Judge: Andrew E. Cooper, Case: 23CHCV01859, Date: 2024-12-17 Tentative Ruling

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Case Number: 23CHCV01859    Hearing Date: December 17, 2024    Dept: F51

DEMURRER

Demurrer Filed: 8/19/24

MOVING PARTY: Defendant/Cross-Complainant/Cross-Defendant Linda Romney, as Successor Trustee of the Marie F. Kloss Revocable Trust Dated 5/21/1996 (“Cross-Defendant”)

RESPONDING PARTY: Defendant/Cross-Defendant/Cross-Complainant sPower LLC, individually and as assignee of, and successor corporation to, Adelanto Greenworks One LLC (“Cross-Complainant”)

NOTICE: OK

RELIEF REQUESTED: Cross-Defendant demurs against the first, second, and fourth causes of action in Cross-Complainant’s cross-complaint.

TENTATIVE RULING: The demurrer is overruled. Cross-Defendant to file and serve her answer to Cross-Complainant’s cross-complaint within 20 days.

BACKGROUND

This is a contract action involving a parcel of vacant land, identified as Assessor’s Parcel Number 3103- 591-03-0-000, located in Victorville, the County of San Bernardino. (Compl. ¶ 7.) On 2/10/14, Cross-Defendant, as seller, and Cross-Complainant’s predecessor, as buyer, entered into a purchase and sale agreement for the subject parcel. (Ibid.) Cross-Complainant deposited the sum of $206,250.00 with Plaintiff-in-Interpleader Escrow Technologies, Inc., representing the buyer’s deposit. (Id. at ¶ 9.) On 6/25/24, Cross-Complainant directed Plaintiff to cancel the land purchase and release the buyer’s deposit in the sum of $76,250.00 back to Cross-Complainant, but Cross-Defendant refused to release the deposit, arguing that she was entitled to the same. (Id. at ¶¶ 10–14.) The disputed funds remain in escrow. (Id. at ¶ 14.)

On 6/26/23, Plaintiff filed its interpleader complaint against Cross-Complainant and Cross-Defendant. On 10/12/23, Cross-Defendant filed her answer, and cross-complaint, alleging against Cross-Complainant the following causes of action: (1) Breach of Contract; (2) Ejectment; and (3) Declaratory Relief. On 7/11/24, Cross-Complainant filed its answer to Plaintiff’s complaint.

On 7/12/24, Cross-Complainant filed the instant cross-complaint, alleging against Cross-Defendant the following causes of action: (1) Breach of Contract; (2) Breach of the Duty of Good Faith and Fair Dealing; (3) Declaratory Relief; and (4) Unjust Enrichment.

On 8/19/24, Cross-Defendant filed the instant demurrer. On 12/4/24, Cross-Complainant filed its opposition. On 12/5/24, Cross-Defendant filed her reply.

ANALYSIS

As a general matter, a party may respond to a pleading against it by demurrer on the basis of any single or combination of eight enumerated grounds, including that “the pleading does not state facts sufficient to constitute a cause of action.” (Code Civ. Proc., § 430.10, subd. (e).) In a demurrer proceeding, the defects must be apparent on the face of the pleading or via proper judicial notice.¿(Donabedian v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968, 994.)¿

“A demurrer tests the pleading alone, and not the evidence or facts alleged.” (E-Fab, Inc. v. Accountants, Inc. Servs. (2007) 153 Cal.App.4th 1308, 1315.) As such, the court assumes the truth of the complaint’s properly pleaded or implied factual allegations. (Ibid.) The only issue a demurrer is concerned with is whether the complaint, as it stands, states a cause of action. (Hahn v. Mirda (2007) 147 Cal.App.4th 740, 747.) 

Here, Cross-Defendant demurs to Cross-Complainant’s first, second, and fourth causes of action on the basis that they are barred by the applicable statutes of limitation and therefore fail to allege facts sufficient to constitute a cause of action.

A.    Meet and Confer

Before filing its demurrer, “the demurring party shall meet and confer in person or by telephone with the party who filed the pleading that is subject to demurrer for the purpose of determining whether an agreement can be reached that would resolve the objections to be raised in the demurrer.” (Code Civ. Proc. § 430.41, subd. (a).) The demurring party must file and serve a meet and confer declaration stating either: “(A) The means by which the demurring party met and conferred with the party who filed the pleading subject to demurrer, and that the parties did not reach an agreement resolving the objections raised in the demurrer;” or “(B) That the party who filed the pleading subject to demurrer failed to respond to the meet and confer request of the demurring party or otherwise failed to meet and confer in good faith.” (Id. at subd. (a)(3).)

