J-CM Services, Inc. vs. Duran

As such, the individual sought to be liable must have been “personally involved” in the alleged violations or have had “sufficient participation in the activities of the employer” such that the individual contributed to the alleged violations. (See Usher v. White (2021) 64 Cal.App.5th 883 [affirming grant of summary judgment where the undisputed facts showed the individual owner not participate in the decision of the business to classify plaintiffs as independent contractors, which classification was the basis of plaintiff’s claims].)

Here, the Complaint alleges insufficient facts (as opposed to conclusory allegations) to support personal liability against Moving Defendants Garrett White and Danielle White. The Complaint merely identifies the two defendants in a couple of paragraphs (Compl., ¶¶ 1 and 10) and then requests relief against them (Compl., p. 15 [Prayer for Relief].) The paragraphs in the Complaint merely alleges in conclusory fashion that the individual defendants are and were at all relevant times, officers, owners, directors, and/or managing agents of Defendants and are personally liable for violations of Labor Code. (Compl., ¶ 10.) “Bare conclusions devoid of any supporting facts ... are insufficient to withstand demurrer.” (Schmid v. City and County of San Francisco (2021) 60 Cal.App.5th 470, 481.)

As such, the court SUSTAINS Moving Defendants’ demurrer to the fifth and eighth causes of action, with 20 days leave to amend.

Moving Defendants to give notice.

16 J-CM Services, Inc. Demurrer vs. Duran The court SUSTAINS in part, and OVERRULES in part, the demurrer filed by Defendants ALL INCLUSIVE ENVIRONMENTAL SERVICES, INC. (“AIES”), RUBEN DURAN and CHRISTOPHER WERNICKE to the Complaint filed by Plaintiff J-CM SERVICES, INC. The court GRANTS 15 days leave to amend to address the deficiencies noted below.

The Complaint contains the following causes of action against all named defendants:

(1) Breach of contract (2) Negligent misrepresentation (3) Intentional misrepresentation (4) Improper licensing in violation of Bus. & Prof. Code § 7031 (5) Unfair competition (Bus. & Prof. Code, § 17200) (6) Constructive fraud (7) Negligence (8) Declaratory relief

Defendants argue that (1) Orange County is an improper venue for this action and (2) the fraud claims are barred by the economic loss rule.

Venue

Venue is not a statutory basis for demurrer, nor an element of any claim. Code of Civil Procedure section 430.10 lists the objections which may be raised by demurrer and no reference to venue is included therein.

In arguing that venue is appropriately raised on demurrer, Defendants cite Douglas v. Donner Pines, Inc. (1977) 73 Cal.App.3d 268. The court in Douglas affirmed an order sustaining a demurrer against an action to foreclose on a mechanic’s lien, on the basis the claim was not initiated within 90 days after recording, in “a proper court.” (Id. at 270.) However, in doing so, the court relied on the language of former Civil Code section 3144, which then stated: “No lien provided for in this chapter binds any property for a longer period of time than 90 days after the recording of the claim of lien, unless within that time an action to foreclose the lien is commenced in a proper court....” (Id. at 271.)

Civil Code section 3144 was replaced in 2012 by Civil Code section 8460. While Section 8460 still requires a claimant “commence an action to enforce a lien within 90 days after recordation of the claim of lien,” to avoid expiration and unenforceability, it makes no reference to a “proper court.” (Civ. Code, § 8460(a).) In other words, Douglas

enforced a statutory prerequisite for a foreclosure claim that no longer exists. Based on then-existing law, the identified lien was unenforceable and the complaint failed to “state facts sufficient to constitute a cause of action.” (Code Civ. Proc., § 430.10(e).)

Douglas does not identify a current failing in the pleading, given that Civil Code section 8460 makes no references to a “proper court.”

Therefore, the court OVERRULES the demurrer based on a venue argument.

