State Ready Mix, Inc. v. Moffatt & Nichol ( 2015 )

Filed 1/8/15
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION SIX
STATE READY MIX, INC., 2d Civil No. B253421
(Super. Ct. No. 56-2012-00423313-CU-BC-
VTA)
Cross-Complainant and Appellant, (Ventura County)
v.
MOFFATT & NICHOL,
Cross-Defendant and Respondent.
Mixing concrete, like baking a cake, is fraught with problems when the
recipe is not followed. Here, concrete supplier, State Ready Mix, Inc. (State), wrote
the concrete mix design (the recipe) and prepared a bad batch of concrete that was
used to construct a harbor pier. State blames the bad concrete on the civil engineer
who drafted the pier plans and helped the general contractor by gratuitously reviewing
State's concrete mix design. In the words of Clare Boothe Luce, "No good deed goes
unpunished." (See Wright v. Beverly Fabrics, Inc. (2002) 95 Cal.App.4th 346, 348.)
When State was sued to recoup the cost of replacing the concrete, it filed
a cross-complaint for equitable indemnity and contribution against the civil engineer,
Moffatt & Nichol (Moffatt). The trial court sustained, without leave to amend,
Moffatt's demurrer to the second amended cross-complaint. State appeals. We affirm
and conclude the cross-complaint is barred by the economic loss rule. (Aas v. Superior
Court (2000) 24 Cal.4th 627, 643.) State cannot seek equitable indemnity or
contribution for damages caused by the breach of its own contract. (Stop Loss Ins.
Brokers, Inc. v. Brown & Toland Medical Group (2006) 143 Cal.App.4th 1036, 1041-
1044 (Stop Loss).)
Facts and Procedural History
In 2012, Bellingham Marine, Inc. (Bellingham), a marine project
manager, hired Major Engineering Marine, Inc. (Major) to construct a travel lift pier at
the Channel Islands Harbor. Bellingham hired Moffatt, a civil engineering firm, to
prepare the plans for the pier. The plans required that the concrete have an air
entrainment of two to four percent and that the concrete, when cured, attain a
compressive strength of 5,000 PSI in 28 days. Major's contract with Bellingham
provided that if the concrete failed to meet the 5000 PSI compression strength
standard, that it would be removed and replaced at Major's expense.
After Major hired State to supply the concrete, State submitted a
concrete mix design (Mix Design SR5ORD) stating that Micro-Air (an air entrainment
chemical) would be added to each batch of concrete.1 Moffatt, at the request of
Major, reviewed and approved Mix Design SR5ORD It was not part of Moffatt's job
duties.
On February 14, 2012, State delivered seven truck loads of wet pre-
mixed concrete to the project site. After the concrete was cast, Major's testing lab
took a sample that showed the concrete had a compressive strength of only 3,650 PSI
at 28 days.
Major asked State to investigate. In a March 9, 2012 email, State's
technical advisor reported: "The day of the pour, 2-14-2012, State Ready Mix
encountered a mechanical failure in their chemical dispensing equipment and had to
manually add the 'Air Entrainment' chemical into the trucks. There was an error in the
1Mico-Air is an air-entraining admixture used to increase the concrete's workability.
Too much entrained-air (micro air bubbles) can significantly reduce the structural
compressive strength of concrete.
2
calculations and the chemical was over dosed. This is the reason for the lower
compressive strengths."2 Major determined that the micro-air admixture was 6.5
times greater than the amount necessary to attain the air-entrainment specified in the
plans.
Major demolished and rebuilt the affected portion of the pier. It sued
for the money spent to remove and replace the defective concrete based on contract
and warranty theories. State filed a cross-complaint for implied equitable indemnity
and contribution, alleging that Moffatt failed to use reasonable care in reviewing and
approving Mix Design SR5ORD. After three pleading attempts, the trial court
sustained Moffatt's demurrer without leave to amend because Moffatt was not in
privity of contract with Major or State and because the cross-complaint was barred by
the economic loss rule.
