Judge: Anne Richardson, Case: 22STCV13653, Date: 2023-09-28 Tentative Ruling

DEPARTMENT 40 - JUDGE ANNE RICHARDSON - LAW AND MOTION RULINGS
The Court issues tentative rulings on certain motions.The tentative ruling will not become the final ruling until the hearing [see CRC 3.1308(a)(2)]. If the parties wish to submit on the tentative ruling and avoid a court appearance, all counsel must agree and choose which counsel will give notice. That counsel must 1) email Dept 40 by 8:30 a.m. on the day of the hearing (smcdept40@lacourt.org) with a copy to the other party(ies) and state that all parties will submit on the tentative ruling, and 2) serve notice of the ruling on all parties. If any party declines to submit on the tentative ruling, then no email is necessary and all parties should appear at the hearing in person or by Court Call. 

Case Number: 22STCV13653    Hearing Date: September 28, 2023    Dept: 40

Superior Court of California

County of Los Angeles

Department 40

Background

Plaintiff/Cross-Defendant California Rent-a-Car, Inc. (Cal Rent-a-Car) sues Defendant/Cross-Complainant Simon’s Caterers Inc. (SCI), Simon Cohen (SCI’s owner), and Does 1 to 25 pursuant to claims of (1) Breach of Contract against Simon’s Caterers Inc. and (2) Negligence against Simon’s Caterers Inc. and Simon Cohen.

The claims arise from allegations that Cal Rent-a-Car made a written agreement with Simon Caterers Inc. for the rental of a vehicle and that, “[w]hile last in possession of the Plaintiff’s vehicle …, [D]efendant Simon Cohen, left the vehicle’s ignition key in the ignition, interior door, or trunk when the vehicle was unoccupied” and “failed to close all windows and lock all doors,” resulting in the “vehicle … [being] stolen by a third party …, causing damages [to Plaintiff] … [including] Property Damage to the vehicle in the amount of $25,361.17,” “Graphic Repair charges of $807.08, Lift Gate repair charges of $280.00, Towing and storage charges of $310.00, and loss of rental use of $7,425.00,” for “[t]otal [damages] of $34,183.25.”

In turn, Defendant/Cross-Complainant SCI sues Cal Rent-a-Car pursuant to a June 1, 2023 Cross-Complaint alleging claims of (1) Fraud, (2) Violation of Penal Code § 496, (3) Unfair Business Practice, and (4) Common Counts – Money Had and Received.

The claims arise from allegations that, among other things, Cal Rent-a-Car took payments from SCI for damage waiver insurance coverage related to a vehicle rental and that Cal Rent-a-Car never intended to honor that type of coverage, thereby damaging SCI when the vehicle SCI had rented from Cal Rent-a-Car was vandalized by third parties and Cal Rent-a-Car refused to apply the damage waiver insurance to cover damages.

On June 30, 2023, Cal Rent-a-Car demurred to SCI’s Cross-Complaint.

On September 15, 2023, rather than oppose the demurrer, SCI filed a First Amended Cross-Complaint.

Cal Rent-a-Car’s demurrer is now before the Court.

Demurrer

Preliminary Note

The Court initially notes that the September 15, 2023 First Amended Cross-Complaint (FAXC) filed by SCI was not properly filed and therefore does not supersede SCI’s original June 1, 2023 Cross-Complaint.

A party may file a superseding pleading in response to a demurrer provided that such superseding pleading is filed nine court days prior to the hearing on the demurrer. (Code Civ. Proc., §§ 472, subd. (a), 1005, subd. (b).)

When taking into account Native American Day—September 22, 2023—nine court days before this hearing was September 14, 2023. SCI filed and served its FAXC on September 15, 2023, one court day too late. The FAXC was therefore not filed as a matter of course (Code Civ. Proc., §§ 472, subd. (a), 1005, subd. (b)) and was filed without leave of court or by stipulation of the parties (Code Civ. Proc., §§ 472, subd. (a)).

The FAXC is therefore STRICKEN. (Code Civ. Proc., § 436, subd. (a) [“The court may … at any time in its discretion … [s]trike out all or any part of any pleading not drawn or filed in conformity with the laws of this state”].)

The Court now proceeds with a substantive discussion of Cal Rent-a-Car’s demurrer.

