Preview
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‘Thomas E. Miller, Esq. (Bar No. 57821)
Rachel M. Miller, Esq. (Bar No. 182630)
Thomas W. J. Purtell, Esq. (Bar No. 229961)
ELECTRONICALLY
Emma E. Nelson-Munson, Esq. (Bar No. 271708} FILED
THE MILLER LAW FIRM
235 Montgomery St., Suite 930
San Francisco, CA 94104
Superior Court of California,
County of San Francisco
Telephone: (415) 437-1800 / Fax: (415) 437-0177 JUL 25 2014
tmiller@constructiondefects,com
Attorneys for Plaintiff
88 TOWNSEND STREET OWNERS ASSOCIATION
Clerk of the Court
BY: VANESSA WU
Deputy Clerk
SUPERIOR COURT OF THE STATE OF CALIFORNIA
IN AND FOR THE COUNTY OF SAN FRANCISCO
88 TOWNSEND STREET OWNERS
ASSOCIATION, a California non-profit
mutual benefit corporation,
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,
Defendants.
AND RELATED CROSS-ACTION(S).
iit
He
Case No. CGC-13-531203
PLAINTIFF 88 TOWNSEND STREET
OWNERS ASSOCIATION’S OPPOSITION TO
689 SECOND DEVELOPMENT, LLC, AND
CANNON CONSTRUCTORS, INC.’S
DEMURRER TO PLAINTIFF'S SECOND
AMENDED COMPLAINT
Reservation No.: 061714-04
Date: August 7, 2014
Time: 9:30 a.m.
Dept: 302
Complaint filed: May 6, 2013
Trial Date: November 10, 2014
L
PLAINTIFF'S OPPOSITION TO 699 SECOND DEVELOPMENT, LLC, AND CANNON CONSTRUCTORS,
INC.’S DEMURRER TG SECOND AMENDED COMPLAINTTO ALL PARTIES AND THEIR ATTORNEYS OF RECORD:
Plaintiff 88 TOWNSEND STREET OWNERS ASSOCIATION (hereinafter “Plaintiff”)
hereby opposes 699 SECOND DEVELOPMENT, LLC, AND CANNON CONSTRUCTORS,
INC.’s (“Defendants”) Demurrer to Plaintiff's Second Amended Complaint.
1. INTRODUCTION
Defendants’ entire Demurrer is fatally flawed because it is based on the false premise that
“Plaintiff fails to plead that Defendants made a positive misrepresentation of fact and therefore
have failed to allege facts sufficient to support a negligent misrepresentation claim.” As
discussed below, Defendants simply fail to recognize that Plaintiff's Eighth Cause of Action for
10 || Negligent Misrepresentation in Paragraph 67, siates: “The ASSOCIATION incorporates and
11 | re-alleges, as though fully set forth in this cause of action, the preceding paragraphs of this
12 | Complaint.” (emphasis added). This incorporation and re-alleging includes Paragraph 22, which
13 | clearly pleads that Defendants made a positive misrepresentation of fact sufficient to support a
14 | negligent misrepresentation claim against Defendants as follows:
15 22. ASSOCIATION is informed and believes, and thereon
16 alleges, that from the date of the ASSOCIATION’S creation
through the present date, that the Defendants or Defendants’ agents
7 were members of the board of directors and established reserves
for long term maintenance repairs and made inspections,
18 investigated, concealed by temporary repairs, and did not reveal,
disclose, or inform ASSOCIATION or its members of various
19 building deficiencies and defective conditions of the Project that
20 were observed and/or discovered during —_ inspections,
investigations, and temporary repairs conducted by the Defendants
a and did not disclose budgetary deficiencies in Association’s
reserves, and ASSOCIATION reasonably relied on the implied
22 and express representations by Defendants that the Project
4 was adequately reserved and free from building standard
deficiencies, defective conditions, construction or design
34 defects, premature and unreasonable deterioration of the
improvements at the Project, was constructed in accordance
25 with applicable building standards, and that the
ASSOCIATION’S obligations of maintenance, repairs, and
26 replacement of the common areas and condominium units as
7 also required by the Governing Documents could be funded by
the pro-forma budget submitted by BUILDER DEFENDANTS
28 to the California Department of Real Estate. (emphasis added).
