Motion,Ex Parte: BEACON RESIDENTIAL COMMUNITY ASSOCIATION VS. CATELLUS THIRD AND KING LLC et al

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                                JAMES PATRICK CASTLES (SBN 70414)

RICHARD GC. YOUNG (SBN 215407)
ROBLES, CASTLES & MEREDITH LLP ELECTRONICALLY
492 Ninth Street, Suite 200 FILED
Oakland, CA 94607 Superior Court of California,
Telephone: 415.743-9300 County of San Francisco
Facsimile: 415.743-9305 SEP 23 2014
Clerk of the Court
Attorneys for Defendant BY: ROMY RISK
SKIDMORE, OWINGS & MERRILL LLP Deputy Clerk

IN THE SUPERIOR COURT OF CALIFORNIA
COUNTY OF SAN FRANCISCO
BEACON RESIDENTIAL COMMUNITY > CASE NO. CGC-08-478453

ASSOCIATION,
SKIDMORE, OWINGS & MERRILL LLP’S
Plaintiff, REPLY RE ITS RENEWED MOTION TO
vs STRIKE PORTIONS OF PLAINTIFF’S THIRD
. AMENDED COMPLAINT
CATELLUS THIRD AND KING LLC, et al.
DATE: September 30, 2014
Defendants. TIME: 9:00 a.m.
JUDGE: Hon. Curtis E.A. Karnow
AND RELATED CROSS-ACTIONS DEPT: 304
1 PLAINTIFF’S OBJECTION TO SOM’S RENEWED MOTION SHOULD BE

OVERRULED

A. Plaintiff's Objection Should Not Be Considered as It is an Improper Attempt
to Circumvent the Page Limits For an Opposition to a Motion

California Rules of Court (‘CRC’), Rule 3.1113, subsection (d) provides in part: “Except
in a summary judgment or summary adjudication motion, no opening or responding
memorandum may exceed 15 pages.” In an effort to skirt this rule, Plaintiff has divided its
response to SOM’s Renewed Motion to Strike into two separate memoranda, both an
Opposition and an Objection. The former is 15 pages, and the latter is 8 pages. In sum,
Plaintiff's responding memoranda consists of 23 pages, a clear violation of CRC Rule 3.1113,
subsection (d). As a result, this Court should refuse to consider Plaintiff's Objection. CRC Rule
3.1113, subsection (g) provides: “A memorandum that exceeds the page limits of these rules
must be filed and considered in the same manner as a late-filed paper.” CRC Rule 3.1300,
subsection (d) allows the court, in its discretion, to refuse to consider a late filed paper.

B. If Plaintiff's Objection Is Considered, It Should Be Overruled

41. Procedural History
On April 27, 2011, Plaintiff filed its Third Amended Complaint (“TAC”). On May 20,

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2011, this court held a Case Management Conference, at which it set a hearing for demurrers
to the TAC on October 28, 2011. On October 5, 2011, SOM filed both a demurrer and a motion
to strike portions of the TAC. HKS joined the motion to strike. The parties fully briefed the
demurrer and motion, and the matters were heard on October 28, 2011. in its ruling, the court
sustained the demurrer with leave to amend. As a result, the court did not rule on the motion to
strike; rather, the court ruled that if Plaintiff filed an amended complaint, “the motion to strike
shall be deemed refilled.” (See Order Re Demurrers and Motions to Strike in Reference to the
Third Amended Compiaint, filed November 22, 2011, attached hereto as Exhibit A, p. 7, lines
15-22.) lt was clearly this Court's intent that SOM’s motion to strike should be heard if
Plaintiffs case against SOM continued. Plaintiff chose not to amend its TAC, but instead filed
an appeal, which was heard by Court of Appeal and the California Supreme Court. Remittitur
was issued by the Court of Appeal on August 7, 2014.

In response, on August 13, 2014, SOM reserved a hearing date with this court of
September 19, 2014 for its motion to strike. On August 20, 2014, SOM filed (i) its Notice of
Renewed Motion and Renewed Motion to Strike Portions of Plaintiff's Third Amended
Complaint; and (ii) its Memorandum In Support. SOM’s August 20, 2014 memorandum simply
attached a copy of its October 5, 2011 memorandum in support. On August 28, 2014, HKS
attempted to file its own motion to strike, with its hearing coordinated with SOM’s hearing of
September 19, 2014; the filing, however, was unsuccessful. Due to timing constraints, HKS
reserved a new hearing date of September 30, 2014. Rather than have two separate hearings,
SOM filed a single document, its Amended Notice of Renewed Motion and Renewed Motion to
Strike Portions of Plaintiff's Third Amended Complaint on September 3, 2014, with a hearing
set for September 30, 2014. Contrary to Plaintiff's contention, SOM did not file an amended
motion; rather, SOM simply filed an amended notice of motion, simply changing the hearing
date from September 19, 2014 to September 30, 2014, so that SOM’s and HKS’s motions
could be heard concurrently. On September 4, 2014, HKS filed its motion, with a hearing date
of September 30, 2014.

2. SOWM’s Renewed Motion is not untimely

SOM has complied with CRC Rule 3.1322, subsection (b), which provides: “A notice of
motion to strike must be given within the time allowed to plead, and if a demurrer is interposed,
concurrently therewith, and must be noticed for hearing and heard at the same time as the
demurrer.” When SOM timely filed its demurrer and motion to strike on October 5, 2011, SOM

set one hearing date of October 28, 2011. According to this court's Order, the court heard and
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considered argument concerning both matters at the hearing. (See Exhibit A, Order, p. 1, line
49 —p. 2, line 21.) When SOM filed its Renewed Motion, SOM did not file a demurrer, so CRC
Rule 3.1322, subsection (b) does not apply. In sum, contrary to Plaintiff's contentions, SOM
has complied with CRC Rule 3.1322, subsection (b) and its motion to strike is not untimely.