Demurrer Sufficiency Standard

A demurrer for sufficiency tests whether the complaint states a cause of action. (Hahn v. Mirda (2007) 147 Cal.App.4th 740, 747; see Code Civ. Proc., § 430.10, subd. (e).) This device can be used only to challenge defects that appear on the face of the pleading under attack or from matters outside the pleading that are judicially noticeable. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) “To survive a [general] demurrer, the complaint need only allege facts sufficient to state a cause of action; each evidentiary fact that might eventually form part of the plaintiff’s proof need not be alleged.” (C.A. v. William S. Hart Union High School Dist. (2012) 53 Cal.4th 861, 872.) In testing the sufficiency of the cause of action, the demurrer admits the truth of all material facts properly pleaded. (Aubry v. Tri-City Hospital Dist. (1992) 2 Cal.4th 962, 966-67.) A demurrer, however, “does not admit contentions, deductions or conclusions of fact or law.” (Daar v. Yellow Cab Co. (1967) 67 Cal.2d 695, 713.) When considering demurrers, courts read the allegations liberally and in context. (Taylor v. City of Los Angeles Dept. of Water and Power (2006) 144 Cal.App.4th 1216, 1228, disapproved on other grounds, Jones v. Lodge at Torrey Pines Partnership (2008) 42 Cal.4th 1158, 1162.) The face of the complaint includes exhibits attached to the complaint. (Frantz v. Blackwell (1987) 189 Cal.App.3d 91, 94.) If facts appearing in the exhibits contradict those alleged, the facts in the exhibits take precedence. (Holland v. Morse Diesel Intern., Inc. (2001) 86 Cal.App.4th 1443, 1447, superseded by statute on other grounds as stated in White v. Cridlebaugh (2009) 178 Cal.App.4th 506, 521.)

Cross-Complaint, First Cause of Action, Fraud: OVERRULED.

“[T]he elements of an action for fraud and deceit based on a concealment are: (1) the defendant must have concealed or suppressed a material fact, (2) the defendant must have been under a duty to disclose the fact to the plaintiff, (3) the defendant must have intentionally concealed or suppressed the fact with the intent to defraud the plaintiff, (4) the plaintiff must have been unaware of the fact and would not have acted as he did if he had known of the concealed or suppressed fact, and (5) as a result of the concealment or suppression of the fact, the plaintiff must have sustained damage.” (Boschma v. Home Loan Center, Inc. (2011) 198 Cal.App.4th 230, 248; see also Roddenberry v. Roddenberry (1996) 44 Cal.App.4th 634, 665-666.)

Allegations of fraud “must be pled with more detail than other causes of action.” (Apollo Capital Fund, LLC v. Roth Capital Partners, LLC (2007) 158 Cal.App.4th 226, 240.) “Every element of the cause of action for fraud must be alleged … factually and specifically[,] and the policy of liberal construction of the pleadings … will not ordinarily be invoked to sustain a pleading defective in any material respect. [Citations.]” (Committee on Children’s Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 216, superseded by statute as stated in Branick v. Downey Savings & Loan Assn. (2006) 39 Cal.4th 235, 242.) “[G]eneral and conclusory allegations do not suffice.” (Small v. Fritz Cos., Inc. (2003) 30 Cal.4th 167, 184 [citations omitted].) A plaintiff pleading fraud must plead facts showing “how, when, where, to whom, and by what means” the allegedly fraudulent representations were tendered. (Lazar v. Superior Court (1996) 12 Cal.4th 631, 645.)

The Cross-Complaint’s first cause of action alleges that on March 25, 2022, SCI rented a car from Cal Rent-a-Car, which was rented subject to an optional damage waiver insurance that Cal Rent-a-Car never intended to honor. The Cross-Complaint alleges that the reason for refusing to honor the damage waiver was that SCI had rented the vehicle as a “commercial hire.” Cal Rent-a-Car refused to honor that damages waiver when on March 28, 2022, a car SCI had rented from Cal Rent-a-Car was vandalized by third parties. A copy of the parties’ rental contract is not attached to the Cross-Complaint. (Cross-Complaint, ¶¶ 7-12.)

