Harrison Croff; Anne Croff v. Insulate SB, Inc, Chad Sanchez, David Esquer
Harrison Croff; Anne Croff v. Insulate SB, Inc, Chad Sanchez, David Esquer
Case Number
23CV01753
Case Type
Hearing Date / Time
Wed, 05/29/2024 - 10:00
Nature of Proceedings
Defendants Motion for Summary Judgment, or in the alternative, Summary Adjudication
Tentative Ruling
Attorneys for Plaintiffs Croffs: Christopher Haskell, Jeff Tschakarov.
Attorneys for Defendants and Cross-Complainants: Mark A. Love, Rosario L. Vizzie, Julie V. Oneto.
Matter
Defendants Motion for Summary Judgment, or in the alternative, Summary Adjudication.
Ruling
For the reasons set out below the Defendants Motion for Summary Judgment, or in the alternative Summary Adjudication, is DENIED.
Acknowledgements
The Court acknowledges and appreciates the professional work done by counsel in the case.[1] The case has been contentious; at times even acrimonious.
Trial and MSC
The case is set for trial on 6/26/24 and a MSC on 6/7/24.
Background
On April 25, 2023, Plaintiffs Harrison Croff and Anne Croff filed their original complaint against Defendants Insulate SB, Inc., Chad Sanchez, and David Esquer. The complaint contains causes of action for: (1) Breach of Contract; (2) Negligence; (3) Fraud (Intentional Misrepresentation); and (4) Fraud (Negligent Misrepresentation).
On May 23, 2023, Plaintiffs filed their operative first amended complaint (“FAC”) removing the fraud element from their fourth cause of action.
The FAC alleges that the parties entered into a contract for Defendants to remove existing fiberglass batt insulation and install spray foam insulation in the attic of Plaintiffs’ home. A day following the installation on June 24, 2022, Plaintiffs returned home with their infant daughter and noticed a chemical odor that was seeping into the interior of the property through ceiling penetrations and ventilation chaises. Defendants Sanchez and Esquer made several representations that the smell was normal, safe, and that it would dissipate over time. Plaintiffs made various attempts to rid the house of the chemical smell including the use of an air purifier. The air purifier was registering extremely high levels of volatile organic compounds. Following unsuccessful attempts to resolve the issues with Defendants, on July 25, 2022, Plaintiffs reached out to who they believed to be the manufacturer of the foam product that was installed. The representative of the company, that Plaintiffs believed to be the manufacturer, told Plaintiffs that the odors were not normal a month after installation and was indicative of a defective installation. Plaintiffs were told that if there was an odor a month after installation, they and their daughter should evacuate the house immediately.
On July 26, 2022, Sanchez told Plaintiffs that a different spray foam insulation was used than they had previously thought and that the installers had used the wrong product settings. Thereafter, Plaintiffs visited the correct manufacturer’s website and learned that contrary to what Defendants had been representing, once installed the insulation should have no odor.
After being advised to evacuate the property again, Plaintiffs leased a home that they could temporarily live in. While relocated, Plaintiffs had the spray foam insulation and air in the home tested. The testing confirmed that the foam was the source of the smell and that it was emitting volatile organic compounds and toxic chemicals. Plaintiffs were required to do a complete removal of the spray foam insulation along with the substrate to which the foam was applied.
Demurrer and Motion to Strike.
Defendants demurred to Plaintiffs’ first cause of action, for breach of contract, “on the grounds that Plaintiffs’ claim for breach of contract fails to include the contract on which the claim is predicated.” Defendants also demurred to Plaintiffs’ third cause of action for fraud (intentional misrepresentation) on the grounds that it “fails to state a cause of action against Defendants [and] is uncertain.” Defendants moved to strike punitive damages allegations. Defendants Motions were overruled.
Defendants Filed their Answer on 8/16/24.
General denial with 49 affirmative defenses. Accompanied by a Cross-complaint for negligence, product liability, implied indemnity, contribution, and declaratory relief against Roes 1 through 25.
Amendment to Complaint
On 1/4/24 Cross Complainant identified ROE 1 as Carlisle Construction Materials, LLC.
[It appears that the Cross-complaint was never served; Plaintiffs reports in their opposition,
that although the Declarations of Defendants Sanchez and Esquer in support of the SJ
Motion purport to identify Carlisle as the SPF chemical product manufacturer, Esquer
retracted this statement during his deposition, while Sanchez admitted that according to
Defendant ISB’s business records, the chemical manufacturer was Huntsman – not Carlisle
and argue that if Defendants were SPF installers in good standing, they should have no
difficulty confirming the manufacturer of the SPF chemical product they used at the
Property.]
Trial Dates Confirmed
At the CMC on 1/10/24 the trial date [6/26/24] was confirmed but the Court said:
“Plaintiff’s counsel shall meet and confer with the new Defendant and cross-complainant to
suggest trial date and MSC date and provide this information on the Case Management
Statement otherwise the dates above are confirmed.”
At the CMC on 2/21/24 Christopher Haskell, Attorney for Plaintiff, and Rosario Vizzie,
Attorney for Defendant appeared by zoom and the MSC and Trial dates were confirmed.
Ex parte Application
On 3/8/24 the Defendants filed an ex parte Motion requesting an order specially setting the
hearing on Defendants’ Motion for Summary Judgment, for a date between May 20, 2024
(75 days after personal service of the Dispositive Motion was effected) and May 27, 2024
(30 days prior to June 26, 2024 trial date). The Court granted the request and specially set
the Motion for May 29, 2024, and confirmed the trial date of 6/26/24.
Motion for Summary Judgment
Filed by Defendants on 3/11/24 and set for 5/29/24.