3. SOM's Renewed Motion is properly authorized by CCP § 435 and
is properly grounded on CCP § 436

California Code of Civil Procedure (CCP) § 435, subsection (b)(1), states that “[a]ny
party ... may serve and file a notice of motion to strike.” CCP § 436 states in part: “The court
may, upon a motion made pursuant to Section 435, or at any time in its discretion, and upon
terms it deems proper: (a) Strike out any irrelevant, false, or improper matter inserted in any
pleading.” As noted in Weil & Brown, California Practice Guide: Civil Procedure Before Trial
(The Rutter Group 2014) Ch. 7(1)-B, CCP § 436(a) provides the grounds for striking portions of
a pleading: “c. [7:177] Grounds for striking portions of pleading: A motion to strike can also be
used as a ‘scalpel’—to cut out any ‘irrelevant, false or improper’ matters inserted therein. [CCP
§ 436(a)].” As noted in SOM’s Amended Notice of Motion, “This Renewed Motion to Strike is
based on the grounds that the court may ‘upon a motion ... or at any time in its discretion, ...
[s]trike out any irrelevant, faise, or improper matter inserted in any pleading’ (CCP § 436(a))...”
(page 3, lines 18-20). Accordingly, Plaintiff's Opposition is off-base when it argues that SOM’s
motion is brought under CCP § 436(a), “a non-existent procedure.” SOM’s Renewed Motion is

properly authorized by CCP § 435 and properly grounded on CCP § 436.

Cc. If SOM’s Renewed Motion Is Somehow Procedurally Improper, The Court
Should Act on its Own Discretion Pursuant to CCP § 436

As noted above, CCP § 436 provides that the court may, at any time in its discretion,
and upon terms it deems proper, strike out any irrelevant, false, or improper matter inserted in
any pleading. If SOM’s Renewed Motion to Strike is somehow deemed procedurally improper,
the court should act on its own discretion pursuant to CCP § 436 and consider SOM’s

argument on its merit.

I. PLAINTIFF’S OPPOSITION FAILS TO REFUTE THAT SOM’S RENEWED
MOTION SHOULD BE GRANTED

A. SOM’s Renewed Motion to Strike is Not an Improperly Presented Motion for
Summary Adjudication

As identified in SOM’s Renewed Motion to Strike, the grounds for the Motion are found
solely within the TAC, specifically at ] 116, p. 53, line 5—p. 54, line 1. Plaintiffs Opposition
fails to identify any grounds for the Motion outside the face of the TAC. Accordingly, SOM has

complied with CCP § 437, subsection (a), which provides: “The grounds for a motion to strike
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shall appear on the face of the challenged pleading or from any matter of which the court is
required to take judicial notice.” Plaintiff's argument, that the Motion is predicated on matters
outside of the TAC and is, therefore, an improperly presented motion for summary
adjudication, is simply without merit.

B. Case Law Supports SOM’s Renewed Motion to Strike

1. Krusi v. S.J. Amoroso Construction Co. is not significantly different
than the facts of this case, and its holding is applicable

Contrary to the Opposition, the facts of Krusi v. S.J. Amoroso Construction Co. (2000)
81 Cal.App.4th 995, are not “enormously different than anything involved here.” Rather, the
pertinent facts are the same: a prior owner suffers harm because of inadequate design of, or
engineering or construction work performed on his building, the prior owner sells the building,
and the subsequent owner attempts to sues over the defect. Accordingly, the holding of Krusi
applies here: “if, as, and when an owner of a building suffers harm because of inadequate
design of, or engineering or construction work performed on a building, a cause of action
accrues to that owner. To be sure, it may choose to deliberately transfer that cause of action to
another, but without some clear manifestation of such an intention, the cause of action is not
transferred to a subsequent owner.” (/d. at p. 1005.) As such, the right to recover for the
alleged defects belongs to the Sellers, CATELLUS and MISSION PLACE. (In fact, MISSION
PLACE sued SOM for negligence but dismissed its cross-complaint without prejudice.)

Plaintiff's Opposition simply identifies a distinction without a difference when it argues
that Krusi does not apply here because in Krusi, the prior owner had previously litigated over
the defect. While the appellate court in Krusi took consideration of that fact in determining
whether the prior owner had suffered harm, Krus/ does not impose a requirement that the prior
owner actually litigate over the defect for the cause of action to accrue to that owner; rather,
ihe prior owner simply needs to have suffered harm. Likewise, the fact that in Krusi, the prior
owner communicated the existence of the defects to the subsequent owner before the sale,
whereas here, Plaintiff alleges the Sellers concealed the Overheating Conditions, is irrelevant.
Krusi still applies: a cause of action alleging inadequate design, engineering or construction of
a building belongs to the owner who was first damaged or who first discovered, or ought to
have discovered, the alleged defects, here, the Sellers. If Sellers, in fact, concealed the
alleged defects, Plaintiff is not without remedy as it would have a valid cause of action for
concealment.

Other cases cited by Plaintiff's Opposition do not support Plaintiff's argument. First,

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Jasmine Networks, Inc. v. Superior Court (2009) 180 Cal.App.4th 980, actually supports the
tight of MISSION PLACE to sue SOM for negligence concerning the Overheating Conditions,
even though MISSION PLACE is no longer the owner. The case addresses the question of
whether the owner of an alleged trade secret loses the right to bring an action for its
misappropriation if, after the alleged misappropriation occurs, he sells his remaining interest in
the secret to a third party. (/d. at 993.) In answering the question, the court noted, “One whose
property has been wrongfully damaged by another does not lose the right to recover for that
damage merely because he has sold the property at the time of suit.” (/d.)

Second, Beacon Residential Community Assn. v. Skidmore, Owings & Merrill
LLP (2014) 59 Cal.4th 568, does not support Plaintiff. There, the California Supreme Court
addressed the issue of whether SOM owed Plaintiff a duty of care, and in considering a factor
in the duty analysis set forth in Bily v. Arthur Young & Co. (1992) 3 Cal.4th 370, the closeness
of the connection between defendants’ conduct and plaintiff's injury, the Court held:

Nor do we find persuasive defendants’ claim that the connection between their
conduct and plaintiff's injury is “attenuated because ... when the developer sold
the units two years after construction, it was aware of, and concealed, the
alleged defects.” (Id. at 583. Internal citations omitted.)