In its demurrer, Cal Rent-a-Car first argues that the optional Collision Damage Waiver (CDW) was not applied to the March 28, 2022 incident because “SCI breached the rental agreement by failing to close all windows and leaving the keys in the vehicle unattended.” Second, Cal Rent-a-Car argues that “no other specific facts alleged in the Cross-Complaint support the finding of [Cal Rent-a-Car]’s intent to defraud SCI and no facts are pled that would establish any fraudulent representations or intent to deceive” and that “[t]he mere allegation of offering an optional CDW on the rental agreement is not sufficient to show [Cal Rent-a-Car’s] fraudulent intent.” (Demurrer, pp. 5-6.)

No opposition or reply are before the Court.

The Court finds in favor of SCI.

The Court first determines that the argument relating to SCI leaving the vehicle unattended goes beyond the pleadings before the Court, for which reason the Court does not consider this argument.

The Court next determines that the Cross-Complaint sufficiently alleges intent to defraud and concealment. The concealment is alleged as a failure to “disclose to SCI that [Cal Rent-a-Car] would not honor damage waiver coverage in light of SCI’s commercial hire.” (Cross-Complaint, ¶ 9.) The intent to defraud is alleged as Cal Rent-a-Car issuing a damage waiver insurance for which “[Cal Rent-a-Car] … collected fees under false pretenses and/or for inapplicable or nonexistent services.” (Cross-Complaint, ¶ 10.) Otherwise stated, the Cross-Complaint alleges that, for the purpose of making a profit, Cal Rent-a-Car charged SCI for a damage waiver it never intended to honor, thus sufficiently alleging intent to defraud.

Last, the Court determines that Cal Rent-a-Car’s argument that “[t]he mere allegation of offering an optional CDW on the rental agreement is not sufficient to show [its] fraudulent intent” is not availing based on the reasoning in the preceding paragraph.

Cal Rent-a-Car’s demurer to the first cause of action is thus OVERRULED.

Cross-Complaint, Second Cause of Action, Violation of Penal Code § 496: SUSTAINED, Without Leave to Amend.

To sustain a conviction for receiving stolen property, the prosecution must prove (1) the property was stolen, (2) the defendant knew the property was stolen, and (3) the defendant had possession of the stolen property. (People v. Land (1994) 30 Cal.App.4th 220, 223; see Pen. Code, § 496, subd. (a).)

The Cross-Complaint’s second cause of action alleges Cal Rent-a-Car received stolen property by “obtain[ing] money from SCI by theft under false pretenses.” (Cross-Complaint, ¶ 14.) The claim incorporates prior allegations, from which the Court determines that the false pretenses were Cal Rent-a-Car issuing damage waiver insurance coverage that it never intended to honor. (Cross-Complaint, ¶¶ 9, 13.)

In its demurrer, Cal Rent-a-Car argues that “under §496(a), a principal may not be convicted of both receiving stolen property and of the theft of the same property.” Cal Rent-a-Car also argues that “when the property in question comes into the defendant’s hands, it must already have the character of having been stolen.” (Demurrer, p. 6.)

No opposition or reply are before the Court.

The Court finds in favor of Cal Rent-a-Car.

“‘[W]hen the [stolen] property in question comes into the defendant’s hands, it must already have the character of having been stolen.’ [Citation.]” (Lacagnina v. Comprehend Systems, Inc. (2018) 25 Cal.App.5th 955, 971, emphasis in original.) Here, the Cross-Complaint alleges that SCI paid its own money to Cal Rent-a-Car for the purpose of securing a certain type of insurance coverage. (Cross-Complaint, ¶¶ 8, 13.) The second cause of action is therefore fatally defective as stated.

Cal Rent-a-Car’s demurrer to the second cause of action is thus SUSTAINED, Without Leave to Amend.

Cross-Complaint, Third Cause of Action, Unfair Business Practice: OVERRULED.

