Opinion
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
APPEALS from judgments of the Superior Court of Los Angeles County, Wendell Mortimer, Jr., Judge, Los Angeles County Super. Ct. No. BC303854, Los Angeles County Super. Ct. No. BC301797.
Schimmel & Parks, Alan I. Schimmel; Locks Law Firm and Andrew P. Bell for Plaintiffs and Appellants.
Shaw, Terhar & LaMontagne, Ralph S. LaMontagne, Jr., Michael J. Terhar; Womble, Carlyle, Sandridge & Rice and Clayton M. Custer for Defendant and Respondent Pass & Seymour, Inc.
Wilson, Elser, Moskowitz, Edelman & Dicker, Patrick M. Kelly, Martin K. Deniston and Arlene N. Berger for Defendant and Respondent Leviton Manufacturing Company, Inc.
CROSKEY, J.
In these two consolidated appeals, Stephanie Laney, Danny Waitman, and others, on their own behalf and on behalf of others similarly situated, sued the manufacturers of electrical receptacles known as back-wire push-in receptacles. The plaintiffs alleged that the receptacles posed an unreasonable risk of fire and damage to electrical wiring. The trial court concluded that the plaintiffs’ amended complaints alleged facts inconsistent with facts alleged in their original complaints concerning damages, disregarded the later allegations, and concluded that the economic loss rule barred the counts for negligence and strict products liability. The court therefore sustained demurrers to those counts without leave to amend. The court later sustained demurrers to the plaintiffs’ remaining counts for violation of the unfair competition law (Bus. & Prof. Code, § 17200) without leave to amend and dismissed the complaints.
On appeal, the plaintiffs contend their amended complaints properly alleged damage to property other than the receptacles themselves, were not sham pleadings, and were not barred by the economic loss rule. They also contend their later amended complaints adequately allege an injury-in-fact as required to establish standing under the unfair competition law and adequately allege unlawful business practices and deceptive advertising. We conclude that the sustaining of the demurrers to the counts for negligence and strict products liability without leave to amend was proper, but that sustaining of the demurrers to the unfair competition counts was error. We will therefore reverse and remand with directions.
FACTUAL AND PROCEDURAL BACKGROUND
1. Original Complaints and the Defendants’ Demurrers
Stephanie Laney, Debra Lynn Garelick, and Mary Beth Sweet (collectively, Laney) filed a complaint against Leviton Manufacturing Company, Inc. (Leviton), in September 2003 (Super. Ct. L.A. County, No. BC301797). Laney alleged that back-wire push-in receptacles designed and manufactured by Leviton use a “quick-wire” connection in which a wire is inserted into a hole and held in place by a brass spring, rather than wrapped around a screw that is tightened to hold the wire in place. She alleged that the wire interface deteriorates more rapidly in a back-wire push-in receptacle, resulting in excessive heat and an increased risk of fire or electrical shock. She alleged: “The deterioration results in elevated temperature at the contact points which, in turn, accelerates the deterioration. Eventually, temperatures are reached that cause degradation in the properties of the spring tab which further reduces the spring contact force and promotes more movement, corrosion, high resistance and failure.”
Laney alleged that the plaintiff class included persons who had purchased or owned back-wire push-in receptacles manufactured by the defendants, but specifically excluded from the class “consumers who have sustained personal injury and/or property damage (other than damages to the receptacle itself) as a result of Defendants’ practices.” Laney alleged that the named plaintiffs’ claims were typical of those of the plaintiff class. She alleged counts against Leviton for (1) negligence, (2) strict products liability based on failure to warn, (3) strict products liability based on design defect, and (4) unfair competition. She alleged damages for negligence consisting of only the costs to repair and replace the allegedly defective receptacles. She alleged damages more generally in the strict products liability counts. She alleged the first three counts as a class action and the fourth count as a representative action. Danny Waitman filed a complaint against Pass & Seymour, Inc. (Pass & Seymour), in October 2003, asserting the same factual allegations and the same counts against Pass & Seymour (Super. Ct. L.A. County, No. BC303854).
Leviton and Pass & Seymour generally demurred to the complaints, arguing that the economic loss rule precluded recovery on the first three counts because the plaintiffs failed to allege any personal injury or damage to other property. The defendants also argued that the complaints failed to adequately allege unfair competition. Rather than contest the demurrers, Laney and Waitman each filed first amended complaints. Laney later filed a second amended complaint.
