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SUPERIOR COURT OF CALIFORNIA
COUNTY OF SAN FRANCISCO
Document Scanning Lead Sheet
Apr-29-2014 3:14 pm
Case Number: CGC-13-531203
Filing Date: Apr-29-2014 3:13
Filed by: BOWMAN LIU
Juke Box: 001 Image: 04465184
OPPOSITION
88 TOWNSEND STREET OWNERS ASOCIATION, VS. 699 SECOND
DEVELOPMENT LLC, et al
001004465184
Instructions:
Please place this sheet on top of the document to be scanned.Co Om YN DH BF Ww NY
be NNN YN NN NY Oe Be ew oe Be Be eB Be eS
oN A WH FYB NHN fF SOD ww AIDA ROHN = ST
Thomas E. Miller, Esq. (Bar No. 57821)
Rachel M. Miller, Esq. (Bar No. 182630)
Thomas W. J. Purtell, Esq. (Bar No. 229961)
Emma E. Nelson-Munson, Esq. (Bar No. 271708)
THE MILLER LAW FIRM
235 Montgomery St., Suite 930
San Francisco, CA 94104
Telephone: (415) 437-1800 / Fax: (415) 437-0177
tmiller@constructiondefects.com
Attomeys for Plaintiff
e
FILED
San Francisco County Superior Court
APR 29 L014
GORI PARK-LI, Clerk
Clerk
BOWMAN fi
88 TOWNSEND STREET OWNERS ASSOCIATION
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.
Case No. CGC-13-531203
PLAINTIFF 88 TOWNSEND STREET
OWNERS ASSOCIATION’S OPPOSITION TO
699 SECOND DEVELOPMENT, LLC, AND
CANNON CONSTRUCTORS, INC.’S
DEMURRER TO PLAINTIFF'S FIRST
AMENDED COMPLAINT
Date: May 12, 2014
Time: 9:30 a.m.
Dept: 302
BY FAX
TO 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. (hereinafter “Defendants”) Demurrer to Plaintiff's First Amended Complaint.
L INTRODUCTION
Defendants’ entire Demurrer is fatally flawed because it is based on the false premise that
SB 800 does not apply to construction defects that result in damage. Specifically, Defendants
1
PLAINTIFF’S OPPOSITION TO 699 SECOND DEVELOPMENT, LLC, AND CANNON CONSTRUCTORS,
INC.’S DEMURRER TO FIRST AMENDED COMPLAINTCom YN DA WHF Bw NY
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demur to all Plaintiff's Causes of Action alleging that “Plaintiff cannot plead additional common
law theories of liability for alleged damages which are in the exclusive purview of SB800.”
Defendants’ interpretation of California law is dead wrong.
As discussed at length below, it is clear that the Court in Liberty Mutual v. Brookfield
held that California Civil Code Section 896 does not eliminate a property owner’s common law
rights and remedies where actual damage has occurred, and therefore other causes of action may
be pled.’ Finding nothing in the legislative history of the Act indicating an intent to bar a
homeowner’s common law claims for actual damages, the court held that when construction
defects cause actual damage, a homeowner may pursue its rights under the Act and under
common law tort theories. As such, for construction defects that result in actual damage, both SB
800 and common law causes of action may be pled.”
Here, Plaintiff's First Amended Complaint is proper because it properly pleads Plaintiff's
rights under the Act and under the common law tort theories of Negligence, Strict Liability, and
Breach of Implied Warranty.’ Therefore, Defendants’ Demurrer must be overruled in its entirety.*
1 On December 11, 2013, the California Supreme Court refused requests to de-publish or review Liberty Mutual
Insurance Company v. Brookfield Crystal Cove LLC., (2013) 219 Cal.App.4th 831.
2 In Liberty Mutual Insurance Company v. Brookfield, reversing the trial court, the Court of Appeal analyzed the
legislative history of the Right to Repair Act and concluded that the legislature intended to provide plaintiffs with
additional remedies specifically to address claims in which construction defects resulted in economic damages only.
The appellate court reasoned that the legislature did not intend to bar common law claims for actual property
damage, and to do so would be "nonsensical." In effect, the Court rejected the notion that the Act provides an
exclusive remedy for all types of construction defect claims.
3 The damages recoverable under SB 800 and the common law are different. Civil Code Section 944 limits a
claimant's recovery under the Act to certain damages including:
1, The reasonable value of repairing any violation of the standards set forth in the title;
2. The reasonable cost of repairing any damages caused by the repair efforts;
3. The reasonable cost of repairing and rectifying any damages resulting from the failure of the home to
meet the standards;
4. The reasonable cost of removing and replacing any improper repair by the builder;
5. Reasonable relocation and storage expenses;
6. Lost business income if the home was used as a principal place of business licensed to be operated from
the home;
7. Reasonable investigative costs for each established violation; and
8. All other costs or fees recoverable by contract or statute,
Common law claims have no such limitation.
