Judge Bruce G. Iwasaki, Case Number: 22STCV04775, Date: 2023-08-15 Tentative Ruling

Tentative Ruling: The demurrer to the third cause of action is overruled and the demurrer is sustained without leave to amend as to fourth and fifth causes of action. The motion to strike is denied.

This case arises out of an incident involving a water truck falling into a sinkhole. Plaintiff Steve Martinez dba Agua Dulce Water Trucks & Transportation (Plaintiff) alleges that on May 14, 2021, his water truck fell into a sinkhole on a vacant lot owned by co-defendants, Newhall Land & Farming Co. (Newhall), and Five Point Holdings, LLC (Five Point), in Valencia, California (Property).

Plaintiff asserts that he contracted with Defendant Goldie Productions, LLC (Goldie) to supply water to a film production at the Property. Plaintiff’s truck allegedly fell into a sinkhole that opened underneath the truck as it was “above or adjacent to” a gas line installed by Defendant Southern California Gas Company (SoCal Gas). Plaintiff alleges Defendant SoCal Gas entered a contract with Defendant Barnard Construction Company, Inc. (Barnard) to “install pipes” at the Property. (SAC ¶13.)

The Second Amended Complaint (SAC) contains causes of action for (1.) Negligence; (2.) Premises Liability; (3.) Breach Of Oral Contract; (4.) Promissory Estoppel; (5.) Fraud; (6.) Violation Of Business Professions Code Section 17200; and (7.) Violation Of Cal. Pub. Util. Code§ 2106.

On March 10, 2023, Defendant Newhall filed a demurrer to the fifth and sixth causes of action of the FAC for fraud and constructive fraud, respectively, and a motion to strike the punitive damages claims. On April 14, 2023, the Court sustained Newhall's demurrer with leave to amend as to the fifth and sixth causes of action, and granted the motion to strike as to the punitive damages request in the prayer for relief.

On March 10, 2023, Defendant SoCal Gas filed a demurrer to the third, fourth, fifth, and sixth causes of action of the FAC for breach of fiduciary duty, promissory estoppel, fraud, and constructive fraud, respectively, and a motion to strike the punitive damages claims. On April 20, 2023, the Court sustained SoCal Gas' demurrer with leave to amend as to the third, fourth, fifth, and sixth causes of action, and granted the motion to strike as to the punitive damages request in the prayer for relief.

On March 27, 2023, Defendant Five Point filed a demurrer as the first, second, fifth, and sixth causes of action of the FAC for negligence, premises liability, fraud, and constructive fraud, on the grounds that they each fail to state a cause of action. Five Point also moved to strike the request for punitive damages. On May 5, 2023, the Court overruled the demurrer to the first and second causes of action and sustained with leave as to the fifth and sixth causes of action. The Court also granted the motion to strike.

On July 6, 2023, Defendant Barnard filed a demurrer to the first and seventh causes of action in the Second Amended Complaint. Defendant also moved to strike the request for punitive damages. On August 15, 2023, the Court sustained the demurrer to the first cause of action with leave and sustained without leave as to the seventh cause of action. The Court also granted the motion to strike.

On July 24, 2023, Defendant SoCal Gas filed a demurrer to the third, fourth, and fifth, causes of action in the Second Amended Complaint. Defendant also moves to strike the request for punitive damages.[1] Plaintiff opposed SoCal Gas’s demurrer and motion to strike. No reply was filed.

The demurer to the third cause of action is overruled, and the demurrer to the fourth and fifth causes of action is sustained without leave to amend. The motion to strike is denied.

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. 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.) At the pleading stage, a plaintiff need only allege ultimate facts sufficient to apprise the defendant of the factual basis for the claim against him. (Semole v. Sansoucie (1972) 28 Cal. App. 3d 714, 721.) A “demurrer does not, however, admit contentions, deductions or conclusions of fact or law alleged in the pleading, or the construction of instruments pleaded, or facts impossible in law.” (S. Shore Land Co. v. Petersen (1964) 226 Cal.App.2d 725, 732 [internal citations omitted].)

“The court may, upon a motion made pursuant to Section 435, or at any time in its discretion, and upon terms it deems proper: (a) Strike out any irrelevant, false, or improper matter inserted in any pleading. (b) Strike out all or any part of any pleading not drawn or filed in conformity with the laws of this state, a court rule, or an order of the court.”¿(Code Civ. Proc. § 436.) “Immaterial” or “irrelevant” matters include allegations not essential to the claim, allegations neither pertinent to nor supported by an otherwise sufficient claim or a demand for judgment requesting relief not supported by the allegations of the complaint. (Code Civ. Proc. § 431.10, subds. (b)(1)-(3).)

