Some maxims of civil procedure have been around for so long that, in the abstract, no lawyer would question them. But even today, the precise application of these time-honored rules in some instances becomes the subject of protracted dispute. For example, in ruling on a demurrer, it is axiomatic that the court is limited to the four corners of the complaint and exhibits attached thereto. One narrow exception is that the court may consider documents of which judicial notice is proper. A recent case from the California Court of Appeal chronicled a significant controversy about the application of this rule.
Panterra GP (no, not these dudes who, incidentally, are actually pretty good), a licensed California general contractor, allegedly completed millions of dollars of construction work for defendants, but was not paid. It filed suit, but faced a problem– while some documents (e.g., the certificate of occupancy) named it as the contractor, the construction contract attached to the complaint named “Panterra Development Ltd., L.L.P.” as the contractor for the project. That’s an issue. Panterra Development is not licensed as a contractor in California; it is the partnership of which Panterra GP is the general partner. Unlicensed contractors are unable to recover for their work.
While the case had a long procedural history, involving three successive complaints and corresponding demurrers raising multiple issues, the short story is that the trial court sustained the third demurrer without leave. The Court of Appeal, however, granted Panterra GP’s writ of mandate, and ruled in its favor.
The court acknowledged that, in ruling on a demurrer, “a complaint otherwise good on its face is subject to demurrer when facts judicially noticed render it defective.” But judicial notice is not an invitation to hold a trial on the merits at the pleading stage: “A demurrer is simply not the appropriate procedure for determining the truth of disputed facts. The hearing on demurrer may not be turned into a contested evidentiary hearing through the guise of having the court take judicial notice of documents whose truthfulness or proper interpretation are disputable.” Thus, resolving the inconsistency in the documents about who was the contractor would have to wait until summary judgment or trial.
As an attorney representing plaintiffs in California state court, I have occasionally had to fend off challenges at the pleading stage by defendants inappropriately raising factual matter. The Panterra court’s restatement of the correct application of the rule is a welcome development.