Supported by Points and Authorities; 26 pages; summarized: This lawsuit involves the
installation of spray foam insulation in a residential property in Santa Barbara, California.
Plaintiffs Harrison and Anne Croff (“Plaintiffs”) claim that the insulation was misapplied,
and contend it resulted in off-gassing/emission of chemicals into the residence; there is no
evidence to support that Defendants breached any duty owed to Plaintiffs, that Defendants
caused any emission of chemicals into Plaintiffs’ home, or that Defendants caused Plaintiffs
any bodily injury or property damage; there is no evidence to support any intent on
Defendants’ part to defraud Plaintiffs, nor is there any evidence of a misrepresentation by
Defendants of a past or existing material fact made with the intent to induce Plaintiffs’
reliance on the fact purportedly misrepresented; the court should enter judgment in favor
of Defendants as a matter of law; in the alternative, summary adjudication in favor of
Defendants as to the first, second, third, and/or fourth causes of action and the punitive
damages claim is warranted; in the event the court finds that a triable issue of material fact
exists as to any of the causes of action (which Defendants deny), then under the express
terms of the contract at issue herein, the maximum amount of Defendants’ potential
liability to Plaintiffs can be no more than $7,465 and summary adjudication in
Defendants’ favor as to any damages claimed in excess of that amount is also warranted;
any allegations and purported associated costs/expenses relating to plaintiffs’ unnamed
minor daughter as set forth in the complaint are not at issue in this litigation, are
irrelevant, and should be stricken or dismissed because the unnamed minor daughter is not
a plaintiff to this action.
Supported by Exhibits 1 through 14; 367 pages; read and considered.
Supported by a Separate Statement; 57 pages; read and considered.
Supported by The Declarations of:
Rosario Vizzie; 3 pages; read and considered.
Chad Sanchez; 4 pages; summarized: In performing its work under the Construction Agreement, no one from or on behalf of Insulate SB “consciously and voluntarily undertook acts and omissions that [they] knew would likely cause grave harm and injury to Plaintiffs, their daughter, and their property.” On July 6, 2022, he visited the subject residence at Mr. Croff’s request to investigate his claims of an unusual odor; he did not detect an unusual odor when he observed plaintiffs’ attic, where the Carlisle spray foam had been installed; attic in general smelled as he expected it would several days after a spray foam insulation application; it smelled normal to him; he made no false representations to plaintiffs regarding detecting any unusual odors at the subject residence; the spray foam insulation that Insulate SB installed at the subject property was applied correctly, looked good, and smelled normal; at no time did he make any representation to either plaintiff (Harrison Croff or Anne Croft) with any intent to deceive or defraud them.
David Esquer; 4 pages; summarized: At all relevant times he was employed by defendant Insulate SB, Inc as an estimator. On behalf of Insulate SB, he prepared “Estimate #391216” on June 2, 2022, for the installation of spray foam insulation at the single family residence located at 1375 Sycamore Canyon Road (“subject residence”). The estimate was then signed by the individual whom he understood to be the owner of the subject residence, Harrison Croff. After Mr. Croff signed the estimate, it became the contract, also referred to as the “Construction Agreement,” for the spray foam insulation installation; a copy of the Construction Agreement signed by plaintiff Harrison Croff is attached to the Compendium of Exhibits filed as Exhibit 1. Although the Construction Agreement (Exhibit 1) references an “Exhibit “A” and “Exhibit “A – Estimate” on the first page of the document, in fact no such exhibit was prepared, so the inclusion of “Exhibit “A” and “Exhibit “A – Estimate” in the Construction Agreement was a clerical oversight. Instead, the scope of work for the spray foam insulation installation at the subject residence is set forth in the section on the first page of the document with the header “Sales Description.” The contracted-for scope of work at the subject residence agreed to by Insulate SB was the following: “Install: Plastic over access work area and against walls for protection. Bag up existing Fiberglass batt material and remove from site. Includes vacuuming any loose debris on attic floor F-22 (5.95” minimum thickness) Open Cell ½ LB Spray Foam between roof rafters at attic space. R-20 (5.5” minimum thickness Open Cell ½ LB Spray Foam between attic gable walls.” The Construction Agreement signed by Harrison Croff (Exhibit 1) did not specify which brand of spray foam insulation was to be installed at his home; he can confirm that the manufacturer of the spray foam insulation that was installed at the subject residence was Carlisle Spray Foam; he personally observed the foam in the attic following installation, and can confirm that the installation of the spray foam insulation complied with the specifications set forth in the Construction Agreement. Upon information and belief, the spray foam insulation installed at the subject residence in June 2022 became tack dry in approximately 20 seconds after it was sprayed onto the surfaces, and contained no CFC, HFC, or VOC by approximately 28 hours after its installation. On June 29, 2022, he visited the subject residence after Insulate SB’s work was complete; did not detect any unusual odors at the subject residence during visit. The attic, where Insulate SB performed its spray foam insulation services, smelled as he expected it would several days after a spray foam insulation application; it smelled normal; he made no false representations to plaintiffs regarding detecting any unusual odors because when he entered the attic of the property, it smelled normal; the spray foam insulation that Insulate SB installed at the subject property was applied correctly, looked good, and smelled normal.