Indemnification
The trial court correctly ruled that State could not sue for equitable
indemnity or contribution. No facts are alleged that Moffatt owed State "a duty of care
sounding in tort." (Stop Loss Ins., supra, 143 Cal.App.4th, at p. 1041.) Nor can State
sue for equitable indemnification based on the theory that Moffatt negligently
performed its contract with Bellingham. (Id., at pp. 1042-1043.) "[C]onduct
amounting to a breach of contract becomes tortious only when it also violates a duty
independent of the contract arising from principles of tort law. [Citation.] ' " ' An
2 State argues that the email, which is a smoking gun, (see Maureen K. v. Tuschka
(2013) 215 Cal.App.4th 519, 524, fn. 4 [defining "smoking gun"] should not be
considered because it is hearsay and lacks foundation. The email is quoted in Major's
complaint and attached to the complaint. State's cross-complaint incorporates by
reference Major's complaint which makes the email part of the pleading. (See Holly
Sugar Corp. v. Johnson (1941) 18 Cal.2d 218, 225-226; 4 Witkin, Cal. Procedure (5th
ed. 2008) Pleading, § 434, pp. 567-568.) If the allegations in State's cross- complaint
are inconsistent with an incorporated writing, the written instrument controls. (Fundin
v. Chicago Pneumatic Tool Co. (1984) 152 Cal.App.3d 951, 955.)
3
omission to perform a contract obligation is never a tort, unless that omission is also an
omission of a legal duty.' " ' [Citation.]" (Erlich v. Menezes (1999) 21 Cal.4th 543,
551, italics added.)
In BFGC Architects Planners, Inc. v. Forcum/Mackey Construction, Inc.
(2004) 119 Cal.App.4th 848 (BFGC), the project owner (a school district) sued its
architect for breach of contract and professional negligence that caused $4 million in
extra project costs. Architect filed a cross-complaint for equitable indemnity against
the general contractors, alleging that they negligently failed to comply with the terms
of their contracts with the school district. The Court of Appeal held that the no
cognizable claim for equitable indemnity was stated. "The only allegations of
defendants' misconduct are based on their alleged breach of contract . . . . This is an
improper attempt to recast a breach of contract cause of action as a tort claim. Nor is
there any social policy that would demand resort to tort remedies. Without any action
sounding in tort, there is no basis for a finding of potential joint and several liability on
the part of defendants, thereby precluding a claim for equitable indemnity." (Id., at
p. 853.)
The same principle applies here. State cannot recast Major's complaint
for breach of contract/breach of warranty as a tort action. "A person may not
ordinarily recover in tort for the breach of duties that merely restate contractual
obligations." (Aas v. Superior Court, supra, 24 Cal.4th at p. 643 (Aas).) In Aas,
homeowners sued the developer, contractor, and subcontractors in negligence for
construct defects that caused no property damage. Our Supreme Court held that the
economic loss rule precludes recovery for damages such as "the difference between
price paid and value received, and deviations from standards of quality that have not
resulted in property damage or personal injury." (Id., at p. 636.)
"Simply stated, the economic loss rule provides: ' " '[W]hen a
purchaser's expectations in a sale are frustrated because the product he bought is not
working properly, his remedy is said to be in contract alone, for he has suffered only
"economic" losses.' " This doctrine hinges on a distinction drawn between transactions
4
involving the commercial and contract law, and those involving the sale of defective
products to individual consumers who are injured in a manner which has traditionally
been remedied by resort to the law of torts' [Citation.]" (Robinson Helicoper Co., Inc.
v. Dana Corp. (2004) 34 Cal.4th 979, 988.)
Like Aas, the economic loss rule bars State's cross-complaint because
Moffatt has no contractual relationship with State or Major and no facts are alleged
that the concrete injured a person or damaged other property. (See e.g., Fieldstone Co.
v. Briggs Plumbing Products, Inc. (1997) 54 Cal.App.4th 357, 367-368 [developer
could not sue manufacturers of defective sinks for equitable indemnity or contribution;
no privity of contract.)