2
PLAINTIFF’S OPPOSITION TO 699 SECOND DEVELOPMENT, LLC, AND CANNON CONSTRUCTORS,
INC.'S DEMURRER TO SECOND AMENDED COMPLAINTsO cM Rt Rw ON me
BONN OR Rat
oe 2 A A BR YB MP = SD 6 wo YB AR He RB YW Me = S
Therefore, as discussed below, Plaintiff properly pleads that Defendants made a positive
misrepresentation of fact sufficient to support a negligent misrepresentation claim against
Defendants. As such, Defendants’ Demurrer must be overruled in its entirety.
th ARGUMENT
A. LEGAL STANDARD
A demurrer challenges the legal sufficiency of a complaint, not the truth or accuracy of
ihe allegations or the Plaintiff's ability to prove those allegations. 2/6 Sutter Bay Associates v.
County of Suiter (1997) 58 Cal.App.4" 860,' A demurrer tests the legal sufficiency of a pleading,
it raises issues of law, not fact, regarding the form or content of the opposing party’s pleading.
Donabedian v. Mercury ins. Co, (2004) 116 Cal. App.4th 968, 994,
Existing case law affirms that a demurrer can be used only to challenge defects that
appear on the face of a complaint. For the purpose of testing the sufficiency of the pleading on
demurrer, the court must accept as true all material facts properly pled.’ Blarty v. New York Times
Co., (1986) 42 Cal.3d 1033, 1040; Stop Youth Addiction, Inc. v. Lucky Stores, Inc., (1998) 17
Cal.4" §53, 558. Also, all facts are to be construed in the light least favorable to defendant
(moving party). Perdue v. Crocker Nat'l Bank (1985) 38 Cal.3d 913, 922.
Whether the plaintiff will be able to prove the pled facts is irrelevant to ruling upon the
demurrer. Stevens v. Superior Court (1986) 180 Cal. App.3d 605, 609. It is well established that a
demurrer will not be sustained unless the complaint, liberally construed, fails to state a cause of
action on any theory. Brousseau v. Jarrett (1977) 73 Cal.App.3d 864. In addition, it is error to
sustain a demurrer if it appears that the plaintiff is entitled to any relief under the circumstances
' Further, a demurrer challenges only defects on the face of the pleading or matters outside the pleading that are
judicially noticeable. Blank v. Kirwan (1985) 39 Cal.3d 311, No other extrinsic evidence can be considered. fon
Equip. Corp. v. Nelson (1980) 110 Cal.3d 868, 881. When determining whether the complaint states facts sufficient
to constitute a cause of action, the trial court may consider all material facts pled in the complaint and those arising
by reasonable implication therefrom; it may not consider contentions, deductions or conclusions of fact or law.
Moore y. Conliffe (1994) 7 Cal.4th 634; Montclair Parkowners Assn. v. City of Montclair (1999) 76 Cal. App.4th
784,
a Additionally, Code of Civil Procedure § 452 reads as follows: “In construction of a pleading, for the purpose of
determining its effect, its allegations must be liberally construed, with a view to substantial justice between the
parties.”
3
PLAINTIFF'S OPPOSITION TO 699 SECOND DEVELOPMENT, LLC, AND CANNON CONSTRUCTORS,
INC,’S DEMURRER TO SECOND AMENDED COMPLAINTOO Ret
pe eee
SB & NR =
45
16
17
18
19
20
21
22
23
24
25
26
27
28
pled. Dubins v. Regents of Univ. of Cal, (1994) 25 Cal AppAth 77, 82; Jack Heskett Lincoln-
Mercury, Inc. v. Metcalf (1984) 158 Cal. App.3d 38, 41.
However, a demurrer should not be sustained without leave to amend if the complaint,
liberally construed, can state a cause of action under any theory or if there is a reasonable
possibility the defect can be cured by amendment. Aubry v. Tri-City Hospital Dist. (1992) 2
Cal.4th 962, 967; Jager v. County of Alameda (1992) 8 Cal.App.4th 294, 297; Young v. Gannon,
(2002) 97 Cal_App.4th 209, 220. If there is a reasonable possibility that a pleading defect can be
cured, leave to amend must be granted. Platt v. Coldwell Banker Residential Real Estate Servs.
(1990) 217 Cal App.3d 1439, 1444; Blank v. Kirwan, (1985) 39 Cal.3d 311, 318.
B. PLAINTIFF'S EIGHTH CAUSE OF ACTION FOR NEGLIGENT
MISREPRESENTATION CLEARLY PLEADS FACTS SUFFICIENT TO
SUPPORT A NEGLIGENT MISREPRESENTATION CLAIM AGAINST
DEFENDANTS
Defendants’ Demurrer alleges that Plaintiff fails to plead facts sufficient to support a
negligent misrepresentation claim against Defendants. This is absurd.