Defendants Request for Judicial Notice
Judicial notice is the recognition and acceptance by the court, for use by the trier of fact or by the court, of the existence of a matter of law or fact that is relevant to an issue in the action without requiring formal proof of the matter. Judicial notice may not be taken of any matter unless authorized or required by law. Matters that are subject to judicial notice are listed in Evid. Code §§ 451 and 452. A matter ordinarily is subject to judicial notice only if the matter is reasonably beyond dispute. Taking judicial notice of a document is not the same as accepting the truth of its contents or accepting a particular interpretation of its meaning. While courts take judicial notice of public records, they do not take notice of the truth of matters stated therein. When judicial notice is taken of a document, the truthfulness and proper interpretation of the document are disputable. Herrera v. Deutsche Bank National Trust Co., (2011) 196 Cal. App. 4th 1366.) [Emphasis the Court’s]
Filed 3/11/24; 3 pages; summarized;
Pursuant to California Code of Civil Procedure sections 437c(b)(1) and Evidence Code
sections 452 and 453, defendants Insulate SB, Inc., Chad Sanchez, and David Esquer request the court to take judicial notice of the following:
1. Online public record regarding the corporate status of Insulate SB, Inc. as of
February 29, 2024, which can be accessed from the California Secretary of State’s
website at the following URL and attached to the concurrently filed Compendium
of Exhibits as Exhibit 2:
2. “Carlisle” brand spray foam insulation is manufactured by Carlisle Spray Foam
Insulation, a division of Carlisle Construction Materials, a wholly owned subsidiary of Carlisle Companies (NYSE: CSL).
Ruling: The requests are Granted.
Plaintiffs” Opposition
Filed 5/13/24; read and considered; 24 pages; summarized: Defendants argue in the Motion that there is hardly any evidence supporting Plaintiffs’ claims; Plaintiffs’ experts in the fields of indoor air quality testing, toxicology, and spray foam installation industry standards have confirmed that: (1) air and foam samples collected from Plaintiffs’ residence almost 2 months post-installation were off-gassing a dangerous cocktail of toxic chemicals creating a health hazard for adults and especially for infant children such as Plaintiffs’ daughter; (2) Defendants failed to properly install the spray foam and their carelessness was an extreme departure from basic and commonly accepted industry standards; (3) removal of the spray foam along with the underlying roof substrate was the only remediation guaranteeing 100% elimination of the health hazard Defendants installed in Plaintiffs’ residence; and (4) Plaintiffs’ evacuation of their home and medical testing of the family, especially Plaintiffs’ infant daughter, were necessary and reasonable.
Defendants attack two of the elements of Plaintiffs’ cause of action for breach of contract by contending that there is no evidence of a contractual breach or damages. Plaintiffs have
presented triable issues of fact that satisfy these requirements.
Plaintiffs have presented triable issues of fact as to Defendant ISB’s gross negligence. As confirmed by Plaintiffs’ experts, Defendants grossly deviated from the applicable standard of care in this case and acted with a complete disregard for the health hazard their carelessness created at Plaintiffs’ residence. As a result of Defendants’ gross negligence, Plaintiffs have suffered damages related to their expenses for SPF construction remediation, substitute housing, and medical consultations and testing, as well as loss of income and Property market value.
Plaintiff have presented triable issues of fact as to Defendants’ intentional misrepresentations. Defendants represented on several occasions to Croff that the air in the Property smelled like foam and that the odors were normal and not dangerous. Defendants’ representations were false.
Plaintiff have presented triable issues of fact as to Defendants’ negligent misrepresentations.
Plaintiffs have presented triable issues of fact as to their claim for punitive damages.
No grounds exist for striking or dismissing allegations or damages related to Plaintiffs’ daughter.
The damage limitation clause in the construction agreement is unenforceable. Plaintiff have presented triable issues of fact as to Defendants’ intentional misrepresentations.
Supported by Plaintiffs’ Evidentiary Objections; 19 pages:
Evidentiary and Rulings as to the Objections to:
The Declaration of Chad Sanchez.
¶ 5 Sustained
¶ 6 Sustained
¶ 7 Overruled
¶ 8 Sustained
¶ 8 Sustained
¶ 8 Sustained
¶ 9 Sustained
¶ 10 Overruled
The Declaration of Defendant David Esquer.
¶ 3 Sustained
¶ 4 Sustained
¶ 5 Sustained
¶ 5 Sustained
¶ 5 Sustained
¶ 7 Sustained
¶ 8 Sustained
Evidentiary Objection to Defendants UMF.
