Judge: Anne Hwang, Case: 24STCV00168, Date: 2024-06-27 Tentative Ruling

Case Number: 24STCV00168    Hearing Date: June 27, 2024    Dept: 32

PLEASE NOTE:   Parties are encouraged to meet and confer concerning this tentative ruling to determine if a resolution may be reached.  If the parties are unable to reach a resolution and a party intends to submit on this tentative ruling, the party must send an email to the Court at sscdept32@lacourt.org indicating that party’s intention to submit.  The email shall include the case number, date and time of the hearing, counsel’s contact information (if applicable), and the identity of the party submitting on this tentative ruling.  If the Court does not receive an email indicating the parties are submitting on this tentative ruling and there are no appearances at the hearing, the Court may place the motion off calendar or adopt the tentative ruling as the order of the Court.  If all parties do not submit on this tentative ruling, they should arrange to appear in-person or remotely.  Further, after the Court has posted/issued a tentative ruling, the Court has the inherent authority to prohibit the withdrawal of the subject motion and adopt the tentative ruling as the order of the Court. 

TENTATIVE RULING

MOTION

On January 2, 2024, Plaintiff Infinity Insurance Company (“Plaintiff”) filed a complaint against Defendant Alexandra Delgado (“Defendant”) alleging breach of contract of a settlement agreement.

Defendant now demurs to the complaint arguing it does not contain facts that a contract was formed between the parties, does not allege a written contract, and is barred by the statute of limitations. Plaintiff opposes and Defendant replies.

LEGAL STANDARD

A demurrer is a pleading used to test the legal sufficiency of other pleadings.  It raises issues of law, not fact, regarding the form or content of the opposing party's pleading (complaint, answer or cross-complaint).  (Code Civ. Proc. §§ 422.10, 589; see Donabedian v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968, 994.)  It is not the function of the demurrer to challenge the truthfulness of the complaint; and for purposes of the ruling on the demurrer, all facts pleaded in the complaint are assumed to be true.  (Donabedian, 116 Cal.App.4th at 994.)

The general rule is that the plaintiff need only allege ultimate facts, not evidentiary facts. (Doe v. City of Los Angeles (2007) 42 Cal.4th 531, 550.) “All that is required of a plaintiff, as a matter of pleading, even as against a special demurrer, is that his complaint set forth the essential facts of the case with reasonable precision and with sufficient particularity to acquaint the defendant with the nature, source and extent of his cause of action.” (Rannard v. Lockheed Aircraft Corp. (1945) 26 Cal.2d 149, 156-157.) 

A demurrer can be utilized where the “face of the complaint” itself is incomplete or discloses some defense that would bar recovery. (Guardian North Bay, Inc. v. Superior Court (2001) 94 Cal.App.4th 963, 971-72.) A general demurrer may be brought where the dates alleged in the complaint show the cause of action is barred by the statute of limitations. (See Saliter v. Pierce Bros. Mortuaries (1978) 81 Cal.App.3d 292, 300.) If dates are missing from the complaint that would show the statute of limitations bars recovery, then there is no ground for a general demurrer. The party demurring must instead ascertain the factual basis for the contentions and file a motion for summary judgment. (See United Western Medical Centers v. Superior Court (1996) 42 Cal.App.4th 500, 505.)

            Where a demurrer is sustained, leave to amend must be allowed where there is a reasonable possibility of successful amendment. (Goodman v. Kennedy (1976) 18 Cal.3d 335, 348.) The burden is on the plaintiff to show the court that a pleading can be amended successfully. (Id.; Lewis v. YouTube, LLC (2015) 244 Cal.App.4th 118, 226.) However, “[i]f there is any reasonable possibility that the plaintiff can state a good cause of action, it is error to sustain a demurrer without leave to amend.” (Youngman v. Nevada Irrigation Dist. (1969) 70 Cal.2d 240, 245).  

