Judge Barbara M. Scheper, Case 21STCV25510 2022-10-03 Tentative Ruling

Judge: Barbara M. Scheper, Case: 21STCV25510, Date: 2022-10-03 Tentative Ruling

Case Number: 21STCV25510 Hearing Date: October 3, 2022 Dept: 30

Dept. 30

Calendar No.

Gallagher vs. Ygrene Energy Fund California, LLC, et. al., Case No. 21STCV25510

Tentative Ruling re: Defendant’s Demurrer to Second Amended Complaint

Defendant Ygrene Energy Fund California, LLC (Ygrene) demurs to the third, fourth, sixth, and seventh causes of action in the Second Amended Complaint (SAC) of Plaintiff Andrew Gallagher (Plaintiff). The demurrer is sustained without leave to amend.

In reviewing the legal sufficiency of a complaint against a demurrer, a court will treat the demurrer as admitting all material facts properly pleaded, but not contentions, deductions, or conclusions of law. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318 (Blank); C & H Foods Co. v. Hartford Ins. Co. (1984) 163 Cal.App.3d 1055, 1062.) It is well settled that a “demurrer lies only for defects appearing on the face of the complaint[.]” (Stevens v. Superior Court (1999) 75 Cal.App.4th 594, 601.) “The rules by which the sufficiency of a complaint is tested against a general demurrer are well settled. We not only treat the demurrer as admitting all material facts properly pleaded, but also give the complaint a reasonable interpretation, reading it as a whole and its parts in their context.” (Guclimane Co. v. Stewart Title Guaranty Co. (1998) 19 Cal.4th 26, 38 (internal quotes omitted).) For purposes of ruling on a demurrer, the complaint must be construed liberally by drawing reasonable inferences from the facts pleaded. (Wilner v. Sunset Life Ins. Co. (2000) 78 Cal.App.4th 952, 958.)

When ruling on a demurrer, the Court may only consider the complaint’s allegations or matters which may be judicially noticed. (Blank, supra, 39 Cal.3d at 318.) The Court may not consider any other extrinsic evidence or judge the credibility of the allegations plead or the difficulty a plaintiff may have in proving his allegations. (Ion Equip. Corp. v. Nelson (1980) 110 Cal.App.3d 868, 881.) A demurrer is properly sustained only when the complaint, liberally construed, fails to state facts sufficient to constitute any cause of action. (Kramer v. Intuit Inc. (2004) 121 Cal.App.4th 574, 578.)

Plaintiff’s claims in this action arise out of his participation in a Clean Energy Program (CEP) Loans program (also referred to as “PACE programs”). Plaintiff alleges, “CEP loans are modeled on traditional land-secured financing whereby a local government identifies a public interest . . ., approves of and issues bonds to pay for up-front costs, places a lien on the properties receiving the benefit from the financed improvement, and repays bond investors through an assessment paid through the property tax bill.” (SAC ¶ 13.) Ygrene allegedly contracted with the Community Facilities District to administer its CEP Loans program. (SAC ¶ 17.)

Plaintiff was allegedly solicited for the CEP loans by Cory Corbin, an alleged salesperson for Ygrene and other Defendants, in July 2017. (SAC ¶ 26.) Corbin was seeking homeowners like Plaintiff “to perform home repair and improvement projects, including the sale of consumer goods, that would be financed under the CEP programs which were being administered by Ygrene." (SAC ¶ 26.) Plaintiff “agreed with Mr. Corbin to perform various home improvement projects and to purchase various consumer products from [Ygrene and other defendants], conditioned on the funding having been agreed to by Ygrene.” (SAC ¶ 31.)

On July 14, 2017, Plaintiff was presented with a “Finance Estimate and Disclosure Agreement” by Corbin on behalf of Ygrene. (SAC ¶ 33.) This document is attached to the SAC. (SAC, Ex. 6 [103].) The form consists of multiple sections; the first is titled “Financing Estimate and Disclosures” and lists project and financing costs. The signature block at the end of this section, signed by Plaintiff, reads, “This confirms the receipt of the information in this form. You do not have to accept this financing just because you acknowledge that you have received or signed this form, and it is NOT a contract.” (SAC, Ex. 3 [105].)

