Syber Sales & Marketing v. Cal. Building and Remodeling
Filed 4/3/08 Syber Sales & Marketing v. Cal. Building and Remodeling CA4/1
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COURT OF APPEAL, FOURTH APPELLATE DISTRICT
STATE OF CALIFORNIA
SYBER SALES & MARKETING, INC.,
Cross-complainant and Appellant,
CALIFORNIA BUILDING & REMODELING, INC. et al.,
Cross-defendants and Respondents.
(Super. Ct. No. GIC859894)
APPEAL from a judgment of the Superior Court of San Diego County, Patricia A. Y. Cowett, Judge. Reversed with directions.
Syber Sales & Marketing, Inc. (Syber Sales) filed a cross-complaint alleging breach of contract against MBS Brawn, LLC (MBS Brawn) (first cause of action); negligence against MBS Brawn, SMS.AC, Inc. (SMS.AC) and California Building & Remodeling, Inc. (California Building & Remodeling) (second cause of action); intentional bad faith breach of provision of quiet enjoyment against MBS Brawn and SMS.AC (third cause of action); and breach of contract against SMS.AC (fourth cause of action). SMS.AC and California Building & Remodeling (codefendants) filed demurrers. The trial court entered a judgment of dismissal, following its order sustaining a demurrer without leave to amend the cross-complaint.
Syber Sales appeals the dismissal of only the negligence cause of action, contending the cross-complaint set forth sufficient ultimate facts regarding the codefendants' negligence to withstand demurrer; or, alternatively, the trial court should have granted leave to amend the cross-complaint. We reverse with directions.
FACTUAL AND PROCEDURAL BACKGROUND
The cross-complaint alleges the following facts: Syber Sales leased space at 741 "F" Street in San Diego, California from MBS Brawn. While the lease was in effect, MBS Brawn leased the entire building to SMS.AC, which in turn hired California Building & Remodeling, an independent contractor, to demolish the premises and construct tenant improvements. The construction, which was carried out without a construction permit, interfered with Syber Sale's use of the premises, and resulted in "noise, debris, dust, collapse of portions of the ceiling walls, power outages, interference with phone lines, air conditioning and personal injury to Syber Sales' employees." Syber Sales informed MBS Brawn about this interference, but the construction and demolition did not cease. A City of San Diego inspector "advised" cross-defendants to cease construction because they obtained no construction permit. Syber Sales claimed it suffered damages for loss of business, property, goodwill and business interruption, including lost income of $125,000.00; and, loss of $12,500.00 caused by a drop in value of the leased premises.
SMS.AC demurred on the grounds the cross-complaint failed to set forth with particularity the alleged statutes, ordinances or laws SMS.AC allegedly violated, and the cross-complaint failed to state facts sufficient to constitute a cause of action because it did not specify the construction permits SMS.AC was required to obtain. California Building & Remodeling separately demurred on the grounds it owed no legal duty to Syber Sales, which failed to allege reasonable harm and damages.
The trial court sustained the demurrers without leave to amend because the cross-complaint failed to allege facts sufficient to sustain a negligence cause of action, and it could not be amended to allege personal injuries. Syber Sales filed a motion to reconsider under Code of Civil Procedure, sections 473, 581, subdivision (f) and 1008, but the trial court denied the motion because Syber Sales failed to present new or different facts, circumstances or law.
A demurrer tests the legal sufficiency of factual allegations in a complaint.(Title Ins. Co. v. Comerica Bank-California (1994) 27 Cal.App.4th 800, 807.) "To the extent there are factual issues in dispute, however, this court must assume the truth not only of all facts properly pled, but also of those facts that may be implied or inferred from those expressly alleged in the complaint." (City of Atascadero v. Merrill Lynch, Pierce, Fenner & Smith, Inc. (1998) 68 Cal.App.4th 445, 459.) The court does not assume the truth of contentions, deductions or conclusions of law. The judgment must be affirmed if any one of the several grounds of demurrer is well taken. It is error for a trial court to sustain a demurrer when the plaintiff has stated a cause of action under any possible legal theory. (Aubry v. Tri-City Hospital Dist. (1992) 2 Cal.4th 962, 966-967.)
A plaintiff challenging a demurrer on appeal bears the burden of demonstrating that the trial court erroneously sustained the demurrer as a matter of law. This court thus reviews the complaint de novo to determine whether it alleges facts to state a cause of action under any legal theory. (Cantu v. Resolution Trust Corp. (1992) 4 Cal.App.4th 857, 879-880) When a demurrer is sustained without leave to amend, we also must determine whether there is a reasonable possibility that the defect can be cured by amendment. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) If it can be cured, the trial court has abused its discretion in sustaining the demurrer without leave to amend and we reverse. (Ibid.) If it cannot be cured, there has been no abuse of discretion and we affirm. (Ibid.) The plaintiff bears the burden of proving there is a reasonable possibility of amendment, and may make this showing for the first time on appeal. (Rakestraw v. California Physicians' Service (2000) 81 Cal.App.4th 39, 43-44.)