Here, Cross-Defendant’s counsel fails to present the Court with any declaration attesting to the parties’ meet and confer efforts. Accordingly, the Court finds that counsel did not sufficiently meet and confer. However, “a determination by the court that the meet and confer process was insufficient shall not be grounds to overrule or sustain a demurrer.” (Code Civ. Proc. § 430.41, subd. (a)(4).)

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B.     Breach of Contract

Cross-Complainant’s first cause of action alleges Breach of Contract against Cross-Defendant. To state a cause of action for breach of contract, a plaintiff must be able to establish “(1) the existence of the contract, (2) plaintiff’s performance or excuse for nonperformance, (3) defendant’s breach, and (4) the resulting damages to the plaintiff.” (Oasis West Realty, LLC v. Goldman (2011) 51 Cal.4th 811, 821.)

Here, Cross-Complainant alleges that Cross-Defendant breached the purchase agreement, which states that “in the event Romney refused to sell, transfer and convey the property to Adelanto, Romney was obligated to execute escrow instructions refunding the money Adelanto placed in escrow.” (Cross-Compl. ¶ 28.) “Romney failed and refused to sell, transfer and convey the Property to Adelanto … and continues to fail and refuse to execute those escrow instructions, which failure and refusal constitutes a breach of the VLPA.” (Id. at ¶¶ 29–30.)

1.      Statute of Limitations

Cross-Defendant argues that Cross-Complainant’s claims are time-barred by the applicable statute of limitations. The statute of limitations for an action for breach of written contract is four years. (Code Civ. Proc. § 337, subd. (a).) A statute of limitations begins to run when a cause of action accrues, and “a cause of action accrues at the time when the cause of action is complete with all of its elements.” (Fox v. Ethicon Endo-Surgery, Inc. (2005) 35 Cal.4th 797, 806–807 [quotations and citations omitted].)

Cross-Defendant notes that here, Cross-Complainant alleges in its cross-complaint that “on or about February 9, 2016, Cross-Complainant, who was originally known as FTP Solar LLC dissolved Adelanto Greenworks One LLC and at that time assumed all of Adelanto’s assets and liabilities including the rights to the property which is the subject of this lawsuit.” (Dem. 6:3–6.) Cross-Defendant argues that “this admission by Cross-Complainant is evidence that as early as February 9, 2016, they were aware of the alleged breach by Cross-Defendant. Cross-Complainant had 4 years from February 9, 2016, more specifically February 9, 2020, to have filed this lawsuit. As this lawsuit was not filed until 2023/2024 time period, it is barred by the applicable statute of limitations.” (Id. at 6:10–13.)

In opposition, Cross-Complainant asserts that “Romney’s demurrer fails to explain, if those defenses were a bar to sPower’s claims, how it would not also bar her breach of contract and indemnity claims. Nor does she provide any case law to support her demurrer.” (Opp. 1:20–22.) Cross-Complainant further argues that its claims are not time-barred under the continuous accrual doctrine. (Id. at 6:21–24, citing Aryeh v. Canon Business Solutions, Inc. (2013) 55 Cal.4th 1185, 1192 [“under the theory of continuous accrual, a series of wrongs or injuries may be viewed as each triggering its own limitations period, such that a suit for relief may be partially time-barred as to older events but timely as to those within the applicable limitations period.”].)

Cross-Complainant asserts that “here, rather than execute the cancellation instructions and return the funds to sPower upon receipt of the interpleader complaint, [Cross-Defendant] elected not to and filed her [cross-complaint]. As such, the most recent breach of contract and/or the duty of good faith and fair dealing is well within the statutory period pursuant to the continuous accrual doctrine.” (Id. at 6:24–27.) The Court notes that Cross-Defendant fails to address this argument in her reply, and further notes that Cross-Complainant expressly alleges that Cross-Defendant “continues to fail and refuse to execute those escrow instructions, which failure and refusal constitutes a breach of the VLPA.” (Cross-Compl. ¶ 30 [emphasis in original].)

Based on the foregoing, the Court finds that Cross-Complainant has sufficiently alleged the Cross-Defendant’s continuous breach the subject agreement, and therefore finds that the Cross-Defendant’s claims are not necessarily time-barred. Accordingly, the demurrer against Cross-Complainant’s first cause of action is overruled on this basis.

2.      Unclean Hands; Laches

Cross-Defendant further asserts that “Cross-Complainant has intentionally delayed taking action. Their unclean hands and the doctrine of laches prevents them from prevailing on this cross-complaint and in the main action.” (Dem. 6:16–18.)