Fact No. 3: Sustained
Fact No. 36: Overruled
Fact No. 37: Overruled
Fact No. 38: Overruled
Fact No. 39: Overruled
Fact No. 40: Overruled
Fact No. 41: Overruled
Supported by the following Declarations: filed 5/13/24; summarized:
Harrison Croft; 7 pages; summarized; security camera footage indicates that on June 24, 2022, Insulate SB’s workers brought out a construction fan from their work truck at approximately 8:00 a.m. and the fan was then placed back in the truck at approximately 11:53 a.m. Insulate SB’s crew left the Property shortly after 12:30 p.m. Also on June 24, 2022, Defendant Esquer confirmed that the SPF chemical product installed in the Property was Huntsman No-Mix. During the SPF installation on June 24, 2022, his wife and he and their infant daughter, were out of town as the house was required to be vacant for 24 hours after installation. On June 25, 2022, they returned home and immediately noticed an offensive chemical odor throughout the interior of the Property, seeping down from the attic through ceiling penetrations and ventilation chaises; obnoxious chemical odors in the Property persisted for weeks despite his purchase and installation of top-of-the-line air filters and other ventilation equipment; called Esquer to ask if it was normal for the smell to still be so strong and if he could check out the installation; Esquer inspected the Property, including the attic, and stated that it smelled like foam, it would take some time to air out, and the odors were “normal” and “not dangerous at all.” Sanchez informed him that the SPF product used in the Attic had been Carlisle No-Mix and not Huntsman No-Mix, as Plaintiff was previously told by Esquer; about July 6, 2022, Sanchez arrived at the Property; Croff told him that he was extremely concerned for the safety of his daughter and the effects that the odors and chemical off-gassing may have on her health; Sanchez inspected the Property; he stated that everything looked normal, the smell was normal and there was nothing to worry about as it was completely safe. Croff reached out directly to the purported manufacturer of the foam product – Carlisle – to ask if the persistent chemical odors they were experiencing in the Property were normal; McKinstrie, the West Coast Technical Services Team representative for Carlisle, informed him of the foam insulation issues and odors at the Property; McKinstrie told him that it was absolutely not normal to have foam odors in the Property a month after installation and such odors were indicative of a defective foam installation; Sanchez informed him over the phone that the spray foam applied in the Property was actually Huntsman No-Mix and was manufactured by Huntsman – not Carlisle; Sanchez stated that Insulate SB’s installers selected the wrong manufacturer and product setting on the SPF machine, and that it was “just human error, man.” Sanchez also informed him that a representative from Huntsman would be flying to Santa Barbara to take samples of the foam insulation at the Property on August 1, 2022. Croff spoke to Pickering, the Huntsman Field Service Technician assigned to Plaintiffs’ case; Pickering stated that even without ventilation, there should be absolutely no odors emitting from the finished foam product after 24 hours since installation; Pickering refused to answer any further questions, directly explaining that “the lawyers” were now involved; on August 15, 2022 Sanchez sent him Mackey’s letter that expressly confirmed “based on the findings from these samples it has been determined that the foam in these samples exhibits an uncharacteristic odor in both room temperature and hot conditions;” on August 17, 2022, he arranged for air and foam samples to be collected from the Property and tested for air quality and VOC emissions by Indoor Environmental Engineering; the Indoor Environmental Engineering’s report confirmed that the SPF at the Property was off-gassing toxic chemicals and recommended that the SPF be removed along with the substrate; expended considerable funds on SPF remediation construction work by licensed professionals; had Defendants admitted immediately that the chemical odors in the Property were not normal and were likely caused by misapplied SPF, he would have commenced SPF remediation much earlier, which would have reduced the amount of toxic chemicals soaking deep into the SPF substrate.
Anne Croft; 3 pages; summarized: Daughter was 10 months old at the time and they were extremely worried that the toxic chemicals emitting from the SPF could have a devastating effect on her fragile and still developing body; in order to determine whether the SPF at the Property had caused any damage to their health and especially to the health of their infant daughter, they incurred expenses for consultations with doctors and medical testing.
Jeff Tchakarov; 3 pages; an attorney with Price, Postel & Parma LLP – counsel of record for Plaintiffs; read and considered; he did the following:
Attached Exhibit 1 to the Compendium of Exhibits a copy of pertinent excerpts from the transcript of Chad Sanchez’s deposition.
Attached as Exhibit 2 to the Compendium of Exhibits a copy of pertinent excerpts from the transcript of David Esquer’s deposition.
Attached as Exhibit 3 to the Compendium of Exhibits a copy of pertinent excerpts from the transcript of Jose Anaya’s deposition.
Attached as Exhibit 4 to the Compendium of Exhibits a copy of pertinent excerpts from the transcript of Marvin Magana’s deposition.
Attached as Exhibit 5 to the Compendium of Exhibits a copy of Defendant Insulate SB, Inc.’s Response to Special Interrogatories, Set One.
Attached as Exhibit 6 to the Compendium of Exhibits a copy of a print-out from Defendant Insulate SB, Inc.’s website.
Attached as Exhibit 7 to the Compendium of Exhibits filed a copy of Defendants’ Amendment to Cross-Complaint Naming ROE 1, filed on January 4, 2024.
Attached as Exhibit 8 to the Compendium of Exhibits a copy of Plaintiffs’ Requests for Production of Documents to Defendant Insulate SB, Inc., Set One.
Attached as Exhibit 9 to the Compendium of Exhibits filed a copy of Plaintiffs’ Deposition Exhibits No. 27 (Carlisle’s Technical Data Sheet), No. 28 (Carlisle’s Safety Data Sheet), and No. 29 (Carlisle’s Application Guide, i.e., SPF installation instructions). All three documents were produced during discovery as part of Defendants’ document production.
Attached as Exhibit 10 to the Compendium of Exhibits a copy of Plaintiffs’ Deposition Exhibits Nos. 14 and 19, depicting photos of cross-sections of the SPF Defendants installed at Plaintiffs’ residence.
Attached as Exhibit 11 to the Compendium of Exhibits a copy of pertinent excerpts from Defendants’ document production.
Attached as Exhibit 12 to the Compendium of Exhibits a copy of pertinent excerpts from Plaintiffs’ document production.
Michael Neal Arnold; 5 pages; summarized; As a result of a survey of professional literature, discussions with persons familiar with the local residential real estate market (appraisers, brokers, and a developer), and professional experience, he concluded that a price discount of approximately $500,000 (25%) would be necessary to offset a buyer’s reluctance to purchase a property with the history, and the continuing existence, of contamination like that of the subject property. Based on a well-regarded cost estimating service, discussions with local builders, and professional experience, it was estimated that a reasonable estimate of cost to replace the entire roof structure would be $275,000. To this would be added allowances for contingencies, architectural & engineering, and market resistance. The total allowance for replacing the roof would be $400,000. It appears that replacing the roof would have the least impact on the value of the subject property; the following was concluded as of April 12, 2024: Market Value without Contamination: $2,000,000; Less Cost of Remediation: -$400,000; Market Value with Contamination: $1,600,000; Market Value without Contamination: $2,000,000; Market Value with Contamination: $1,600,000; Indicated Diminution in Value: $400,000
Henri Fennell; 8 pages; summarized: President of H C Fennell Consulting, LLC, and a building envelope specialist and architect with nearly fifty years of experience in energy conservation design and services; in his expert opinion, there were multiple failures to follow established SPF industry norms during the SPF installation at the Property; Defendant Insulate SB and its SPF installers blatantly disregarded industry standards and best practices for proper training, SPF installation and safety protocols; Defendant Insulate SB failed to properly install the SPF insulation at the Property by grossly deviating from even the most basic SPF industry standards and inexcusably subjected Plaintiffs and their daughter to a completely avoidable health hazard.
