SALAD COSMO U.S.A. CORPORATION vs. KLIPPENSTEIN CORPORATION

Case No. CU23-02985

FANUC’s Demurrer to KLIPPENSTEIN’s First Amended Cross-Complaint

Cross-Defendant FANUC AMERICA CORPORATION (“FANUC”) demurs to Cross- Complainant KLIPPENSTEIN CORPORATION’s first amended cross-complaint (“KLIPPENSTEIN 1AXC”) alleging causes of action for indemnity, contribution, declaratory relief, breach of express warranty, breach of the implied warranty of merchantability, and breach of the implied warranty of fitness for a particular purpose. KLIPPENSTEIN alleges that it purchased robots from FANUC under particular performance guarantees; when KLIPPENSTEIN installed those robots for its customer Plaintiff SALAD COSMO U.S.A. CORPORATION (“SALAD COSMO”) those robots did not meet those performance guarantees, resulting in SALAD COSMO suing KLIPPENSTEIN on contract and warranty claims.

Legal Standard on Demurrer. “The function of a demurrer is to test the sufficiency of the complaint as a matter of law.” (Holiday Matinee, Inc. v. Rambus, Inc. (2004) 118 Cal.App.4th 1413, 1420.) A complaint must allege facts sufficient to establish every element of each cause of action. (Rakestraw v. California Physicians’ Service (2000) 81 Cal.App.4th 39, 43.) A complaint is sufficient if it alleges ultimate rather than evidentiary facts, but the plaintiff must set forth the essential facts of his or her case “with reasonable precision and with particularity sufficient to acquaint [the] defendant with the nature, source and extent” of the plaintiff’s claim. (Doheny Park Terrace Homeowners Assn., Inc. v.

Truck Ins. Exchange (2005) 132 Cal.App.4th 1076, 1099.) Legal conclusions are insufficient. (Id. at 1098–1099; Doe v. City of Los Angeles (2007) 42 Cal.4th 531, 551, fn. 5 [ultimate facts sufficient].) The Court “assume[s] the truth of the allegations in the complaint, but do[es] not assume the truth of contentions, deductions, or conclusions of law.” (California Logistics, Inc. v. State of California (2008) 161 Cal.App.4th 242, 247.)

Judicial Notice. Matters subject to judicial notice may support a demurrer under Code of Civil Procedure section 430.30, subdivision (a). A court may take judicial notice of a legally operative document such as a contract, including notice of the fact of the document and facts that clearly derive from its legal effect, as not reasonably subject to dispute per Evidence Code section 452, subdivision (h). (Scott v. JPMorgan Chase Bank, N.A. (2013) 214 Cal.App.4th 743, 753-754.)

The court takes judicial notice of the sales contract between FANUC and KLIPPENSTEIN for the robots at issue. KLIPPENSTEIN expressly refers to the sales contract in the first amended cross-complaint at paragraphs 28, 36, and 44, making the contract relevant to resolution of this demurrer. However, judicial notice of the contract does not include judicial notice of the concept that the sales contract expresses the only

warranty FANUC provided to KLIPPENSTEIN as that is a factual matter open to dispute.

Equitable Indemnity; Contribution. Implied contractual indemnity is a form of equitable indemnity. (Bay Development, Ltd. v. Superior Court (1990) 50 Cal.3d 1012, 1029-1030.) However, implied contractual indemnity arises from contractual terms not specifically mentioning indemnity, and so of course depends on a contract, not the principles of tort law. (Prince v. Pacific Gas & Electric Co. (2009) 45 Cal.4th 1151, 1167 [implied contractual indemnity grounded upon indemnitor’s failure to properly perform contractual duties owed to indemnitee].) Thus, KLIPPENSTEIN needs to plead contract terms and breaches impliedly giving rise to indemnity rather than the concepts of tort law presently found in the KLIPPENSTEIN 1AXC. (See KLIPPENSTEIN 1AXC at ¶¶ 20, 22 [stating tort doctrines supporting equitable indemnity].)

Contribution is solely a tort doctrine and has no application to a contract action. (State Ready Mix, Inc. v. Moffatt & Nichol (2015) 232 Cal.App.4th 1227, 1231.) KLIPPENSTEIN’s claim for contribution is inapposite here.

Declaratory Relief. Declaratory relief is an equitable remedy enabling a court to adjudicate the legal rights and duties of parties when there is an actual controversy relating to those legal rights. (East Bay Municipal Utility District v. Cal. Dept. of Foresty and Fire Protection (1996) 43 Cal.App.4th 1113, 1121.) The purpose of a judicial declaration of rights is to enable parties to shape their conduct so as to avoid further dispute; thus, declaratory relief operates prospectively and not merely for redress of past wrongs. (Babb v.