Specifically, Defendants’ Demurrer alleges as follows:
...[T]he failure to disclose does not form the basis of a negligent
misrepresentation claim. A cause of action for negligent
misrepresentation requires assertions of fact. Byrum v.Brand, 219
Cal. App. 3d 926, 940 (1990). "[FJor a cause of action for negligent
misrepresentation, clearly a representation is an essential element."
id. at 42. “A negligent misrepresentation claim ‘requires a positive
assertion,’ not merely an omission." Lopez v. Nissan Am., Inc., 201
Cal. App. 4th 572, 596 (2011). Plaintiff here improperly attempts to
tum an alleged failure to adequately set reserves into a negligent
misrepresentation claim. Because the eighth cause of action alleges
merely non-disclosures and not representations, Plaintiff's eighth
cause of action fails to set forth sufficient facts to support a claim of
liability.
However, Plaintiff properly pleads that Defendants made a positive misrepresentation of
? The elements 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.dth 967, 983. In contrast to fraud, negligent
misrepresentation does not require knowledge of falsity. A defendant who makes false statements"
‘honestly believing that they are true, but without reasonable ground for such belief, .. may be liable for
negligent misrepresentation...." [Citation.]" Bily v. Arthur Young & Co. (1992) 3 Cal.4th 370, 407.
4
PLAINTIFF'S OPPOSITION TO 699 SECOND DEVELOPMENT, LLC, AND CANNON CONSTRUCTORS,
INC.’S DEMURRER TO SECOND AMENDED COMPLAINTfact sufficient to support a negligent misrepresentation claim against Defendants.’ Defendants
fail to recognize that Plaintiffs Eighth Cause of Action for Negligent Misrepresentation in
Paragraph 67, states: “The ASSOCIATION incorporates and _re-alleges, as though fully set
forth in this cause of action, the preceding paragraphs of this Complaint.” (emphasis added).
This incorporation and re-alleging includes Paragraph 22, which clearly pleads that Defendants
made a positive representation of fact sufficient to support a negligent misrepresentation claim
against Defendants as follows:
22, ASSOCIATION is informed and believes, and thereon
alleges, that from the date of the ASSOCIATION’S creation
through the present date, thai 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 alse required by the Governing
Documents could be funded by the pro-forma budget submitted
by BUILDER DEFENDANTS to the California Department of
Real Estate. (emphasis added).
Clearly, Plaintiff pleads that Defendants made a positive misrepresentation of fact
sufficient to support a negligent misrepresentation claim against Defendants> Therefore,
+ “Negligent misrepresentation is a separate and distinct tort, a species of the tort of deceit. ‘Where the defendant
makes false statements, honestly believing that they are true, but without reasonable ground for such belief, he may
be Jiable for negligent misrepresentation, a form of deceit.’ Bity, 3 Cal.4th at pp. 407, internal citations omitted.
* As compared to fraud and intentional misrepresentation, negligent misrepresentation does not require knowledge of
falsity. Apoflo Capital Fund LLC v. Roth Capital Partners, LLC, 158 Cal. App.4th 226 (2007).
5
PLAINTIFF'S OPPOSITION TG 699 SECOND DEVELOPMENT, LLC, AND CANNON CONSTRUCTORS,
INC.’S DEMURRER TO SECOND AMENDED COMPLAINTDefendants’ Demurrer must be overruled in its entirety.
Cc IN THE ALTERNATIVE, PLAINTIFF REQUESTS LEAVE TO AMEND
ITS SECOND AMENDED COMPLAINT
A demurrer should not be sustained without leave to amend if the complaint, liberally
construed, can state a cause of action under any theory or if there is a reasonable possibility the
defect can be cured by amendment. Aubry v. Tri-City Hospital Dist. (1992) 2 Cal.4th 962, 967;
Jager v. County of Alameda (1992) 8 Cal App.4th 294, 297; Young v. Gannon, (2002) 97
Cal.App.4th 209, 220. If there is a reasonable possibility that a pleading defect can be cured,
leave to amend must be granted. Platt v. Coldwell Banker Residential Real Estate Servs. (1990)
217 Cal. App.3d 1439, 1444; Blank v. Kirwan, (1985) 39 Cal.3d 311, 318.
it is an abuse of discretion to sustain a demurrer without leave to amend if the
complainant shows there is a reasonable possibility any defect identified by the defendant can be
cured by amendment. Aubry v. Tri-City Hospital, (1992) 2 Cal.4th 962. This abuse of discretion
is reviewable on appeal even in the absence of a request for leave to amend, and even if the
plaintiff does not clair on appeal that the trial court abused its discretion in sustaining a demurrer
without leave to amend. Jd. As such, in the alternative, Plaintiff respectfully requests that it be
granted leave to amend its Second Amended Complaint per the Aubry, Jager and Young line of
cases.
mi. CONCLUSION
For the foregoing reasons, Plaintiff respectfully requests that this Court overrule
Defendants’ Demurrer to Plaintiffs Second Amended Complaint in its entirety. However,
should this Court disagree, Plaintiff respectfully requests that it be granted leave to amend its
Second Amended Complaint per the Aubry, Jager and Young line of cases.
