the defendant's representation may be treated as one of material fact.” Bily v Arthur Young & Co (1992) 3 Cal 4^th 370, 408 [citing also Gagne v Bertran (1954) 43 Cal 2dc 481, 489 & Cohen (supra).) On this element, Defendants provide evidence as to Ruimi’s lack of expertise/knowledge in the general field of construction. However, the evidence is that Defendants’ have owner/developer status on the project. Further, Plaintiff provides evidence of Defendants’ representations of knowledge regarding the construction project in their statements to the bank. (Plaintiff’s Additional Material Fact (“PAMF”) 9.) These facts create triable issues for the jury’s determination.

In passing, Defendants argue that they made no representation to Plaintiff that the utilities would be removed. However, as acquiesced in Defendants’ motion (Motion pg. 7:17-19), Plaintiff expressly disputes the denial and Plaintiff submits their own declaration showing that such representations were made by Defendants.

Plaintiff sufficiently shows a triable issue of material fact on the element regarding a representation of a “fact” and that Defendants made the representation.

Defendants argue that there is no triable issue of fact regarding knowledge of the falsity. (DMF 12, 15.) Preliminarily, it is noted that the facts presented in Defendants’ separate statement only show that Ruimi lacked any general knowledge regarding construction or specifically poles, guy wires, or underground water pipes. However, this fact does not address the falsity at issue which concern the removal of such utilities. Without any evidence from Defendants that the statement that the utilities would be removed lacked falsity, Defendants failed to meet their initial burden to show that no triable issue of material fact exists as to this element of fraud. Even if the Court were to construe Defendants’ facts to show that Defendants lacked knowledge of the statement being false, it is noted that this element can be supported by circumstantial evidence. Evidence of defendant's behavior after making the promise is admissible to prove defendant never intended to perform. Glendale Fed. Sav. & Loan Ass'n v. Marina View Heights Develop. Co., Inc. (1977) 66 Cal. App. 3d 101, 131-135; Miller v. National American Life Ins. Co. (1976) 54 Cal. App. 3d 331, 338-339. The fact that the utilities were not removed provides circumstantial evidence and thus a triable issue of fact that Defendants had knowledge of the falsity at the time the alleged promise was made. Plaintiffs have shown a triable issue of material fact on this element of fraud.

Defendants argue that there is no triable issue of material fact as to reliance. Reliance is delineated into both actual and justified reliance. Plaintiff’s evidence sufficiently shows there is a triable issue as to actual reliance in that the bid to grade the construction site was sequenced and priced based upon Defendants’ timetables and without any disruption or de-mobilization in the middle of the job. However, delays due to the utilities required Plaintiff’s work to be interrupted. (PAMF 18-22.) These facts establish a triable issue that Plaintiff actually relied upon Defendants’ representations that the utilities would be moved. As to the element of justified reliance, Defendants’, as the owner/developer of the project, acknowledge that they had been working with the utility companies since 2013 to place utilities underground. (DMF 21-24.) The parties entered into the construction contract on August 14, 2015. (DMF 1.) The scope of the contract requires Plaintiff to perform grading services. (DMF 6-7.) Defendants’ argument on the grounds that the construction contract lacked any provision requiring the removal of the utilities in order to complete the grading is undisputed, however, Plaintiff presents facts showing that the poles and guy wires needed to be removed prior to grading due to safety issues. (PAMF 25-26.) Further, because Defendants are the owner/developers of the project and Plaintiff’s service was limited to grading, the fact that the contract between the parties lacked any provision regarding removal has limited consequence. The facts show a triable issue as to whether it was Defendants’ responsibility, as the owner/developer, to negotiate with the utility companies (i.e.: the owners of the poles and guy wires) to prepare the site for grading and having utilities in the area that required grading is unreasonable.

Defendants present that Plaintiff’s failed to reference or request the removal of the poles, guy wires or utilities. (DMF 27.) However, Plaintiff directly disputes this fact and presents their evidence to show that Plaintiff did not need to raise the issue since Defendants represented that the poles would be moved by November or December which was in the middle of the grading phase. (DMF 27.)

Lastly, Defendants’ arguments as to the fact that Plaintiff paid Southern California Edison (“SCE”) after Plaintiff damaged a guy wire is irrelevant regarding the issues presented on the reliance element of fraud.

Therefore, there is a triable issue of material fact as to Plaintiff’s reliance upon Defendants’ representations.

B. Second COA for Concealment

Defendants argue that there is no triable issue of material fact on the element of falsity. The COA is grounded on the allegation that Defendants concealed their intent to not pay for the removal of the poles, guy wires or utilities. (Compl. ¶24.) Defendants provide that they paid $775,000 to SCE. (DMF 35.) However, a review of the deposition of Deanna Arens shows that these payments did not include payment for the removal of the poles, guy wires or utilities at issue in that her express testimony shows that Defendants were not required to remove the poles, guy wires or utilities. (DMF 35: Kilkowski Decl., Exh. E. pg. 101:16-19.) The fact that Defendants paid $775,000 to SCE is irrelevant to the contention made by Defendants on the motion or at a minimum, establishes a triable issue of fact as to what the payment was for.

Defendants further argue that there is no evidence as to a “fact” being concealed. However, this is belied by the allegation in the Complaint and Defendants’ contention is not supported by the proffered evidence.

C. Third COA for False Promise

The arguments made by Defendants are the same arguments made against the first COA and the Court addressed the arguments above.

IT IS SO ORDERED, CLERK TO GIVE NOTICE.