The Court then added the following dicta:

This specific allegation, if true, may inform whether defendants’ conduct was the
proximate cause of plaintiff's injury. It also may give rise to a claim of equitable
indemnity by defendants against the developer. (/d. Internal citations omitted.)

But Beacon never addressed the issue here, to whom the right to seek redress for construction
defects belongs as between a prior owner and a current one. “A decision, of course, is not
authority for what it does not consider.” (Mercury ins. Group v. Superior Court (1998) 19
Cal.4th 332, 348.)

Third, Plaintiffs reliance on Huang v. Garner (1984) 157 Cal. App.3d 404, is misplaced.
Contrary to the Opposition, Huang did not hold that the owners could maintain an action for
negligent design against an architect even though the owners were maintaining a claim for
concealment against a prior owner. in fact, the owners settled their claims against the prior
owners so the only claim considered in Huang was negligence against the architects. (/d. at
410.) Huang never considered the issue raised in Krusi and Siegel v. Anderson Homes, Inc.
(2004) 118 Cal.App.4th 994, i.e., whether the prior owner's knowledge of defects vested the
right to recovery for the defects solely in the prior owner, as Krusi and Siegel were decided

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SOM’s REPLY RE ITS RENEWED MOTION TO STRIKE PORTIONS OF PLAINTIFF'S TACoem WD Bw HN

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years after Huang, in 2000 and 2004, respectively. Again, “[a] decision, of course, is not
authority for what it does not consider.” (Mercury Ins. Group, supra.)

Finally, Plaintiff reliance on Valenzuela v. Superior Court (1992) 3 Cal.App.4th 1499 is
misplaced. Plaintiff cites to Valenzuela to support its argument that because MISSION PLACE
was formed to purchase and sell the project, the court should not impute MISSION PLACE’s
knowledge to Plaintiff for the purpose of determining accrual. But Valenzuela does not apply
here, and Plaintiff's argument is without merit. Initially, it should be noted that while Plaintiff
argues in its Opposition that MISSION PLACE was formed to purchase and sell the project,
Plaintiff's Opposition does not cite to any such allegation in the TAC. Plaintiff's argument is,
therefore, not a fact for purposes of this motion. But even if Plaintiff did plead such facts, it
would make no difference as Valenzuela is not relevant to the issues here. First, Valenzuela
concerns imputation of knowledge of defects from one owner to a later owner for purposes of
the statute of limitation. But SOM is not asserting a statute of limitations defense here. Second,
SOM is not arguing that anyone’s knowledge be imputed to another. Rather, SOM's argument
is that because the Sellers were aware of and harmed by defects, the right to recovery for
inadequate design, engineering or construction of a building belongs to Sellers, not to Plaintiff.
Third, the facts of Valenzuela are very different from those here. In Valenzuela, the prior owner
was “not an independent person or business occupying the property before selling it to the
current owners. According to the complaint, the prior owner is a corporation created to
purchase the residence as part of the settlement of a lawsuit brought against the developer by
another prior owner” and “the prior owner act[ed] as an agent for the developer in concealing
the defects. (id. at 1503) Here, Plaintiff identifies no allegation that MISSION PLACE was not

independent and that MISSION PLACE acted as CATELLUS’s agent in concealing defects.

2. Plaintiff's alleged injuries are not “fundamentally different from”
those suffered by MISSION PLACE

As explained in SOM’s Motion, a cause of action alleging inadequate design,
engineering or construction of a building belongs to the owner who was first damaged or who
first discovered, or ought to have discovered, the alleged defects, pursuant to Krusi and Siegel.

But Krusi notes that this doctrine does not apply when:

the damage suffered by that subsequent owner is fundamentally different from the
earlier type. Thus, if owner number one has an obviously leaky roof and suffers
damage to its building on account thereof, a cause of action accrues to it against
the defendant or defendants whose deficient design or construction work caused
the defect. But, if that condition goes essentially unremedied over a period of
years, owners two and three of the same building have no such right of action

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against those defendants, unless such was explicitly (and properly) transferred to
them by owner number one. But owners two and three could well have a cause of
action against those same defendants for, e.g., damage caused by an
earthquake if it could be shown that inadequate seismic safeguards were
designed and constructed into the building. Such is, patently, a new and
different cause of action. (Krusi, supra, 81 Cal.App.4th at 1006. Boiding added.)

Here, the Sellers’ damage is not “fundamentally different from’ that suffered by Plaintiff.
As the TAC alleges, the Sellers suffered and knew about serious deficiencies at the Subject
Property, which the TAC refers to as the “the Overheating Conditions.” (TAC, 4 116, page 53,
line 5 - page 54, line 1) The TAC alleges that these are the very same problems being faced
by Plaintiff. (TAC, 150, parts B and C, page 23, line 1 to page 25, line 10.) Plaintiff fails to
identify any difference in the problems faced by the Sellers and Plaintiff. The situation here is
not in any way like the example of fundamentally different damages given in Krusi above, a
leaky roof and damage caused by an earthquake due to inadequate seismic safeguards.
Accordingly, Plaintiff's argument, i.e., that the Seller's damage is “fundamentally different from”
that suffered by Plaintiff so Krus/ does not apply, is simply off the mark.

Furthermore, Plaintiff's Opposition is simply wrong when it contends that the TAC does
not allege that MISSION PLACE sustained any damages, which Siege/ holds is necessary for
accrual: “the cause of action belongs to the owner who first discovered, or ought to have
discovered, the property damage. It is only then that some entity capable of maintaining a legal
claim will have suffered a compensable injury, e.g., the cost of repair and/or the loss in the
property's value.” (/d. at 1009.) The TAC, in fact, alleges that MISSION PLACE incurred repair
costs when it tried to correct the Overheating Conditions by applying a window film: “In an
attempt to remediate the severe habitability, safety and health problems caused by the
substandard design and materials installed, defendant ‘MISSION PLACE, LLC’ exacerbated
the problem by having defendant WINDOW SOLUTIONS... install a ‘film’ inside a substantial
number of windows in the Units.” (TAC, page 53, lines 16-20.) Furthermore, the Overheating
Conditions have resulted in a loss in the property's value. (TAC, p. 38, lines 8-11.)

