Judge: Armen Tamzarian, Case: 24STCV06670, Date: 2024-05-31 Tentative Ruling

Case Number: 24STCV06670    Hearing Date: May 31, 2024    Dept: 52

Defendant Auto Finance Solutions, LLC’s Demurrer

Defendant Auto Finance Solutions, LLC demurs to all three causes of action alleged by plaintiff Auto Auction Group, Inc.

1. Breach of contract

Plaintiff does not allege sufficient facts for breach of contract.  The elements of breach of contract are: “(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.)

Plaintiff does not adequately allege the contract.  “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.’ ”  (McKell v. Washington Mutual, Inc. (2006) 142 Cal.App.4th 1457, 1489, citing Witkin.)

The complaint alleges, “On November 7, 2022 plaintiff and defendants … entered into a DEMAND PROMISSORY NOTE AND SECURITY AGREEMENT - FLOORING AGREEMENT which is attached hereto as EXHIBIT 1.”  (Comp., ¶ 7.)  But the exhibit is not attached.  Nor does the body of the complaint allege the contract’s terms or legal effects. 

2. Unlawful repossession – conversion in the absence of security interest

            Defendant demurs to this cause of action on the basis that plaintiff’s complaint incorrectly claims defendant never had a security interest.  (Demurrer, pp. 6-7.)  Defendant argues the contract—which is neither attached to the complaint nor the demurrer—expressly provides that defendant has a security interest in the vehicles.  That contract is not part of the record.  It cannot serve as a basis for demurrer.

3. Breach of peace

Defendant demurs to this cause of action on the basis that it is not an independent claim and merely duplicates the conversion claim.  Rather than an independent cause of action, breaching the peace can give rise to a claim for conversion that would otherwise be lawful.  “[W]here one is otherwise entitled to take possession of property, its repossession by [unlawful] means constitutes a conversion.”  (Henderson v. Security Nat. Bank (1977) 72 Cal.App.3d 764, 770.) 

Though “breach of peace” is not a cause of action, per se, the court must examine the complaint “[i]rrespective of the labels attached …  to any alleged cause of action … ‘to determine whether [the allegations] state a cause of action on any available legal theory.’ ”  (Adelman v. Associated Intern. Ins. Co. (2001) 90 Cal.App.4th 352, 359.)  In substance, the complaint alleges breaching the peace as an alternative legal theory for conversion.  The second cause of action alleges defendants had no right to repossess the vehicles.  The third cause of action alleges that, even if defendant had the right to repossess the vehicles, it did so by “trespassing upon plaintiff’s property” and “threatening plaintiff’s employee with physical harm.”  (Comp., ¶ 16.)  That constitutes conversion via the theory of repossession by unlawful means.    

Disposition

            Defendant Auto Finance Solutions, LLC’s demurrer to plaintiff’s first cause of action is sustained with 20 days’ leave to amend.  Defendant’s demurrer to the second and third causes of action is overruled.