Bernadou v. Costo Wholesaler

Filed 10/12/06 Bernadou v. Costo Wholesaler CA1/5

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 977(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 977(b). This opinion has not been certified for publication or ordered published for purposes of rule 977.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FIRST APPELLATE DISTRICT

DIVISION FIVE

Plaintiff Renee Bernadou (Bernadou) appeals the dismissal of her first amended and operative complaint against defendants Costco Wholesale Corporation and Washington Wholesalers, Inc. (collectively Costco), for fraudulent concealment and intentional misrepresentation after Costco’s demurrer was sustained without leave to amend.^[1] Bernadou contends the trial court erroneously sustained the demurrer and denied her leave to amend. We agree and reverse.

Procedural History and Facts

In October 2004, Bernadou filed her original complaint against Costco and the individual coemployee defendants for (1) negligence, (2) breach of contract, (3) breach of fiduciary duty, (4) nuisance, (5) fraud/fraudulent concealment, (6) fraud/intentional misrepresentation, (7) negligent misrepresentation, and (8) fraud/promise made without intent to perform. The trial court ordered the dismissal of the individual defendants after sustaining their unopposed demurrer without leave to amend. As to Costco’s demurrer, the court sustained without leave to amend the unopposed demurrer to the third and fourth causes of action, sustained without leave to amend the demurrer to the first and eighth causes of action on the ground that they were barred by workers’ compensation exclusivity (Lab. Code, §§ 3600, 3602),^[2] and sustained without leave to amend the demurrer to the second cause of action on the ground that Bernadou had not alleged contractual obligations, and the cause of action was barred by workers’ compensation exclusivity. The court sustained with leave to amend the demurrer to the fifth and sixth causes of action for fraudulent concealment and intentional misrepresentation, to allege, if possible, facts establishing the exception to workers’ compensation exclusivity (§ 3602, subd. (b)(2)) (hereafter section 3602(b)(2)). Specifically, the court found that Bernadou had failed to allege that Costco had actual knowledge of her alleged injury prior to the date she initiated her workers’ compensation claim, or that Costco did anything after obtaining such knowledge to aggravate her alleged injury.

First Amended (Operative) Complaint

Bernadou worked for Costco at its Livermore location (subject property) from October 1995 through January 7, 2003.^[3] In the winter of 1995 to 1996, shortly after moving into the subject property, Bernadou noticed water leaking into her office window, which wet the carpeting. The water intrusion continued every winter and Bernadou repeatedly and unsuccessfully complained about it to Costco. In November and December 2002, Bernadou notified Costco that eight offices at the subject property had flooded with water.

In early January 2003, Bernadou visited her doctor complaining of difficulty breathing. Her doctor diagnosed her with asthma possibly related to the flooding at the subject property. On January 6, Bernadou first complained of asthma and filed a workers’ compensation claim based on work-related asthma and moved out of the subject property.^[4]

In mid-January 2003, Costco retained an environmental mold testing company to conduct sampling at the subject property and obtained a copy of the test results in late January. In February, Costco faxed a copy of the mold testing report to Bernadou’s doctor, but concealed and withheld five pages of the eight-page report. Bernadou ultimately obtained a complete copy of the report in March.

Prior to Bernadou’s filing of her workers’ compensation claim, Costco knew of the water intrusion and harmful, toxic molds within the subject property, and “knew or should have known that . . . [Bernadou] and . . . other individuals [within the subject property] had sustained injuries as a result of the toxic mold exposure. . . . Costco concealed the connection between [Bernadou’s] injuries and [Bernadou’s] employment at the subject property caused by the exposure to toxic mold and water saturated building materials. Finally, . . . [Bernadou’s] injuries were caused and/or aggravated by the concealment [by Costco] of the presence of mold within the subject property and the connection between [Bernadou’s] injuries and the mold as well as the connection between [Bernadou’s] injuries and [Bernadou’s] employment at the subject property.”

Bernadou was unaware until mid-February 2003 that toxic mold was present at the subject property. Prior to that time Bernadou neither knew nor had reason to know that she had been injured, the cause of her injuries, or Costco’s liability therefore.

The first cause of action for fraudulent concealment (Civ. Code, §§ 1572, subd. (3), 1710, subd. (3)) alleged that when Bernadou filed her workers’ compensation claim in January 2003, Costco knew that water intrusion, if not properly repaired, could lead to the development of toxic molds, which could cause health problems, but failed to warn her that toxic mold could have been a contributing factor in causing her injuries. It also alleged, “[i]n spite of this knowledge, when [Bernadou] first filed a workers’ compensation claim due to her asthma on January 6, 2003, Costco was aware that [Bernadou] had been having health problems consistent with exposure to toxic mold and did nothing to warn or inform [Bernadou] that toxic mold could have been a cause or contributing factor of her injuries.”

