Judge: Anne Richardson, Case: 24STCV01760, Date: 2024-07-08 Tentative Ruling

Case Number: 24STCV01760    Hearing Date: July 8, 2024    Dept: 40

Superior Court of California

County of Los Angeles

Department 40

I. Background

A. Pleadings

Plaintiff Steven Clark sues Defendants Rory Beeso, Raven Paul & Co., Inc. formerly known as Witt, LLC, and Does 1 through 50 pursuant to a January 23, 2024, Complaint alleging claims of (1) Default on Note (i.e., breach of contract), (2) Intentional Misrepresentation, (3) Unjust Enrichment, (4) Money Lent, (5) Account Stated, and (6) Breach of Fiduciary Duty.

The claims arise from allegations that, as shown by the exhibits attached to the Complaint, The Entrust Group, “FBO” (for the benefit of) Plaintiff Clark, issued a loan to Witt, LLC, pursuant to a promissory note, on which Witt, LLC—now Raven Paul & Co., Inc.—defaulted in 2019.

The Court notes that attachments to the below opposition seek to establish that Witt, LLC is now Witt RB, LLC.

B. Motion Before the Court

On March 12, 2024, Defendants Beeso, Raven Paul & Co., Inc. (Raven Paul), and Witt RB, LLC filed a demurrer challenging the Complaint’s six causes of action, namely on statute of limitations and real party in interest grounds.

On June 24, 2024, Plaintiff Clark filed an opposition, and on June 28, 2024, Defendants filed a reply.

Defendants’ demurrer is now before the Court.

II. Demurrer

A. Requests for Judicial Notice

The Court denies the request to take judicial notice of the documents advanced for notice by the demurrer and by the opposition. The requests seek judicial notice of filings made with the California Secretary of State in relation to Witt, LLC and Defendant Witt RB, LLC. (Demurrer, RJN, Exs. 1-2; Opp’n, RJN, Ex. A.) The Court rejects these filings (1) as extrinsic matter that seeks to turn a ‘pleadings’ hearing into a contested evidentiary hearing and (2) because these documents are not relevant to the Court’s final disposition for the demurrer. (Joslin v. H.A.S. Ins. Brokerage (1986) 184 Cal.App.3d 369, 375; J People ex rel. Lockyer v. Shamrock Foods Co. (2000) 24 Cal.4th 415, 422 fn. 2 [“There is, however, a precondition to the taking of judicial notice in either its mandatory or permissive form—any matter to be judicially noticed must be relevant to a material issue”].)

B. Legal Standard

1. Sufficiency

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).)

To sufficiently allege a cause of action, a complaint must allege all the ultimate facts—that is, the facts needed to establish each element of the cause of action pleaded. (Committee on Children’s Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 212, superseded by statute as stated in Branick v. Downey Savings & Loan Assn. (2006) 39 Cal.4th 235, 242.) “[E]ach 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.) 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.) 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.)

A demurrer may only be used 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.) 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.)

2. Uncertainty

A demurrer to a pleading lies where the pleading is uncertain, ambiguous, or unintelligible. (Code Civ. Proc. § 430.10, subd. (f).)

“A demurrer for uncertainty is strictly construed, even where a complaint is in some respects uncertain, because ambiguities can be clarified under modern discovery procedures.” (Khoury v. Maly’s of California, Inc. (1993) 14 Cal.App.4th 612, 616, disapproved on other grounds in Quelimane Co. v. Stewart Title Guar. Co. (1998) 19 Cal.4th 26, 46 [holding claims for unfair business practices need not be pled specifically, impliedly disapproving Khoury].) As a result, a special demurrer for uncertainty is not intended to reach failure to incorporate sufficient facts in the pleading but is directed only at uncertainty existing in the allegations already made. (People v. Taliaferro (1957) 149 Cal.App.2d 822, 825, disapproved on other grounds in Jefferson v. J.E. French Co. (1960) 54 Cal.2d 717, 719-720 [statute of limitations question].)

Where complaint is sufficient to state a cause of action and to apprise defendant of issues he is to meet, it is not properly subject to a special demurrer for uncertainty. (See ibid.; see also Gressley v. Williams (1961) 193 Cal.App.2d 636, 643 [“A special demurrer [for uncertainty] should be overruled where the allegations of the complaint are sufficiently clear to apprise the defendant of the issues which he is to meet”].)