Date: July 25,2014 ‘THE MILLER LAW FIRM
By:
‘Thomas EF. Miller, EG. “
Attorneys for Plaintiff 88 TOWNSEND STREET
OWNERS ASSOCIATION
6
PLAINTIFF'S OPPOSITION TO 699 SECOND DEVELOPMENT, LLC, AND CANNON CONSTRUCTORS,
INC.’S DEMURRER TO SECOND AMENDED COMPLAINTOo © NU AB wR Bw Nm
wR NM NM RB MR RON meme meee mkt
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PROOF OF SERVICE
[C.CP. Section 1013A(3)]
STATE OF CALIFORNIA, COUNTY OF SAN FRANCISCO
I am employed in the County of San Francisco, State of California. I am over the
age of 18 and not a party to the within action; my business address is: 235 Montgomery
Street, Suite 930, San Francisco, CA 94104.
On July as, 2014, 1 served the documents described as: PLAINTIFF 88
TOWNSEND OWNERS ASSOCIATION’S OPPOSITION TO 699 SECOND
DEVELOPMENT, LLC, AND CANNON CONSTRUCTORS, INC.’S DEMURRER
TO PLAINTIFE’S SECOND AMENDED COMPLAINT on the interested parties in
this action as follows:
SEE ATTACHED SERVICE LIST
BY U.S. MAIL - As follows: I placed a true copy in a sealed envelope addressed
as indicated above. I am "readily familiar" with the firm's practice of collection and
processing correspondence for mailing. Under that practice it would be deposited with the
US. Postal Service on the same day with postage thereon fully prepaid at San Francisco,
California in the ordinary course of business. I am aware that on motion of the party
served, service is presumed invalid if postal cancellation date or postage meter date is
more than one day after date of deposit for mailing in affidavit.
PERSONAL SERVICE - I placed the copies in a sealed envelope addressed as
indicated above and caused such envelope to be delivered by hand to counsel for the
parties in this action.
BY ELECTRONIC MAIL. | caused the said document(s) to be transmitted by
électronic mail to the email addresses indicated on the attached service list.
X_ BY ELECTRONIC SERVICE — Via Nexis Lexis File and Serve Express.
1 declare under penalty of perjury under the laws of the State of California that the
above is true and correct. Executed on July aS, 2014 at San Francisco, California.
-i-
PROOF OF SERVICEoC ec YM A BW BB YB NM
RON Rte ttt
eo A WB B&B BS F&F SG Oo we SH HH RB BH NM HS S
88 Townsend Street Owners Association v. 699 Second Development, LLC, et al.
San Francisco Superior Court - Case Ne. CGC-13-531203
SERVICE LIST
Steven M. Cvitanovic, Esq.
Jessica M. Lassere Ryland, Esq.
HAIGHT BROWN & BONESTEEL LLP
Three Embarcadero Center, Suite 200
San Francisco, CA 94111
Tel: (415) 281-7608 / Fax: 415-546-7505
scvitanovic@hbblaw.com
JLassereR yland@HBBLAW.com
Attorneys for Defendants 699 SECOND
DEVELOPMENT, LLC; and CANNON
CONSTRUCTORS, INC.
David M. Levy
Courtney B. McFate
Van De Pool, Levy & Allen, LLP
1600 South Main Plaza Ste 325
Walnut Creek, CA 94596
(925) 934-6102
dlevy@vanlevylaw.com
cmefate@vanlevylaw.com
Attorneys for Sternberg Benjamin Architects
Gregory G. Dahl
Law Offices of Timothy R. Wagner
2633 Camino Ramon, Suite 210
San Ramon, CA 94583
(925) 901-2500 / Fax: (866) 386-1186
Gregoryg.dall@aig.com
Associated Attorneys for Blomberg Building
Materials, Inc. DBA Blomberg Window
Systems
James J. Ficenec
Archer Norris
2033 North Main Street, Suite 800
Walnut Creek, CA 94596
925-930-6600 / Fax: 925-930-6620
ificenec@archernorris.com
Attorneys for Marvin Windows, Inc.
Colin W. Larson, Esq.