* Specifically, a defendant in 255 Berry Homeowners Association v. Channel Park Development demurred arguing
that Plaintiff cannot plead additional common law theories of liability for alleged damages which are in the exclusive
purview of SB800. San Francisco Superior Court Department 302 overruled this demurrer. (Plaintiff's Request for
Judicial Notice, Paragraph 2)
2
PLAINTIFF’S OPPOSITION TO 699 SECOND DEVELOPMENT, LLC, AND CANNON CONSTRUCTORS,
INC.’S DEMURRER TO FIRST AMENDED COMPLAINTCe ND WH BF WN
NY YM YN NR DN DY Be ew me me ee
BRREEBRRRGPSERDREBTDREBRSTS
i. ARGUMENT
A. LEGAL STANDARD
A demurrer challenges the legal sufficiency of a complaint, not the truth or accuracy of
the allegations or the Plaintiff's ability to prove those allegations. Sutter Bay Associates v. County
of Sutter (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.
Moreover, 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.® Blatty v. New York
Times Co., (1986) 42 Cal.3d 1033, 1040; Stop Youth Addiction, Inc. v. Lucky Stores, Inc., (1998)
17 Cal.4® 553, 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.
Furthermore, 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 pled. Dubins v. Regents of Univ. of Cal., (1994) 25 Cal.App.4th 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
5 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. Jon
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 there from; it may not consider contentions, deductions or conclusions of fact or law.
Moore v. Conliffe (1994) 7 Cal.4th 634; Montclair Parkowners Assn. v. City of Montclair (1999) 76 Cal.App.4th
784,
6 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 FIRST AMENDED COMPLAINTpossibility 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 FIRST, SECOND, THIRD, AND FOURTH CAUSES OF
ACTION ARE PROPERLY PLED
Defendants’ entire Demurrer is improper because it is based on the false premise that SB
800 does not apply to construction defects that result in damage. Specifically, Defendants demur
to all Plaintiff's Causes of Action alleging that “Plaintiff cannot plead additional common law
theories of liability for alleged damages which are in the exclusive purview of SB800.”
Defendants’ interpretation of California law is incorrect.
Defendants improperly allege that:
There is little doubt that Plaintiffs alleged damages are within the exclusive
confines of Civil Code 895 to 945.5 (“SB800.”) Consequently, Plaintiff's common
law claims are improper and should be stricken. The law is clear and
unambiguous, recovery for alleged SB800 violations are expressly limited to the
statutory remedies set forth in SB800.
However, it is clear that under Liberty Mutual, California Civil Code Section 896 is not the
exclusive remedy in construction defect cases and other causes of action may be pled.” As such,
Defendants’ argument is incorrect.
Without question, the Court in Liberty Mutual v. Brookfield held that California Civil
Code Section 896 is not the exclusive remedy and other causes of action may be pled.
Specifically, the Liberty Mutual court found that California Civil Code Section 896 does not
eliminate a property owner’s common law rights and remedies where actual damage has
occurred. Finding nothing in the legislative history of the Act indicating an intent to bar a
"Further, the Court in Liberty Mutual Insurance Company v. Brookfield ruled that SB 800 (Civil Code Sections 895
through 945.5, the "Right to Repair Act") is not the only remedy for construction defect claims even when those
claims fall within the scope of the Act; therefore, the requirements of the Right to Repair Act do not apply to claims
brought under common law.
4
PLAINTIFF’S OPPOSITION TO 699 SECOND DEVELOPMENT, LLC, AND CANNON CONSTRUCTORS,
INC.’S DEMURRER TO FIRST AMENDED COMPLAINT24
homeowner’s common law claims for actual damages, the court held that when construction
defects cause actual damage, a homeowner may pursue its rights under the Act and under
common law tort theories.
In sum, as discussed below, for construction defects that result in actual damage, both SB
800 and common law causes of action causes may be pled. Therefore, Plaintiff has properly pled
its first, second, third, and fourth cause of action.
Cc. FOR CONSTRUCTION DEFECTS THAT RESULT IN ACTUAL
DAMAGE, BOTH “SB 800” AND COMMON LAW CAUSES OF ACTION
CAUSES MAY BE PLED
First, it is undisputed that the Court in Liberty Mutual v. Brookfield held that California
Civil Code Section 896 is not the exclusive remedy and other common law causes of action may
be pled for construction defects that result in actual damage. In accordance with the holding in
Liberty Mutual v. Brookfield, Plaintiff's First Amended Complaint properly pleads construction
defects that result in actual damage in Plaintiffs common law Negligence Cause of Action as
follows:
35. Defendants, and each of them, negligently planned, designed, improved,
constructed, inspected, installed, repaired, investigated, and replaced the
Project’s site and structural elements, including, but not limited to, the
Project’s garage area, walkways, exterior siding, stucco and other finishes,
exterior waterproofing systems, windows and window systems, doors and
frames, roofing and flashing systems, drainage systems, caulking and
waterproofing, electrical, heating, ventilation, plumbing, and other elements
of the Project presently unknown (hereinafter referred to collectively as
“Project Defects”), and otherwise failed to use adequate materials, products,
goods, devices and procedures, design plans or specifications, so that those
elements of the Project do not function or perform properly; and are
defective so as to create unsafe and unhealthy conditions; and have caused
consequential damages to the buildings, improvements, personal property at
the Project, and loss of use of property.
