Twelve-year-old Angelina Posca and her father, 58-year-old Angel Jorge Posca, were killed when that truck slammed into their car.
Pasadena Superior Court Judge Lisa Lench said Friday there was insufficient evidence to show intent to kill the two victims.
Prosecutors say they'll appeal the decision.
Costa still faces reckless driving and vehicular manslaughter charges.
Prosecutors say Costa failed to follow weight regulations, causing the brakes to fail.
Two others suffered concussions in the multi-car accident, and a third sustained a bone fracture.
Defense attorney Steve Meister said the judge's opinion confirms his argument in the case.
"We are not celebrating or dancing in the streets because we still know two people (were killed) and many more were injured," he said.
Meister said the facts of the case "did not support" the murder charges, and that his client has no criminal record or history of bad driving, and no drugs or alcohol were involved.
Costa remained in jail on $2.09 million bail. He's expected back in court October 20.
CNS contributed to this report.
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