Bledsoe, Cathcart, Diestel, Pederen & Treppa
601 California St., 16th Floor
San Francisco, CA 94108-2805
(415) 981-541 1/(415) 981-0352
clarson@bledsoelaw.com
smedonald@bledsoelaw.com
atrinidad@bledsoelaw.com
Attorneys for Blomberg Building Materials,
inc. DBA Blomberg Window Systems
SERVICE LIST
Preview
Oo Oo NR mB WB NM DORR RRR Neat eo @ A A RF Bb eB &— SG wo wm Hw A HB BW NY SS ‘Thomas E. Miller, Esq. (Bar No. 57821) Rachel M. Miller, Esq. (Bar No. 182630) Thomas W. J. Purtell, Esq. (Bar No. 229961) ELECTRONICALLY Emma E. Nelson-Munson, Esq. (Bar No. 271708} FILED THE MILLER LAW FIRM 235 Montgomery St., Suite 930 San Francisco, CA 94104 Superior Court of California, County of San Francisco Telephone: (415) 437-1800 / Fax: (415) 437-0177 JUL 25 2014 tmiller@constructiondefects,com Attorneys for Plaintiff 88 TOWNSEND STREET OWNERS ASSOCIATION Clerk of the Court BY: VANESSA WU Deputy Clerk SUPERIOR COURT OF THE STATE OF CALIFORNIA IN AND FOR THE COUNTY OF SAN FRANCISCO 88 TOWNSEND STREET OWNERS ASSOCIATION, a California non-profit mutual benefit corporation, 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, Defendants. AND RELATED CROSS-ACTION(S). iit He Case No. CGC-13-531203 PLAINTIFF 88 TOWNSEND STREET OWNERS ASSOCIATION’S OPPOSITION TO 689 SECOND DEVELOPMENT, LLC, AND CANNON CONSTRUCTORS, INC.’S DEMURRER TO PLAINTIFF'S SECOND AMENDED COMPLAINT Reservation No.: 061714-04 Date: August 7, 2014 Time: 9:30 a.m. Dept: 302 Complaint filed: May 6, 2013 Trial Date: November 10, 2014 L PLAINTIFF'S OPPOSITION TO 699 SECOND DEVELOPMENT, LLC, AND CANNON CONSTRUCTORS, INC.’S DEMURRER TG SECOND AMENDED COMPLAINTTO ALL PARTIES AND THEIR ATTORNEYS OF RECORD: Plaintiff 88 TOWNSEND STREET OWNERS ASSOCIATION (hereinafter “Plaintiff”) hereby opposes 699 SECOND DEVELOPMENT, LLC, AND CANNON CONSTRUCTORS, INC.’s (“Defendants”) Demurrer to Plaintiff's Second Amended Complaint. 1. INTRODUCTION Defendants’ entire Demurrer is fatally flawed because it is based on the false premise that “Plaintiff fails to plead that Defendants made a positive misrepresentation of fact and therefore have failed to allege facts sufficient to support a negligent misrepresentation claim.” As discussed below, Defendants simply fail to recognize that Plaintiff's Eighth Cause of Action for 10 || Negligent Misrepresentation in Paragraph 67, siates: “The ASSOCIATION incorporates and 11 | re-alleges, as though fully set forth in this cause of action, the preceding paragraphs of this 12 | Complaint.” (emphasis added). This incorporation and re-alleging includes Paragraph 22, which 13 | clearly pleads that Defendants made a positive misrepresentation of fact sufficient to support a 14 | negligent misrepresentation claim against Defendants as follows: 15 22. ASSOCIATION is informed and believes, and thereon 16 alleges, that from the date of the ASSOCIATION’S creation through the present date, that the Defendants or Defendants’ agents 7 were members of the board of directors and established reserves for long term maintenance repairs and made inspections, 18 investigated, concealed by temporary repairs, and did not reveal, disclose, or inform ASSOCIATION or its members of various 19 building deficiencies and defective conditions of the Project that 20 were observed and/or discovered during —_ inspections, investigations, and temporary repairs conducted by the Defendants a and did not disclose budgetary deficiencies in Association’s reserves, and ASSOCIATION reasonably relied on the implied 22 and express representations by Defendants that the Project 4 was adequately reserved and free from building standard deficiencies, defective conditions, construction or design 34 defects, premature and unreasonable deterioration of the improvements at the Project, was constructed in accordance 25 with applicable building standards, and that the ASSOCIATION’S obligations of maintenance, repairs, and 26 replacement of the common areas and condominium units as 7 also required by the Governing Documents could be funded by the pro-forma budget submitted by BUILDER DEFENDANTS 28 to the California Department of Real Estate. (emphasis added). 