Second, the express language of California Civil Code Section 896 confirms that “SB
800” may be pled for construction defects that result in actual damage. California Civil Code
Section 896 expressly states as follows:
896. In any action seeking recovery of damages arising out of, or related to
deficiencies in, the residential construction, design, specifications,
surveying, planning, supervision, testing, or observation of construction, a
builder, and to the extent set forth in Chapter 4 (commencing with Section
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PLAINTIFF’S OPPOSITION TO 699 SECOND DEVELOPMENT, LLC, AND CANNON CONSTRUCTORS,
INC.’S DEMURRER TO FIRST AMENDED COMPLAINTCo em IY DH BF YW NY
Ny NH NY N N NY YN YS eS eee
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910), a general contractor, subcontractor, material supplier, individual
product manufacturer, or design professional, shall, except as specifically set
forth in this title, be liable for, and the claimant's claims or causes of action
shall be limited to violation of, the following standards, except as
specifically set forth in this title. This title applies to original construction
intended to be sold as an individual dwelling unit. As to condominium
conversions, this title does not apply to or does not supersede any other
statutory or common law.
(a) With respect to water issues:
.-(3) Windows, patio doors, deck doors, and their systems shall not allow
excessive condensation to enter the structure and cause damage to another
component. For purposes of this paragraph, "systems" include, without
limitation, windows, window assemblies, framing, substrate, flashings, and
trim, if any.
.-.(6) Decks, deck systems, balconies, balcony systems, exterior stairs, and
stair systems shall not allow unintended water to pass within the systems
themselves and cause damage to the systems. For purposes of this
paragraph, "systems" include, without limitation, framing, substrate,
flashing, and sheathing, if any.
...(7) Foundation systems and slabs shall not allow water or vapor to enter
into the structure so as to cause damage to another building component.
Here, Plaintiff's First Amended Complaint is proper because it properly pleads Plaintiff's
Tights under the Act and under the common law tort theories of Negligence, Strict Liability, and
Breach of Implied Warranty. Therefore, Defendants’ Demurrer must be overruled in its entirety.
D. SAN FRANCISCO SUPERIOR COURT DEPARTMENT 302 HAS
ALREADY DETERMINED THAT BOTH SB 800 AND COMMON LAW
CAUSES OF ACTION CAUSES MAY BE PLED FOR CONSTRUCTION
DEFECTS THAT RESULT IN ACTUAL DAMAGE
Defendants’ Demurrer to Plaintiffs First Amended Complaint attempts to improperly
assert that “Plaintiff cannot plead additional common law theories of liability for alleged
damages which are in the exclusive purview of SB800.” However, San Francisco Superior Court
Department 302 has already determined that both SB 800 and common law causes of action
causes may be pled for construction defects that result in actual damage.
Specifically, a defendant in 255 Berry Homeowners Associations v. Channel Park
Development demurred arguing that Plaintiff cannot plead additional common law theories of
liability for alleged damages which are in the exclusive purview of SB800. San Francisco
6
PLAINTIFF’S OPPOSITION TO 699 SECOND DEVELOPMENT, LLC, AND CANNON CONSTRUCTORS,
INC.’S DEMURRER TO FIRST AMENDED COMPLAINTCo Om YN DH PB WN
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Superior Court Department 302 overruled this demurrer.® Defendants’ entire Demurrer in this
case is likewise fatally flawed because it was based on the false premise that SB 800 does not
apply to construction defects that result in damage.”
In sum, a simple comparison of the documents filed in this San Francisco Superior Court
and the instant case clearly shows that Defendants’ Counsel’s exact same Demurrer arguments
were rejected by the San Francisco Superior Court in a Demurrer Hearing on January 17, 2014,
due to Defendants’ Counsel’s misunderstanding of the Court’s holding in Liberty Mutual Ins. Co.
v. Brookfield. Indeed, Liberty Mutual Ins. Co. v. Brookfield does not require Plaintiff to delineate
between the defects that cause actual damages and the defects that have not caused actual damage
at the pleading stage. As such, Defendants’ Demurrer must be overruled in its entirety.
E. LIBERTY MUTUAL V. BROOKFIELD AND BURCH V. SUPERIOR COURT
HAVE NOT IN ANY WAY BEEN AFFECTED BY K.B. HOME V.
SUPERIOR COURT
In Defendants’ demurrer to Plaintiff's First Amended Complaint filed on April 11, 2014,
Defendant improperly implies that Liberty Mutual and Burch have somehow been negatively
affected by KB Home v. Superior Court (2014) 223 Cal.App.4th 1411. Specifically, Defendant
states that:
* Attached as Exhibit A to Plaintiff's Request for Judicial Notice is a copy of the ruling of San Francisco Superior
Court Department 302 in 255 Berry Homeowners Associations v. Channel Park Development
° On January 17, 2014, a Demurrer Hearing in San Francisco Superior Court Case entitled 255 Berry Homeowners
Association v. Channel Park Development, LLC, et. al., Case No. CGC-12-527395, occurred and the Court issued
the following order denying Defendant CHANNEL PARK DEVELOPMENT, LLC’s Demurrer to Plaintiff 255
BERRY HOMEOWNERS ASSOCIATION’s First Amended Complaint:
TO ALL PARTIES AND TO THEIR ATTORNEYS OF RECORD:
This matter came before this court upon the demurrer of Defendants’ CHANNEL PARK
DEVELOPMENT, LLC, THE RIDING GROUP II, LLC, AND DEVCON CONSTRUCTION
(“Defendants”) to Plaintiff 255 Berry Homeowners Association’s First Amended Complaint in
Department 302 of the San Francisco County Superior Court.
