Filed 7/8/14 Ayala Boring, Inc. v. City of Los Angeles CA2/3

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for 

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publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION THREE

AYALA BORING INC.,

Plaintiff and Appellant,

v.

CITY OF LOS ANGELES et al.,

Defendants and Respondents.

B251754

(Los Angeles County

Super. Ct. No. BC501699)

APPEAL from a judgment of the Superior Court of Los Angeles County, 

Mel Red Recana, Judge. Affirmed.

Mahoney & Soll, Paul M. Mahoney and Richard A. Soll for Plaintiff and 

Appellant.

Michael N. Feuer, City Attorney, Raymond Ilgunas, General Counsel, and 

Brian Clark Ostler, Deputy City Attorney for Defendants and Respondents.

_______________________________________
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Ayala Boring Inc. (Ayala) appeals a judgment of dismissal after the sustaining of 

a demurrer to its complaint without leave to amend. Ayala was a subcontractor on 

a construction project owned by the City of Los Angeles and its Department of Airports, 

also known as Los Angeles World Airports.1 Ayala alleges that the plans and 

specifications provided by the city were deficient and that it relied on them in 

submitting its bid for work on the project and suffered damages as a result. Ayala 

contends it has adequately alleged counts against the city for breach of implied 

warranty, failure to disclose, negligence, and promissory estoppel. We conclude that 

the trial court properly sustained the demurrer to each count and will affirm the 

judgment.

FACTUAL AND PROCEDURAL BACKGROUND

1. Factual Background

Ayala is a licensed contractor and performs subterranean boring and pipe 

installation. The city solicited bids for a public works project and selected Evans 

Brothers, Inc. (Evans), as the general contractor. Ayala became a subcontractor through 

another subcontractor, Valverde Construction, Inc. (Valverde). Ayala’s contract with 

Valderde incorporated by reference the contract between Evans and the city including 

plans and specifications provided by the city.

 

1 Any distinction between the City of Los Angeles and Los Angeles World 

Airports is not relevant in this appeal. We will use the term “the city” to refer to either 

or both the City of Los Angeles and Los Angeles World Airports.
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2. Prior Action

Ayala filed a complaint against the city, Valverde, Evans, and others in 

January 2013 alleging that it had performed work on the project for which it was not 

compensated and that the sum of $398,255.47 was due and owing. Ayala alleged 

common counts and a count for breach of contract against Valverde, counts against 

bond sureties for payment on bonds, and a count against the city and Evans to enforce 

a stop notice.

Evans filed a cross-complaint followed by a first amended cross-complaint 

against Valverde and the city, alleging counts for (1) breach of contract, against the city; 

(2) implied contractual indemnity, against the city; (3) equitable indemnity, against the 

city; (4) breach of implied warranty of plans and specifications, against the city; 

(5) express indemnity, against Valverde; and (6) declaratory relief, against Valverde.2

3. Complaint in the Present Action

Ayala filed its complaint against the city in the present action in February 2013 

alleging that the plans and specifications provided by the city were defective because 

they contained false information and failed to disclose a dangerous condition on the 

project site. Ayala alleges that the city knew that subcontractors would rely on the plans 

and specifications and that Ayala actually relied on them, was not aware that they were 

defective, and suffered $398,255.47 in damages as a result. Ayala alleges counts 

 

2 We granted the city’s request for judicial notice of the first amended 

cross-complaint filed by Evans on January 27, 2014, in case No. BC499817. (Evid. 

Code, § 452, subd. (d).)
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against the city for (1) breach of implied warranty of correctness of plans and 

specifications; (2) failure to disclose important information regarding a construction 

project; (3) negligence; and (4) promissory estoppel.

4. Demurrer

The city generally demurred to each count alleged in the complaint and specially 

demurred to each count based on Ayala’s failure to allege whether the contract was

written, oral, or implied by conduct. It argued as to the first count that Ayala could not 

maintain a count for breach of implied warranty without privity of contract with the 

city. It argued that the second count was barred by Government Code section 818.8 to 

the extent that it was based on a fraudulent misrepresentation and otherwise merely 

duplicated the first count.