2 PLAINTIFF’S OPPOSITION TO 699 SECOND DEVELOPMENT, LLC, AND CANNON CONSTRUCTORS, INC.'S DEMURRER TO SECOND AMENDED COMPLAINTsO cM Rt Rw ON me BONN OR Rat oe 2 A A BR YB MP = SD 6 wo YB AR He RB YW Me = S Therefore, as discussed below, Plaintiff properly pleads that Defendants made a positive misrepresentation of fact sufficient to support a negligent misrepresentation claim against Defendants. As such, Defendants’ Demurrer must be overruled in its entirety. th ARGUMENT A. LEGAL STANDARD A demurrer challenges the legal sufficiency of a complaint, not the truth or accuracy of ihe allegations or the Plaintiff's ability to prove those allegations. 2/6 Sutter Bay Associates v. County of Suiter (1997) 58 Cal.App.4" 860,' A demurrer tests the legal sufficiency of a pleading, it raises issues of law, not fact, regarding the form or content of the opposing party’s pleading. Donabedian v. Mercury ins. Co, (2004) 116 Cal. App.4th 968, 994, Existing case law affirms that a demurrer can be used only to challenge defects that appear on the face of a complaint. For the purpose of testing the sufficiency of the pleading on demurrer, the court must accept as true all material facts properly pled.’ Blarty v. New York Times Co., (1986) 42 Cal.3d 1033, 1040; Stop Youth Addiction, Inc. v. Lucky Stores, Inc., (1998) 17 Cal.4" §53, 558. Also, all facts are to be construed in the light least favorable to defendant (moving party). Perdue v. Crocker Nat'l Bank (1985) 38 Cal.3d 913, 922. Whether the plaintiff will be able to prove the pled facts is irrelevant to ruling upon the demurrer. Stevens v. Superior Court (1986) 180 Cal. App.3d 605, 609. It is well established that a demurrer will not be sustained unless the complaint, liberally construed, fails to state a cause of action on any theory. Brousseau v. Jarrett (1977) 73 Cal.App.3d 864. In addition, it is error to sustain a demurrer if it appears that the plaintiff is entitled to any relief under the circumstances ' Further, a demurrer challenges only defects on the face of the pleading or matters outside the pleading that are judicially noticeable. Blank v. Kirwan (1985) 39 Cal.3d 311, No other extrinsic evidence can be considered. fon Equip. Corp. v. Nelson (1980) 110 Cal.3d 868, 881. When determining whether the complaint states facts sufficient to constitute a cause of action, the trial court may consider all material facts pled in the complaint and those arising by reasonable implication therefrom; it may not consider contentions, deductions or conclusions of fact or law. Moore y. Conliffe (1994) 7 Cal.4th 634; Montclair Parkowners Assn. v. City of Montclair (1999) 76 Cal. App.4th 784, a Additionally, Code of Civil Procedure § 452 reads as follows: “In construction of a pleading, for the purpose of determining its effect, its allegations must be liberally construed, with a view to substantial justice between the parties.” 3 PLAINTIFF'S OPPOSITION TO 699 SECOND DEVELOPMENT, LLC, AND CANNON CONSTRUCTORS, INC,’S DEMURRER TO SECOND AMENDED COMPLAINTOO Ret pe eee SB & NR = 45 16 17 18 19 20 21 22 23 24 25 26 27 28 pled. Dubins v. Regents of Univ. of Cal, (1994) 25 Cal AppAth 77, 82; Jack Heskett Lincoln- Mercury, Inc. v. Metcalf (1984) 158 Cal. App.3d 38, 41. However, a demurrer should not be sustained without leave to amend if the complaint, liberally construed, can state a cause of action under any theory or if there is a reasonable possibility the defect can be cured by amendment. Aubry v. Tri-City Hospital Dist. (1992) 2 Cal.4th 962, 967; Jager v. County of Alameda (1992) 8 Cal.App.4th 294, 297; Young v. Gannon, (2002) 97 Cal_App.4th 209, 220. If there is a reasonable possibility that a pleading defect can be cured, leave to amend must be granted. Platt v. Coldwell Banker Residential Real Estate Servs. (1990) 217 Cal App.3d 1439, 1444; Blank v. Kirwan, (1985) 39 Cal.3d 311, 318. B. PLAINTIFF'S EIGHTH CAUSE OF ACTION FOR NEGLIGENT MISREPRESENTATION CLEARLY PLEADS FACTS SUFFICIENT TO SUPPORT A NEGLIGENT MISREPRESENTATION CLAIM AGAINST DEFENDANTS Defendants’ Demurrer alleges that Plaintiff fails to plead facts sufficient to support a negligent misrepresentation claim against Defendants. This is absurd. Specifically, Defendants’ Demurrer alleges as follows: ...