Having reviewed and considered the papers submitted by all parties, the file and pleadings in this
action, and the argument of counsel at the hearing it is hereby ORDERED that:
Defendants’ Demurrer is Overruled as to all causes of action. All requests for judicial notice are
granted. Liberty Mutual Ins, Co. v. Brookfield Crystal Cove LLC. (2013) 219 Cal.App.4th 98,
does not require Plaintiff to delineate between the defects that causes actual damages and the
defects that have not caused actual damage at the pleading stage. Defendants can reasonably
determine what issues must be admitted or denied, or what counts or claims are directed against
them. (See Khoury v. Maly's of California (1993) 14 Cal.App.4th 612.)
7
PLAINTIFF’S OPPOSITION TO 699 SECOND DEVELOPMENT, LLC, AND CANNON CONSTRUCTORS,
INC.’S DEMURRER TO FIRST AMENDED COMPLAINTTo date, only one Appellate decision has upheld Liberty Mutual. Burch v.
Superior Court (2014) 223 Cal.App.4th 1411. The holding in Burch permits
plaintiffs to file common law tort actions for damages, rather than comply with the
express limitations of SB800...This Court need not follow the Burch decision. In
a subsequent opinion to Burch, a recent appellate decision concluded that a claim
subject to SB800 is limited by the statute as expressly set out in SB800. In KB
Homes [sic] v. Superior Court (Allstate) (2014) 223 Cal.App.4th 1471, the Court
correctly ruled that a homeowner's failure to give the builder an opportunity to
inspect and repair a construction defect excused the builder's liability under
SB800. In so holding, the Court went out of its way to state it had ruled earlier in
that case that since its enactment in 2002, SB800 is the exclusive remedy for such
claims.
However, in K.B. Home v. Superior Court, the Court plainly stated that the issue before it
did not involve common law causes of action: “[tJhe issue that is before us is whether the [SB
800] Act requires that notice be given to a builder before repairs are made.” In K.B. Home, a
homeowner reported a water leak to his insurance company, Allstate, who repaired the damage.
Allstate then sought to pursue its subrogation right against builder K.B. Home, with a single
cause of action under SB 800. K.B. Home filed a motion for summary judgment based on its
affirmative defense of Allstate’s failure to give timely notice to repair the defect. Although the
Court granted K.B. Home’s motion, the holding is limited to the notice required under SB 800,
holding that “...failure to give timely notice to [builder] is fatal to[a] cause of action under the
Act.”!° However, the court issued no holding as to the applicability of SB 800 versus common
law causes of action. The court purposefully stated that “...whether the Act or tort common law
applies in this case is not an issue properly before us at this time.” The Court further clarified that
its decision should not be interpreted to prevent pleading common law causes of action in
construction defect cases, confirming that “(nJothing in our decision prevents Allstate from
raising that issue in an appeal from the final judgment.”
It is clear that for Defendants to state that “this Court need not follow the Burch decision”
is misleading and incorrect. The bottom line is that Liberty Mutual and Burch have not in any
way been affected by K.B. Home v. Superior Court.
'° Here, Defendants do not raise a “notice” argument.
8
PLAINTIFF’S OPPOSITION TO 699 SECOND DEVELOPMENT, LLC, AND CANNON CONSTRUCTORS,
INC.’S DEMURRER TO FIRST AMENDED COMPLAINTF. IN THE ALTERNATIVE, PLAINTIFF REQUESTS LEAVE TO AMEND
ITS 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.
Cc Oe YD WH PF BW ND
It is an abuse of discretion to sustain a demurrer without leave to amend if the
_
o
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
8
is reviewable on appeal even in the absence of a request for leave to amend, and even if the
we
plaintiff does not claim on appeal that the trial court abused its discretion in sustaining a demurrer
_
a
without leave to amend. Jd. As such, in the alternative, Plaintiff respectfully requests that it be
wv
granted leave to amend its First Amended Complaint per the Aubry, Jager and Young line of
a
cases, supra.
_
Il. CONCLUSION
For the foregoing reasons, Plaintiff respectfully requests that this Court overrule
So ©
Defendants’ Demurrer to Plaintiff's First Amended Complaint in its entirety. However, should
y
S
this Court disagree, Plaintiff respectfully requests that it be granted leave to amend its First
R
Amended Complaint per the Aubry, Jager and Young line of cases, supra.
