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Steve M. Cvitanovie (Bar No. 168031)
Jessica M. L. Ryland (Bar No. 286724)
HAIGHT BROWN & BONESTEEL LLP
Three Embarcadero Center, Suite 200 ELECTRONICALLY
San Francisco, California 94111 FILED
Telephone: 415.546.7500 t iD
Facsimile: 415.546.7505 “County of Son Proncisco”
Attorneys for Defendants JUL 31 2014
669 SECOND DEVELOPMENT, LLC & Clerk of the Court
CANNON CONSTRUCTORS, INC. BY: MICHAEL *Ooputy Cle k
SUPERIOR COURT OF THE STATE OF CALIFORNIA
FOR THE COUNTY OF SAN FRANCISCO
88 TOWNSEND STREET OWNERS
ASSOCIATION, a California non-profit
mutual benefit corporation,
Case No. CGC-13-531203
DEFENDANTS 699 SECOND
DEVELOPMENT, LLC AND CANNON
CONSTRUCTORS, INC.’S REPLY TO
PLAINTIFF’S OPPOSITION TO
GENERAL DEMURRER TO
PLAINTIFF’S SECOND AMENDED
COMPLAINT
Plaintiff,
vs.
699 SECOND DEVELOPMENT, LLC, A
California limited liability company;
CANNON CONSTRUCTORS, INC., a
California Corporation; Sternberg Benjamin
Architects, Inc., a California corporation;
Marvin Windows and Doors, a Minnesota
corporation; Blomberg Building Materials dba
Blomberg Window Systems, a California
corporation, and DOES 1-100, 102-125, and
129-150, inclusive,
Reservation No. 061714-04.
Date: August 7, 2014
Time: 9:30 a.m.
Dept.: 302
Defendants.
ee eee
Defendants 699 Second Development, LLC (“699 Development”) and Cannon
Constructors, Inc. (“Cannon”) (collectively "Defendants") hereby submit the following Reply to
Plaintiffs Opposition to General Demurrer on Plaintiff's Second Amended Complaint.
L LEGAL ARGUMENT ON REPLY
Defendants have demurred to Plaintiff's eighth cause of action for negligent
misrepresentation on the grounds that it fails to state facts sufficient to constitute a cause of action.
In its Opposition, Plaintiff points to paragraph twenty-two of its complaint—which it incorporated
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and re-alleged in each cause of action—as its saving grace in supporting its negligent
misrepresentation claim. However, paragraph twenty-two makes broad stroke, boilerplate
allegations which are simply not sufficient to plead a misrepresentation claim against 699
Development.
Negligent misrepresentation is a serious claim that sounds in fraud. Because fraud actions
involve an attack on the defendants’ character, the law has imposed heightened pleading standards
to protect defendants and to allow them to answer to the claim. Cal. Prac. Guide Civ. Pro. Before
Trial Ch. 6-B.
The facts constituting the negligent misrepresentation must be alleged, and additionally,
every element of the cause of action must be alleged with specificity. Lesperance v. North Am.
Aviation, Inc. (1963) 217 Cal.App.2d 336, 344; Small v. Fritz Companies, Inc. (2003) 30 Cal.4th
167, 184.
The clements of negligent misrepresentation are (1) the
misrepresentation of a past or existing material fact, (2) without
reasonable ground for believing it to be true, (3) with intent to
induce another's reliance on the fact misrepresented, (4) justifiable
reliance on the misrepresentation, and (5) resulting damage.
(Shamsian v. Atlantic Richfield Co. (2003) 107 Cal.App.4th 967,
983, 132 Cal.Rptr.2d 635 (Shamsian).) [. . .] However, a positive
assertion is required; an omission or an implied assertion or
representation is not sufficient.
Apollo Capital Fund, LLC v. Roth Capital Partners, LLC, 158 Cal.App.4th 226, 243 (2007)
{emphasis added). See alse Judicial Council Of California Civil (*CACI”) Jury Instruction 1903.
