Judge: Ashfaq G. Chowdhury, Case: 23GDCV02110, Date: 2024-02-09 Tentative Ruling
Case Number: 23GDCV02110 Hearing Date: February 9, 2024 Dept: E
Case No: 23GDCV02110
Hearing Date: 02/09/2024 – 8:30am
Trial Date: UNSET
Case Name: HEADWAY CAPITAL, LLC, a Delaware limited
liability company v. THE PIE HOLE LLC, a limited liability company; SEAN
BRENNAN, an individual; DOES 1-10
[TENTATIVE RULING ON
DEMURRER]
Moving Party: Defendants, The Pie Hole LLC and Sean Brennan
Responding Party: Plaintiff,
Headway Capital, LLC
Moving Papers: Notice;
Memorandum; Talerico Declaration
Opposition Papers: Opposition;
Proof of Service
Reply Papers: No Reply
as of 2/5/2024
RELIEF REQUESTED
Defendants, The Pie Hole LLC and Sean Brennan, demur to the Complaint based on
the grounds that the allegations against Defendants in the first cause of
action for Breach of Contract fails to state facts sufficient to constitute a
cause of action and is uncertain.
BACKGROUND
Plaintiff filed a
Complaint on 10/05/2023 alleging one cause of action for breach of contract. Plaintiff
alleges that Plaintiff and Defendants, The Pie Hole LLC and Sean Brennan,
entered into a written Business Use Line of Credit Agreement (Agreement).
(Compl. ¶7.) Plaintiff alleges that pursuant to the Agreement, Sean Brennan
personally guaranteed payment of the loan. (Id.) Plaintiff further
alleges that Defendants defaulted under the terms of the agreement. (Compl.
¶8.)
This
demurrer pertains to the sole cause of action in the Complaint for breach of
contract.
PROCEDURAL ANALYSIS
Proof of Service Timely Filed (CRC Rule
3.1300): Ok
16/21 Court Days Lapsed (CCP 1005(b)): Ok
Proper Address (CCP §1013, §1013a, §1013b): Ok
Meet and Confer
A party filing a
demurrer “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
shall meet and confer at least five days before the date the responsive
pleading is due. If the parties are not able to meet and confer at least five
days prior to the date the responsive pleading is due, the demurring party
shall be granted an automatic 30-day extension of time within which to file a
responsive pleading, by filing and serving, on or before the date on which a
demurrer would be due, a declaration stating under penalty of perjury that a
good faith attempt to meet and confer was made and explaining the reasons why
the parties could not meet and confer.”
(Code Civ. Proc., §430.41, subd. (a)(2).)
Failure
to sufficiently meet and confer is not grounds to overrule or sustain a
demurrer. (Code Civ. Proc., §430.41(a)(4).)
Here,
Defendants’ counsel left a voicemail regarding a meet and confer on this
demurrer and followed up with an email setting forth grounds for demurrer and
requested a call back to discuss; however, Plaintiff’s counsel did not respond
to the request to meet and confer. (Talerico Decl. ¶2.)
LEGAL STANDARDS FOR DEMURRERS
Demurrer
– Sufficiency
A demurrer for
sufficiency tests whether the complaint states a cause of action. (Hahn v. Mirda, (2007) 147 Cal.App.4th
740, 747.) 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.) The court “treat[s]
the demurrer as admitting all material facts properly pleaded, but not
contentions, deductions or conclusions of fact or law ….” (Berkley v. Dowds (2007) 152
Cal.App.4th 518, 525.) In a demurrer
proceeding, the defects must be apparent on the face of the pleading or via
proper judicial notice. (Donabedian
v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968, 994.) A demurrer tests the pleadings alone and
not the evidence or other extrinsic matters; therefore, it lies only where the
defects appear on the face of the pleading or are judicially noticed. (Code Civ. Proc., §§ 430.30, 430.70.) The only issue involved in a demurrer hearing
is whether the complaint, as it stands, unconnected with extraneous matters,
states a cause of action. (Hahn, supra, 147 Cal.App.4th at
747.)
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 … 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.)