2. Laney’s Second Amended Complaint, Waitman’s First Amended Complaint, and the Defendants’ Demurrers
Laney’s second amended complaint and Waitman’s first amended complaint alleged the same four counts as their original complaints. In addition to the prior allegations, they alleged that back-wire push-in receptacles manufactured by the defendants had resulted in physical injury to tangible property, including damage to home wiring and electrical systems. They also added the allegation, “From the outset and as soon as current is carried through them, the process of degradation of the contacts and contact surfaces commences.” The amended complaints alleged that the plaintiff class in each action included persons in the State of California who had purchased or owned back-wire push-in receptacles manufactured by the defendants, but amended the prior exclusion from the class of “consumers who have sustained personal injury and/or property damage (other than damages to the receptacle itself)” to read, “consumers who have sustained personal injury and/or property damage (other than damages to the receptacle and/or wire/insulation in the vicinity of the receptacle termination).” (Italics added.) The amended complaints continued to allege that the named plaintiffs’ claims were typical of those of the plaintiff class. The allegation of damages in the negligence count in each complaint was amended to state that the plaintiffs were “damaged in that the cost to repair and replace the defective receptacles and other property are substantial.” (Italics added.)
The defendants generally demurred to each count alleged in the complaints. They argued that the new damages allegations contradicted prior allegations, that the new allegations should be disregarded as sham allegations, and that the prior allegations showed that the economic loss rule precluded recovery on the first three counts. The defendants also argued that the complaints failed to adequately allege unfair competition. The defendants also specially demurred to the first three counts on the ground that the allegations of damages were uncertain.
The trial court conducted a joint hearing on the demurrers to Laney’s second amended complaint and Waitman’s first amended complaint in October 2004. The court sustained the demurrers to counts one, two, and three without leave to amend, stating in its minute order: “The class allegations in the amended complaint specifically exclude plaintiffs who have sustained personal injury or property damage other than damage to the receptacle. The initial complaint also pled this. . . . The first three causes of action fail because they do not claim economic loss. The pleadings are a sham as they do not adequately describe property damage or personal injury and are inconsistent with the original complaints.” The court sustained the demurrers to the fourth count in each action with leave to amend, stating that the allegations were “vague and uncertain, e.g. the ‘unlawful’ claim fails to specify a law that was violated.”
3. Laney’s Third Amended Complaint, Waitman’s Second Amended Complaint, and the Defendants’ Demurrers
Laney filed a third amended complaint, and Waitman filed a second amended complaint, each alleging a single count for unfair competition. The plaintiffs allege that the National Electrical Code (NEC) establishes building standards applicable to residential construction in California and that the defendants as manufacturers and sellers of back-wire push-in receptacles have failed to comply with sections 110.14(A) and 110.3(A)(5) of the NEC. They also allege that the defendants represented that the receptacles “are of the highest quality” and failed to disclose that the receptacles were defective. They allege further that each defendant “failed to properly label its receptacles and has created an unreasonable risk of danger for the general public undertaking to identify if a particular model of [the defendant’s] product is installed in their residence.” The plaintiffs allege that deficient labeling creates a risk of harm to members of the general public who seek to determine whether the defendants’ allegedly defective products are installed in their homes and thereby creates a public nuisance. Based on those allegations, the plaintiffs allege that the defendants’ conduct constitutes unlawful and unfair business practices under the unfair competition law.
The plaintiffs allege: “As a result of said conduct, Defendant has unlawfully and unfairly obtained monies unfairly gained and due and owing to consumers and to the public at large in the form of the costs associated with the investigation, rewiring and replacement of the defective backwire push-in receptacles. Defendant is required to make restitution and/or disgorgement of all ill-gotten gains obtained as a result of Defendant’s unlawful and unfair conduct as well as . . . .” Laney’s third amended complaint completes this sentence, “fluid recovery on a classwide basis,” while Waitman’s second amended complaint here seeks, “direct compensatory damages and/or fluid recovery damages on a classwide basis.” The plaintiffs allege the actions as both representative and class actions.