George Thompson; 7 pages; summarized: Retained by Plaintiffs as an expert witness; a toxicologist and psychopharmacologist with nearly 55 years of experience; his expert opinion to a reasonable degree of scientific certainty, is that the SPF in the Property was installed incorrectly and created a health hazard in Plaintiffs’ home in an extreme departure from SPF industry norms and standards, and there was no reasonable basis for the individual Defendants in this case to represent that the odors in the Property were
“normal” and/or “not dangerous.” Plaintiffs were prudent and reasonable in: (a) evacuating the Property, (b) consulting with doctors and undergoing medical testing to check for any adverse health effects from the SPF, especially for their infant daughter, and (c) removing all the toxic SPF from the Property, along with the underlying substrate to ensure complete elimination of the health hazard Defendants created.
Francis Offermann; 5 pages; summarized: Retained by Plaintiffs as an expert witness; is the owner and President of Indoor Environmental Engineering, a building science consulting firm with more than 40 years of experience; in his expert opinion the VOC emissions from the installed SPF at the Property have resulted in indoor concentrations that pose a health risk to the occupants; the presence of odor emitted by the installed SPF is additional evidence of improperly installed SPF; the measured VOC emission rates from the SPF and the amount of these compounds reported in the Safety Data Sheets, the chemical emissions from the SPF installed at the Property were expected to persist more than 50 years; based on the above and in his expert opinion, the SPF at the Property was misapplied in an extreme departure from the most basic SPF industry standard which requires that the finished SPF product does not off-gas any toxic chemicals and VOCs and is also odorless.
Separate Statement; 164 pages; read and considered; very important; particularly disputed evidence at ## 15; 20; 21; 22; 23; 24; 25; 26; 28; 29; 30; and 31 plus the balance of the objections have been read and considered.
Exhibits 1 through 15; 42 pages; Exhibit in Support of Pleadings:
Set One
Set Two
Set Three
Set Four – OMITTED
Set Five
Set Six
Set Seven
Set Eight
Set Nine
Set 10
Set 11
Set 12
Set 13; 16 pages; Anthem Health Care Summary
Set 14 - OMITTED
Set 15; 16 pages; Anthem Health Care Summary
Set 16; 16 pages; Anthem Health Care Summary
Set 17; 36 pages; Anthem Health Care Summary and Exhibits 13-15.
Defendants Reply
Filed 5/24/24; read and considered:
Evidentiary Objections to Declarations of Harrison and Anne Croff’s evidence; 17 pages; summarized: Despite the hyperbole in Plaintiff’s opposition, the facts remain undisputed: there is no evidence to support that Defendants breached any duty owed to Plaintiffs, that Defendants caused any emission of chemicals into Plaintiffs’ home, or that Defendants caused Plaintiffs any bodily injury or property damage; there is no evidence to support any intent on Defendants’ part to defraud Plaintiffs, nor is there any evidence of a misrepresentation by Defendants of a past or existing material fact made with the intent to induce plaintiffs’ reliance on the fact purportedly misrepresented; opposition is replete with statements unsupported by any admissible evidence and should not be considered by this court; the opposition also ignores Defendants’ arguments and authorities establishing the plaintiffs’ lack of any competent evidence to support their claims for breach of contract, negligence, fraud, and misrepresentation, as well as any reasonable justification for punitive damages; Plaintiffs’ discovery responses were resolute: “Plaintiff is not making a claim for any physical, mental or emotional injuries sustained as a result of Defendants’ SPF installation[.]” (UMF No. 33.) Plaintiffs attempt to create a dispute of material facts to survive this motion by providing self-serving declarations filled with inadmissible hearsay and based on matters over which the declarants have no expertise; declarations contradict the evidence, as well as Plaintiffs’ sworn discovery responses; these declarations cannot be used to artificially create a dispute in material facts to survive the motion for summary judgment; the Court should enter judgment in favor of Defendants as a matter of law; in the alternative, summary adjudication in favor of Defendants as to the first, second, third, and/or fourth causes of action and the punitive damages claim is warranted; in the event the court finds that a triable issue of material fact exists as to any of the causes of action (which Defendants deny), then under the express terms of the contract at issue herein, the maximum amount of Defendants’ potential liability to Plaintiffs can be no more than $7,465 and summary adjudication in Defendants’ favor as to any damages claimed in excess of that amount is also warranted; any allegations and purported associated costs/expenses relating to Plaintiffs’ unnamed minor daughter as set forth in the complaint are not at issue in this litigation, are irrelevant, and should be stricken or dismissed because the unnamed minor daughter is not a plaintiff to this action. Regarding “Plaintiffs’ Separate Statement of Disputed and Additional Material Facts,” the alleged additional “facts” (beginning on page 105) are immaterial to the issues raised in the Defendants’ motion and do not need to be considered by the court. Nearly all the “facts” are not factual at all – they are legal argument; are wholly unsupported by admissible evidence and therefore cannot be considered; do not “relate to a claim or defense in issue which could make a difference in the outcome,” thus, the additional purported “facts” submitted by plaintiffs are, by definition, immaterial and should be ignored. (L.A. National Bank v. Bank of Canton (1991) 229 Cal.App.3d 1267, 1274.)