Defendant SoCal Gas demurs to the breach of oral contract claim on the grounds that there is no allegation showing any damages resulting from this purported breach. This argument was the basis of the Court’s previous ruling sustaining the demurrer to this claim.

“The elements of a breach of oral contract claim are the same as those for a breach of written contract: a contract; its performance or excuse for nonperformance; breach; and damages.” (Stockton Mortgage, Inc. v. Tope (2014) 233 Cal.App.4th 437, 453.) A breach of contract is not actionable without damage. (Bramalea California, Inc. v. Reliable Interiors, Inc. (2004) 119 Cal.App.4th 468, 473.)

Defendant SoCal Gas argues that the allegations fail to demonstrate any damage to Plaintiff that occurred after any purported contract was entered into between Plaintiff and SoCal Gas. That is, Plaintiff has not pled any “new” damage from the so-called breach. In fact, SoCal Gas contents that, according to the SAC, Plaintiff had the truck repaired. (SAC ¶ 32 [“The truck has been operable as of July 10, 2021.”].)

The SAC alleges Plaintiff agreed “not to call the fire department and in return” SoCal Gas promised to “(1) have the truck removed quickly, (2) completely repair the truck immediately, (3) have the insurance carrier for SOCALGAS further take steps to initiate and start a claims process for the damage to the truck, ( 4) buy a new truck if needed, (5) take care of everything.” (SAC ¶ 80.) The SAC further alleges “as a direct and proximate result of Defendant SOCALGAS 's breach of its fiduciary duty to the PLAINTIFF by not honoring its promises, PLAINTIFF has been damaged in an amount of over $294,000 for repair costs for its truck, or in some other amount to be proven at trial, plus attorney fees and costs.” (SAC ¶ 82.)

The SAC’s allegations for breach of contract appear to be a conflation of Plaintiff’s allegations for a breach of fiduciary duty and its fraud claims. Nonetheless, an oral promise to make repairs and pay for repairs (even if damages occurred from some other injury) is an adequate bargained for exchange for the purposes of pleading an oral agreement. That is, it is of no consequence that SoCal Gas may be liable for these damages under Plaintiff’s negligence theory, as well; SoCal Gas may be separately liable based on the promises made in the alleged oral contract where the promise was to repair the truck and the damages are the unrepaired truck and/or the cost of repairs Plaintiff incurred to make repairs.

Here, the SAC alleges that SoCal Gas agreed to “completely repair the truck.” The SAC alleges that water tank “is” damaged and the truck frame “is” damaged. (SAC ¶ 34.) Thus, in liberally construing Plaintiff’s allegations, Plaintiff has alleged a breach of an oral contract and resulting damage.

Although this finding is sufficient to overrule the demurrer to this cause of action, the Court will briefly address the other purported oral contract terms because these remaining allegations are neither clear nor concrete oral contract terms that demonstrate a resulting breach.

As a preliminary matter, the SAC alleges performance by SoCal Gas on the many of the so-called terms of the oral contract. First, “SOCALGAS Superintendent Mr. Matheus contacted SOCALGAS ' claim department to apprise them of the accident and the same day, Mr. Mario Ramos sent an email to PLAINTIFF wherein he introduced himself as the Senior Claims Advisor for SOCALGAS Claim Department and asked PLAINTIFF to send him any other information regarding the damages and work to be performed to his truck.” (SAC ¶ 26.) Further, SOCALGAS Superintended Mr. Matheus ordered a subcontractor to come with a big machine to pick up the TRUCK and move it out of the hole. . . . . Within a couple of hours of the INCIDENT, SOCALGAS subcontractor's vehicle picked up the TRUCK.” (SAC ¶ 27.) The SAC also alleges that it took it truck to the repair shop, but after two and half weeks the repair were not made quickly enough such that Plaintiff moved the truck to another location. (SAC ¶¶ 28-30.)

Finally, the Court does not find that an alleged promise to “take care everything” is an enforceable contract term as to SoCal Gas. Contract terms must be sufficiently definite that the performance promised is reasonably certain, and allegations that are too indefinite do not create a binding contract. (See e.g., Mason v. Woodlawn Sav. & Loan Ass'n (1967) 254 Cal.App.2d 41, 44; Weddington Productions, Inc. v. Flick (1998) 60 Cal.App.4th 793, 811.)

Defendant SoCal Gas argues that this cause of action must be pled with specificity.

“ ‘The elements of a promissory estoppel claim are “(1) a promise clear and unambiguous in its terms; (2) reliance by the party to whom the promise is made; (3) [the] reliance must be both reasonable and foreseeable; and (4) the party asserting the estoppel must be injured by his reliance.” [Citation.]’ [Citation.]” (Jones v. Wachovia Bank (2014) 230 Cal.App.4th 935, 945.)