Implied Contract - Promissory Estoppel
State argues that Moffatt, at Major's request, reviewed and approved the
mix design which created an "implied contract" between Major and Moffatt. We
address this theoretical claim even though it may be inapposite. 3 The concrete mix
design (written by State who was a concrete designer and supplier) called for adding
32 times more Micro-Air than the manufacturer recommended, increasing the risk that
the concrete would not achieve a 5000 PSI compressive strength. The second
amended cross-complaint alleges that Moffatt should have known that using large
amounts of the air-entrainment admixture would result in the loss of compressive
strength. Invoking the doctrine of promissory estoppel, State argues that Moffatt
"promised" the amount of Mico-Air in the concrete mix design would work.
A promissory estoppel claim generally entitles a plaintiff to the same
damages available on a breach of contract claim. (Aceves v. U.S. Bank, N.A. (2011)
192 Cal.App.4th 218, 231.) "The elements of promissory estoppel are (1) a clear
promise, (2) reliance, (3) substantial detriment, and (4) damages 'measured by the
3As indicated (Ante at p. 3) State did not follow any mix-designed ratio. After its
equipment malfunctioned, it manually added the chemical in a manner that was the
antithesis of precision.
5
extent of the obligation assumed and not performed.' [Citation.]" (Toscano v. Greene
Music (2004) 124 Cal.App.4th 685, 692.) Moffatt worked for the project general
manager (Bellingham), not Major or State. No facts are alleged that Moffatt made a
"clear and unambiguous promise" (see Garcia v. World Savings, FSB (2010) 183
Cal.App.4th 1031, 1044), that Major detrimentally relied on Moffatt's approval of the
concrete mix design, or that Major's damages are related to an "obligation assumed"
but not performed by Moffatt. Even if Major's complaint is founded on an implied
contract or promissory estoppel (of which State seeks equitable indemnification) the
damages are to recoup the cost of replacing the concrete. "Quite simply, the economic
loss rule 'prevents the law of contract and the law of tort from dissolving one into the
other.' [Citation.]" (Robinson Helicopter Company, Inc. v. Dana Corporation, supra,
34 Cal.4th at p. 988.)
Special Relationship: Biakanja Factors To Impose Duty of Care
Relying on Biakanja v. Irving (1958) 49 Cal.2d 647 (Biakanja), State
argues that Moffatt owed a duty of care based on the following public policy factors:
(1) the extent to which the transaction was intended to affect State; (2) the
foreseeability of harm to State; (3) the degree of certainty that State suffered injury: (4)
the closeness of the connection between Moffatt's conduct and the injury suffered; (5)
the moral blame attached to Moffatt's conduct; and (6) the policy of preventing future
harm. Lack of privity of contract does not bar equitable indemnity if these factors
favor imposition of a legal duty of care. (See Weseloh Family Ltd. Partnership v. K.L.
Wessel Construction Co., Inc. (2004) 125 Cal.App.4th 152, 165.)
The Biakanja argument fails on every factor. First, no facts are alleged
that Moffatt's services were intended to affect or benefit State. Moffatt agreed to help
Major out and review the concrete design mix. The service was gratuitous and
intended to benefit project manager, Bellingham. All the contractual duties allegedly
assumed by Moffatt were intended to benefit Bellingham, not State or Major.
Moffatt's review and approval of Mix Design SR5ORD was not the cause of the bad
concrete.
6
The second Biakanja factor, foreseeability of harm, is lacking. State
alleges that Moffatt knew or should have known that the concrete would not meet the
project specifications. But that is not why the concrete was nonconforming. State
over-dosed the concrete with an air-entrainment chemical, causing the concrete to
attain a low compression strength. When State delivered the wet concrete, no facts
are alleged that Moffatt knew or should have known that the concrete would not attain
a 5000 PSI compression strength.
The third Biakanja factor, certainty of injury, clearly weighs against
imposition of a duty of care. State failed to test the wet concrete to assure that it
complied with contract specifications. No facts are alleged that Moffatt knew or
should have known that State deviated from the approved mix design.
The fourth Biakanja factor, the closeness of the connection between
Moffatt's conduct and the injury suffered, is lacking. State had equipment problems
and "guesstimated" the concrete mix without telling anyone. Lacking clairvoyant
powers, Moffatt could not predict the structural soundness of the concrete before it
cured.