Defendant’s Reply; filed 5/24/24; 11 pages; summarized; read and considered; appears to track the information contained in the above document.
The Court’s Analysis
The Court disagrees with the Defendants contentions on every point. The Court found the testimony of Michael Neal Arnold, Francis Offermann, and Henri Fennell very helpful in its analysis. When supported by the declarations of the Croffs and relying on the specific disputed evidence in the Plaintiffs’ Separate Statement there are triable issues on all the issues raised by Defendants.
In summary the Court has read hundreds if not thousands of pages of evidence and argument and finds the Opposition to the Motions persuasive; compelling; credible.
Testimony of the Croffs
The Court recognizes the hearsay testimony in the Croff declarations but overrules those objections as it provides the Court with an explanation of what they did, why they did it, and when they did it. Their testimony was convincing and reasonable.
The Damage Limitation Clause (“DLC”)
The Court agrees with the Plaintiff’s analysis. The DLC is unenforceable at least as to Plaintiffs’ claims for gross negligence and fraud. California law prohibits all contracts which have for their object, directly or indirectly, to exempt anyone from responsibility for his own fraud, or willful injury to the person or property of another, or violation of law, whether willful or negligent. Cal. Civ. Code § 1668. It is well-settled that a contractual provision that purports to eliminate or limit liability for fraudulent conduct is unenforceable. (Food Safety Net Servs. v. Eco Safe Sys. USA, Inc. (2012) 209 Cal.App. 4th 1118, 1126.) The California Supreme Court has extended this prohibition to claims of gross negligence as well. (See City of Santa Barbara, 41 Cal. 4th at 750-51 [holding that an agreement, “to the extent it purports to release liability for future gross negligence, violates public policy and is unenforceable.”]).
In this case, based upon the evidence presented here, Defendants’ SPF installation at the Property constituted an extreme departure from the most basic and commonly accepted industry standards, supporting a finding that Defendants were grossly negligent. The evidence also indicates that Defendants engaged in fraudulent conduct to conceal their negligence and avoid liability.
Therefore, the DLC is unenforceable and cannot shield Defendants from liability for all of Plaintiffs’ damages proximately caused by Defendants’ fraudulent and grossly negligent conduct.
Further, in interpreting the scope of Civil Code section 1668, courts have held that even limitations of liability for ordinary negligence are unenforceable if they involve and impair the public interest. (See City of Santa Barbara, 41 Cal. 4th at 755 (citing Tunkl v. Regents of Univ. of Cal., 60 Cal. 2d 92, 96 (1963)). Here, Defendants are engaged in the business of SPF installation, which is publicly regulated by the Contractors State License Board of the California Department of Consumer Affairs, as evidenced by the fact that Defendant ISB is required to and does hold a contractor’s license. Defendants perform a service of great importance and practical necessity to the public’s home improvement and insulation needs, and Defendants hold themselves out as willing to perform this service for any member of the public who seeks it. As a result of the essential nature of their services, Defendants possess a decisive advantage of bargaining strength against the public, and in exercising that superior bargaining power, Defendants confront the public with a standardized adhesion contract of exculpation that contains no provision allowing customers, such as Plaintiffs in this case, to pay additional fees and obtain protection against negligence. The Construction Agreement required Plaintiffs to vacate the Property during the SPF installation and for a period of at least 24 hours thereafter, which placed the Property entirely under Defendants’ control, subject to the risk of carelessness by Defendants. Under these circumstances, the SPF installation transaction between Plaintiffs and Defendants affects the public interest and that interest would be substantially impaired if Defendants are allowed to pay only nominal liability even for ordinary negligence.
Additionally, pursuant to Civil Code § 2782.5, California courts have held that limitation on liability clauses in contracts such as the Construction Agreement in this case are unenforceable when one party (i.e., Plaintiffs) did not have the technical knowledge or expertise about the specialized subject matter to make an informed opinion regarding the risk they were undertaking when signing the contract.
The DLC in the Construction Agreement is not enforceable and Defendants’ request for summary adjudication of this issue should be denied.
Breach of Contract
There are triable issues related to breach of contract.
The Construction Agreement expressly required Defendant ISB to install SPF at the
Property with no VOCs emitting from the finished foam product after 28 hours post-installation. This is a material contractual term due to the fact that misapplied SPF can continue to off-gas toxic VOCs for decades; the same VOCs that require installers to wear full PPE during application. Defendants insist in the Motion that there is no admissible evidence that the spray foam installed by ISB contained any CFC, HFC, or VOC approximately 28 hours after its installation. However, this claim is supported only by the self-serving Declarations of Defendants Sanchez and Esquer, who have not performed any testing of air and foam samples from Plaintiffs’ residence and are not experts in indoor air quality or VOC testing.
More importantly, as evidenced by the opinions of Plaintiffs’ experts, the foam samples collected from the Property on almost 2 months after Defendants’ SPF installation, were still off-gassing a toxic “cocktail” of seven VOCs, which were also registered in the indoor air samples from the Property.
Plaintiffs’ expert toxicologist has confirmed that all seven VOCs emitting from Defendants’ SPF have numerous toxic effects on human health and are particularly dangerous when inhaled by an infant such as Plaintiffs’ daughter.
The Construction Agreement expressly required Defendant ISB to install SPF insulation in a manner that would ensure it became “tack dry in twenty seconds” after application. SPF is “cured” when the reaction between the A-side and B-side chemicals is completed, and the SPF hardens throughout. The curing process begins on the surface of the SPF and proceeds through the full depth of the applied SPF over time. Typically, “tack dry” or “tack free” condition occurs within 60 minutes, and full cure may be completed in 8 to 24 hours.