Plaintiff's eighth cause of action alleges that Defendants “failed to disclose and therefore
misrepresented the need for and cost of ongoing maintenance, repair, rehabilitation, and
restoration of the historic facade of the project to the ASSOCATION.” Plaintiffs SAC 68.
Additionally, Plaintiff claims that Defendants are liable because they had “no reasonable grounds
to believe that the historic fagade of the project would not require ongoing maintenance, repair,
rehabilitation, and restoration,” and that the omission of fagade maintenance as a line-item from
the reserve funding harmed Plaintiff. As stated in Defendants’ Demurrer, the failure to disclose
does not form the basis of a negligent misrepresentation claim, which requires a positive assertion
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of fact. Byrum v. Brand, 219 Cal. App. 3d 926, 940 (1990).
Plaintiff's Opposition points to paragraph twenty-two of its Second Amended Complaint
CSAC”) as alleging a “positive misrepresentation of fact sufficient to support a negligent
misrepresentation claim against Defendants.” Paragraph twenty-two provides:
22. ASSOCIATION is informed and believes, and thereon alleges, that
from the date of the ASSOCIATION’S creation through the present date, that the
Defendants or Defendants’ agents were members of the board of directors and
established reserves for long term maintenance repairs and made inspections,
investigated, concealed by temporary repairs, and did not reveal, disclose, or
inform ASSOCIATION or its members of various building deficiencies and
defective conditions of the Project that were observed and/or discovered during
inspections, investigations, and temporary repairs conducted by the Defendants
and did not disclose budgetary deficiencies in Association’s reserves, and
ASSOCIATION reasonably relied on the implied and express representations
by Defendants that the Project was adequately reserved and free from building
standard deficiencies, defective conditions, construction or design defects,
premature and unreasonable deterioration of the improvements at the Project, was
constructed in accordance with applicable building standards, and that the
ASSOCIATION’S obligations of maintenance, repairs, and replacement of the
common areas and condominium units as also required by the Governing
Documents could be funded by the pro-forma budget submitted by BUILDER
DEFENDANTS to the Califomia Department of Real Estate.
Emphasis added. Again, the majority of this paragraph references an omission on the part of 699
Development (¢.g., “did not reveal,” “did not disclose”). Such allegations are insufficient to
support a negligent misrepresentation claim as a matter of law, as set forth above. Neither can a
negligent misrepresentation claim rely on implied representations. Apollo Capital Fund, LLC, 58
Cal.App.4th at 243,
Plaintiff's claim therefore relies solely on the following language: “express representations
by Defendants . . . .” However, as stated by the California Supreme Court, the particularity
requirement “necessitates pleading facts which show how, when, where, to whom, and by
what means the representations were tendered.” Lazar v. Superior Court, 12 Cal. 4th 631, 645
(1996) (emphasis added; internal quotation marks omitted); Stansfield v. Starkey, 220 Cal. App. 3d
59, 73 (Cal. Ct. App. 1990). General allegations do not suffice. /d.
First, paragraph twenty-two of the SAC points to the actions of “Defendants or
Defendants’ agents.” Plaintiff names five defendants in its action and fails to attribute the
misrepresentation to any particular person or entity.
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Second, even if Plaintiff had identified a particular actor, it wholly fails to show “how,
when, where, to whom, and by what means” the alleged representations were tendered. When
were such misrepresentations made? Who made the representation to whom? When was such
representation made? Was the “express” representation oral? Written?
Furthermore, while Plaintiff broadly alleges that “Defendants” observed and/or discovered
defective conditions at the Project, it does not allege which defendant discovered such defects,
when they were discovered in relation to the alleged express misrepresentation. Otherwise stated,
paragraph twenty-two does not specifically allege that 699 Development had no reasonable ground
for believing a particular representation about the Project’s reserves to be untrue or state whether
such amorphous representation was made with the specific intent to induce Plaintiff's reliance.