Bernadou’s injuries were aggravated as a result of Costco’s fraudulent concealment of the health effects of toxic mold that it knew existed on the subject property and Costco’s refusal to share the results of mold testing with her. Bernadou was unaware at the time she filed her January 2003 workers’ compensation claim that mold was a cause and/or aggravating factor of the respiratory and mold-related injuries she suffered prior to that time. Because of its prior dealings with mold testing and mold remediation companies, and the existence of numerous employees in the subject premises with cold and flu-like symptoms and other mold-related injuries, Costco knew of the true cause and source of these injuries. Had Costco timely notified its employees of the potential health effects of toxic mold, caused by the intrusion of water into the subject property since at least 1995, Bernadou could have undertaken mitigating actions such as requesting a transfer or seeking alternative employment.

The second cause of action for intentional misrepresentation (Civ. Code, §§ 1572, subd. (1), 1710, subd. (1)) alleged that Costco fraudulently misrepresented facts regarding the mold testing and its concern for the health and safety of its employees. It also alleged that had Bernadou known the true facts she would not have continued to work in the subject property, would have moved out of the subject property sooner and would have conducted additional inspections of the property or hired persons to inspect and/or repair the property.

Costco demurred on the ground that both causes of action were barred by the workers’ compensation exclusivity rule. (§ 3602(b)(2).) The court sustained the demurrer without leave to amend on the ground that like the original complaint, the first amended complaint contains no specific factual allegations demonstrating that Costco had actual knowledge of Bernadou’s injury (as distinguished from knowledge of the underlying condition of the subject property) prior to the date she initiated her workers’ compensation claim, or that Costco did anything after obtaining such knowledge to aggravate her alleged injury.

Standard of Review

We review de novo an order sustaining a demurrer without leave to amend, exercising our independent judgment as to whether, as a matter of law, the complaint states a cause of action on any available legal theory. (See Lazar v. Hertz Corp. (1999) 69 Cal.App.4th 1494, 1501.) In doing so, we assume the truth of all material factual allegations, and are required to accept them as such, together with those matters subject to judicial notice. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.)

Discussion

Bernadou contends the court erred in sustaining Costco’s demurrer because her complaint adequately alleged that Costco was aware of the presence of toxic mold and her and her fellow employees’ illnesses related to their exposure to mold in the workplace, and her injuries were aggravated due to Costco’s concealment of this information. Consequently, she argues she sufficiently pled the fraudulent concealment exception to the workers’ compensation exclusivity rule. (§ 3602(b)(2).)

“As a general rule, an employee injured in the course of employment is limited to the remedies available under the Workers’ Compensation Act.” (Davis v. Lockheed Corp. (1993) 13 Cal.App.4th 519, 521-522, citing Foster v. Xerox Corp. (1985) 40 Cal.3d 306, 308 (Foster); accord, Palestini v. General Dynamics Corp. (2002) 99 Cal.App.4th 80, 86-87 (Palestini).) However, section 3602(b)(2)^[5] provides a narrow exception to this workers’ compensation exclusivity rule. (Foster, at pp. 308-309.)

Three conditions are necessary for the fraudulent concealment exception to apply: “(1) the employer knew that the plaintiff had suffered a work-related injury; (2) the employer concealed that knowledge from the plaintiff; and (3) the injury was aggravated as a result of such concealment.” (Palestini, supra, 99 Cal.App.4th at p. 90, citing Foster, supra, 40 Cal.3d at p.312.)

In Foster, the plaintiff alleged he repaired and maintained equipment that was unsafe for its intended use because it contained a large amount of arsenic, a poisonous substance; the defendant employer did not warn the plaintiff of the presence of arsenic or safeguard the plaintiff from its effects; and the plaintiff suffered symptoms of arsenic poisoning, which he reported to his supervisor. Thereafter, when the plaintiff terminated his employment due to the severity of his symptoms, his doctor told him he was suffering from arsenic poisoning caused by his work and aggravated by his continued exposure to arsenic. (Foster, supra, 40 Cal.3d at p. 309.) The court found that the complaint was sufficient because it alleged in general terms that the defendant knew the plaintiff’s physical problems were caused by the arsenic and that his injuries “ ‘as reported to the company and well known to them’ “ were aggravated by the plaintiff’s continued exposure to arsenic in the workplace. (Id. at p. 312.) “Since the complaint alleges that [the] defendant knew [the] plaintiff had contracted arsenic poisoning from his employment and concealed that knowledge from him, thereby aggravating his illness, it is sufficient to state a cause of action under [section 3602(b)(2)].” (Foster, at p. 312.)