3. The fact that MISSION PLACE cannot assert a count under
the Right of Repair Act is irrelevant

A defendant's invasion of a single “primary right” gives rise to only a single cause of
action. (Crowley v. Katleman (1994) 8 C4th 666, 681-682; Hindin v. Rust (2004) 118 CA4th
1247, 1257.) A “primary right’ is simply plaintiff's right to be free from the particular injury
suffered (e.g., bodily harm, property damage, etc.). (Crowley v. Katleman, supra, 8 C4th at

681.) Where a single primary right and injury are involved, there is only one cause of action, no
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matter how many counts are pleaded. It makes no difference that the complaint asserts
different legal theories or seeks different remedies. (Slater v. Blackwood (1975) 15 C3d 791,
795; Boeken v. Philip Morris USA, Inc, (2010) 48 C4th 788, 797-798; Plotnik v. Meihaus
(2012) 208 CA4th 1590, 1612,—“Even where there are multiple legal theories upon which
recovery might be predicated, one injury gives rise to only one claim for relief.” (Internal quotes
omitted.})

Pursuant to Krusi and Siegal, the cause of action for defects in a building lies with the
owner who first discovered and was harmed by the defects, regardless of the counts/legal
iheories of recovery to be asserted. Here, applying Krusi and Siegal, the cause of action for
defects in the project belongs to the Sellers, who can seek recovery through a count of
negligence against SOM. The fact that the Sellers have different theories of recovery than
Plaintiff and cannot bring a count under the Right of Repair Act is irrelevant. The cause of
action for recovery for the defects, regardless of counts to be asserted, belongs to the Sellers.
To rule that Sellers hold the right to recovery through negligence but that Plaintiff holds the
tight to recovery under the Right of Repair Act, could subject SOM to lawsuits by two different
plaintiffs for the same damages, i.e., the damage caused by the Overheating Conditions. The
fact that the Sellers damages may be measured by the reduced value of the units and the
resulting lost profits from their sales whereas Plaintiff's may be measured by the cost of repair
is of no importance here. The general measure of damages for tortious injury to property is
either the difference between the value of the property before and after the injury, i.e.,
diminution in value, or the cost of restoring property to its original condition prior to the injury,
commonly referred to as costs of repairs. (See, e.g., Linforth v. S.F. Gas and Electric Co.
(1909) 156 Cal. 58; Rest.2d Torts, § 929.) Accordingly, the Seller's damages are the same as
Plaintiff's, units with Overheating Conditions, although they may be measured differently.

Plaintiff's Opposition suggests that SOM could somehow be “exonerated from liability” if
SOM's motion to strike is granted. But Plaintiff clearly misconstrues SOM’s argument. Because
the right to recovery for the Overheating Conditions belongs to the Sellers, Sellers can sue
SOM for negligence in that regard. SOM’s Motion does not purport to insulate SOM from all
liability; rather, the Motion seeks to clarify who has the right to sue SOM. Nor is Plaintiff left
without a remedy. If MISSION PLACE, in fact, concealed the alleged defects, Plaintiff would
have a valid right to recovery for concealment.
it
if

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A, When a claim accrues is generally a question of fact, but if the facts
are undisputed, becomes a question of law, appropriate for a motion
to strike

Plaintiff is correct that the issue of when a cause of action accrues is generally a
question of fact. But that does not mean that accrual can never be determined on a motion to
strike. In ruling on a motion to strike, the allegations in the complaint are presumed to be true:
“[J]Judges read allegations of a pleading subject to a motion to strike as a whole, all parts in
their context, and assume their truth.” (Clauson v. Sup.Ct. (Pedus Services, Inc.) (1998) 67
CA4th 1253, 1255.) Accordingly, the facts in the TAC are undisputed, and thus, accrual
becomes a question of law, appropriate for a motion to strike. For example, Slavin v.

Trout (1993) 18 Cal.App.4th 1536, 1538, states, “The issue on appeal is the date the cause of
action accrued, which on undisputed facts is a question of law....” Likewise, Smith v. SHN
Consulting Engineers & Geologists, Inc. (2001) 89 Cal.App.4th 638, 652-653, holds that “the
point at which a negligence action accrues during a construction project will sometimes be a
question of fact,” but the court there noted that the undisputed facts showed when the claims
accrued and thus held that the plaintiffs claims were barred by the statute of limitations. If
Plaintiff's argument were correct, a statute of limitations defense could never be decided ona
demurrer because such a defense would require the determination of the date of accrual,
which Plaintiff contends is a question of fact. But where the dates alleged in the complaint
show the action is barred by the statute of limitations, a general demurrer lies. (See Saliter v.
Pierce Bros. Mortuaries (1978) 81 CA3d 292, 300; iverson, Yoakum, Papiano & Hatch v.
Berwald (1991) 76 CA4th 990, 995.) As with demurrers, the grounds for a motion to strike must
appear on the face of the pleading under attack, or from matter which the court may judicially
notice. (CCP § 437) So, as long as accrual can be determined from the face of the pleading,
accrual can be determined on a motion to strike. And as explained in SOM’s Motion, the
undisputed facts clearly demonstrate that the claims at issue accrued when the Sellers owned
the project. In sum, accrual can be determined based on the allegations of the TAC, and
SOM’s Motion to Strike is therefore an appropriate vehicle for determining that the claims at

issue do not belong to Plaintiff.

c. While A Plaintiff Can Plead Inconsistent Theories, Here Plaintiff Has Pled
Only One Set of Facts

Plaintiff's Opposition argues that a plaintiff can plead alternative theories “in varied and
inconsistent counts.” SOM does not dispute this point. Mendoza v. Rast Produce Co.,
Inc. (2006) 140 Cal.App.4th 1395, 1402, holds: “When a pleader is in doubt about what