Cross-section samples extracted from the SPF at the Property clearly displayed areas with different texture, layers of different cell structure and color, and internal streaks and voids filled with uncharacteristic substance, which is indicative of misapplied and improperly “cured” SPF off-gassing toxic chemicals and VOCs.
Defendant ISB’s lead installer at the Property, Jose Anaya, admitted that the cross-section samples of the SPF contained parts with different color and texture which is not normal.
Therefore, despite the Declarations of Defendants Sanchez and Esquer, admissible evidence clearly indicates that Defendants breached material terms of the Construction Agreement by misapplying the SPF, which never properly “cured” and continued to off-gas toxic VOCs for weeks after installation.
As for damages, according to Plaintiffs’ experts, it was reasonable for Plaintiffs not only to remove all the defectively installed SPF and replace the substrate (roof deck), but also to evacuate the Property and lease substitute housing to avoid any further exposure to toxic chemicals, which could be especially harmful to Plaintiffs’ infant daughter. It was also reasonable for Plaintiffs and their infant daughter to consult with doctors and undergo medical testing aimed at establishing whether Defendants’ defectively installed SPF had caused any damages to their health. The medical consultations and testing for Plaintiffs’ daughter were especially important and necessary in light of the fact that the VOCs emitting from Defendants’ SPF were especially dangerous to an infant’s health. During his involvement in SPF remediation at the Property, Croff diverted a considerable amount of time away from his work, which resulted in a substantial reduction of Plaintiffs’ household income over the span of several months.
The market value of the Property has been diminished due to the stigma associated with its history of toxic SPF contamination, which Plaintiffs will have to disclose to any potential buyer.
Negligence
There are triable issues related to Negligence. Defendants argue in the Motion that there is no evidence indicating that anything Defendants did fell below the standard of care, or that Defendants caused any damages, or even that Plaintiffs suffered any kind of legitimate measurable damages.
But there is evidence to support a finding that Defendants were not only negligent, but grossly negligent during their SPF installation at the Property. Defendants specialize and hold themselves out to the general public as experts in the spray foam insulation industry.
Defendants are held to a higher standard of care requiring them to use the skill, prudence, and diligence commonly exercised by SPF installers in good standing. As evident from the Plaintiffs’ experts, Defendants grossly deviated from the applicable standard of care in this case and acted with a complete disregard for the health hazard their carelessness created at Plaintiffs’ residence.
Defendants grossly deviated from basic SPF installation industry standards for many reasons, including the following:
1. For a period of more than a year and a half after the SPF installation in June 2022, Defendants could not definitively name the manufacturer of the SPF chemical product they themselves used at the Property, pointing to Huntsman or Carlisle on different occasions. In their discovery responses, Defendants indicated that they were not sure whether the manufacturer was Huntsman or Carlisle. Defendants then filed an Amendment to Cross-Complaint Naming ROE 1, identifying the SPF manufacturer as Carlise Construction Materials, LLC. Although the Declarations of Defendants Sanchez and Esquer in support of the Motion purport to identify Carlisle as the SPF chemical product manufacturer, Esquer retracted this statement during his deposition, while Sanchez admitted that according to Defendant ISB’s business records, the chemical manufacturer was Huntsman – not Carlisle. If Defendants were SPF installers in good standing, they should have no difficulty confirming the manufacturer of the SPF chemical product they used at the Property.
2. During discovery, Defendant ISB identified the SPF installers at the Property as
Jose Anaya (lead installer) and Marvin Magana (assistant). Plaintiffs propounded discovery requests seeking all documents relating to training certificates issued by third parties to Defendant ISB and its SPF installers after completion of training for operating SPF equipment, working with SPF chemical products, and safety and air control procedures. In response, Defendant ISB produced only two training certificates for Jose Anaya: Defendant ISB also produced only one for Marvin Magana, which was acquired online on December 12, 2022, i.e., after the SPF installation at the Property. Jose
Anaya’s 2012 training certificate is not only outdated and precedes numerous technological
advances over the ten-year period before the SPF installation at the Property in 2022, but it is also not a certificate issued by Carlisle, the purported manufacturer of the SPF chemical products used at the Property.
3. During discovery, Defendants produced a readout from the SPF machine used at the
Property, which shows that the installers selected the Carlisle setting on the machine, but the A-side and B-side drum lot numbers on the readout are Huntsman lot numbers, not Carlisle lot numbers. Defendants’ installers mismatched the SPF machine’s settings and the chemical product they used at the Property.
4. Plaintiffs’ experts have confirmed that the SPF samples from the Property were off-
gassing several chemicals, one of which was Huntsman-specific, and another was Carlisle-specific. Defendants’ SPF installers must have combined chemical products from different manufacturers, which is a fundamental mistake according to basic SPF installation industry standards that invariably leads to misapplied, defective and toxic SPF.
5. If the SPF product installed at the Property was manufactured by Carlisle, Defendants’ installers failed to follow Carlisle’s ventilation requirements set forth in Carlise’s Application Guide.
6. An undisputed standard in the SPF installation industry requires that the finished foam product must not off-gas any toxic chemicals and VOCs, as confirmed by the express terms
of the Construction Agreement.
7. The only evidence supporting Defendants’ position that the SPF at the Property was
properly installed are the declarations of Defendants Sanchez and Esquer who are admittedly not experts in SPF installation and have retracted most of their declaration statements.
8. Contrary to Defendant ISB’s assertion that it is a corporation in good standing, on September 15, 2023 and in relation to the SPF project at Plaintiffs’ Property, the
California Contractors State License Board cited Defendant ISB for having violated several sections of the California Business and Professions Code.