The defendants generally demurred to the amended complaints arguing that the complaints fail to adequately allege unlawful or unfair business practices or deceptive advertising. The defendants also argued that the complaints fail to adequately allege injury-in-fact and that the allegations of damage to property other than the receptacles are a sham. The defendants also specially demurred, arguing that the allegations of injury and unlawful conduct are vague and uncertain.
The trial court sustained the demurrers without leave to amend. A minute order filed in each action on July 22, 2005, states: “Proposition 64 does apply to existing claims and the pleading does not adequately describe any actionable damage. No property or money damage articulated in the complaint. The original complaint excluded plaintiffs who had property damage and any contrary allegations are inconsistent.”
The court did not expressly state whether it sustained the general or the special demurrers. (See Code Civ. Proc., §§ 472d, 430.10.) The reasons stated in the minute orders suggest that the court sustained the general demurrers on the ground of failure to state facts sufficient to constitute a cause of action (id., § 430.10, subd. (e)). Accordingly, we assume that the court sustained only the general demurrer in each action and did not rule on the special demurrers. (Briscoe v. Reader’s Digest Association, Inc. (1971) 4 Cal.3d 529, 544, overruled on another point in Gates v. Discovery Communications, Inc. (2004) 34 Cal.4th 679, 685, 697, fn. 9; Fremont Indemnity Co. v. Fremont General Corp. (2007) 148 Cal.App.4th 97, 111-112.)
The court entered a judgment of dismissal in each action. Laney (No. B186727). and Waitman (No. B186726) timely appealed the judgments. As already indicated, we have consolidated the two appeals.
The issues raised in the two appeals are identical, and it is appropriate to decide the two appeals together in a single opinion. In addition, the plaintiffs in the two actions are represented on appeal by the same counsel.
CONTENTIONS
The plaintiffs contend (1) Laney’s second amended complaint and Waitman’s first amended complaint properly alleged damages to wiring and insulation apart from the receptacles themselves, were not sham pleadings, and were not barred by the economic loss rule; (2) Laney’s third amended complaint and Waitman’s second amended complaint adequately allege unlawful business practices based on both NEC violations and public nuisance; (3) the plaintiffs adequately allege a cause of action under the unfair competition law based on false advertising; (4) the plaintiffs’ allegations that the receptacles caused physical damage to wiring and insulation and that they incurred expenses to investigate, rewire, and replace the receptacles, are sufficient to satisfy the standing requirement that they “suffered injury-in-fact and . . . lost money or property” (Bus. & Prof. Code, § 17204).
DISCUSSION
1. Standard of Review
We independently review the ruling on a demurrer and determine de novo whether the complaint alleges facts sufficient to state a cause of action. (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 affirm the judgment if it is correct on any ground stated in the demurrer, regardless of the trial court’s stated reasons. (Aubry v. Tri-City Hospital Dist. (1992) 2 Cal.4th 962, 967.)
It is an abuse of discretion to sustain a demurrer 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 burden is on the plaintiff to demonstrate how the complaint can be amended to state a valid cause of action. (Ibid.)
An amended complaint that omits harmful factual allegations from a previous complaint, whether verified or unverified, without an adequate explanation for the discrepancy is regarded as a sham pleading. A court ruling on a demurrer may take judicial notice of facts alleged in a prior complaint that reveal a defect in an amended complaint, and may disregard any inconsistent allegations in the amended complaint. (State ex rel. Metz v. CCC Information Services, Inc. (2007) 149 Cal.App.4th 402, 412; see Deveny v. Entropin, Inc. (2006) 139 Cal.App.4th 408, 425-426.)
2. The Economic Loss Rule Precludes the Purchaser of a Product from Recovering Damages for Economic Losses Based on Negligence or Strict Products Liability
The purchaser of a product ordinarily may not recover tort damages for the breach of a contractual obligation that causes only economic losses. Instead, the purchaser’s remedy is in contract alone, unless the conduct violated a duty independent of the contract arising from principles of tort law. (Robinson Helicopter Co., Inc. v. Dana Corp. (2004) 34 Cal.4th 979, 988-990; Aas v. Superior Court (2000) 24 Cal.4th 627, 643; Erlich v. Menezes (1999) 21 Cal.4th 543, 551-552.) Economic losses include damages for inadequate value, costs of repair and replacement of the defective product, and consequent loss of profits. (Robinson Helicopter, supra, at p. 988.) If the defendant’s conduct directly results in personal injury or damage to property other than the product itself, the duty that gives rise to tort liability is independent of the contract, so the economic loss rule does not apply. (Erlich, supra, at pp. 551-552; Seely v. White Motor Co. (1965) 63 Cal.2d 9, 18-19.)