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actually occurred or what can be established by the evidence, the modern practice allows that
party to plead in the alternative and make inconsistent allegations.” But that is not what has
occurred here. Plaintiff did not plead inconsistent allegations; rather, Plaintiff has pled only one
set of “facts”: the Sellers knew about and were harmed by the defects in question. A plaintiff
cannot plead certain events as undisputed fact and then claim that the facts are not facts.
Plaintiff's Opposition claims that the TAC “adverts to plaintiffs uncertainty about the facts,
stating that the issue of whether or not MISSION PLACE concealed the Overheating Defects is
one that must be presented to the Court for decision in this case. (Complaint, {] 18(c), 11:20 -
11:22.)" In fact, paragraph 18 of the TAC merely notes: “Plaintiff also brings this case in its
representative capacity ... with respect to the following issues:” (page 11, lines 12-13) and then
identifies the following issue in subparagraph (c): “Did ... MISSION PLACE LLC conceal the
heat gain issue from the Members when [it] sold separate interests to the Members and their
predecessors?” It is true that the court must decide this contested issue, but nowhere does
Plaintiff assert that Plaintiff is uncertain as to the answer. Rather, the TAC offers one version of
the facts: the Sellers knew about and were harmed by the defects in question.

Furthermore, the fact that the causes of action against SOM are the First, Second and
Fifth Causes of Action, while the allegations fatal to these causes of action are found in the
Eighth Cause of Action, is irrelevant. CCP § 437, subsection (a) provides: “The grounds for a
motion to strike shall appear on the face of the challenged pleading or from any matter of
which the court is required to take judicial notice.” Clauson v. Sup.Ct. (Pedus Services, Inc.)
(1998) 67 CA4th 1253, 1255, holds: “[JJudges read allegations of a pleading subject to a
motion to strike as a whole, all parts in their context, and assume their truth.” Plaintiff identifies
no statute or case which holds that the grounds for a motion to strike must be found within the

same cause of action as the language to be stricken.

DATED: September 23, 2014 ROBLES, CASTLES & MEREDITH LLP

By:

RICHARD C. YOUNG OO
Attorneys for Defendant
SKIDMORE, OWINGS & MERRILL LLP

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SOM’s REPLY RE ITS RENEWED MOTION TO STRIKE PORTIONS OF PLAINTIFF'S TACEXHIBIT AOo 8 MA wm Rw ow

Superior Court of California
County oPetn Francisco.

NOV 22 2011
CLERK Of FHE COURT

SUPERIOR COURT OF THE STATE OF CALIFORNIA

COUNTY OF 8AN FRANCISCO
BEACON RESIDENTIAL COMMUNITY ) Case No. CGC: 08-478453
ASSOCIATION, )
) ORDER RE DEMURRERS AND
Plaintiff, ) MOTIONS TO STRIKE IN
} REFERENCE TO THE THIRD
vs, ) AMENDED COMPLAINT
)
CATELLUS THIRD AND KING LLC, et )
al, ) Date: October 28, 2011
) Time: 9:30 a.m,
Defendants, ) Dept: 304
)  Indge: Hon. Richard A. Kramer

This matter came before the Court for hearing on Friday, October 28, 2011. Before the
Court were the following contested matters:

1, The demurrer of defendants Catellus Third and King LLC, Catellus Commercial
Development Corp., Catellus Operating Limited Partnership, Catelus Utban Development
Corporation, Catethis Urban Developinent Group LLC, Third and King Investors LLC, and

Prologis (hereafter collectively, the *Crielius Parties”) to the Second, Third, Fourth, Sixth and
Eighth Causes of Action in the Third Amended Complaint filed by Plaintiff Beacon Residential
Community Association (hereafter, “Plaintiff” on April 27, 2011,

2, The motion of the Catellus Patties to strike the entirety of the Second Cause of
Action in the Third Amended Complaint, as well as certain additional sentences in the ‘Third

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ORDER RE DEMURRERS AND MOTIONS ‘TO STRIKE IN REVERENCE

TO THE THIRD AMENDED COMPLAINT2 MW tH WwW me ww om

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Amended Complaint, and the paragraph of the prayer for relief that requests punitive damages.

3 The demurter of defendants Mission Place LLC, Mission Place Mezzanine LLC,
Mission Place Mezz Holdings LLC, Mission Place Partners LLC, Centurion Real Bstate Investors
IV, LLC, and Conturlon Real Estate Partners, LLC (hereinafier collectively, the “Mission Place
Parties") to the Second Cause of Action and the Eighth Cause of Action of the Third Amended
Complaint,

4, The demurrer of defendant Skidmore, Owings & Mewill, LLP (hereinafter,
*SOM”) to the First Cause of Action, the Second Cause of Action, and the Fifth Cause of Action
of the Third Amended Complaint,

5. The motion to stcike all portions of the Second Amended Complaint that seek
damages against SOM conceming excessive heat gain, inadequate ventilation, and lack of
complianes with California Code of Regulations Title 24, as found in the First, Second, and Fifth
Causes of Action of the Thitd Amended Complaint,

6. The demurrer of defendant HKS, Inc, individually and dba HKS Architects, Inc,
(hereinafter, “BKS”) to the First Cause of Action, the Second Cause of Action, and the Fifth
Cause of Action of the Third Amended Complaint,

h Requests for judicial notice by several of moving parties, as well as by Plaintiff,

The Court received and considered briefs supporting and opposing each of the above
motions, demutrers and requests, Additionally, in the hearing of October 28, all of the above
mentioned parties appeared by counsel, and presenied arguinent which the Court heard and

considered,

The Court hereby rules on the above listed matters as follows,
L Requests for Judictal Notice,

Several of the requests for Jedicial notice ask the Coutt to take notice of prior orders of this
Court herein, The Court automatically takes judielel notice of jis prlor orders on file herein,
There is no need for parties to request such judicial notice,

The Cowt grants the requests for judicial notice, to the extent that they ask the Court to
take notice of papers filed in this case, and in the case of Edmund Zucker y. Catellus Development