The party claiming estoppel must specifically plead all facts relied on to establish its elements. (See Smith v. City and County of San Francisco (1990) 225 Cal.App.3d 38, 48.) “ ‘[A] promise is an indispensable element of the doctrine of promissory estoppel. The cases are uniform in holding that this doctrine cannot be invoked and must be held inapplicable in the absence of a showing that a promise had been made upon which the complaining party relied to his prejudice.’ [Citation.] The promise must, in addition, be ‘clear and unambiguous in its terms.’ [Citation.] ‘Estoppel cannot be established from ... preliminary discussions and negotiations.’ ” (Garcia v. World Savings, FSB (2010) 183 Cal.App.4th 1031, 1044.)

Here, the SAC fails to allege a claim for promissory estoppel. Unlike the oral contract claim, the promissory estoppel claim does require separate damages apart from the damages sustained by the accident itself.

This is “because promissory estoppel claims are aimed solely at allowing recovery in equity where a contractual claim fails for a lack of consideration, and in all other respects the claim is akin to one for breach of contract, it is logical and proper to require that any claimed damages be caused by a defendant's breach of the agreement.” (US Ecology, Inc. v. State of California (2005) 129 Cal.App.4th 887, 904.)

Here, the allegations do not show that Plaintiff sustained any separate and distinct injury from relying on SoCal Gas’s purported promise. All the injuries allegedly sustained were the injuries that resulted from the accident itself and not from SoCal Gas’s breach of its promise.

Plaintiff also claims SoCal Gas defrauded him in two respects. Plaintiff characterizes the promises underlying his estoppel cause of action as, alternatively, “misrepresentations of material fact” sufficient to state a claim for intentional misrepresentation. He also claims SoCal Gas should be liable for “fraudulent concealment of sinkholes.”

The elements of intentional misrepresentation, or fraud in the inducement, are “(a) misrepresentation (false representation, concealment, or nondisclosure); (b) knowledge of falsity (or ‘scienter’); (c) intent to defraud, i.e., to induce reliance; (d) justifiable reliance; and (e) resulting damage.” (Lazar v. Superior Court (1996) 12 Cal.4th 631, 638.) Plaintiff bases his cause of action on the same promises he refers to in his promissory estoppel claim. In fact, he repeats SoCal Gas’s five alleged promises verbatim in his fourth and fifth causes of action: to remove the truck, perform repairs, start an insurance claim, replace the truck if needed, and “take care of everything.” (FAC ¶¶ 84, 90.) Plaintiff claims these statements “were a substantial factor in causing the damages related to the twisted and damages water tank . . . .” (Id., ¶ 92.)

The SAC’s misrepresentations of material fact are based on promises made to Plaintiff immediately following the accident. (SAC ¶ 90.) Plaintiff alleges SoCal Gas had no intention of keeping these promises. (SAC ¶ 90.)

As with the promissory estoppel claim, Plaintiff does not establish any of his damages are attributable to the promises made after the accident, rather than the accident itself.

Thus, these allegations fail to state a claim for intentional misrepresentation.

Plaintiff also alleges fraud based on SoCal Gas’s “reckless omission of notice and/or its negligent or intentional creation of sinkholes and the company's self-evidently intentional failure to warn the public of the sinkholes at the accident site.” (SAC ¶ 95.) The SAC continues by stating:

“Defendants knew the situation was very dangerous, so when PLAINTIFF Martinez stated he was going to call the Fire Department, Defendant SOCALGAS promised him everything and anything to convince him not to. [¶] . The managing agents for SOCALGAS all had actual knowledge of the sink roles, how they were created, a failure to put up sinkhole warnings, a scheme to keep the sinkholes a secret from the public and government because it would cost an incredible amount of money to properly repair and maintain the earth to avoid the collapse of sink holes.” (SAC ¶¶ 96-97.)

To state a claim for fraudulent inducement-concealment, Plaintiffs must allege: (1) the defendant “concealed or suppressed a material fact,” (2) the defendant was “under a duty to disclose the fact to the plaintiff,” (3) the defendant “intentionally concealed or suppressed the fact with the intent to defraud the plaintiff,” (4) the plaintiff was “unaware of the fact and would not have acted as he did if he had known of the concealed or suppressed fact,” and (5) “as a result of the concealment or suppression of the fact, the plaintiff must have sustained damage.” (BiglerEngler v. Breg, Inc. (2017) 7 Cal.App.5th 276, 310–311.)

