Judge Bruce G. Iwasaki, Case Number: 23STCV01639, Date: 2024-01-03 Tentative Ruling

Tentative Ruling: The Demurrer to the Second Amended Complaint is sustained in part and overruled in part.

This is a dispute arising over the payment for transportation services brought by Plaintiffs HGH Express, Continental Trusted Trucking and Galaxy Trucking (Plaintiffs). The Second Amended Complaint (SAC) alleges causes of action for (1.) breach of contract, (2.) restitution, unjust enrichment, negligence, violation of unfair business practices, and (3.) fraud.

On November 14, 2023, Defendants Uber Freight, LLC, its predecessor in interest Transplace Texas, and Liberty Mutual (Liberty) (Defendants) demurred to the entire SAC. No opposition was filed.

Defendants’ request for judicial notice of Exhibits A-B is denied. (Evid. Code, 452, subd. (h); Del E. Webb Corp. v. Structural Materials Co. (1981) 123 Cal.App.3d 593, 604.)

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.) In applying these standards, the court liberally construes the complaint to determine whether a cause of action has been stated. (Picton v. Anderson Union High School Dist. (1996) 50 Cal.App.4th 726, 733.)

Defendants argue the first and second causes of action are barred by the applicable statute of limitations.

Defendants argue that both the first cause of action for breach of contract and the second cause of action for restitution, unjust enrichment, negligence, and violation of unfair business practices arise from unpaid freight charges and are, therefore, subject to 49 U.S.C. section 14705.

49 U.S.C. section 14705, subdivision (a), provides, “A carrier providing transportation or service subject to jurisdiction under chapter 135 [49 U.S.C. § 13501 et seq.] must begin a civil action to recover charges for transportation or service provided by the carrier within 18 months after the claim accrues.” Further, “[a] claim related to a shipment of property accrues under this section on delivery or tender of delivery by the carrier.” (49 U.S.C. § 14705, subd. (g).) This provision preempts any state law that would provide a longer limitations period for interstate freight charges. (Emmert Indus. Corp. v. Artisan Associates (9th Cir.2007) 497 F.3d 982, 988–991.)

Here, Plaintiffs allege that they were damaged in the amount of “not more than $68,469” for “the subject unpaid 22 loads: 0921768--$2900, 0923695--$3091, 0945409--$2635, 0946479-- $2100, 0944931--$2300 , 0953096--$1500, 0951799--$3500, 0953292--$3300, 0957103--$150, 0948199--$1444, 817736897--$3350, 0954130--$2650, 0954188--$2500, 0954182--$2500, 0956046--$2650, 0954135--$2650, 816982473--$3450, 0940804--$2350, 817799725--$3375, 0954131--$2650, 0954175--$2650, 0956048--$2650.” (SAC ¶¶ 4-5.)

It cannot be determined from the Second Amended Complaint alone that all the claims arising from the unpaid freight charges are barred by 49 USC section 14705; that is, the SAC does not provide the date of delivery for these loads. (SAC ¶¶ 13-16.)

The Court cannot, however, take judicial notice of these discovery responses. The court in Del E. Webb Corp. recognized, a court “passing upon the question of the demurrer may look to affidavits filed on behalf of plaintiff, and the plaintiff's answers to interrogatories [citation], as well as to the plaintiff's response to request for admissions,” but “only where they contain statements of the plaintiff or his agent which are inconsistent with the allegations of the pleading before the court. The hearing may not be turned into a contested evidentiary hearing through the guise of having the court take judicial notice of affidavits, declarations, depositions, and other such material which was filed on behalf of the adverse party and which purports to contradict the allegations and contentions of the plaintiff.” (Del E. Webb Corp. v. Structural Materials Co., supra, 123 Cal.App.3d at pp. 604-605.) Thus, “ ‘judicial notice of matters upon demurrer will be dispositive only in those instances where there is not or cannot be a factual dispute concerning that which is sought to be judicially noticed.’ (Cruz v. County of Los Angeles (1985) 173 Cal.App.3d 1131, 1134.)” (Joslin v. H.A.S. Ins. Brokerage (1986) 184 Cal.App.3d 369, 375.)

Here, there is no clear factual inconsistency between the SAC and the discovery responses that would allow the Court to take judicial notice of these admissions. That is because the SAC is simply silent as to the dates of delivery.