To state a cause of action for unfair business practices, a plaintiff must establish defendant engaged in “unlawful, unfair or fraudulent business act or practice and unfair, deceptive, untrue or misleading advertising.” (Bus. & Prof. Code, § 17200.) This section establishes three types of unfair competition, prohibiting “practices that are either ‘unfair,’ or ‘unlawful,’ or ‘fraudulent.’” (Pastoria v. Nationwide Ins. (2003) 112 Cal.App.4th 1490, 1496.) Thus, “[a]n act or practice may be actionable as “unfair” under the unfair competition law even if it is not ‘unlawful.’” (Chavez v. Whirlpool Corp. (2001) 93 Cal.App.4th 363, 374.) A violation of other laws is deemed independently actionable under the UCL. (See Law Offices of Mathew Higbee v. Expungement Assistance Servs. (2013) 214 Cal.App.4th 544, 554.) “‘Virtually any law—federal, state or local—can serve as a predicate for a section 17200 action.’” (Ibid., quoting Troyk v. Farmers Group, Inc. (2009) 171 Cal.App.4th 1305, 1335.)

Despite the broad scope of Business and Professions Code section 17200, its remedies are limited to equitable relief and damages are not recoverable. (Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th 1134, 1144.)

The Cross-Complaint’s third cause of action seeks restitution of the fees paid to Cal Rent-a-Car for damage waiver insurance based on Cal Rent-a-Car’s alleged unfair and deceptive practice of using “contradictory and/or vague and ambiguous clauses” that “are designed to prevent or have the effect of preventing customers from realizing the true nature of damage waiver insurance offered by [Cal Rent-a-Car].” (Cross-Complaint, ¶¶ 23, 26.)

In its demurrer, Cal Rent-a-Car argues that “SCI cannot provide enough facts or evidence to show that [Cal Rent-a-Car] violates any laws by offering the optional CDW in the rental agreement” because “[t]he facts pled in the Cross-Complaint are not sufficient to show that [Cal Rent-a-Car] did not intend to honor the CDW or any intent to deceive SCI at the time the contract was executed.” (Demurrer, p. 7.)

No opposition or reply are before the Court.

The Court finds in favor of SCI.

The Court adopts its determination as to the concealment claim to determine that Cal Rent-a-Car is sufficiently alleged to have participated in the unfair practice of offering a type of insurance coverage that it did not intend to honor, in relation to which SCI seeks restitution of monies paid for that type of coverage.

Cal Rent-a-Car’s demurrer to the third cause of action is thus OVERRULED.

Cross-Complaint, Fourth Cause of Action, Common Counts – Money Had and Received: OVERRULED.

“‘A cause of action for money had and received is stated if it is alleged the defendant “is indebted to the plaintiff in a certain sum ‘for money had and received by the defendant for the use of the plaintiff.”’ [Citation.]” (Farmers Ins. Exchange v. Zerin (1997) 53 Cal.App.4th 445, 460.)

The Cross-Complaint’s fourth cause of action alleges money had and received based on Cal Rent-a-Car receiving “money, via fees charged for damage waiver insurance, intended to benefit SCI,” and which “was not used for SCI’s benefit,” with “[Cal Rent-a-Car] pocket[ing] the money and … [failing to] return[] it to SCI.” (Cross-Complaint, ¶¶ 28-30.)

In its demurrer, Cal Rent-a-Car argues that “SCI voluntarily opted to pay for the optional CDW in the rental agreement for its own interest” and “[t]he money paid for the CDW was used for protecting SCI from paying for the collision damages to the rented vehicle.” Cal Rent-a-Car also argues that “SCI could have chosen not to accept the CDW, but it voluntarily chose to purchase it for its own benefit,” and that “the rental agreement clearly excludes damage to the vehicle in circumstances such as those present in this case.” (Demurrer, p. 8.)

No opposition or reply are before the Court.

The Court finds in favor of SCI.

The Cross-Complaint alleges that SCI paid Cal Rent-a-Car monies for the benefit of damage waiver insurance coverage, which Cal Rent-a-Car never intended to honor and did not honor when the vehicle rented by SCI from Cal Rent-a-Car was vandalized by third parties. (Cross-Complaint, ¶¶ 7-12, 27-30.)

Cal Rent-a-Car’s demurrer to the fourth cause of action is thus OVERRULED.

Conclusion

Plaintiff/Cross-Defendant California Rent-a-Car’s Demurrer to Cross-Complaint is SUSTAINED, Without Leave to Amend, as to the second cause of action, but OVERRULED as to the first, third, and fourth causes of action.

Plaintiff is given fourteen calendar days’ leave to amend the pleadings.