Syber Sales concedes that its cross-complaint does not properly allege personal injury because Syber Sales acknowledges that its "employees have filed workers compensation claims and at least one personal injury action arising from the negligent conduct described in [its] cross-complaint." Nonetheless, Syber Sales relies on J'AireCorp v. Gregory (1979) 24 Cal.3d 799 (J'Aire ) for the contention that "the damages recoverable in a negligence action by a tenant against a contractor are not limited to personal injury." Both SMS.AC and California Building and Remodeling acknowledge that J'Aire sets forth an exception to the general rule that a contractor is not liable to a third party for purely economic damages, but they contend J'Aire is not applicable here.
J'Aire involved a tort claim by a tenant for its lost profits against a contractor who failed timely to complete construction of tenant improvements pursuant to the landlord's construction contract with the contractor. (Id. at pp. 802-804.) Under J'Aire, a "special relationship" may exist between a contractor and a tenant of a building undergoing construction, such that the contractor owes the tenant a duty of care, and the tenant may recover for loss of economic advantage through negligence. (Id. at pp. 804, 808.)
Preliminarily, we note J'Aire applies when the harm caused by the construction "would adversely affect appellant's business beyond the normal disruption associated with such construction." (J'Aire, 24 Cal.3d 799,at pp. 804-805.) Here, the cross-complaint alleges harm beyond normal disruption, including "noise, debris, dust, collapse of portions of the ceiling walls, power outages, interference with phone lines, air conditioning and personal injury to Syber Sales' employees."
The J'Aire court listed several criteria to be applied in determining whether the landlord and his contractor could be liable to a tenant. "Those criteria are (1) the extent to which the transaction was intended to affect the plaintiff, (2) the foreseeability of harm to the plaintiff, (3) the degree of certainty that the plaintiff suffered injury, (4) the closeness of the connection between the defendant's conduct and the injury suffered, (5) the moral blame attached to the defendant's conduct and (6) the policy of preventing future harm." (J'Aire, 24 Cal.3d 799, at p. 804, citing Biakanja v. Irving (1958) 49 Cal.2d 647.) The J'Aire court concluded all six criteria were met and the tenant could state a cause of action for negligent interference with prospective economic advantage, but limited the case's holding to circumstances, such as when "the injury is not part of the plaintiff's ordinary business risk." (Id. at p. 808.)
We conclude J'Aire is controlling here, and our analysis appliesto both codefendants. The first factor is met because of the effect the construction had on Syber Sales' premises. The contract entered into between SMS.AC and California Building & Remodeling was for the renovation of the premises in which Syber Sales maintained its business. Accordingly, "The contract could not have been performed without impinging on" Syber Sales' business. (J'Aire, 24 Cal.3d 799, at p. 804.) The second factor relates to the forseeability of harm; here, Syber Sales informed MBS Brawn of the injury caused to Syber Sales by the codefendants' demolition and construction, which did not cease. We give a reasonable interpretation to the cross-complaint and construe the notice to MBS Brawn as applicable to the codefendants, who do not contend they lacked notice of the harm caused to Syber Sales. The third factor is met because the cross-complaint "leaves no doubt" that Syber Sales "suffered harm." (Id. at p. 805.) Specifically, Syber Sales alleges loss of business, property, good will and business interruption including lost income of $125,000.000. The fourth factor is met because Syber Sales alleges a causal nexus between the codefendants' conduct and the harm done to Syber Sales' ceiling and walls. As in J'Aire, the fifth factor applies here because codefendants' "lack of diligence in the present case was particularly blameworthy" because the construction continued after Syber Sales complained regarding the probability of damage. (Id. at p. 805.) Finally, J'Aire stated the public policy at stake here: "Damages for loss of profits or earnings are recoverable where they result from an injury to one's person or property caused by another's negligence. Recovery for injury to one's economic interests, where it is the foreseeable result of another's want of ordinary care, should not be foreclosed simply because it is the only injury that occurs." (Id. at p. 806.)
California Building & Remodeling contends there was no forseeability that its negligence in securing permits as alleged in the cross-complaint would cause Syber Sales to suffer economic damages. But Syber Sales contended in the trial court, "The presence or absence of a building permit is not a necessary element in stating a cause of action for negligence." This contention is repeated on appeal. Syber Sales, in effect, claims its cross-complaint may be amended to minimize or eliminate the suggestion that the negligence claim was based exclusively on the lack of a construction permit. It appears possible that Syber Sales can make such an amendment; therefore, the trial court abused its discretion in not granting Syber Sales leave to amend the cross-complaint on this point.
SMS.AC also contends there was no forseeability because the improvements were not intended to affect Syber Sales in any way; rather, the improvements were to SMS.AC's space on a separate floor in the building. Merely restating this assertion demonstrates the existence of a factual question unsuitable for resolution at the pleading stage. (See City of Atascadero v. Merrill Lynch, Pierce, Fenner & Smith, Inc., supra, 68 Cal.App.4th at p. 459 [a demurrer tests the pleading alone, not the evidence or the facts alleged; a demurrer will be sustained only where the pleading is defective on its face].)
The judgment of dismissal is reversed. The trial court is directed to grant Syber Sales & Marketing, Inc. leave to file an amended cross-complaint consistent with this opinion. The parties are to bear their own costs on appeal.
HUFFMAN, Acting P. J.
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 The briefs and the record do not explain the apparent anomaly that MBS Brawn leased the entire building to SMS.AC while Syber Sales' lease was still in effect.