Plaintiff does not plead sufficient facts to support its mistepresentation claim, and does not
plead its claim with particularity. Plaintiff has failed to meet the basic pleading requirements for a
misrepresentation claim. Defendants’ demurrer should be granted without leave to amend.
Dated: July 31, 2014 HAIGHT BROWN & BONESTEEL LLP
Oh Ld
sica’M. L. Ryland
Attorneys for Defendants
699 SECOND DEVELOPMENT, LLC and
CANNON CONSTRUCTORS, INC.
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PROOF OF SERVICE
I am employed in the County of San Francisco, State of California. 1 am over the age of 18
and not a party to the within action. My business address is Three Embarcadero Center, Suite 200,
San Francisco, California 94111.
On July 31, 2014, I served the within document(s) described as:
DEFENDANTS 699 SECOND DEVELOPMENT, LLC AND CANNON CONSTRUCTORS,
INC.’S REPLY TO PLAINTIFF’S OPPOSITION TO GENERAL DEMURRER TO
PLAINTIFFS SECOND AMENDED COMPLAINT
on the interested parties in this action as shown on the attached Service List.
(FILE & SERVEXPRESS) I submitted such document to be Electronically Served through
IX] the File & ServeXpress for the above-entitled matter. This service complies with Code of
Civil Procedure section1010. The file transmission was reported as complete and a copy
of the “File & ServeXpress Transaction Receipt” page will be maintained with the original
document(s) in our office.
I declare under penalty of perjury under the laws of the State of California that the
foregoing is true and correct.
Executed on July 31, 2014, at San Francisco, California.
Wy Zielypoo
Ollye L. Robinson
1
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SERVICE LIST
88 TOWNSEND STREET OWNERS ASSOCIATION ».
699 SECOND STREET DEVELOPMENT, LLC, et al.
Thomas E. Miller, Esq.
THE MILLER LAW FIRM
235 Montgomery Street, Suite 930
San Francisco, CA 94104
Tel: (415) 437-1800
Fax: (415) 437-0177
Email: tmiller@constructiondefects.com
David Levy, Esq.
VAN DE POEL, LEVY & ALLEN, LLP
1600 South Main Plaza, Suite 325
Wainut Creek, CA 94596
Tel.: (925) 934-6102
Fax: (925) 934-6060
Email: dlevy@vanlevylaw.com
Attorney for Plaintiff
88 TOWNSEND STREET OWNERS
ASSOCIATION
Attorneys for Sternberg Benjamin Architects
James J. Ficenec, Esq.
ARCHER NORRIS
2033 N. Main Street, Suite 800
Walnut Creek, CA 94596
Tel: (925) 930-6600
Fax: (925) 930-6620
Email: jficenec@archernorris.com
Attorneys for Marvin Windows, Inc.
Steven E. McDonald, Esq.
James L. Shea, Esq.
Colin W. Larson, Esq.
BLEDSOE CATHCART, DIESTEL,
PEDERSEN, & TREPPA LLP
601 California Street, 16th Floor
San Francisco, CA 94108
Tel: (415) 981-5411
Fax: (415) 981-0352
Email: smcdonald@bledsoelaw.com
jshea@bledsoelaw.com
clarson@bledsoelaw.com
Attorneys for Blomberg Building Materials,
Inc. dba Blomberg Window Systems
Timothy R. Wagner
Gregory G. Dahl
LAW OFFICES OF TIMOTHY R.
WAGNER
2633 Camino Ramon, Suite 210
San Ramon, CA 94583
Tel: (925) 901-2209
Fax: (925) 901-2234
Email: Timothy. Wagner@AIG.com
Attorneys for Blomberg Building Materials,
Inc. dba Blomberg Window Systems
DOCUMENT DEPOSITORY:
Esquire Deposition Solutions
44 Montgomery Street, Suite 1100
San Francisco, CA 94104
Tel:
Fax:
(415) 591-3333
(415) 591-3335
Check only if sent: 0
SD29-000000 1
100675671
PROOF OF SERVICE