Similarly, to any extent Defendant intended to invoke Code of Civil Procedure section 430.10(a) – not cited in the demurrer, the argument likewise fails as “commencing the action in a county where the real property is located is now a rule of venue and no longer a jurisdictional requirement.” (Douglas v. Donner Pines, Inc. (1977) 73 Cal.App.3d 268, 271.) Stated similarly, “the place of filing an action affecting real property involves questions of venue only, not jurisdiction.” (Nelson v. Crocker Nat. Bank (1975) 51 Cal.App.3d 536, 540.)

Economic Loss Rule

Defendants next demur to Plaintiff’s “fraud” claims based on the contractual economic loss rule. “[T]he rule functions to bar claims in negligence for pure economic losses in deference to a contract between litigating parties.” (Sheen v. Wells Fargo Bank, N.A. (2022) 12 Cal.5th 905, 922.) “[T]here is no liability in tort for economic loss caused by negligence in the performance or negotiation of a contract between the parties.” (Id. at 923.)

“Not all tort claims for monetary losses between contractual parties are barred by the economic loss rule. But such claims are barred when they arise from – or are not independent of - the parties’ underlying contracts.” (Sheen v. Wells Fargo Bank, N.A. (2022) 12 Cal.5th 905, 923.)

Citing only the general principle that “a party cannot recover tort damages for purely economic losses arising from a contract dispute absent an independent duty owed outside the contractual relationship,” Defendants assert the Second, Third, Sixth and Seventh Causes of Action are all barred by the economic loss rule. (See Demurrer at p. 4, lines 16-18 [citing Robinson Helicopter Co., Inc. v. Dana Corp. (2004) 34 Cal.4th 979], and p. 4, lines 25-28.) Three of the identified four claims, include three separate counts (See Second, Third and Seventh Causes of Action.) Consequently, the demurrer appears to challenge ten separate claims.

Defendants challenge these claims, asserting they all arise from contractual obligations. Per the Complaint, “[u]nder the Subcontract, Defendants were required to maintain a valid contractor’s license and sufficient insurance for the duration of construction work.” (Compl., ¶ 43. See also Compl., ¶16.)

Given the above, Defendants are correct in stating the following claims arise from contractual duties: Second Cause of Action (Count 1) [¶ 58]; Second Cause of Action (Count 3) [¶ 83]; Third Cause of Action (Count 1) [¶ 99]; Third Cause of Action (Count 3) [¶ 125]; and Seventh Cause of Action (Count 1) [¶ 169].

With respect to the above claims, Plaintiff alleges Defendants misrepresented during contract negotiations that they would maintain insurance and a valid license – representations which are directly connected to contractual obligations. (See Compl., ¶¶ 58, 83, 99, 125 and 169.)

Similarly, per the Complaint “Defendants agreed to provide non-hazardous remediation services....” (Compl., ¶ 15.) Consequently, the claim asserting “Defendants breached their standard of care by improperly disposing of nonhazardous soil,” arises directly from a contractual obligation. (Compl., ¶ 180 [Seventh Cause of Action [Count 3].)

In responding to the demurrer, Plaintiff argues the following: “[C]ourts will generally enforce the breach of a

contractual promise through contract law, except when the actions that constitute the breach violate a social policy that merits the imposition of tort remedies.” (Robinson Helicopter Co., Inc. v. Dana Corp. (2004) 34 Cal.4th 979, 992.) The Court in Robinson held “the economic loss rule does not bar Robinson’s fraud and intentional misrepresentation claims because they were independent of Dana’s breach of contract.” (Id. at 991.) The Court also further explained, “Our holding today is narrow in scope and limited to a defendant’s affirmative misrepresentations on which a plaintiff relies and which exposes a plaintiff to liability for personal damages independent of the plaintiff’s economic loss.” (Id. at 993.)

This stated exception applies to only some of the claims challenged by Defendants. In particular, the exception based on intentional misrepresentation applies solely to Counts 1 and 3, within the Third Cause of Action, to which the Demurrer is OVERRULED.

As Plaintiff has not identified an applicable exception to claims for negligence, the Demurrer is SUSTAINED as to the Second Cause of Action (Count 1), Second Cause of Action (Count 3), Seventh Cause of Action (Count 1) and Seventh Cause of Action (Count 3).

