RGH CONSTRUCTION LLC v. SPEVAK

4 Ms. Spevak brings her cross-complaint in both her individual capacity and in her

capacity as trustee of the Kristen Spevak Revocable Trust.

LAW AND MOTION CALENDAR MAY 1, 2026

misrepresented that the Project was being carried out in the proper manner.” (FAXC,

¶ 2.) “By way of example, ... Cross-Defendants intentionally misrepresented the days

and times Cross-Defendants worked at the Project in an attempt to inflate bills for time

worked at the Project; provided knowingly false and inaccurate timelines with respect to

various construction stages of the Project and their associated costs in an attempt to

secure continued business with Cross-Complainants; and provided knowingly false and

inaccurate statements to Cross-Complainants about the progress of the Project at

several different stages of the Project.” (FAXC, ¶ 43.)

2. Legal Principles

“[A] demurrer challenges only the legal sufficiency of the complaint, not the truth or

the accuracy of its factual allegations or the plaintiff’s ability to prove those allegations.”

(Amarel v. Connell (1998) 202 Cal.App.3d 137, 140.) A demurrer is directed at the face of

the complaint and to matters subject to judicial notice. (Code Civ. Proc., § 430.30,

subd. (a).) All properly pleaded allegations of fact in the complaint are accepted as true,

however improbable they may be, but not the contentions, deductions or conclusions of

fact or law. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318; Del E. Webb Corp. v. Structural

Materials Co. (1981) 123 Cal.App.3d 593, 604.) A judge gives “the complaint a

reasonable interpretation, reading it as a whole and its parts in their context.” (Blank,

supra, 39 Cal.3d at p. 318.)

3. Discussion

3.1. Third C/A for Negligence

“Actionable negligence involves a legal duty to use due care, a breach of such legal

duty, and the breach as the proximate or legal cause of the resulting injury.” (United

States Liab. Ins. Co. v. Haidinger-Hayes, Inc. (1970) 1 Cal.3d 586, 594.)

Cross-defendants argue that the negligence cause of action is barred by the

economic loss rule. Economic loss consists of “ ‘ “ ‘damages for inadequate value, costs

of repair and replacement of the defective product or consequent loss of profits—

LAW AND MOTION CALENDAR MAY 1, 2026

without any claim of personal injury or damages to other property....’ ” ’ [Citation.]”

(Jimenez v. Superior Court (2002) 29 Cal.4th 473, 482 (emphasis added).) “The economic

loss rule requires a purchaser to recover in contract for purely economic loss due to

disappointed expectations, unless he can demonstrate harm above and beyond a

broken contractual promise.” (Robinson Helicopter Co. v. Dana Corp. (2004) 34 Cal.4th

979, 988.)

Cross-complainant counters that the FAXC alleges damage at the property as a result

of the pipe burst. (Opp. at 4:11–19, citing FAXC, ¶ 13.) Assuming that cross-complainant

alleges the damage was caused to other property beyond the scope of work provided

for in the parties’ contract, the court would agree that the economic loss rule does not

bar this negligence claim. However, the FAXC is not clear on that point. It alleges that

the pipe burst caused damage “at the property.” Therefore, the court will sustain the

demurrer to this cause of action with leave to amend.

3.2. Fourth C/A for Fraudulent Concealment or Misrepresentation

“The elements of fraud that will give rise to a tort action for deceit are:

‘(a) misrepresentation (false representation, concealment, or nondisclosure);

(b) knowledge of falsity (or ‘scienter’); (c) intent to defraud, i.e., to induce reliance;

(d) justifiable reliance; and (e) resulting damage.’ ” (Engalla v. Permanente Medical

Group, Inc. (1997) 15 Cal.4th 951, 974 (internal quotation marks omitted).) In California,

fraud must be pled specifically; general and conclusory allegations do not suffice.

[Citations.]” (Lazar v. Superior Court (1996) 12 Cal.4th 631, 645.) Moreover, “[t]he

requirement of specificity in a fraud action against a corporation requires the plaintiff to

allege the names of the persons who made the allegedly fraudulent representations,

their authority to speak, to whom they spoke, what they said or wrote, and when it was

said or written. [Citations.]” (Tarmann v. State Farm Mut. Auto. Ins. Co. (1991) 2

Cal.App.4th 153, 157.)

LAW AND MOTION CALENDAR MAY 1, 2026

Here, cross-complainants’ allegations of misrepresentation are not pleaded with the

required specificity.

The court rejects cross-defendants’ argument that the FAXC fails to allege the

required element of intent to defraud. The FAXC alleges cross-defendants made the

alleged misrepresentations to inflate bills and secure continued business with cross-

complainants. (FAXC, ¶ 43.)

Because the fourth cause of action is not pleaded with the required specificity, the

court sustains the demurrer with leave to amend.

TENTATIVE RULING # 7: THE DEMURRER IS SUSTAINED WITH LEAVE TO AMEND. NO

HEARING ON THIS MATTER WILL BE HELD (LEWIS v. SUPERIOR COURT (1999) 19

CAL.4TH 1232, 1247), UNLESS A NOTICE OF INTENT TO APPEAR AND REQUEST FOR

ORAL ARGUMENT IS TRANSMITTED ELECTRONICALLY THROUGH THE COURT’S

WEBSITE OR BY TELEPHONE TO THE COURT AT (530) 573-3042 BY 4:00 P.M. ON THE

DAY THE TENTATIVE RULING IS ISSUED. NOTICE TO ALL PARTIES OF AN INTENT TO

APPEAR MUST BE MADE BY TELEPHONE OR IN PERSON. PROOF OF SERVICE OF SAID

NOTICE MUST BE FILED PRIOR TO OR AT THE HEARING.