Judge Bruce G. Iwasaki, Case Number: 23STCV00893, Date: 2023-04-26 Tentative Ruling

Tentative Ruling: The Demurrer to the SAC is sustained with leave to amend.

This case arises from allegations of a failure to pay for services rendered involving a construction project.

On January 13, 2023, Plaintiff Touchstone Marble, Inc. sued Defendant J Allyn Construction Inc. (J Allyn Construction), alleging a breach of contract in the amount of $73,000 for failure to pay for services rendered. On February 14, 2023, Plaintiff Touchstone Marble and Granite filed a First Amended Complaint, substituting in and replacing Plaintiff Touchstone Marble, Inc.

On March 13, 2023, Cross-Complainant Jeffrey J. Allyn dba J. Allyn Construction filed a Cross-Complaint against Cross-Defendant Touchstone Marble, Inc. for recovery of payments to unlicensed contractor pursuant to Business and Professions Code section 7031.

That same day, Jeffrey J. Allyn dba J. Allyn Construction, as the defendant in the First Amended Complaint, filed a demurrer. The Court sustained the demurrer with leave to amend.

On May 15, 2023, Plaintiff Touchstone Marble and Granite filed a Second Amended Complaint alleging causes of action for (1.) breach of contract, and (2.) common count.

On May 15, 2023, Cross-Defendant Touchstone Marble, Inc. filed a demurrer to the Cross-Complaint. The Court overruled the demurrer.

Defendant J Allyn Construction Inc. now demurs to the Second Amended Complaint. Plaintiff Touchstone Marble and Granite opposes the demurrer.

Defendant J Allyn Construction Inc. requests judicial notice of Exhibits 1-5. The Court grants the request. (Evid. Code, § 452, subd. (d), (c).)

A demurrer is an objection to a pleading, the grounds for which are apparent from either the face of the complaint or a matter of which the court may take judicial notice. (Code Civ. Proc., § 430.30, subd. (a); see also Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) The purpose of a demurrer is to challenge the sufficiency of a pleading “by raising questions of law.” (Postley v. Harvey (1984) 153 Cal.App.3d 280, 286.) “In the construction of a pleading, for the purpose of determining its effect, its allegations must be liberally construed, with a view to substantial justice between the parties.” (Code Civ. Proc., § 452.) 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.)

Defendant J Allyn Construction Inc. demurs to the SAC on the grounds that Plaintiff Touchstone Marble and Granite has failed to state a claim – specifically, Plaintiff Touchstone Marble and Granite is not a party to the written contract.

The SAC alleges that Touchstone Marble and Granite and J Allyn Construction Inc. entered into an agreement whereby Plaintiff performed ceramic and mosaic tile fabrication and installation work for J Allyn Construction Inc. at 24712 Malibu Road, Malibu, California 90265 (Property). (SAC ¶¶ 1, 10.) The SAC continues by alleging that J Allyn Construction Inc. breached the contract by refusing to pay a $60,000 due per Invoice 1666 for Plaintiff’s ceramic and mosaic tile fabrication and installation. (SAC ¶¶ 9, 11.)

Defendant J Allyn Construction Inc. now argues that the SAC was brought on behalf of Touchstone Marble and Granite as “a California Department of Consumer Affairs Contractors State License Board” with no allegations of its legal status or explanation for the different party identified in the contract and invoices.

In explaining the change in Plaintiff from the Complaint to the FAC, the SAC alleges that the name of the plaintiff was corrected from Touchstone Marble, Inc. to Touchstone Marble and Granite, pursuant to Code of Civil Procedure section 473, subdivision (a)(1). (SAC ¶ 8.) The SAC also alleges that Touchstone Marble, Inc. and Touchstone Marble and Granite are two separate and distinct companies. (SAC ¶ 9.) There is no explanation for Touchstone Marble, Inc.’s name on the parties’ contract and invoices.

The demurrer is well taken where all the contract and invoices attached to the pleadings identifies Touchstone Marble Inc. – not Plaintiff Touchstone Marble and Granite. The pleadings do not explain this inconsistency. Based on this inconsistency between the allegations and the exhibits, the facts contained in the exhibits prevail. (Holland v. Morse Diesel Intern., Inc. (2001) 86 Cal.App.4th 1443, 1447 [“If facts appearing in the exhibits contradict those alleged, the facts in the exhibits take precedence.”].) Thus, Plaintiff Touchstone Marble and Granite apparently lacks standing to bring the breach of contract claim. (Hatchwell v. Blue Shield of California (1988) 198 Cal.App.3d 1027, 1034 [“Someone who is not a party to the contract has no standing to enforce the contract or to recover extra-contract damages for wrongful withholding of benefits to the contracting party”]

The second cause of action for common counts fails for similar reasons. Touchstone Marble and Granite’s second cause of action for common counts alleges indebtedness to Touchstone Marble and Granite based on invoices issued by non-party Touchstone Marble Inc. with no mention of the name “Touchstone Marble and Granite.” (SAC ¶ 15, Exhs. B-C.) “When a common count is used as an alternative way of seeking the same recovery demanded in a specific cause of action, as in this case, and is based on the same facts, the common count is demurrable if the cause of action is demurrable.” (McBride v. Boughton (2004) 123 Cal.App.4th 379, 394.)

Defendant argues that Plaintiff has had an opportunity to cure the defects in the pleadings and failed to do so. Defendant takes the position that the pleadings cannot be amended, citing Opp v. St. Paul Fire & Marine Ins. Co. (2007) 154 Cal.App.4th 71.

In Opp, an individual (Opp) held a contractor's license. (Opp, supra, 154 Cal.App.4th at p. 72.) Opp was also the president of a corporation, MCI, that did not hold a license. (Ibid.) Opp, as president of MCI, entered into a subcontract and inserted his individual contractor's license number where the contract documents called for a license number. (Id. at pp. 72-73.) When MCI later sued for compensation under the subcontract, the court entered summary judgment for the defendant insurer, and the appellate court affirmed. (Id. at pp. 73, 74-76.) The court held that MCI was the contracting party and was unlicensed, and that MCI's claim therefore was barred by section 7031. (Opp, supra, at pp. 74-76.)

Touchstone Marble Inc.’s name on both the contract and invoices is potentially problematic under Business and Professions Code section 7031.[1] However, Plaintiff is entitled to one more opportunity to remedy the defects here.

The demurrer is sustained in its entirety. Plaintiff shall have leave to amend. The amended complaint shall be served and filed on or before November 27, 2023.

[1] Under Business and Professions Code section 7031, subdivision (a), a contractor that performs work without the required contractor's license generally cannot bring an action for the collection of compensation. Further, under section 7031, subdivision (b), a person who has paid an unlicensed contractor typically can bring an action to recover “all compensation” paid to the contractor for work performed, even if the work was performed properly.