In Palestini, the plaintiff alleged that he was continuously overexposed to certain chemicals in the workplace that the defendant employer knew could be absorbed through the skin and cause cancer. As a result of the plaintiff’s overexposure to these chemicals, carcinogens entered his body and caused him to develop skin rashes and discoloration which he reported to his supervisors. The defendant knew it was overexposing the plaintiff and other employees to carcinogenic chemicals and that the overexposure would probably cause damage to them. The defendant fraudulently concealed from the plaintiff that the chemicals to which he was exposed contained carcinogens and that his skin problems were a precursor to the development of the type of cancer he later developed, thereby aggravating his work-related injuries. (Palestini, supra, 99 Cal.App.4th at p. 84.)

The Court of Appeal stated, “An employer’s actual knowledge of the existence of an employee’s injury connected with the employment is a necessary prerequisite to establishing a claim against the employer for fraudulent concealment under section 3602(b)(2). [Citations.] This principle is based on the rationale that an employer cannot be held liable under section 3602(b)(2) for concealing something of which it had no knowledge. [Citation.]” (Palestini, supra, 99 Cal.App.4th at p. 93.) Because we are required to liberally construe pleadings, the court found that the first pleading requirement of Foster (the employer knew the plaintiff suffered a work-related injury) had been sufficiently pled. (Palestini, at p. 93.)

Palestini found that the plaintiff had satisfied the second pleading requirement of Foster (the defendant concealed its knowledge that the plaintiff suffered a work-related injury) by alleging that the defendant knew of the causal relationship between the plaintiff’s symptoms and the cancer he developed and concealed from him its knowledge that he was injured as a result of chronic exposure to carcinogenic chemicals. (Palestini, supra, 99 Cal.App.4th at pp. 93-96.)

Palestini also found that the plaintiff had satisfied the third Foster pleading requirement (the plaintiff’s work-related injuries were aggravated due to the defendant’s fraudulent concealment of its knowledge of the existence of the plaintiff’s injuries) by alleging that as a result of the defendant’s acts of concealment, the plaintiff was deprived of the opportunity to take proper precautions to avoid exposure to the particular chemicals and as a proximate result, the plaintiff sustained long term chronic exposure to carcinogens and contracted cancer. (Palestini, supra, 99 Cal.App.4th at pp. 96-97.)

I. Costco’s Knowledge that Bernadou Suffered a Work-Related Injury

Bernadou argues that the allegations of her complaint were sufficient under Foster and Palestini to establish Costco’s actual knowledge that she sustained a work-related injury as a result of exposure to toxic mold.

An employer’s actual knowledge of the employee’s injury is an essential prerequisite to establishing a section 3602(b)(2) claim. However, we are mindful that at the pleading stage, general allegations that the employer knew the plaintiff’s problems were caused by the plaintiff’s workplace exposure are sufficient. (Palestini, supra, 99 Cal.App.4th at p. 93.) Further, under Code of Civil Procedure section 452 we are obligated to “liberally” construe the allegations of plaintiff’s complaint “with a view to substantial justice between the parties.”

Bernadou alleged that Costco “knew or should have known” that Bernadou and other employees “had sustained injuries as a result of the toxic mold exposure.” In pleading the fraudulent concealment cause of action, she alleged that when she filed her workers’ compensation claim in January 2003, Costco “was aware that [Bernadou] had been having health problems consistent with exposure to toxic mold.”

“We give the complaint a reasonable interpretation, reading it as a whole and its parts in their context. [Citation.]” (Reynolds v. Bement (2005) 36 Cal.4th 1075, 1083.) The complaint is adequately specific if it provides defendants “fair notice” of the nature of plaintiff’s claims. (Doheny Park Terrace Homeowners Assn., Inc. v. Truck Ins. Exchange (2005) 132 Cal.App.4th 1076, 1099.)

Bernadou alleged that Costco knew or should have known that her injuries resulted from toxic mold exposure in the workplace. Her allegation, in the alternative, that Costco had constructive knowledge of her injury does not undermine her allegation of actual knowledge. A plaintiff may plead alternative theories if the facts are in doubt or if a defendant’s liability depends on facts not well known to the plaintiff. (Tanforan v. Tanforan (1916) 173 Cal. 270, 273; see also 4 Witkin, Cal. Procedure (4th ed. 1997) Pleading, §§ 363-364, pp. 466-467.) The complaint also alleges, “when [Bernadou] first filed a workers’ compensation claim due to her asthma on January 6, 2003, Costco was aware that [Bernadou] had been having health problems consistent with exposure to toxic mold and did nothing to warn or inform [Bernadou] that toxic mold could have been a cause or contributing factor of her injuries.” Construed liberally, this allegation can reasonably be interpreted to mean that as of January 6, 2003, when Bernadou filed her workers’ compensation claim, Costco was already aware that Bernadou was having health problems consistent with toxic mold exposure. As such, it sufficiently alleges that Costco had actual knowledge that Bernadou suffered injury as a result of the toxic mold exposure.