The fifth factor, moral blame, is wanting. No facts are alleged that
Moffatt controlled State's performance or controlled the contractual relationship
between State and Major.
The final Biakanja factor, preventing future harm, does not support the
imposition of a duty of care. Moffatt was not State's insurer or guardian angel. It did
not warrant that the concrete, if over-dosed with the Micro-Air additive, would work.
State could have protected itself by following the recipe (Mix Design SR5ORD), by
keeping the chemical dispensing equipment in good working order, by hiring a quality
control tester, or by negotiating protections in its contract with Major to minimize the
risk of harm. (See e.g., Weseloh Family Ltd. Partnership v. K.L. Wessel Construction
Co., Inc., supra, 125 Cal.App.4th at p. 172.)
7
Good Samaritan - Negligent Undertaking
State contends that Moffatt owed a duty to protect concrete suppliers
based on the good Samaritan or negligent undertaking doctrine. (See Artiglio v.
Corning, Inc. (1998) 18 Cal.4th 604, 607, discussing negligent undertaking theory
articulated in Restatement Second of Torts, section 324A.) In the context of the
presenting facts, this is a far-fetched theory. In Artiglio v. Corning, Inc., supra , the
users of silicone gel breast implants sued Dow Chemical Company (Dow) for failure
to report negative toxicology research on the dangers of silicone to breast implant
manufacturers. Plaintiffs claimed that it was a "negligent undertaking" and rendered
Dow liable in tort for plaintiffs' physical harm. The Supreme Court held that once a
good Samaritan has performed his voluntary act, he is not required to continue to
render aid indefinitely. (Id., at pp. 617-618.)
Assuming that Moffatt's good Samaritan approval of the concrete mix
design was a "negligent undertaking," Moffatt did not have a continuing duty to
ensure that State follow the recipe and mix the concrete properly. State's negligent
undertaking cases are inapposite and involve physical harm to a third party. (Van Horn
v. Watson (2008) 45 Cal.4th 322 [good Samaritan injured plaintiff while removing her
from car after an accident]; Delgado v. Trax Bar & Grill (2005) 36 Cal.4th 224 [bar
owner who hired guard had a duty to protect patrons against foreseeable criminal acts
of third parties].) Simply stated the concrete was hastily and erroneously mixed and
delivered to the project site. After the concrete dried, it did not injure anyone or
damage other property. The negligent undertaking theory of liability permits damages
for personal injury or property damage, not economic losses.
Conclusion
State's appeal is premised on the theory that Moffatt had a duty to "sound
the alarm" when State submitted a concrete mix design that increased the risk of
making substandard concrete. State claims that the moral blame falls on Moffatt. If
State wants to see who is at fault, it should look in the mirror. State failed to follow its
8
own concrete mix design. Common sense compels the conclusion that State alone is
responsible for the bad concrete.4
The judgment (order sustaining demurrer without leave to amend) is
affirmed. Moffatt is awarded costs on appeal.
CERTIFIED FOR PUBLICATION.
YEGAN, J.
We concur:
GILBERT, P.J.
PERREN, J.
4 The cause of action for contribution also fails. The right of contribution is a creature
of statute (Code Civ. Proc., § 875) and comes into existence only after rendition of a
judgment declaring more than one defendant jointly liable to the plaintiff. (Coca-Cola
Bottling Co. v. Lucky Stores, Inc. (1992) 11 Cal.App.4th 1372, 1378.) It arises where
"one of several joint tortfeasor judgment debtors has paid more than a pro rata share of
a judgment." (Ibid.)
9
Vincent J. O'Neal, Judge
Superior Court County of Ventura
______________________________
Patrick Au, Trang K. Le; Bremer, Whyte,Brown & O'Meara and Everett
L. Skillman, for Cross-Complainant and Appellant.
Morris, Polich & Purdy, Jens B. Koepke, Theodore D. Levin and Raina
L. Richter, for Cross-Defendant and Respondent.
10