Del E. Webb Corp. v. Structural Materials Co.

• Decision Date: 15 September 1981
• Citation: 123 Cal.App.3d 593,176 Cal.Rptr. 824
• Court: California Court of Appeals Court of Appeals
• Parties: DEL E. WEBB CORPORATION, Plaintiff and Appellant, v. STRUCTURAL MATERIALS COMPANY, Defendant and Respondent. Civ. 61796.

Page 824

176 Cal.Rptr. 824

123 Cal.App.3d 593

DEL E. WEBB CORPORATION, Plaintiff and Appellant, v. STRUCTURAL MATERIALS COMPANY, Defendant and Respondent.

Civ. 61796.

Court of Appeal, Second District, Division 5, California.

Sept. 15, 1981.

De Marco, Beral, Greenberg & Thrall and G. Emmett Raitt, Jr., Los Angeles, for plaintiff and appellant.

Grant & Popovich and Irvin Grant, Santa Monica, for defendant and respondent.

WOLF, Associate Justice. ^*

Plaintiff Del E. Webb Corporation (hereinafter referred to as "Webb") appeals from a judgment of dismissal entered in favor of defendant Structural Materials Company (hereinafter referred to as "SMC") following the sustaining of SMC's general demurrers without leave to amend to plaintiff's second amended complaint, and from the summary judgment entered in favor of defendant and against plaintiff in the said action. ¹ A brief summary of the controversy which culminated with the filing of the instant lawsuit is as follows: Webb entered into written agreement with the City of Fresno to act as general contractor of a construction project known as the Municipal Service Center. Webb entered into a subcontract with defendant Joseph L. DeLancey (hereinafter referred to as "DeLancey"), a roofing subcontractor, for the performance by DeLancey of the roofing and waterproofing work on the Fresno project. ² DeLancey defaulted in the performance of his subcontract agreement with Webb and, in particular, failed to furnish all of the materials which were required for the roofing and waterproofing portion of the project.

Defendant SMC was in the business of selling building materials and sold roofing and waterproofing materials to DeLancey for use on the Fresno project. Plaintiff Webb contends that SMC is liable for the breach of the subcontract agreement by DeLancey and is also liable for damages sustained by Webb as a result of SMC's alleged failure to supply Webb with roofing materials necessary for the construction project. In this regard, Webb contends that SMC was paid in advance for these materials by the issuance of two checks jointly payable to DeLancey and SMC in the amounts of $52,704.49 and $19,944.61. ³

Webb received only a portion of the materials described in the invoices for which the checks were issued and its principal claim against SMC relates to SMC's failure to furnish the balance of the materials for which Webb has made payment.

In order to more succinctly analyze the issue raised in this appeal, we will discuss separately issues raised on demurrer and issues raised in the summary judgment proceedings.

WEBB'S THEORIES OF RECOVERY

Webb's second amended complaint purports to set forth 10 causes of action against defendant SMC. The first and second causes of action are for money had and received and money paid. A demurrer to a common count is properly sustained where the plaintiff is not entitled to recover under those counts in the complaint wherein all the facts upon which his claim is based are specifically pleaded. (Hays v. Temple, 23 Cal.App.2d 690, 73 P.2d 1248.) The validity of the first and second causes of action is, therefore, dependent upon whether a basis of recovery is adequately set forth in the other causes of action.

The third cause of action seeks damages from SMC for breach of the subcontract agreement between Webb and DeLancey. SMC's purported liability for breach of the agreement, in which it is not a named party, was predicated upon the theory that SMC was the alter ego of DeLancey. Webb concedes on appeal that the allegations of the third cause of action were insufficient to establish an alter ego theory. It urges, however, that the third cause of action is viable on the theory that DeLancey was acting as an agent for SMC at the time the subcontract was made, and that SMC was the undisclosed principal in that contract; that the allegation reciting that "each of the defendants was the agent of each of the remaining defendants and were at all times acting within the scope of their authority as such agents" sufficiently alleged that DeLancey signed the contract on behalf of SMC, at least to the extent that Webb should have been given leave to amend so as to clarify the agency concept.

The fourth cause of action is against DeLancey only and is not involved in this appeal.