[T]he failure to disclose does not form the basis of a negligent misrepresentation claim. A cause of action for negligent misrepresentation requires assertions of fact. Byrum v.Brand, 219 Cal. App. 3d 926, 940 (1990). "[FJor a cause of action for negligent misrepresentation, clearly a representation is an essential element." id. at 42. “A negligent misrepresentation claim ‘requires a positive assertion,’ not merely an omission." Lopez v. Nissan Am., Inc., 201 Cal. App. 4th 572, 596 (2011). Plaintiff here improperly attempts to tum an alleged failure to adequately set reserves into a negligent misrepresentation claim. Because the eighth cause of action alleges merely non-disclosures and not representations, Plaintiff's eighth cause of action fails to set forth sufficient facts to support a claim of liability. However, Plaintiff properly pleads that Defendants made a positive misrepresentation of ? The elements 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.dth 967, 983. In contrast to fraud, negligent misrepresentation does not require knowledge of falsity. A defendant who makes false statements" ‘honestly believing that they are true, but without reasonable ground for such belief, .. may be liable for negligent misrepresentation...." [Citation.]" Bily v. Arthur Young & Co. (1992) 3 Cal.4th 370, 407. 4 PLAINTIFF'S OPPOSITION TO 699 SECOND DEVELOPMENT, LLC, AND CANNON CONSTRUCTORS, INC.’S DEMURRER TO SECOND AMENDED COMPLAINTfact sufficient to support a negligent misrepresentation claim against Defendants.’ Defendants fail to recognize that Plaintiffs Eighth Cause of Action for Negligent Misrepresentation in Paragraph 67, states: “The ASSOCIATION incorporates and _re-alleges, as though fully set forth in this cause of action, the preceding paragraphs of this Complaint.” (emphasis added). This incorporation and re-alleging includes Paragraph 22, which clearly pleads that Defendants made a positive representation of fact sufficient to support a negligent misrepresentation claim against Defendants as follows: 22, ASSOCIATION is informed and believes, and thereon alleges, that from the date of the ASSOCIATION’S creation through the present date, thai 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 alse required by the Governing Documents could be funded by the pro-forma budget submitted by BUILDER DEFENDANTS to the California Department of Real Estate. (emphasis added). Clearly, Plaintiff pleads that Defendants made a positive misrepresentation of fact sufficient to support a negligent misrepresentation claim against Defendants> Therefore, + “Negligent misrepresentation is a separate and distinct tort, a species of the tort of deceit. ‘Where the defendant makes false statements, honestly believing that they are true, but without reasonable ground for such belief, he may be Jiable for negligent misrepresentation, a form of deceit.’ Bity, 3 Cal.4th at pp. 407, internal citations omitted. * As compared to fraud and intentional misrepresentation, negligent misrepresentation does not require knowledge of falsity. Apoflo Capital Fund LLC v. Roth Capital Partners, LLC, 158 Cal. App.4th 226 (2007). 5 PLAINTIFF'S OPPOSITION TG 699 SECOND DEVELOPMENT, LLC, AND CANNON CONSTRUCTORS, INC.’S DEMURRER TO SECOND AMENDED COMPLAINTDefendants’ Demurrer must be overruled in its entirety. Cc IN THE ALTERNATIVE, PLAINTIFF REQUESTS LEAVE TO AMEND ITS SECOND AMENDED COMPLAINT A demurrer should not be sustained without leave to amend if the complaint, liberally construed, can state a cause of action under any theory or if there is a reasonable possibility the defect can be cured by amendment. Aubry v. Tri-City Hospital Dist. (1992) 2 Cal.4th 962, 967; Jager v. County of Alameda (1992) 8 Cal App.4th 294, 297; Young v. Gannon, (2002) 97 Cal.App.4th 209, 220. If there is a reasonable possibility that a pleading defect can be cured, leave to amend must be granted. Platt v. Coldwell Banker Residential Real Estate Servs. (1990) 217 Cal. App.3d 1439, 1444; Blank v. Kirwan, (1985) 39 Cal.3d 311, 318. it is an abuse of discretion to sustain a demurrer without leave to amend if the complainant shows there is a reasonable possibility any defect identified by the defendant can be cured by amendment. Aubry v. Tri-City Hospital, (1992) 2 Cal.4th 962. This abuse of discretion is reviewable on appeal even in the absence of a request for leave to amend, and even if the plaintiff does not