8
Date: April 29, 2014 THE MILLER LAW FIRM
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PLAINTIFF’S OPPOSITION TO 699 SECOND DEVELOPMENT, LLC, AND CANNON CONSTRUCTORS,
INC.’S DEMURRER TO FIRST AMENDED.COMPLAINT
Preview
SUPERIOR COURT OF CALIFORNIA COUNTY OF SAN FRANCISCO Document Scanning Lead Sheet Apr-29-2014 3:14 pm Case Number: CGC-13-531203 Filing Date: Apr-29-2014 3:13 Filed by: BOWMAN LIU Juke Box: 001 Image: 04465184 OPPOSITION 88 TOWNSEND STREET OWNERS ASOCIATION, VS. 699 SECOND DEVELOPMENT LLC, et al 001004465184 Instructions: Please place this sheet on top of the document to be scanned.Co Om YN DH BF Ww NY be NNN YN NN NY Oe Be ew oe Be Be eB Be eS oN A WH FYB NHN fF SOD ww AIDA ROHN = ST Thomas E. Miller, Esq. (Bar No. 57821) Rachel M. Miller, Esq. (Bar No. 182630) Thomas W. J. Purtell, Esq. (Bar No. 229961) Emma E. Nelson-Munson, Esq. (Bar No. 271708) THE MILLER LAW FIRM 235 Montgomery St., Suite 930 San Francisco, CA 94104 Telephone: (415) 437-1800 / Fax: (415) 437-0177 tmiller@constructiondefects.com Attomeys for Plaintiff e FILED San Francisco County Superior Court APR 29 L014 GORI PARK-LI, Clerk Clerk BOWMAN fi 88 TOWNSEND STREET OWNERS ASSOCIATION 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. Case No. CGC-13-531203 PLAINTIFF 88 TOWNSEND STREET OWNERS ASSOCIATION’S OPPOSITION TO 699 SECOND DEVELOPMENT, LLC, AND CANNON CONSTRUCTORS, INC.’S DEMURRER TO PLAINTIFF'S FIRST AMENDED COMPLAINT Date: May 12, 2014 Time: 9:30 a.m. Dept: 302 BY FAX TO 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. (hereinafter “Defendants”) Demurrer to Plaintiff's First Amended Complaint. L INTRODUCTION Defendants’ entire Demurrer is fatally flawed because it is based on the false premise that SB 800 does not apply to construction defects that result in damage. Specifically, Defendants 1 PLAINTIFF’S OPPOSITION TO 699 SECOND DEVELOPMENT, LLC, AND CANNON CONSTRUCTORS, INC.’S DEMURRER TO FIRST AMENDED COMPLAINTCom YN DA WHF Bw NY Ny NYY NN eee a a a i BeRaAEBBRSESGSEWABDRESKR SS demur to all Plaintiff's Causes of Action alleging that “Plaintiff cannot plead additional common law theories of liability for alleged damages which are in the exclusive purview of SB800.” Defendants’ interpretation of California law is dead wrong. As discussed at length below, it is clear that the Court in Liberty Mutual v. Brookfield held that California Civil Code Section 896 does not eliminate a property owner’s common law rights and remedies where actual damage has occurred, and therefore other causes of action may be pled.’ Finding nothing in the legislative history of the Act indicating an intent to bar a homeowner’s common law claims for actual damages, the court held that when construction defects cause actual damage, a homeowner may pursue its rights under the Act and under common law tort theories. As such, for construction defects that result in actual damage, both SB 800 and common law causes of action may be pled.” Here, Plaintiff's First Amended Complaint is proper because it properly pleads Plaintiff's rights under the Act and under the common law tort theories of Negligence, Strict Liability, and Breach of Implied Warranty.’ Therefore, Defendants’ Demurrer must be overruled in its entirety.* 1 On December 11, 2013, the California Supreme Court refused requests to de-publish or review Liberty Mutual Insurance Company v. Brookfield Crystal Cove LLC., (2013) 219 Cal.App.4th 831. 2 In Liberty Mutual Insurance Company v. Brookfield, reversing the trial court, the Court of Appeal analyzed the legislative history of the Right to Repair Act and concluded that the legislature intended to provide plaintiffs with additional remedies specifically to address claims in which construction defects resulted in economic damages only. The appellate court reasoned that the legislature did not intend to bar common law claims for actual property damage, and to do so would be "nonsensical." In effect, the Court rejected the notion that the Act provides an exclusive remedy for all types of construction defect claims. 3 The damages recoverable under SB 800 and the common law are different. Civil Code Section 944 limits a claimant's recovery under the Act to certain damages including: 1, The reasonable value of repairing any violation of the standards set forth in the title; 2. The reasonable cost of repairing any damages caused by the repair efforts; 3. The reasonable cost of repairing and rectifying any damages resulting from the failure of the home to meet the standards; 4. The reasonable cost of removing and replacing any improper repair by the builder; 5. Reasonable relocation and storage expenses; 6. Lost business income if the home was used as a principal place of business licensed to be operated from the home; 7. Reasonable investigative costs for each established violation; and 8. All other costs or fees recoverable by contract or statute, Common law claims have no such limitation. * Specifically, a defendant in 255 Berry Homeowners Association v. Channel Park Development demurred arguing that Plaintiff cannot plead additional common law theories of liability for alleged damages which are in the exclusive purview of SB800. San Francisco Superior Court Department 302 overruled this demurrer. (Plaintiff's Request for Judicial Notice, Paragraph 2) 2 PLAINTIFF’S OPPOSITION TO 699 SECOND DEVELOPMENT, LLC, AND CANNON CONSTRUCTORS, INC.’S DEMURRER TO FIRST AMENDED COMPLAINTCe ND WH BF WN NY YM YN NR DN DY Be ew me me ee BRREEBRRRGPSERDREBTDREBRSTS i. ARGUMENT A. LEGAL STANDARD A demurrer challenges the legal sufficiency of a complaint, not the truth or accuracy of the allegations or the Plaintiff's ability to prove those allegations. Sutter Bay Associates v. County of Sutter (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. Moreover, 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.