C. Demurrer, Complaint, First to Sixth Causes of Action: SUSTAINED with leave to amend.

1. Relevant Law

A demurrer will lie in an instance in which the plaintiff lacks standing. (PacLink Communications Internat., Inc. v. Superior Court (2001) 90 Cal.App.4th 958, 964 [demurrer challenged limited liability company members’ standing where wrong was one suffered by company itself]; City of Brentwood v. Campbell (2015) 237 Cal.App.4th 488, 504 [“Every action must be prosecuted in the name of the real party in interest,” i.e., “the person who possesses the right to sue under the substantive law involved” and “anyone other than a real party in interest lacks standing and is subject to a [general] demurrer for the failure to state a cause of action.”].) The issue of standing to sue is a threshold legal issue to be decided by the court. (Bozung v. Local Agency Formation Com. (1975) 13 Cal.3d 263, 287, fn. 32; Jauregi v. Superior Court (1999) 72 Cal.App.4th 931, 939.)

2. Court’s Determination

The Court finds in favor of Defendants Beeso, Raven Paul, and Witt RB, LLC, though the Court notes that the defect appears curable.

The copy of the promissory note attached to the Complaint shows that the loan documents were executed by “THE ENTRUST GROUP, FBO STEVEN B. CLARK” and “RA BEESO” as “MANAGING MEMBER” of “WITT, LLC.” (Complaint, Ex. A.)

A third party may bring a breach of contract action against a party to a contract only if the third party establishes not only (1) that it is likely to benefit from the contract, but also (2) that a motivating purpose of the contracting parties is to provide a benefit to the third party, and further (3) that permitting the third party to bring its own breach of contract action against a contracting party is consistent with the objectives of the contract and the reasonable expectations of the contracting parties. (Goonewardene v. ADP, LLC (2019) 6 Cal.5th 817, 821; see, e.g., ibid. [employee could not sue payroll company for unpaid wages for breach of payroll company’s contract with employer under third party beneficiary doctrine].)

Here, the allegations in the Complaint do not clarify who “The Entrust Group” is (hereafter, Entrust), for which reason it is not clear how Entrust was related to the 2015 loan. For example, outstanding questions include: who is Entrust and what is its relationship to Plaintiff Clark; how did Entrust obtain the monies allegedly belonging to Plaintiff Clark; and under what circumstances did Entrust execute the 2015 promissory note for the benefit of (“FBO”) Plaintiff Clark? (See, e.g., Complaint, ¶ 11 [alleging loan monies were rolled over from 401(k) account but failing to specify origin of account and nature of Entrust].)

Thus, while a contract made “expressly for the benefit of a third person” may be enforced by that person (Civ. Code, § 1559; see Performance Plastering v. Richmond American Homes of Calif., Inc. (2007) 153 Cal.App.4th 659, 667), and while the attachments to the Complaint appear to show that the note was executed for the benefit of Steven Clark (Complaint, Ex. A [promissory note signed by “THE ENTRUST GROUP, FBO STEVEN B. CLARK”]), the lack of clarity as to the relationship between Entrust and Clark renders the Complaint uncertain, which in turn results in insufficient allegations for establishing that Entrust entered the transaction for the benefit of Plaintiff Clark.

The Court finds it important to note that the opposition does not contend that the promissory note was entered by Entrust for the benefit of Plaintiff Clark. Instead, the opposition argues that “Plaintiff, and not some representative of The Entrust Group, signed as the acceptor on the bottom left[-]hand corner” of the 2015 promissory note. (Complaint, Ex. A.) However, the signatures on the note are clear: an unnamed person signed on behalf of Entrust “FBO” Steven Clark and “MA BEESO” signed on behalf of Witt, LLC. (Ibid.) Plaintiff Clark’s opposition argument is thus unavailing absent greater clarity in the pleadings as to who signed the promissory note, what Entrust is, the connection to Plaintiff Clark, and how the execution of the promissory note was for Clark’s benefit.

Although this is a sufficient basis to sustain the demurrer, the Court notes that the Opposition requests leave to amend to clarify plaintiff’s theories as to why the statute of limitations does not bar the claims and why he has a sufficient basis against these defendants. (See, e.g., Opp’n, pp. 5 fn. 1, 7:1, and 7:21-28.) In any amended complaint, Plaintiff should allege any additional facts upon which he bases his statute of limitations argument and any facts he otherwise sought the Court to take judicial notice of. As for the laches argument made by Defendants, the Court does not base its ruling on facts set forth in the demurrer that are outside the pleadings. (Mot., p. 11:10-15.)

Based on the above, Defendants Beeso, Raven Paul, and Witt RB, LLC’s demurrer is SUSTAINED with leave to amend. 

III. Conclusion

Defendants Rory Beeso, Raven Paul & Co., Inc., and Witt RB, LLC’s Demurrer to Complaint [Res ID # 3534] is SUSTAINED with leave to amend.