The city argued as to Ayala’s third count for negligence that negligence in the 

provision of plans and specifications should be regarded as a contractual count for 

breach of implied warranty of correctness of plans and specifications, requiring privity 

of contract. It also argued that the city was entitled to immunity from liability arising 

from the exercise of discretion by a city employee (Gov. Code, § 820.2). It argued as to 

the fourth count that Ayala failed to allege a promise by the city as necessary to 

establish promissory estoppel. The city requested judicial notice of Ayala’s complaint 

filed in case No. BC499817.

Ayala opposed the demurrer. The trial court sustained the general demurrer to 

each count without leave to amend. The court also stated as to the first, second, and 

fourth counts that Ayala failed to allege whether the contract was written or oral. The 
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court filed a signed order of dismissal in September 2013.3 Ayala timely appealed the 

judgment.

CONTENTIONS

Ayala contends (1) it has adequately alleged counts for breach of implied 

warranty, failure to disclose, negligence, and promissory estoppel; and (2) it is entitled 

to leave to amend its complaint.

DISCUSSION

1. Standard of Review

A demurrer tests the legal sufficiency of the factual allegations in a complaint. 

We independently review the sustaining of a demurrer and determine de novo whether 

the complaint alleges facts sufficient to state a cause of action or discloses a complete 

defense. (McCall v. PacifiCare of Cal., Inc. (2001) 25 Cal.4th 412, 415.) We assume 

the truth of the properly pleaded factual allegations, facts that reasonably can be inferred 

from those expressly pleaded and matters of which judicial notice has been taken. 

(Schifando v. City of Los Angeles (2003) 31 Cal.4th 1074, 1081.) We construe the 

pleading in a reasonable manner and read the allegations in context. (Ibid.) We must 

affirm the judgment if the sustaining of a general demurrer was proper on any of the 

grounds stated in the demurrer, regardless of the trial court’s stated reasons. (Aubry v. 

Tri-City Hospital Dist. (1992) 2 Cal.4th 962, 967.)

 

3 A signed order of dismissal is an appealable judgment. (Code Civ. Proc., 

§ 581d.)
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It is an abuse of discretion to sustain a demurrer without leave to amend if there 

is a reasonable probability that the defect can be cured by amendment. (Schifando v. 

City of Los Angeles, supra, 31 Cal.4th at p. 1082.) The plaintiff has the burden to show 

how the complaint could be amended to cure any defect. (Ibid.) The plaintiff can make 

that showing for the first time on appeal. (Careau & Co. v. Security Pacific Business 

Credit, Inc. (1990) 222 Cal.App.3d 1371, 1386.)

2. The Trial Court Properly Sustained the Demurrer to the First Count

Implied in every public works contract is a warranty that the plans and 

specifications are correct and that the public entity has disclosed to the contractor all 

material facts known to the public entity that would affect the contractor’s performance 

costs. (Los Angeles Unified School Dist. v. Great American Ins. Co. (2010) 49 Cal.4th 

739, 753-754 (LAUSD); Warner Constr. Corp. v. City of Los Angeles (1970) 2 Cal.3d 

285, 294 (Warner); Souza & McCue Constr. Co. v. Superior Court (1962) 57 Cal.2d 

508, 510-511.) An action for breach of implied warranty is a contract action, so 

governmental immunities under the Government Claims Act (Gov. Code, § 810 et seq.) 

are inapplicable. (LAUSD, supra, 49 Cal.4th at p. 748; Warner, supra, 2 Cal.3d at 

p. 294, fn. 4.)

An implied warranty arises in favor of a party to a contract and generally cannot 

be enforced by a stranger to the contract. “The general rule is that privity of contract is 

required in an action for breach of either express or implied warranty . . . . ” (Burr v.

Sherwin Williams Co. (1954) 42 Cal.2d 682, 695.) Exceptions have been recognized 

with respect to foodstuffs, drugs, and certain other products. (Ibid.; Jones v. 
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ConocoPhillips (2011) 198 Cal.App.4th 1187, 1201 [noting exceptions].) Ayala does 

not argue that any recognized exception applies here or that it was a third party 

beneficiary of the city’s contract with Evans and therefore has shown no error based on 

such theories.