® Blatty v. New York Times Co., (1986) 42 Cal.3d 1033, 1040; Stop Youth Addiction, Inc. v. Lucky Stores, Inc., (1998) 17 Cal.4® 553, 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. Furthermore, 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 pled. Dubins v. Regents of Univ. of Cal., (1994) 25 Cal.App.4th 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 5 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. Jon 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 there from; it may not consider contentions, deductions or conclusions of fact or law. Moore v. Conliffe (1994) 7 Cal.4th 634; Montclair Parkowners Assn. v. City of Montclair (1999) 76 Cal.App.4th 784, 6 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 FIRST AMENDED COMPLAINTpossibility 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 FIRST, SECOND, THIRD, AND FOURTH CAUSES OF ACTION ARE PROPERLY PLED Defendants’ entire Demurrer is improper because it is based on the false premise that SB 800 does not apply to construction defects that result in damage. Specifically, Defendants demur to all Plaintiff's Causes of Action alleging that “Plaintiff cannot plead additional common law theories of liability for alleged damages which are in the exclusive purview of SB800.” Defendants’ interpretation of California law is incorrect. Defendants improperly allege that: There is little doubt that Plaintiffs alleged damages are within the exclusive confines of Civil Code 895 to 945.5 (“SB800.”) Consequently, Plaintiff's common law claims are improper and should be stricken. The law is clear and unambiguous, recovery for alleged SB800 violations are expressly limited to the statutory remedies set forth in SB800. However, it is clear that under Liberty Mutual, California Civil Code Section 896 is not the exclusive remedy in construction defect cases and other causes of action may be pled.” As such, Defendants’ argument is incorrect. Without question, the Court in Liberty Mutual v. Brookfield held that California Civil Code Section 896 is not the exclusive remedy and other causes of action may be pled. Specifically, the Liberty Mutual court found that California Civil Code Section 896 does not eliminate a property owner’s common law rights and remedies where actual damage has occurred. Finding nothing in the legislative history of the Act indicating an intent to bar a "Further, the Court in Liberty Mutual Insurance Company v. Brookfield ruled that SB 800 (Civil Code Sections 895 through 945.5, the "Right to Repair Act") is not the only remedy for construction defect claims even when those claims fall within the scope of the Act; therefore, the requirements of the Right to Repair Act do not apply to claims brought under common law. 4 PLAINTIFF’S OPPOSITION TO 699 SECOND DEVELOPMENT, LLC, AND CANNON CONSTRUCTORS, INC.’S DEMURRER TO FIRST AMENDED COMPLAINT24 homeowner’s common law claims for actual damages, the court held that when construction defects cause actual damage, a homeowner may pursue its rights under the Act and under common law tort theories. In sum, as discussed below, for construction defects that result in actual damage, both SB 800 and common law causes of action causes may be pled. Therefore, Plaintiff has properly pled its first, second, third, and fourth cause of action. Cc. FOR CONSTRUCTION DEFECTS THAT RESULT IN ACTUAL DAMAGE, BOTH “SB 800” AND COMMON LAW CAUSES OF ACTION CAUSES MAY BE PLED First, it is undisputed that the Court in Liberty Mutual v. Brookfield held that California Civil Code Section 896 is not the exclusive remedy and other common law causes of action may be pled for construction defects that result in actual damage. In accordance with the holding in Liberty Mutual v. Brookfield, Plaintiff's First Amended Complaint properly pleads construction defects that result in actual damage in Plaintiffs common law Negligence Cause of Action as follows: 35. Defendants, and each of them, negligently planned, designed, improved, constructed, inspected, installed, repaired, investigated, and replaced the Project’s site and structural elements, including, but not limited to, the Project’s garage area, walkways, exterior siding, stucco and other finishes, exterior waterproofing systems, windows and window systems, doors and frames, roofing and flashing systems, drainage systems, caulking and waterproofing, electrical, heating, ventilation, plumbing, and other elements of the Project presently unknown (hereinafter referred to collectively as “Project Defects”), and otherwise failed to use adequate materials, products, goods, devices and procedures, design plans or specifications, so that those elements of the Project do not function or perform properly; and are defective so as to create unsafe and