The fifth cause of action seeks damages for the breach of an alleged oral agreement between SMC and DeLancey which Webb contends was made for its benefit. Webb alleges that SMC and DeLancey orally agreed that SMC would provide all roofing and other materials necessary for the performance of the subcontract in a condition free of defects; that the oral contract was made for the benefit of Webb and has never been rescinded; that SMC breached the oral contract by supplying defective roofing materials to the project and by refusing to supply a portion of the roofing materials paid for by Webb.

In its sixth cause of action Webb contends that SMC breached an implied contract which existed between SMC and Webb. It is alleged that SMC agreed to furnish Webb, through DeLancey, with roofing materials necessary for Webb's construction project; Webb agreed to pay for the materials by joint checks to DeLancey and SMC; that SMC submitted invoices from SMC and DeLancey and the waiver of lien to Webb through DeLancey; that Webb paid the invoices by joint check; that by reason of the foregoing SMC impliedly contracted to deliver to Webb all of the materials covered by said invoices in a usable condition, and that SMC breached the said contract by failing to deliver all the materials and by delivering certain of the materials in a defective and unusable condition.

Essentially the same allegations formulate the basis for the tenth cause of action, wherein Webb alleges that SMC failed and refused to deliver, in a nondefective condition, all the materials which Webb paid for pursuant to SMC's invoice, and have also failed and refused to return any of the monies paid by Webb to SMC for the materials. Webb alleges that by reason thereof SMC has been unjustly enriched in the amount which was paid by Webb to SMC for materials which SMC did not deliver or which were delivered in a defective and unusable condition.

The seventh cause of action is for fraud. It is alleged that DeLancey acting as an authorized agent for SMC falsely and fraudulently represented to Webb that if Webb would prepay for roofing materials to be used in its construction project the payment would be used exclusively for the purchase of those materials and SMC and DeLancey would provide all the materials when requested to do so by Webb; that the representations were false and SMC intended to apply Webb's payments to accounts which DeLancey had incurred on other projects and did not intend to furnish the materials paid for by Webb; that Webb and DeLancey knew that the representations were false and that they were made with the intent to defraud and deceive Webb; that Webb was ignorant of the falsity of the representation and paid invoices presented by SMC and DeLancey in reliance upon said representation which reliance was justified. Webb seeks compensatory and punitive damages for the alleged tortious conduct.

The eighth cause of action incorporates the allegations of the seventh cause of action and further alleges that SMC and DeLancey conspired to defraud Webb by inducing Webb to pay for roofing materials which said defendants did not intend to furnish to Webb. ⁴

The ninth cause of action alleges that Webb was the owner and entitled to possession of certain roofing materials described in an invoice of SMC; that Webb made demand on SMC for delivery of said personal property which demand was refused by SMC; that by reason thereof SMC converted the said personal property to its own use and benefit for which Webb seeks compensatory and punitive damages.

THE SUFFICIENCY OF THE PLEADINGS

Webb argues, in essence, that each of its causes of action is sufficiently pleaded to withstand an attack by way of general demurrer; that if any of the causes of action are insufficient, the deficiency can be cured by amendment and that the trial court abused its discretion in denying leave to amend. Additionally, plaintiff contends that facts in the complaint establish SMC's liability to Webb for negligent interference with perspective economic advantage, a theory that was not argued at the trial court level, but which is viable from the pleadings and which make the complaint immune to attack by general demurrer. ⁵

SMC asserts that the allegations of Webb's second amended complaint fail on their face to state a cause of action against SMC. Furthermore, SMC contends, if the court takes judicial notice, which it has the right to do, of the declarations, depositions, and documentations contained in the court records which were filed in connection with SMC's motion for summary judgment, it must conclude that none of the allegations set forth in the complaint have a factual basis and that Webb could not amend its complaint to state a cause of action. SMC additionally contends that Webb's latest theory, that it has stated a cause of action for negligent interference with prospective economic advantage, was not raised in the trial court and, therefore, may not be raised for the first time on appeal, and, in any event, it has no application to the facts in the instant case. ⁶

THE CONCEPT OF TRUTHFUL PLEADING

As a general rule in testing a pleading against a demurrer the facts alleged in the pleading are deemed to be true, however improbable they may be. (Griffith v. Department of Public Works, 141 Cal.App.2d 376, 296 P.2d 838.) The courts, however will not close their eyes to situations where a complaint contains allegations of fact inconsistent with attached documents, or allegations contrary to facts which are judicially noticed. (Alphonzo E. Bell Corp. v. Bell View Oil Syndicate, 46 Cal.App.2d 684, 116 P.2d 786; Chavez v....