clair on appeal that the trial court abused its discretion in sustaining a demurrer without leave to amend. Jd. As such, in the alternative, Plaintiff respectfully requests that it be granted leave to amend its Second Amended Complaint per the Aubry, Jager and Young line of cases. mi. CONCLUSION For the foregoing reasons, Plaintiff respectfully requests that this Court overrule Defendants’ Demurrer to Plaintiffs Second Amended Complaint in its entirety. However, should this Court disagree, Plaintiff respectfully requests that it be granted leave to amend its Second Amended Complaint per the Aubry, Jager and Young line of cases. Date: July 25,2014 ‘THE MILLER LAW FIRM By: ‘Thomas EF. Miller, EG. “ Attorneys for Plaintiff 88 TOWNSEND STREET OWNERS ASSOCIATION 6 PLAINTIFF'S OPPOSITION TO 699 SECOND DEVELOPMENT, LLC, AND CANNON CONSTRUCTORS, INC.’S DEMURRER TO SECOND AMENDED COMPLAINTOo © NU AB wR Bw Nm wR NM NM RB MR RON meme meee mkt eo 4 aA fF fF OU MR se SF Oo me YW KR HH RB WY N & S PROOF OF SERVICE [C.CP. Section 1013A(3)] STATE OF CALIFORNIA, COUNTY OF SAN FRANCISCO I am employed in the County of San Francisco, State of California. I am over the age of 18 and not a party to the within action; my business address is: 235 Montgomery Street, Suite 930, San Francisco, CA 94104. On July as, 2014, 1 served the documents described as: PLAINTIFF 88 TOWNSEND OWNERS ASSOCIATION’S OPPOSITION TO 699 SECOND DEVELOPMENT, LLC, AND CANNON CONSTRUCTORS, INC.’S DEMURRER TO PLAINTIFE’S SECOND AMENDED COMPLAINT on the interested parties in this action as follows: SEE ATTACHED SERVICE LIST BY U.S. MAIL - As follows: I placed a true copy in a sealed envelope addressed as indicated above. I am "readily familiar" with the firm's practice of collection and processing correspondence for mailing. Under that practice it would be deposited with the US. Postal Service on the same day with postage thereon fully prepaid at San Francisco, California in the ordinary course of business. I am aware that on motion of the party served, service is presumed invalid if postal cancellation date or postage meter date is more than one day after date of deposit for mailing in affidavit. PERSONAL SERVICE - I placed the copies in a sealed envelope addressed as indicated above and caused such envelope to be delivered by hand to counsel for the parties in this action. BY ELECTRONIC MAIL. | caused the said document(s) to be transmitted by électronic mail to the email addresses indicated on the attached service list. X_ BY ELECTRONIC SERVICE — Via Nexis Lexis File and Serve Express. 1 declare under penalty of perjury under the laws of the State of California that the above is true and correct. Executed on July aS, 2014 at San Francisco, California. -i- PROOF OF SERVICEoC ec YM A BW BB YB NM RON Rte ttt eo A WB B&B BS F&F SG Oo we SH HH RB BH NM HS S 88 Townsend Street Owners Association v. 699 Second Development, LLC, et al. San Francisco Superior Court - Case Ne. CGC-13-531203 SERVICE LIST Steven M. Cvitanovic, Esq. Jessica M. Lassere Ryland, Esq. HAIGHT BROWN & BONESTEEL LLP Three Embarcadero Center, Suite 200 San Francisco, CA 94111 Tel: (415) 281-7608 / Fax: 415-546-7505 scvitanovic@hbblaw.com JLassereR yland@HBBLAW.com Attorneys for Defendants 699 SECOND DEVELOPMENT, LLC; and CANNON CONSTRUCTORS, INC. David M. Levy Courtney B. McFate Van De Pool, Levy & Allen, LLP 1600 South Main Plaza Ste 325 Walnut Creek, CA 94596 (925) 934-6102 dlevy@vanlevylaw.com cmefate@vanlevylaw.com Attorneys for Sternberg Benjamin Architects Gregory G. Dahl Law Offices of Timothy R. Wagner 2633 Camino Ramon, Suite 210 San Ramon, CA 94583 (925) 901-2500 / Fax: (866) 386-1186 Gregoryg.dall@aig.com Associated Attorneys for Blomberg Building Materials, Inc. DBA Blomberg Window Systems James J. Ficenec Archer Norris 2033 North Main Street, Suite 800 Walnut Creek, CA 94596 925-930-6600 / Fax: 925-930-6620 ificenec@archernorris.com Attorneys for Marvin Windows, Inc. Colin W. Larson, Esq. Bledsoe, Cathcart, Diestel, Pederen & Treppa 601 California St., 16th Floor San Francisco, CA 94108-2805 (415) 981-541 1/(415) 981-0352 clarson@bledsoelaw.com smedonald@bledsoelaw.com atrinidad@bledsoelaw.com Attorneys for Blomberg Building Materials, inc. DBA Blomberg Window Systems SERVICE LIST