Ayala argues that it is subject to the burden of Public Contract Code section 7104 

and therefore is entitled to the benefit of the statute.4 Section 7104 generally provides 

that public works contracts of local public entities involving excavations deeper than 

 

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“Any public works contract of a local public entity which involves digging 

trenches or other excavations that extend deeper than four feet below the surface shall 

contain a clause which provides the following:

“(a) That the contractor shall promptly, and before the following conditions are 

disturbed, notify the local public entity, in writing, of any:

“(1) Material that the contractor believes may be material that is hazardous 

waste, as defined in Section 25117 of the Health and Safety Code, that is required to be 

removed to a Class I, Class II, or Class III disposal site in accordance with provisions of 

existing law.

“(2) Subsurface or latent physical conditions at the site differing from those 

indicated by information about the site made available to bidders prior to the deadline 

for submitting bids.

“(3) Unknown physical conditions at the site of any unusual nature, different 

materially from those ordinarily encountered and generally recognized as inherent in 

work of the character provided for in the contract.

“(b) That the local public entity shall promptly investigate the conditions, and if 

it finds that the conditions do materially so differ, or do involve hazardous waste, and 

cause a decrease or increase in the contractor’s cost of, or the time required for, 

performance of any part of the work shall issue a change order under the procedures 

described in the contract.

“(c) That, in the event that a dispute arises between the local public entity and the 

contractor whether the conditions materially differ, or involve hazardous waste, or cause 

a decrease or increase in the contractor’s cost of, or time required for, performance of 

any part of the work, the contractor shall not be excused from any scheduled completion 

date provided for by the contract, but shall proceed with all work to be performed under 

the contract. The contractor shall retain any and all rights provided either by contract or 

by law which pertain to the resolution of disputes and protests between the contracting 

parties.” (Pub. Contract Code, § 7104.)
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four feet must contain a clause requiring the contractor to promptly notify the public 

entity of physical conditions that materially differ from those previously disclosed to the 

contractor or those ordinarily encountered. (Id., subd. (a).) Such contracts also must 

contain a clause requiring the public entity to issue a change order if it finds that the 

physical conditions do so materially differ and that such differences affect the cost of 

performance or the time required for performance. (Id., subd. (b).) Ayala alleges in its 

complaint that its contract with Valverde incorporates by reference the city’s contract 

with Evans, and the city’s contract with Evans includes the language required by section 

7104.

Public Contract Code section 7104 by its express terms applies only to public 

works contracts of local public entities. It does not apply to contracts between 

contractors or other contracts to which no local public entity is a party. Section 7104 

therefore created no obligation owed by the city to Ayala. Moreover, the city was not 

a party to the contract between Ayala and Valverde, so the incorporation by reference of 

language required by section 7104 in that contract created no obligation on the part of 

the city and cannot support the city’s liability for breach of implied warranty.

Ayala also argues that the factors set forth in Biakanja v. Irving (1958) 49 Cal.2d 

647, 650, support the city ‘s liability for breach of implied warranty. But the Biakanja

factors determine the existence of a tort duty of care and do not support extending the 

implied warranty in the city’s contract with Evans to Ayala as a stranger to that contract. 

We conclude that Ayala as a stranger to the city’s contract with Evans cannot maintain 

an action against the city for breach of implied warranty. The trial court properly 
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sustained the city’s demurrer to the first count for breach of implied warranty of 

correctness of plans and specifications.

3. The Trial Court Properly Sustained the Demurrer to the Second Count

Ayala alleges in its second count that the city failed to disclose important 

information concerning the site conditions. Government Code section 818.8 bars a tort 

action for negligent or intentional misrepresentation against a public entity, but does not 

affect an action in contract for breach of warranty.5 (LAUSD, supra, 49 Cal.4th at 

p. 748; Warner, supra, 2 Cal.3d at pp. 293-294 & fn. 4.) Accordingly, we construe the 

second count as a count for breach of the same implied warranty discussed above. (See 

Warner, supra, at pp. 290, 293-294 [treated a count for “fraudulent concealment” as 

a count for breach of implied warranty].) We conclude that Ayala as a third party to the 

city’s contract with Evans cannot maintain an action for breach of implied warranty for 

the same reasons discussed above. The trial court properly sustained the city’s demurrer 

to the second count.