MEET AND CONFER

Code of Civil Procedure section 430.41 requires that “[b]efore filing a demurrer pursuant to this chapter, 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 parties are to meet and confer at least five days before the date the responsive pleading is due. (Code Civ. Proc., § 430.41, subd. (a)(2).) Thereafter, the demurring party shall file and serve a declaration detailing their meet and confer efforts. (Code Civ. Proc., § 430.41, subd. (a)(3).)

According to the Declaration of Claudia A. Smith, Defendant’s counsel, the parties had a telephone conversation on January 22, 2024 to discuss the instant demurrer. (Smith Decl. ¶ 4.)  Therefore, the meet and confer requirement has been met.

ANALYSIS

Breach of Contract

The elements of a cause of action for breach of contract are: (1) the formation of the contract, (2) plaintiff's performance or excuse for nonperformance, (3) defendant's breach, and (4) the resulting damages to plaintiff.”  (Coles v. Glaser (2016) 2 Cal.App.5th 384, 391, internal quotations omitted.)  “A written contract may be pleaded either by its terms—set out verbatim in the complaint or a copy of the contract attached to the complaint and incorporated therein by reference—or by its legal effect. [Citation.] In order to plead a contract by its legal effect, plaintiff must ‘allege the substance of its relevant terms. This is more difficult, for it requires a careful analysis of the instrument, comprehensiveness in statement, and avoidance of legal conclusions.”¿ (Heritage Pacific Financial, LLC v. Monroy (2013) 215 Cal.App.4th 972, 993, citations omitted.)¿ Terms of an oral contract may be pleaded generally as to its effect because it is rarely possible to allege the exact words. (Scolinos v. Kolts (1995) 37 Cal.App.4th 635, 640; Khoury v. Maly's of California, Inc. (1993) 14 Cal.App.4th 612, 616.)  In pleading the existence of a contractual relationship, “the complaint must indicate on its face whether the contract is written, oral, or implied by conduct. (Code Civ. Proc., § 430.10, subd. (g).)”  (Otworth v. Southern Pac. Transportation (1985) 166 Cal.App.3d 452, 458-59.)   

 “‘A settlement agreement is a contract, and the legal principles [that] apply to contracts generally apply to settlement contracts.’ [Citation.] Its validity is ‘judged by the same legal principles applicable to contracts generally.’ [Citations.]”  (Stewart v. Preston Pipeline Inc. (2005) 134 Cal.App.4th 1565, 1585.) “Contract formation requires mutual consent, which cannot exist unless the parties ‘agree upon the same thing in the same sense.’ (Civ. Code, §§ 1580, 1550, 1565.) ‘If there is no evidence establishing a manifestation of assent to the “same thing” by both parties, then there is no mutual consent to contract and no contract formation.’ [Citation.].”  (Bustamente v. Intuit, Inc. (2006) 141 Cal.App.4th 199, 208.) 

An essential element of any contract is the consent of the parties, or mutual assent. Mutual assent to a contract usually is manifested by an offer communicated to the offeree, and an acceptance communicated to the offeror. An “offer” is the manifestation of willingness to enter into a bargain so made as to justify another person in understanding that his assent to that bargain is invited and will conclude it. Determination of whether a particular communication constitutes an operative offer, rather than an inoperative step in the preliminary negotiation of a contract, depends upon all the surrounding circumstances. The objective manifestation of the party's assent ordinarily controls in determining whether a communication constitutes an operative offer, and the pertinent inquiry is whether the individual to whom the communication was made had reason to believe that it was intended as an offer.  (Donovan v. RRL Corp. (2001) 26 Cal.4th 261, 271, rehearing denied, as modified.) 

“Contract law … requires that an acceptance be communicated in a clear and unequivocal fashion.”  (Gray v. Stewart (2002) 97 Cal.App.4th 1394, 1397.)  “ ‘[T]erms proposed in an offer must be met exactly, precisely and unequivocally for its acceptance to result in the formation of a binding contract [citations]; and a qualified acceptance amounts to a new proposal or counteroffer putting an end to the original offer ....’ [Citation.]”  (Panagotacos v. Bank of America (1998) 60 Cal.App.4th 851, 855-56; J.B.B. Investment Partners Ltd. v. R. Thomas Fair (2019) 37 Cal.App.5th 1, 13 n.10.)  For example, when the recipient of an offer responds “I agree,” “I accept,” and “we have a deal,” the communications “permit only one reasonable conclusion – the parties agreed to a binding settlement.”  (J.B.B. Investment Partners Ltd., 37 Cal.App.5th at 11.)   