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ORDER RE DEMURRERS AND MOTIONS TO STRIKE IN REFERENCE

TO THE THIRD AMENDED COMPLAINT

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ICorp, San Francisco Supeslor Court Case No. C06-455352, The Court tekes notice of the fact
that the papers were filed, but as to the exhibity cited, the Court does not consider anything stated
in exhibits to such papers to be established as true. Ht would be improper for the Court, in quling
on a demurrer, to engage in any weighing of evidence or to draw any inferences from evidence
that is contained in such exhibits,

The Court declines to take judicial notice of claimed inferences from deposition testimony
of Michael Alfaro and John Tashjian, as well as the exhibits io these depositions, Judicial notice
of matters upon demurrer may be dispositive only in those instances where there is not or cannot
be a factual dispute concerning that which is sought fo be fudicially noticed. GFiltams v,
Southern Cal. Gas Co, (2009) 176 Cal.App.4" $91, 599-600.) The disputed inferences from this
deposition testimony are improper for the Court to consider at the demurrer stage,

a Demurrer of the Catelius Parties,

‘The demurrer of the Catellus Patties is overruled, Plaintiff is entitled to plead inconsistent
altemative claims, (4 Witkin, Cal, Procedure (5 Ba, 2008) Pleading §§ 402-406, pp. 542-45);
Dubin vy, Chesebrough Trust (2002) 96 Cal.App.4" 465, 477) Pursuant to this doctrine, Plaintify
has properly pleaded its Thitd Cause of Action Gor strict liability of developer) and its Fourth
Cause of Action (for negligence) against the Catellus Parties, as alternatives to its First Cause of
Action (for Hability under $B 800, Civil Code 88 895 et seq.), to apply only if SB 800 is found
inapplicable to Plaintiff's claims against the Catellus Patties herein.

As a matter of oase Taahagement and judicial economy, however, the Court will permit
discovery to go forward with respect to these causes of action only if responses fo PlainifPs initlal
Written discovery indicate that the applicability of SB 800 to this case is a matier in dispute. The
Court’s prior stay on discovery is hereby lifted for the limited purpose of permitting Plaintiff te
Propound written discovery reasonably tailored fo determining whether the applicability of SB 800
is a matter in dispute.

The Catellus Parties need not demur to the Sixth Cause of Action (for breach of implied
warranty). This cause of action is not directed to the Catellus Parties,

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ORDER RE DEMURRERS AND MOTIONS TO STRIKE IN REFERENCE

‘TO THE THIRD AMENDED COMPLAINTThe Catellus Parties’ demurrer to the Eighth Cause of Action is overruled, The elemenis

of Plaintiff's claim for fraudulent concealment have been set out with sufficient particularity to

enable the Catellus Parties to understand and respond to this claim. Plaintiffs allege colorable

Glaims that the Catellus Parties were either joint venturers or partners of the Mission Place parties,

or that the Catellus Parties engaged in concealment that is actionable by a subsequent purchaser
under the doctrine of Geernacrt v, Mitchell (1995) 31 Cal,App.4" 601, 605-09, and Barahouse v

City of Pinole (1982) 133 Cal.App.3d 171, 191, Further adjudication of issues as to this claim
faust await development through discovery.

The question of whether or not Plaintiff is a proper class representative of the unit owners
who have claims as to which Plaintiff requests standing to proceed as a class representative is not
appropriate for resolution at the demurrer stage, The class certification issue will be handled
through motion pursuant to California Rules of Court, Rule 3.764, and related procedures,

The demurrer fo Plaintifs Second Cause of Action, for negligence per se, is also
overruled, This portion of Plaintiff's Complaint places the defendants on notice that Plaintiff
intends to proceed under the exception to SB 800 exclusivity in Civil Code § 943(a). The
specification of the statute involved is adequate, in the Court’s view, to provide notice to the
defendants, under the liberal standard of notice pleading that is applicable here. The Court is
satisfied that under appropriate circumstances, a cause of action may properly be denominated as
“negligence per se.” (E.g., Capri v. L.A. Fitness dnt'E (2006) 136 Cal.App.4" 1078, 1085-89.)

3, Motion to Strike of the Catellus Parties,

The motion to strike by the Catellus Parties is denied, As stated above, Plaintiff's pleading

is not Improper insofar as ii alleges a cause of action for negligence per se, PlalntifP's Third
Amended Complaint is not so inherently contradictory as to require striking an allegation as to a
false representation by defendanis be stricken fiom the Third Amended Complaint, Plaintiff is
permitted fo plead in the altermative, even if the allegations are inconsistent, Regarding punitive
damages, there is no basis to strike the prayer based on Plaintiff's pleading in the Third Amended
Complaint. Punitive damages have been held proper for misrepresentations and concealment in.
the sale of real estate under some Gircurnstances, (ez, Godfeyy, Steinpress (1982) 128

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ORDER RE DEMURRERS AND MOTIONS TO STRIRE IN REFERENCE

TO THE THIRD AMENDED COMPLAINTCal.App.3d 154, 18 1-82.) The Court does not properly address this issue at the demurrer stage.

4, The Demurrer of the Mission Place Parties,

The demurrer of the Mission Place Parties is overruled for largely the same reasons stated
above as to the demurrer of the Catellus Parties, The Second Cause of Action for “negligence per
se” has potential appHeability, In the context of this action, The allegations of fraudulent
concealment in the Highth Cause of Action are sufficient, in the Court's view, to afford the
Mission Place Parties adequate notice of Plaintiff's theory,

5. Demurrer of SOM, :

‘The demurrer of SOM is sustained, The Couri’s sling is based on the case of Bily v.
Arthur Young & Co, (1992) 3 Cai 370, in which the California Supreme Court held that a third

party could not maintain a cause of action to recover in negligence against an auditor for economia
losses sustained as a result of the latter’s work, and held that only those persons or entitles with
which the professional had directly contracted were owed a duty of care,

The Court rejects Plaintiff's argument, based on Civil Code 896 ahd 936, that the
Legislature, in enacting SB 800, intended to provide a cause of action against the architects to the
cwners of condominiums, or the condomininm association, that ig independent of the Bily dootrine
regarding limitations on a professional's duty of care, The Court concludes that an SB 800 type
action may be maintained by a plaintiff directly against « design professional only if the design
professional owed the plaintiffa duty of care undet the Bily principtes,

The Court is cognizant that in the case of Weseloh v. KL, Wessel Construction Co,, Tne.