Superior Court (1971) 3 Cal.3d 841, 848.) When a cause of action has accrued and matured into a claim for damages, a cause of action for declaratory relief is redundant. KLIPPENSTEIN’s declaratory relief cause of action is duplicative of its claim for indemnification, which has accrued and matured in that SALAD COSMO has already initiated a civil action against KLIPPENSTEIN asserting its liability.

Warranty Claims. To plead a cause of action for breach of express warranty a plaintiff must allege that (1) a seller made statements constituting an affirmation of fact or promise or a description of goods, (2) the statements were part of the basis of the bargain, and (3) the warranty was breached. (Dagher v. Ford Motor Co. (2015) 238 Cal.App.4th 905, 928; Weinstat v. Dentsply International (2010) 180 Cal.App.4th 1213, 1227 (Weinstat); Cal. U. Comm. Code, § 2313; CACI 1230.) No particular reliance on the seller’s part is necessary. (Weinstat at p. 1227.)

Per Fundin v. Chicago Pneumatic Tool Co. (1984) 152 Cal.App.3d 951 (Fundin) and Uniform Commercial Code section 2316 express warranties and words limiting or negating a warranty shall be construed as operative whenever reasonable and consistent but limitations and negations shall be considered inoperative if unreasonable. In Fundin a sales brochure warranted particular drill performance specifications and simultaneously disclaimed all warranties but the drill maker’s standard warranty; in these circumstances it was unreasonable to disregard the performance specifications

because for all the consumer knew those specifications were the standard warranty. (Id. at p. 958.) “Strict construction against the person who has both warrantied a particular fact to be true and then attempted to disclaim the warranty is especially appropriate in light of the fact that ‘[A] disclaimer of an express warranty is essentially contradictory...’” (Ibid. [citing 2 Witkin, Summary of Cal. Law (8th ed. 1973) Sales, § 74].)

The sales contract between the parties contains an express warranty that the robots will be free of defects in material or workmanship for one year and that FANUC will repair the robots if they are found defective in that year. The sales contract also contains a disclaimer of all other warranties than the one expressly stated. However, KLIPPENSTEIN alleges that FANUC provided it with express warranties from a few sources other than the sales contract: written materials, product descriptions, and oral representations. (KLIPPENSTEIN 1AXC at ¶ 31.)

If any of these representations contained an express warranty of performance specifications it would be unreasonable to then hold effective the sales contract’s disclaimer of all other warranties – if the sales contract’s disclaimer is even contradictory. A promise of particular performance capabilities does not necessarily conflict with a guarantee that the product will be free of material or workmanship defects. The fact that in Fundin the guarantee and disclaimer were in the same document is not a meaningful point of distinction from the instant case.

If FANUC induced the sale of the robots by guarantees of particular performance outside of the terms of the sales contract it would be unreasonable to hold that the sales contract’s guarantee of freedom from defects of material or workmanship excludes those previous guarantees.

However, KLIPPENSTEIN’s allegations of other warranties from FANUC lack specificity. KLIPPENSTEIN alleges that the robots did not perform up to specifications but does not allege where and how those specifications were given in other than conclusory terms of “written materials, product descriptions, and oral representations.” (KLIPPENSTEIN 1AXC at ¶ 31.) The pleading and judicially noticeable material presently show only the guarantee found in the sales contract. Further, the sales contract warranty states that FANUC will repair the robots if they are found to be defective, and such repair is KLIPPENSTEIN’s only remedy for a breach of the sales contract warranty.

KLIPPENSTEIN alleges that the robots have been repaired and now function according to SALAD COSMO’s satisfaction. (KLIPPENSTEIN 1AXC at ¶ 15.) This allegation is not a statement of an alternative legal theory but rather a statement of fact that contradicts the claim of breach of warranty. Without facts showing other warranties by FANUC and breaches thereof the face of the pleading does not sufficiently state a claim for breach of express or implied warranty.

Leave to Amend. Leave to amend is proper where identified defects are amenable to cure. (Vaccaro v. Kaiman (1998) 63 Cal.App.4th 761, 768.) The court finds that the identified defects with the indemnity and warranty causes of action are amenable to cure.

Conclusion. FANUC’s demurrer is sustained without leave to amend with regard to the causes of action for contribution and declaratory relief. FANUC’s demurrer is sustained with leave to amend with regard to all other causes of action.

JESSE MORRIS vs. TREVOR BARLETT; ET AL.