unhealthy conditions; and have caused consequential damages to the buildings, improvements, personal property at the Project, and loss of use of property. Second, the express language of California Civil Code Section 896 confirms that “SB 800” may be pled for construction defects that result in actual damage. California Civil Code Section 896 expressly states as follows: 896. In any action seeking recovery of damages arising out of, or related to deficiencies in, the residential construction, design, specifications, surveying, planning, supervision, testing, or observation of construction, a builder, and to the extent set forth in Chapter 4 (commencing with Section 5 PLAINTIFF’S OPPOSITION TO 699 SECOND DEVELOPMENT, LLC, AND CANNON CONSTRUCTORS, INC.’S DEMURRER TO FIRST AMENDED COMPLAINTCo em IY DH BF YW NY Ny NH NY N N NY YN YS eS eee BRFRREBRHEBSSEWAEBDEBEAS 910), a general contractor, subcontractor, material supplier, individual product manufacturer, or design professional, shall, except as specifically set forth in this title, be liable for, and the claimant's claims or causes of action shall be limited to violation of, the following standards, except as specifically set forth in this title. This title applies to original construction intended to be sold as an individual dwelling unit. As to condominium conversions, this title does not apply to or does not supersede any other statutory or common law. (a) With respect to water issues: .-(3) Windows, patio doors, deck doors, and their systems shall not allow excessive condensation to enter the structure and cause damage to another component. For purposes of this paragraph, "systems" include, without limitation, windows, window assemblies, framing, substrate, flashings, and trim, if any. .-.(6) Decks, deck systems, balconies, balcony systems, exterior stairs, and stair systems shall not allow unintended water to pass within the systems themselves and cause damage to the systems. For purposes of this paragraph, "systems" include, without limitation, framing, substrate, flashing, and sheathing, if any. ...(7) Foundation systems and slabs shall not allow water or vapor to enter into the structure so as to cause damage to another building component. Here, Plaintiff's First Amended Complaint is proper because it properly pleads Plaintiff's Tights under the Act and under the common law tort theories of Negligence, Strict Liability, and Breach of Implied Warranty. Therefore, Defendants’ Demurrer must be overruled in its entirety. D. SAN FRANCISCO SUPERIOR COURT DEPARTMENT 302 HAS ALREADY DETERMINED THAT BOTH SB 800 AND COMMON LAW CAUSES OF ACTION CAUSES MAY BE PLED FOR CONSTRUCTION DEFECTS THAT RESULT IN ACTUAL DAMAGE Defendants’ Demurrer to Plaintiffs First Amended Complaint attempts to improperly assert that “Plaintiff cannot plead additional common law theories of liability for alleged damages which are in the exclusive purview of SB800.” However, San Francisco Superior Court Department 302 has already determined that both SB 800 and common law causes of action causes may be pled for construction defects that result in actual damage. Specifically, a defendant in 255 Berry Homeowners Associations v. Channel Park Development demurred arguing that Plaintiff cannot plead additional common law theories of liability for alleged damages which are in the exclusive purview of SB800. San Francisco 6 PLAINTIFF’S OPPOSITION TO 699 SECOND DEVELOPMENT, LLC, AND CANNON CONSTRUCTORS, INC.’S DEMURRER TO FIRST AMENDED COMPLAINTCo Om YN DH PB WN Re oye yy N NN Be Be eB oe ew eB eB Be em Beek REBBRBRRBESEAEWABDEBERAS Superior Court Department 302 overruled this demurrer.® Defendants’ entire Demurrer in this case is likewise fatally flawed because it was based on the false premise that SB 800 does not apply to construction defects that result in damage.” In sum, a simple comparison of the documents filed in this San Francisco Superior Court and the instant case clearly shows that Defendants’ Counsel’s exact same Demurrer arguments were rejected by the San Francisco Superior Court in a Demurrer Hearing on January 17, 2014, due to Defendants’ Counsel’s misunderstanding of the Court’s holding in Liberty Mutual Ins. Co. v. Brookfield. Indeed, Liberty Mutual Ins. Co. v. Brookfield does not require Plaintiff to delineate between the defects that cause actual damages and the defects that have not caused actual damage at the pleading stage. As such, Defendants’ Demurrer must be overruled in its entirety. E. LIBERTY MUTUAL V. BROOKFIELD AND BURCH V. SUPERIOR COURT HAVE NOT IN ANY WAY BEEN AFFECTED BY K.B. HOME V. SUPERIOR COURT In Defendants’ demurrer to Plaintiff's First Amended Complaint filed on April 11, 2014, Defendant improperly implies that Liberty Mutual and Burch have somehow been negatively affected by KB Home v. Superior Court (2014) 223 Cal.App.4th 1411. Specifically, Defendant states that: * Attached as Exhibit A to Plaintiff's Request for Judicial Notice is a copy of the ruling of San Francisco Superior Court Department 302 in 255 Berry Homeowners Associations v. Channel Park Development ° On January 17, 2014, a Demurrer Hearing in San Francisco Superior Court Case entitled 255 Berry Homeowners Association v. Channel Park Development, LLC, et. al., Case No. CGC-12-527395, occurred and the Court