Evidence presented by summary adjudication or at trial may resolve this claim, but it cannot be disposed of on the pleadings.

In the alternative, Defendants argue that Plaintiff has failed to plead a cause of action for breach of contract against Defendant Liberty.

To prevail on a breach of contract cause of action, a plaintiff must prove: (1) the existence of a contract; (2) plaintiff's performance or excuse for nonperformance; (3) defendant's breach; and (4) resulting damages to plaintiff. (Careau & Co. v. Security Pacific Business Credit, Inc. (1990) 222 Cal.App.3d 1371, 1388.)

Here, the SAC’s only specific allegation with respect to Defendant Liberty is as follows: “Defendant LIBERTY MUTUAL failed to reject or approve Plaintiff’s claim within 30 days’ time period, which is negligent or intentional failure to abide by the procedure prescribed by the law and the bond regulations.” (SAC ¶ 3.)

There are no allegations demonstrating the existence of a contract between Defendant Liberty and Plaintiffs; nor are there any allegations alleging the legal effect of such a contract to determine the specific nature of the breach from such a contract. In fact, the SAC even concedes that “[s]ome of Plaintiffs did not have a written agreement with Defendants.” (SAC ¶ 35.)

Therefore, the demurrer to this cause of action is sustained as to Defendant Liberty.

Second Cause of Action – Restitution, Unjust Enrichment, Negligence and Violation of Unfair Business Practices Act

Defendants argue that these claims – improperly labeled a single cause of action – fail to state a claim. The second cause of action joins several different legal theories under one purported cause of action. The Court will address each theory separately.

First, with respect to the negligence claim, the SAC alleges “Defendants collectively have a duty to care about the carriers – contractors/owner operators and must act in a way not to harm, damage or cause negative consequences to a party who hauled a load for them. This duty was breached and was a proximate cause, to harm Plaintiffs in the sums described herein, because Plaintiffs paid out of their pocket for fuel and labor to haul the subject loads for the benefit of Defendants.” (SAC ¶ 45.)

As cited by Defendants, there is “no tort duty to guard against purely economic losses,” which are “’pecuniary or commercial loss[es] that do[] not arise from actionable physical, emotional or reputational injury to persons or physical injury to property.’” (Southern California Gas Leak Cases (2019) 7 Cal.5th 391, 398.) That is, under the economic loss doctrine, a defendant is not liable in tort for economic losses alone, but only for physical injuries to persons or property.

Here, there are no allegations of any personal injuries suffered by Plaintiffs based on Defendants’ alleged failure to pay the freight charges. Because Plaintiffs’ SAC seeks recovery only of economic damages – which they cannot recover under the economic loss doctrine – they cannot prove the damages element of their negligence cause of action.

Further, the SAC alleges that “Defendants effectively have been withholding the payment and by doing so, Defendants have been unjustly enriched.” (SAC ¶ 40.) Defendants argue, again, there are no specific allegations as to Defendant Liberty here. Defendants’ argument is correct. However, the demurrer does not address the following allegation: “Defendants’ surety bond also refused to pay under bond coverage.” (SAC ¶ 39.)

Accordingly, the demurrer is overruled as to the unjust enrichment claim with respect to all Defendants.

With respect to the Unfair Business Practices Act and the restitution claims, they both fail because Plaintiffs are seeking damages, not restitution.

The Unfair Business Practices Act or UCL defines unfair competition as “any unlawful, unfair, or fraudulent business act or practice.” (Bus. & Prof. Code § 17200; Bank of the West v. Superior Court (1992) 2 Cal.4th 1254, 1266.) A business practice need only satisfy one of the three criteria—unlawful, unfair, or fraudulent—to be considered unfair competition. (McKell v. Wash. Mut., Inc. (2006) 142 Cal.App.4th 1457, 1470-1471.)

The remedies available to private plaintiffs under the UCL are limited to injunctive relief and restitution. (Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th 1134, 1144 [“We have stated that under the UCL, ‘[p]revailing plaintiffs are generally limited to injunctive relief and restitution.’ ”].) In order to establish an entitlement to restitution under the UCL, a plaintiff must show: (1) that she had at one time “an ownership interest” in the money or property she “lost” and (2) that money or property must have been “acquired” by the defendant. (Kwikset Corp. v. Superior Court (2011) 51 Cal.4^th 310, 336.)