“[W]hen parties agree on the material terms of a contract with the intention to later reduce it to a formal writing, failure to complete the formal writing does not negate the existence of the initial contract.” (CSAA Ins. Exchange v. Hodroj (2021) 72 Cal.App.5th 272, 276-77 [finding that letters of an offer and acceptance sent between insurer and third-party to settle claim, formed a contract].)

            Here, Plaintiff alleges that it provided insurance coverage to three individuals involved in an accident with Defendant. (Complaint ¶ 10.) On September 16, 2020, Defendant sent a letter offering to settle her claim with Plaintiff. On October 6, 2020, Plaintiff timely accepted the offer and formed a binding contract to settle the claim for the policy limits. (Id. ¶ 12.) Plaintiff attaches the letters to its complaint. (Complaint, Exh. A, B.) Plaintiff alleges that Defendant breached this agreement by filing a complaint against Plaintiff’s insureds. (Id. ¶ 18.)

            Defendant appears to argue that Plaintiff’s acceptance was not complete because it did not accept all the terms of the offer. However, in a demurrer, the Court is limited by the pleading and any attachments. Here, exhibit A attached to the complaint shows that Defendant offered to settle the claim with Plaintiff for “the policy limits, subject to written confirmation of same, and declarations under penalty of perjury from your insured( s) that they were not in the course of any agency or employment when the loss occurred.” This offer expired on October 6, 2020. (Complaint, Exh. A; see Frantz v. Blackwell (1987) 189 Cal.App.3d 91, 94 [evidentiary facts found in recitals of exhibits attached to a complaint or superseded complaint can be considered on demurrer].) Exhibit B shows a letter dated October 6, 2020, where Plaintiff writes that it accepts Defendant’s demand to resolve the claim for the policy limits and enclosed declarations of its insureds stating they carried no other insurance and were not in the course and scope of employment. Plaintiff also enclosed a proposed release. (Complaint, Exh. B.) Contrary to Defendant’s argument in reply, exhibits C and D in the complaint do not establish as a matter of law that there was no contract formation. 

Therefore, it is not apparent on the face of the pleading that acceptance was deficient. Defendant also argues that there are no facts that she signed a written settlement agreement or release form. However, she cites no authority supporting her argument. (Demurrer, 4.)

Lastly, Defendant argues that the two-year statute of limitations under Code of Civil Procedure section 339 applies.  

The statute of limitations for a breach of contract action is four years if based on a written instrument and two years if not based on a written instrument. (Code Civ. Proc. §§ 337(a), 339.)  “According to the Supreme Court, ‘[t]he contract may be “in writing” for purposes of the statute of limitations even though it was accepted orally or by an act other than signing. [Citations.]’ [Citation.] ‘When a party has agreed to the writing, there is no reason to invoke the two-year statute of limitations applicable to oral agreements. The four-year statute of limitations, unlike the statute of frauds, does not require that the writing be signed by the party to be charged.’” (Pietrobon v. Libarle (2006) 137 Cal.App.4th 992, 997.)

Here, based on the complaint and its attachments, the purported settlement agreement is contained within the offer and acceptance letters. Therefore, it is based on a “written instrument” and subject to the four-year statute of limitations. Because it is alleged that contract was formed on October 6, 2020, the statue of limitations expires on October 6, 2024. Because the complaint was filed on January 2, 2024, it is timely.

CONCLUSION AND ORDER

Therefore, Defendant’s demurrer to Plaintiff’s complaint is OVERRULED.

Defendant shall provide notice of the Court’s ruling and file a proof of service of such.