With respect to the remaining counts for negligent misrepresentation, fraudulent misrepresentation and negligence, not addressed above, it is not clear the claims arise from contractual obligations, as asserted by Defendants within the Demurrer.

Within these remaining claims Plaintiff alleges Defendants “represented they possessed valid and sufficient grounds to assert the Lien and Stop payment notice,” when recording and serving the same. (Compl., ¶¶ 70-71 [Second Cause of Action (Count 2)] and (Compl., ¶¶ 112-113 [Third Cause of Action (Count 2).) Additionally, Plaintiff alleges Defendants “breached their standard of care by serving an invalid and improper Stop payment notice and recording an invalid and improper mechanics lien.” (Compl., ¶175 [Seventh Cause of Action [Count 2)].)

While the above claims are connected to the relationship established following contract formation, Defendants’ assertions the claims “relate directly to contractual performance and compliance with contractual obligations” and “[n]o independent duty exists beyond the contract” (Demurrer: 5:5-7), have not been sufficiently supported by reference to contractual provisions or law.

Essentially, Defendants have not established that the obligation to refrain from recording an improper lien (as alleged above) is purely contractual.

Thus, the demurrer directed at the above counts (i.e. Second Cause of Action (Count 2), Third Cause of Action (Count 2) and Seventh Cause of Action (Count 2)) is OVERRULED.

As to the Sixth Cause of Action for Constructive Fraud the same alleges “[b]y virtue of their relationship, Defendant owed Plaintiff duties of utmost good faith, full disclosure, and fair dealing in all matters pertaining to said relationship.” (Compl., ¶ 158.)

While labelled a claim for “constructive fraud,” the allegations suggests the claim is actually a contractual claim for breach of the implied covenant of good faith: “The covenant of good faith and fair dealing, implied by law in every contract, exists merely to prevent one contracting party from unfairly frustrating the other party’s right to receive the benefits of the agreement actually made.” (Durell v. Sharp Healthcare (2010) 183 Cal.App.4th 1350, 1369.) As explained by the court in Careau & Co. v.

Security Pacific Business Credit, Inc. (1990) 222 Cal.App.3d 1371, “When a court enforces the implied covenant it is in essence acting to protect ‘the interest in having promises performed’...This is the traditional function of a contract action. (Id. at 1394.) Further, the court explained that “it is clear to us that the recognition of a tort remedy for a breach of the implied covenant in a noninsurance contract has little authoritative support.” (Id. at 1399.)

Necessarily, the economic loss rule does not apply to bar additional contract claims and, consequently, the demurrer to the Sixth Cause of Action is OVERRULED.

Defendants to give notice.

Upcoming CMC & OSC

In light of Defendants’ response to the Complaint (i.e., the above-discussed demurrer), the court DISCHARGES the Order to Show Cause set for 8/31/26.

As the action is not yet at-issue, the court CONTINUES the Case Management Conference to December 7, 2026, at 10:00 am in Dept. W8.

All appearing parties SHALL file and serve a new timely case management statement at least 15 calendar days prior to the continued hearing as required by the rules, including California Rules of Court rule 3.725 and Local Rule 369.

Plaintiff to give notice.

17 Cannon vs. Crown Demurrer Point Condos No. 2 The court SUSTAINS in part, and OVERRULES in part, Defendants CROWN POINT CONDOS NO. 2, SHERRI CHAPMAN and CHAD BRUNOCHELLI’s demurrer to Plaintiff CINDY CANNON’S First Amended Complaint (“FAC”).

Specifically, the court SUSTAINS the demurrer to the first, fourth, eighth, nineth and tenth causes of action, and OVERRULES the demurrer to the fifth cause of action (cancellation of instrument). Plaintiff is granted 15 days leave to amend as to the first and fourth causes of action only.

The FAC asserts the following causes of action:

1. Preliminary and permanent injunctions 2. Breach of fiduciary duty 3. Fraudulent concealment 4. Quiet title

27