The unclean hands defense “demands that a plaintiff act fairly in the matter for which he seeks a remedy. He must come into court with clean hands, and keep them clean, or he will be denied relief, regardless of the merits of his claim. … Any conduct that violates conscience, or good faith, or other equitable standards of conduct is sufficient cause to invoke the doctrine.” (Kendall-Jackson Winery, Ltd. v. Superior Court (1999) 76 Cal.App.4th 970, 978–979.) “Whether the doctrine of unclean hands applies is a question of fact.” (Id. at 978.)

“Laches, as a successful affirmative defense, requires a showing of the plaintiff’s unreasonable delay in filing suit, together with either the plaintiff’s acquiescence in the conduct about which it complains or prejudice resulting to the defendant because of the delay.” (Blaser v. State Teachers’ Retirement System (2022) 86 Cal.App.5th 507, 539.) “[I]t is well established, both in California and generally, that laches applies to equitable actions, not actions at law.” (Id. at 540.) “For laches to be a successful defense there must have been unreasonable delay and prejudice to the defendant caused by that delay … For a demurrer to be sustained both the delay and the injury must be disclosed in the complaint.” (Sangiolo v. Sangiolo (1978) 87 Cal.App.3d 511, 514.)

Here, Cross-Complainant asserts that Cross-Defendant’s unclean hands argument fails because Cross-Defendant “does not cite any case law, does not explain what misconduct sPower has done, nor explain a relationship between the misconduct and the claimed injuries.” (Opp. 5:19–20.) Furthermore, as Cross-Complainant observes, the doctrine of laches is an equitable defense, and therefore is inapplicable to Plaintiff’s contract claims. (Id. at 6:13–15.) Even if it were to apply, “Cross-Defendant does not cite to any factual allegation of injury towards her.” (Id. at 5:25–26.)

The Court agrees, and further notes that Cross-Defendant fails to address these points in her reply. Based on the foregoing, the Court overrules the demurrer against Cross-Complainant’s first cause of action on these bases.

C.    Breach of the Duty of Good Faith and Fair Dealing

Cross-Complainant’s second cause of action alleges against Cross-Defendant a breach of the implied covenant of good faith and fair dealing. Every contract contains an implied covenant of good faith and fair dealing that neither party will do anything to interfere with the other party’s right to receive the benefits of the agreement. (Howard v. American Nat’l Fire Ins. Co. (2010) 187 Cal.App.4th 498, 528.) The precise nature and extent of the duty depends on the nature and purpose of the underlying contract and the parties’ legitimate expectations arising from the contract. (Ibid.) “A breach of the implied covenant of good faith is a breach of the contract … and breach of a specific provision of the contract is not ... necessary to a claim for breach of the implied covenant of good faith and fair dealing.” (Thrifty Payless, Inc. v. The Americana at Brand, LLC (2013) 218 Cal.App.4th 1230, 1244.)

Here, Cross-Defendant’s arguments against Cross-Complainant’s second cause of action are identical to those asserted against Cross-Complainant’s first cause of action. For the reasons set forth above, the Court overrules the demurrer against Cross-Complainant’s second cause of action.

D.    Unjust Enrichment

Cross-Complainant’s third cause of action alleges Unjust Enrichment against Cross-Defendant. “The elements for a claim of unjust enrichment are receipt of a benefit and unjust retention of the benefit at the expense of another. The theory of unjust enrichment requires one who acquires a benefit which may not justly be retained, to return either the thing or its equivalent to the aggrieved party so as not to be unjustly enriched.” (Lyles v. Sangadeo-Patel (2014) 225 Cal.App.4th 759, 769 [quotations and citations omitted.])

Here, Cross-Complainant alleges that “to the extent Romney claims some entitlement to the escrowed funds and/or damages, awarding Romney any of those sums would be unjust, because she failed to sell, transfer, and convey the Property.” (Cross-Compl. ¶ 47.)

Again, Cross-Defendant’s arguments against Cross-Complainant’s third cause of action are identical to those asserted against Cross-Complainant’s first and second causes of action. Cross-Complainant argues that “as Romney has made no argument as to why the Unjust Enrichment claim fails, she has not met her burden on demurrer and it must be overruled.” (Opp. 4:27–5:2.) The Court agrees. Accordingly, for the reasons set forth above, the Court overrules the demurrer against Cross-Complainant’s third cause of action.

CONCLUSION

The demurrer is overruled. Cross-Defendant to file and serve her answer to Cross-Complainant’s cross-complaint within 20 days.