4. The Trial Court Properly Sustained the Demurrer to the Third Count

Ayala alleges in its third count that city employees “negligently and carelessly 

drafted, labeled, designed, distributed, analyzed, recommended, and advertised the plans 

and specifications by providing a false depiction of the project site and not advertising 

that the project site was different than advertised and that the site had a potential to 

 

5

“A public entity is not liable for an injury caused by misrepresentation by an 

employee of the public entity, whether or not such misrepresentation be negligent or 

intentional.” (Gov. Code, § 818.8.)
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cause damage to property and injury to person.” Although the third count is labeled 

“Negligence,” the essence of the count is that the city’s plans and specifications 

negligently misrepresented the site conditions. Ayala’s alleged injury arose not merely 

because the plans and specifications allegedly were negligently drafted, but because the 

allegedly deficient plans and specifications were communicated to Ayala. A negligent 

misrepresentation is the assertion of a fact that is not true and is made without 

reasonable ground for the assertion. (Bily v. Arthur Young & Co. (1992) 3 Cal.4th 370, 

407-408, citing Civ. Code, §§ 1572, subd. 2, 1710, subd. 2.) We regard the third count 

as alleging a negligent misrepresentation.

Government Code section 818.8 immunizes the city from tort liability for 

a misrepresentation by its employees, whether intentional or negligent. The city 

therefore is immune from liability on the third count, and the sustaining of the demurrer 

to the third count for negligent misrepresentation was proper.

5. The Trial Court Properly Sustained the Demurrer to the Fourth Count

Ayala alleges in its fourth count that the city made “promises and 

representations” that it reasonably should have expected would induce action by Ayala 

and that actually induced such action. It alleges that the city reasonably should have 

expected that subcontractors would rely on the plans and specifications, that Ayala 

reasonably relied on them, and that the plans and specifications were incorrect and 

failed to disclose a dangerous condition on the project site. Ayala alleges further that 

“[t]he plans and specifications . . . constituted a promise by Defendants wherein 

Defendants reasonably expected to induce Plaintiff to bid upon the plans and 
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specifications and to perform the work specified in the plans and specifications if 

Plaintiff was the successful bidder . . . . ” Thus, Ayala alleges that the plans and 

specifications constituted or contained “promises and representations” that the 

conditions of the project site were as represented in the plans and specifications.

The doctrine of promissory estoppel provides that a promise that the promisor 

should reasonably expect to induce action on the part of the promisee or a third person 

and that induces such action or forbearance is binding if enforcement of the promise is 

necessary in order to avoid injustice. (Kajima/Ray Wilson v. Los Angeles County 

Metropolitan Transportation Authority (2000) 23 Cal.4th 305, 310 (Kajima); Rest.2d 

Contracts, § 90, subd. (1).6) A “promise” for purposes of promissory estoppel means 

“a manifestation of intention to act or refrain from acting in a specified way, so made as 

to justify a promisee in understanding that a commitment has been made.” (Rest.2d 

Contracts, § 2, subd. (1).) In other words, promissory estoppel requires a promise to act 

or refrain from acting in a specified way.

Ayala’s allegations involve representations regarding the site conditions rather 

than a promise to act or refrain from acting in a specified way. We conclude that Ayala 

fails to allege an actionable promise. We therefore conclude that the trial court properly 

sustained the demurrer to the fourth count for promissory estoppel.

 

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Section 90, subdivision (1) of the Restatement Second of Contracts states: 

“A promise which the promisor should reasonably expect to induce action or 

forbearance on the part of the promisee or a third person and which does induce such 

action or forbearance is binding if injustice can be avoided only by enforcement of the 

promise. The remedy granted for breach may be limited as justice requires.” California 

courts have adopted section 90. (Kajima, supra, 23 Cal.4th at p. 310.)
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6. Ayala Is Not Entitled to Leave to Amend

Ayala contends it is entitled to leave to amend its complaint to cure any defects. 

The plaintiff has the burden of showing how the complaint can be amended to cure any 

defects. (Schifando v. City of Los Angeles, supra, 31 Cal.4th at p. 1082.) A general 

argument that the complaint can be amended to cure any defects therefore is 

insufficient.

Ayala also argues that it is entitled to leave to amend its complaint “to further 

clarify that there is no need for a privity of contract in this case.” We conclude that 

Ayala has failed to show how its complaint could be amended to state a valid cause of 

action.
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DISPOSITION

The judgment is affirmed. The city is entitled to recover its costs on appeal.

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

CROSKEY, J.

WE CONCUR:

KLEIN, P. J.

KITCHING, J.