Fraud (Intentional Misrepresentation).
There are triable issues related to Fraud. Defendants argue in the Motion that Plaintiffs cannot prove the knowledge/scienter element of their cause of action for fraud because there is no evidence that Defendants knew of any issues with their SPF installation.
However, when fraud is alleged, lack of direct evidence of a defendant’s knowledge is not unusual. (RSB Vineyards, LLC v. Orsi, (2017) 15 Cal.App. 5th 1089, 1097. When a defendant “must have known,” an inference of actual knowledge is permitted. Id. at 1098.
Here, Defendants represented on several occasions to Croff that the air in the Property
smelled like foam and that the odors were normal and not dangerous. Defendants’ representations were false, as evidenced by the following: (1) Plaintiffs experienced offensive chemical odors throughout the Property for weeks; (2) Huntsman’s Vice President of Research and Development confirmed in writing that foam samples collected from the Property exhibited an uncharacteristic odor; and (3) Plaintiffs’ indoor air quality and VOC expert has also confirmed that foam samples from the Property emitted uncharacteristic, sweet chemical odors. Technical specification sheets and installation instructions published by Huntsman and Carlisle, Defendants’ chemical product suppliers, indicate unequivocally that properly installed SPF should have “neutral” odor, i.e., no odor, and misapplied SPF off-gasses “offensive” odors. It is also commonly accepted in the SPF installation industry that properly applied SPF is inert (i.e., inactive, without any ongoing chemical reactions) and therefore odorless.
Defendants also argue that there is no evidence indicating that Defendants intended for
Plaintiffs to rely on any kind of false representation, concealment, or nondisclosure.
Defendants Sanchez and Esquer state in their Declarations that they did not make any representations to Plaintiffs with intent to deceive or defraud. Code of Civil Procedure section 437c(e) is dispositive on the question of intent and provides, in relevant part, that: “summary judgment may be denied in the discretion of the court ... if a material fact is an individual's state of mind, or lack thereof, and that fact is sought to be established solely by the individual's affirmation thereof.” Defendants’ declarations are insufficient to negate Plaintiffs’ allegations that Defendants made misrepresentations with intent to deceive Plaintiffs into delaying and/or foregoing claims arising out of the defective SPF installation at the Property.
Allegations of fraud are sufficient to defeat a motion for summary judgment, as actual fraud is always a question of fact. Cal. Civ. Code § 1574. A question of fact is an issue for the trier of fact. Based on the evidence discussed above, triable issues exist as to Defendants’ fraudulent conduct and the Court should defer to the trier of fact for their adjudication.
Negligent Misrepresentation.
There are triable issues related to Negligent Misrepresentation. Plaintiffs point out that Defendants argue in the Motion that there is no evidence indicating that Defendants’ SPF
installation was defective, that Defendants made misrepresentations to Plaintiffs with intent to induce Plaintiffs’ reliance, and that Plaintiffs suffered damages as a result. These arguments have already been addressed in detail above.
Additionally, Plaintiffs allege negligent misrepresentation in the alternative to their cause of action for fraud. If Defendants honestly believed that their representations regarding the chemical odors in the Property were true, the evidence indicates that Defendants had no reasonable grounds for such belief as they specialize and hold themselves out to the general public as experts in the spray foam insulation industry and therefore Defendants should have been familiar with the common industry standard that properly applied SPF is inert and odorless.
Punitive Damages
There are triable issues related to Punitive Damages. Punitive damages are recoverable for fraud actions involving intentional misrepresentation. (Alliance Mortgage Co. v. Rothwell (1995) 10 Cal.4th 1226, 1241.)
Defendants argue in the Motion that there is no evidence indicating that Defendants acted despicably and with a willful and conscious disregard for Plaintiffs’ rights and safety. But Defendants’ fraudulent conduct fully supports an award of punitive damages in this case. Fraud alone is an adequate basis for awarding punitive damages. (Las Palmas Assocs. v. Las Palmas Ctr. Assocs. (1991) 235 Cal.App. 3d 1220, 1239. Defendants allegedly intentionally deceived and defrauded Plaintiffs into thinking that the chemical odors in the Property were normal while being fully aware, as professionals specializing in SPF installation, that the odors were caused by their defectively installed SPF which was off-gassing toxic chemicals endangering Plaintiffs’ health and safety.
There is a triable issue as to whether Defendants’ fraud and deception was despicable since Defendants were informed, at all relevant times, that Plaintiffs resided at the Property with their infant daughter about the potential impact of SPF off-gassing on their child’s health.
No Grounds for Striking Allegations Related to Daughter
Although Plaintiff’s daughter is not a named plaintiff, Plaintiffs’ claims pertaining to
their daughter is very much at issue in this action, contrary to Defendants’ assertions in the Motion. Plaintiffs are not making any claims or seeking any damages on behalf of
their daughter for any physical, mental, emotional, or financial injuries sustained by their daughter. Plaintiffs themselves were financially injured when they incurred medical expenses related to consultations with doctors and medical tests aimed at establishing whether Plaintiffs’ daughter had sustained any physical injuries because of Defendants’ defective SPF installation. All references to Plaintiffs’ concerns for their daughter’s health and the cost of Plaintiffs’ daughter’ medical testing is properly asserted in the FAC, as such references form, in part, the basis for Plaintiffs’ claim for damages related to medical consultations and testing.
Defendants Lack of Expert Testimony
The Court has looked for any expert testimony from the defense to rebut what the Plaintiffs’ experts have opined and found none. That was not helpful to their cause here.
Conclusion
The Motions should be denied.
[1] The Court apologizes for any grammatical and typographical errors in this ruling.