The economic loss rule preserves “the fundamental difference between, on the one hand, the consumer’s contractual interest in having a product of the expected, bargained-for value and quality, and, on the other hand, the consumer’s tort interest in not suffering property damage or personal injury due to negligence in the manufacturing process.” (Aas v. Superior Court, supra, 24 Cal.4th at p. 642.) “ ‘This doctrine hinges on a distinction drawn between transactions involving the sale of goods for commercial purposes where economic expectations are protected by 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.] The economic loss rule requires a purchaser to recover in contract for purely economic loss due to disappointed expectations, unless he can demonstrate harm above and beyond a broken contractual promise. [Citation.]” (Robinson Helicopter Co., Inc. v. Dana Corp., supra, 34 Cal.4th at p. 988.)
The economic loss rule precludes the recovery of damages for economic losses based on a strict products liability cause of action. “[R]ecovery under the doctrine of strict liability is limited solely to ‘physical harm to person or property.’ [Citation.] Damages available under strict products liability do not include economic loss, which includes ‘ “ ‘damages for inadequate value, costs of repair and replacement of the defective product or consequent loss of profits—without any claim of personal injury or damages to other property . . . .’ ” ’ [Citation.] [¶] . . . [¶] In summary, the economic loss rule allows a plaintiff to recover in strict products liability in tort when a product defect causes damage to ‘other property,’ that is, property other than the product itself. The law of contractual warranty governs damage to the product itself. [Citations.]” (Jimenez v. Superior Court (2002) 29 Cal.4th 473, 482-483.) The economic loss rule similarly precludes the recovery of damages for economic losses based on a negligence cause of action. (Aas v. Superior Court, supra, 24 Cal.4th at pp. 640, 643.)
3. Facts Alleged in Prior Complaints Show that the Economic Loss Rule Precludes Recovery on the Negligence and Strict Products Liability Count
Laney and Waitman alleged in their original complaints that back-wire push-in receptacles designed and manufactured by the defendants created an imminent risk of property damage and bodily injury, and that the receptacles were “believed responsible for a vast number of home fires, millions of dollars in property damage and bodily injuries.” They alleged that the plaintiff class included persons who purchased or owned such receptacles manufactured by the defendants, but specifically excluded “consumers who have sustained personal injury and/or property damage (other than damages to the receptacle itself) as a result of Defendants’ practices.” They alleged that the claims of the named plaintiffs were typical of those of the plaintiff class. Those allegations necessarily implied that the named plaintiffs sustained no personal injury or property damage, other than damage to the receptacles themselves.
Laney and Waitman in their original complaints alleged counts for (1) negligence, (2) strict products liability based on failure to warn, (3) strict products liability based on design defect, and (4) unfair competition. Consistent with the alleged class definition excluding persons who suffered personal injury or property damage, the plaintiffs sought to recover only economic losses in the negligence count. Thus, they alleged that the defendants’ negligence resulted in damage “in that the cost[s] to repair and replace the defective receptacles are substantial . . . .” In the strict products liability counts, the plaintiffs alleged damages more generally.
The plaintiffs attempted to avoid the economic loss rule in their amended complaints. Laney alleged in her first amended complaint that the plaintiff class included persons in the State of California who purchased or owned back-wire push-in receptacles manufactured by the defendants, but omitted the prior exclusion of “consumers who have sustained personal injury and/or property damage (other than damages to the receptacle itself).” Waitman’s first amended complaint amended the prior exclusion to state that the class excluded “consumers who have sustained personal injury and/or property damage (other than damages to the receptacle and/or wire/insulation in the vicinity of the receptacle termination).” (Italics added.) The first amended complaints continued to allege that the named plaintiffs’ claims were typical of those of the plaintiff class. The first amended complaints also added allegations that the receptacles had caused physical injury to tangible property apart from the receptacles themselves, including “the wiring, electricity and electrical systems of these homes.” The damages allegation in the negligence count in each complaint was amended to state that the plaintiffs were “damaged in that the cost to repair and replace the defective receptacles and other property are substantial.” (Italics added.) Laney amended the plaintiff class definition again in her second amended complaint to conform to the exclusion alleged in Waitman’s first amended complaint.