issued the following order denying Defendant CHANNEL PARK DEVELOPMENT, LLC’s Demurrer to Plaintiff 255 BERRY HOMEOWNERS ASSOCIATION’s First Amended Complaint: TO ALL PARTIES AND TO THEIR ATTORNEYS OF RECORD: This matter came before this court upon the demurrer of Defendants’ CHANNEL PARK DEVELOPMENT, LLC, THE RIDING GROUP II, LLC, AND DEVCON CONSTRUCTION (“Defendants”) to Plaintiff 255 Berry Homeowners Association’s First Amended Complaint in Department 302 of the San Francisco County Superior Court. Having reviewed and considered the papers submitted by all parties, the file and pleadings in this action, and the argument of counsel at the hearing it is hereby ORDERED that: Defendants’ Demurrer is Overruled as to all causes of action. All requests for judicial notice are granted. Liberty Mutual Ins, Co. v. Brookfield Crystal Cove LLC. (2013) 219 Cal.App.4th 98, does not require Plaintiff to delineate between the defects that causes actual damages and the defects that have not caused actual damage at the pleading stage. Defendants can reasonably determine what issues must be admitted or denied, or what counts or claims are directed against them. (See Khoury v. Maly's of California (1993) 14 Cal.App.4th 612.) 7 PLAINTIFF’S OPPOSITION TO 699 SECOND DEVELOPMENT, LLC, AND CANNON CONSTRUCTORS, INC.’S DEMURRER TO FIRST AMENDED COMPLAINTTo date, only one Appellate decision has upheld Liberty Mutual. Burch v. Superior Court (2014) 223 Cal.App.4th 1411. The holding in Burch permits plaintiffs to file common law tort actions for damages, rather than comply with the express limitations of SB800...This Court need not follow the Burch decision. In a subsequent opinion to Burch, a recent appellate decision concluded that a claim subject to SB800 is limited by the statute as expressly set out in SB800. In KB Homes [sic] v. Superior Court (Allstate) (2014) 223 Cal.App.4th 1471, the Court correctly ruled that a homeowner's failure to give the builder an opportunity to inspect and repair a construction defect excused the builder's liability under SB800. In so holding, the Court went out of its way to state it had ruled earlier in that case that since its enactment in 2002, SB800 is the exclusive remedy for such claims. However, in K.B. Home v. Superior Court, the Court plainly stated that the issue before it did not involve common law causes of action: “[tJhe issue that is before us is whether the [SB 800] Act requires that notice be given to a builder before repairs are made.” In K.B. Home, a homeowner reported a water leak to his insurance company, Allstate, who repaired the damage. Allstate then sought to pursue its subrogation right against builder K.B. Home, with a single cause of action under SB 800. K.B. Home filed a motion for summary judgment based on its affirmative defense of Allstate’s failure to give timely notice to repair the defect. Although the Court granted K.B. Home’s motion, the holding is limited to the notice required under SB 800, holding that “...failure to give timely notice to [builder] is fatal to[a] cause of action under the Act.”!° However, the court issued no holding as to the applicability of SB 800 versus common law causes of action. The court purposefully stated that “...whether the Act or tort common law applies in this case is not an issue properly before us at this time.” The Court further clarified that its decision should not be interpreted to prevent pleading common law causes of action in construction defect cases, confirming that “(nJothing in our decision prevents Allstate from raising that issue in an appeal from the final judgment.” It is clear that for Defendants to state that “this Court need not follow the Burch decision” is misleading and incorrect. The bottom line is that Liberty Mutual and Burch have not in any way been affected by K.B. Home v. Superior Court. '° Here, Defendants do not raise a “notice” argument. 8 PLAINTIFF’S OPPOSITION TO 699 SECOND DEVELOPMENT, LLC, AND CANNON CONSTRUCTORS, INC.’S DEMURRER TO FIRST AMENDED COMPLAINTF. IN THE ALTERNATIVE, PLAINTIFF REQUESTS LEAVE TO AMEND ITS 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. Cc Oe YD WH PF BW ND It is an abuse of discretion to sustain a demurrer without leave to amend if the _ o 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 8 is reviewable on appeal even in the absence of a request for leave to amend, and even if the we plaintiff does not claim on appeal that the trial court abused its discretion in sustaining a demurrer _ a without leave to amend. Jd. As such, in the alternative, Plaintiff respectfully requests that it be wv granted leave to amend its First Amended Complaint per the Aubry, Jager and Young line of a cases, supra. _ Il. CONCLUSION For the foregoing reasons, Plaintiff respectfully requests that this Court overrule So © Defendants’ Demurrer to Plaintiff's First Amended Complaint in its entirety. However, should y S this Court disagree, Plaintiff respectfully requests that it be granted leave to amend its First R Amended Complaint per the Aubry, Jager and Young line of cases, supra. 8 Date: April 29, 2014 THE MILLER LAW FIRM Noy oN A BD dn a 88 TOWNSEND STREET OWNERS ASSOCIATION N RB 8 9 PLAINTIFF’S OPPOSITION TO 699 SECOND DEVELOPMENT, LLC, AND CANNON CONSTRUCTORS, INC.’S DEMURRER TO FIRST AMENDED.COMPLAINT