On
demurrer, a trial court has an independent duty to “determine whether or not
the … complaint alleges facts sufficient to state a cause of action under any
legal theory.” (Das v. Bank of
America, N.A. (2010) 186 Cal.App.4th 727, 734.) Demurrers do not lie as to only parts of
causes of action, where some valid claim is alleged but “must dispose of an
entire cause of action to be sustained.”
(Poizner v. Fremont General Corp. (2007) 148 Cal.App.4th 97,
119.) “Generally
it is an abuse of discretion to sustain a demurrer without leave to amend if
there is any reasonable possibility that the defect can be cured by
amendment.” (Goodman v. Kennedy
(1976) 18 Cal.3d 335, 349.)
Demurrer – Uncertainty
A special demurrer for uncertainty, CCP section 430.10(f), is disfavored
and will only be sustained where the pleading is so bad that defendant cannot
reasonably respond—i.e., cannot reasonably determine what issues must be
admitted or denied, or what counts or claims are directed against
him/her. (Khoury v. Maly’s of Calif., Inc. (1993) 14
Cal.App.4th 612, 616.) Moreover, even if the pleading is somewhat vague,
“ambiguities can be clarified under modern discovery procedures.” (Ibid.)
ANALYSIS
[As an initial
matter, the Court notes that on eCourt, Defendants have a “Hearing on Demurrer –
without Motion to Strike (2866)” that is Scheduled and a “Hearing on Demurrer –
without Motion to Strike” that is Reserved. On eCourt, there is only one
demurrer filed, which is the demurrer that is scheduled with reservation number
2866. Therefore, the Court notes that there is only one hearing on demurrer
before the Court at the instant hearing.]
First Cause of
Action – Breach of Contract
To
state a cause of action for breach of contract, Plaintiff must allege “(1) the
existence of the contract, (2) plaintiff’s performance or excuse for
nonperformance, (3) defendant’s breach, and (4) resulting damages to the
plaintiff.” (Oasis West Realty, LLC
v. Goldman (2011) 51 Cal.4th 811, 821.)
A cause of action
for breach of contract is subject to demurrer if “it cannot be ascertained from
the pleading whether the contract is written, is oral, or is implied by
conduct.” (Code Civ. Proc., §430.10(g).)
A written contract must be pleaded verbatim in the body of the complaint, be
attached to the complaint and incorporated by reference, or be pleaded
according to its legal effect. (Bowden
v. Robinson (1977) 67 Cal.App.3d 705, 718.)
An allegation of an oral agreement must “set[] forth the substance of
its relative terms.” (Gautier v.
General Tel. Co. (1965) 234 Cal.App.2d 302, 305.)
As a preliminary
matter, it can be ascertained from the pleading that the alleged contract is
written. Plaintiff refers to the Agreement as “written,” Plaintiff indicates
the Agreement is attached as Exhibit A, and Plaintiff attaches the Agreement to
the Complaint. (Compl. ¶7, Ex. A.)
(1) The existence
of the contract
Here,
Plaintiff successfully alleged this element for a breach of contract cause of
action.
“On or about
August 6, 2019, Plaintiff HEADWAY CAPITAL, LLC, a Delaware limited liability
company, and Defendants THE PIE HOLE LLC, a limited liability company, SEAN
BRENNAN, an individual, and DOES 1 through 10, entered into a written Business
Use Line of Credit Agreement (“Agreement”). Pursuant to said Agreement,
Defendant SEAN BRENNAN, an individual, personally guaranteed payment of the
loan. A true copy of the Agreement is attached hereto, marked Exhibit
"A" and incorporated herein.” (Compl. ¶7.)
Defendants do not
indicate which element of a breach of contract cause of action they are
attacking. Presumably, it appears as if Defendants are attacking the first
element of a breach of contract cause of action.
Defendants argue,
without citing any case law:
Brennan is not
obligated to Plaintiff on the Business Use Line of Credit Agreement (the
“Agreement”) attached to the Complaint. Brennan is party to a guaranty of the
Agreement. However, the first cause of action alleges that Pie Hole and Brennan
breached the Agreement. Because Brennan is not a party to the Agreement he has
no obligation under the Agreement. Therefore, the Demurrer should be granted
because the first cause of action does not set forth a contractual obligation
to which Brennan is a party, it fails to state facts sufficient to constitute a
cause of action.
(Dem. p. 3.)