(2004) 125 Cal App.d™ 152, 164, the Const of Appeal stated that “the lack of privity of contract
does not preclude the imposition ofa duty of care” ona design engineer, However, the Court does
not view the: allegations against SOM in the Third Amended Cornplaint as rising to the level
sufficient to establish such a duty of care,

Paragraph 87 of the Third Amended Complaint alleges, in substance, that defendant SOM,
and its co-arohitect, HKS, not only provided original design services in the form of the project
plans and specifications, they also regularly visited and inspected the project throughout
construction, participated in weekly meetings, and made detailed analyses and recommendations

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ORDER RE DEMURRERS AND MOTIONS To STRIKE IN REFERENCR
TO THE THIRD AMBNDED COMPLAINT

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'of many detailed aspects of the project, These architects, according to the Third Amended
Complaint, advised the owner as to any work that did not conform to the contract documents, and
recommended revisions to the design of the project fo control the porceived quality of fhe
consiruction,

Patagraph 88 is even more specific as to the architects? alleged tole, According to these
allegetions on information and belief, SOM and HKS reviewed and approved the course of action
where the specifications for the exterior windows, contrary to the approved Title 24 submittal for
the project, were changed to a design that inadequately prevented heat gain, which causes a
setiously defeotive and nonfunctional condition that is also unhealthy, Also, according to
Paragraph 88, Plaintiff alleges on information and belief, SOM and HES recommended that the
number of Z ducts (for ventilation within units) be reduced by a significant quantity, which is a
major factor in the nonfunctional, unhealthy condition on the interiors of the units,

The Coutt concludes that these allegations are insufficient to establish the existence of a
duty of care, under Bily and Weselah, The allegations do not show that either of the architects
weut beyond the typical role of aa architect, which is to make recommendations to the owner,

Even if the architect initiated the substitutions, changes, and other clements of design that Plaintife
alleges to be the cause of serious defects, so long as the final decision rested with the owner, there
is no duty owed by the architect to the future condominium owners, in the Court’s view, The
owner made the final decisions, according to the Third Amended Complaint, Therefore, in the
Court’s view, the holding of Weseloh, finding no duty of care of the engineer in that case, dictates
the result here based on the facts alleged in the Third Amended Complaint, (eseloh, supra, 125
Cal,App,3th at pp, 166-73.)

At argument, counsel for Plaintiff expressed the view that Plaintlf? may, in good faith, be
able to amend the Third Amended Complaint to stafe that the role of either 80M, HKS, or both,
went beyond the traditional role of the architect, This needs to be more than a recommendation,

When the architect recommends something, the atchiteot does not contro! it, But if the architect
actually dictated and controlled the decision to eliminate Z ducts, acting in a manner that was
contrary to the directions of the owner, or that ignored the owner’s directions @ather than merely

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ORDER RE DEMURRERS AND MOTIONS TO STRIKE IN REFERENCE
TO THE THIRD AMENDED COMPLAINTrecommending such a decision to the owner), then the architect may awe a duty of care under the
lest of Biakanja v. Irving (1958) 49 Cat2d 647 as further explicated in Weseloh, in the Court's
view,

Therefore, the Court grants Plaintiff leave to amend paragraph 88 of the Third Amended
Complaint to state a claim that the architect affirmatively controlled the decision to eliminate Z
duois, if Plaintiff can make such allegation consistent with counsel's ethical duties. Any such
amendment need not restate the remainder of the complaint (i.¢., may be made in the form of a
First Amendment to the Third Amended Complaint), and must be filed within ten days of this
Order, In such amendment, Plaintiff may also incorporate by reference the amendment within its
First Cause of Action (under SB 800), again, if this may be done in good faith,

If Plaintiff files an amendment to the limited extent permitted herein, and if SOM again
demuts to the amendment, the demurrer shall be heard on Thursday, January 12, 2012, at 1:30
pan,, in this Department, If Plaintiff does not file an amendment within the time permitted, then
SOM’s demurer shall be sustained without leave to amend,

6 Motion to Strike of SOM,

In view of the Court’s ruling on SOM’s demurrer, it is unnecessary for the Court to
consider S0M’s motion to sttike at this time. if Plaintiff does not amend to the limited extent as
Derinitted herein, the motion to strike is smoot. If Plaintiff docs amend, the motion to strike shall
be deemed refiled upon SOM’s filing of a demurrer; shall be deemed to include a motion to strike
any amended text, and shall be heard on Janvary 12, 2012 along with the demurrer, No additional
briefs shall be filed by either patty as to the SOM motion to sitike, Since KS joined in SOM’s
motion fo strlke, this Order is equally applicable to HKS,

7 Demurrer of HKS,

The Court's ruling on the SOM denuurer is equally applicable to the demurrer of HKS,
The HKS demurrer is sustained in Hs entirety, for the identical reasons stated above, The Court’s
reasoning as stated above applies equally to any design professional, although it would not apply
to other project participants who are not design professionals. Leave to amend is granted to the
Limited extent stated above, as to SOM, Such amendment shall be filed within ten days of this

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ORDER RE DEMURRERS AND MOTIONS ‘TO STRIKE IN REFERENCE

TO THE THIRD AMENDED COMPLAINT

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Order, and any denaurer by HKS shall be heard on January 12, 2012, at 1:30 po. If Plaintiff
does not file an amendment within the time permitied, then BKS" demurrer shali be sustained
without leave to amend,

7 Answers by the Catellus Parties and the Mission Place Parties,

The Catellus Parties and the Mission Place Parties are ordered to file answers and any

other permissible responsive pleadings on or before Nov. 22, 2011,

ITIS SO ORDERED,
bass \E=(7= ( WY Ao —

Hon, Richard A. Kramer
Judge of the Supertor Court

APPROVED AS TO FORM;

