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September 29, 1992

LINCOLN ALAMEDA CREEK, et al., Plaintiffs,

The opinion of the court was delivered by: MARILYN HALL PATEL


 The facts underlying this third-party complaint are not in dispute. Mary Orsetti entered into an agreement with the plaintiff, Lincoln Alameda Creek ("Lincoln"), for the sale of a piece of property located at 29990 Union City Boulevard, Union City, California. According to the agreement, Lincoln's purchase was conditioned upon its approval of the condition of the soils, sub-soils and groundwater of the property. In October, 1986, Lincoln hired Beta, an environmental consultant, to perform a subsurface soil and groundwater contaminants investigation of the property in order to assist Lincoln in deciding whether to purchase it. This contract between Beta and Lincoln was an oral contract.

 Beta was not given a copy of the purchase contract between Lincoln and Mary Orsetti during its investigation of the property, and Lincoln did not discuss its terms with Beta. Beta obtained some information regarding the property from Orsetti's real estate agent, but was not able to get in contact with Mary Orsetti. Beta placed several calls to Orsetti in order to get additional historic information, but these calls were not returned.

 The report was completed on November 21, 1986 and was given to Lincoln. Lincoln did not discuss with Beta their intention that the report would be for the benefit of anyone other than Lincoln. Beta was also not informed that Mary Orsetti would review or rely on the report. Beta did not have a contract with Orsetti, and did not give Orsetti any express warranty.

 The report stated that Beta's analysis of the land did not reveal any of the "constituents of concern" and therefore they felt the property was clear of contamination. The sale of the land was subsequently completed. Lincoln is presently involved in litigation with Orsetti for the alleged contamination of the property. Orsetti brought this third-party complaint against Beta for its alleged negligence, breach of warranty, and misrepresentation in the preparation of the ground contamination report. Orsetti is seeking indemnification and compensatory damages from Beta.

 Beta's motion for summary judgment turns on the following issues: (1) whether Beta owed Orsetti any duty of care in the preparation of the report, (2) whether Orsetti was a third-party beneficiary of the contract between Lincoln and Beta and (3) whether Beta committed any fraud or misrepresentation to the damage of Orsetti.


 I. Legal Standard

 Under Federal Rule of Civil Procedure 56, summary judgment shall be granted "against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial . . . since a complete failure of proof concerning an essential element of the nonmoving party's case necessarily renders all other facts immaterial." Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986). See also T.W. Elec. Serv. v. Pacific Elec. Contractors Ass'n, 809 F.2d 626, 630 (9th Cir. 1987) (the nonmoving party may not rely on the pleadings but must present significant probative evidence supporting the claim); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986) (a dispute about a material fact is genuine "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.").

 The court's function, however, is not to make credibility determinations. Anderson, 477 U.S. at 249. The inferences to be drawn from the facts must be viewed in a light most favorable to the party opposing the motion. T.W. Elec. Serv., 809 F.2d at 631.

 An essential element of any negligence claim is a legal duty of care. All persons have a duty "to use ordinary care to prevent others being injured as the result of their conduct . . . ." Rowland v. Christian, 69 Cal. 2d 108, 112, 70 Cal. Rptr. 97, 443 P.2d 561 (1968). But liability is not automatically imposed on someone for injuries sustained by another person. Rather, a defendant is liable only for those injuries which were reasonably foreseeable to the defendant at the time of the act. Dillon v. Legg, 68 Cal. 2d 728, 739, 69 Cal. Rptr. 72, 441 P.2d 912 (1968). Whether a duty will be imposed depends on a number of factors, including: (1) the extent to which the transaction was intended to affect the plaintiff, (2) the foreseeability of the injury suffered, (3) the degree of certainty the plaintiff was injured, (4) the ...

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