Judge: Armen Tamzarian, Case: 24STCV14819, Date: 2024-09-09 Tentative Ruling
Case Number: 24STCV14819 Hearing Date: September 9, 2024 Dept: 52
Defendant Lewis Brisbois Bisgaard
& Smith LLP’s Demurrer to First Amended Complaint
Defendant Lewis Brisbois Bisgaard &
Smith LLP demur to all three causes of action alleged by plaintiff Jonathan J.
Larsen’s first amended complaint.
1.
Breach of Contract
Defendant demurs to plaintiff’s
first cause of action on the grounds that “it cannot be ascertained from the
pleading whether the contract is written, is oral, or is implied by conduct.” (Code Civ. Proc., § 430.10, subd. (g).) The first amended complaint expressly alleges
breach of a written contract: “an Exclusive Representation Agreement
(‘ERA’).” (FAC, ¶ 6, Exs. A & B.) The first cause of action alleges, “Mr.
Larsen and LBBS are parties to the ERA. The ERA is valid and can be enforced by Mr.
Larsen. Pursuant to the ERA, Mr. Larsen,
as LBBS’s exclusive broker was to receive commissions and fees as provided
therein until at least June 22, 2030. LBBS
breached the ERA by unilaterally and abruptly terminating the ERA without good
cause. Mr. Larsen and [real estate firm]
AY performed his and its obligations under the ERA.” (FAC, ¶¶ 70-73.)
Defendant relies on the following allegations:
“Mr. Larsen was asked by Mr. Lewis to provide consulting services behind the
scenes to benefit LBBS. The consulting
services, typically worth 10% of the savings, included significant market data
on comparable lease renegotiations… .” (FAC,
¶ 20.) “Mr. Larsen negotiated for the
initial office lease” and performed other services “valued at $5,000,000 for no
cost or early termination penalty. The
cost savings at the Downtown Los Angeles headquarters office lease due to the
successful renegotiation spearheaded by Mr. Larsen lead to a market value cost
payment of $500,000 to Mr. Larsen, or to AY, at Mr. Larsen’s discretion.” (¶¶ 20-21.)
Those allegations do not allege those
terms were the subject of a contract or agreement. Rather than alleging Lewis agreed to
pay a specific amount for those services, plaintiff alleges Lewis “asked” for
the services, which were “typically worth 10% of the savings.” (FAC, ¶ 20.)
Thus, this portion of the first amended complaint alleges a substantive obligation
separate from the ERA. The ERA does not
include any provision requiring defendant to pay plaintiff 10% of costs saved
for renegotiating leases or for consulting services. (FAC, Ex. A.)
Though the first cause of action alleges, “Mr. Larsen repeats and
re-alleges” all other paragraphs of the pleading (¶ 69), its substantive
allegations (¶¶ 70-73) repeatedly and specifically affirm that the first cause
of action alleges defendant breached the written ERA. These allegations are clear enough to
withstand demurrer.
2.
Breach of the Implied Covenant of Good Faith and Fair Dealing
Plaintiff alleges sufficient facts
for this cause of action. Defendant
demurs on the grounds that this claim is superfluous. A cause of action for breach of the implied
covenant must be based on something more than a breach of the express terms of
the contract. (Careau & Co. v. Security Pacific Business Credit, Inc. (1990)
222 Cal.App.3d 1371, 1395.) A cause of
action for breach of the implied covenant fails if it “relies on the same acts,
and seeks the same damages” as the “claim for breach of contract.” (Bionghi v. Metropolitan Water Dist. of
So. California (1999) 70 Cal.App.4th 1358, 1370.) Plaintiff
alleges “terminating the ERA without good cause” breached both the contract’s
express terms (FAC, ¶ 72) and “the covenant of good faith and fair dealing” (¶
78). For both causes of action,
plaintiff seeks $9,000,000 in damages.
(¶¶ 74, 80.)
Generally,
however, a plaintiff “ ‘may plead
in the alternative and may make inconsistent allegations.’ ” (Third Eye Blind, Inc. v. Near North
Entertainment Ins. Services, LLC (2005) 127 Cal.App.4th 1311, 1323;
accord Newport Harbor Ventures, LLC v. Morris Cerullo World Evangelism
(2016) 6 Cal.App.5th 1207, 1223 [“plaintiff may plead inconsistent causes of
action for breach of contract and common count”].)
When liberally construed, the first amended
complaint adequately alleges in the alternative that, if terminating the
contract did not breach an express term of the contract, defendant terminated
the contract in a way that complied with its terms but breached the implied
covenant of good faith and fair dealing.
Plaintiff alleges facts that may constitute acting in bad faith. For example, plaintiff alleges “The
Termination Letter purported to justify the unilateral termination of the ERA
by claiming, falsely, that Mr. Lewis did not have authority to bind LBBS
despite Mr. Lewis’s longstanding role as the Managing Partner and Board
Chairman throughout 2015 through 2022.”
(¶ 39.) Similarly, plaintiff
alleges, “[T]he Termination Letter claims in a vague and non-specific manner
that there were problems with Lease Auditing services and Project accounting
services.” (¶ 61.) At this stage, these allegations permit a
trier of fact to conclude defendant acted in bad faith to engineer a way to terminate
the contract that was technically permitted under its express terms.
3. Quantum Meruit
Defendant
demurs to plaintiff’s third cause of action on the basis that a plaintiff cannot
bring a quantum meruit claim because the parties had an express contract. “A quantum meruit or
quasi-contractual recovery rests upon the equitable theory that a contract to
pay for services rendered is implied by law for reasons of justice. [Citation.]
However, it is well settled that there is no equitable basis for an
implied-in-law promise to pay reasonable value when the parties have an actual
agreement covering compensation.” (Hedging
Concepts, Inc. v. First Alliance Mortgage Co. (1996) 41 Cal.App.4th
1410, 1419.)
As discussed with respect to the
first cause of action, the first amended complaint alleges a separate,
substantive duty not included in the ERA.
The first amended complaint’s allegations on that subject are phrased in
the terms that define the legal doctrine of quantum meruit: “To recover on a
claim for the reasonable value of services under a quantum meruit theory, a
plaintiff must establish both that he or she was acting pursuant to either an
express or implied request for services from the defendant and that the
services rendered were intended to and did benefit the defendant.” (Ochs v. PacifiCare of California (2004)
115 Cal.App.4th 782, 794.)
Plaintiff
alleges, “Mr. Larsen was asked by Mr. Lewis to provide consulting services
behind the scenes to benefit LBBS.”
(FAC, ¶ 20.) Instead of alleging
Lewis agreed to pay a specific amount for those services, plaintiff alleges the
services were “typically worth 10% of the savings.” (Ibid.) Plaintiff alleges those services included
“lease renegotiations” (¶ 20) and “cost savings at the Downtown Los Angeles
headquarters office lease due to the successful renegotiation” (¶ 21). The third cause of action alleges, among
other things, that plaintiff “never received his commission from the
renegotiation of LBBS’s lease at their Downtown Los Angeles headquarters office
location.” (¶ 84.) When liberally construed, the first amended
complaint alleges sufficient facts for quantum meruit based on services not
included in any express contract or agreement.
Disposition
Defendant Lewis Brisbois Bisgaard &
Smith LLP’s demurrer to plaintiff’s first amended complaint is overruled. Defendant is ordered to answer within
20 days.