The allegations in the original complaints that the plaintiff class excluded consumers who had sustained personal injury or property damage apart from damage to the receptacle itself and that the claims of the named plaintiffs were typical of those of the plaintiff class expressly limited the plaintiffs’ alleged injuries to only economic losses. Those allegations, if true, would defeat any right to recover tort damages based on negligence or strict products liability, pursuant the economic loss rule explained ante. The allegations in the amended complaints that the receptacles had caused physical injury to tangible property apart from the receptacles themselves, that the plaintiff class did not exclude consumers who sustained damage to the “wire/insulation in the vicinity of the receptacle termination,” and that the named plaintiffs’ claims were typical of those of the plaintiff class directly contradicted the prior allegations in that the named plaintiffs in the amended complaints allegedly sustained property damage apart from damage to the receptacle itself.
This is a material factual contradiction and not merely a permissible modification of the class definition or a change concerning the alleged legal effect of the same facts, as the plaintiffs argue. The named plaintiffs either sustained damage to property other than the receptacles, as alleged in the amended complaints, or they did not, as alleged in the original complaints. If the latter, the economic loss rule precludes the recovery of tort damages for negligence or strict products liability. Laney and Waitman seek to dismiss the significance of this contradiction by arguing that there was no real change in the facts alleged and only their legal theory has changed. We disagree. We conclude that the facts alleged in Laney’s second amended complaint and Waitman’s first amended complaint concerning damage to other property contradict the facts alleged in the original complaints, that those allegations in the amended complaints were a sham, and that the sustaining of the demurrers to those amended complaints was proper. The plaintiffs request leave to amend the counts for negligence and strict liability but have not shown how they can amend those counts to state a valid cause of action, and therefore are not entitled to leave to amend those counts.
4. The Plaintiffs Adequately Allege an Unlawful Business Practice
a. Unfair Competition Law
The unfair competition law defines “unfair competition” as “any unlawful, unfair or fraudulent business act or practice and unfair, deceptive, untrue or misleading advertising”, and any act prohibited by the false advertising law (Bus. & Prof. Code, § 17500 et seq.). (Id., § 17200.) The unfair competition law provides equitable remedies to prevent unfair competition and restore to the plaintiff any money or property wrongfully acquired by the defendant. (Id., § 17203.) A private person’s remedies under the unfair competition law are limited to injunctive relief and restitution. (Kasky v. Nike, Inc. (2002) 27 Cal.4th 939, 950.) An order for restitution is an order that compels the defendant to return money obtained through unfair competition to persons from whom the property was taken. (Ibid.) Damages are not available as a remedy for violation of the unfair competition law. (Cortez v. Purolator Air Filtration Products Co. (2000) 23 Cal.4th 163, 173.)
A private person has standing to sue for relief under the unfair competition law only if he or she “has suffered injury in fact and has lost money or property as a result of such unfair competition.” (Bus. & Prof. Code, § 17204.) Former Business and Professions Code section 17204 stated that an action could be prosecuted “by any person acting for the interests of itself, its members or the general public.” (Stats. 1993, ch. 926, § 2, pp. 5198-5199.) Proposition 64 amended section 17204 and restricted the scope of a private person’s standing to sue. Proposition 64 also amended section 17203 to state that a private person may maintain a representative claim for relief on behalf of others only if he or she satisfies both the standing requirements of section 17204 and the requirements of Code of Civil Procedure section 382 governing class actions. Proposition 64 was approved by the electorate on November 2, 2004, and became effective the following day. (Cal. Const., art. II, § 10, subd. (a).) These statutory amendments apply in all pending cases, regardless of when the cases were commenced. (Californians for Disability Rights v. Mervyn’s, LLC (2006) 39 Cal.4th 223, 227, 232-233.)