With respect to concealment, “ ‘[t]here are “four circumstances in which nondisclosure or concealment may constitute actionable fraud: (1) when the defendant is in a fiduciary relationship with the plaintiff; (2) when the defendant had exclusive knowledge of material facts not known to the plaintiff; (3) when the defendant actively conceals a material fact from the plaintiff; and (4) when the defendant makes partial representations but also suppresses some material facts.” ’ ” (Bigler-Engler, supra, 7 Cal.App.5th at p. 311.) The latter three circumstances “ ‘presuppose[ ] the existence of some other relationship between the plaintiff and defendant in which a duty to disclose can arise.’ ” (Ibid.) This relationship has been described as a “transaction,” such as that between “ ‘ “seller and buyer, employer and prospective employee, doctor and patient, or parties entering into any kind of contractual arrangement.” ’ ” (Shin v. Kong (2000) 80 Cal.App.4th 498, 509.)

Here, as with the FAC, Plaintiff alleges that Newhall and SoCal Gas had a contract, that Newhall and Goldie had an agreement that Goldie could use its property, and that Plaintiff and Goldie had an agreement that Plaintiff would deliver water. (See SAC ¶ 13, 18, 68.) There are no new allegations that demonstrate the existence of any special relationship between Plaintiff and SoCal Gas prior to the accident which would have support disclosing the sinkhole to Plaintiff. Thus, Plaintiff cannot recover its damages of $294,000 based on this purported omission.

Accordingly, these allegations fail to state a claim for fraudulent concealment. The demurrer to this cause of action is sustained without leave to amend.

Defendant also moves to strike the request for punitive damages. In opposition, Plaintiff argues that it has pled sufficient facts to support a prayer for punitive damages.

A claim for punitive damages in a complaint must allege that the defendant “has been guilty of oppression, fraud or malice. (Civ. Code, § 3294, subd. (a).) “Oppression’ means despicable conduct that subjects a person to cruel and unjust hardship in conscious disregard of that person's rights.” (Civ. Code, § 3294¿subd. (c)(2).)¿“Fraud means an intentional misrepresentation, deceit, or concealment of a material fact known to the defendant with the intention on the part of the defendant of thereby depriving a person of property or legal rights or otherwise causing injury.” (Civ. Code, § 3294,¿subd. (c)(3).) “Malice means conduct which is intended by the defendant to cause injury to the plaintiff or despicable conduct which is carried on by the defendant with a willful and conscious disregard of the rights or safety of others.”¿ (Civ. Code, § 3294¿subd. (c)(1); see Taylor v. Superior Court (1979) 24 Cal.3d 890, 895-896.)

To survive a motion to strike allegations of punitive damages, “the ultimate facts showing an entitlement to such relief must be pled by a plaintiff. [Citations.] In passing on the correctness of a ruling on a motion to strike, judges read allegations of a pleading subject to a motion to strike as a whole, all parts in their context, and assume their truth. [Citations.] In ruling on a motion to strike, courts do not read allegations in isolation. [Citation.]” (Clauson v. Superior Court (1998) 67 Cal.App.4th 1253, 1255.)¿“The mere allegation an intentional tort was committed is not sufficient to warrant an award of punitive damages.¿ [Citation.] ¿Not only must there be circumstances of oppression, fraud or malice, but facts must be alleged in the pleading to support such a claim.” (Grieves v. Superior Court. (1984) 157 Cal.App.3d 159, 166.)¿ A¿plaintiff’s “conclusory characterization of defendant’s conduct as intentional, willful and fraudulent is a patently insufficient statement of ‘oppression, fraud,¿or malice, express or implied,¿within the meaning of section 3294.”¿(Brousseau v. Jarrett¿(1977) 73 Cal.App.3d 864, 872.)

Here, Defendant SoCal Gas’s motion to strike references only the allegation in the First Amended Complaint and then concludes by seeking the “court grant the motion to strike portions of the First Amended Complaint without leave to amend.” (Mot., p. 7.) There is no analysis as to the allegations in the Second Amneded Complaint. Thus, the Motion is not well-taken.

The demurrer is overruled as to the third cause of action. The demurrer is sustained without leave to amend as to the fourth and fifth causes of action. The motion to strike is denied.

[1] The Notice of Demurrer demurs to the “third cause of action for breach of fiduciary duty”, “fourth cause of action for promissory estoppel,” “fifth cause of action for fraud,” and “sixth cause of action for constructive fraud” on the grounds that they fail to state a cause of action. However, the memorandum of points and authority only challenges the third cause of action for breach of oral contract, fourth cause of action for promissory estoppel and fifth cause of action for fraud. Similarly, in opposition, Plaintiff argues it has stated a cause of action for constructive fraud in its sixth cause of action; however, the SAC’s sixth cause of action is for Violation of Business and Profession Code section 17200.