The Court does not
find Defendants’ argument availing. Plaintiff successfully alleged this
element.
In
a demurrer proceeding, the defects must be apparent on the face of the pleading
or via proper judicial notice. (Donabedian
v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968, 994.) A demurrer tests the pleadings alone and not
the evidence or other extrinsic matters; therefore, it lies only where the
defects appear on the face of the pleading or are judicially noticed. (Code Civ. Proc., §§ 430.30, 430.70.) The only issue involved in a demurrer hearing
is whether the complaint, as it stands, unconnected with extraneous matters,
states a cause of action. (Hahn, supra, 147 Cal.App.4th at
747.)
The
Court notes that in the Agreement attached as Exhibit A to the Complaint, the
Borrower is listed as The Pie Hole LLC and the Guarantor is listed as Sean
Brennan. It appears that the Defendants may be attempting to argue that because
Brennan was a guarantor and not the borrower, that Brennan is not a party to
the contract. But the contract itself is “Signed on behalf of the Borrower” by
“Sean Brennan” and is “Signed as Guarantor” by “Sean Brennan”—so the Court is
left somewhat unclear as to Defendants’ argument.
Civil
Code § 2787 provides: “A surety or guarantor is one who promises to answer for
the debt, default, or miscarriage of another, or hypothecates property as
security therefor.”
“[G]uaranty
contracts are construed according to the same rules as those used for other
contracts, with a view to ascertaining the intent of the parties.” (River
Bank Am. v. Diller (1995) 38 Cal. App. 4th 1400, 1415.) It seems pretty
clear from the text of the contract that Brennan was intended by the parties to
serve as a guarantor for the borrower (for whom Brennan also signed). The Court
will hear argument.
(2) Plaintiff’s performance or excuse for nonperformance
Here, Plaintiff
successfully alleged this element for a breach of contract cause of action.
“Plaintiff performed all obligations required of it under the
terms of the Agreement.” (Compl. ¶10.)
(3) Defendant’s breach
Here, Plaintiff
successfully alleged this element for a breach of contract cause of action.
“Thereafter, within the last four years, Defendants, and each of
them, defaulted under the terms of the written Agreement by failing to make
payment thereunder and to which Defendants had agreed.” (Compl. ¶8.)
“As a result of the non-payment of sums due, Defendants, and each
of them, breached the terms of the written contract.” (Compl. ¶9.)
(4) Resulting damages to the plaintiff
Here, Plaintiff
successfully alleged this element for a breach of contract cause of action.
“As a result of the above-described breach of the terms of the
written Agreement, Plaintiff has been damaged in the sum of $121,136.53.
Pursuant to the written Agreement, Plaintiff also requests reasonable attorney
fees and collection costs as well as court costs. No part of said sum has been
paid, although demand has been made, and the balance sued remains due, owing
and unpaid.” (Compl. 11.)
Uncertainty
Defendants also argue:
Code of Civ. P. § 430.10(f) provides grounds for
an exemption to a cause of action if it is “uncertain,” which is further
defined to include pleading that is “ambiguous and unintelligible.” The first
cause of action is ambiguous. The Agreement attached to the Complaint states in
Section 3.b. that the credit limit is $40,000. Yet the Complaint alleges that
$121,136.53 is owed on the Agreement. Plaintiff provides no accounting on how
an agreement to loan up to $40,000 could possibly have a balance in excess of
$120,000 four years after its making. It appears that Plaintiff is claiming a
balance due on some other obligation owed by some other party. These
allegations are nonsensical and create ambiguity as to this cause of action. As
such the Demurrer to the first cause of action should be granted as uncertain.
(Dem. p. 3.)
The Court does not find Defendants’ argument
availing.
A special demurrer for uncertainty, CCP §
430.10(f), is disfavored and will only be sustained where the pleading is so
bad that defendant cannot reasonably respond—i.e., cannot reasonably determine
what issues must be admitted or denied, or what counts or claims are
directed against him/her. (Khoury v. Maly’s of Calif., Inc. (1993)
14 Cal.App.4th 612, 616.) Moreover, even if the pleading is somewhat
vague, “ambiguities can be clarified under modern discovery procedures.” (Ibid.)
TENTATIVE RULING
Defendants’
demurrer is OVERRULED.