b. The Plaintiffs Adequately Allege that they Suffered an Injury-in-Fact and Lost Money or Property
An uncodified section of Proposition 64 stated that the initiative was intended to impose on private persons suing under the unfair competition law the injury-in-fact standing requirement of the United States Constitution. (Prop. 64, as approved by voters, Gen. Elec. (Nov. 2, 2004), § 1(e).) Article III, section 2 of the United States Constitution confines the judicial power of federal courts to the adjudication of “Cases” or “Controversies.” The United States Supreme Court has derived from the case or controversy requirement certain standing requirements, including the requirement that the plaintiff demonstrate that he or she has suffered an injury-in-fact. (Vermont Agency of Natural Resources v. United States ex rel. Stevens (2000) 529 U.S. 765, 771 [120 S.Ct. 1858].) An injury-in-fact is an injury that is “concrete and particularized” (Lujan v. Defenders of Wildlife (1992) 504 U.S. 555, 560 [112 S.Ct. 2130]), “ ‘distinct and palpable’ ” (Whitmore v. Arkansas (1989) 495 U.S. 149, 155 [110 S.Ct. 1717]), and “actual or imminent” (ibid.), rather than merely “ ‘conjectural’ or ‘hypothetical’ ” (ibid.). A particularized injury is an injury that affects the plaintiff in a personal and individual way. (Lujan, supra, at p. 560, fn. 1.) Business and Professions Code section 17204, as amended by Proposition 64, imposes these standing requirements on a plaintiff suing under the unfair competition law, and also states that the plaintiff must have “lost money or property as a result of such unfair competition.”
“It is the intent of the California voters in enacting this act to prohibit private attorneys from filing lawsuits for unfair competition where they have no client who has been injured in fact under the standing requirements of the United States Constitution.” (Prop. 64, supra, § 1(e).)
Although Proposition 64 stated that it was intended to incorporate only the injury-in-fact standing requirement under the United States Constitution, Daro v. Superior Court (2007) 151 Cal.App.4th 1079, 1098 suggested that Proposition 64 was intended to incorporate not only the injury-in-fact requirement, but also other, separate standing requirements imposed under Article III of the United States Constitution.
Whether a loss of money or property occurred “as a result of” (Bus. & Prof. Code, § 17204) the alleged unfair competition is a question of reliance or causation, rather than standing. We address this question in section 4.c., post.
The allegations that the plaintiffs purchased or own defective receptacles manufactured by the defendants that deteriorate rapidly and present an unreasonable risk of fire are sufficient to allege an injury-in-fact irrespective of the sham allegations concerning injury to other property. The alleged economic injury of purchasing a defective product is concrete and particularized, distinct and palpable, and actual, and is neither conjectural nor hypothetical. Moreover, the alleged purchase of a defective productive constitutes a loss of money within the meaning of the statute.
We assume that the court did not sustain the special demurrers to the amended complaints (see fn. 1, ante), so we cannot affirm the judgment on the ground that the allegations that the plaintiffs “purchased and/or own” defective receptacles manufactured by the defendants are vague and uncertain.
The court stated in its minute orders sustaining the demurrers to Laney’s third amended complaint and to Waitman’s second amended complaint that the original complaints excluded from the plaintiff class persons who suffered “property damage.” The court apparently regarded as sham allegations, as we do, the allegations in the amended complaints that the plaintiffs have suffered damage to property other than the receptacles. We construe the court’s statement that the plaintiffs failed to allege “actionable damage” as required by Proposition 64 to mean that they failed to allege an injury-in-fact and a loss of money or property as required by Business and Professions Code section 17204, as amended. As we have explained, that conclusion was error.
c. The Plaintiffs Adequately Allege an Unlawful Business Practice Based on NEC Violations
An unlawful business practice under the unfair competition law is any conduct that is both a business practice and forbidden by law. (Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Co. (1999) 20 Cal.4th 163, 180.) The plaintiffs allege that the defendants have manufactured and sold back-wire push-in receptacles in violation of sections 110.14(A) and 110.3(A)(5) of the NEC. They allege that section 110.14(A) states, in pertinent part, “ ‘connection of conductors to terminal parts shall ensure a thoroughly good connection without damaging the conductors . . .’ ” and that section 110.3(A)(5) “requires consideration of the ‘[h]eating effects under normal conditions of use and also under abnormal conditions likely to arise in service.’ ”
The defendants argued in their demurrers that the complaints failed to specify a law that was violated, as the trial court had concluded with regard to the prior amended complaints, and that the NEC is not a California statute or regulation. The defendants repeat those arguments on appeal, and also argue that the plaintiffs must establish the existence of the NEC provisions by judicial notice or some other means but failed to do so; that the defendants are not subject to the alleged NEC provisions in any event because the defendants are not builders; and that the plaintiffs fail to allege a causal connection between the alleged unfair competition and the plaintiffs’ injury. We reject these arguments.