II. Costco’s Concealment of Its Knowledge that Bernadou Suffered a Work-Related Injury

Bernadou next contends the allegations of her complaint were sufficient to plead that Costco concealed from her its knowledge of her injuries and their connection with her employment. Costco appears to respond that it could not conceal what it did not know, and the complaint’s failure to allege actual knowledge is fatal to its concealment claim.

We have already rejected Costco’s contention that the complaint fails to allege it had actual knowledge. In addition, the complaint alleges that “Costco concealed the connection between [Bernadou’s] injuries and [Bernadou’s] employment at the subject property caused by the exposure to toxic mold and water saturated building materials.” This allegation is sufficient to allege that Costco concealed from Bernadou its knowledge of her work-related injury.

III. Aggravation of Bernadou’s Injury Due to Costco’s Concealment

Finally, Bernadou contends her complaint adequately alleged that her injuries were aggravated by Costco’s concealment of its knowledge that toxic mold was present in the workplace and its connection to her injuries. We agree.

The complaint alleges:

(1) Bernadou’s “injuries were caused and/or aggravated by the concealment [by Costco] of the presence of mold within the subject property and the connection between [Bernadou’s] injuries and the mold as well as the connection between [Bernadou’s] injuries and [Bernadou’s] employment at the subject property.”

(2) “[W]hen [Bernadou] first filed a workers’ compensation claim due to her asthma on January 6, 2003, Costco was aware” she had been having “health problems consistent with exposure to toxic mold and did nothing to warn or inform [her] that toxic mold could have been a cause or contributing factor of her injuries.”

(3) “Costco further compounded and aggravated [Bernadou’s] injuries by refusing to divulge the results of mold testing performed . . . on or about January 13, 2003.”

(4) “[Bernadou’s] injuries were aggravated as a result of [Costco’s] fraudulent concealment. Although [Bernadou] filed a workers’ compensation claim on January 6, 2003, in response to a visit to her physician on January 3, 2003, [Bernadou] was not aware at this time that mold was a cause and/or aggravating factor to her injuries. [Bernadou] was aware that numerous individuals in the building had reported an increase in cold and flu-like symptoms over the years, but [Bernadou] was wholly ignorant of the true cause of these injuries. Further, [Bernadou] suffered from increased respiratory and other mold-related injuries prior to January 2003, but was wholly ignorant of the true cause and source of these injuries. [Costco] knew of the true cause and source of these injuries because of its prior dealings with mold testing and mold remediation companies, as well as numerous employees in the subject property which had reported an increase in cold and flu-like symptoms and other mold-related injuries such as headaches.”

These allegations permit the inference that prior to the time Bernadou permanently vacated the subject premises and filed her workers’ compensation claim, Costco concealed from her its knowledge of her work-related injury, thereby aggravating any such injury.

Because Bernadou’s complaint adequately alleged each of the three pleading requirements necessary to state a claim under section 3602(b)(2), the demurrer to her complaint was erroneously sustained.

Disposition

The judgment of dismissal is reversed.

SIMONS, J.

We concur.

JONES, P.J.

GEMELLO, J.

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^[1] Plaintiff does not appeal the dismissal of individual defendants Tracy Mauldin-Avery, Rob Zipp and Dennis Hoover, after their demurrer was sustained without leave to amend.

^[2] All undesignated section references are to the Labor Code.

^[3] Elsewhere the complaint alleges that Bernadou was forced to move out of the Livermore location on or about February 3, 2003.

^[4] Although the complaint variously states that plaintiff filed her workers’ compensation claim in January 2002 and January 2004, the parties agree that such claim was filed in January 2003.

^[5] Section 3602(b)(2) provides: “(b) An employee, or his or her dependents in the event of his or her death, may bring an action at law for damages against the employer, as if this division did not apply, in the following instances: . . . (2) Where the employee’s injury is aggravated by the employer’s fraudulent concealment of the existence of the injury and its connection with the employment, in which case the employer’s liability shall be limited to those damages proximately caused by the aggravation. The burden of proof respecting apportionment of damages between the injury and any subsequent aggravation thereof is upon the employer.”