WOOD, SMITH, HENNING & BERMAN

By,
David Webster

Counsel for Catellus Third and King, LLC,
Catelhis Commercial Development Corp,
Catolius Operating Limited Partnership,
Catellus Urban Development Corporation,
Catellus Urban Development Group, LLC,

Third and King Investors, LLC, and Prologis

HAIGHT, BROWN & BONRSTEEL

By:
Steven Cvitanovic

Counsel for Mission Place, LLC; Mission
Place Mezzanine LLC, Mission Place Mezz
Moldings, LLC; Mission Place Partners LLC;
Centurion Real Estate Investors IV, LLC and
Centurion Real Estate Partners, LLC

Page 8
ORDER RE DEMURRERS AND MOTIONS TO STRIKE IN RBEERENCH

TO THE THIRD AMENDED COMPLAINTOM MSN & SR ow oe

RBM wR wie Bw NM Ww bet om = me
aoe EB BRE R REESE Soe

WENDEL, ROSEN, BLACK & DEAN, LLP

By:
Peter Laufenberg

Counsel for Mission Place, LLC; Mission
Place Mezzanine LLC, Mission Place Mezz
Holdings, LC; Mission Place Partners LLC;
Centurion Real Estate Investors TV, LLC and
Centurion Real Estate Partners, LLC

ROBLES, CASTLE &

By
Richard Young (
Counsel for Skidmore, O ings & Merrill, LLP

SCHWARTZ & JANZEN

By;
Steven Schwariz
Counsel for HKS Architecis, Inc.
And for HES, Ine,

SELLAR HAZARD MANNING PICENEC &
LUCIA

By:

Denae M. Olivieri

Counsel for Cupertino Electric, lnc; Creative
Masonry, Inc; Carefres Toland Pools, Inc.; JW.
MeClenahan, Inc.; Van-Mulder Sheet Metal, Inc:
N.V, Heathorn, Inc; Critchfield Mechanical, ine,
Blue's Roofing Company; West Const Protective
Coatings, Inc; Allied Fire Protection; F, Rodgers
Cotporation and Western Roofing Service

Page 9
ORDER RE DEMURRERS AND MOTIONS TO STRIKE IN REFERENCE
TO THR THIRD AMENDED COMPLAINTOo ON DM FB WN wm

BW BW WwW NM YN YY YN YN Qe om Re ee Re Re eR Se
One FDO eA AA PON se SOSH IA DAA ROR = S

PROOF OF SERVICE

1am a resident of the State of California, over the age of eighteen years, and not a party

to the within action. My business address is Robles, Castles & Meredith LLP, 492 Ninth St.,
Suite 200, Oakland, CA, 94607. On September 23, 2014, | served the following documents:

SKIDMORE, OWINGS & MERRILL LLP’S REPLY RE ITS RENEWED MOTION TO STRIKE

PORTIONS OF PLAINTIFF’S THIRD AMENDED COMPLAINT

C

Xpress service list.

By transmitting on this date before 5:00 p.m. via File and Serve Xpress the
document(s) listed above to all parties/attorneys listed on the File and Serve

I declare under penalty of perjury under the laws of the State of California that the
above is true and correct and that this declaration is executed on September 23, 2014 at

Oakland , California.

Richard C. Young

SERVICE LIST

Ann Rankin, Esq.

Terry Wil Kens, Esq.

LAW OFFICES OF ANN RANKIN
3911 Harrison St

Oakland, CA 94611-4536

Phone Number (510) 653-8886
Fax Number (510) 653-8889
arankin@annrankin.com
twilkens@annrankin.com

Attorneys for Plaintiff BEACON
RESIDENTIAL COMMUNITY
ASSOCIATION

Kenneth Katzoff

Sung E Shim, Esq.

KATZOFF & RIGGS

1500 Park Ave #300
Emeryville, CA 94608

Phone Number (510) 597-1990
Fax Number (510) 597-0295
kkatzoff@katzoffriggs.com

sshim@katzoffriggs.com

Attorneys for Plaintiff BEACON
RESIDENTIAL COMMUNITY
ASSOCIATION

Charles A Hansen, Esq.

WENDEL, ROSEN, [BLACK & DEAN

4111 Broadway, 24" Floor

Oakland, CA 94607-4036

(510) 834-6600/FAX (510) 834-1928
laufenbera@wendel.com

GJung@wendel.com

Attorneys for Defendants MISSION
PLACE LLC; CENTURION REAL
ESTATE PARTNERS, LLC; MISSION
PLACE MEZZ HOLDINGS LLC,
erroneously named as MISSION PLACE
HOLDINGS LLC; MISSION PLACE
MEZZANINE, LLC; and MISSION PLACE

PARTNERS, LLC.

Steven M. Cvitanovic, Esq.
HAIGHT, BROWN & BONESTEEL
71 Stevenson Street, 20th Floor
San Francisco, CA 94105-2981
(415) 546-7500/FAX (415) 546-7505

scvitanovic@hbblaw.com

Co-Counsel for Defendants MISSION
PLACE LLC; CENTURION REAL
ESTATE PARTNERS, LLC; MISSION
PLACE MEZZ HOLDINGS LLC,
erroneously named as MISSION PLACE
HOLDINGS LLC; MISSION PLACE
MEZZANINE, LLC; and MISSION PLACE
PARTNERS, LLC.

1

SOM's REPLY RE [TS RENEWED MOTION TO STRIKE PORTIONS OF PLAINTIFF'S TACDo ONY AH Bw NY

ww BW WHY NN YN YN NN De ee Re RR
On FSS eA KDA BOSH |= Soe w~HIY AA FE wYHN eS SS

John A. Koeppel, Esq.

Devin C Courteau, Esq.

Kathleen Strickland, Esq.

ROPERS, MAJESKI, KOHN & BENTLEY
PC

150 Spear Street, Suite 850

San Francisco, CA 94105

Office: (415) 543-4800

Fax: (415) 972-