California building standards are regulations that are codified in the California Building Standards Code. (Health & Saf. Code, §§ 18909, 18910, 18911, 18919, 18940.) Building standards are based on model codes, national standards, or specifications. (Id., § 18928.) The California Building Standards Law (id., § 18901 et seq.) defines “model code” as “any building code drafted by private organizations or otherwise,” specifically including the latest edition of “The National Electric Code of the National Fire Protection Association.” (Id., § 18916.) Building standards codified in the California Building Standards Code based on a model code ordinarily must incorporate the text of the model code by reference only, and must indicate any additions to or deletions from the model code. (Id., § 18928.1.) Health and Safety Code section 18938, subdivision (b) states that the building standards contained in several model codes, including the NEC, “as referenced in the California Building Standards Code, shall apply to all occupancies throughout the state . . . .”
Building standards are adopted pursuant to the California Building Standards Law only through an exercise of discretion by the California Building Standards Commission. (Plastic Pipe & Fittings Assn. v. California Building Standards Com. (2004) 124 Cal.App.4th 1390, 1404-1405.) The statutory authority to adopt building standards based on model codes therefore is not an unconstitutional delegation of legislative authority. (See id. at p. 1410; International Assn. of Plumbing etc. Officials v. California Building Stds. Com. (1997) 55 Cal.App.4th 245, 253-254.)
The California Building Standards Code is title 24 of the California Code of Regulations, but is published separately. The parties did not request judicial notice of the relevant portions of the California Building Standards Code or the NEC in the trial court or on appeal. The contents of the California Building Standards Code and the NEC provisions incorporated therein is a question of fact that must be established for the plaintiffs to prevail on the merits of their claim based on NEC violations. To overcome the demurrers, however, the plaintiffs need only plead the existence and terms of the applicable building standards. We must assume the truth of the properly pleaded factual allegations, unless matters of which judicial notice is taken conclusively negate the facts alleged. (Cruz v. County of Los Angeles (1985) 173 Cal.App.3d 1131, 1134.) The plaintiffs in their operative complaints specify the NEC provisions that the defendants allegedly violated and quote portions of the provisions. Those allegations are sufficient to allege a violation of law as necessary to establish an unlawful business practice under the unfair competition law.
Whether the NEC provisions govern conduct by the defendants as manufacturers and sellers of the receptacles is another question. The defendants did not argue in the trial court that the NEC provisions did not apply to them. Although we may take judicial notice of the relevant provisions and decide in the first instance whether those provisions apply to the defendants, we believe that the relevant provisions and legal arguments concerning those provisions should be presented to the trial court in the first instance.
Finally, the plaintiffs’ allegations that they “purchased and/or own” back-wire push-in receptacles manufactured by the defendants and that the receptacles are defective adequately allege that the plaintiffs lost money as a result of the alleged unlawful business practice, for purposes of Business and Professions Code section 17204. In light of our conclusion that the plaintiffs adequately allege an unfair business practice based on NEC violations, we need not address the parties’ arguments concerning other potential bases for the unfair competition counts.
d. The Plaintiffs Adequately Allege a Request for Restitution
The defendants argue that the sustaining of the demurrers to the unfair competition counts was proper because the plaintiffs fail to properly allege a request for relief that is recoverable under the unfair competition law. The defendants argue that the plaintiffs are not entitled to restitution, as alleged in the complaints, because the plaintiffs do not adequately allege that the defendants wrongfully acquired the plaintiffs’ money or property. We conclude that the allegations that the plaintiffs are entitled to restitution of amounts paid to the defendants for defective receptacles are sufficient, at the pleading stage, to allege a right of restitution.
DISPOSITION
The judgments are reversed in both actions with directions to the trial court to vacate its orders of July 22, 2005, sustaining the demurrers to Laney’s third amended complaint (No. B186727) and Waitman’s second amended complaint (No. B186726), and enter new orders overruling those demurrers. Each party is to bear its own costs on appeal.
We Concur: KLEIN, P. J., KITCHING, J.