The next section in the attached document is titled “Right to Cancel.” (SAC, Ex. 6 [106].) It states in part, “You are entering into a Unanimous Approval Agreement (‘UAA’) with the Golden State Finance Authority (as assigned to Ygrene Energy Fund California, LLC, ‘Provider’) for financing that will result in a property tax lien on the property at: [Plaintiff’s property].” The following section is the “Unanimous Approval Agreement” (UAA), which provides that it “is between Golden State Finance Authority, a California joint exercise of powers authority” and Plaintiff. (SAC, Ex. 6 [110].) The UAA also explains, “The Authority has contracted with Ygrene Energy Fund, California LLC (the ‘Program Administrator’) to administer the Program and to fund the acquisition and installation of qualifying renewable energy systems…” Ygrene presented Plaintiff with a second “Finance Estimate and Disclosure Agreement” on July 28, 2017, then with a third on September 29, 2017. (SAC ¶¶ 40-41; Exs. 7-8.)

Ygrene first demurs on the basis that Plaintiff has waived and released all claims against it. The Court agrees.

Section 15 of the UAA between Plaintiff and Golden State Finance Authority, titled “Waiver of Claims,” provides that Plaintiff “hereby waives the right to recover from, and fully and irrevocably releases the Authority, the Authority Parties, and the Program Administrator from, all claims, obligations, liabilities, causes of actions, or damages” arising from the program. (SAC, Ex. 3, pp. 5-6 [114-115].) Ygrene is identified elsewhere in the UAA as the “Program Administrator.” (SAC, Ex. 3, p. 1 [110].)

Section 15 also waives claims “of which the owner is not currently aware or which the Owner does not suspect to exist, and which, if known by the Owner, would materially affect the Owner’s release of the Authority, the Authority Parties, and/or the Program Administrator.” The UAA then expressly refers to Civil Code § 1542 and provides that Plaintiff waives the provisions of that section. (SAC, Ex. 3, p. 6 [115].) Under section 1542, “A general release does not extend to claims that the creditor or releasing party does not know or suspect to exist in his or her favor at the time of executing the release and that, if known by him or her, would have materially affected his or her settlement with the debtor or released party.”

Plaintiff argues that the waiver is ineffective because he did not properly assent to the provision, based on the allegation that “all three executed Financing Estimate and Disclosure Agreements were on pre-printed forms, contained in an on-line portal that precluded Plaintiff from reviewing each page.” (SAC ¶ 43.) Plaintiff cites the “general rule that the assent of a party to a contract is necessary in order that it be binding upon him, and that, if the circumstances of a transaction are such that he is not estopped from setting up his want of assent, he can be relieved from the effect of his signature if it can be made to appear that he did not in reality assent to it.” (Edwards v. Comstock Insurance Co. (1988) 205 Cal.App.3d 1164, 1167–1168.)

The contract attached to the SAC contradicts Plaintiff’s allegation that he was unable to access and read the waiver provision. Every page of the attached UAA, including both containing the Section 15 waiver provision, is electronically initialed by Plaintiff. (SAC, Ex. 3 pp. 5-6 [114].) The fact that Plaintiff initialed each individual page indicates that Plaintiff was able to review the contents of those pages. (See Nolte v. Cedars-Sinai Medical Center (2015) 236 Cal.App.4th 1401, 1406 [facts appearing in attached exhibits “also are accepted as true and are given precedence, to the extent they contradict the allegations”].) Consequently, Plaintiff has not pled grounds for lack of assent to the waiver.

Furthermore, the UAA’s waiver provision does not present any factual dispute.

The scope of a waiver of Section 1542 will be a question of fact where the text of the agreement is ambiguous. (Butler v. Vons Companies, Inc. (2006) 140 Cal.App.4th 943, 949.) In Butler, the plaintiff, Sheldon Butler, was a supermarket clerk who had previously entered into a settlement agreement with his employer to resolve a grievance over an altercation with his manager. (Id. at 945.) The settlement agreement included an express waiver of Section 1542. Around the same time as the settlement was made, Butler complained of racial harassment and discrimination by employees other than the manager, though those discrimination claims were not referenced in the grievance settlement or discussed in the negotiations over it. The trial court granted summary judgment for the employer based on the waiver clause. The Court of Appeal reversed, finding that the Section 1542 waiver in the grievance settlement was ambiguous, and that a question of fact existed as to whether the waiver also extended to the discrimination claims. (Id. at 948-50.)

Here, in contrast to Butler, the text of Section 15 of the UAA clearly indicates that the scope of the waiver is intended to encompass virtually all topics relating to the loan program, including “the performance of the Improvements,” “the Improvements,” “the workmanship of any third parties,” and “any other matter with respect to the Program.” (SAC, Ex. 3, pp. 5-6 [114-115].) Given that there is no ambiguity in the text of the UAA, there is no question of fact presented. Accordingly, the waiver is effective and precludes Plaintiff’s claims against Ygrene in this action.