Here, Plaintiffs purport to seek restitution. However, Plaintiffs fail to allege that Defendants “acquired” the money that Plaintiffs “lost.” Rather, the allegations are that Plaintiffs never received payment they were entitled to for services rendered. Therefore, the facts alleged in the SAC are insufficient to state a claim for violation of the UCL because they fail to demonstrate entitlement to restitution.

Accordingly, the demurrer to the second cause of action is sustained in part and overruled in part.

Defendants also demur to fraud cause of action on the grounds that the SAC does not plead fraud with the particularity required by law.

The elements of intentional misrepresentation “are (1) a misrepresentation, (2) knowledge of falsity, (3) intent to induce reliance, (4) actual and justifiable reliance, and (5) resulting damage.” (Chapman v. Skype Inc. (2013) 220 Cal.App.4th 217, 230–231.)

Generally, “[i]n California, fraud must be pled specifically; general and conclusory allegations do not suffice.” (Lazar v. Superior Court (1996) 12 Cal.4th 631, 645.). “This particularity requirement necessitates pleading facts which show how, where, to whom, and by what means” the alleged fraud occurred. (Id.) The purpose of the particularity requirement is to “separate meritorious and nonmeritorious cases, if possible in advance of trial.” (Small v. Fritz Companies, Inc. (2003) 30 Cal.4th 167, 184.)

Here the SAC alleges that that “Daniel Sbanotto VP, Legal for Defendants…had been communicating with Defendants, with clear intention to defraud. This communication was made during 2021 and 2022 between the parties to this lawsuit.” (SAC ¶ 55.)[1]

These allegations are woefully deficient. The SAC is devoid of any allegations specifying what was said, when it was said, or to whom specifically it was said. (SAC ¶¶ 52-59.) Moreover, the title of “VP, Legal for Defendants” is impermissibly vague and fails to demonstrate upon whose authority this individual was acting.

Accordingly, the fraud claim is insufficiently pled. The demurrer to this cause of action is sustained.[2]

The demurrer is sustained as to the first cause of action with respect to Defendant Liberty and overruled as to the remaining Defendants. The demurrer is sustained as to all Defendants with respect to the negligence, restitution, UCL and fraud causes of action. The demurrer is overruled as to the unjust enrichment cause of action with respect to all Defendants.

Thus, the first cause of action remains as to Defendants Uber Freight, LLC and its predecessor in interest Transplace Texas, and the second cause of action solely as to unjust enrichment claims remains as to all Defendants.

The Court is disinclined to allow leave to amend for this poorly drafted third iteration of Plaintiff’s pleading. “If we see a reasonable possibility that the plaintiff could cure the defect by amendment, then we conclude that the trial court abused its discretion in denying leave to amend. If we determine otherwise, then we conclude it did not.” (Campbell v. Regents of University of California (2005) 35 Cal.4th 311, 320.) “The burden of proving such reasonable possibility is squarely on the plaintiff.” (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) “To satisfy this burden, ‘ “a plaintiff ‘must show in what manner he can amend his complaint and how that amendment will change the legal effect of his pleading’ ” ’ by clearly stating not only the legal basis for the amendment, but also the factual allegations to sufficiently state a cause of action. [Citation.]” (Graham v. Bank of America (2014) 226 Cal.App.4th 594, 618.) Here, Plaintiff, by failing to oppose the demurrer, would seem to have forfeited any argument for leave to amend.

While the Court’s tentative ruling is to sustain the demurrer on the claims indicated without leave to amend, the Court will consider at the hearing factual grounds that there is a reasonable possibility that Plaintiff can cure the defects in the Second Amended Complaint.

[1] Presumably, the SAC intended to allege that Daniel Sbanotto VP, Legal for Defendants had been communicating with Plaintiffs.

[2] In considering these allegations, the fraud cause of action reads more as an argument for equitable tolling of the statute of limitations to the first two causes of action rather than a separate fraud claim. However, even treating it as a tolling argument, the allegations are too vague to determine that any equitable relief should apply to the statute of limitations – assuming the statute of limitations was at issue.

Judge Bruce G. Iwasaki

Department 58